ARBIOS SYSTEMS, INC.
Exhibit
10.4
XXXXXX
SYSTEMS, INC.
November
13, 2007
Xx.
Xxxxxx Xxxxx
000
Xxxx
Xxxxxx
Xxxxxxxxxx,
XX 00000
Dear
Xxxxxx:
The
purpose of this letter agreement (the “Agreement”) is to set forth the terms
regarding your separation of employment from Xxxxxx Systems, Inc. (the
“Company”). As more fully set forth below, the Company desires to provide you
with severance pay and benefits in exchange for certain agreements by you.
This
agreement shall become effective (the “Effective Date”) upon full execution and
upon expiration of the revocation period (without revocation by you) set forth
in paragraph 10 below.
1. Separation
of Employment.
You
acknowledge that your employment with the Company terminated, or will terminate,
effective September 21, 2007 (the “Separation Date”), which includes a
termination from all positions and offices with the Company and as a member
of
the Company’s Board of Directors effective on the Separation Date. You
acknowledge that from and after the Separation Date, you have not had and shall
not have any authority and have not and shall not represent yourself as an
officer director, employee or agent of the Company.
2. Acknowledgement
of Payment.
You
acknowledge that you have been paid all salary, bonus and accrued vacation
due
to you for the period of employment through the Separation Date, except that
the
amount of $30,000 which may become due you as a Performance Bonus under the
incentive compensation plan approved by the Company’s Board of Directors on July
12, 2007. Such amount shall be earned conditioned on, and paid not later than
thirty (30) days following, the closing by the Company of a financing
transaction, including a transaction involving a strategic collaboration, in
which the Company receives net proceeds of not less than $5,000,000 within
one
hundred eighty (180) days following the Separation Date. You also will be
reimbursed for all expenses incurred, submitted and approved in accordance
with
the Company’s policies on expense reimbursement. Such payments were or, as the
case may be, will be made without any requirement that you accept this
agreement.
3. Severance
Compensation.
In
exchange for the mutual covenants set forth in this agreement, the Company
agrees to provide you with the following:
(a) Severance
Pay.
Payment
of an amount equal to twelve (12) months of your gross monthly base salary
of
$25,000, less all applicable federal, state, local and other employment-related
deductions, such payments to be made in approximately equal monthly installments
beginning on the first regularly scheduled Company payday for senior executives
which is at least ten (10) days after your acceptance of this Agreement.
(b) Health
Insurance.
In the
event that you choose to exercise your right under Chapter 176J, Section 9
of
the Massachusetts General Laws to continue your participation in the Company’s
health insurance plan (which you may do, to the extent permitted by such
statute, regardless of whether you accept this Agreement), the Company shall
pay
its normal share of the costs for such coverage (the “Severance Benefits”) for a
period of twelve (12) month(s) beginning on the Separation Date to the same
extent that such insurance is provided to persons then currently employed by
the
Company, provided, however, that notwithstanding any other provision of this
Agreement, this obligation shall cease on the date you become eligible to
receive health insurance benefits through any other employer you subsequently
work for. Your co-pay, if any, shall be deducted from the monthly severance
payments described in subsection (a) above or, if no such payments remain to
be
paid, shall be paid by you directly to the Company within seven (7) days of
receipt of notice such payment is due.
(c) Notice
of Eligibility for other Health Care Insurance.
You
agree to provide the Company with written notice immediately upon becoming
eligible for coverage under another employer’s health insurance plan. The notice
described herein shall be given in the same manner as prescribed for acceptance
of this Agreement.
(d) Options.
All
unvested options under your Stock Option Agreement dated as of November 8,
2005
(Stock Option Number 61 and Stock Option Number 62 and hereinafter jointly
the
“2005 Option”) shall become exercisable as of the Separation Date. Options for
60,000 shares under your Stock Option Agreement dated as of July 10, 2007 (the
“2007 Option”) shall become exercisable as of the Separation Date. Any vested
options under both agreements shall be exercisable for ninety (90) days
following the Separation Date in accordance with the terms of these
agreements
and for
the additional twelve (12) month consulting period described in Section 5 below;
in addition, should such twelve (12) month consulting period be extended by
mutual agreement, the period in which you may extend the options shall be
extended by an equal length of time.
You
acknowledge and agree that the Severance Compensation provided in this Agreement
is not otherwise due or owing to you under any Company employment agreement
(oral or written) or Company policy or practice, and that this Severance
Compensation to be provided to you is not intended to, and shall not constitute,
a severance plan, and shall confer no benefit on anyone other than the parties
hereto. You further acknowledge that except for the specific financial
consideration set forth in this Agreement, you are not and shall not in the
future be entitled to any other compensation including, without limitation,
wages, bonuses, vacation pay, holiday pay or any other form of compensation
or
benefit.
Notwithstanding
any other provision of this Agreement, the Company, its officers, directors,
employees, attorneys and agents make no guarantee of any tax consequences with
respect to the payments or compensation set forth herein, including, without
limitation, Section 409A of the Internal Revenue Code of 1986, as
amended.
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4. Unemployment
Benefits.
The
Company agrees that it will not contest any claim for unemployment benefits
by
you with the Massachusetts Department of Employment and Training. The Company,
of course, shall not be required to falsify any information.
5. Consulting.
In
exchange for the consideration set forth herein, including the extension of
the
option exercise period for an additional twelve (12) months as described in
Section 3(d) above, you agree to provide the Company, at reasonable times and
places as requested by the Company, including at the Company’s premises if
needed, consulting services for eight (8) hours per month, for twelve (12)
consecutive months, commencing on the Effective Date. The Company in making
such
requests shall take into account and attempt to accommodate your other work
and
personal commitments. If requested by the Company, you will provide it with
a
written summary from time to time of the services provided and the time spent
on
each activity. The twelve (12) month consulting period may be extended by mutual
agreement in exchange for a further extension of the option exercise period
as
described in Section 3(d) above.
6. Cooperation. You
agree
that both during and at any time after your employment, you shall cooperate
fully with the Company in connection with any matter or event relating to your
employment or events that occurred during your employment, including, without
limitation, in the defense or prosecution of any claims or actions now in
existence or which may be brought or threatened in the future against or on
behalf of the Company, including any claims or actions against its affiliates
and its and their officers and employees. Your cooperation in connection with
such matters, actions and claims shall include, without limitation, being
available, upon reasonable notice to meet with the Company regarding matters
in
which you have been involved, and any contract matters or audits; to prepare
for, attend and participate in any proceeding (including, without limitation,
depositions, consultation, discovery or trial); to provide affidavits; to assist
with any audit, inspection, proceeding or other inquiry; and to act as a witness
in connection with any litigation or other legal proceeding affecting the
Company. You further agree that should you be contacted (directly or indirectly)
by any person or entity (for example, by any party representing an individual
or
entity) adverse to the Company, you shall promptly notify the Chief Executive
Officer or the Chairman of the Board of the Company. You shall be reimbursed
for
any reasonable costs and expenses incurred in connection with providing such
cooperation under this section.
7. Additional
Covenants by You.
You
expressly acknowledge and agree to the following:
(a) that
you
have returned to the Company, and have not retained, all Company files and
documents (and any copies thereof in any form or media) and property, including
without limitation, any cell phone, computer, keys, key cards and vehicles,
and
that you shall abide by any and all contractual, common law and/or statutory
obligations relating to protection and non-disclosure of the Company’s trade
secrets and/or confidential and proprietary documents and information; provided,
however, that ownership of the Company laptop computer you have been using
shall
be
transferred to you, and possession of it returned to you, after you have
delivered it to the Company and permitted the Company, with verification by
its
Chief Financial Officer, to remove all Company information and property
contained thereon;
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(b) that
all
information relating in any way to the negotiation of this Agreement, including
the terms and amount of financial consideration provided for in this Agreement,
shall be held confidential by you and shall not be publicized or disclosed
to
any person (other than an immediate family member, legal counsel or financial
advisor, provided that any such individual to whom disclosure is made agrees
to
be bound by these confidentiality obligations), business entity or government
agency (except as mandated by state or federal law);
(c) that
you
will not make any statements that are professionally or personally disparaging
about, or adverse to, the interests of the Company (including its officers,
directors and employees) including, but not limited to, any statements that
disparage any person, product, service, finances, financial condition,
capability or any other aspect of the business of the Company, and that you
will
not engage in any conduct which is intended to harm professionally or personally
the reputation of the Company (including its officers, directors and employees).
Nothing herein shall apply to any legal action or proceeding to enforce the
provisions of this Agreement, to any legal proceeding between you and any person
subject to this provision, or to any communication required or privileged by
law; and
(d) that
the
breach of any of the foregoing covenants by you shall constitute a material
breach of this Agreement and shall relieve the Company of any further
obligations hereunder and, in addition to any other legal or equitable remedy
available to the Company, shall entitle the Company to recover any Severance
Compensation already paid to you and/or, where applicable, the cost of same
to
the Company and to rescind and revoke any action taken pursuant to this
Agreement.
8. Additional
Covenants by the Company.
(a) Nondisparagement.
The
Company agrees that its officers and directors shall not make, or cause to
be
made, any statement (whether oral or written) that disparages you and will
not
engage in conduct which is intended to harm your reputation. Nothing herein
shall apply to any legal action or proceeding to enforce the provisions of
this
Agreement, to any legal proceeding between you and any person subject to this
provision, or to any communication required or privileged by
law.
(b) Reference.
In
response to requests for references received by officers, directors or senior
management of the Company, the Company will respond to the effect that you
were
in good standing with the Company through the period of your employment.
9. Release
of Claims.
You
hereby agree that by signing this agreement and accepting the Severance
Compensation, and other good and valuable consideration provided for in this
Agreement, you are waiving and releasing your right to assert any form of legal
claim against the Company1
whatsoever for any alleged action, inaction or circumstance existing or arising
from the beginning of time through the Separation Date. Your waiver and release
herein is intended to bar any form of legal claim, charge, complaint or any
other form of action (jointly referred to as “Claims”) against the Company
seeking any form of relief including, without limitation, equitable relief
(whether declaratory, injunctive or otherwise), the recovery of any damages
or
any other form of monetary recovery whatsoever (including, without limitation,
back pay, front pay, compensatory damages, emotional distress damages, punitive
damages, attorneys fees and any other costs) against the Company, for any
alleged action, inaction or circumstance existing or arising through the
Separation Date.
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For the
purposes of this section, the parties agree that the term “Company” shall
include Xxxxxx Systems, Inc., its divisions, affiliates, parents and
subsidiaries, and its and their respective officers, directors, shareholders,
owners, employees, attorneys, agents and assigns.
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Without
limiting the foregoing general waiver and release, you specifically waive and
release the Company from any Claim arising from or related to your employment
relationship with the Company or the termination thereof, including, without
limitation:
·
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Claims
under any state or federal discrimination, fair employment practices
or
other employment related statute, regulation or executive order (as
they
may have been amended through the Separation Date) prohibiting
discrimination or harassment based upon any protected status including,
without limitation, race, national origin, age, gender, marital status,
disability, veteran status or sexual orientation. Without limitation,
specifically included in this paragraph are any Claims arising under
the
federal Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII
of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal
Pay Act,
the Americans With Disabilities Act and any similar Massachusetts
or other
state statute.
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·
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Claims
under any other state or federal employment related statute, regulation
or
executive order (as they may have been amended through the Separation
Date) relating to wages, hours or any other terms and conditions
of
employment. Without limitation, specifically included in this paragraph
are any Claims arising under the Fair Labor Standards Act, the National
Labor Relations Act, the Employee Retirement Income Security Act
of 1974,
the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
and any
similar Massachusetts or other state statute.
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·
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Claims
under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good
faith
and fair dealing, violation of public policy, defamation, interference
with contractual relations, intentional or negligent infliction of
emotional distress, invasion of privacy, misrepresentation, deceit,
fraud
or negligence.
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·
|
Any
other Claim arising under local, state or federal
law.
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Notwithstanding
the foregoing, this section does not:
·
|
release
the Company from any obligation expressly set forth in this Agreement
or
from any obligation, including without limitation obligations under
the
Workers Compensation laws, which as a matter of law cannot be
released;
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·
|
prohibit
you from filing a charge with the Equal Employment Opportunity Commission
(“EEOC”);
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·
|
prohibit
you from participating in an investigation or proceeding by the EEOC
or
any comparable state or local
agency.
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Your
waiver and release, however, are intended to be a complete bar to any recovery
or personal benefit by or to you with respect to any claim whatsoever, including
those raised through a charge with the EEOC, except those which, as a matter
of
law, cannot be released.
You
acknowledge and agree that, but for providing this waiver and release, you
would
not be receiving the Severance Pay being provided to you under the terms of
this
Agreement.
10. Waiver
of Employment.
You
hereby waive and release forever any right or rights you may have to employment
with the Company and any affiliate thereof at any time in the future and agree
not to seek or make application for employment with the Company or any affiliate
thereof.
11. Assignment
on Death.
Notwithstanding paragraph 3 above or any provision of this Agreement, should
you
die before all of the Severance Compensation set forth in paragraph 3 above
is
paid, the Company will (1) make all remaining Severance Compensation payments
to
your estate, and/or (2) allow the exercise of stock options by your estate
within the period set forth in Section 2(d) above.
12. Entire
Agreement/Modification/Waiver/Choice of Law/Enforceability/Jury
Waiver.
You
acknowledge and agree that, with the exception of your November
3, 2005 Employee
Invention Assignment and Confidentiality Agreement and any other agreement
relating to inventions and/or confidentiality, your November 3, 2005
Indemnification Agreement, and the 2005 Option and the 2007 Option,
the
terms
of all of which you and the Company hereby acknowledge, reaffirm and agree
to,
this
Agreement supersedes any and all prior or contemporaneous oral and/or written
agreements between you and the Company, and sets forth the entire agreement
between you and the Company. No variations or modifications hereof shall be
deemed valid unless reduced to writing and signed by the parties hereto. The
failure of the Company to seek enforcement of any provision of this Agreement
in
any instance or for any period of time shall not be construed as a waiver of
such provision or the Company's right to seek enforcement of such provision
in
the future. This Agreement shall be deemed to have been made in the Commonwealth
of Massachusetts, shall take effect as an instrument under seal within the
Commonwealth of Massachusetts, and shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to conflict of law principles. You agree that any action, demand, claim
or counterclaim relating to the terms and provisions of this Agreement, or
to
its formation or breach, shall be commenced in the Commonwealth of Massachusetts
in a court of competent jurisdiction, and you further acknowledge that venue
for
such actions shall lie exclusively in the Commonwealth of Massachusetts and
that
material witnesses and documents would be located in the Commonwealth of
Massachusetts. The provisions of this Agreement are severable, and if for any
reason any part hereof shall be found to be unenforceable, the remaining
provisions shall be enforced in full.
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By
executing this Agreement, you are acknowledging that you have been afforded
sufficient time to understand the terms and effects of this agreement, that
your
agreements and obligations hereunder are made voluntarily, knowingly and without
duress, and that neither the Company nor its agents or representatives have
made
any representations inconsistent with the provisions of this
agreement.
This
Agreement may be signed on one or more copies, each of which when signed will
be
deemed to be an original, and all of which together will constitute one and
the
same Agreement.
If
the
foregoing correctly sets forth our agreement, please sign, date and return
the
enclosed copy of this agreement to me at Xxxxxx Systems, Inc. by hand delivery
or by mailing by first-class mail or overnight delivery within twenty-one (21)
days of the date of this letter. You may revoke such acceptance in the same
manner within seven (7) days of such acceptance.
Very
truly yours,
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XXXXXX
SYSTEMS, INC.
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By:
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/s/
Xxx Xxxxx
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Name:
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Xxx
Xxxxx
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Title:
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Dated:
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November
13, 2007
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Confirmed
and Agreed:
/s/
Xxxxxx Xxxxx
Xxxxxx
Xxxxx
Dated: November
13, 2007
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