**Exhibit 10.5**

 

**SETTLEMENT AND RELEASE AGREEMENT**

 

This Settlement and ReleaseAgreement (the “Settlement and Release Agreement”) is made this 15thday of August, 2002 (the “Effective Date”), by and between EnchiraBiotechnology Corporation, a Delaware corporation (the “Company”), and DanielJ. Monticello (“Monticello”).

 

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

 

WHEREAS, Monticello and theCompany entered into that certain Employment Agreement dated January 31, 1996,as amended by that certain First Amendment to Employment Agreement dated April10, 1998, as further amended by that certain Second Amendment to EmploymentAgreement dated April 9, 2001, as further amended by that certain ThirdAmendment to Employment Agreement dated April 2, 2002, to be effective as ofJanuary 1, 2002, and as further amended by that certain Fourth Amendment toEmployment Agreement dated August 15, 2002 (collectively, the “EmploymentAgreement”); and

 

WHEREAS, Monticello and theCompany entered into that certain Settlement and Release Agreement (the “OriginalRelease”) dated May 7, 2002 whereby in exchange for certain retention paymentsby the Company to Monticello, which Monticello accepted, Monticello agreed toforgo certain severance obligations set forth in his Employment Agreement andfurther agreed to settle any claims that he may have had with the Company andrelease the 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 Monticello aninitial payment of $80,000 and deposited with Southwest Bank of Texas, N.A., aTexas banking corporation, a second payment in the amount of $80,000 to be heldin escrow (the “Second Payment”) payable to Monticello under certain conditionsas set forth in Section 1B. of the Original Release, including, but not limitedto, the execution of this Settlement and Release Agreement; and

 

WHEREAS, the Company desiresto retain Monticello as an employee of the Company, and Monticello desires toremain an employee 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.             Employment Agreement and Payment.

 

A.            EmploymentAgreement.  Notwithstanding Section1B. of the Original Release which contemplates the termination of theEmployment Agreement and Monticello’s resignation as an officer and/or directoras conditions to Monticello’s receipt of the Second

 

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Payment,the Company desires to retain Monticello as an officer and/or director of theCompany, and Monticello desires to remain an officer and/or director of theCompany, in accordance with the terms of his Employment Agreement; provided,however, Monticello agrees to release the Company from any all obligationsarising under the Employment Agreement as they relate to payment of severanceto Monticello.

 

B.            Termination ofNon-Competition Provisions.  TheCompany agrees that upon expiration or termination of the Employment Agreement,other than for cause, it will release Monticello from the provisions ofSection 5.6 of the Employment Agreement and expressly agrees thatMonticello 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 shall continue to survive on the terms providedtherein and Monticello shall continue to be bound by the terms thereof.

 

C.            Payment by theCompany.  The Company agrees to, andconcurrently with the execution of this Settlement and Release Agreement andthe Fourth Amendment to Employment Agreement does hereby, pay Monticello a lumpsum payment in the amount of the Second Payment, with such interest thereon, ifany, in consideration for Monticello’s amendment to the Employment Agreementand for the releases contained herein, among other things.  The Second Payment will be subject to alllegally required taxes, deductions and withholdings.  The Second Payment paid under this Settlement and ReleaseAgreement is in lieu and amendment of any other severance benefits that mayotherwise be payable to Monticello (including, without limitation, thoseprovided in the Employment Agreement), except for such benefits required to beprovided by law.  The considerationrepresented by the Second Payment is allocated among the waivers and releasescontained in this Section 1.C. and Section 2 as follows:  (i) 5% of the Second Payment ($4,000, withany interest thereon) shall be allocated to Monticello’s waiver and release ofany claims under the Age Discrimination Employment Act of 1967, as amended, and(ii) the remaining 95% of the Second Payment ($76,000, with any interestthereon) shall be allocated to Monticello’s amendment, waiver and release withrespect to the severance benefits payable to Monticello pursuant to theEmployment Agreement as provided in this Section 1.C. and all other remainingclaims described in Section 2.

 

2.             Waiver and Release by Monticello.  Monticello 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 Agreementand his relationship with the Company, that he has or may have against theCompany, its officers, directors, shareholders, agents and employees and thesuccessors and assigns of each, and all other persons, firms, partnerships, orcorporations in control of, under the direction of, or in any way presently orformerly associated with the Company (the “Company Released Parties”) of anykind whatsoever, including, but not limited to, allegations of wrongfultermination, breach of contract (other than in connection with this Settlementand Release Agreement), intentional infliction of emotional distress, negligentinfliction of emotional distress, defamation, invasion of privacy, any actionin tort or contract (including any action

 

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under the Company’s charter documents), anyclaims arising under and/or for any alleged violation of any federal, state, orlocal law (including, but not limited to, Title VII of the Civil RightsAct of 1964, as amended, 42 U.S.C. § 2000e *et seq*., the Civil Rights Act of 1866, 42 U.S.C.§ 1981 *et seq*., the EqualPay Act, 29 U.S.C. § 206; the Employee Retirement Income Security Act of1974, as amended (“ERISA”) 29 U.S.C. § 1001 *et seq.* (non-vested rights), the Americanswith Disabilities Act, 42 U.S.C. § 12101 *et seq.*,the Age Discrimination Employment Act of 1967, as amended (“ADEA”),29 U.S.C. § 621 *et seq.*,the Fair Labor Standards Act, as amended, 29 U.S.C. § 201 *et seq.*, the National Labor Relations Act,29 U.S.C. §§ 151 *et seq.*,the Family and Medical Leave Act of 1993, 29 U.S.A. § 2601 *et seq.*, the Worker Adjustment andRetraining Notification Act (WARN), 29 U.S.C., § 2101 *et seq.*, the Occupational Safety andHealth Act, as amended, the Texas Commission on Human Rights Act, Texas LaborCode § 21.001 *et seq.*, theTexas Payday Act, Texas Labor Code, § 61.01 *etseq.*, the Texas Workers’ Compensation Statute, Texas Labor Code§ 451.0001 *et seq.*, and anyother employment or civil rights act) and any and all claims for severance pay,bonus payments and, except as provided by law, benefits under any compensationor employee benefit plan, program, policy, contract, agreement or otherarrangement of the Company (including the Employment Agreement) occurring priorto the Effective Date hereof, and does hereby release and forever discharge allof the Company Released Parties of and from any and all debts, claims, demands,damages, actions, causes of action, or liabilities of any nature whatsoeverarising in connection with or otherwise relating to the Employment Agreementand his relationship with the Company, occurring prior to the Effective Datehereof that Monticello shall or may have against any of the Company ReleasedParties.

 

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 partyunderstands and agrees that in the event such party breaches any of the termsof this Section 3, such party shall be liable to the other party for actualdamages suffered 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 required corporate and other actions. The Company has duly executed and delivered this Settlement and ReleaseAgreement.  This Settlement and ReleaseAgreement constitutes the legal, valid and binding obligation of the Companyenforceable in accordance with its respective terms, subject to bankruptcy,insolvency, reorganization, moratorium and other similar laws relating to therights of creditors generally and except that the enforceability of anyindemnification provisions contained in this Settlement and Release Agreementmay be subject to considerations of public policy.

 

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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 Monticello containedherein, 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.  Monticello understands that insofar as itrelates to 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 Agreement relatingto the waiver and release of any claims under the ADEA is revocable by him fora period of seven (7) days following the execution of this Settlement andRelease Agreement, and if not so revoked, will become effective and enforceableafter such period of seven (7) days.

 

12.           Review by Monticello and Counsel.  Monticello expressly represents and warrantsto the Company that he has completely read this Settlement and ReleaseAgreement prior to executing it, has had an opportunity to review it with hiscounsel, has been offered forty-five (45) days within which to considerthis Settlement and Release Agreement and to understand its terms, contents,conditions and effects and has entered into this Settlement and ReleaseAgreement knowingly and voluntarily.

 

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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/ Paul G. Brown, III |
|   |   |   | Name:                                  | Paul G. Brown, III |
|   |   |   | Title:                                 | President |
|   |   |   |                                   |
|   |   |   |                                   |
|   |   |   | **MONTICELLO**                         |
|   |   |   |                                   |
|   |   |   |   /s/ Daniel J. Monticello        |
|   |   |   | Daniel J. Monticello                   |
|        |        |        |                                        |  |  |  |

 

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