SEPARATION AND GENERAL RELEASE AGREEMENT
EXHIBIT 10.4
This Separation and General Release Agreement (this “Agreement”) is being entered into
as of this 31st day of January, 2008 (the “Date of this Agreement”), by and
between Biolase Technology, Inc. (the “Company”), and Xxxxxxx X. Xxxxx, an individual
(“Employee”) (each of the Company and Employee is sometimes hereinafter referred to
individually, as a “Party” and collectively, as the “Parties”).
WHEREAS, Employee and the Company are parties to that certain Employment Agreement, dated as
of December 29, 2005, as amended by that certain Amendment No. 1 to Employment Agreement, dated as
of February 10, 2006 (as amended, the “Employment Agreement”).
WHEREAS, Employee was employed by the Company as Chief Executive Officer through November 5,
2007.
WHEREAS, the Parties wish to provide for severance benefits in lieu of any severance benefits
provided under the Employment Agreements on the terms and conditions set forth below.
WHEREFORE in consideration of the foregoing premises and the terms and conditions set forth
below, the Parties agree as follows:
1. Termination of Employment; Partial Cancellation of Stock Option.
a. The Company terminated Employee’s employment, effective as of November 5, 2007 (the
“Termination Date”). The Company terminated Employee from his positions as the Chief
Executive Officer and President of the Company, effective as of the Termination Date. Employee
hereby resigns as a member of the Board of Directors of the Company, and from each position as a
director, officer and/or employee of any subsidiary or affiliate of the Company, effective as of
the Date of this Agreement.
b. Employee acknowledges that he has been paid all salary and wages through the Termination
Date, including without limitation, any accrued unused vacation benefits, and has been reimbursed
for all business expenses. Except as otherwise provided for in this Agreement, the rights and
obligations of Employee and the Company under the Employment Agreement terminated on the
Termination Date and shall have no further force or effect after the Termination Date.
c. Provided that within twenty-one days of the date on which Employee receives this Agreement,
Employee executes and delivers to the Company the Termination Certification attached hereto as
Exhibit A and the Mutual Release and Waiver of Claims (the “Release”) attached
hereto as Exhibit B, and further provided that Employee does not revoke the Release in
accordance with its terms and conditions, the Company shall provide to Employee, in lieu of any
compensation or benefits under the Employment Agreement, the following severance benefits:
(1) On the first business day that is at least eight days following the date on
which Employee executes and delivers the Release to the Company (the “Payment
Date”), the Company shall pay to Employee a lump sum payment in cash in the
amount of $374,822.18, subject to applicable tax withholding. The Company shall
report such amount as wages paid on the Payment Date and shall remit the amount of
the required tax withholding to the relevant tax authorities.
(2) On the Payment Date, Employee shall deliver to the Company the 2005 Porsche Turbo
Carerra automobile, VIN number WPOCB29925S675140, leased by the Company for the benefit of
Employee (the “Leased Car”), and Employee shall have no further right to use the
Leased Car on or after the Payment Date. Upon the delivery of the Leased Car by Employee to
the Company, the Company shall provide to Employee documentation evidencing that Employee’s
name has been totally removed from the lease for the Leased Car and any other financing or
payment obligation relating to the lease of the Leased Car. Such documentation shall
include notice from the lease or finance company indicating that Employee is no longer
liable to make any payments relating to the lease of the Leased Car. Employee shall have
use of the Leased Car through the Payment Date. The Company shall remain responsible for
and shall pay the lease payments under the lease of the Leased Car. Employee shall be
responsible for all maintenance and fuel expenses incurred subsequent to the Termination
Date and prior to Employee’s delivery of the Leased Car to the Company. The Company shall
continue to maintain through the Payment Date adequate comprehensive and liability insurance
on the Leased Car (as is normally required for a leased vehicle) through the Payment Date.
(3) Provided that Employee elects and continues to remain eligible for COBRA benefits,
the Company shall pay the premiums for the continuation coverage for Employee and Employee’s
eligible spouse and dependent children under the Company’s health care insurance plan, as in
effect from time to time, as required under Section 4980B of the Internal Revenue Code of
1986, as amended (“COBRA”), for the months of December 2007 through February 2008.
Following such period, Employee and his eligible spouse and his dependent children will be
required to pay any applicable premium for such COBRA continuation coverage for any
subsequent period during which such COBRA continuation coverage remains in effect.
Employee, his eligible spouse and his dependent children will be provided only such
continuation coverage as is required under COBRA, and the Company shall pay any applicable
premium for the period described in the first sentence only to the extent that continuation
coverage is elected by and provided to Employee, his eligible spouse or his dependent
children under COBRA. This Agreement shall not restrict in any way the Company’s right to
amend, modify or terminate any group health plan of the Company.
d. No Future Compensation or Benefits. Except as provided for in this Agreement,
Employee understands and agrees that he is giving up any right or claim to further compensation
from the Company. Employee and the Company have no further rights or obligations under the
Employment Agreement, except as otherwise specified in this Agreement.
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e. Partial Cancellation of Stock Option.
(1) On December 12, 2003, the Company granted to Employee a nonqualified stock
option (the “2003 Option”) to purchase 200,000 shares of the Company’s
common stock (“Common Stock”), at a per share exercise price of $14.01,
under the Company’s 2002 Stock Incentive Plan (the “2002 Plan”). The 2003
Option is subject to terms and conditions of the 2002 Plan and the Notice of Grant
of Stock Option and Stock Option Agreement, dated 12/12, 2003, between the Company
and Employee (the “2003 Stock Option Agreement”). As of the Date of this
Agreement, no portion of the 2003 Option has been exercised by Employee.
(2) Effective as of the Date of this Agreement, the 2003 Option shall terminate
and be cancelled with respect to 100,000 shares of Common Stock, and Employee hereby
waives and releases any and all rights to exercise the 2003 Option with respect to
such shares of Common Stock. The Company and Employee hereby agree to amend the
2003 Stock Option Agreement in accordance with such partial termination and
cancellation and to reduce the number of shares of Common Stock subject to the 2003
Option to 100,000 shares of Common Stock. The 2003 Option shall continue in full
force and effect with respect to the remaining 100,000 shares of Common Stock,
subject to the terms and conditions of the 2003 Plan and the 2003 Stock Option
Agreement, as so amended.
f. Employee’s Outstanding Stock Options. As of the Date of this Agreement,
and after giving effect to Section 1.e above, the outstanding stock options granted by the
Company to Employee are set forth on Exhibit C attached hereto. Each such stock
option is subject to the terms and conditions of the Company plan under which such stock
option was granted and the stock option agreement between the Company and Employee with
respect to such stock option.
2. No Admission. Employee and the Company further understand and agree that neither
the payment of money nor the execution of this Agreement, including the Release, shall constitute
or be construed as an admission of any liability whatsoever by either Party.
3. Severability. The provisions of this Agreement are severable, and if any part of
this Agreement is found to be unenforceable, the other paragraphs (or portions thereof) shall
remain fully valid and enforceable.
4. No Encouragement of Actions/Cooperation with the Company. Employee agrees that he
will not assist any person or entity in bringing or pursuing legal action against the Company, its
agents, successors, representatives, employees and related and/or affiliated companies, based on
events occurring prior to the Termination Date; provided, however, that this Section 4 shall not
apply to any legal action arising from or related to this Agreement or to any conduct compelled by
or pursuant to applicable law, nor shall it prohibit, in any way, Employee from responding to a
subpoena or taking any other action required by law. To the extent Employee is subpoenaed or
otherwise requested or required to provide any documents, testimony or other information concerning
the Company, he shall notify the Company as soon as practicable, and cooperate with the Company in
opposing any such request or requirement to the
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extent permitted by applicable law. Employee shall also provide information requested by the
Company, and make himself available at reasonable time upon reasonable request to assist the
Company in defending or prosecuting any legal action or arbitration to the extent it concerns
events occurring during his employment as to which he may have knowledge. The Company shall
reimburse Employee for any reasonable out of pocket expenses incurred and shall compensate Employee
for Employee’s actual time spent, including travel time, providing information or assistance to the
Company under the next preceding sentence at the rate of $250 per hour.
5. No Disparagement. The Company and Employee agree that for a period of three (3)
years after Employee’s employment with the Company ceases, they will not, in any communication with
any person or entity, including any actual or potential customer, client, investor, vendor, or
business partner of the Company, or any third party media outlet, make any derogatory or
disparaging or critical negative statements — orally, written or otherwise — against the other,
or against the Employee’s affiliates, or any of the Company’s directors, officers, or agents (in
the case of any of Employee’s affiliates, at such time as they are affiliated with Employee or, in
the case of any of the Company’s directors, officers or agents, at such time as they are employed
by, or acting for, the Company). The parties acknowledge and agree that the obligation on the part
of the Company not to make any derogatory statements as set forth in this paragraph shall only
apply to the Company’s officers and directors.
6. Company Property. Employee agrees to search his/her home, office and all other
storage areas for all property owned by the Company and to return all Company equipment to the
Company within twenty-one (21) days of his receipt of this Agreement.
7. Choice of Law and Venue. The Parties acknowledge and agree that this Agreement
shall be interpreted in accordance with California law. If any claims or actions arising out of or
relating to this Agreement or Employee’s service with the Company are determined by an arbitrator
not to be subject to Section 9, they shall be filed in either the Superior Court of the State of
California for the County of Orange, or the Federal District Court for the Central District of
California.
8. Sole and Entire Agreement; Obligations of Employee. This Agreement and the
exhibits hereto represent the sole and entire agreement among the Parties and supersedes all prior
agreements (including, without limitation, the Employment Agreement), negotiations, and discussions
between the Parties hereto and/or their respective counsel, excluding the Proprietary Information
Agreement, dated as of December 29, 2005, by and between the Company and the Employee (the
“Proprietary Information Agreement”), and the provisions set forth in Part One, Paragraph 9
of the Employment Agreement. Employee’s obligations under this Agreement, the Proprietary
Information Agreement and Part One, Paragraph 9 of the Employment Agreement shall remain in full
force and effect and shall survive the termination of Employee’s employment with the Company and
the termination of the Employment Agreement, and Employee acknowledges and agrees that the Company
shall have the right to communicate with any future or prospective employer of Employee concerning
Employee’s obligations under this Agreement, and the Proprietary Information Agreement and Part
One, Paragraph 9 of the Employment Agreement. Employee is not relying on any promise or
representation by the Company that is not expressly stated herein and the Company is not relying on
any promise or representation by Employee that is not expressly stated herein. Any agreement
amending or superseding this Agreement must be in writing, signed by duly authorized
representatives of the Parties,
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specifically reference this Agreement; and state the intent of the Parties to amend or
supersede this Agreement. This Agreement may only be modified by a writing signed by both Employee
and a duly authorized officer of the Company.
9. Arbitration. The Parties hereby agree to submit any claim or dispute arising out
of or relating to the terms of this Agreement to private and confidential arbitration by a single
neutral arbitrator. Subject to the terms of this Section, the arbitration proceedings shall be
governed by the rules of the Judicial Arbitration and Mediation Service (“JAMS”) applicable
to employment disputes as they may be in effect from time to time, and shall take place in Orange
County, California. The arbitrator shall be appointed by agreement of the Parties hereto or, if no
agreement can be reached, by the JAMS pursuant to its rules. The decision of the arbitrator shall
be rendered in writing and be final and binding on all Parties to this Agreement, and judgment
thereon may be entered in any court having jurisdiction. The arbitrator’s fees and/or any other
fees payable to JAMS shall be shared in accordance with the rules of JAMS; provided, however, that
Employee shall not be required to pay any such fees that are unique to arbitration and/or would
exceed the cost of filing the same claim(s) in a court of competent jurisdiction, and any shortfall
shall be borne by the Company. The Parties shall each bear their own attorneys’ fees, witness
expenses, expert fees and other costs, except to the extent they may be awarded otherwise by the
arbitrator in accordance with applicable law. This arbitration procedure is intended to be the sole
and exclusive method of resolving any claim between the Parties, and each of the Parties hereby
waives any right to a jury trial with respect to such claims.
10. Headings; Construction of Agreement. The headings in this Agreement are provided
solely for the Parties’ convenience, and are not intended to be part of, nor to affect or alter the
interpretation or meaning of this Agreement. Both Parties have been represented by, or had the
opportunity to be represented by, counsel in connection with this Agreement.
11. Counterparts. For the convenience of the Parties hereto, this Agreement may be
executed in any number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same agreement.
[Remainder of page intentionally left blank]
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12. Authority to Execute this Agreement. The person or persons executing this Agreement
on behalf of a Party warrants and represents that he has the authority to execute this Agreement on
behalf of the Party and has the authority to bind that Party to the performance of its obligations
hereunder.
IN WITNESS WHEREOF, the parties have entered into this Separate and General Release Agreement
as of the date first set forth above.
| “COMPANY” BIOLASE TECHNOLOGY, INC. |
||||
| By: | /s/ XXXXXX X. D'ARBELOFF | |||
| Name: | Xxxxxx X. d'Arbeloff | |||
| Title: | Chairman | |||
| “EMPLOYEE” |
||||
| /s/ XXXXXXX X. XXXXX | ||||
| Xxxxxxx X. Xxxxx | ||||
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EXHIBIT A
BIOLASE TECHNOLOGY, INC.
TERMINATION CERTIFICATION
This is to certify that based on a reasonably diligent search by me, and to the best of my
knowledge, I do not have in my possession, nor have I failed to return, any devices, records, data,
notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, or reproductions of any aforementioned items
which is a trade secret and/or proprietary information belonging to BioLase Technology, Inc., its
subsidiaries, affiliates, successors or assigns (together, the “Company”).
I further certify that, to the best of my knowledge, I have complied with all the terms of the
Company’s Employee Proprietary Information Agreement signed by me.
I further agree that, in compliance with the Employee Proprietary Information Agreement, I will
preserve as confidential all trade secrets, confidential knowledge, data or other proprietary
information relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining to any Business of
the Company or any of its clients, consultants or licensees which is proprietary and/or
confidential information to the Company. The Employee Proprietary Information Agreement and this
Termination Certificate do not prohibit me from using or disclosing information that is generally
known to the public or in the industry, or becomes generally known to the public or in the
industry, provided that the information did or does not become known due to a violation of the
Employee Proprietary Information Agreement.
Date:
| (Employee’s Signature) | ||||
| (Type/Print Employee's Name) | ||||
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EXHIBIT B
MUTUAL RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in the Separation and General
Release Agreement dated , 2008 to which this document is Exhibit B (the
“Agreement”), Biolase Technology, Inc. (the “Company”) and Xxxxxxx X. Xxxxx
(“Employee”) hereby agree to the following mutual release and waiver of claims
(“Release and Waiver”).
In exchange for the consideration provided to Employee under the terms and conditions of the
Agreement (including, without limitation Employee’s execution, delivery and non-revocation of this
Release and Waiver), Employee hereby generally and completely releases the Company and its
directors, officers, employees, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns from any and all
claims, liabilities and obligations, both known and unknown, that arise out of or are in any way
related to events, acts, conduct, or omissions occurring prior to my signing this Release and
Waiver. This general release includes, but is not limited to: (1) all claims arising out of or in
any way related to Employee’s employment with the Company or the termination of that employment;
(2) all claims related to Employee’s compensation or benefits from the Company, including salary,
bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock,
or any other ownership interests in the Company; (3) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort
claims, including claims for fraud, defamation, emotional distress, and discharge in violation of
public policy; and (5) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under Title VII
of the 1964 Civil Rights Act, as amended, the Age Discrimination in Employment Act, the California
Fair Employment and Housing Act, the Equal Pay Act of 1963, as amended, the provisions of the
California Labor Code, the Americans with Disabilities Act, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Xxxxxxxx-Xxxxx
Act of 2002, and any other state, federal, or local laws and regulations relating to employment
and/or employment discrimination. Notwithstanding the foregoing, Employee does not release any
claims Employee may have for unemployment compensation and worker’s compensation; rights to
indemnification under the Company’s articles, bylaws or applicable state law; vested pension or
welfare benefits; or rights under any stock option or restricted stock agreement between Employee
and the Company.
In consideration of Employee’s release of claims as set forth above, the Company, on behalf of
itself and each of its respective officers, directors, shareholders, employees, attorneys,
partners, associates, agents, representatives, predecessors, successors, assigns, and anyone who
could claim by or through them, past, present and future, hereby unconditionally and irrevocably
releases and forever discharge Employee, his representatives, predecessors, successors, assigns,
spouses, heirs, executors and trustees, past, present and future, from any and all claims, demands,
causes of action, damages and expenses, whether known or unknown, suspected or unsuspected, with
respect to: (1) all claims arising out of or in any way related to Employee’s employment with the
Company or the termination of that employment; and (2) all claims related to Employee’s
compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay,
expense reimbursements, severance pay, fringe benefits,
stock, or any other ownership interests in the Company. By this release of claims, the
Company
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is not releasing Employee from his continuing obligations under the Agreement, the
Proprietary Information Agreement, dated as of December 29, 2005, by and between the Company and
Employee (the “Proprietary Information Agreement”) and the provisions set forth in Part
One, Paragraph 9 of that certain Employment Agreement, dated as of December 29, 2005, by and
between the Company and Employee, as amended by that certain Amendment No. 1 to Employment
Agreement, dated as of February 10, 2006 (as amended, the “Employment Agreement”).
Employee’s obligations under Part One, Paragraph 9 of the Employment Agreement and the Proprietary
Information Agreement shall remain in full force and effect and shall survive the termination of
the Employment Agreement.
Both Employee and the Company expressly waive and relinquish any and all rights and benefits
they now have or may have in the future under the terms of Section 1542 of the Civil Code of the
State of California, which sections reads in full as follows:
A general release does not extend to claims which the creditor does not know or suspect to
exist in his or her favor at the time of executing the release, which if known by him or her
must have materially affected his or her settlement with the debtor.
Notwithstanding said Code Section, and subject to the continuing obligations under the Agreement,
the Proprietary Information Agreement and the provisions set forth in Part One, Paragraph 9 of the
Employment Agreement, the Parties knowingly and voluntarily waive the provisions of Section 1542 as
well as any other statutory or common law provisions of similar effect and acknowledge and agree
that this waiver is an essential part of this Release and Waiver.
Employee acknowledges that, among other rights, Employee is waiving and releasing any rights
Employee may have under ADEA, that this Release and Waiver is knowing and voluntary, and that the
consideration given for this Release and Waiver is in addition to anything of value to which
Employee was already entitled as an employee of the Company. Employee further acknowledge that
Employee has been advised, as required by the Older Workers Benefit Protection Act, that: (a) the
release and waiver granted herein does not relate to claims under the ADEA which may arise after
this Release and Waiver is executed; (b) Employee has the right to consult with an attorney prior
to executing this Release and Waiver (although Employee may choose voluntarily not to do so); and
(c) Employee has twenty-one (21) days from the date of termination of Employee’s employment with
the Company in which to consider this Release and Waiver (although Employee may choose voluntarily
to execute this Release and Waiver earlier, in which case he waives the remainder of the twenty-one
(21) day period); (d) Employee has seven (7) days following the execution of this Release and
Waiver to revoke his consent to this Release and Waiver; and (e) this Release and Waiver shall not
be effective until the seven (7) day revocation period has expired.
Employee acknowledges his continuing obligations under the Agreement, the Proprietary
Information Agreement and the provisions set forth in Part One, Paragraph 9 of the Employment
Agreement. Nothing contained in this Release and Waiver shall be deemed to modify, amend or
supersede the obligations set forth in the Agreement, the Proprietary Information Agreement or Part
One, Paragraph 9 of the Employment Agreement.
By signing this Release and Waiver, Employee hereby represents that he is not aware of any
affirmative conduct or the failure to act on the part of the Company, its officers,
9
directors,
and/or employees concerning the Company’s business practices, its reporting obligations, its
customers and/or prospective customers, its products, and/or any other any other aspect of the
Company’s business, which Employee has any reason to believe rises to the level of unfair, improper
and/or unlawful conduct pursuant to any state or federal law, rule, regulation or order, including,
but not limited to, any rule, regulation or decision promulgated or enforced by the Securities and
Exchange Commission, or which has been promulgated or enforced by any other state or federal office
or administrative body pursuant to the Xxxxxxxx-Xxxxx Act of 2002.
This Release and Waiver constitutes the complete, final and exclusive embodiment of the entire
agreement between the Company and Employee with regard to the release and waiver of claims between
them. Employee is not relying on any promise or representation by the Company that is not
expressly stated herein and the Company is not relying on any promise or representation by Employee
that is not expressly stated herein. This Release and Waiver may only be modified by a writing
signed by both Employee and a duly authorized officer of the Company.
The parties agree that this Mutual Release does not in any way compromise or lessen Employee’s
rights to be indemnified by the Company or otherwise be covered under any applicable insurance
policies that Employee would otherwise be entitled to receive and/or be covered by.
The parties agree that in no way does this mutual release of claims preclude Employee from
enforcing his ownership rights pertaining to any stock or stock options which may have been
purchased by Employee or granted to Employee by the Company pursuant to a written stock option
grant and/or as memorialized in a written Board Resolution (and as reported periodically in the
Company’s proxy statements).
| BIOLASE TECHNOLOGY, INC. |
||||
| By: | ||||
| Title: | ||||
| Dated: | ||||
| Xxxxxxx X. Xxxxx | ||||
| Dated: | ||||
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EXHIBIT C
EMPLOYEE’S OUTSTANDING STOCK OPTIONS
EMPLOYEE’S OUTSTANDING STOCK OPTIONS
| Per Share Exercise | Original Xxxxx | Xxxxx Shares | Grant Shares | |||||||||||||||||||||
| Grant Date | Price | Shares | Plan | Outstanding | Exercisable | Expiration Date | ||||||||||||||||||
December 18, 1998 |
$ | 2.125 | 407,000 | 1998 | 407,000 | 407,000 | December 18, 2008 | |||||||||||||||||
December 15, 1999 |
$ | 2.125 | 50,000 | 1998 | 50,000 | 50,000 | November 5, 2009 | |||||||||||||||||
December 15, 1999 |
$ | 2.125 | 50,000 | 1998 | 50,000 | 50,000 | November 5, 2009 | |||||||||||||||||
December 20, 2001 |
$ | 5.170 | 300,000 | 1998 | 300,000 | 300,000 | November 5, 2009 | |||||||||||||||||
December 12, 2003 |
$ | 14.010 | 200,000 | 2002 | 100,000 | 100,000 | November 5, 2009 | |||||||||||||||||
December 29, 2005 |
$ | 8.110 | 50,000 | 2002 | 50,000 | 50,000 | February 5, 2008 | |||||||||||||||||
June 27, 2007 |
$ | 5.950 | 50,000 | 2002 | 4,166 | 4,166 | February 5, 2008 | |||||||||||||||||
