**Exhibit 10.3**

 

**SETTLEMENT AND RELEASE AGREEMENT**

 

This Settlement and ReleaseAgreement (the “Settlement and Release Agreement”) is made this 16thday of August, 2002 (the “Effective Date”), by and between EnchiraBiotechnology Corporation, a Delaware corporation (the “Company”), and Paul G.Brown, III (“Brown”).

 

**R E C I T A L S**

 

WHEREAS, Brown and theCompany entered into that certain Employment Agreement dated July 18, 1995, asamended by that certain First Amendment to Employment Agreement dated April 18,2000, as further amended by that certain Second Amendment to EmploymentAgreement dated April 2, 2002, to be effective as of January 1, 2002(collectively, the “Employment Agreement”); and

 

WHEREAS, Brown and theCompany entered into that certain Settlement and Release Agreement (the“Original Release”) dated May 7, 2002 whereby in exchange for certain retentionpayments by the Company to Brown, which Brown accepted, Brown agreed to forgocertain severance obligations set forth in his Employment Agreement and furtheragreed to settle any claims that he may have had with the Company and releasethe Company from any liability he may claim as of May****7, 2002; and

 

WHEREAS, concurrently withthe execution of the Original Release, the Company paid to Brown an initialpayment of $75,000 and deposited with Southwest Bank of Texas, N.A., a Texasbanking corporation, a second payment in the amount of $75,000 to be held inescrow (the “Second Payment”) payable to Brown under certain conditions as setforth in Section 1B. of the Original Release, including, but not limited to,the termination of the Employment Agreement and the execution of thisSettlement and Release Agreement; and

 

WHEREAS, the Company desiresto engage Brown as a consultant, and Brown desires to accept such engagement asa consultant of the Company.

 

NOW, THEREFORE, inconsideration of the execution, delivery and performance of this Settlement andRelease Agreement, and for other good and valuable consideration, the partieshereto intending to be legally bound, mutually agree as follows:

 

1.             Termination, Resignation and Payment.

 

A.            Termination ofEmployment Agreement.  As of thedate hereof, the parties hereby terminate the Employment Agreement and exceptas provided in B. below, the Company hereby releases Brown from any and allfurther obligations arising under the Employment Agreement.  Brown hereby acknowledges termination of theEmployment Agreement and releases the Company from any and all furtherobligations arising under the Employment

 

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Agreementincluding, without limitation, the provisions thereof providing for theCompany’s payment of severance to Brown.

 

B.            Termination ofNon-Competition Provisions.  TheCompany agrees that upon expiration or termination of the Consulting Agreement,as defined below, other than for cause, it will release Brown from theprovisions of Section 5.6 of the Employment Agreement and expressly agreesthat Brown shall be permitted to engage in competitive activities following thedate of such termination or expiration; provided, however, that the remainingnondisclosure, inventions and confidentiality provisions of Section 5 ofthe Employment Agreement or such similar provisions as are set forth in theConsulting Agreement (as defined below) shall continue to survive on the termsprovided therein and Brown shall continue to be bound by the terms thereof.

 

C.            ConsultingAgreement.  Notwithstanding Section1B. of the Original Release which contemplates Brown’s resignation as anofficer and/or director as a condition to Brown’s receipt of the SecondPayment, the Company desires to engage Brown as a consultant, and Brown desiresto accept such engagement as a consultant of the Company, in accordance withthe terms of that certain Consulting Agreement between Brown and the Companydated of even date herewith (the “Consulting Agreement”), a form of which isattached hereto as Exhibit A.

 

D.            Payment by theCompany.  The Company agrees to, andconcurrently with the execution of this Settlement and Release Agreement andthe Consulting Agreement does hereby, pay Brown a lump sum severance payment inthe amount of the Second Payment, with such interest thereon, if any, (the“Severance Payment”) in consideration for Brown’s termination of the EmploymentAgreement, entering into the Consulting Agreement and for the releasescontained herein, among other things. The Severance Payment will be subject to all legally required taxes,deductions and withholdings.  TheSeverance Payment paid under this Settlement and Release Agreement is in lieuand amendment of any other severance benefits that may otherwise be payable toBrown (including, without limitation, those provided in the EmploymentAgreement), except for such benefits required to be provided by law.  The consideration represented by theSeverance Payment is allocated among the waivers and releases contained in thisSection 1.D. and Section 2 as follows: (i) 5% of the Severance Payment ($3,750, with any interest thereon)shall be allocated to Brown’s waiver and release of any claims under the AgeDiscrimination Employment Act of 1967, as amended, and (ii) the remaining 95%of the Severance Payment ($71,250, with any interest thereon) shall beallocated to Brown’s amendment, waiver and release with respect to theseverance benefits payable to Brown pursuant to the Employment Agreement asprovided in this Section 1.D. and all other remaining claims described inSection 2.

 

2.             Waiver and Release by Brown.  Brown hereby waives any and all claims,charges, complaints, liabilities, obligations, promises, agreements, contracts,damages, actions, causes of action, suits, accrued benefits or otherliabilities of any kind or character, whether known or hereafter discovered,arising in connection with or otherwise relating to the Employment Agreement,including, but not limited to, termination of same, and his relationship

 

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with the Company, that he has or may haveagainst the Company, its officers, directors, shareholders, agents and employeesand the successors and assigns of each, and all other persons, firms,partnerships, or corporations in control of, under the direction of, or in anyway presently or formerly associated with the Company (the “Company ReleasedParties”) of any kind whatsoever, including, but not limited to, allegations ofwrongful termination, breach of contract (other than in connection with thisSettlement and Release Agreement), intentional infliction of emotionaldistress, negligent infliction of emotional distress, defamation, invasion ofprivacy, any action in tort or contract (including any action under theCompany’s charter documents), any claims arising under and/or for any allegedviolation of any federal, state, or local law (including, but not limited to,Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e *et seq*., the CivilRights Act of 1866, 42 U.S.C. § 1981 *etseq*., the Equal Pay Act, 29 U.S.C. § 206; the EmployeeRetirement Income Security Act of 1974, as amended (“ERISA”) 29 U.S.C.§ 1001 *et seq.* (non-vestedrights), the Americans with Disabilities Act, 42 U.S.C. § 12101 *et seq.*, the Age DiscriminationEmployment Act of 1967, as amended (“ADEA”), 29 U.S.C. § 621 *et seq.*, the Fair Labor Standards Act, asamended, 29 U.S.C. § 201 *et seq.*,the National Labor Relations Act, 29 U.S.C. §§ 151 *et seq.*, the Family and Medical Leave Actof 1993, 29 U.S.A. § 2601 *et seq.*,the Worker Adjustment and Retraining Notification Act (WARN), 29 U.S.C.,§ 2101 *et seq.*, theOccupational Safety and Health Act, as amended, the Texas Commission on HumanRights Act, Texas Labor Code § 21.001 *etseq.*, the Texas Payday Act, Texas Labor Code, § 61.01 *et seq.*, the Texas Workers’ CompensationStatute, Texas Labor Code § 451.0001 *etseq.*, and any other employment or civil rights act) and any and allclaims for severance pay, bonus payments and, except as provided by law,benefits under any compensation or employee benefit plan, program, policy,contract, agreement or other arrangement of the Company (including the EmploymentAgreement) and does hereby release and forever discharge all of the CompanyReleased Parties of and from any and all debts, claims, demands, damages,actions, causes of action, or liabilities of any nature whatsoever arising inconnection with or otherwise relating to the Employment Agreement, including,but not limited to, termination of same, and his relationship with the Company,that Brown shall or may have against any of the Company Released Parties.

 

3.             Confidentiality. Each party agrees to hold and maintain confidential and not disclose toany third party the terms and conditions of this Settlement and ReleaseAgreement including, without limitation, the consideration provided for by thisSettlement and Release Agreement; provided, however, that the foregoing shallnot apply to any disclosure: (i) that may be required to the extentcompelled by legal process, a government agency or court order or otherwiserequired by applicable laws or regulations, (ii) that may be required toenforce either party’s rights hereunder or (iii) to either party’s attorneys,accountants and other professional advisors to whom disclosure is necessary toaccomplish the professional purposes for which such party has consulted suchprofessional advisors.  Each party understandsand agrees that in the event such party breaches any of the terms of thisSection 3, such party shall be liable to the other party for actual damagessuffered by such other party caused by such breach.

 

4.             Company Representations and Warranties.  The Company has all requisite power,authority (corporate and other) and legal right to execute, deliver, enterinto, consummate and perform this Settlement and Release Agreement.  The execution, delivery and performance ofthis Settlement and Release Agreement by the Company have been duly authorizedby all

 

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required corporate and other actions.  The Company has duly executed and deliveredthis Settlement and Release Agreement. This Settlement and Release Agreement constitutes the legal, valid andbinding obligation of the Company enforceable in accordance with its respectiveterms, subject to bankruptcy, insolvency, reorganization, moratorium and othersimilar laws relating to the rights of creditors generally and except that theenforceability of any indemnification provisions contained in this Settlementand Release Agreement may be subject to considerations of public policy.

 

5.             Effective Date. Insofar as this Settlement and Release Agreement relates to the waiverand release of any claims under ADEA, such waiver and release will becomeeffective on the next business day following seven (7) days from the dateset forth above.  In all other respects,the terms and provisions of this Settlement and Release Agreement, including,without limitation, all other waivers and releases of Brown contained herein,are effective as of the date set forth above.

 

6.             Governing Law. This Settlement and Release Agreement shall be governed by the laws ofthe State of Texas.

 

7.             Payment of Legal Fees.  If any party is required to engage in any proceedings, legal orotherwise, to defend or enforce its rights under this Settlement and ReleaseAgreement, such party, if successful, shall be entitled to recover from theother party which is in breach of its duties hereunder, in addition to anyother remedy or sums due, the reasonable attorneys’ fees and disbursements andcosts of such proceeding incurred in connection therewith.

 

8.             Counterparts. This Settlement and Release Agreement may be executed in more than onecounterpart, each of which shall be an original, but all of which, takentogether, shall be and remain one instrument.

 

9.             Headings. The headings of the several sections of this Settlement and ReleaseAgreement are inserted for convenience only and shall not control or affect themeaning or construction of any of the provisions hereof.

 

10.           Severability. If one or more of the provisions in this Settlement and ReleaseAgreement are deemed void by law, then the remaining provisions will continuein full force and effect.

 

11.           Time for Review; Revocation.  Brown understands that insofar as it relatesto the waiver and release of any claims under the ADEA, he hasforty-five (45) days within which to consider this Settlement and ReleaseAgreement and that the portion of this Settlement and Release Agreementrelating to the waiver and release of any claims under the ADEA is revocable byhim for a period of seven (7) days following the execution of this Settlementand Release Agreement, and if not so revoked, will become effective andenforceable after such period of seven (7) days.

 

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12.           Review by Brown and Counsel.  Brown expressly represents and warrants tothe Company that he has completely read this Settlement and Release Agreementprior to executing it, has had an opportunity to review it with his counsel,has been offered forty-five (45) days within which to consider thisSettlement and Release Agreement and to understand its terms, contents,conditions and effects and has entered into this Settlement and ReleaseAgreement knowingly and voluntarily.

 

IN WITNESS WHEREOF, theparties hereto have caused this Settlement and Release Agreement to be executedas of the day and year set forth above.

 
|   |   |   | **ENCHIRA BIOTECHNOLOGY CORPORATION** |
|--------|--------|--------|---------------------------------------|
|   |   |   |                                  |
|   |   |   |                                  |
|   |   |   | By:                                   | /s/  William E. Nasser |
|   |   |   | Name:                                 | William E. Nasser |
|   |   |   | Title:                                | Chairman of the Board |
|   |   |   |                                  |
|   |   |   |                                  |
|   |   |   | **BROWN**                             |
|   |   |   |                                  |
|   |   |   |   /s/ Paul G. Brown, III         |
|   |   |   | Paul G. Brown, III                    |
|        |        |        |                                       |  |  |  |

 

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Exhibit A

 

Form of ConsultingAgreement

 

(See attached)

 

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