EXHIBIT 10.121

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

Aeolus Pharmaceuticals, Inc. and I, Richard Reichow, have entered into this
agreement (Release) to settle all issues between us in connection with my
termination of employment. Except to the extent governed by federal law, this
Release shall be governed by the statutes and common law of North Carolina,
excluding any that mandate the use of another jurisdiction’s laws.

 

The Company and I agree as follows:

 

Section 1 — Benefits

 

(a) In General: The Company promises that I will receive the benefits set forth
in this section that are conditioned on my execution of this Release. I
understand and agree that I am not otherwise entitled to receive the benefits
provided to me under this Release.

 

(b) Cash Payment: In consideration for this Release, I will receive a lump sum
separation payment of $10,000.00, less all applicable federal, state and local
taxes and withholdings, within 15 days after I execute this Release.

 

(c) Compensation and Benefit Plans: I will cease to be eligible to participate
under any stock option, bonus, incentive compensation, commission, medical,
dental, life insurance, retirement, and other compensation or benefit plans of
the Company or any affiliate following my separation of employment. Thereafter,
I will have no rights under any of those plans, except as follows:

 

Group Insurance: Following my separation of employment, I will be eligible to
obtain continued health insurance coverage, to be paid for by the Company from
June 17, 2005 until April 17, 2006, pursuant to the applicable provisions of
COBRA. I understand and agree that upon securing any full-time employment that
includes health insurance coverage prior to April 17, 2006, I will immediately
notify the Company in writing and that such COBRA payments by the Company shall
immediately cease.

 

Qualified Plan Retirement Benefits: I will retain my vested benefits, if any,
under all qualified retirement plans of the Company, and all rights associated
with such benefits, as determined under the official terms of those plans.

 

Payments made under this Release will not be included in my compensation for
purposes of calculating the benefits to which I am entitled under any employee
benefit program, notwithstanding anything in it to the contrary.

 

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Section 2 — Complete Release

 

(a) In General: I irrevocably and unconditionally release all the Claims
described in Section 2(b) that I may now have against the Released Parties
listed in Section 2(d). I understand that I am not releasing future claims.

 

(b) Claims Released: The Claims I am releasing under Section 2(a) include all
known and unknown claims, promises, causes of action, or similar rights of any
type that I presently may have (Claims) with respect to any Released Party
listed in Section 2(d). I understand that the Claims I am releasing might arise
under many different foreign, domestic, national, state, or local laws
(including statutes, regulations, other administrative guidance, and common law
doctrines), such as the following:

 

Anti-discrimination statutes, such as Title VII of the Civil Rights Act of 1964,
Sections 1981 and 1983 of the Civil Rights Act of 1866, and Executive Order
11,246, which prohibit discrimination based on race, color, national origin,
religion, or sex; the Equal Pay Act, which prohibits paying men and women
unequal pay for equal work; the Americans With Disabilities Act and Sections 503
and 504 of the Rehabilitation Act of 1973, which prohibit discrimination based
on disability; and any other federal, state, or local laws prohibiting
discrimination in employment based on actual or perceived race, religion, color,
national origin, ancestry, physical or mental disability, medical condition,
marital status, sex, sexual orientation, or association with a person who has,
or is perceived to have, any of those characteristics.

 

Federal employment statutes, such as the WARN Act, which requires that advance
notice be given of certain work force reductions; the Employee Retirement Income
Security Act of 1974, which, among other things, protects employee benefits; the
Fair Labor Standards Act of 1938, which regulates wage and hour matters; the
Family and Medical Leave Act of 1993, which requires employers to provide leaves
of absence under certain circumstances; and any other federal laws relating to
employment, such as veterans’ reemployment rights laws.

 

Other laws, such as any federal, state, or local laws providing workers’
compensation benefits, mandating leaves of absence, restricting an employer’s
right to terminate employees, or otherwise regulating employment; any federal,
state, or local law enforcing express or implied employment contracts or
requiring an employer to deal with employees fairly or in good faith; any other
federal, state, or local laws providing recourse for alleged wrongful discharge,
tort, physical or personal injury, emotional distress, fraud, negligent
misrepresentation, defamation, and similar or related claims, and any other law
relating to salary, commission, compensation, benefits, and other matters;
applicable state workers’ compensation laws; and family and medical leave laws.

 

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Examples of released Claims include, but are not limited to the following
(except to the extent explicitly preserved by Section 1 or 2(a) of this
Release): (i) Claims that in any way relate to or arose during my employment
with the Company, or the termination of that employment, such as Claims for
compensation, bonuses, commissions, lost wages, or unused accrued vacation or
sick pay; (ii) Claims that in any way relate to the design or administration of
any employee benefit program; (iii) Claims that I have irrevocable or vested
rights to severance or similar benefits or to post-employment health or group
insurance benefits; or (iv) any Claims to attorneys’ fees or other indemnities
(such as under the Civil Rights Attorneys’ Fees Act), with respect to Claims I
am releasing.

 

(c) Unknown Claims: I understand that I am releasing Claims that I may not know
about. That is my knowing and voluntary intent even though I recognize that
someday I might regret having signed this Release. Nevertheless, I am assuming
that risk and I agree that this Release shall remain effective in all respects
in any such case. I expressly waive all rights I might have under any law that
is intended to protect me from waiving unknown claims. I understand the
significance of doing so.

 

(d) Released Parties: The Released Parties are the Company, all current and
former parents, subsidiaries, related companies, partnerships, or joint
ventures, and, with respect to each of them, their predecessors and successors;
and, with respect to each such entity, all of its past, present, and future
employees, officers, directors, stockholders, owners, representatives, assigns,
attorneys, agents, insurers, employee benefit programs (and the trustees,
administrators, fiduciaries, and insurers of such programs), and any other
persons acting by, through, under or in concert with any of the persons or
entities listed in this subsection, and their successors.

 

Section 3 — Promises

 

(a) Employment Termination: I agree that my employment with the Company and its
affiliates is ending and that I am accepting payments and benefits under this
Release in lieu of any such other rights or benefits to which I possibly could
be or become entitled. No one has represented to me that the Company or its
affiliates will ever hereafter seek to rehire me and I agree that I will not
seek employment with them in the future.

 

(b) Pursuit of Claims: I have not filed, initiated, or prosecuted (or caused to
be filed, initiated, or prosecuted) any lawsuit, complaint, charge, action,
compliance review, investigation, or proceeding with respect to any Claim this
Release purports to waive, and I promise never to do so in the future, whether
as a named plaintiff, class member, or otherwise. I promise to request any
administrative agency or other body assuming jurisdiction of any such lawsuit,
etc. to withdraw from the matter or dismiss it with prejudice. However, the two
preceding sentences shall not preclude me from filing or prosecuting a charge
with any administrative agency with respect to any such Claim as long as I do
not seek any damages, remedies, or other relief for myself personally, which I
promise not to do, and any right to which I hereby waive. If I am

 

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ever awarded or recover any amount as to a Claim I have purported to waive in
this Release, I agree that the amount of the award or recovery shall be reduced
by the amounts I was paid under this Release, increased appropriately for the
time value of money, using an interest rate of 10 percent per annum. To the
extent such a setoff is not effected, I promise to pay, or assign to the Company
my right to receive, the amount that should have been set off. I promise never
directly or indirectly to bring or participate in an action against any Released
Party under any unfair competition law of any jurisdiction.

 

(c) Company Property and Debts: I will return to the Company all files,
memoranda, documents, records, copies of the foregoing, Company-provided credit
cards, keys, building passes, security passes, access or identification cards,
and any other property of the Company or any Released Party in my possession or
control, on or about June 21, 2005. I have cleared all expense accounts, repaid
everything I owe to the Company or any Released Party, paid all amounts I owe on
Company-provided credit cards or accounts (such as cell phone accounts), and
canceled or personally assumed any such credit cards or accounts.

 

(d) Taxes: I am responsible for paying any taxes on amounts I receive because I
signed this Release. I agree that the Company is to withhold all taxes it
determines it is legally required to withhold. I agree not to make any claim
against the Company or any other person based on how the Company reports amounts
paid under this Release to tax authorities.

 

(e) Ownership of Claims: I have not assigned or transferred any Claim I am
purporting to release, nor have I attempted to do so.

 

(f) Nonadmission of Liability: I agree not to assert that this Release is an
admission of wrongdoing and I acknowledge that the Released Parties do not
believe or admit that any of them has done anything wrong.

 

(g) No Disparagement or Harm: I agree not to criticize, denigrate, or disparage
any Released Party. I agree not to incur any expenses, obligations, or
liabilities on behalf of the Company.

 

(h) Confidential and Proprietary Information and Existing Obligations: I agree
to always keep confidential all proprietary information of the Company. I
understand that “proprietary information” means information not fully disclosed
in writing to the public and which is treated as confidential within the
Company, or is of value to competitors. I agree to remain bound by any Company
or Company affiliate agreement or policy relating to confidential information,
invention, nonsolicitation, noncompetition, or similar matters to which I am now
subject. In particular, I acknowledge that in the course of my employment with
the Company, I have obtained confidential, proprietary and/or trade secret
information of the Company, relating to, among other things, (i) programs,
strategies, information or materials related to the Company’s business,
services, manner of operation and activities of the Company; (ii) prospective
sellers or purchasers of the Company’s products and services; (iii)

 

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appraisals or other technical data regarding the Company’s products and
services; (iv) customers, clients or prospects of the Company; (v) computer
hardware or software used in the course of Company business; and (vi) marketing
strategies or other activities of the Company from or on behalf of any of its
clients, (hereinafter collectively referred to as “Confidential Information”). I
recognize that the Confidential Information has been developed by the Company at
great expense; is a valuable, special and unique asset of the Company which it
uses in its business to obtain competitive advantage over its competitors; is
and shall be proprietary to the Company; is and shall remain the exclusive
property of the Company; and, shall not be transmitted to any other person,
entity or thing. I agree and represent that I have not disclosed, copied,
disseminated, shared or transmitted any Confidential Information to any person,
firm, corporation or entity for any reason or purpose whatsoever, except in the
course of carrying out my duties and responsibilities of employment with the
Company. I also agree not to make use of any Confidential Information for my own
purposes or for the benefit of any person, firm, corporation or other entity. I
further warrant and represent that all Confidential Information in my
possession, custody or control that is or was a property of the Company has been
or shall be returned to the Company by or on the date of my separation.

 

(i) Implementation: I agree to sign any documents and do anything else that in
the future is needed to implement this Release.

 

(j) Other Representations: In addition to my other representations in this
Release, I have made the following representations to the Company, on which I
acknowledge it also has relied in entering into this Release with me:

 

There Have Been No Wrongful Acts: I have not suffered any discrimination on
account of my age, sex, race, disability, national origin, marital status,
sexual orientation, or any other protected status, and none of these ever has
been an adverse factor used against me by any Released Party. I have not
suffered any job-related wrongs or injuries for which I might still be entitled
to compensation or relief, such as an injury for which I might receive a
workers’ compensation award in the future. I already have been paid all wages,
commissions, compensation, benefits, and other amounts that any Released Party
has ever owed me, except for unpaid amounts or benefits expressly payable under
the terms of this Release and the letter of termination of employment received
from the Company dated June 16, 2005.

 

My Factual Allegations Were Truthful: To the best of my knowledge, all of the
factual allegations I made that induced the Company to enter into this Release
are true in all material respects.

 

(k) False Claims Representations and Promises: I have disclosed to the Company
any information I have concerning any conduct involving the Company or any
affiliate that I have any reason to believe may be unlawful or that involves any
false claims to the United States. I promise to cooperate fully in any
investigation the

 

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Company or any affiliate undertakes into matters occurring during my employment
with the Company or any affiliate. I understand that nothing in this Release
prevents me from cooperating with any U.S. government investigation. In
addition, to the fullest extent permitted by law, I hereby irrevocably assign to
the U.S. government any right I might have to any proceeds or awards in
connection with any false claims proceedings against the Company or any
affiliate.

 

(l) Cooperation Required: I agree that I will fully cooperate with the Company
or any affiliate in effecting a smooth transition of my responsibilities to
others. Within 5 days of any request by the Company, I will draft a work status
report regarding my pre-termination job responsibilities and communicate with
any person identified by the Company regarding those responsibilities. Further,
when requested by the Company, I will promptly and fully respond to all
inquiries from the Company or any affiliate and its representatives relating to
any lawsuit in which I am identified as having factual information needed by the
Company. To the extent I incur reasonable out-of-pocket expenses (such as
postage costs or telephone charges) in assisting the Company or any affiliate at
its request, the Company will mail me a reimbursement check for those expenses
within 15 days after it receives my request for payment, along with satisfactory
written substantiation of the claimed expenses.

 

(m) This Release to be Kept Confidential: I have not disclosed and will never
disclose the underlying facts that led up to the settlement evidenced by this
Release, or the terms, amount, or existence of that settlement or this Release,
to anyone other than a member of my immediate family or my attorney or other
professional advisor and, even as to such a person, only if the person agrees to
honor this confidentiality requirement. Such a person’s violation of this
confidentiality requirement is to be treated as a violation by me. This
subsection does not prohibit disclosures to the extent necessary legally to
enforce this Release, nor does it prohibit disclosures to the extent otherwise
legally required (but only if I notify the Company of a disclosure obligation or
request within 1 day after I learn of it and permit the Company to take all
steps it deems to be appropriate to prevent or limit the required disclosure).

 

Section 4 — Consequences of Violating Promises

 

(a) General Consequences: In addition to any other remedies or relief that may
be available, I agree to pay any attorneys’ fees (including in-house counsel
costs) and damages Released Parties may incur as a result of my breaching a
promise I made in this Release (such as by suing a Released Party over a
released Claim) or if any representation I made in this Release was false when
made. I agree that the minimum damages for each breach will be half of the
attorneys’ fees each Released Party incurs as a result of the breach, which is a
reasonable estimate of the value of the time the Released Party is likely to
have to spend seeking a remedy for the breach. I further agree that the Company
would be irreparably harmed by any actual or threatened violation of Section 3
that involves Release-related disclosures or disclosure or use of confidential
information or trade secrets or solicitation of employees, customers, or
suppliers, and that the Company will be entitled to an injunction prohibiting me
from committing any such violation.

 

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(b) Challenges to Validity: Should I attempt to challenge the enforceability of
this Release, I agree first (1) to deliver a certified check to the Company for
all amounts I have received because I signed this Release, plus 10 percent
interest per annum, (2) to direct in writing that all future benefits or
payments I am to receive because I signed this Release be suspended, and (3) to
invite the Company to cancel this Release. If the Company accepts my offer, this
Release will be canceled. If it rejects my offer, the Company will notify me and
deposit the amount I repaid, plus all suspended future benefits and payments, in
an interest-bearing account pending a determination of the enforceability of
this Release. If the Release is determined to be enforceable, the Company is to
pay me the amount in the account, less any amounts I owe the Company. If the
Release is determined to be unenforceable, the amount credited to the account
shall be paid to the entities that paid the consideration for this Release in
proportion to their payments, and the suspension of future benefits or payments
shall become permanent.

 

Section 5 — Consideration of Release

 

I acknowledge that, before signing this Release, I was given a reasonable period
of time in which to consider this Release. I waive any right I might have to
additional time within which to consider this Release. I further acknowledge
that: (1) I took advantage of the time I was given to consider this Release
before signing it; (2) I carefully read this Release; (3) I fully understand it;
(4) I am entering into it voluntarily; (5) I am receiving valuable consideration
in exchange for my execution of this Release that I would not otherwise be
entitled to receive; and (6) The Company, in writing, encouraged me to discuss
this Release with my attorney (at my own expense) before signing it, and that I
did so to the extent I deemed appropriate.

 

Section 6 — Miscellaneous

 

(a) Entire Agreement: This Release is the entire agreement between me and the
Company relating to my termination of employment or the subject matter of this
Release. This Release supersedes and extinguishes all other agreements relating
to my termination of employment by the Company. This Release may not be modified
or canceled in any manner, nor may any provision of it or any legal remedy with
respect to it be waived, except by a writing signed by both me and an authorized
Company official. I acknowledge that the Company has made no representations or
promises to me (such as that my former position will remain vacant), other than
those in or referred to by this Release. If any provision in this Release is
found to be unenforceable, all other provisions will remain fully enforceable.

 

(b) Successors: This Release binds my heirs, administrators, representatives,
executors, successors, and assigns, and will inure to the benefit of all
Released Parties and their respective heirs, administrators, representatives,
executors, successors, and assigns.

 

(c) Interpretation: This Release shall be construed as a whole according to its
fair meaning. It shall not be construed strictly for or against me or any
Released Party. Unless the context indicates otherwise, the term “or” shall be
deemed to

 

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include the term “and” and the singular or plural number shall be deemed to
include the other. Captions are intended solely for convenience of reference and
shall not be used in the interpretation of this Release.

 

Section 7 — Arbitration of Disputes

 

(a) Arbitrable Disputes: The Company and I agree to resolve any claims we may
have with each other (except, if either I or the Company so elects, any dispute
for which injunctive relief is a principal remedy) through final and binding
arbitration in accordance with this section. I also agree to resolve in
accordance with this section any claim between me and any other Released Party
who offers or agrees to arbitrate the claim in this manner. This arbitration
requirement applies to, among other things, disputes about the validity,
interpretation, or effect of this Release or alleged violations of it, claims of
discrimination under federal or state law, or other statutory violation claims.

 

(b) The Arbitration: Except as otherwise provided in any other enforceable
arbitration agreement between me and the Company (Another Arbitration
Agreement), which the Company and I hereby reaffirm if one exists, the
arbitration shall be in accordance with the then-current arbitration rules and
procedures for employment disputes governing arbitrations administered by the
American Arbitration Association (AAA), except as provided in this section.
Arbitration shall take place in the state listed in the first paragraph of this
Release before an experienced employment arbitrator licensed to practice law in
that state who has been selected in accordance with subsection (c). The
arbitrator may not modify or change this Release in any way. I, the Company, and
any Released Party who agrees to arbitrate an Arbitrable Dispute under this
section agree to submit to personal jurisdiction in the state listed in the
first paragraph of this Release for such arbitration and in any jurisdiction
necessary for the enforcement of any arbitration award. I represent that this
state is a convenient dispute resolution location for me.

 

(c) Selection of the Arbitrator: The arbitrator shall be selected as follows:
AAA shall give each party a list of 11 arbitrators drawn from its panel of
employment dispute arbitrators. Each party may strike all names on the list it
deems unacceptable. If only one common name remains on the lists of both
parties, that individual shall be designated as the Arbitrator. If more than one
common name remains on the lists of both parties, the parties shall strike names
alternately from the list of common names until only one remains. The party who
did not initiate the claim shall strike first. If no common name exists on the
lists of both parties, AAA shall furnish an additional list and the process
shall be repeated. If no arbitrator has been selected after two lists have been
distributed, then the parties shall strike alternately from a third list, with
the party initiating the claim striking first, until only one name remains. That
person shall be designated as the arbitrator. Striking decisions must be made
and communicated to the other party and AAA within 10 calendar days after the
date of the transmittal communication relaying the arbitrators remaining for
selection. In the event a party does not make a timely strike, the other party
may select the arbitrator from the names remaining.

 

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(d) Fees and Expenses: Each party shall pay the fees of his or her attorneys,
the expenses of his or her witnesses, and any other expenses that party incurs
in connection with the arbitration, but all costs of the arbitration itself,
including the fees of the arbitrator, the cost of any record or transcript of
the arbitration, administrative fees, and other fees and costs shall be paid in
equal shares by the plaintiff(s) and defendant(s), unless prohibited by law. At
my written request and on a showing of substantial hardship, the Company shall
advance all or a portion of my share of those arbitration costs to the extent
they would exceed the out-of-pocket costs I would have incurred in a lawsuit.
The party losing the arbitration shall reimburse the party who prevailed for all
attorneys’ fees and expenses the prevailing party paid pursuant to this
subsection (d), except to the extent prohibited by a statute under which the
dispute has been brought.

 

(e) Exclusive Remedy: Arbitration in this manner shall be the exclusive remedy
for any claim that must be arbitrated pursuant to this section. Should I or the
Company attempt to resolve such a claim by any method other than arbitration
pursuant to this section, the responding party will be entitled to recover from
the initiating party all damages, expenses, and attorneys’ fees incurred as a
result of that breach.

 

TAKE THIS RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS
BEFORE SIGNING IT: IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS, AND ITS
ARBITRATION-OF-CLAIMS REQUIREMENT WAIVES YOUR RIGHT TO A JURY TRIAL. IF YOU
WISH, YOU SHOULD TAKE ADVANTAGE OF THE FULL CONSIDERATION PERIOD AFFORDED BY
SECTION 5 AND YOU SHOULD CONSULT YOUR ATTORNEY.

 

Executed at Research Triangle Park, NC this 20th day of June, 2005.

 

/s/ Richard Reichow

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Employee

 

Executed at San Diego, CA this 20th day of June, 2005.

 

/s/ Richard P. Burgoon, Jr.

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The Company

 

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