SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement") is made and entered into as
of June 28, 1999, by and among Avatex Corporation, a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxxxx, an individual ("Employee").
RECITALS
A. Employee and the Company are parties to an Employment Agreement
dated on or about November 12, 1996, as amended by the Amendment to
Employment Agreement, dated February 1, 1998, (the "Employment Agreement"),
under which the Company has employed Employee as the Company's Senior Vice
President and Chief Financial Officer.
B. The Company and Employee have agreed that Employee's employment by
the Company shall terminate at the end of the day on June 28, 1999 (the
"Separation Date"), unless terminated for cause prior thereto in accordance
with the terms of the Employment Agreement.
C. This Agreement is entered into to resolve all matters between the
Company and Employee in connection with separation of Employee from with the
Company, including but not limited to any payments claimed due by Employee.
Notwithstanding anything in this Agreement to the contrary, this Agreement
(other than this sentence) shall have no force and effect if Employee's
employment with the Company is terminated for cause prior to the Separation
Date in accordance with the terms of the Employment Agreement.
UNDERTAKINGS, AGREEMENTS, AND ACKNOWLEDGMENTS
1. With respect to Employee's status as an employee of the Company and
as a director or manager of certain entities in which the Company or its
subsidiaries has an investment:
(a) Employee shall continue to be employed by the Company and shall
continue to be paid his current salary through the Separation Date. The
Employment Agreement shall terminate on the Separation Date, except that
Sections 5 and 7 of the Employment Agreement shall continue in full force and
effect. On the Separation Date, Employee shall be deemed to have resigned
from his position as an officer of the Company and all of its subsidiaries of
which he was an officer immediately prior to the Separation Date.
(b) On the Separation Date, Employee shall execute and deliver to the
Company a letter of resignation, dated and effective as of the Separation
Date, resigning as a director of RAS Holding Corp., Presby Corp., PC Lens
Corp. and Medical Internet Technologies, Inc., in the form of Exhibit A
hereto.
2. In consideration for the release being given by Employee and
Employee's full and complete performance of the obligations herein and in
full satisfaction of the Company's
obligation under the Employment Agreement and any policies or agreements to
pay a severance amount, the Company shall pay to Employee, less applicable
deductions required by law, the following amounts:
(a) In respect of Employee's contractual bonus that would otherwise be
payable in November 1999, the Company shall pay $50,000.00 to Employee, less
applicable deductions required by law, on the later of (i) the Separation
Date or (ii) the expiration of the seven (7) day revocation period described
in Section 10 of this Agreement.
(b) The Company shall pay to Employee (i) $150,000.00, less applicable
deductions required by law, on the expiration of the seven (7) day revocation
period described in Section 10 of this Agreement and (ii) $150,000.00, less
applicable deductions required by law, on June 28, 2000.
(c) The Company shall calculate and, if required, make an annual
payment to Employee as follows:
(1) As soon as practicable after the end of each of the Company's fiscal
years ending on March 31, 2000 and March 31, 2001, the Company shall
calculate an amount (the "Avatex Bonus Amount") equal to the total
amount of bonuses paid and/or accrued by the Company with respect to
its General Counsel and its Chief Financial Officer for the applicable
fiscal year. The Avatex Bonus Amount, if any, shall be paid by the
Company to Employee, less applicable deductions required by law, on
or about the date that the Company pays any bonus to its General
Counsel for the applicable fiscal year.
(2) If no bonus is paid or accrued by the Company with respect to both
its General Counsel and its Chief Financial Officer for either of the
Company's fiscal years ending on March 31, 2000 and March 31, 2001,
then, as soon as practicable after the end of the Company's fiscal
year ending on March 31, 2002 ("Fiscal 2002"), the Company shall
calculate the Avatex Bonus Amount for Fiscal 2002. The Avatex Bonus
Amount for Fiscal 2002, if any, shall be paid by the Company to
Employee, less applicable deductions required by law, on or about the
date that the Company pays any bonus to its General Counsel for Fiscal
2002.
(3) If the position of either General Counsel or Chief Financial
Officer of the Company is not filled (i) for one of the Company's
fiscal years or (ii) at the time a bonus is paid or accrued for one
of the Company's fiscal years, then, for the purpose of calculating
the amount of any Avatex Annual Bonus for such period under
Subsection 2(c)(1) and (2) above, such position shall be deemed to
have been paid or accrued, as applicable, the same bonus as the
filled position. If the positions of both General Counsel and Chief
Financial Officer of the
-2-
Company are not filled (x) for one of the Company's fiscal years or
(y) at the time a bonus is paid or accrued for one of the Company's
fiscal years, then the Company and Employee shall negotiate in good
faith to reach an agreement on the amount, if any, of any bonus to be
paid to Employee for such period.
3. In addition to the foregoing, Employee shall receive the following
consideration:
(a) As of the date hereof, Employee owns the following options to
purchase the Company's common stock ("Options") that were previously granted
to him by the Company, which as of the date hereof have the following grant
dates, vesting schedules, exercise prices and expiration dates:
-------------------------------------------------------------------------------
Grant Date No. Of Options Vesting Date Exercise Price Expiration Date
-------------------------------------------------------------------------------
02-12-97 52,000 vested $1.1875 02-12-02
-------------------------------------------------------------------------------
07-02-97 133,333 vested $1.1250 07-02-02
-------------------------------------------------------------------------------
07-02-97 133,333 07-02-99 $1.1250 07-02-02
-------------------------------------------------------------------------------
07-02-97 133,334 07-02-00 $1.1250 07-02-02
-------------------------------------------------------------------------------
Notwithstanding anything in any stock option agreement to the contrary, (i)
Employee shall be permitted to retain all of these Options, irrespective of
whether the Options have vested as of the Separation Date, (ii) any Options
that have not vested as of the Separation Date will vest in accordance with
the vesting schedule set forth in the applicable stock option agreement, as
set forth above, and (iii) Employee may exercise any vested Options at any
time or times until the expiration date of the Option. Employee and the
Company agree that nothing herein shall be deemed or interpreted to extend
the expiration date of any Options grant, and any Options that Employee fails
to exercise before the applicable expiration date shall be terminated and
void at the close of business on such date. Employee expressly acknowledges
that the exercise of any Options remains subject to all restrictions imposed
(x) by the applicable stock option agreement between the Company and Employee
(to the extent such restrictions are not modified by this Agreement) and (y)
under applicable law.
(b) Employee shall have the right to elect continued medical insurance
coverage in accordance with applicable law from July 1, 1999 through December
31, 1999. If Employee elects to continue such coverage after the Separation
Date, Employee shall timely make all payments of all premiums to or at the
direction of the Company. Nothing herein shall be deemed to expand the
period for which coverage is otherwise required to be provided under any
applicable law. Any other benefits that were available to Employee during
his employment with the Company, other than those set forth in this
Agreement, are not available to Employee after the Separation Date.
(c) For the purpose of Employee's participation in the Company's
Performance Incentive Plan, as amended (the "Plan"), Employee's employment
with the Company shall be
-3-
considered a termination other than for cause, and Employee shall retain his
2.86% interest in Litigation Income (as such term is defined in the Plan), to
the same extent that the other participants in the Plan retain their
respective interests in Litigation Income under the Plan.
(d) The Company shall maintain, for a period of at least three years
from the Separation Date, directors and officer liability insurance providing
at least $30 million of coverage with respect to the Company's present and
former officers and directors and other similar coverage as the current
policies maintained by or on behalf of the Company, and containing terms and
conditions that are no less advantageous with respect to matters existing or
occurring at or prior to the Separation Date, and in the event any claim is
made against present or former directors or officers of the Company, that is
covered, in whole or in part, or potentially so covered by insurance, the
Company shall not do anything that would forfeit, jeopardize, restrict or
limit the insurance coverage available for that claim until the final
disposition of that claim; provided, however, that if the cost of maintaining
such insurance exceeds twice the current cost related to providing such
insurance (the "Current Cost"), then the Company shall maintain such director
and officer liability insurance with the maximum amount of coverage
obtainable at twice such Current Cost.
4. Employee hereby acknowledges that the payments to be made and other
consideration to be provided pursuant to Sections 2 and 3 of this Agreement
constitute items of value to Employee that are in excess of anything of value
to which Employee may already be entitled. The payments provided for in
Sections 2 and 3 hereof are premised on Employee's compliance with this
Agreement and Section 5 of the Employment Agreement.
5. In exchange for the payments and other consideration set forth in
Sections 2 and 3 above, Employee, on his own behalf and behalf of his
executors, heirs, agents, representatives, assigns, legal representatives and
attorneys (collectively, the "Employee Parties"), hereby releases the Company
together with its directors, officers, parents, owners, shareholders,
affiliates, subsidiaries, employees, agents, representatives, assigns, heirs,
predecessors, successors, legal representatives and attorneys (collectively,
the "Company Parties"), of and from any and all debts, claims, demands,
damages, obligations, suits, controversies, expenses, liabilities and causes
of action of any kind whatsoever, whether known or unknown, that the Employee
Parties have or might have against the Company Parties based on or related to
Employee's employment with the Company or the separation of Employee from the
Company, whether or not due to the negligence or misconduct of the Company or
any of the other Company Parties. Employee understands and agrees that
Employee is hereby releasing any rights or claims that Employee may have
under the Age Discrimination in Employment Act of 1967, which prohibits age
discrimination in employment; Title VII of the Civil Rights Act of 1964,
which prohibits discrimination in employment based on race, color, national
origin, religion or sex; the Civil Rights Act of 1866; the Civil Rights Act
of 1871; the Civil Rights Act of 1991; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Labor Management
Relations Act; the Americans with Disability Act of 1990; or any other
federal, state or local
-4-
laws, regulations, or orders that regulate, without limitation, employment
discrimination, fair employment practices, labor relations, civil rights,
wages, occupational safety and health, worker's compensation, discrimination
or any other aspect of employment. Employee further understands and agrees
that, except as expressly provided herein, Employee is releasing any claims
for wrongful discharge, any claims arising under common law, any claims for
any bonus, any claims under any relocation, severance, vacation or incentive
plan or policy, and any claims based upon any contract, whether oral or
written, or any tort. Employee further understands and agrees that Employee
is releasing not only claims that Employee knows about, but also any claims
existing at the time of this Agreement about which Employee may not know.
Notwithstanding the foregoing, nothing herein shall affect Employee's rights
(a) under this Agreement or (b) to indemnification, whether arising under the
Indemnification Agreement dated as of October 23, 1997 between the Company
and Employee or otherwise.
6. The Company hereby releases Employee from all claims and demands the
Company may have based on Employee's employment with the Company or the
separation of Employee from the Company, whether or not due to Employee's
negligence or misconduct. Notwithstanding the foregoing, nothing herein shall
affect the Company's rights (a) under this Agreement or Sections 5 and 7 of
the Employment Agreement or (b) with respect to Employee's right to
indemnification, whether arising under the Indemnification Agreement dated as
of October 23, 1997 between the Company and Employee or otherwise.
7. Employee and the Company agree never to file a lawsuit asserting any
claims that are released in Sections 5 or 6 of this Agreement.
8. Employee acknowledges that he was given a period of up to twenty-one
(21) days during which to consider this Agreement before signing it.
9. Employee acknowledges that the Company advised Employee to consult
with an attorney before signing this Agreement and that Employee has read and
understood this Agreement. Any consultation by Employee with an attorney is
at Employee's sole cost.
10. Employee may revoke this Agreement within seven (7) days of Employee
signing it. Revocation can be made by delivering a written notice of
revocation to the Company. For such revocation to be effective, notice must
be received no later than the seventh (7th) day after Employee signs this
Agreement. If Employee revokes this Agreement, the Agreement shall not be
effective or enforceable and Employee shall not receive the consideration
described in Sections 2 and 3 of this Agreement and shall refund to the
Company any payments made by the Company to Employee under this Agreement.
11. By making this Agreement, neither the Company nor Employee admits
that it or he has done anything wrong or unlawful.
12. Neither party shall intentionally interfere with or liable or
slander Employee or
-5-
the Company or its management, officers or directors.
13. Employee shall be available to cooperate with the Company and its
affiliates from time to time after the date of this Agreement, as reasonably
requested by the Company, for matters in which Employee was involved
pertaining to the Company, including, but not limited to lawsuits filed
against the Company. In providing assistance, Employee shall work in good
faith with the Company's representatives. The Company shall give reasonable
advance notice to Employee regarding any assistance it requests.
14. Until two years from the date of this Agreement, without the prior
written consent of the Company, Employee agrees not to, and agrees to cause
Caring not to, directly or indirectly solicit any person who was an officer
or employee of the Company on the date hereof to become employed or retained
by Caring in any capacity, including, without limitation, as an employee,
consultant or independent contractor.
15. Notwithstanding any provisions in this Agreement to the contrary, in
the event that Employee breaches the provisions of Sections 7, 12, 13 or 14
of this Agreement, in addition to any legal or equitable rights and remedies
Company may have under this Agreement or otherwise with respect to such
breach, the Company shall have no further obligations to Employee under this
Agreement. The prevailing party in any legal proceeding based upon this
Agreement shall be entitled to reasonable attorneys fees' and court costs in
addition to any other recovery allowed.
16. If any provision of this Agreement is determined to be invalid by a
court of competent jurisdiction, the invalidity of that provision shall not
affect the validity of any other provision of the Agreement.
17. This is the entire Agreement between Employee and the Company. No
promises have been made to Employee other than those in this Agreement. This
Agreement supersedes any other agreement or policy in effect between Employee
and the Company or its affiliates regarding employment or severance,
including but not limited to any provision set forth in the Avatex
Corporation Policy and Procedure Manual or the Employment Agreement;
provided, however, that the Plan and any stock option agreement between
Employee and the Company shall remain in effect except as amended or modified
by this Agreement.
18. Employee's rights and interests herein shall not be assignable or
transferrable (in law or in equity) by Employee. Any obligation by the
Company to make payments hereunder are not subject to alienation, sale,
transfer, claims of creditors, pledge, attachment, garnishment, levy,
execution or encumbrance of any kind.
19. Employee is responsible for payment of all individual taxes on all
payments or benefits received by him under this Agreement. Any payments or
benefits received under this Agreement shall be subject to withholding for
such taxes to the extent and at the rate required by applicable law.
-6-
20. This Agreement shall be governed by and construed in accordance
with, the laws of the State of Texas.
21. All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
overnight delivery service, cable, telegram, facsimile transmission or telex
to the parties. Any notice or communication with respect to this Agreement
shall be directed to:
If to the Company: Avatex Corporation
Attn: General Counsel
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
If to Employee: Xx. Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
22. If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable under applicable law, then such illegality,
invalidity or unenforceability shall not invalidate the entire Agreement.
Such provision shall be deemed to be modified to the extent necessary to
render it legal, valid and enforceable, and if no such modification shall
render it legal, valid and enforceable, then this Agreement shall be
construed as if not containing the provision held to be illegal, invalid or
unenforceable and the rights and obligations of the respective parties shall
be construed and enforced accordingly.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT
AND IS VOLUNTARILY ENTERING INTO IT.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
-7-
IN WITNESS WHEREOF, this Agreement is executed to become effective as of
June 30, 1999.
AVATEX CORPORATION
By: _________________________
Name:________________________
Title:_______________________
_______________________
Xxxxxx X. Xxxxxxx
-8-
EXHIBIT A
To the Boards of Directors of RAS Holding Corp., Presby Corp., PC Lens Corp.
and Medical Internet Technologies, Inc.:
The undersigned hereby resigns my position as a director of RAS Holding
Corp., Presby Corp., PC Lens Corp. and Medical Internet Technologies, Inc.,
effective as of the close of business on June __, 1999.
_______________________
Xxxxxx X. Xxxxxxx
