RELEASE AND SETTLEMENT AGREEMENT
Exhibit
10.4
THIS
RELEASE AND SETTLEMENT AGREEMENT (this “Agreement”) is entered into by and
between XXXX X. XXXXXXXX, an individual (“Xxxxxxxx”) and MEDICAL DISCOVERIES,
INC., a Utah corporation (hereinafter referred to as “MDI”) on the following
premises:
Premises
A. On
or
about April 1, 2005, Xxxxxxxx and MDI entered into an employment agreement
(the
“Employment Agreement”).
B. As
of
March 31, 2007, under the terms of the Employment Agreement, MDI owed Xxxxxxxx
approximately $1,851,804.93 in accrued and unpaid compensation, un-accrued
and
pro-rata bonuses, and severance pay.
C. The
parties have raised issues respecting the amount due to Xxxxxxxx and MDI’s
ability to pay such amount and desire to reach an agreement resolving such
issues in order to facilitate anticipated financing for MDI. Accordingly,
Xxxxxxxx has agreed to accept in settlement of the amount owed a sum of
$500,000.00, payable from proceeds from the sale of certain Formestane assets
owned by MDI (the “Formestane Asset Sale”) to Eucodis, a third
party.
D. The
parties desire to enter into a full and complete release and settlement with
each other, compromising, resolving, and settling all matters between them
and
buying peace.
Agreement
NOW,
THEREFORE, upon these premises, which are incorporated herein by reference,
and
for and in consideration of the mutual promises and covenants set forth herein
and other good and valuable consideration, the receipt and adequacy of which
are
hereby acknowledged, it is hereby agreed as follows:
1. Payment
to Xxxxxxxx.
MDI
agrees to pay Xxxxxxxx the sum of $500,000, following MDI’s closing of the
Formestane Asset Sale and its receipt of the payment for such sale, subject
to
Xxxxxxxx fulfilling the “Ongoing Duties” set forth in Section 5 herein. Xxxxxxxx
agrees that, with the exception of the payment described in this Section 1
and
the compensation payable pursuant to Sections 5 and 6 hereof, she will not
be
owed any amounts by MDI under the Employment Agreement or otherwise for her
services as an employee, director or consultant of MDI through the date of
her
resignation pursuant to Section 7, whether in the form of salary, bonus,
vacation pay, sick pay or any other compensation or benefits, and MDI shall
have
no other obligation to provide or maintain any compensation or benefits for
MDI
after the date of her deemed resignation.
2. Timely
Disbursal of Funds.
In
order to facilitate the timely transfer of funds on the closing of the
Formestane Asset Sale, including MDI’s receipt of at least $2,000,000 in cash
(the “Formestane Closing”), Five Hundred Thousand dollars ($500,000.00) from the
Formestane Closing shall be held in the Emmes Group’s Client Trust account, and
shall be disbursed to Xxxxxxxx upon the fulfillment of the “Ongoing Duties” set
forth in Section 5 herein. Such disbursal shall be affected by wire transfer
of
funds to such bank account or accounts as Xxxxxxxxx may specify to the Emmes
Group in writing. In order to implement the foregoing, contemporaneously with
the execution of this Agreement the parties shall execute and deliver to the
Emmes Group the parties’ irrevocable disbursal instructions in the form attached
hereto as Exhibit A and incorporated herein by reference.
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3. Waiver
of 2007 Bonus.
Xxxxxxxx waives any pro rata 2007 bonus, otherwise granted at the discretion
of
MDI’s Board of Directors.
4. Stock
Options.
Xxxxxxxx shall retain her previously granted incentive stock options to purchase
two million (2,000,000) shares of MDI common stock (the “Retained Options”)
(subject to stock splits, stock dividends, and similar pro rata adjustments).
The Retained Options shall continue to have the same terms and conditions as
currently in existence, including an option price of $0.01 per share, and the
5:00PM Pacific Time, December 31, 2012 expiration date. All other incentive
stock options awarded Xxxxxxxx during her tenure with MDI shall be cancelled.
5. Ongoing
Duties.
Xxxxxxxx shall continue to act as Chief Executive Officer of MDI at an annual
salary of $250,000 per year for a period commencing April 1, 2007, and
terminating upon the completion of MDI’s financial audit and the completion,
signing, and filing of the officer certifications to be attached as exhibits
to
the Form 10-KSB for 2006 and the Forms 10-QSB for 2007. During such period,
and
provided MDI receives interim enabling financing, Xxxxxxxx’x primary
responsibilities shall include using her commercially reasonable best efforts
to:
(a) Cause
MDI
to file all delinquent periodic reports required to be filed by it pursuant
to
sections 13 or 15(d) under the Securities Exchange Act of 1934;
(b) Manage
MDI’s 2006 audit, which duties include completing,
signing, and filing the officer certifications to be attached as exhibits to
the
Form 10-KSB for 2006 and the Forms 10-QSB for 2007;
(c) Complete
the sale of the Formestane asset to Eucodis Pharmaceuticals Forschungs - und
Entwicklungs GmbH;
(d) Manage,
provide support, or personally conduct negotiations with all MDI creditors
not
transferred to Eucodis, with the objective of achieving a level of reduction
in
the remaining debt of MDI satisfactory to MDI’s Chairman of the board of
directors;
(e) Seek
and
obtain written approval from the Chairman of the MDI Board prior to the release
and payment of any MDI funds; and,
(f) Coordinate
the delivery of all MDI company records to a location directed by the Chairman
of the MDI Board.
6. Sale
of MDI-P Asset.
MDI
shall pay Xxxxxxxx 15% of all consideration passing to MDI for the sale or
transfer of MDI’s MDI-P asset in cash or in kind, payable if, as and when
received.
7. Xxxxxxxx’x
Resignation.
Upon
the completion of MDI’s financial audit, and the completion, signing, and filing
of the officer certifications to be attached as exhibits to the Form 10-KSB
for
2006 and the last of the Forms 10-QSB for 2007, Xxxxxxxx shall automatically
be
deemed to have resigned as an officer, director, and employee of
MDI.
8. Release
of Claims and Waiver by Xxxxxxxx.
Upon
Xxxxxxxx’x resignation as an officer, director and employee of MDI and expressly
subject thereto, Xxxxxxxx, for herself and for her present and former employees,
agents, attorneys, heirs, administrators, personal representatives, successors,
and assigns, shall be deemed to have irrevocably released, remised, acquitted,
and forever discharged and agreed to indemnify MDI, including all of its future,
present, and former employees, agents, representatives, consultants, attorneys,
fiduciaries, servants, officers, directors, managers, partners, predecessors,
successors and assigns, subsidiary and parent entities, from any and all actions
and causes of action, judgments, execution, suits, debts, claims, demands,
liabilities, obligations, damages, and expenses of any and every character,
known or unknown, direct and/or indirect, at law or in equity, or whatsoever
kind or nature, arising prior to the date hereof, for or because of any matter
or things done, omitted, or suffered to be done by any of the other parties
prior to and including the date of execution hereof, and in any way directly
or
indirectly arising out of or in any way connected therewith, save and except
only any obligation or covenant arising under this Agreement. Xxxxxxxx
acknowledges that the agreements in this paragraph are intended to be in full
satisfaction of any and all related injuries or damages arising prior to the
date hereof in connection with her relationship with MDI.
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9. Release
of Claims by MDI.
Except
in the event of the discovery of fraud or other such willful misconduct on
the
part of Xxxxxxxx, upon Xxxxxxxx’x resignation as an officer, director and
employee of MDI of MDI and expressly subject thereto, MDI, for itself and its
present and former officers, shareholders, directors, managers, members,
employees, agents, attorneys, heirs, administrators, personal representatives,
successors, and assigns, shall be deemed to have irrevocably released, remised,
acquitted, and forever discharged, and agreed to indemnify and hold harmless
Xxxxxxxx, together with all of her future, present, and former agents,
representatives, consultants, attorneys, fiduciaries, servants, partners,
predecessors, successors, and assigns, from any and all actions and causes
of
action, judgments, executions, suits, debts, claims, demands, liabilities,
obligations, damages, and expenses of any and every character, known or unknown,
direct and/or indirect, at law or in equity, of whatsoever kind or nature
arising prior to and as of the date hereof, for or because of any matter or
thing done, omitted, or suffered to be done by any of the other parties prior
to
and including the date of execution hereof, and in any way directly or
indirectly arising out of or in any way connected with claims by or against
Xxxxxxxx, save and except only any obligation or covenant arising under this
Agreement. MDI acknowledges that the agreements in this paragraph are intended
to be in full satisfaction of any and all related injuries or damages arising
prior to the date hereof in connection its relationship with
Xxxxxxxx.
10. Xxxxxxxx
Covenant Not To Xxx.
Upon
Xxxxxxxx’x resignation as an officer, director and employee of MDI and expressly
subject thereto, Xxxxxxxx hereby covenants and agrees that she will not at
any
time, directly or indirectly, initiate, maintain, or prosecute, or in any way
knowingly aid in the initiation, maintenance, or prosecution, of any claim,
demand, or cause of action, at law, in equity, or otherwise, against MDI,
including all of its future, present, and former employees, agents,
representatives, consultants, attorneys, fiduciaries, servants, officers,
directors, managers, partners, predecessors, successors and assigns, subsidiary
corporations and companies, and parent corporations and companies for any claim,
damage, loss, or injury of any kind arising out of or in any way connected
with
any transaction, agreement, occurrence, act, failure to act, statement, or
omission with respect to which a release has been given herein. In furtherance
of this covenant, Xxxxxxxx agrees that, except as may be required by an order
of
any court or governmental agency having jurisdiction, she will not make
available to any third party any evidence, documents, or other information
or
materials in her possession or under her care, custody, or control, or in the
possession, custody, or under the control of her counsel, which in any way
relates to any transaction, agreement, occurrence, act, failure to act,
statement, or omission that is referred to or included within the scope of
such
release, save and except any legal proceeding to enforce or seek a remedy or
relief based on or arising out of this Agreement. In any event, Xxxxxxxx shall
notify MDI within two days after receipt of any request from any third party
for
any such any evidence, documents, or other information or materials so that
MDI
may protect its interests hereunder.
11. MDI
Covenant Not To Xxx.
Except
in the event of the discovery of fraud or other such willful misconduct on
the
part of Xxxxxxxx, upon Xxxxxxxx’x resignation as an officer, director and
employee of MDI and expressly subject thereto, MDI covenants and agrees that
it
will not at any time, directly or indirectly, initiate, maintain, or prosecute,
or in any way knowingly aid in the initiation, maintenance, or prosecution,
of
any claim, demand, or cause of action, at law, in equity, or otherwise, against
Xxxxxxxx, including her future, present, and former agents, representatives,
consultants, attorneys, fiduciaries, servants, partners, predecessors,
successors, and assigns for any claim, damage, loss, or injury of any kind
arising out of or in any way connected with any transaction, agreement,
occurrence, act, failure to act, statement, or omission with respect to which
a
release has been given herein. In furtherance of this covenant, MDI agrees
that,
except as may be required by an order of any court or governmental agency having
jurisdiction, it will not make available to any third party any evidence,
documents, or other information or materials in its possession or under its
care, custody, or control, or in the possession, custody, or under the control
of its counsel, which in any way relates to any transaction, agreement,
occurrence, act, failure to act, statement, or omission, which is referred
to or
included within the scope of such release. In any event, MDI shall notify
Xxxxxxxx within two days after receipt of any request from any third party
for
any such any evidence, documents, or other information or materials so that
Xxxxxxxx may protect her interests hereunder.
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12. Unknown
Claims.
The
parties acknowledge that they may have some claim, demand, or cause of action
of
which they are totally unaware and unsuspecting. Except in the event of the
discovery of fraud or other such willful misconduct on the part of Xxxxxxxx,
it
is the intention of the parties in executing the agreement that it will deprive
them of any such claim and prevent them from asserting the same against any
other party. To the end, the parties expressly waive any and all rights and
benefits conferred upon them by any statute or at common law in any jurisdiction
applicable hereto which would otherwise modify, limit, nullify, or prohibit
the
release granted hereby. The parties covenant and agree to execute any further
releases as may be required under any applicable statute or common law
requirement in order to give full force and effect to the agreement.
13. Qualification.
The
releases set forth above includes, without limitation, all claims, demands,
causes of action, facts, transactions, occurrences, circumstances, acts or
omissions, or allegations of any kind and character whatsoever asserted by
Xxxxxxxx or which could have been asserted by Xxxxxxxx in connection with his
employment or other relationships with MDI, including any and all facts in
any
manner arising out of, related or pertaining to or connected with those claims
or with the terms of or value of any consideration paid to Xxxxxxxx in
connection with Xxxxxxxx'x employment or other relationships with, or
termination of employment from, MDI, or any of its related entities, including,
without limitation, any claims based on, related to or arising from United
States federal, state or local laws (including, but not limited to, the Age
Discrimination in Employment Act, and the Fair Labor Standards Act) that
prohibit employment discrimination on the basis of race, national origin,
religion, age, gender, marital status, pregnancy, handicap, perceived handicap,
ancestry, sexual orientation, family or personal leave or of any other form
of
discrimination, or from laws such as workers' compensation laws, which provide
rights and remedies for injuries sustained in the workplace, including, without
limitation, fraud, deceit, breach of privacy, misrepresentation, defamation,
wrongful termination, tortious infliction of emotional distress, breach of
fiduciary duty, violation of public policy and any other common law claim of
any
kind whatsoever, any claims for severance pay, sick leave, family leave,
vacation, life insurance, bonuses, health insurance, disability or medical
insurance or any other fringe benefit or compensation, or any claims relating
to
or arising out of any purported right to stock or stock options in MDI, and
all
rights or claims arising under the Employment Retirement Income Security Act
of
1974 (“ERISA”) or pertaining to ERISA regulated benefits.
14. Confidentiality:
(a) Except
with MDI’s prior written approval, Xxxxxxxx will not disclose, and will not
permit any attorney, agent, or other representative acting on her behalf to
disclose, to any person other than MDI or its duly constituted representatives,
the existence or terms of this Agreement; provided that
she may
make such disclosure if required by law, valid order of court, or other legal
process. In the event that Xxxxxxxx is requested in any proceeding to disclose
the existence or terms of this Agreement, Xxxxxxxx will make best efforts to
notify MDI within two days after receipt of such request so that MDI may seek
an
appropriate protective order. The restrictions set forth in this paragraph
shall
not apply to any information that Xxxxxxxx demonstrates (a) is on the date
hereof or hereafter becomes generally available to the public other than as
a
result of a disclosure, directly or indirectly, by Xxxxxxxx or her
representatives, or (b) was available to Xxxxxxxx on a non-confidential basis
prior to its disclosure to her by MDI or their representatives or becomes
available to Xxxxxxxx on a non-confidential basis, in each case from a source
other than MDI or its representatives, which source was not itself bound by
a
confidentiality agreement with MDI or its representatives and had not received
such information, directly or indirectly, from a person so bound.
Notwithstanding this or any other provision of this Agreement, Xxxxxxxx may
disclose information regarding this Agreement, as reasonably necessary, to
her
tax consultant, financial advisor, attorney, and the duly designated taxing
authorities of the United States of America and/or any state or local
entity.
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(b) Except
with Xxxxxxxx’x prior written approval, MDI will not disclose, and will not
permit any attorney, agent, or other representative acting on its behalf to
disclose, to any person other than Xxxxxxxx or her duly constituted
representatives, the existence or terms of this Agreement; provided
that it
may make such disclosure if required by law, valid order of court, or other
legal process. In the event that MDI is requested in any proceeding to disclose
the existence or terms of this Agreement, MDI will make best efforts to notify
Xxxxxxxx within two days after receipt of such request so that Xxxxxxxx may
seek
an appropriate protective order. The restrictions set forth in this paragraph
shall not apply to any information that MDI demonstrates (a) is on the date
hereof or hereafter becomes generally available to the public other than as
a
result of a disclosure, directly or indirectly, by Xxxxxxxx or their
representatives, or (b) was available to MDI on a non-confidential basis prior
to its disclosure to it by Xxxxxxxx or MAG or their representatives or becomes
available to MDI on a non-confidential basis, in each case from a source other
than Xxxxxxxx or her representatives, which source was not itself bound by
a
confidentiality agreement with Xxxxxxxx or her representatives and had not
received such information, directly or indirectly, from a person so bound.
Notwithstanding this or any other provision of this Agreement, MDI may disclose
information regarding this Agreement, as reasonably necessary, to its tax
consultant, auditor, attorney, and the duly designated taxing authorities of
the
United States of America and/or any state or local entity.
15. Independent
Investigation.
The
parties hereby declare, acknowledge, and agree that the terms of this Agreement
have been read by them, have been read by and discussed with their respective
legal counsel, and such terms are fully understood and voluntarily accepted
for
the purpose of making a full, final, and complete compromise, settlement, and
adjustment of all transactions, agreements, arrangements, or courses of dealing.
The parties further acknowledge, declare, and agree that the facts and
assumptions underlying this Agreement have been thoroughly investigated and
reviewed by them and their respective counsel and that they are not relying
upon
any representations by any other party hereto, but have entered into this
Agreement based on their own independent investigation.
16. No
Admission of Liability.
Neither
this Agreement nor the negotiation, execution, or performance hereof shall
be
deemed to constitute an admission, directly or indirectly, by any party of
any
liability or responsibility on account of or with respect to any claims released
herein, but this Agreement is entered into for the sole and exclusive purposes
of resolving the disputes between the parties and buying peace, and each party
expressly denies any and all liability arising out of any of the claims,
allegations, or demands whatsoever of any party against the other.
17. Survival.
The
representations, warranties, covenants, and agreements of the respective parties
set forth herein shall survive the date of the consummation of the transaction
contemplated in this Agreement.
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18. Governing
Law.
This
Agreement shall be governed by and construed under and in accordance with the
laws of the State of Utah, excluding the laws respecting choice or conflicts
of
law.
19. Entire
Agreement.
This
Agreement represents the entire agreement between the parties relating to the
subject matter hereof, and no other courses of dealing, understandings,
agreements, representations, or warranties, written or oral, except as set
forth
herein, shall be of any force or effect. No amendment or modification hereof
shall be effective until and unless the same shall have been set forth in
writing and signed by the parties hereto.
20. Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect. If any covenants or provisions
of
this Agreement are determined to be unenforceable by reason of their extent,
duration, scope, or otherwise, then the parties contemplate that the court
making such determination shall reduce such extent, duration, scope, or other
provision and enforce them in their reduced form for all purposes contemplated
by this Agreement.
21. Notices.
Any
notice, demand, request, or other communication under this Agreement shall
be in
writing and shall be deemed to have been given on the date of service if
personally served or by facsimile transmission (if receipt is confirmed by
the
facsimile operator of the recipient), or delivered by overnight courier service,
or on the third day after mailing if mailed by certified mail, return receipt
requested, addressed as follows:
|
If
to Xxxxxxxx, as follows:
|
Xxxx
Xxxxxxxx 0000 Xxxxx Xxxxxxxx Xxxxx, #000 Xxxx Xxxx Xxxx, XX 00000 |
|
If
to MDI, as follows:
|
Medical
Discoveries, Inc. c/o Sunhaven Farms 00000 Xxxx Xxxxx Xxxx Xxxxxxx, XX 00000 |
or
such
other addresses and facsimile numbers as shall be furnished in writing by any
party in the manner for giving notices hereunder, and any such notice, demand,
request, or other communication shall be deemed to have been given as of the
date so delivered or sent by facsimile transmission (if receipt is confirmed
by
the facsimile operator of the recipient), three days after the date so mailed,
or one day after the date so sent by overnight delivery.
22. Relief.
Any
party’s breach or threatened breach of any covenant contained in this Agreement
will cause such damage to the other party as will be irreparable, and for that
reason, each party agrees that the other shall be entitled as a matter of right
to an injunction from any court of competent jurisdiction restraining any
further violation of such covenants by such other party. The right to injunctive
relief shall be cumulative and in addition to all other remedies, including,
specifically, recovery of damages.
23. Attorneys’
Fees.
In the
event that any party institutes any action or suit to enforce this Agreement
or
to secure relief from any default hereunder or breach hereof, the non-prevailing
party shall reimburse the prevailing party for all costs, including reasonable
attorneys’ fees, incurred in connection therewith and in enforcing or collecting
any judgment rendered therein, including such costs which are incurred in any
bankruptcy or appellate proceeding.
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24. Jurisdiction
and Venue.
Any
judicial proceeding brought against any of the parties hereto, with respect
to
the Agreement, shall be brought in any court of competent jurisdiction in Salt
Lake County, Utah, irrespective of where such party may be located at the time
of such proceeding, and by execution and delivery of the Agreement, each of
the
parties hereto hereby consents to the jurisdiction and venue of such court
and
waives any defense or opposition to such jurisdiction and venue.
25. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
26. Additional
Documents.
Each
party shall, at any time and from time to time, execute and deliver to the
other
party all other and further instruments necessary or convenient to effectuate
the purpose and intent of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed,
individually or by their respective officers, hereunto duly authorized.
| Date this 31st day of August, 2007 | XXXX XXXXXXXX | |
|
|
||
| Dated this 31st day of August, 2007 | MEDICAL DISCOVERIES, INC. | |
| By: | ||
|
Xxxxx
X. Xxxxxx, Chairman
|
||
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