Exhibit 10.17

 

SEVERANCE AGREEMENT AND FULL WAIVER AND RELEASE

 

This SEVERANCE AGREEMENT AND FULL WAIVER AND RELEASE (“Agreement”) sets forth
the agreement reached between DOV MICHAELI (“Employee”) and APHTON CORPORATION
(“Company”).

 

1. Employment Termination. Employee’s last day of work will be May 31, 2005 (the
“Termination Date”). On the Termination Date, Employee will return all keys,
passes, credit cards and other property of the Company, including all documents,
computer discs, tapes and other materials that relate to the business of the
Company, and will otherwise comply with the employment termination procedures of
the Company.

 

2. Consideration to Employee.

 

A. In consideration for the promises set forth in this Agreement and Employee’s
execution of this Agreement, but subject to Paragraph 9 of this Agreement
entitled “Review and Revocation Period,” Company shall pay to Employee a
severance amount equal to $246,093.00 (less deductions, withholdings and other
payments required under applicable law), payable over the six month period
immediately following the Effective Date (as defined in Section 9 hereof) in
accordance with the Company’s payroll procedures for employees. Employee agrees
that this sum is adequate consideration for the promises he is making in this
Agreement and the rights and claims he is waiving and releasing under this
Agreement.

 

B. As additional consideration, the Company agrees that notwithstanding the
terms of any individual agreement, the vesting period of all stock options held
by Employee on the Termination Date that remain unvested shall be accelerated
such that all such unvested stock options shall be fully vested as of the
Termination Date. In addition, the Company agrees that notwithstanding any early
termination provisions set forth in any option grant letter or option award
agreement issued to Employee by the Company, all stock options held by Employee
on the Termination Date shall remain exercisable until the scheduled expiration
of the stock options, as provided in such letters or agreements, as the case may
be.

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3. Consideration to the Company. In consideration for the promises set forth in
this Agreement:

 

A. General Release.

 

(1) Waiver and Release. (a) Employee voluntarily and knowingly agrees that he,
on behalf of himself and his spouse, representatives, agents, heirs, and
assigns, waives and releases and forever discharges the Company, including its
parent and subsidiary corporations, affiliates, all related domestic and foreign
businesses, entities, corporations, partnerships, and benefit plans, as well as
all current, former, and future directors, officers, executives, shareholders,
partners, employees, successors in interest, predecessors, representatives,
agents, insurers, attorneys, and assigns from any and all claims, rights,
liabilities, damages, losses, demands, obligations, and causes of action, in law
or in equity, of any kind whatsoever, including, but not limited to, claims
arising under federal, state and local law, including, without limitation, Title
VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the
Older Workers Benefit Protection Act, the Age Discrimination in Employment Act,
the California Fair Employment Act, claims for wrongful discharge under any
public policy or any policy of the Company, claims for breach of fiduciary duty,
and the laws of contract and tort, and any claim for attorneys’ fees, which
Employee has or may have against the Company from the beginning of the world
until the Effective Date, whether such claims, rights, or causes of action are
now known or are later discovered or suspected or unsuspected. Employee declares
and represents that he has not suffered any on-the-job injuries or work-related
accidents or injuries, occupational diseases or disabilities, whether temporary,
permanent, partial, or total.

 

(b) Employee voluntarily and knowingly agrees that all intellectual property,
including, without limitation, any Inventions and Ideas (as defined in the
Company’s Statement of Policy Regarding Inventions and Ideas) and any patents,
trademarks, copyrights, know-how and/or trade secrets (together “Intellectual
Property”) conceived, reduced to practice, or developed by Employee (in whole or
in part, either alone or jointly with others): (a) during his employment with
the Company; (b) for a period of one (1) year after the Termination Date; (c) by
using any of Company’s Confidential Information (as defined by the Company’s
Statement of Policy Regarding Confidential Information); (d) by using the
Company’s equipment, supplies, or facilities; and/or (e) which relates directly
to the business of the Company or to the Company’s

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actual or demonstrably anticipated research or development, is and will remain
the sole property of the Company and its successors or assigns to the maximum
extent permitted by law (and, to the fullest extent permitted by law, will be
deemed “works made for hire”), and that the Company and its successors and
assigns will be the sole owner of such Intellectual Property. Employee hereby
assigns to the Company any and all right, title and interest he may have, or may
claim to have, to any such Intellectual Property. Further, Employee voluntarily
and knowingly agrees that he will not at any time, for himself or on behalf of
any other party, make a claim to any right, title or interest in and to any such
Intellectual Property. Employee hereby represents and warrants that he has not
pledged, assigned, sold or otherwise transferred, nor has he attempted to
pledge, assign, sell, or otherwise transfer, any such right, title or interest
to any third party. To the knowledge of Employee, no party has, nor has any
party made any claim that it has, any right, title or interest in or to any such
Intellectual Property. To the knowledge of Employee, no such Intellectual
Property infringes upon the rights, title or interest of any third party.
Employee acknowledges and agrees that he will continue to be bound by the
Company’s Inventions Policy (as defined in Section 3.B.(2) hereof) following the
Termination Date.

 

(2) Covenant Not to Sue. Employee voluntarily and knowingly agrees that he, on
behalf of himself and his spouse, representatives, agents, heirs, and assigns,
promises never to file a lawsuit or assist in or commence any action asserting
any claims, rights, liabilities, damages, losses, demands, obligations, and
causes of action, in law or in equity, of any kind whatsoever, which have been
released hereunder.

 

(3) Known or Unknown Claims. The parties understand and expressly agree that
this Agreement extends to all claims of every nature and kind, known or unknown,
or suspected or unsuspected, past, present, or future, arising from or
attributable to any conduct of the Company and its successors, subsidiaries, and
affiliates, and all their current, former, and future directors, officers,
executives, shareholders, partners, employees, successors in interest,
predecessors, representatives, agents, insurers, attorneys, and assigns, whether
known by Employee or whether or not Employee believes he may have any claims,
and that any and all rights granted to Employee under Section 1542 of the
California Civil Code or any analogous state law or federal law or regulations,
are hereby expressly waived, if applicable. Said Section 1542 of the California
Civil Code reads as follows:

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GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.

 

(4) Exceptions from Release. Notwithstanding the generality of the foregoing,
Employee does not release the following claims:

 

(a) Claims to continued participation in certain of the Company’s group benefit
plans pursuant to the terms and conditions of the federal law known as COBRA;

 

(b) Claims to any benefit entitlements vested as of the Termination Date,
pursuant to written terms of any Company employee benefit plan; and

 

(c) Claims to indemnity for his actions as an employee of the Company, to the
extent permitted by the Company’s by-laws and by California law.

 

B. Confidential Information and Inventions Policy of the Company.

 

(1) Agreement Not to Disclose Confidential Information. Employee acknowledges he
has read and understands the Company’s Statement of Policy Regarding
Confidential Information (“Confidentiality Policy”), which is attached hereto as
Exhibit “A” and incorporated herein by reference, and acknowledges and agrees
that he will continue to be bound by, and will comply with, the Confidential
Policy at all times on and subsequent to the Termination Date. Employee further
agrees that at all times subsequent to the Termination Date he will hold all
Confidential Information (as that term is defined by the Confidentiality Policy)
in trust and confidence, and will not use any such Confidential Information for
any purpose, or disclose any such Confidential Information to any third party,
unless authorized to do so in writing by a qualified officer of the Company.

 

(2) Agreement to Comply with Company Policy Regarding Inventions and Ideas.
Employee acknowledges he has read and understands the Company’s Policy Regarding
Inventions and Ideas (“Inventions Policy”) “), which is attached hereto as
Exhibit “B” and incorporated herein by reference. Employee hereby acknowledges
and agrees that at all times on and subsequent to the Termination Date, he will
continue to be bound by, and will comply with, the Inventions Policy.

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4. Assignability. If the Company or any entity resulting from any acquisition,
merger or consolidation of, with or by the Company is acquired by, or merged or
consolidated into or with any other entity or entities, or if substantially all
of the assets of the Company or any such entity are sold or otherwise
transferred to another entity, the provisions of this Agreement shall be binding
upon and shall inure to the benefit of the continuing entity in or the entity
resulting from such acquisition, merger or consolidation or the entity to which
such assets are sold or transferred. This Agreement shall not be assignable by
Employee.

 

5. Amendments to Agreement. Any amendments, additions, or supplements to this
Agreement shall be effective and binding on the parties only if any such
amendments, additions, or supplements are in writing and signed by both parties.

 

6. Severability and Governing Law. If any provision (other than the waiver and
release) of this Agreement is invalid, illegal or unenforceable, it shall not
affect the other provisions of this Agreement, which shall remain in effect.
This Agreement shall be governed by the laws of the State of California, without
reference to its or any other jurisdiction’s choice of law rules.

 

7. Dispute Resolution. All controversies, claims and disputes arising out of or
relating to this Agreement, including, without limitation, any alleged violation
of its terms, shall be resolved by final and binding arbitration before a single
neutral arbitrator in San Francisco, California, in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association
(“AAA”). The arbitration shall be commenced by filing a demand for arbitration
with the AAA within 14 (fourteen) days after the filing party has given notice
of such breach to the other party. The arbitrator shall award the prevailing
party attorneys’ fees and expert fees, if any. Notwithstanding the foregoing, it
is acknowledged that it will be impossible to measure in money the damages that
would be suffered if Employee fails to comply with any of the obligations
imposed on him under Section 3.B. hereof, and that in the event of any such
failure, an aggrieved person will be irreparably damaged and will not have an
adequate remedy at law. Any such person shall, therefore, be entitled to
injunctive relief, including specific performance, to enforce such obligations,
and if any action shall be brought in equity to enforce any of the provisions of
Section 3.B. of this Agreement, Employee shall not raise the defense that there
is an adequate remedy at law.

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8. Survivability. All Paragraphs of Section 3.B. of this Agreement survive the
termination and/or expiration of this Agreement.

 

9. Review and Revocation Period. Employee has had a reasonable period of time of
up to twenty-one (21) days after the date this Agreement was delivered to him to
decide whether to sign this Agreement. Employee understands that he can use all
or any part of this 21-day period to decide whether to sign this Agreement.

 

A. Employee and the Company agree that any material or non-material changes
which may be made in this Agreement after the Agreement is initially provided to
Employee shall not re-start the running of the 21-day period. Employee
acknowledges that he has been encouraged to consult with an attorney prior to
signing this Agreement.

 

B. For a period of seven (7) days following the date Employee signs this
Agreement (the “Revocation Period”), Employee may revoke this Agreement by
providing written notice of revocation to Patrick T. Mooney, M.D., Chief
Executive Officer, Aphton Corporation, 8 Penn Center, Suite 2300, 1628 JFK
Boulevard, Philadelphia, PA 19103, to be received not later than 5:00 p.m. on
the seventh (7th) day of the Revocation Period.

 

C. This Agreement shall become effective and enforceable upon expiration of the
Revocation Period unless this Agreement is timely revoked by Employee. The
“Effective Date” of this Agreement shall be the eighth day following the signing
of this Agreement by Employee, so long as Employee has not revoked the
Agreement.

 

10. Non-Admission; No Disparagement. Nothing in this Agreement shall be
construed as an admission or concession of any liability, unlawful conduct, or
wrongdoing whatsoever by either party. Employee agrees not to make any
disparaging comments about the Company.

 

11. No Third Party Beneficiaries. There are no third beneficiaries to this
Agreement.

 

12. Entire Agreement. This Agreement contains the entire understanding of the
parties in respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter.

 

BOTH PARTIES, HAVING HAD A FULL OPPORTUNITY TO REVIEW THE FOREGOING, AND BOTH
PARTIES, BEING IN COMPLETE AND FULL AGREEMENT AS TO THE TERMS OF THIS AGREEMENT,
HAVE VOLUNTARILY SIGNED THIS AGREEMENT.

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APHTON CORPORATION      DOV MICHAELI

/s/ Patrick T. Mooney

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/s/ Dov Michaeli

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Patrick Mooney, in his capacity as Chief Executive Officer (CEO) and as
authorized representative of Aphton Corporation        Date: June 1, 2005     
Date: June 1, 2005 Witness:  

/s/ John McCafferty

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     Witness:   

/s/ Patricia Salber

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