CONFIDENTIAL SETTLEMENT AGREEMENT AND RELEASE
This Confidential Settlement Agreement and Release ("Agreement") is made
and entered into between Xxxxxxx X. Xxxxxx, 0000 X. Xxxxx Xxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000, and Empyrean Bioscience, Inc., 0000 Xxxx Xxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, this 31st day of December, 1999.
WHEREAS, Xxxxxxx X. Xxxxxx ("Xxxxxx") has been employed by Empyrean
Bioscience, Inc. (the "Company");
WHEREAS, Xxxxxx has decided to resign from the Company;
WHEREAS, Xxxxxx and the Company have reached an agreement regarding
Xxxxxx'x resignation upon the terms and subject to the conditions set forth in
this Agreement.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound by this Agreement, Xxxxxx and
the Company agree as follows:
1. Xxxxxx agrees to resign his positions as President and Chief
Executive Officer and Chairman of the Board effective December 31, 1999 and to
execute all documents necessary to effectuate same.
2. Xxxxxx agrees that his employment by the Company is concluded
effective December 31, 1999. 1.
3. The Company agrees to pay Xxxxxx severance in an amount equivalent
to twelve months pay, for a total payment of $180,000, less ordinary deductions
for taxes and withholdings, which compensation includes payment for all unused
accrued vacation, sick and personal days. Payment will be made in twenty-six
(26) consecutive, equal, biweekly installments mailed to Xxxxxx on the same date
when the Company customarily issues paychecks to its employees and shall be
mailed to Xxxxxx'x home address, which Xxxxxx shall allow the Company to
designate as its place of business in Arizona beginning January 9, 2000 and
ending December 31, 2000. The Company commenced issuing checks to Xxxxxx in
January, 2000 and all checks issued to Xxxxxx, during 2000, including those
issued prior to the date when Xxxxxx signed this Agreement, constitute severance
paid pursuant to this Agreement.
4. The Company agrees to continue Xxxxxx'x current benefits package
including company-sponsored group health and dental insurance (including
prescription drug plan), at the Company's expense, for a period beginning
January 1, 2000 and concluding December 31, 2000. Thereafter, Xxxxxx may obtain
health insurance coverage at his own expense. The Company is not subject to the
Consolidated Omnibus Budget Reconciliation Act, the federal law known as
"COBRA".
5. The Company agrees to pay Xxxxxx the sum of $2,400 as reimbursement
for the cost of automobile lease payments incurred by Xxxxxx. The foregoing
reimbursement will be paid in a lump sum in a check mailed to Xxxxxx at his home
address on the Company's first occurring payday following expiration of the
seven (7) day revocation period subsequent to the date when Xxxxxx signs this
Agreement.
6. A schedule of Xxxxxx'x 1,351,045 vested incentive stock options and
their prices is as follows:
NUMBER OF
VESTED OPTIONS DATE OF GRANT EXPIRATION DATE EXERCISE PRICE
-------------- ------------- --------------- --------------
175,000 September 6, 1996 September 6, 2000 0.38
300,000 October 3, 1997 October 3, 2000 0.55
450,000 April 28, 1998 April 28, 2001 0.95
250,000 April 28, 1998 April 28, 2001 0.95
21,197 February 5, 1999 February 4, 2009 0.38
154,373 February 5, 1999 February 4, 2009 0.38
=========
1,351,045 Total Number of Vested Options as of December 31, 1999
2
The Stock Option Agreements and Stock Option Certificates between the Company
and Xxxxxx (collectively the "Option Agreements"), pursuant to which the
foregoing options were granted, are hereby amended to provide that the
expiration date for each of the vested options described above shall be the
earlier to occur of: (a) the date which is twelve (12) months after Xxxxxx
ceases to be a director of the Company or (b) the first business day prior to
the ten (10) year anniversary of the date of grant of such option. If a
Registration Statement (as hereinafter defined) becomes effective and Xxxxxx
determines to exercise part or all of his vested options described above and to
sell the shares which are issued upon exercise of such vested options (the
"Option Shares"), Xxxxxx hereby agrees to limit his sale of Option Shares, plus
any other shares of the Company beneficially owned by Xxxxxx, during any period
of ninety (90) consecutive days following the effective date of the Registration
Statement to not more than one percent (1%) of the issued and outstanding shares
of the Company. As used herein, the term "Registration Statement" means a
registration statement on Form S-8 which registers securities of the Company to
be offered pursuant to its 1998 Empyrean Diagnostics, Ltd. Stock Plan (the
"Stock Option Plan") as well as the reoffer or resale of such securities. The
Company agrees to name Xxxxxx as a selling shareholder in any reoffer prospectus
which is prepared relating to the Registration Statement. Notwithstanding the
provisions of Section 7 of this Agreement, the Option Agreements, as modified by
this Agreement, remain in full force and effect according to their respective
terms.
7. In consideration of the payments and other benefits being provided
to Xxxxxx pursuant to this Agreement, Xxxxxx, for himself and his heirs,
executors, administrators and assigns, does hereby release, acquit and forever
discharge Empyrean Bioscience, Inc., its successors, predecessors, affiliates,
parent companies and past, present and future officers, directors, shareholders,
employees, agents, attorneys and assigns and Xxxxxxx X. Xxxxxxx and Xxxxxxx
X.Xxxxx (hereinafter collectively referred to as "Employer") of and from any and
3
all charges, claims, demands, damages, lawsuits, actions or causes of action, of
any kind or description whatsoever, whether arising out of tort, contract or
otherwise, in law or in equity, which Xxxxxx now has, has had or may hereafter
have against Employer (and/or its past, present and future officers, directors,
shareholders, employees and agents) resulting from any matter whatsoever arising
in connection with Xxxxxx'x employment relationship with Employer, the
termination thereof and all past, present and future consequences, losses,
negotiations, injuries, expenses (including attorneys' fees), and damages of any
kind, nature or description relating thereto from the beginning of the world to
the date of this Agreement. Xxxxxx, for himself and for his heirs, executors,
successors and assigns, does hereby further covenant and agree not to bring,
commence, prosecute, maintain, continue to maintain or cause or permit to be
brought, commenced, prosecuted, maintained or continued to be maintained, any
suit, action or administrative proceeding, either at law or in equity, in any
court or administrative body of the United States or in any state thereof or
elsewhere with respect to any matter embraced within this release of claims, it
being expressly understood that this release of claims and covenant not to xxx
specifically include, but are not limited to, all claims arising under the Civil
Rights Act of 1866, the Fair Labor Standards Act of 1938, the Equal Pay Act of
1963, the Civil Rights Act of 1964, the Age Discrimination in Employment Act of
1967, the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act
of 1990, the Americans With Disabilities Act of 1990, the Civil Rights Act of
1991 and the Family and Medical Leave Act of 1993, and all other federal or
state laws governing employers and employees.
8. ACKNOWLEDGMENT. By entering into this Agreement, and in connection
with Xxxxxx'x release of claims and covenant not to xxx set forth in the
foregoing paragraphs, Xxxxxx acknowledges that:
4
X. Xxxxxx is knowingly and voluntarily entering into this Agreement;
B. Company and Employer are not admitting any liability or violation
of any law, contract or other agreement;
C. No promise or inducement has been offered to Xxxxxx except as
stated here and the benefits being provided to Xxxxxx pursuant to
this Agreement are more than that to which Xxxxxx would otherwise
be entitled;
D. This Agreement is being executed by Xxxxxx without reliance upon
any statements by Company or Employer or their representatives
concerning the nature or extent of any claims or damages or legal
liability therefor;
E. This Agreement has been written in understandable language, and
all provisions hereof are understood by Xxxxxx;
X. Xxxxxx has been advised in writing to consult with an attorney
prior to executing this Agreement;
X. Xxxxxx has had a period of at least twenty-one (21) days within
which to consider this Agreement before accepting the same and,
by signing this Agreement earlier than 21 days following receipt
of it, Xxxxxx acknowledges that he has knowingly and voluntarily
waived the 21 day period and has accelerated the date when he may
begin receiving the severance payments following expiration of
the revocation period referenced in Paragraph H; and
5
X. Xxxxxx has the right to revoke this Agreement for a period of
seven (7) days following his acceptance hereof, and this
Agreement shall not become effective or enforceable until such
seven (7) day period has expired.
Should Xxxxxx desire to revoke this Agreement, he must notify the Company in
writing at 00000 Xxxxxxxx Xxxx Xxxx, Xxxxx X, Xxxxxxxxx, Xxxx 00000, prior to
the close of business on the 7th day following the date when he signs this
Agreement. In the event Xxxxxx declines to accept the terms of this Agreement
or, having accepted them, effectively revokes his acceptance thereof, this
Agreement shall have no force or effect and neither its terms, nor any of the
discussions of the parties relative to its negotiation shall be admissible in
evidence in any proceeding brought by or on behalf of Xxxxxx against Company
and/or Employer.
9. Xxxxxx agrees not to issue any communication or statement, written,
oral or otherwise, that disparages, criticizes or otherwise infers or reflects
adversely or encourages adverse action against the Company and/or Employer and
Xxxxxx agrees not to take any action to injure or harm the Company or its
reputation or business relationships. Xxxxxx further agrees not to initiate
discussions regarding matters pertaining to the Company with investors, analysts
or shareholders and, in the event Xxxxxx receives inquiries about the Company
from any of the foregoing or from other curious or inquiring parties, Xxxxxx
agrees to refer all such inquires, including questions regarding his
resignation, to the Company's investor relations agency and/or Xxxxxxx Xxxxxxx
and Xxxxxx agrees that, in the course of referring such inquiries, any remarks
or communications by Xxxxxx shall be consistent with the Company's press release
regarding his decision to accelerate his retirement.
6
10. Xxxxxx further agrees that he shall have no contact whatsoever
regarding any matter whatsoever with any parties related to International
Bioscience Corporation, formerly known as Geda International Marketing Co., Ltd.
(GIMCO), Geda International, S.A., Prevent-X, Inc., anyone associated with
Mercury Technology, Inc., Optima Holding Co., Ltd. or Bioserv, Inc. and the
litigation related thereto, any persons associated with The Alliance for
Microbicide Development, National Institutes of Health (NIH), National
Institutes of Allergic and Infectious Diseases (NIAID), the Food & Drug
Administration (FDA) including, but not limited to, current and former
employees, consultants and independent contractors. Xxxxxx understands and
acknowledges that any communications he makes, however well-intentioned, are a
violation of this paragraph of this Agreement and that the Company need not
demonstrate any adverse impact arising from Xxxxxx'x communications before
invoking its rights under paragraph 12 to cease payments to Xxxxxx and demand
repayment from Xxxxxx of all sums paid pursuant to this Agreement.
11. Xxxxxx warrants that he has not disclosed the terms of this
Agreement to date and he further agrees to keep confidential the terms of this
Agreement and not publicize, disclose or discuss it or its terms with any person
other than his attorney, spouse, financial advisor or accountant in this matter
provided Xxxxxx first informs such individuals of their obligation to keep that
information confidential and obtains their assurance to do so. In the event
Xxxxxx is served with a subpoena or other legal process seeking or purporting to
require disclosure of information which is prohibited by this Agreement, Xxxxxx
will provide Company with prompt written notice (describing the information
being sought and the party seeking same) so that Company may seek a protective
order or take other action to prevent or limit said disclosure and/or waive
Xxxxxx'x obligation to comply with this provision of the Agreement. Pending the
Company's receipt of notice from Xxxxxx, Xxxxxx will use all lawful means
7
reasonably available to him to resist disclosing the information which this
Agreement requires him to keep confidential.
12. Xxxxxx acknowledges and agrees that the Company's obligation to
pay the settlement amounts and benefits set forth in paragraphs 3, 4 and 5 and
to amend the Option Agreements as set forth in paragraph 6 is conditioned upon
Xxxxxx'x compliance with this Agreement and Release, including, but not limited
to the non-disparagement, nondisclosure and confidentiality provisions of
paragraphs 9, 10 and 11. Xxxxxx acknowledges that his agreements to comply with
the provisions of paragraphs 9, 10 and 11 are material inducements for the
Company to enter into this Agreement and Release and that any violation thereof
shall be deemed to be a material breach of this Agreement and Release and that
in such event the Company shall immediately be relieved of any further
obligation pursuant to this Agreement or otherwise, and that the Company shall
cease making any payments pursuant to paragraph 3 and that Xxxxxx shall be
liable to repay to the Company without deduction, any and all of the settlement
amounts and benefits already paid to or on behalf of Xxxxxx pursuant to
paragraphs 3, 4 and 5 and that the provisions of paragraph 6 shall become void
and the stock options listed in paragraph 6 shall revert to their original
expiration dates. Upon notice to Xxxxxx from the Company of any violation of the
provisions of paragraphs 9, 10 and 11 of this Agreement, Xxxxxx shall resign as
a member of the Board of Directors immediately. Attached to this Confidential
Settlement Agreement and Release is an undated Letter of Resignation which
Xxxxxx agrees to sign and deliver to the Company to hold in the event of a
violation of the provisions of paragraphs 9, 10 and 11 of this Agreement and
Release and Xxxxxx acknowledges and understands that upon receiving notice from
the Company of any such violation, the Company is authorized to date the Letter
of Resignation and deliver it to the Chairman of the Board and the Board of
Directors and thereby effectuate Xxxxxx'x resignation. Xxxxxx further
acknowledges that the Company shall be entitled to pursue any and all remedies
8
available to it including, but not limited to, filing suit, seeking temporary,
preliminary and permanent injunctive relief as well as money damages, an
equitable accounting of all earnings, profits and other benefits arising from
such violation and damages for defamation, breach of contract, and tortious
interference with business relationships.
13. The parties agree that this Agreement and Release may be
specifically enforced in court and may be used in evidence in a subsequent
proceeding in which any of the parties allege a breach of this Agreement and
Release. In the event any claim, defense, action, suit or other proceeding is
brought to interpret, enforce or obtain relief from a breach of this Agreement
and Release, the prevailing party shall recover all such party's costs, expenses
and attorneys fees incurred in each and every such claim, defense, action, suit
or other proceeding, including any and all appeals or petitions from therefrom.
14. In the event any provision of this Agreement and Release shall be
held to be void, voidable, unlawful or, for any reason, unenforceable, the
remaining portion shall remain in full force and effect.
15. This Agreement constitutes the entire understanding between Xxxxxx
and the Company with respect to the subject matter contained herein and it
supersedes and replaces all prior understandings and agreements (both oral and
written), except for the Stock Option Agreements and Stock Option Certificates
referenced in paragraph 6 above. All prior and contemporaneous discussions and
negotiations have been and are merged and integrated into, and are superceded
by, this Agreement and Release. No waiver of a provision or condition of this
Release at any time shall be deemed a waiver of such provision or condition, or
any other provision or condition, at any prior or subsequent time. This
Agreement cannot be modified except by means of a written document signed by
both Xxxxxx and the Company.
9
------------------------------------------
Xxxxxxx X. Xxxxxx
------------------------------------------
Date (to be supplied by Xxxxxxx X. Xxxxxx)
SWORN TO and subscribed by Xxxxxxx X. Xxxxxx before me, a Notary Public, on
this ____ day of ______________, 2000.
------------------------------------------
Notary Public
PLEASE SEND THE CHECKS TO ME AT THE FOLLOWING ADDRESS:
----------------------------------
----------------------------------
10
