EXHIBIT 10.49
TRANSITION AGREEMENT AND RELEASE
RECITALS
This Transition Agreement and Release ("Agreement") is made by and
between Xxxxxx X. Xxxxxxxx ("Executive") and Cholestech Corporation, its
predecessors, successors and assigns ("Company") (collectively referred to as
the "Parties"):
WHEREAS, Executive is employed by the Company as its Chief Operating
Officer;
WHEREAS, the Executive and Company have agreed that effective January
1, 2003 the Executive resigned from his position as Chief Operating Officer.
This agreement will nullify the Change of Control document executed July 25,
2001 as of the Effective Date of this document, as defined below. The Executive
will relinquish his duties as the C.O.O. of Diagnostic Products.
WHEREAS, the Company and Executive entered into an At-Will Employment,
Confidential Information, Invention Assignment, and Arbitration Agreement (the
"Confidentiality Agreement") signed on July 20, 1998;
WHEREAS, the Company and Executive have entered into Stock Option
Agreements dated August 20, 1998, March 25, 1999, September 17, 1999, August 17,
2000, June 14, 2001 and March 27, 2002 granting Executive the option to purchase
shares of the Company's common stock subject to the terms and conditions of the
Company's 1997 and the Company's 2000 Stock Option Plan and the Stock Option
Agreement (the "Stock Agreements");
WHEREAS, the Parties, and each of them, wish to resolve any and all
disputes, claims, complaints, grievances, charges, actions, petitions and
demands that the Executive may have against the Company as defined herein,
including, but not limited to, any and all claims arising or in any way related
to Executive's employment with, or separation from, the Company;
WHEREAS, the Parties wish to set forth the terms of the orderly
transition of Executive's employment duties;
NOW THEREFORE, in consideration of the promises made herein, the
Parties hereby agree as follows:
COVENANTS
1. Transition Period. The term of this Agreement shall commence
on January 1, 2003 and, provided Executive executes and does not revoke this
Agreement, shall terminate no later than June 30, 2004. The actual date of
termination of employment shall be referred to herein as the "Termination Date."
However, the parties agree that the Executive's employment with the Company
shall be "at-will" employment and may be terminated at any time, for any reason,
with or without Cause (as defined herein) or notice. No provision of this
Agreement shall be construed as conferring upon the Executive a right to
continue as an employee of the Company.
(a) Position. Executive agrees to remain with the Company
in his current position through December 31, 2002. On January 1, 2003, Executive
shall be employed by the Company, reporting to the Company's Chief Executive
Officer ("CEO"), and shall assume and discharge such responsibilities as may be
requested and deemed necessary and appropriate by the CEO. The Executive shall
perform his duties faithfully and to the best of his ability. The Executive may
serve on the boards of directors of other entities and engage in other business
activities outside of his employment with the Company, so long as such
activities do not materially interfere with his duties to the Company. It is
expected that the Executive will be available to work:
- 416 hours (138 hours/per month) for the months
January through March 2003
- 312 hours (104 hours/per month) for months April
through June 2003
- 208 hours (70 hours/per month) for months July 2003
through September 2003
- 104 hours (35 hours/per month) for months October
2003 through December 2003
- 144 hours (24 hours/per month) for months January
2004 through June 2004
(b) Salary. The Company will continue to pay Executive as
compensation his base salary at an annualized rate of $224,000 in accordance
with the Company's normal payroll practices until December 31, 2002. The Company
agrees to pay Executive at the rate of $97.00 per hour, less applicable
withholding and in accordance with the Company's regular payroll practices,
beginning January 1, 2003 and continuing until the Termination Date (the
"Payment Period"). If annualized this hourly salary would be $201,760. The
actual salary amount will be based on the hours listed in Paragraph 1(a) of this
Agreement.
(c) Benefits. During the Payment Period, the Executive
shall be entitled to participate in the employee benefit plans and programs of
the Company, if any, to the extent that his position, salary, age, health and
other qualifications make him eligible to participate in such plans or programs,
subject to the rules and regulations applicable thereto. The Company reserves
the right to cancel or change the benefit plans and programs it offers to its
employees at any time.
(d) Paid Time Off. ("PTO") During the Payment Period, the
Executive shall be entitled to accrue PTO in accordance with the Company's
current policy for an employee of the Executive's position and salary. Any
accrued and unused PTO will be paid upon the Termination Date.
(e) Expenses. The Company shall reimburse the Executive
for reasonable travel, entertainment or other expenses incurred by the Executive
in the furtherance of or in connection with the performance of the Executive's
duties hereunder during the Payment Period, in accordance with the Company's
expense reimbursement policy as in effect from time to time.
(f) Bonus. The Executive will be eligible for the
Management Incentive Bonus Plan ("MIBP") in FY03. Eligibility for payout will be
pro-rated based on 9 months having served as
-2-
the COO of Cholestech and 3 months as the V.P. of Business Development. Terms of
any payout amounts will be subject to the terms and conditions of the Cholestech
policy.
2. Severance Agreement. If: (1) the Company terminates
Executive's employment, provided such termination is not "for Cause" as defined
below, or Executive tenders his resignation, provided such resignation does not
follow acts by the Executive that the Company determines in its sole discretion
warrant the termination of Executive for Cause; and (2) in consideration for the
execution by Executive of a general release on the Termination Date, the form of
which is attached hereto as Exhibit A (the "Supplemental Agreement"), provided
Executive does not revoke the Supplemental Agreement, the Company agrees to pay
Executive severance as follows:
(a) Severance Payment. The Executive shall be entitled to
receive a lump sum payment of Three Hundred and Thirty Six Thousand dollars
($336,000) (the "Severance Payment"), less all applicable withholding taxes and
in accordance with Company's standard payroll practices. The Severance Payment,
if applicable, will be paid no later than fifteen (15) days after the Effective
Date of the Supplemental Agreement.
(i) Accelerated Payment. In the event of
Executive's death during the Transition Period, the Executive's spouse shall be
entitled to receive the Severance Payment of Three Hundred and Thirty Six
Thousand dollars ($336,000), less all applicable withholding taxes and in
accordance with Company's standard payroll practices, provided that the
Supplemental Agreement is signed, within ninety (90) days of Executive's death,
by the Executive's spouse and by the executor or administrator of the
Executive's estate, or, if none, by the beneficiary(ies) under the Executive's
will or under the laws of descent or distribution.
(b) COBRA. The Company shall reimburse Executive for the
payments he makes for COBRA coverage for a period of 18 months beginning on the
Termination Date, or until Executive has secured other employment, whichever
occurs first. COBRA reimbursements shall be made by the Company to Executive
within thirty (30) days of Executive's provision to the Company of his payments
for COBRA coverage, provided, however, that (i) the Executive constitutes a
qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue
Code of 1986, as amended, and (ii) Executive timely elects and pays for COBRA
coverage.
(c) Stock Treatment. If the Company or the Executive
terminates the Executive's employment, for any or no reason, the Executive
agrees and acknowledges that the remaining unvested shares of the Company
subject to his stock options shall terminate immediately as of the date of such
termination. The Parties agree that for purposes of determining the number of
shares of the Company's common stock which Executive is entitled to purchase
from the Company, pursuant to the exercise of outstanding options, the Executive
will have continued vesting through the Payment Period. The exercise of any
stock options shall continue to be subject to the terms and conditions of the
Stock Agreements.
(d) Cause. For the purposes of this Agreement, the term
"Cause" shall mean the occurrence of any one or more of the following: (i) any
act of personal dishonesty taken by the Executive in connection with his
responsibilities as an employee which is intended to result in substantial
personal enrichment of the Executive, (ii) the Executive's conviction of a
felony which the Board of Directors reasonably believes has had or will have a
material detrimental effect on the
-3-
Company's reputation or business, (iii) a willful act by the Executive which
constitutes misconduct and is injurious to the Company, or (iv) continued
willful violations by the Executive of the Executive's obligations to the
Company after there has been delivered to the Executive a written demand for
performance from the Company which describes the basis for the Company's belief
that the Executive has not substantially performed his duties.
(e) Mitigation. The Executive shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Executive may receive from any
other source. However, the Executive shall not be entitled to receive the health
coverage and benefits contemplated by this Agreement in the event that the
Executive receives similar health coverage and benefits as a result of new
employment during the 18 month period commencing on the date of the Executive's
termination.
3. Confidential Information. Executive shall continue to maintain
the confidentiality of all confidential and proprietary information of the
Company and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Executive and the Company. Executive shall
return all of the Company's property and confidential and proprietary
information in his possession to the Company on the Termination Date.
4. Payment of Salary. Executive acknowledges and represents that
the Company has paid all salary, wages, bonuses, accrued Paid Time Off,
commissions and any and all other benefits due to Executive as of the Effective
Date of this Agreement.
5. Release of Claims. Executive agrees that the foregoing
consideration represents settlement in full of all outstanding obligations owed
to Executive by the Company and its officers, managers, supervisors, agents and
employees. Executive, on his own behalf, and on behalf of his respective heirs,
family members, executors, agents, and assigns, hereby fully and forever
releases the Company and its officers, directors, employees, agents, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns, from, and agree not to xxx concerning,
any claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that
Executive may possess arising from any omissions, acts or facts that have
occurred up until and including the Effective Date of this Agreement including,
without limitation:
(a) any and all claims relating to or arising from
Executive's employment relationship with the Company and the termination of that
relationship;
(b) any and all claims relating to, or arising from,
Executive's right to purchase, or actual purchase of shares of stock of the
Company, including, without limitation, any claims for fraud, misrepresentation,
breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;
(c) any and all claims under the law of any jurisdiction
including, but not limited to, wrongful discharge of employment; constructive
discharge from employment; termination in violation of public policy;
discrimination; breach of contract, both express and implied; breach of a
covenant of good faith and fair dealing, both express and implied; promissory
estoppel; negligent or intentional infliction of emotional distress; negligent
or intentional misrepresentation; negligent or
-4-
intentional interference with contract or prospective economic advantage; unfair
business practices; defamation; libel; slander; negligence; personal injury;
assault; battery; invasion of privacy; false imprisonment; and conversion;
(d) any and all claims for violation of any federal,
state or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990; the Fair Labor Standards Act; the Fair Credit
Reporting Act; the Age Discrimination in Employment Act of 1967; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Family and Medical Leave Act; the California Family Rights
Act; the California Fair Employment and Housing Act, and the California Labor
Code;
(e) any and all claims for violation of the federal, or
any state, constitution;
(f) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;
(g) any claim for any loss, cost, damage, or expense
arising out of any dispute over the non-withholding or other tax treatment of
any of the proceeds received by Executive as a result of this Agreement; and
(h) any and all claims for attorneys' fees and costs.
The Company and Executive agree that the release set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. This release does not extend to any
obligations incurred under this Agreement.
Executive acknowledges and agrees that any breach of any provision of
this Agreement shall constitute a material breach of this Agreement.
6. Acknowledgement of Waiver of Claims Under ADEA. Executive
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Executive and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Agreement. Executive acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Executive was already entitled. Executive further
acknowledges that he has been advised by this writing that
(a) he should consult with an attorney prior to executing
this Agreement;
(b) he has up to twenty-one (21) days within which to
consider this Agreement;
(c) he has seven (7) days following his execution of this
Agreement to revoke this Agreement;
(d) this Agreement shall not be effective until the
revocation period has expired; and,
-5-
(e) nothing in this Agreement prevents or precludes
Executive from challenging or seeking a determination in good faith of the
validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties or costs for doing so, unless specifically authorized by
federal law.
7. Civil Code Section 1542. The Parties represent that they are
not aware of any claim by either of them other than the claims that are released
by this Agreement. Executive acknowledges that he has been advised by legal
counsel and is familiar with the provisions of California Civil Code Section
1542, which provides 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.
Executive, being aware of said code section, agrees to expressly waive
any rights he may have thereunder, as well as under any other statute or common
law principles of similar effect.
8. No Pending or Future Lawsuits. Executive represents that he
has no lawsuits, claims, or actions pending in his name, or on behalf of any
other person or entity, against the Company or any other person or entity
referred to herein. Executive also represents that he does not intend to bring
any claims on his own behalf or on behalf of any other person or entity against
the Company or any other person or entity referred to herein.
9. Application for Employment. Executive understands and agrees
that, as a condition of this Agreement, after the termination of his employment,
he shall not be entitled to any employment with the Company, its subsidiaries,
or any successor, and he hereby waives any right, or alleged right, of
employment or re-employment with the Company, its subsidiaries or related
companies, or any successor.
10. Confidentiality. The Parties acknowledge that Executive's
agreement to keep the terms and conditions of this Agreement and the
Supplemental Agreement confidential was a material factor on which all parties
relied in entering into this Agreement. Executive hereto agrees to use his best
efforts to maintain in confidence: (i) the existence of this Agreement and the
Supplemental agreement, (ii) the contents and terms of this Agreement and the
Supplemental Agreement, (iii) the consideration for this Agreement and the
Supplemental Agreement, and (iv) any allegations relating to the Company or its
officers or employees with respect to Executive's employment with the Company,
except as otherwise provided for in this Agreement (hereinafter collectively
referred to as "Settlement Information"). Executive agrees to take every
reasonable precaution to prevent disclosure of any Settlement Information to
third parties, and agrees that there will be no publicity, directly or
indirectly, concerning any Settlement Information. Executive agrees to take
every precaution to disclose Settlement Information only to those attorneys,
accountants, governmental entities, and family members who have a reasonable
need to know of such Settlement Information. The Parties agree that if Company
proves that Executive breached this Confidentiality provision, it shall be
entitled to an award of its costs spent enforcing this provision, including all
reasonable
-6-
attorneys' fees associated with the enforcement action, without regard to
whether the Company can establish actual damages from the breach by Executive.
11. No Cooperation. Executive agrees he will not act in any manner
that might damage the business of the Company. Executive agrees that he will not
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so. Executive further agrees both to
immediately notify the Company upon receipt of any court order, subpoena, or any
legal discovery device that seeks or might require the disclosure or production
of the existence or terms of this Agreement, and to furnish, within three (3)
business days of its receipt, a copy of such subpoena or legal discovery device
to the Company.
12. Non-Disparagement. Executive agrees to refrain from any
defamation, libel or slander of the Company or tortious interference with the
contracts and relationships of the Company. All inquiries by potential future
employers of Executive will be directed to Human Resources. Upon inquiry, the
Company shall only state the following: Executive 's last position and dates of
employment.
13. Non-Solicitation. Executive agrees that for a period of twelve
(12) months immediately following the termination of his employment, Executive
shall not either directly or indirectly solicit, induce, recruit or encourage
any of the Company's employees to leave their employment, or take away such
employees, or attempt to solicit, induce, recruit, encourage, take away or hire
employees of the Company, either for him or any other person or entity.
14. No Admission of Liability. The Parties understand and
acknowledge that this Agreement constitutes a compromise and settlement of
disputed claims. No action taken by the Parties hereto, or either of them,
either previously or in connection with this Agreement shall be deemed or
construed to be: (a) an admission of the truth or falsity of any claims
heretofore made or (b) an acknowledgment or admission by either party of any
fault or liability whatsoever to the other party or to any third party.
15. No Knowledge of Wrongdoing. Executive represents that he has
no knowledge of any wrongdoing involving improper or false claims against a
federal or state governmental agency, or any other wrongdoing that involves
Executive or other present or former Company employees.
16. Costs. The Parties shall each bear their own costs, expert
fees, attorneys' fees and other fees incurred in connection with this Agreement.
17. Indemnification. Executive agrees to indemnify and hold
harmless the Company from and against any and all loss, costs, damages or
expenses, including, without limitation, attorneys' fees or expenses incurred by
the Company arising out of the breach of this Agreement by Executive, or from
any false representation made herein by Executive, or from any action or
proceeding which may be commenced, prosecuted or threatened by Executive or for
Executive's benefit, upon Executive's initiative, or with Executive's aid or
approval, contrary to the provisions of this Agreement. Executive further agrees
that in any such action or proceeding, this Agreement may
-7-
be pled by the Company as a complete defense, or may be asserted by way of
counterclaim or cross-claim.
18. Arbitration. The Parties agree that any and all disputes
arising out of the terms of this Agreement, their interpretation, and any of the
matters herein released, shall be subject to binding arbitration in Alameda
County before the American Arbitration Association under its National Rules for
the Resolution of Employment Disputes or the California Code of Civil Procedure.
The Parties agree that the prevailing party in any arbitration shall be entitled
to injunctive relief in any court of competent jurisdiction to enforce the
arbitration award. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY
DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. This section
will not prevent either party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the Parties and the
subject matter of their dispute relating to Executive's obligations under this
Agreement and the agreements incorporated herein by reference.
19. Authority. The Company represents and warrants that the
undersigned has the authority to act on behalf of the Company and to bind the
Company and all who may claim through it to the terms and conditions of this
Agreement. Executive represents and warrants that he has the capacity to act on
his own behalf and on behalf of all who might claim through him to bind them to
the terms and conditions of this Agreement, including Executive's spouse and the
executor or administrator of Executive's estate, or, if none, by the
beneficiary(ies) under the Executive's will or under the laws of descent or
distribution. Each party warrants and represents that there are no liens or
claims of lien or assignments in law or equity or otherwise of or against any of
the claims or causes of action released herein.
20. No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
21. Severability. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision so long as the remaining provisions remain intelligible and continue
to reflect the original intent of the Parties.
22. Entire Agreement. This Agreement and the Supplemental
Agreement represents the entire agreement and understanding between the Company
and Executive concerning the subject matter of this Agreement and Executive's
relationship with the Company, and supersedes and replaces any and all prior
agreements and understandings between the Parties concerning the subject matter
of this Agreement and Executive's relationship with the Company, with the
exception of the Confidentiality Agreement and the Stock Agreements.
23. No Waiver. The failure of any party to insist upon the
performance of any of the terms and conditions in this Agreement, or the failure
to prosecute any breach of any of the terms and conditions of this Agreement,
shall not be construed thereafter as a waiver of any such terms or conditions.
This entire Agreement shall remain in full force and effect as if no such
forbearance or failure of performance had occurred.
-8-
24. No Oral Modification. Any modification or amendment of this
Agreement, or additional obligation assumed by either party in connection with
this Agreement, shall be effective only if placed in writing and signed by both
Parties or by authorized representatives of each party.
25. Governing Law. This Agreement shall be deemed to have been
executed and delivered within the State of California, and it shall be
construed, interpreted, governed, and enforced in accordance with the laws of
the State of California, without regard to choice of law principles.
26. Attorneys' Fees. In the event that either Party brings an
action to enforce or effect its rights under this Agreement, the prevailing
party shall be entitled to recover its costs and expenses, including the costs
of mediation, arbitration, litigation, court fees, plus reasonable attorneys'
fees, incurred in connection with such an action.
27. Effective Date. This Agreement is effective after it has been
signed by both parties and after seven (7) days have passed since Executive has
signed the Agreement (the "Effective Date"), unless revoked by Executive within
seven (7) days after the date the Agreement was signed by Executive.
28. Counterparts. This Agreement may be executed in counterparts,
and each counterpart shall have the same force and effect as an original and
shall constitute an effective, binding agreement on the part of each of the
undersigned.
29. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of their own
choice or that they have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this
Agreement and of the releases it contains; and
(d) They are fully aware of the legal and binding effect
of this Agreement.
-9-
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.
CHOLESTECH CORPORATION
Dated: 12/18/02 By: /s/ Xxxxxx X. Xxxxxxxx XX
----------------------------------------
Xxxxxx X. Xxxxxxxx XX
Chief Executive Officer
Xxxxxx X. Xxxxxxxx, an individual
Dated: 12/16/02 /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxx
-10-
EXHIBIT A
SUPPLEMENTAL SEVERANCE AGREEMENT AND RELEASE
This Supplemental Severance Agreement and Release ("Supplemental
Agreement") is made by and between Xxxxxx X. Xxxxxxxx ("Executive") and
Cholestech Corporation ("Company") (collectively referred to as the "Parties"):
WHEREAS, Executive's employment was terminated on _________________ (the
"Termination Date");
1. Transition Agreement. Company and Executive agree that the
terms of the Transition and Release Agreement dated _______________ (the
"Transition Agreement") shall remain in full force and effect and are fully
incorporated herein except to the extent it is inconsistent with this
Supplemental Agreement.
2. Payment of Salary. Executive acknowledges and represents that
the Company has paid all salary, wages, bonuses, accrued vacation, commissions
and any and all other benefits due to Executive as of the Effective Date of this
Supplemental Agreement.
3. Consideration. In exchange for Executive's execution, and
non-revocation of this Supplemental Agreement, the Company agrees to pay
Executive severance as follows:
(a) Severance Payment: Executive shall be entitled to
receive a lump sum payment of Three Hundred and Thirty Six Thousand dollars
($336,000) (the "Severance Payment"), less all applicable withholding taxes and
in accordance with Company's standard payroll practices. The Severance Payment,
if applicable, will be paid no later than fifteen (15) days after the Effective
Date of the Supplemental Agreement.
(i) Accelerated Payment. In the event of
Executive's death during the Transition Period, the Executive's spouse shall be
entitled to receive the Severance Payment of Three Hundred and Thirty Six
Thousand dollars ($336,000), less all applicable withholding taxes and in
accordance with Company's standard payroll practices, provided that the
Supplemental Agreement is signed, within ninety (90) days of Executive's death,
by the Executive's spouse and by the executor or administrator of the
Executive's estate, or, if none, by the beneficiary(ies) under the Executive's
will or under the laws of descent or distribution.
(b) COBRA. The Company shall reimburse Executive for the
payments he makes for COBRA coverage for a period of 18 months beginning on the
Termination Date, or until Executive has secured other employment, whichever
occurs first. COBRA reimbursements shall be made by the Company to Executive
within thirty (30) days of Executive's provision to the Company of documentation
substantiating his payments for COBRA coverage, provided, however, that (i) the
Executive constitutes a qualified beneficiary, as defined in Section 4980B(g)(1)
of the Internal Revenue Code of 1986, as amended, and (ii) Executive timely
elects and pays for COBRA coverage.
(c) Stock Treatment. The Parties agree that for purposes
of determining the number of shares of the Company's common stock which
Executive is entitled to purchase from the Company, pursuant to the exercise of
outstanding options, the Executive will be considered to have vested only up to
the Termination Date. Executive acknowledges that as of the Termination Date, he
will have vested in _________ options and no more. Executive shall not be
entitled to continue vesting after the Termination Date. The exercise of any
stock options shall continue to be subject to the terms and conditions of the
Stock Agreements.
(d) Cause. For the purposes of this Agreement, the term
"Cause" shall mean the occurrence of any one or more of the following: (i) any
act of personal dishonesty taken by the Executive in connection with his
responsibilities as an employee which is intended to result in substantial
personal enrichment of the Executive, (ii) the Executive's conviction of a
felony which the Board of Directors reasonably believes has had or will have a
material detrimental effect on the Company's reputation or business, (iii) a
willful act by the Executive which constitutes misconduct and is injurious to
the Company, or (iv) continued willful violations by the Executive of the
Executive's obligations to the Company after there has been delivered to the
Executive a written demand for performance from the Company which describes the
basis for the Company's belief that the Executive has not substantially
performed his duties.
4. Release of Claims. Executive agrees that the foregoing
consideration represents settlement in full of all outstanding obligations owed
to Executive by the Company and its officers, managers, supervisors, agents and
employees. Executive, on his own behalf, and on behalf of his respective heirs,
family members, executors, agents, and assigns, hereby fully and forever
releases the Company and its officers, directors, employees, agents, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns, from, and agree not to xxx concerning,
any claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that
Executive may possess arising from any omissions, acts or facts that have
occurred up until and including the Effective Date of this Supplemental
Agreement including, without limitation:
(a) any and all claims relating to or arising from
Executive's employment relationship with the Company and the termination of that
relationship;
(b) any and all claims relating to, or arising from,
Executive's right to purchase, or actual purchase of shares of stock of the
Company, including, without limitation, any claims for fraud, misrepresentation,
breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;
(c) any and all claims under the law of any jurisdiction
including, but not limited to, wrongful discharge of employment; constructive
discharge from employment; termination in violation of public policy;
discrimination; breach of contract, both express and implied; breach of a
covenant of good faith and fair dealing, both express and implied; promissory
estoppel; negligent or intentional infliction of emotional distress; negligent
or intentional misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; unfair business practices;
defamation; libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; and conversion;
A-2
(d) any and all claims for violation of any federal,
state or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990; the Fair Labor Standards Act; the Fair Credit
Reporting Act; the Age Discrimination in Employment Act of 1967; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Family and Medical Leave Act; the California Family Rights
Act; the California Fair Employment and Housing Act, and the California Labor
Code;
(e) any and all claims for violation of the federal, or
any state, constitution;
(f) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;
(g) any claim for any loss, cost, damage, or expense
arising out of any dispute over the non-withholding or other tax treatment of
any of the proceeds received by Executive as a result of this Supplemental
Agreement; and
(h) any and all claims for attorneys' fees and costs.
The Company and Executive agree that the release set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. This release does not extend to any
obligations incurred under this Supplemental Agreement.
Executive acknowledges and agrees that any breach of any provision of
this Supplemental Agreement shall constitute a material breach of this
Supplemental Agreement and shall entitle the Company immediately to recover and
cease the severance benefits provided to Executive under this Supplemental
Agreement.
5. Acknowledgement of Waiver of Claims Under ADEA. Executive
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Executive and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Supplemental Agreement. Executive
acknowledges that the consideration given for this waiver and release
Supplemental Agreement is in addition to anything of value to which Executive
was already entitled. Executive further acknowledges that he has been advised by
this writing that
(a) he should consult with an attorney prior to executing
this Supplemental Agreement;
(b) he has up to twenty-one (21) days within which to
consider this Supplemental Agreement;
(c) he has seven (7) days following his execution of this
Supplemental Agreement to revoke this Supplemental Agreement;
(d) this Supplemental Agreement shall not be effective
until the revocation period has expired; and,
A-3
(e) nothing in this Supplemental Agreement prevents or
precludes Executive from challenging or seeking a determination in good faith of
the validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties or costs for doing so, unless specifically authorized by
federal law.
6. Civil Code Section 1542. The Parties represent that they are
not aware of any claim by either of them other than the claims that are released
by this Supplemental Agreement. Executive acknowledges that he has been advised
by legal counsel and is familiar with the provisions of California Civil Code
Section 1542, which provides 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.
Executive, being aware of said code section, agrees to expressly waive
any rights he may have thereunder, as well as under any other statute or common
law principles of similar effect.
7. Arbitration. The Parties agree that any and all disputes
arising out of the terms of this Supplemental Agreement, their interpretation,
and any of the matters herein released, shall be subject to binding arbitration
in Alameda County before the American Arbitration Association under its National
Rules for the Resolution of Employment Disputes or the California Code of Civil
Procedure. The Parties agree that the prevailing party in any arbitration shall
be entitled to injunctive relief in any court of competent jurisdiction to
enforce the arbitration award. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO
HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.
This section will not prevent either party from seeking injunctive relief (or
any other provisional remedy) from any court having jurisdiction over the
Parties and the subject matter of their dispute relating to Executive's
obligations under this Supplemental Agreement and the agreements incorporated
herein by reference.
8. Entire Agreement. The Supplemental Agreement and the
Transition Agreement represent the entire agreement and understanding between
the Company and Executive concerning the subject matter of this Supplemental
Agreement and Executive's relationship with the Company, and supersedes and
replaces any and all prior agreements and understandings between the Parties
concerning the subject matter of this Supplemental Agreement and Executive's
relationship with the Company, with the exception of the Transition Agreement,
the Confidentiality Agreement and the Stock Agreements.
9. Governing Law. This Supplemental Agreement shall be deemed to
have been executed and delivered within the State of California, and it shall be
construed, interpreted, governed, and enforced in accordance with the laws of
the State of California, without regard to choice of law principles.
10. Effective Date. This Supplemental Agreement is effective after
it has been signed by both parties and after seven (7) days have passed since
Executive has signed the Supplemental
A-4
Agreement (the "Effective Date"), unless revoked by Executive within seven (7)
days after the date the Supplemental Agreement was signed by Executive.
11. Voluntary Execution of Agreement. This Supplemental Agreement
is executed voluntarily and without any duress or undue influence on the part or
behalf of the Parties hereto, with the full intent of releasing all claims. The
Parties acknowledge that:
(a) They have read this Supplemental Agreement;
(b) They have been represented in the preparation,
negotiation, and execution of this Supplemental Agreement by legal counsel of
their own choice or that they have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this
Supplemental Agreement and of the releases it contains; and
(d) They are fully aware of the legal and binding effect
of this Supplemental Agreement.
IN WITNESS WHEREOF, the Parties have executed this Supplemental
Agreement on the respective dates set forth below.
CHOLESTECH CORPORATION
Dated: By: ________________________________________
Xxxxxx X. Xxxxxxxx XX
Chief Executive Officer
Xxxxxx X. Xxxxxxxx, an individual
Dated: ____________________________________________
Xxxxxx X. Xxxxxxxx
A-5
