SEPARATION AND GENERAL RELEASE AGREEMENT
Exhibit 10.1
SEPARATION
AND GENERAL RELEASE
AGREEMENT
This
Separation and General Release Agreement (the
“Agreement”) is made and entered into by and between
Tenax Therapeutics, Inc. (the “Company”) and Xxxx
Xxxxxx (the “Executive”). Throughout the remainder of
this Agreement, the Company and Executive may be collectively
referred to as the “Parties” and individually referred
to as a “Party.”
WHEREAS, Executive
is currently employed as Chief Executive Officer of the Company
pursuant to an Executive Employment Agreement dated November 13,
2013 as amended by a First Amendment to Executive Employment
Agreement dated June 18, 2015 (the “Employment
Agreement”) and is subject to the terms of the Employee
Non-Disclosure, Inventions Assignment, and Competitive Business
Activities Agreement, executed by Executive on November 13, 2013
(the “Confidentiality Agreement”).
WHEREAS, the
employment relationship between the Company and Executive is being
terminated as of the Effective Separation Date defined herein and
Executive’s entitlement to certain compensation and benefits
under the Employment Agreement upon termination of his employment
is conditioned, in part, upon his execution and non-revocation of
this Agreement.
WHEREAS, Executive
represents that he has carefully read this entire Agreement,
understands its consequences, and voluntarily enters into
it.
NOW
THEREFORE, in consideration of the above and the mutual promises
set forth below, Executive and the Company agree as
follows:
1. SEPARATION AND RESIGNATION FROM
DIRECTOR AND OFFICER POSITIONS. Executive’s employment
with the Company will terminate on Monday, April 3, 2017
(“Effective Separation Date”). As of the Effective
Separation Date, Executive shall be resigned as a member of the
Board of Directors of the Company and of all employment with the
Company, including without limitation his position as the
Company’s Chief Executive Officer.
2. SEVERANCE BENEFITS. In
consideration of the release of claims and other promises contained
herein and on the condition that this
Agreement has become effective under Section 8 of this
Agreement and that Executive fully complies with his
obligations under this Agreement and the Confidentiality Agreement,
the Company will provide Executive with the following:
(a) Pursuant to Section 6(d)(ii)(B) of the Employment
Agreement, the Company shall pay to Executive the sum of Four
Hundred Thirty Thousand Dollars ($430,000) (less all applicable
withholdings), payable in a lump sum on the sixtieth
(60th)
day following the Effective Separation Date (“Severance
Payment Date”).
(b) Pursuant
to Section 6(d)(ii)(C) of the Employment Agreement, the Company
shall pay to Executive the sum of Eighty Two Thousand One Hundred
Seventy One Dollars and Twenty Three Cents Dollars ($82,171.31)
(less all applicable withholdings), payable in a lump sum on the
Severance Payment Date.
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(c) Pursuant to Section 6(d)(ii)(D) of the Employment
Agreement, conditioned on the proper and timely election by
Executive and/or his qualified beneficiaries to continue group
health insurance under COBRA after the Effective Separation Date,
reimbursement of the applicable COBRA premiums paid by Executive
for such continuation coverage for up to the twelve (12) month
period following the Effective Separation Date. Reimbursements for COBRA premium payments shall
begin on the Severance Payment Date and shall be made as soon as
possible following the Executive’s submission to the Company
of proof of timely payments, but not later than thirty (30) days
after the Executive’s submission of proof of timely payments;
provided, however, all such claims for reimbursement shall be
submitted by the Executive and paid by the Company no later than
fifteen (15) months following the termination of the
Executive’s employment. Any obligation for the Company to
make payments for COBRA reimbursement under this Agreement shall
immediately cease when the Executive becomes eligible for health
insurance from a subsequent employer, and the Executive shall
promptly notify the Company of such subsequent eligibility. If
Executive desires COBRA coverage, Executive shall bear full
responsibility for applying for COBRA coverage and nothing herein
shall constitute a guarantee of COBRA benefits. Under no
circumstances will Executive be entitled to a cash payment or other
benefit in lieu of reimbursements for the actual costs of premiums
for COBRA continuation hereunder.The amount of expenses eligible
for reimbursement during any calendar year shall not be affected by
the amount of expenses eligible for reimbursement in any other
calendar year.
3. EMPLOYMENT AGREEMENT.
Executive acknowledges and agrees that
he is required to execute this Agreement as a condition of
receiving the benefits set forth herein, including specifically the
benefits provided in Section 2. Executive further acknowledges and
agrees the Employment Agreement is hereby terminated, but that he
shall continue to be fully bound by the terms of the
Confidentiality Agreement.
4.
SPECIAL CONSULTING
SERVICES.
(a) Term and Nature of Services.
Beginning on the second business day following the Effective
Separation Date and continuing until the 12 month anniversary of
the Effective Separation Date (the “Consulting Term”),
unless earlier terminated, Executive will be available at his
discretion to provide consulting services to the Company as
requested by and under the direction of the CEO (hereafter, the
“Consulting Arrangement”) related to Executive’s knowledge, expertise
and areas of prior responsibility for the Company. Such
services may include identified legal
and regulatory matters, transition assistance, the provision of
background, and as otherwise requested by the CEO. All consulting
services shall be performed off-site, and the Company will not
provide office facilities or computer equipment to
Executive. Executive will be available at his discretion to
provide consulting services at such times and in such amount as
reasonably requested by the CEO and/or as necessary; provided that
such services shall not exceed 20% of Executive average amount of
work time during the thirty six (36) month period prior to the
Effective Separation Date, in order to ensure that
Executive’s separation from employment with the Company is
considered a “Separation from Service” within the
meaning of Section 409A of the Internal Revenue Code.
(b) Compensation for
Consulting Services. During
the Consulting Term, in full compensation for the delivery of
consulting services, and subject to Section 3(c), the Company shall
pay to Executive a consulting rate of $500.00 per
hour.
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(c) Independent Contractor Status.
The parties hereby acknowledge and agree that Executive’s
provision of consulting services shall be provided strictly as an
independent contractor. Nothing in this Agreement shall be
construed to render him an employee, co-venturer, agent, or other
representative of the Company during the Consulting Term. Executive
understands that he must comply with all tax laws applicable to a
self-employed individual, including the filing of any necessary tax
returns and the payment of all income and self-employment taxes.
The Company shall not be required to withhold from any consulting
fee payments any state or federal income taxes or to make payments
for Social Security tax, unemployment insurance, or any other
payroll taxes. The Company shall not be responsible for, and shall
not obtain, worker’s compensation, disability benefits
insurance, or unemployment security insurance coverage for
Executive. Executive is not eligible for, nor entitled to, and
shall not participate in, any of the Company’s benefit plans.
Consistent with his duties and obligations under this Consulting
Arrangement, Executive shall, at all times, maintain sole and
exclusive control over the manner and method by which he performs
his consulting services.
5. EXECUTIVE
ACKNOWLEDGEMENTS. By signing this Agreement, Executive
represents that (a) he has been properly paid for all time worked
and received all salary, expense reimbursement, and all other
amounts of any kind due to him from the Company with the exceptions
of his final paycheck for work during his final payroll period
which will be paid on the next regularly scheduled payroll date
following the Effective Separation Date, and the pay and benefits
under this Agreement, and (b) that the payments set forth in
Section 2 of this Agreement constitute all post-termination or
severance payments or benefits to which Executive is entitled to
receive under his Employment Agreement, and he is not entitled to
any other compensation, payments or benefits of any nature as the
result of the termination of his employment.
6.
RELEASE.
(a) In
consideration of the benefits conferred by this Agreement,
EXECUTIVE (ON
BEHALF OF HIMSELF AND HIS ASSIGNS, HEIRS AND OTHER REPRESENTATIVES)
RELEASES THE COMPANY AND ITS RELATED PARTIES (DEFINED BELOW)
(“RELEASEES”) FROM ALL
CLAIMS AND
WAIVES ALL
RIGHTS KNOWN OR
UNKNOWN, HE MAY HAVE OR CLAIM TO HAVE AGAINST THE COMPANY, ITS
PREDECESSORS, SUBSIDIARIES OR AFFILIATES arising from or relating to his employment with
the Company and separation therefrom, to the fullest extent
permitted by law, including but not limited
to claims:
(i) for
discrimination, harassment or retaliation arising under federal,
state or local laws prohibiting age (including but not limited to
claims under the Age Discrimination in Employment Act of 1967
(“ADEA”), as amended), sex, national origin, race,
religion, disability, veteran status or other protected class
discrimination, harassment or retaliation for protected
activity;
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(ii) for
compensation and benefits (including but not limited to claims
under the Employee Retirement Income Security Act of 1974
(“ERISA”), Fair Labor Standards Act of 1938
(“FLSA”), Family and Medical Leave Act of 1993
(“FMLA”), all as amended, and similar federal, state,
and local laws and claims under any other Company policy, plan or
program;
(iii) under
federal, state or local law of any nature whatsoever (including but
not limited to constitutional, statutory, tort, express or implied
contract or other common law); and
(iv) for
attorneys’ fees.
Provided,
however, the release of claims set forth in this Agreement does
NOT:
(v) apply
to claims for workers’ compensation benefits, vested
retirement benefits or unemployment benefits filed with the
applicable state agencies or where otherwise prohibited by
law;
(vi) bar
a challenge under the Older Workers Benefit Protection Act of 1990
(OWBPA) to the enforceability of the waiver and release of ADEA
claims set forth in this Agreement; or
(vii) prohibit
Executive from filing a charge with or participating in an
investigation by the U.S. Equal Employment Opportunity Commission
or other governmental agency with jurisdiction concerning the
terms, conditions and privileges of employment or jurisdiction over
the Company’s business or assisting with an investigation
conducted internally by the Company; provided, however, that by
signing this Agreement, Executive waives the right to, and shall
not seek or accept, any monetary or other relief of any nature
whatsoever in connection with any such charges, investigations or
proceedings. This Agreement does not limit Executive’s right
to receive an award for information provided to the SEC, FINRA, or
any other securities regulatory agency or authority.
(b) Executive
will not xxx the Releasees on any matters relating to his
employment or separation therefrom arising before the execution of
this Agreement (with the sole exception of claims and challenges
set forth in subparagraph (a) (v) through (vi) above), or join as a
party with others who may xxx on any such claims, or opt-in to an
action brought by others asserting such claims, and in the event
that Executive is made a member of any class asserting such claims
without his knowledge or consent, Executive shall opt out of such
action at the first opportunity.
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(c) The
Releasees which Executive is releasing by signing this Agreement
include: the Company and its predecessors, successors, and assigns
and its and/or their past, present and future owners, parents,
subsidiaries, affiliates, predecessors, successors, assigns,
officers, directors, employees, employee benefit plans (together
with all plan administrators, trustees, fiduciaries and insurers)
and agents.
7. COMPANY
INFORMATION AND PROPERTY.
(a) Executive shall not at any time after his employment
terminates disclose, use or aid third parties in obtaining or using
any confidential or proprietary Company information nor access or
attempt to access any Company computer systems, networks or any
resources or data that resides thereon.
Confidential
or proprietary information is information relating to the Company
or any aspect of its business which is not generally available to
the public, the Company’s competitors, or other third
parties, or ascertainable through common sense or general business
or technical knowledge; however, nothing in this paragraph or in
this Agreement or in the agreements referenced in subparagraph (c)
below is intended, nor shall be construed, to (i) prohibit
Executive from any communications to, or participation in any
investigation or proceeding conducted by, any governmental agency
referenced in paragraph 6, (ii) interfere with, restrain, or
prevent Executive communications regarding wages, hours, or other
terms and conditions of employment, or (iii) prevent Executive from
otherwise engaging in any legally protected activity. Moreover,
notwithstanding the foregoing or any other provision in this
Agreement, Executive cannot be held criminally or civilly liable
under any federal or state trade secret law if he discloses a trade
secret (iv) to federal, state, or local government officials, to
his attorneys, or in a sealed court document, for the purpose of
reporting or investigating a suspected violation of the law; or (v)
to his attorneys or in a sealed court document in connection with a
lawsuit for retaliation by an employer for reporting a suspected
violation of the law.
(b) All
records, files or other materials maintained by or under the
control, custody or possession of the Company or its agents in
their capacity as such shall be and remain the Company’s
property and Executive shall return all such property. By signing
this Agreement, Executive represents that:
(i)
Executive has returned all the Company property (including, but not
limited to, credit cards; keys; company car; cell phone; air card;
access cards; thumb drive(s), laptop(s), personal digital devices
and all other computer hardware and software; records, files,
documents, manuals, and other documents in whatever form they
exist, whether electronic, hard copy or otherwise and all copies,
notes or summaries thereof and turned over all Company passwords or
access codes which he created, received or otherwise obtained in
connection with his employment);
(ii)
Executive has not deleted any emails, files or other information
from any Company computer or device prior to his return of the
property;
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(iii)
Executive has permanently deleted any Company information that may
reside on his personal computer(s), other devices or accounts and,
if requested by the Company, has submitted all personal computers,
phones and other devices which he used for Company business, and
has identified all personal accounts on which Company information
has been placed and related passwords, to a third party vendor, as
may be designated by the Company, for inspection and removal of any
Company-related information; and
(iv)
Executive will fully cooperate with the Company in winding up his
work and transferring that work to those individuals designated by
the Company.
(c) Nothing
in this Agreement shall relieve Executive from any obligations
under any other previously executed confidentiality, proprietary
information or secrecy agreements. All such agreements shall
continue to be in full force and effect upon the execution of this
Agreement subject to the clarification set forth in subparagraph
(a) above.
8. RIGHT
TO REVIEW AND REVOKE. The
Company delivered this Agreement to Executive on March 29, 2017 by
hand-delivery and desires that he have adequate time and
opportunity to review and understand the consequences of entering
into it. Accordingly, the Company advises him to consult with his
attorney prior to executing it and that he has 21 days within which
to consider it. In the event that he does not return an executed
copy of the Agreement to Xxxxxxxx Xxxxxxxxx at Xxxxx Xxxxxxxx by no
later than the 22nd calendar day after receiving it, this Agreement
and the obligations of the Company herein shall become null and
void and Executive’s employment will terminate on the
Effective Separation Date and he will receive base pay (less
applicable deductions) through the Effective Separation Date and
will not be eligible for the severance benefits described in
Section 2. Executive may revoke the Agreement during the seven (7)
day period immediately following his execution of it. The Agreement
will not become effective or enforceable until the revocation
period has expired. To revoke the Agreement, a written notice of
revocation must be delivered to Xxxxxxxx Xxxxxxxxx at Xxxxx
Xxxxxxxx.
9.
NON-DISPARAGEMENT.
Executive
represents and warrants that since receiving this Agreement, he (i)
has not made, and going forward will not make, disparaging,
defaming or derogatory remarks about the Company or its products,
services, business practices, directors, officers, managers or
employees to anyone; nor (ii) taken, and going forward will not
take, any action that may impair the relations between the Company
and its vendors, customers, employees, or agents or that may be
detrimental to or interfere with, the Company or its
business.
The
Company represents and warrants that each of its named executive
officers and each of its directors since providing this Agreement
to Executive, (i) has not made, and going forward will not make,
disparaging, defaming or derogatory remarks about Executive; nor
(ii) taken, and going forward will not take, any action that might
impair the future business or employment relations between
Executive and third-parties, except as those same relations are
expressly restricted by the terms of this Agreement.
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Nothing in this section nor in this Agreement is intended, nor
shall be construed, to (i) prohibit Executive, the Company’s
named executive officers or the Company’s directors from any
communications to, or participation in any investigation or
proceeding conducted by, any governmental agency referenced in
paragraph 6, (ii) interfere with, restrain, or prevent Executive
from communications regarding wages, hours, or other terms and
conditions of employment, or (iii) prevent Executive from otherwise
engaging in any legally protected activity.
10.
OTHER.
Except as expressly provided in this Agreement, this Agreement
supersedes all other understandings and agreements, oral or
written, between the parties and constitutes the sole agreement
between the parties with respect to its subject matter. Each party
acknowledges that no representations, inducements, promises or
agreements, oral or written, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in
this Agreement and no agreement, statement or promise not contained
in the Agreement shall be valid or binding on the parties unless
such change or modification is in writing and is signed by the
parties. Executive's or the Company's waiver of any breach of a
provision of this Agreement shall not waive any subsequent breach
by the other party. If a court of competent jurisdiction holds that
any provision or sub-part thereof contained in this Agreement is
invalid, illegal or unenforceable, that invalidity, illegality or
unenforceability shall not affect any other provision in this
Agreement.
This
Agreement is intended to avoid all litigation relating to
Executive's employment with the Company and his separation
therefrom; therefore, it is not to be construed as the Company's
admission of any liability to him - liability which the Company
denies.
If
Executive does not abide by this Agreement, then he will: (i)
return all monies received under this Agreement and the Company
will be relieved of its obligations hereunder, except to the extent
that such return and relief would result in invalidation of the
release set forth above, and (ii) indemnify the Company for all
expenses it incurs in seeking to enforce the Agreement or as a
result of his failure to abide by this Agreement, including
reasonable attorneys’ fees in defending any released
claims.
This
Agreement shall apply to, be binding upon and inure to the benefit
of the parties' successors, assigns, heirs and other
representatives and be governed by North Carolina law (with the
sole exception of its conflicts of laws provisions) and the
applicable provisions of federal law, including but not limited to
ADEA.
11. SECTION
409A.
(a)
General Compliance. This
Agreement is intended to comply with Section 409A or an exemption
thereunder and shall be construed and administered in accordance
with Section 409A. Notwithstanding any other provision of this
Agreement, payments provided under this Agreement may only be made
upon an event and in a manner that complies with Section 409A or an
applicable exemption. Any payments under this Agreement that may be
excluded from Section 409A either as separation pay due to an
involuntary separation from service or as a short-term deferral
shall be excluded from Section 409A to the maximum extent possible.
For purposes of Section 409A, each installment payment provided
under this Agreement shall be treated as a separate payment. Any
payments to be made under this Agreement upon a termination of
employment shall only be made upon a "separation from service"
under Section 409A. Notwithstanding the foregoing, the Company
makes no representations that the payments and benefits provided
under this Agreement comply with Section 409A, and in no event
shall the Company be liable for all or any portion of any taxes,
penalties, interest, or other expenses that may be incurred by the
Executive on account of non-compliance with Section
409A.
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(b)
Specified Executives. Notwithstanding
any other provision of this Agreement, if any payment or benefit
provided to the Executive in connection with his termination of
employment is determined to constitute "nonqualified deferred
compensation" within the meaning of Section 409A and the Executive
is determined to be a "specified Executive" as defined in Section
409A(a)(2)(b)(i), then such payment or benefit shall not be paid
until the first payroll date to occur following the six-month
anniversary of the Termination Date or, if earlier, on the
Executive's death (the "Specified Executive Payment Date"). The
aggregate of any payments that would otherwise have been paid
before the Specified Executive Payment Date shall be paid to the
Executive in a lump sum on the Specified Executive Payment Date and
thereafter, any remaining payments shall be paid without delay in
accordance with their original
schedule.
12. Directors
and Officers Insurance Confirmation. The Company confirms that Executive
was and will continue to be a covered person under the
Company’s insurance policy for directors and officers for the
time period that he served as an employee and a director of the
Company.
IN
WITNESS WHEREOF, the parties have entered into this Agreement on
the day and year written below.
EXECUTIVE REPRESENTS THAT HE HAS CAREFULLY READ THE ENTIRE
AGREEMENT, UNDERSTANDS ITS CONSEQUENCES, AND VOLUNTARILY ENTERS
INTO IT.
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/s/ Xxxx
Xxxxxx
4/7/17
Xxxx
Xxxxxx
Date
By: /s/ Xxxxxx
Xxxxx
4/7/17
Name: Xxxxxx
Xxxxx
Date
Title:
Chairman of the Board of Directors
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