EXHIBIT 10.17
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("Agreement") is made by
and among Landacorp, Inc. (the "Company"), Xxxxxx Santa Cattarina ("Cattarina")
and Xxxxxxx X. Xxxxx ("Miele"), Xxxxxxxxxxx X. Xxxx ("Synn"), Xxxxx X. Xxxxxx
("Tiepel"), Xxxxxxx Xxxxxxx ("X. Xxxxxxx"), Xxxxxxx Xxxxxx ("Xxxxxx"), Xxxx Xxxx
("Xxxx"), Xxx Xxxxxx ("Xxxxxx"), Xxxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxx Xxxxx
("Xxxxx"), Xxxxxx Xxxx ("Xxxx"), Xxxx Xxxxxx ("Xxxxxx"), Xxxxxxxx X'Xxxx
("X'Xxxx"), Xxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxx Xxxxxxx ("X. Xxxxxxx"), and
Xxxxxxx Xxxxx ("Green") (collectively referred to hereinafter as the
"PatientCentrix Parties").
WHEREAS, certain of the PatientCentrix Parties entered into an
Agreement and Plan of Merger By and Among the Company, CDMS Acquisition Corp.,
PatientCentrix, Inc. ("PatientCentrix"), Miele, Synn, and Tiepel, dated October
31, 2000 ("Merger Agreement");
WHEREAS the Merger Agreement provided for certain contingent payments
to be made to certain of the PatientCentrix Parties (the "Earn Out");
WHEREAS, a Merger of the Company and PatientCentrix (the "Merger")
resulted from the aforementioned Agreement and Plan of Merger;
WHEREAS, certain disputes have arisen relating to the Merger Agreement
and the calculation and payment of the Earn Out, in the course of which the
Company has asserted, inter alia, that the Earn Out is properly calculated at
$77,096.00, while Miele has asserted that the Earn Out should be calculated at a
greater amount, and has also asserted other claims related to the Merger
Agreement and the Earn Out; and
WHEREAS, the parties hereto, for themselves and their respective heirs,
successors, assigns, agents, representatives, affiliates, subsidiaries,
officers, directors, divisions, predecessor and successor corporations, and any
person or entity claiming by or through any of them have mutually agreed to
settle such disputes as provided herein;
NOW THEREFORE, in consideration of the mutual promises made herein, the
parties hereto hereby agree as follows:
1. Consideration.
(a) Settlement of Earn Out Claims. The parties hereto
acknowledge that there is a bona fide dispute among them as to the amount of the
Earn Out and the performance by the Company of its obligations under the Merger
Agreement in connection therewith. In full settlement of such disputes and in
full payment of the Earn Out, the Company has agreed to pay to the
PatientCentrix Parties a sum of up to $400,000 as provided herein. In accordance
with the Allocation Schedule set forth in the Merger Agreement and attached
hereto as Exhibit A, all PatientCentrix Parties who have executed this Agreement
as of the Effective Date shall be paid their allocated percentage of the Earn
Out from a sum of $375,000.00. Any PatientCentrix Parties who have not executed
this Agreement as of the Effective Date shall be paid their allocated percentage
of the Earn Out from a sum of $77,096.00. On the Effective Date, the sum of
$25,000.00 shall also be paid to Miele in reimbursement of legal fees incurred
by him in connection with the matters which are the subject of this Agreement.
Payment pursuant to this
paragraph shall be made by the Company by wire transfer of immediately available
funds to an account previously specified by such PatientCentrix Party on April
1, 2002. Interest on each payment shall accrue from the Effective Date until
April 1, 2002 at a variable rate per annum equal to the "Prime Rate" as
published in the Wall Street Journal on the first business day of each month. No
interest shall accrue after April 1, 2002, unless the Company fails to pay the
amounts owed when due.
(b) Miele Options. In further consideration for Miele's
release of all of his claims related to the Merger and the Merger Agreement, as
of the Effective Date the exercise price of all options to purchase shares of
the Company's Common Stock held by Miele shall be reduced to $0.39 per share.
All of such options shall be immediately exercisable for a period of one year
from the Effective Date and shall expire, if not exercised on or prior thereto,
on the first anniversary of the Effective Date. In furtherance of the foregoing,
Miele and the Company are hereby simultaneously entering into amendments to the
existing options agreements, which amendments are attached hereto as Exhibit B.
(c) Board Seat. In further consideration for Miele's
release of all of his claims related to the Merger and the Merger Agreement, no
later than the Effective Date, the Company shall and shall cause its Board of
Directors to take all action necessary to elect Miele as a director of the
Company, effective on the date hereof. Miele's term as a director shall expire
on the first anniversary of the Effective Date, subject to his earlier death,
resignation or removal for cause (as determined in accordance with the Delaware
General Corporation Law).
2. Location of Parties. Miele shall use commercially reasonable
efforts to cooperate with the Company in its effort to cause each PatientCentrix
Party to become a party to this Agreement; provided, however, that Miele shall
not be obligated to incur any expense, make any payment or provide any
consideration in connection therewith, other than reasonable expenses in
locating and contacting PatientCentrix Parties for which he will be reimbursed
by the Company upon demand.
3. Effective Date. This Agreement shall become effective on the
date (the "Effective Date") this Agreement has been executed by the Company and
each PatientCentrix Party; provided, however, that if fewer than all of the
PatientCentrix Parties have executed this Agreement on or before 5:00 p.m., New
York time, on February 28, 2002, the Company shall have the sole and exclusive
right, exercisable as described below, to determine whether or not the Agreement
becomes effective among the parties who have executed and delivered this
Agreement. In the event that the Company wishes to exercise its right to declare
the Agreement effective, the Company shall give written notice thereof (by
facsimile or overnight courier to the recipient's address as specified in the
Company's records or as otherwise noticed to the Company by the recipient) to
all PatientCentrix Parties (whether or not they are parties to this Agreement at
such time) which notice shall specify a date (which shall be no earlier than two
(2) business days after the date the notice is given) on which the Effective
Date is to occur. Any PatientCentrix Party that has not executed the Agreement
shall have the right to become a party to this Agreement by executing and
delivering to the Company (which delivery may be by facsimile) a counterpart of
this Agreement not later than 5:00 p.m., New York time, on the Effective Date
established by the Company. If the Effective Date does not occur on or before
5:00 p.m., New York time, on March 13, 2002, this Agreement shall be of no
further force
- 2 -
and effect. The PatientCentrix Parties becoming parties to this Agreement on or
before the Effective Date are hereinafter referred to as the "Settling Parties".
4. Confidential Information.
(a) The confidentiality and non-competition provisions of
the Employment Agreement dated October 31, 2000, between Miele and the Company
and that certain Settlement Agreement and Mutual Release dated May 7, 2001,
between Miele and the Company and the provisions of the Nondisclosure Inventions
Agreement, dated December 18, 1998, by and between Miele and PatientCentrix
shall continue to be in full force and effect.
(b) The provisions of any employment agreement,
confidentiality agreement, invention disclosure agreement, non-competition
agreement or other similar agreement entered into by any Settling Party with
either the Company or PatientCentrix shall continue to be in full force and
effect.
5. Mutual Releases; Consents.
(a) Each of the Settling Parties agrees that the
consideration set forth herein represents settlement in full of all outstanding
obligations owed to any of them by Cattarina, the Company, and/or its officers
and directors (excluding employment-related obligations owed by the Company to
any Settling Party that is currently an employee of or consultant to the
Company). Each Settling Party, on behalf of himself or herself and his or her
respective heirs, family members, executors, officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns and any person or entity
claiming by or through any of the foregoing, hereby fully and forever releases
Cattarina, the Company, and or/its officers and directors, their respective
heirs, family members, executors, officers, directors, employees, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns and any person or entity claiming by or
through any of the foregoing.
(b) Each of Cattarina and the Company agrees that the
consideration set forth herein represents settlement in full of all outstanding
obligations owed to any of them by each of the Settling Parties (excluding
employment-related obligations owed to the Company by any Settling Party that is
currently an employee of or consultant to the Company). Each of Cattarina and
the Company, on behalf of themselves and their respective heirs, family members,
executors, officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns and any person or entity claiming by or through any of
the foregoing, hereby fully and forever releases the Settling Parties, their
respective heirs, family members, executors, officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns and any person or entity
claiming by or through any of the foregoing.
(c) Each Settling Party (other than Miele) acknowledges
that Miele has claims against Cattarina, the Company, and/or its officers and
directors that are unique to Miele and that the additional consideration to be
received by Miele hereunder in settlement of those claims is
- 3 -
fair and appropriate. Accordingly, each Settling Party (other than Miele) hereby
irrevocably consents to the consideration to be received by Miele hereunder.
Further, each Settling Party (other than Miele), on behalf of himself or herself
and his or her respective heirs, family members, executors, officers, directors,
employees, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns and any person
or entity claiming by or through any of the foregoing, hereby fully and forever
releases Miele, his heirs, family members, executors, officers, directors,
employees, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns and any person
or entity claiming by or through any of the foregoing.
(d) No party hereto shall xxx or assert any claims
against any other party hereto concerning any claim, duty, obligation or cause
of action relating to any matters of any kind, existing now or arising in the
future, including without limitation, those claims sounding in breach of
contract, tort or fraud, whether presently known or unknown, knowable or
unknowable, suspected or unsuspected, that any of them may possess arising from
any omissions, acts or facts that have occurred until and including the date of
this Agreement, including but not limited to:
(i) any and all claims arising from or related
to the Merger Agreement;
(ii) any and all claims arising from or related
to the Merger of the Company with PatientCentrix;
(iii) any and all claims arising from or related
to the conduct, action or inaction of Xxxxxx Santa Cattarina, individually
and/or as an officer and director of the Company;
(iv) any and all claims arising from or related
to the conduct, action or inaction of the Company, its officers or directors or
PatientCentrix, its officers, directors and shareholders;
(v) any and all claims arising from or related
to the operation or management of PatientCentrix;
(vi) any and all claims arising from or related
to Miele's consulting relationship with the Company, its officers and directors;
(vii) any and all claims arising from or related
to Miele's service as Shareholders' Representative pursuant to the Merger
Agreement;
(viii) any and all claims arising from or related
to the relationship between Miele and any other Settling Party.
(e) This release does not extend to any Settling Party's
rights to indemnification and exculpation under the Company's Certificate of
Incorporation and Bylaws and pursuant to Delaware law or under any applicable
director and officer liability insurance policy of the Company or
PatientCentrix.
- 4 -
(f) This release shall not be construed to absolve or
relieve any of the Settling Parties (other than Miele) from performing their
respective duties and obligations that arise pursuant to or in connection with
such person's current employment, if any, with the Company.
(g) The parties agree that, except as set forth in
clauses (e) and (f), 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. Moreover, this Agreement and release is a supplement to, and does not
supercede, the Settlement Agreement and Mutual Release dated May 7, 2001, and
the releases set forth therein.
6. No Pending or Future Lawsuits. The parties represent that no
lawsuits, claims, or actions are pending in their respective names, or on behalf
of any other person or entity, against any other party or any other person or
entity referred to herein. Each party hereto also represents that it does not
intend to bring any claims on its own behalf or on behalf of any other person or
entity against any other party or any other person or entity referred to herein
relating to the matters released hereby.
7. Confidentiality. The parties hereto each agree to use their
reasonable best efforts to maintain in confidence the existence of this
Agreement, the contents and terms of this Agreement, and the consideration for
this Agreement (hereinafter collectively referred to as "Settlement
Information"). Each party hereto agrees to take commercially reasonable
precautions to prevent disclosure of any Settlement Information to third
parties. The parties hereto agree to take commercially reasonable precautions to
disclose Settlement Information only to those employees, officers, directors,
attorneys, accountants, governmental entities, and family members who have a
reasonable need to know of such Settlement Information. Notwithstanding the
foregoing, the Company shall be permitted to disclose Settlement Information
publicly if, and to the extent, in the reasonable opinion of counsel to the
Company, such disclosure is required in accordance with applicable state or
federal securities laws, including, without limitation, Regulation FD
promulgated by the Securities Exchange Commission.
8. Non-Disparagement. Each party agrees to refrain from any
defamation, libel or slander of the other, or tortious interference with the
contracts and relationships of the other parties hereto.
9. 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 any 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.
10. 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 Newark, New
Jersey before the American Arbitration Association and its dispute resolution
rules, or by a judge to be mutually agreed upon. The parties agree that the
prevailing party in any arbitration shall be entitled to injunctive relief in
any court of competent
- 5 -
jurisdiction to enforce the arbitration award. The parties agree that the
prevailing party in any arbitration shall be awarded its reasonable attorney's
fees and costs.
11. 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. Each Settling 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.
12. Legal Counsel; 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. Each
party acknowledges that Xxxxxxxxxx Xxxxxxx PC has acted as counsel only to Miele
with respect to this Agreement and the matters which are the subject hereof.
Each Settling Party has been advised of his or her right to retain separate
counsel with respect hereto and has had the opportunity to discuss this
Agreement and the matters which are the subject hereof with counsel of his or
her own choosing to the extent he or she desired to do so. No party has relied
upon any representations or statements made by any other party hereto which are
not specifically set forth in this Agreement.
13. 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. Further, in the event any sub-part of any provision hereof, including
but not limited to any portion of the Releases, becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, the
remaining sub-parts of that same provision shall continue in full force and
effect without said sub-part.
14. Entire Agreement. This Agreement represents the entire
agreement and understanding between the parties with respect to the subject
matter hereof.
15. No Oral Modification. This Agreement may only be amended or
modified in a writing signed by the party or parties intended to be bound
thereby.
16. Governing Law. This Agreement shall be governed by the laws of
the State of New Jersey.
17. Counterparts. This Agreement may be executed in counter-parts,
and each counterpart shall have the same force and effect as an original and,
only if the Effective Date shall occur as provided herein, shall constitute an
effective, binding agreement on the part of each of the undersigned.
18. 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;
- 6 -
(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;
(d) They are fully aware of the legal and binding effect
of this Agreement.
- 7 -
IN WITNESS WHEREOF, the parties have executed this Agreement
on the respective dates set forth below.
LANDACORP, INC.
Dated: February ___, 2002 By:
---------------------------------------
XXXXXX SANTA CATTARINA,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxx Santa Cattarina,
XXXXXXX X. XXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxx X. Xxxxx,
XXXXXXXXXXX X. XXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxxxxxx X. Xxxx,
XXXXX XXXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxx Xxxxxx,
- 8 -
XXXXXXX XXXXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxx Xxxxxxx,
XXXXXXX XXXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxx Xxxxxx,
XXXX XXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxx Xxxx,
XXX XXXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxx Xxxxxx,
XXXXXXXX XXXXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxxx Xxxxxxx
- 9 -
XXXX XXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxx Xxxxx,
XXXXXX XXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxx Xxxx,
XXXX XXXXXX,
Dated: February ___, 2002 By:
---------------------------------------
Xxxx Xxxxxx,
XXXXXXXX X'XXXX
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxxx X'Xxxx
XXXXX XXXXXXX
Dated: February ___, 2002 By:
---------------------------------------
Xxxxx Xxxxxxx
- 10 -
XXXXXX XXXXXXX
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxx Xxxxxxx
XXXXXXX XXXXX
Dated: February ___, 2002 By:
---------------------------------------
Xxxxxxx Xxxxx
- 11 -
EXHIBIT A
Allocation Schedule
EXISTING OPTIONS COMMON
1998 GRANT 1999 GRANT 2000 GRANT STOCK TOTAL % ALLOCATION
Xxxxxxx Xxxxxxx 125,000 125,000 250,000 12.69%
Xxxxxxx Xxxxxx 125,000 125,000 6.35%
Xxxxxxx X. Xxxxx 40,000 80,000 950,000 1,070,000 54.31%
Xxxx Xxxx 15,000 15,000 0.76%
Xxxxx X. Xxxxxx 125,000 40,000 165,000 8.38%
Xxx Xxxxxx 150,000 150,000 7.61%
Xxxxxxxx Xxxxxxx 10,000 10,000 0.51%
Xxxx Xxxxx 60,000 60,000 3.05%
Xxxxxx Xxxx 20,000 20,000 1.02%
Xxxx Xxxxxx 20,000 20,000 1.02%
Xxxxxxxx X'Xxxx 5,000 5,000 0.25%
Xxxxx Xxxxxxx 5,000 5,000 0.25%
Xxxxxx Xxxxxxx 15,000 15,000 0.76%
Xxxxxxx Xxxxx 10,000 10,000 0.51%
Xxxxxxxxxxx X. Xxxx 50,000 50,000 2.54%
----------------------------------------------------------------------------------------------------------------------
Totals 125,000 305,000 500,000 1,040,000 1,970,000 100%
======================================================================================================================
- 12 -
EXHIBIT B
[LANDACORP LETTERHEAD]
FEBRUARY, 2002
XXXXXXX XXXXX
[ADDRESS]
RE: OPTION REPRICING
Dear Xx. Xxxxx:
Reference is made to that certain Settlement Agreement and Mutual
Release (the "Settlement Agreement"), dated the date hereof, by and among
Landacorp, Inc. ("Landacorp"), you and certain other former shareholders and
optionholders of PatientCentrix, Inc., formerly Capitated Disease Management
Services, Inc. ("PatientCentrix"). Pursuant to Section 1(b) of the Settlement
Agreement, Landacorp has agreed to reduce, to $0.39 per share, the exercise
price applicable to all of your options to purchase shares of Landacorp Common
Stock (including your PatientCentrix options which were assumed by Landacorp).
This letter will confirm that the Board of Directors of Landacorp has
determined that the new exercise price applicable to all of your existing
options to purchase Landacorp Common Stock shall be $0.39 per share. In
addition, all such options shall be immediately exercisable for a period of one
year from the Effective Date of the Settlement Agreement and shall expire, if
not exercised on or prior thereto, one year after the Effective Date of the
Settlement Agreement. Such anniversary is hereinafter referred to as the
`Expiration Date.' The options shall be exercisable at any time or from time to
time on or prior to the Expiration Date notwithstanding any provision of any
applicable option plan or option agreement to the contrary. To the extent that
any such option plan or option agreement contains any provision which conflicts
with the provisions of this letter (including, without limitation, as to the
exercisability or expiration of the options), the provisions of this letter
shall control.
Attached hereto as Exhibit 1 is a schedule of your existing options to
purchase shares of Landacorp Common Stock, showing the applicable option plan
pursuant to which the options were issued, the original grant date, the original
exercise price, the new exercise price and the new expiration date. Attached as
Exhibit 2 are the documents that you will need to sign and return to my
attention in order to effect the repricing and other changes to the terms of
your options.
Sincerely,
Xxxxxx Xxxxxx
- 13 -
EXHIBIT 1
Outstanding Options as of February __, 2002
New
Original Exercise
Number of Shares Exercise Price Price Per Expiration
Option Plan Subject to Option Grant Date Per Share Share Date
--------------------------------------- ------------------ ---------- --------------- ---------- -----------
Capitated Disease 44,500 $ 1.28 $ 0.39 ____/03
Management Services, Inc.
Stock Compensation Program
Capitated Disease 89,000 $ 3.19 $ 0.39 ____/03
Management Services, Inc.
Stock Compensation Program
Landacorp Equity Incentive Plan 197,790 $ 1.50 $ 0.39 ____/03
- 14 -
EXHIBIT 2
AMENDMENT OF STOCK OPTIONS
The undersigned optionee hereby elects to amend each of the following stock
options pursuant to the terms set forth in the foregoing letter dated February
__, 2002 from Landacorp:
Option #1 Option #2 Option #3
--------- --------- ---------
Option Grant Date: ______ ______ _______
Number of Shares
Remaining Unexercised: 44,500 89,000 197,790
Exercise Price: $ 0.39 $ 0.39 $ 0.39
Instructions
Please set forth above the information required with respect to each
outstanding stock option that you wish to amend.
The undersigned acknowledges receipt of the Company's letter dated
February ___, 2002 and the enclosures referenced therein and contained
therewith. The undersigned hereby agrees to be bound by all of the terms and
conditions of the repricing program as described in said letter, and understands
that stock options shall be immediately exercisable for a period of one year
from the Effective Date of the Settlement Agreement and shall expire, if not
exercised on or prior thereto, one year from the Effective Date of the
Settlement Agreement.
-------------------------------------------
Xxxxxxx Xxxxx
Date:
--------------------------------------
- 15 -
