Exhibit 10.20
SEPARATION AND CONSULTING AGREEMENT
This SEPARATION AND CONSULTING AGREEMENT (this "Agreement") is made and
entered into by and between XXXX X. XXXXXXXX ("Xx. Xxxxxxxx") and CYPROS
PHARMACEUTICAL CORPORATION (the "Company"), as of the last date on which this
Agreement is executed by either party.
WHEREAS, Xx. Xxxxxxxx has tendered his resignation as Chief Executive
Officer and all other positions he may hold with the Company (other than his
position as a member of the Board of Directors of the Company, which position he
will retain until his successor is elected and has qualified, or until his
earlier death, resignation or removal) and wishes to enter into a consulting
relationship with the Company;
WHEREAS, the Company has accepted Xx. Xxxxxxxx' resignation as Chief
Executive Officer and all other positions he may hold with the Company (other
than his position as a member of the Board of Directors of the Company), and
wishes to provide Xx. Xxxxxxxx with certain benefits in consideration of his
service to the Company and the promises and covenants of Xx. Xxxxxxxx as
contained herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is agreed by and between the parties hereto as follows:
1. RESIGNATION. Xx. Xxxxxxxx has tendered and the Company has accepted
Xx. Xxxxxxxx' resignation as Chief Executive Officer and all other positions he
may hold with the Company (other than his position as a member of the Board of
Directors of the Company, which position he will retain until his successor is
elected and has qualified, or until his earlier death, resignation or removal),
effective _______________, 1999 (the "Separation Date").
2. ACCRUED SALARY AND PAID TIME OFF. The Company will pay Xx. Xxxxxxxx
all accrued salary, and all accrued and unused paid time off earned prior to the
Separation Date, subject to standard payroll deductions and withholdings. Xx.
Xxxxxxxx is entitled to this payment regardless of whether he signs this
Agreement.
3. EXPENSE REIMBURSEMENT. Within ten (10) business days of the
Separation Date, Xx. Xxxxxxxx will submit his final documented expense
reimbursement statement reflecting all business expenses he incurred through the
Separation Date, if any, for which he seeks reimbursement. The Company shall
reimburse Xx. Xxxxxxxx' expenses pursuant to Company policy and regular business
practice.
4. COMPANY ACKNOWLEDGEMENT. The Company acknowledges that it is not
aware of any breach by Xx. Xxxxxxxx of his contractual, statutory or common law
duties to the Company as of the Separation Date.
5. RELEASE OF CLAIMS. In exchange for a payment of Twenty-Five Thousand
Dollars ($25,000.00) ("Release Payment"), and the consulting agreement described
in Section 6
1.
herein, Executive agrees to execute a release (the "Release") in the form
attached hereto and incorporated herein as Exhibit A. Such Release shall
specifically relate to all of Executive's rights and claims in existence at
the time of such execution and shall confirm Executive's obligations under
the Company's standard form of proprietary information and inventions
agreement. It is understood that, as specified in the applicable Release,
Executive has a certain number of calendar days to consider whether to
execute such Release, and Executive may revoke such Release within seven (7)
calendar days after execution. In the event Executive does not execute such
Release within the applicable period, or if Executive revokes such Release
within the subsequent seven (7) day period, no payments shall be payable
under this Agreement, and this Agreement shall be null and void. Executive
shall be paid the Release Payment in a lump sum on the Effective Date of the
Release as defined in the Release.
6. CONSULTING AGREEMENT. Xx. Xxxxxxxx shall serve as a consultant to
the Company under the terms specified herein. The consulting relationship shall
commence on the Separation Date and continue through the first anniversary
thereof (the "Consulting Period").
(a) CONSULTING SERVICES. Xx. Xxxxxxxx agrees to provide consulting
services to the Company in any area of his expertise upon request by the
Company's Chief Executive Officer or the Board of Directors. He agrees to
exercise the highest degree of professionalism and utilize his expertise and
creative talents in performing these services. Xx. Xxxxxxxx agrees to make
himself available to perform such consulting services throughout the Consulting
Period, up to a maximum of thirty (30) hours during the first month of the
Consulting Period and ten (10) hours per month thereafter.
(b) CONSULTING FEES AND BENEFITS.
(i) CONSULTING FEES. Xx. Xxxxxxxx shall receive One Hundred
Twenty-Five Thousand Dollars ($125,000.00) as consulting fees for the entire
Consulting Period (the "Consulting Fees"). The Consulting Fees will be payable
in a lump sum on the Separation Date.
(ii) TAXES AND WITHHOLDING. The Company will not withhold from
the Consulting Fees any amount for taxes, social security or other payroll
deductions. The Company will issue Xx. Xxxxxxxx a Form 1099 with respect to Xx.
Xxxxxxxx' Consulting Fees. Xx. Xxxxxxxx acknowledges that he will be entirely
responsible for payment of all appropriate taxes, and he hereby does and will
indemnify and hold the Company harmless from any liability for his failure to
timely pay any taxes, penalties or interest which may be assessed by any taxing
authority.
(iii) OTHER COMPENSATION. Except as expressly provided herein
and under Xx. Xxxxxxxx' Executive Severance Benefits Agreement with the Company
dated August 4, 1999, Xx. Xxxxxxxx acknowledges that he will not receive (nor is
he entitled to) any additional compensation, severance or benefits (including,
but not limited to, life insurance and disability insurance).
2.
(c) LIMITATIONS ON AUTHORITY. Xx. Xxxxxxxx shall have no
responsibilities or authority as a consultant to the Company other than as
provided for above. Xx. Xxxxxxxx hereby agrees not to represent or purport to
represent the Company in any manner whatsoever to any third party unless
authorized by the Company, in writing, to do so.
(d) COVENANT NOT TO COMPETE. In exchange for the Company's agreement
to pay Xx. Xxxxxxxx an additional Fifty Thousand Dollars ($50,000.00) as
provided in this Section 5(d), Xx. Xxxxxxxx agrees that during the Consulting
Period, Xx. Xxxxxxxx will not directly or indirectly render services of any
nature to, otherwise become employed by, or participate or engage in any
business or entity which directly or indirectly competes with the business of
the Company or any of its affiliates ("Covenant not to Compete"). Assuming Xx.
Xxxxxxxx' continued compliance with this Section 5(d), the Company will pay Xx.
Xxxxxxxx the sum of Fifty Thousand Dollars ($50,000.00) plus eight percent (8%)
interest in equal monthly installments during the Consulting Period. If Xx.
Xxxxxxxx fails to comply with the Covenant not to Compete during the Consulting
Period, the Company will no longer be obligated to make any payment to Xx.
Xxxxxxxx pursuant to this Section 5(d).
(e) OTHER WORK ACTIVITIES. Subject to the Covenant not to Compete
stated in Section 5(d) herein, throughout the Consulting Period, Xx. Xxxxxxxx
retains the right to engage in employment, consulting, or other work
relationships in addition to his work for the Company. The Company will make
reasonable arrangements to enable Xx. Xxxxxxxx to perform his work for the
Company at such times and in such a manner so that it will not interfere with
other activities in which he may engage.
7. ATTORNEY FEES. The Company agrees that, as part of this Agreement,
it will reimburse Executive for his reasonable attorneys fees and disbursements
incurred in connection with the review of this Agreement and other related
agreements in an amount not to exceed Six Thousand Dollars ($6,000.00).
8. NONSOLICITATION. Xx. Xxxxxxxx agrees that during the Consulting
Period, he will not, either directly or through others, solicit or attempt to
solicit any employee, consultant, or independent contractor of the Company to
terminate his or her relationship with the Company in order to become an
employee, consultant or independent contractor to or for any other person or
entity.
9. COMPANY PROPERTY. Within ten (10) days of the Separation Date, Xx.
Xxxxxxxx agrees to return to the Company all Company documents (and all copies
thereof) and other Company property in his possession, or his control,
including, but not limited to, Company files, notes, drawings, records, business
plans and forecasts, financial information, specifications, computer-recorded
information, tangible property, credit cards, entry cards, identification badges
and keys; and, any materials of any kind which contain or embody any proprietary
or confidential material of the Company (and all reproductions thereof). Xx.
Xxxxxxxx agrees that, as of the Separation Date, he will neither use nor possess
Company property, except such property which any officer or the Board
specifically authorizes him to use or possess for the sole purpose of performing
his duties under this Agreement or his duties as a Director of the Company.
3.
10. PROPRIETARY INFORMATION OBLIGATIONS. Xx. Xxxxxxxx hereby agrees to
be bound throughout the Consulting Period by the terms of his Proprietary
Information and Inventions Agreement (the "Proprietary Information Agreement"),
a copy of which is attached hereto as Exhibit B, certain obligations under which
continue after the termination of the Consulting Period, as specified in the
Proprietary Information Agreement. However, inventions which he may make during
this period without reference to proprietary information of the Company, and
which are not derived from such information, shall remain Xx. Xxxxxxxx' sole
property.
11. NONDISPARAGEMENT. Xx. Xxxxxxxx and the Company agree that neither
party will at any time disparage the other in any manner likely to be harmful to
the other party, its business reputation, or the personal or business reputation
of its Directors, stockholders or employees, provided that each party shall
respond accurately and fully to any question, inquiry or request for information
when required by legal process.
12. CONFIDENTIALITY. The provisions of this Agreement shall be held in
strictest confidence by Xx. Xxxxxxxx and the Company and shall not be publicized
or disclosed in any manner whatsoever. Notwithstanding the prohibition in the
preceding sentence: (a) the parties may disclose this Agreement in confidence to
their respective attorneys, accountants, auditors, tax preparers, and financial
advisors; (b) the Company may disclose this Agreement as necessary to fulfill
standard or legally required corporate reporting or disclosure requirements; and
(c) the parties may disclose this Agreement insofar as such disclosure may be
necessary to enforce its terms or as otherwise required by law. In particular
(and without limitation), Xx. Xxxxxxxx agrees not to discuss this Agreement with
present or former Company employees or other personnel, except to the extent
necessary to explain his consulting relationship with the Company or to carry
out his duties under this Agreement.
13. NO ADMISSIONS. It is understood and agreed by Xx. Xxxxxxxx and the
Company that this Agreement represents a compromise settlement of various
matters, and that the promises and payments in consideration of this Agreement
shall not be construed to be an admission of any liability or obligation by
either party to the other party or to any other person.
14. ENTIRE AGREEMENT. This Agreement, including Exhibits A and B,
constitutes the complete, final and exclusive embodiment of the entire agreement
between Xx. Xxxxxxxx and the Company with regard to the subject matter hereof.
It is entered into without reliance on any promise or representation, written or
oral, other than those expressly contained herein. It may not be modified except
in a writing signed by Xx. Xxxxxxxx and a duly authorized officer of the
Company. Each party has carefully read this Agreement, has been afforded the
opportunity to be advised of its meaning and consequences by his or its
respective attorneys, and signed the same of his or its own free will.
15. SUCCESSORS AND ASSIGNS. This Agreement shall bind the heirs,
personal representatives, successors, assigns, executors, and administrators of
each party, and inure to the benefit of each party, its heirs, successors and
assigns. However, because of the unique and personal nature of Xx. Xxxxxxxx'
duties under this Agreement, Xx. Xxxxxxxx agrees not to delegate the performance
of his duties under this Agreement.
4.
16. APPLICABLE LAW. This Agreement shall be deemed to have been entered
into and shall be construed and enforced in accordance with the laws of the
State of California as applied to contracts made and to be performed entirely
within California.
17. SEVERABILITY. If a court of competent jurisdiction determines that
any term or provision of this Agreement is invalid or unenforceable, in whole or
in part, then the remaining terms and provisions hereof shall be unimpaired.
Such court will have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
that most accurately represents the parties' intention with respect to the
invalid or unenforceable term or provision.
18. SECTION HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
19. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly authorized and caused this
Agreement to be executed as follows:
Date: ____________________________ XXXX X. XXXXXXXX,
an individual
__________________________________
Date: ____________________________ CYPROS PHARMACEUTICAL CORPORATION,
a California corporation
By:_______________________________
Name:_____________________________
Title:____________________________
5.
EXHIBIT A
RELEASE
Certain capitalized terms used in this Release are defined in the
Separation and Consulting Agreement (the "Agreement") which I, XXXX X. XXXXXXXX,
have executed and of which this Release is a part.
I hereby confirm my obligations under CYPROS PHARMACEUTICAL
CORPORATION'S (the Company) Proprietary Information and Inventions Agreement.
I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
Except as otherwise set forth in this Release, I hereby release, acquit
and forever discharge the Company, its parents and subsidiaries, and their
officers, directors, agents, servants, employees, shareholders, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed (other than any
claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to the date
I execute this Release, including, but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including but
not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of disputed compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; the California Fair Employment and
Housing Act, as amended; tort law; contract law; statutory law; common law;
wrongful discharge; discrimination; fraud; defamation; emotional distress; and
breach of the implied covenant of good faith and fair dealing; PROVIDED,
HOWEVER, that nothing in this paragraph shall be construed in any way to release
the Company from its obligation to indemnify me pursuant to the Company's
indemnification obligation pursuant to agreement or applicable law.
I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given under the Agreement for the waiver and release in the preceding paragraph
hereof is in addition to anything of value to
1.
which I was already entitled. I further acknowledge that I have been advised
by this writing, as required by the ADEA, that: (A) my waiver and release do
not apply to any rights or claims that may arise on or after the date I
execute this Release; (B) I have the right to consult with an attorney prior
to executing this Release; (C) I have twenty-one (21) days to consider this
Release (although I may choose to voluntarily execute this Release earlier);
(D) I have seven (7) days following the execution of this Release by the
parties to revoke the Release; and (E) this Release shall not be effective
until the date upon which the revocation period has expired, which shall be
the eighth day after this Release is executed by me ("Effective Date").
Date: __________________________ ________________________________
XXXX X. XXXXXXXX
2.
