EXHIBIT 10.44
May 30, 1997
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
Vice President, Research and Development
Molecular Biosystems, Inc.
00000 Xxxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Re: TERMS OF SEPARATION FROM MBI
Dear Xxx:
In accordance with our recent discussions, this letter ("Letter
Agreement") will set forth the terms of our agreement regarding your
voluntary departure from MBI.
1. DESCRIPTION. Both parties shall regard your departure as a
voluntary resignation to pursue personal goals and other opportunities.
2. TIMING. You shall resign as an employee and officer of MBI
effective as of May 30, 1997 ("Resignation Date"). Your resignation shall be
in the form attached hereto.
3. EFFECTIVE DATE. This Letter Agreement shall become effective on
the eighth day following your execution of the agreement, unless you have
revoked acceptance during the seven days prior thereto. (SEE Paragraph
16(b).) Regardless of when this takes place, the Agreement shall be deemed to
have been in effect retroactive to May 30, 1997. The Agreement shall not
become effective unless executed by you and MBI.
4. SEPARATION PAYMENTS. In consideration of your undertakings in this
Agreement, MBI shall provide you with severance benefits equivalent to one
year current salary. This amount shall be paid to you in bi-weekly
installments for the one year period following your Resignation Date (last
payment May 29, 1998). Taxes and other appropriate deductions will be
withheld, however, contributions to your 401(k), health care reimbursement
account, or any other benefit deductions will not be allowed.
5. WELFARE BENEFITS. Regular medical, dental, vision, as well as
basic and optional life and accidental death and dismemberment insurance will
continue through May 31, 1997. Long-Term disability coverage will continue
through the Resignation Date and end thereafter. In addition:
(a) Medical, dental, and vision insurance under MBI's policies for
you and currently insured dependents will be extended through COBRA from June
1, 1997 through May 31, 1998 (unless you obtain other coverage during that
time, in which you must notify MBI) at MBI's expense. Thereafter, you may
elect to continue COBRA coverage at your expense for an additional six
months. (Maximum COBRA coverage is 18 months.)
(b) You will be provided the information needed to request the
option of converting the group life insurance and/or accidental death and
dismemberment insurance coverage to an individual policy. You will work
directly with CIGNA should you elect this option. You would need to exercise
this option within 31 days of the benefits termination date, May 31, 1997.
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 2
(c) You will be provided the information needed to request the
option of converting the Long Term disability (LTD) insurance coverage to an
individual policy. You should work directly with UNUM should you elect this
option. You would need to exercise this option within 31 days of your
resignation date, May 30, 1997.
(d) Depending on the amount of your 401(k) plan balance, you may
either elect to remain in the plan with no further deposits (balance greater
than $3500), or elect a distribution of your funds (balance less than $3500).
You will notify CIGNA within 30 days of the Resignation Date as to how and to
whom your funds should be distributed. Information on how to initiate your
desired option will be provided by Human Resources.
(e) You currently have an outstanding loan against your 401K
account (Approximate remaining balance of loan is $11,068.04.) According to
MBI's 401(k) Plan, you will be responsible for paying the loan balance in
full within 30 days of your Resignation Date. Repayment of the loan should be
in the form of a cashier's check made payable to MBI. If you do not pay back
the loan balance, it will be considered a cash distribution and taxed
accordingly. For more information on tax consequences of a distribution or
how to process your loan repayment you may contact CIGNA directly.
(f) If you are a participant in the health care reimbursement
plan, you will have until the end of 1997 to request reimbursement for
charges incurred through the Resignation Date. Any such request should be
made directly to UNUM.
(g) You will be paid for all earned and unused vacation hours.
You will not accrue any additional vacation following the Resignation Date.
(h) As agreed, MBI will pay all your expenses, according to
policy, to attend the Bio 97' meeting in Houston, Texas in June 1997.
Representatives of Human Resources will be available to explain details of the
above items.
6. STOCK OPTIONS.
(a) CURRENT OPTIONS. You have been granted stock options as
described in the attached schedule. As of May 30, 1997 MBI will accelerate
the vesting of all unvested options. MBI will also extend the period of
exercisability of those options to the maximum period available under our
plans. (That is, the lapse dates in the charts, which are ALREADY at the
maximum, will not be reduced on account of your ceasing to be an employee.)
(b) RESTRICTIONS AND TRANSACTIONS. Until November 30, 1997
("Reporting Period"), you will be under the same constraints imposed by MBI
and securities laws on MBI vice presidents regarding the exercise of options
and the purchase and sale of MBI shares. During the Reporting Period, you
shall notify us of your intentions in this regard (including option
exercises) and shall execute such forms, if any, as MBI and the U.S.
securities laws require. If you wish, you may use the services of MBI's
Finance department to assist you in exercising your options and selling your
shares (if that is how you choose to proceed) during the Reporting Period.
You acknowledge that taxes and commissions will be withheld from any profit
you make on the sale of the stock following exercise and sale during the
Reporting Period. During the Reporting Period, you will be notified monthly,
along with other MBI Section 16(b) reporting persons, as to the current
trading status of MBI stock (i.e., "green light," "yellow light," or
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 3
"red light"). At no time -- presently, or at any future time, during or
after the Reporting Period -- may you trade on inside MBI information.
7. PLACEMENT. MBI will provide you with six months outplacement
counseling and services through Right Management Consultants. In addition,
MBI will also allow you to continue to use the company's phone voicemail
system and your current voice mailbox for a period of three months following
your Resignation Date.
8. COOPERATION; NO RAIDING; NON-DISPARAGEMENT. You shall cooperate
with MBI in any and all governmental and/or third-party proceedings,
including but not limited to lawsuits and other disputes. Following your
resignation such cooperation shall be at MBI's expense (except that MBI
cannot pay for the content of sworn testimony). You shall keep MBI advised
of contacts by governmental agencies and third parties, and shall reasonably
cooperate with MBI in handling any response. At your request, MBI shall
provide counsel to you, if the parties deem counsel necessary or desirable,
in any such proceeding. You shall not voluntarily cooperate with, testify
for, or otherwise assist parties adverse to MBI in a dispute, although you
may respond to compulsory process (i.e., a valid subpoena).
For a period of one year following the Resignation Date, you shall not
contact persons employed by MBI at the time to recruit them for your business
or any business by which you are employed or with which you are affiliated,
or otherwise encourage them to leave MBI.
You shall not materially disparage MBI, and MBI shall not materially
disparage you, to any third parties.
9. CONTACTS BY POTENTIAL EMPLOYERS. Potential employers contacting
MBI will be told only that your resignation was voluntary; your title; your
dates of employment; and your final salary. MBI will provide you with a
positive letter of reference. The letter will be agreed upon between you and
me.
10 CONFIDENTIALITY. You will not remove any MBI information,
documents, or other property from its premises, and you will return any MBI
information currently in your possession or control off MBI's premises. In
addition:
(a) You acknowledge that in the course of your employment with MBI
you have had and will have access to and familiarity with information of
substantial value to MBI which is not old or generally known to the public
and which gives MBI an advantage over its competitors who do not know or use
it, including but not limited to strategies, business plans, research,
formulas and formulations, techniques, designs, drawings, processes,
inventions, developments, equipment, prototypes, sales and customer
information, and financial information, relating to the business, products,
and practices of MBI (hereinafter referred to as "Confidential Information").
You agree at all times following your resignation to regard and preserve as
confidential such Confidential Information, and to refrain from publishing or
disclosing any part of such Confidential Information and from using it except
on behalf of MBI. You further agree at all times to refrain from any other
acts or omissions that would reduce the value of such Confidential
Information to MBI and to take all reasonably necessary and desirable
precautions to prevent such Confidential Information from being disseminated
to any third parties.
(b) You acknowledge that a breach of the terms of this paragraph
would threaten MBI with immediate and irreparable harm not readily
compensable in money damages, and that MBI would be entitled to injunctive
and declaratory relief to stop or prevent any such breach.
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 4
Nothing in this paragraph shall be construed to prevent you from using or
disclosing your general knowledge of the imaging industry (as opposed to
MBI-specific information) acquired at any time prior to or during the course
of your employment.
11. EMPLOYMENT BY COMPETITORS. This Letter Agreement does not limit
your ability to work for competitors of MBI, PROVIDED THAT for a period of
one year from the Resignation Date, reasonably in advance of accepting any
employment with any company, individual, or other entity engaged or planning
to engage in the development, manufacture, or marketing of ultrasound
contrast agents ("Competitor"), you shall notify the President or Chief
Executive Officer of MBI. Prior to accepting any such employment, or
promptly following your engagement in any consulting relationship with a
Competitor, you shall give MBI the opportunity to discuss your plans with you
in order to explore any possible problems or conflicts. While MBI shall not
disparage you or attempt to dissuade any Competitor from employing or
engaging you, you acknowledge that MBI may contact such Competitor, with
proper advance notice to you, informing it truthfully of your confidentiality
obligations to MBI. MBI shall have no liability to you in the event of a
decision by a Competitor not to employ or engage you following such contact
by MBI. Failure to provide this notice to MBI during this period shall be
deemed a material breach of this Agreement.
You remain bound by your confidentiality obligations even if you work
for a Competitor.
12. LOAN. You executed a Note in favor of MBI in the principal amount
of $205,868 and it is due and payable on January 31, 1998. The loan is
secured by 14,000 shares of MBI stock (certificate numbers MB2246 (5,000
shares) and MB1618 (9,000 shares; ("the Subject Shares")) purchased with the
loan proceeds as a result of the exercise of a stock option. With interest,
the indebtedness evidenced by the Note has risen to approximately $255,102 at
March 31, 1997. The indebtedness evidenced by the Note, as amended, has been
retired as of March 31, 1997 as follows: MBI purchased the Subject Shares
from you effective March 31, 1997 at the closing price of MBI common stock on
the New York Stock Exchange as of March 31, 1997 ($9.125 per share). The
purchase proceeds were used to reduce the Note. (Cash did not change hands;
this was handled by bookkeeping entries.) MBI forgave the remaining
indebtedness and the Note was canceled.
EXAMPLE:
Indebtedness: $255,102
Purchase price: $ 9.125
Times 14,000 shares ($127,750)
Remaining debt $127,352
MBI forgave the remaining indebtedness of $127,352.
MBI believes, BUT DOES NOT WARRANT, REPRESENT, OR PROMISE, (1) that the
debt forgiveness will not result in current taxable income to you, but will
instead serve to reduce your basis in the shares for purposes of your tax
accounting, and (2) under the circumstances of your option exercise and the
forgiveness. The sale back of stock to MBI will leave you with a tax gain
which will be subject to tax liability. In order to compensate you for any
additional tax liabilities owed as a result of this Loan forgiveness, MBI
will pay you a lump sum payment of $10,000, from which taxes will be
deducted. MBI will not include the forgiveness on your W-2. MBI STRONGLY
RECOMMENDS THAT YOU SECURE
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 5
COMPETENT TAX ADVICE WITH RESPECT TO THE ACCOUNTING AND TAX TREATMENT OF THE
DESCRIBED TRANSACTION PRIOR TO EXECUTING THIS LETTER AGREEMENT. Additional
information with respect to your loan:
OPTION OPTION
Option price: 9,000 @ $11.875 5,000 @ $15.75
Market price on exercise date $17.50 (12/16/92) $18.00 (12/22/93)
Taxes advanced and added to loan $5,316 (approx.) $4,927 (approx.)
Accrued interest to 3-31-97 $ 49,234 (approx. for both Notes)
MBI's Chief Financial Officer will explain the basis for MBI's belief to
you and/or your professional advisors, if you wish.
13. RELEASE. In consideration for the payments, options, loan
forgiveness, and other consideration described in this Letter Agreement, you
hereby unconditionally, irrevocably, and absolutely release and discharge
MBI, its employees, officers, directors, agents, stockholders, independent
contractors, attorneys, consultants, predecessors, successors and assigns
from any and all claims related in any way to any acts, transactions, or
occurrences between you and MBI to date, including but not limited to all
losses, liabilities, claims, charges, demands and causes of action, known or
unknown, suspected or unsuspected, arising directly or indirectly out of, or
in any way connected with, your employment with or resignation from MBI.
This includes, but is not limited to, any claim of employment discrimination
arising under federal, state or local law, including the Age Discrimination
in Employment Act of 1967, as amended, the Americans with Disabilities Act,
the California Fair Employment and Housing Act, any other statutory cause of
action, and any tort or contract claims.
WAIVER OF ADDITIONAL CLAIMS. Section 1542 of the Civil Code of the
State of California 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.
You waive and relinquish any right or benefit which you may have under this
section or any other provision of the statutory or nonstatutory law or any
other jurisdiction to the full extent that you may lawfully waive all such
rights and benefits. In connection with such waiver and relinquishment, you
acknowledge that you are aware that you, your attorneys or agents may
hereafter discover claims or facts in addition to or different from those
which they now know or believe to exist, but that it is your intention
thereby fully, finally, and forever to release all claims, disputes, and
differences, known or unknown, suspected or unsuspected, which now exist, may
exist, or have existed between the parties, their employees, agents, assigns,
and other privies. Unless this provision shall have been procured by fraud,
the releases given herein shall be effective regardless of the discovery or
existence of any such claim or fact.
14. CONSEQUENCES OF BREACH. If you breach this Letter Agreement, MBI
may terminate it, cease providing payments and benefits hereunder, cancel
your stock options, and recover all payments and benefits already paid, in
addition to any other remedies it may have.
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 6
15. OTHER MATTERS. You will receive materials prepared by Human
Resources describing various rights and duties, including optional benefits,
which will come into effect following your resignation. You will also
receive instruments as are customarily submitted to resigning employees. You
will cooperate fully in these separation meetings and execute or complete
such instruments at the time of your resignation.
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 7
16. ACKNOWLEDGMENTS.
(a) NO PRE-EXISTING OBLIGATION. You acknowledge that but for
the entry by you and MBI into this Letter Agreement, you are not entitled to
the payments, stock options, loan forgiveness, and other consideration
provided for in these agreements (with the exception of federal rights such
as COBRA).
(b) TIME FOR REVIEW; EFFECTIVE DATE. You acknowledge that you
have been given 21 days to consider the terms of this Letter Agreement. In
addition, both parties acknowledge that you may revoke your acceptance of
this Letter Agreement within seven days following your signature (which may
occur during the 21-day period).
(c) ADVICE OF COUNSEL AND OTHER PROFESSIONAL ADVISORS. You
acknowledge that you have been advised in writing to consult with an attorney
and an accountant or tax advisor before entering into these agreements. You
acknowledge either that you have done so and received counseling to your
satisfaction, or that you have declined to do so and voluntarily executed
this Letter Agreement without fraud or undue influence.
17. PROHIBITION AGAINST ASSIGNMENT. You shall not assign this Letter
Agreement or any of the rights, interests and benefits hereunder. However,
you may provide for the assignment, gift, bequest, or transfer of such
benefits under this Letter Agreement to your survivor(s), or to a trust for
their benefit, on your death, or in the event that you suffer a major
disability.
18. ENTIRE AGREEMENT. This Letter Agreement between the parties dated
May 30, 1997, constitutes the entire Agreement between the parties hereto and
contains all of the agreements between the parties with respect to its
subject matter. This Letter Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to their subject matter, PROVIDED THAT Paragraphs 3 (Confidentiality)
and 4-9 (relating to inventions made within a year of termination) of your
Employment Agreement dated October 1, 1992, shall remain in effect.
19. BINDING EFFECT. This Letter Agreement shall be binding upon and
inure to the benefit of both parties and their respective heirs, legal
representatives, executors, administrators, and successors.
20. GOVERNING LAW. This Letter Agreement shall be subject to and
governed by the laws of the State of California irrespective of the fact that
you may become a resident of a different state.
21. AMENDMENT OF LETTER AGREEMENT. No change or modification of this
Letter Agreement shall be valid unless the same be in writing and signed by
both parties. No waiver of any provision of this Letter Agreement shall be
valid unless in writing and signed by the person or party to be charged.
22. SEVERABILITY. If any portion or portions of this Letter Agreement
shall be, for any reason, deemed to be invalid or unenforceable, the
remaining portion or portions shall nevertheless be valid, enforceable and
carried into effect, unless to do so would clearly violate the present legal
and valid intention of the parties hereto.
23. HEADINGS. The headings of this Letter Agreement are inserted for
convenience only and are not to be considered in construction of the
provisions hereof.
Xx. Xxxxx X. Xxxxxxxx, Ph.D.
May 30, 1997
Page 8
24. WAIVER OF BREACH. The waiver by either of the parties hereto of
any breach of any provision hereof shall not be construed to be a waiver of
any succeeding breach of that provision or a waiver of any other provision of
this Letter Agreement.
25. INDEMNIFICATION. With respect to any claim against you arising out
of your work for MBI as an officer or employee, you shall have rights of
indemnification against MBI under MBI's certificate of incorporation and
bylaws equivalent to those of an MBI officer.
* * * *
If you are in agreement with these items, please execute the duplicate
originals of this Letter Agreement and return them to Xxx Alexandra.
Let me take this opportunity to thank you for your services to MBI over
the past several years. We all wish you every success in your future
endeavors.
Sincerely,
/s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
President and Chief Executive Officer
AGREED TO BY:
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Date: May 30, 1997
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