exv10w1



 





Exhibit 10.1




EMPLOYMENT AGREEMENT




THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of October 10, 2007 (the
“Effective Date”), is between TRI-ISTHMUS GROUP, INC., a Delaware corporation (the
“Company”), and DENNIS M. SMITH (“Smith”). The Company and Smith are collectively
referred to in this Agreement as the “Parties.”



Background




The company wishes to employ Smith as its Chief Financial Officer, and the Parties desire to
provide for the employment of Smith as of the Effective Date in accordance with the terms of this
Agreement.



Terms of Agreement




The Parties agree as follows:



1. EMPLOYMENT. The Company employs Smith to devote his personal services to the business
and affairs of the Company, and Smith accepts such employment, on the terms and conditions stated
in this Agreement.




1.1. Duties. Smith’s title and position shall be Chief Financial Officer of the Company.
Smith’s duties will be those customarily performed by persons acting in that capacity and
those that may be designated by the Board of Directors and the Chief Executive Officer of
the Company consistent with the title and position of Chief Financial Officer of the
Company. Smith shall report directly to the Company’s Chief Executive Officer. Smith shall
also serve, upon request and without additional compensation, as an officer or a director,
or both, of any subsidiary, division, or affiliate of the Company or any other entity in
which the Company holds an equity interest or which it sponsors.




1.2. Full-Time Employee. Smith shall devote his full time (except for reasonable vacation
time and absence for any disability), attention, and best efforts to the performance of his
duties described in Article 1.1. Provided, however, that Smith shall be permitted to
continue his service as a non-executive director of Research Pharmaceutical Services, Inc.;
VSource Asia Berhad; and Transpac Media Limited.



2. TERM. The term of Smith’s employment under this Agreement (the “Term”) shall
commence on the Effective Date and shall continue until terminated pursuant to Article 5.



3. COMPENSATION. As compensation for the services rendered by Smith under this Agreement,
the Company shall, during the Term, pay or provide Smith the following:




3.1. Base Salary. The Company shall pay Smith during the Term a base salary equal to Two
Hundred Seventy Five Thousand Dollars ($275,000.00) per fiscal year of the Company
(“Base Salary”). Base Salary shall be paid in equal installments every two weeks,
in arrears, at the Company’s regular and routine payroll dates, or at such intervals



 









 







as may otherwise be agreed upon by the Parties, and in accordance with any other payroll
procedures of the Company. Base Salary shall be prorated in any fiscal year during which
Smith is employed under this Agreement for less than the entire fiscal year, in accordance
with the number of days in that fiscal year during which Smith is so employed. Base Salary
shall also be prorated (on a daily basis) for any partial payroll period of employment under
this Agreement.




3.2. Annual Incentive Bonus. Smith shall be eligible to receive an annual incentive bonus
as determined by the Company’s Board of Directors (the “Board”) or the Compensation
Committee of the Board.




3.3. Option. Smith shall be eligible to participate in any stock option, performance share,
phantom stock, or similar long-term stock-based incentive plan adopted by the Company for
its employees in effect during the Term, including the Option Plan. The extent to which
Smith shall participate in any such plan will be determined by the Board or the Compensation
Committee of the Board. Concurrently, with the Effective Date of this Agreement, Smith
shall receive seven (7) year options to purchase up to six hundred thousand (600,000) shares
of the Company’s common stock at a strike price of $0.3125 per share. Such options shall
vest on the following schedule: options to purchase up to one hundred fifty thousand
(150,000) shares shall vest immediately; options to purchase up to one hundred fifty
thousand (150,000) shares shall vest on the first anniversary of the Effective Date of this
Agreement; and options to purchase up to an additional three hundred thousand (300,000)
            shares shall vest on the second anniversary of the Effective Date of this Agreement.
Provided, however, that Smith must be employed by the Company on the vesting dates set forth
above in order to receive these options, The terms and conditions of these options shall be
as set forth in an option grant agreement between the Company and Smith.




3.4. Savings and Retirement Plans. Smith shall be eligible to participate in any bonus,
savings, deferred compensation, retirement or pension, or death benefit plan adopted by the
Company for its employees generally in effect during the Term.




3.5. Welfare Benefit Plans. Smith shall be eligible to participate in any life insurance,
medical, dental, and hospitalization insurance, disability insurance benefit, or other
similar employee welfare benefit plan or program adopted by the Company covering its
employees generally in effect during the Term. In addition, until such time as the Company
adopts a medical/hospitalization plan, Smith shall be reimbursed for the cost of his
individual health insurance premium with Blue Cross/Blue Shield of South Carolina or such
other major medical insurance carrier that Smith may choose.




3.6. Paid Time Off. Smith shall be entitled to twenty (20) days of paid vacation or time
off (“PTO”) per fiscal year of the Company, in accordance with the Company’s PTO
policies, practices, and procedures in effect during the Term. Such PTO shall, however, be
prorated in any fiscal year during which Smith is employed under this Agreement for less
than the entire fiscal year, in accordance with the number of days in that fiscal year
during which Smith is so employed.



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3.7. Tax Withholding. The Company may deduct from any compensation or other amount payable
to Smith under this Agreement (including under Article 5) social security (FICA) taxes and
all federal, state, municipal, and other taxes or governmental charges as may, in the
Company’s judgment, be required.




3.8. Participation in Compensation and Benefit Plans. Smith’s participation during the Term
in any or all of the plans or programs adopted by the Company described in Articles 3.3
through 3.5 (“Compensation and Benefit Plans”) will be subject to the terms and
conditions of those Compensation and Benefit Plans as they now exist or may hereafter be
adopted, amended, restated, or discontinued by the Company, including the satisfaction of
all applicable eligibility requirements and vesting provisions of those Compensation and
Benefit Plans. The Company shall have no obligation under this Agreement to continue any or
all of the Compensation and Benefit Plans that now exist or are hereafter adopted. To the
extent that Smith is eligible to participate in any Compensation and Benefit Plan existing
on the date of this Agreement for which a plan description or plan materials are available,
the Company has provided to Smith, and Smith hereby acknowledges receipt of, a copy of the
correct and complete written plan description or plan materials distributed to participants
or prospective participants.



4. EXPENSE REIMBURSEMENT. During the Term, Smith may incur, and shall be reimbursed by the
Company for, reasonable, ordinary and necessary, and documented business expenses to the extent
that Smith complies with, and reimbursement is permitted by, the Company’s policies, practices, and
procedures.



5. EMPLOYMENT TERMINATION. Either Party may terminate Smith’s employment under this
Agreement by giving written notice of termination to the other Party. If the Company is
terminating, it shall include in that notice a statement whether the termination is because of
Disability or for Cause or without Cause. The Parties’ respective rights and obligations upon the
termination of Smith’s employment under this Agreement are as follows:




5.1. Termination Generally. Upon any termination of Smith’s employment under this
Agreement, the Company shall pay or provide Smith the following:




5.1.a. Any amount of Base Salary earned by, but not yet paid to, Smith through the
effective date of termination of employment, as further described below (the
“Termination Date”);




5.1.b. All benefits that have been earned by or vested in, and are payable to, Smith
under, and subject to the terms (including all eligibility requirements) of, the
Compensation and Benefit Plans in which Smith participated through the Termination
Date;




5.1.c. All reimbursable expenses due, but not yet paid, to Smith as of the
Termination Date under Article 4; and




5.1.d. An amount equal to all accrued and unused PTO, calculated in accordance with
the Company’s PTO policies, practices, and procedures (including



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authorized deductions and the deductions required by law), through the Termination
Date.




The amount of Base Salary due under Section 5.1.a shall be paid no later than thirty (30)
business days after the Termination Date; the amounts or benefits due under Section 5.1.b
shall be paid or provided in accordance with the terms of the Compensation and Benefit Plans
under which such amounts or benefits are due to Smith; and the amounts due under Sections
5.1.c and 5.1.d shall be paid in accordance with the terms of the Company’s policies,
practices, and procedures regarding reimbursable expenses and PTO, respectively. Except as
expressly provided below in this Article 5, upon paying or providing Smith the preceding
amounts or benefits, the Company shall have no further obligation or liability under this
Agreement for base salary or any other cash compensation or for any benefits under any of
the Compensation and Benefit Plans. Upon termination of Smith’s employment, Smith shall be
deemed to have resigned from any position as an officer or director, or both, of any
subsidiary, division, or affiliate of the Company or any other entity in which the Company
holds an equity interest or which it sponsors that Smith then holds; no written resignation
need be given or delivered to the Company.




In this Agreement, the Termination Date shall be (i) the date of Smith’s death, (ii) the
third business day after the date on which the Company gives notice of termination because
of Disability, or (iii) the date of termination specified in any other notice of
termination, or if not specified in the notice of termination, the date that notice of
termination is given.




In this Agreement, “Disability” means Smith’s permanent and total disability, which
shall be deemed to exist if he is unable reasonably to perform his duties under this
Agreement because of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for at least
ninety (90) consecutive days. Any Disability shall be determined by the Board or an
authorized committee or representative thereof (“Representative”), in its sole and
absolute discretion, upon receipt of competent medical advice from a qualified physician
selected by or acceptable to the Board or its Representative. Smith shall, if there is any
question about his Disability, submit to a physical examination by a qualified physician
selected by the Board or its Representative.




In this Agreement, “Cause” means any of the following: (i) Smith’s failure to
substantially perform his duties under this Agreement, other than any such failure resulting
from his incapacity due to physical or mental illness or Disability; (ii) Smith’s engaging
in any action which, or omitting to engage in any action the omission of which, has been,
is, or is reasonably expected to be substantially injurious (monetarily or otherwise) to the
Company or its business or reputation; (iii) Smith’s performance of any act or omission
constituting dishonesty that results, directly or indirectly, in significant gain or
enrichment of Smith or his family or affiliates at the expense of the Company; or (iv) any
breach by Smith of any obligation under any of Articles 6, 7, 8, and 9. Whether an event or
circumstance constituting Cause exists will be determined in good faith by the Board or its
Representative. If the Company believes that Cause for termination exists



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under clause (i) above in this paragraph, the Company shall notify Smith of that belief, and
that notice shall describe the event or circumstance believed to constitute Cause for
termination. If that event or circumstance may reasonably be remedied or corrected, Smith
shall have thirty (30) days to effect that correction or remedy. If not corrected or
remedied within that thirty (30) day period, Cause for termination shall immediately be
deemed to exist, and Smith’s employment shall be deemed terminated. If the Company believes
that Cause for termination exists under any of clauses (ii), (iii), and (iv) above in this
paragraph, the Company shall notify Smith of that belief, and that notice shall constitute
immediate termination of Smith’s employment.




Smith may voluntarily terminate his employment under this Agreement only by giving at least
thirty (30) days’ prior written notice to the Company. Smith shall not be liable to the
Company for breach of this Agreement because of his termination of employment in accordance
with the preceding sentence.




5.2. Termination Without Cause or Upon Death or Disability. If Smith’s employment is
terminated by death or by the Company because of Disability or without Cause, (or his legal
representative, estate, or heirs) shall be entitled to receive from the Company, as
liquidated damages:




5.2.a. The continued payment of Base Salary, at the rate in effect at the
Termination Date, for six (6) consecutive months following the Termination Date (the
“Severance Payments”). Once Smith has been employed by the Company for at
least twelve (12) consecutive months, the continued payment of Base Salary in effect
at the Termination Date shall be for a period of twelve (12) months following the
Termination date; and




5.2.b. If Smith elects and maintains continued coverage under the Consolidated
Omnibus Benefits Reconciliation Act of 1985 and corresponding regulations
(“COBRA”), then for up to the twelve (12) consecutive months immediately
after the Termination Date, payments in an amount equal to the difference between
(i) the premiums paid or payable by Smith for coverage under COBRA for himself and
his dependents (if any) and (ii) the premiums that he would have paid for comparable
coverage under the Company’s then current group insurance plan or plans if his
employment under this Agreement had not ceased (the “Insurance Payments”);
except that the Insurance Payments shall expire or terminate immediately upon
Smith’s becoming eligible for coverage under another employer’s plan or policy.




The Severance Payments shall be paid at the dates on which Smith’s Base Salary would have
been payable if his employment under this Agreement had not been terminated. The Company
will commence the Severance Payments and the Insurance Payments within ten (10) business
days after the first business day on which the release executed and delivered in accordance
with Section 5.3.a becomes irrevocable by Smith (or his legal representative, estate, or
heirs). The Company’s obligations for the Insurance Payments are not intended to negate or
impair any obligation of the Company or right of Smith under COBRA. The Severance Payments
and the Insurance Payments shall be in



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addition to the amounts or benefits to which Smith is entitled under Article 5.1. Any
Severance Payments or Insurance Payments (or both) under this Article 5.2 shall not be
deemed the continuation of Smith’s employment for any purpose.




5.3. Conditions to Severance Payments. Except as provided in Section 5.2.b and below in
this Article 5.3, none of the Severance Payments and the Insurance Payments under Article
5.2 will be subject to reduction as the result of future compensation earned or received by
Smith (including by self-employment), and Smith shall have no duty to mitigate his damages.
The Severance Payments and the Insurance Payments shall, however, be conditioned upon:




5.3.a. The Company’s receipt of a Settlement Agreement, General Release, and
Covenant Not to Sue executed and performed by Smith (or his legal representative,
estate, or heirs) in substantially the form of Exhibit “A” to this Agreement
(the “Release Agreement”); and




5.3.b. the compliance by Smith (or his legal representative, estate, or heirs) with
Articles 6, 7, 8, and 9 after the Termination Date as specified in those Articles,
as well as with the Release Agreement.




The Company may cease or reduce the Severance Payments or the Insurance Payments (or both)
if, and the Company shall be entitled to a return of the Severance Payments and the
Insurance Payments (or both) made to the extent that, there is or has been any material
violation by Smith (or his legal representatives, estate, or heirs) of any of Articles 6, 7,
8, and 9 or of the Release Agreement.




5.4. Termination for Cause or by Smith. If Smith’s employment is terminated by the Company
for Cause or is voluntarily terminated by Smith, then Smith shall not be entitled to any
payments under this Agreement other than the amounts or benefits to which he is entitled
under Article 5.1.




5.5. Post-Termination Survival. The provisions of this Article 5 shall survive the
termination of Smith’s employment by the Company and its subsidiaries to the extent
necessary to effect the post-termination payments or benefits to which Smith is entitled
under the terms of this Article 5.



6. CONFIDENTIAL INFORMATION. The Company shall provide to Smith, during the Term, access
to various trade secrets, confidential information, and proprietary information of the Company
(which, in this Article 6 as well as in Articles 7, 8, and 9, shall include the Company’s
subsidiaries and affiliates) which are valuable and unique to the Company (“Confidential
Information”). Confidential Information includes the Company’s plans, policies, and procedures
as well as the plans, policies and procedures of other persons having relationships that are
material to the Company’s business and affairs. Smith shall not, either while in the employ of the
Company or at any time thereafter, (i) use any of the Confidential Information, or (ii) disclose
any of the Confidential Information to any person not an employee of the Company or not engaged to
render services to the Company, except (in either case) to perform his duties under this Agreement
or otherwise with the Company’s prior written consent.



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Nothing in this Article 6 shall preclude Smith from the use or disclosure of information generally
known to the public or not considered confidential by the Company or from any disclosure to the
extent required by law or court order (though Smith must give the Company prior notice of any such
required disclosure and must cooperate with any reasonable requests of the Company to obtain a
protective order regarding, or to narrow the scope of, the Confidential Information required to be
disclosed). All files, records, documents, information, data, and similar items relating to the
business or affairs of the Company, whether prepared by Smith or otherwise coming into his
possession, shall remain the exclusive property of the Company and shall not be removed from the
premises from the Company, except in the ordinary course of business as part of Smith’s performance
of his duties under this Agreement, and (in any event) shall be promptly returned or delivered to
the Company (without Smith’s retaining any copies) upon the termination of employment under this
Agreement.



7. NONCOMPETITION. Smith acknowledges that, in addition to his access to and possession of
Confidential Information, during the Term he will acquire valuable experience and special training
regarding the Company’s business and that the knowledge, experience, and training he will acquire
would enable him to injure the Company if he were to engage in any business that is competitive
with the business of the Company. Therefore, Smith shall not, at any time during the Term and for
the twelve (12) consecutive months immediately after the Termination Date, directly or indirectly
(as an employee, employer, consultant, agent, principal, partner, shareholder, officer, director,
or manager or in any other individual or representative capacity), engage, invest, or participate
in any business in direct competition with the business of the Company within a fifty (50)-mile
radius of each location, or set or group of locations, (i) at, from, or to which the Company
conducts or has conducted business or renders, provides, or delivers, or has rendered, provided, or
delivered, services or products during the Measurement Period (as defined below) or (ii) that is or
has been, during the Measurement Period, the subject of a Proposal (as defined below) to conduct
business or render, provide, or deliver services or products thereat, therefrom, or thereto.
“Measurement Period” means, with respect to Smith’s activity (A) at any time during the
Term, the Term, and (B) at any time on or after the Termination Date, the six (6) consecutive
months preceding, and including, the Termination Date. “Proposal” means a written or
formal proposal, bid, arrangement, understanding, or agreement by the Company to or with another
person that reflects or contains negotiated or substantive terms, but does not include any
marketing contact by the Company where the other person has not solicited that contact or indicated
any interest in doing business with the Company. (Smith shall not be prohibited, however, from
owning, as a passive investor, less than five percent (5%) of the publicly traded stock or other
securities of any entity engaged in a business competitive with that of the Company.) Smith
represents and agrees that (x) the Company has agreed to provide him, and he will receive from the
Company, special experience and knowledge, including Confidential Information, (y) because the
Confidential Information is valuable to the Company, its protection (particularly from any
competitive business) constitutes a legitimate interest to be protected by the Company by
enforcement of the restriction in this Article 7, and (z) the enforcement of the restriction in
this Article 7 would not be unduly burdensome to Smith and that, in order to induce the Company to
enter into this Agreement (which contains various benefits to Smith and obligations of the Company
with respect to Smith’s employment), Smith is willing and able to engage, invest, or participate in
business after the Termination Date so as not to violate this Article 7. The Parties agree that
the restrictions in



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this Article 7 regarding scope of activity, duration, and geographic area are reasonable; however,
if any court should determine that any of those restrictions is unenforceable, that restriction
shall not thereby be terminated, but shall be deemed amended to the extent required to render it
enforceable. It is understood and accepted that Smith currently serves as a non-executive director
of: (a) Research Pharmaceutical Services, Inc., (b) VSource Asia Berhad and (c) Transpac Media
Limited and that such service does not constitute business that is competitive to the Company.



8. NONSOLICITATION. Smith shall not, at any time within the twelve (12) consecutive months
immediately after the Termination Date, either directly or indirectly:




8.1. Disclose Contact Information. Make known to any person the names and addresses, or
other contact information, of any of the customers, suppliers, or other persons having
significant business relationships with the Company within the information technology
industry, so that such person could affect, or attempt to affect, any of those relationships
to the detriment of the Company; or




8.2. Solicit Employees. Solicit, recruit, or hire, or attempt to solicit, recruit, or hire,
any employee or consultant of the Company, or in any other manner attempt to induce any
employee or consultant of the Company to leave the employ of the Company or cease his or her
consulting or similar business relationship with the Company. References in this Article
8.2 to “any employee or consultant” shall include any person who was an employee or
consultant of the Company at any time within the six (6) consecutive months preceding, and
including, the Termination Date.



9. DEVELOPMENTS. Smith shall promptly disclose to the Company all inventions, discoveries,
improvements, processes, formulas, ideas, know-how, methods, research, compositions, and other
developments, whether or not patentable or copyrightable, that Smith, by himself or in conjunction
with any other person, conceives, makes, develops, or acquires during the Term which (i) are or
relate to the properties, assets, or existing or contemplated business or research activities of
the Company, (ii) are suggested by, arise out of, or result from, directly or indirectly, Smith’s
association with the Company (including, but not limited to, any finders’ fees payable to Smith as
a result of financing transactions undertaken by the Company), or (iii) arise out of or result
from, directly or indirectly, the use of the Company’s time, labor, materials, facilities, or other
resources (“Developments”).



Smith hereby assigns, transfers, and conveys to the Company, and hereby agrees to assign, transfer,
and convey to the Company during or after the Term, all of his right and title to and interest in
all Developments. Smith shall, from time to time upon the request of the Company during or after
the Term, execute and deliver any and all instruments and documents and take any and all other
actions which, in the judgment of the Company or its counsel, are or may be necessary or desirable
to document any such assignment, transfer, and conveyance to the Company or to enable the Company
to file and process applications for, and to acquire, maintain, and enforce, any and all patents,
trademarks, registrations, or copyrights with respect to any of the Developments, or to obtain any
extension, validation, re-issue, continuance, or renewal of any such patent, trademark,
registration, or copyright. The Company will be responsible for the preparation of any such
instrument or document and for the implementation of any such



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proceedings and will reimburse Smith for all reasonable expenses incurred by him in complying with
this Article 9.



10. INDEMNIFICATION. To the extent Smith is an officer or director of the Company, the
Company shall include Smith under any existing or future (i) directors’ and officers’ liability
insurance policy that the Company obtains and maintains or (ii) indemnification agreements between
the Company and other executives of the Company. Subject to the foregoing sentence, the Company
will indemnify Smith to the fullest extent permitted by the laws of the Company’s state of
incorporation in effect at that time or by the articles or certificate of incorporation and by-laws
of the Company, whichever affords the greater protection to Smith.



11. CERTAIN REMEDIES. Any breach or violation by Smith of any of Articles 6, 7, 8, and 9
shall entitle the Company, as a matter of right, to an injunction issued by any court of competent
jurisdiction, restraining any further or continued breach or violation, or to specific performance
requiring the compliance with Smith’s covenants. This right to an injunction or other equitable
relief shall be in addition to, and not in lieu of, any other remedies to which the Company may be
entitled. The existence of any claim or cause of action of Smith against the Company, or any
subsidiary or affiliate of the Company, whether based on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of Smith’s covenants in any of Articles 6,
7, 8, and 9. The covenants in Articles 6, 7, 8, and 9 and in this Article 11 shall survive the
termination of Smith’s employment under this Agreement.



12. BINDING AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the Company and Smith and their respective legal representatives,
heirs, executors, administrators, and successors and assigns (as permitted by this Article 12),
including any successor to the Company by merger, consolidation, or reorganization and any other
person that acquires all or substantially all of the business and assets of the Company. The
Company shall have the right, without the need for any consent from Smith, to assign its rights,
benefits, remedies, and obligations under this Agreement to one or more other persons. The rights,
benefits, remedies, and obligations of Smith under this Agreement are personal to Smith, however,
and may not be assigned or delegated by him; except that this shall not preclude (i) Smith from
designating one or more beneficiaries to receive any amount or benefit that may be paid or provided
after Smith’s death or (ii) the legal representative of Smith’s estate from assigning any right or
benefit under this Agreement to the person or persons entitled thereto under Smith’s will or the
laws of intestacy applicable to Smith’s estate, as the case may be.



13. SEVERABILITY. If any provision of this Agreement is found to be invalid or
unenforceable for any reason, then (i) that provision shall be severed from this Agreement, (ii)
this Agreement shall be construed and enforced as if that invalid or unenforceable provision never
constituted a part of this Agreement, and (iii) the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest extent permitted by
applicable law. Further, in lieu of that invalid or unenforceable provision, there shall be added
to this Agreement a provision as similar in its terms to that invalid or unenforceable provision as
may be possible and be valid and enforceable.



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14. NOTICES. Any notice, request, or other communication to be given by either Party under
this Agreement by to the other shall be in writing and either (i) delivered in person, (ii)
delivered by prepaid same-day or overnight courier service, (iii) sent by certified mail, postage
prepaid with return receipt requested, or (iv) transmitted by facsimile, in any case addressed to
the other Party as follows:



	 	 	 	 	 
	 

	 	To the Company:
	 	Tri-Isthmus Group, Inc.
	 

	 	 	 	149 South Barrington Avenue, Suite 808
	 

	 	 	 	Los Angeles, California 90049
	 

	 	 	 	Attention: David Hirschhorn, Chief Executive Officer
	 

	 	 	 	Facsimile:                                          
	 
	 	 	 	 
	 

	 	with a copy (which shall not constitute notice) to:

	 
	 	 	 	 
	 

	 	 	 	Hughes & Luce, LLP
	 

	 	 	 	1717 Main Street, Suite 2800
	 

	 	 	 	Dallas, TX 75201
	 

	 	 	 	Attn: I. Bobby Majumder, Esq.
	 

	 	 	 	Facsimile: (214) 939-5849
	 
	 	 	 	 
	 

	 	To Smith:
	 	Dennis M. Smith
	 

	 	 	 	33 Gull Point Drive
	 

	 	 	 	Hilton Head Island, SC 29928
	 

	 	 	 	Facsimile: (603) 843-9266






or to such other address or facsimile number as the Party to be notified may have designated by
notice previously given in accordance with this Article 14. Communications delivered in person or
by courier service or transmitted by facsimile shall be deemed given and received as of actual
receipt (or refusal) by the addressee. Communications mailed as described above in this Article 14
shall be deemed given and received three (3) business days after mailing or upon actual receipt,
whichever is earlier.



15. CERTAIN DEFINED TERMS. In this Agreement, (i) “person” means an individual or
any corporation, partnership, trust, unincorporated association, limited liability company, or
other legal entity, whether acting in an individual, fiduciary, or other capacity, and any
government, court, or governmental agency, (ii) “include” and “including” do not
signify any limitation, (iii) “Article” and “Section” means any Article and any
Section, respectively, of this Agreement, unless otherwise indicated, (iv) an “affiliate”
of a person means any other person controlling, controlled by, or under common control with that
person, and (v) “business day” means any Monday through Friday, other than any such weekday
on which the executive offices of the Company are closed. In addition, the use in this Agreement
of “year,” “annual,” “month,” or “monthly” (or similar terms) to
indicate a measurement period shall not itself be deemed to grant rights to Smith for employment or
compensation for that period.



16. ENTIRE AGREEMENT. This Agreement, with Exhibit “A”, constitutes the entire
agreement between the Company and Smith with respect to the subject matter hereof and



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supersedes any prior agreement between the Company and Smith with respect to the same subject
matter.



17. MODIFICATION AND WAIVER. No amendment to or modification of this Agreement, or waiver
of any term, provision, or condition of this Agreement, will be binding upon a Party unless the
amendment, modification, or waiver is in writing and signed by the Party to be bound. Any waiver
by a Party of a breach or violation of any provision of this Agreement by the other Party shall not
be deemed a waiver of any other provision or of any subsequent breach or violation.



18. GENDER. Whenever the context requires in this Agreement, words denoting gender in this
Agreement include the masculine, feminine, and neuter.



19. GOVERNING LAW; VENUE. This Agreement, and the rights, remedies, obligations, and
duties of the Parties under this Agreement, shall be governed by, construed in accordance with, and
enforced under the laws of the State of Delaware. The exclusive venue of any action or proceeding
relating to this Agreement or its subject matter shall be in Los Angeles, California.



20. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
constitutes an original, but all of which constitute one and the same document.



The Parties have executed this Agreement to be effective as of the date stated in the first
paragraph.



	 	 	 	 	 	 	 
	THE COMPANY:	 	 	 	EMPLOYEE:
	TRI-ISTHMUS GROUP, INC.	 	 	 	 
	a Delaware corporation	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	DAVID HIRSCHHORN
	 	 	 	Printed Name
	Its:

	 	Chief Executive Officer	 	 	 	 






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EXHIBIT “A”




Settlement Agreement, General Release, and Covenant Not to Sue





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EXHIBIT “A”



SETTLEMENT AGREEMENT,

GENERAL RELEASE, AND COVENANT NOT TO SUE




     This Settlement Agreement, General Release, and Covenant Not to Sue (“Agreement”) is
made and entered into as of the                      day of                     , ___, by and between
                                         (“Employee”) and                                         , a                                         
corporation (the “Company”), hereinafter collectively referred to as the “parties”.



Recitals




     WHEREAS, Employee was employed by the Company as                                          under the terms of
an Executive Employment Agreement dated as of
                    , 200___ (the “Employment
Agreement”);



     WHEREAS, Employee’s employment under the Employment Agreement shall terminate effective
                    ,
___ (the “Termination Date”); and



     WHEREAS, the parties desire to settle fully and finally, in the manner set forth herein, all
differences between them which have arisen, or which may arise, prior to, or at the time of, the
execution of this Agreement, including, but in no way limited to, any and all claims and
controversies arising out of the Employment Agreement, the employment relationship between Employee
and the Company, and the termination thereof;



Agreement




     NOW, THEREFORE, in consideration of the Recitals and the mutual promises, covenants and
agreements set forth herein, the parties covenant and agree as follows:



     1. Employee, for himself or herself and on behalf of his or her attorneys, heirs, assigns,
successors, executors, and administrators, IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND
FOREVER DISCHARGES the Company, its current and former parent, subsidiary, affiliated, and related
corporations, firms, associations, partnerships, limited liability companies, and other entities,
their successors and assigns, and the current and former owners, members, shareholders, managers,
directors, officers, partners, employees, agents, attorneys, representatives, and insurers of said
corporations, firms, associations, partnerships, limited liability companies, and other entities,
and their guardians, successors, assigns, heirs, executors, and administrators (hereinafter
collectively referred to as the “Releasees”), from any and all claims, complaints,
grievances, liabilities, obligations, promises, agreements, damages, causes of action, rights,
debts, demands, controversies, costs, losses, damages, and expenses (including, without limitation,
attorneys’ fees and expenses) whatsoever, other than any arising under this Agreement, under any
municipal, local, state, or federal law, common or statutory — including, but in no way limited
to, claims



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under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621, et seq. — for any
actions or omissions whatsoever, whether known or unknown and whether or not connected with the
Employment Agreement, the employment of Employee by the Company, or the termination thereof, which
existed or may have existed prior to, or contemporaneously with, the execution of this Agreement.




     2. Employee, for himself or herself and on behalf of his or her attorneys, heirs, assigns,
successors, executors, and administrators, COVENANTS NOT TO SUE OR OTHERWISE CONSENT TO PARTICIPATE
IN ANY ACTION AGAINST, any of the Releasees based upon any of the claims and other matters released
in paragraph 1 of this Agreement.




     3. Employee agrees that he or she will keep the terms, amount, and fact of this Agreement
STRICTLY AND COMPLETELY CONFIDENTIAL and that he or she will not communicate or otherwise disclose
to any employee (past, present, or future) of the Company or any of the other Releasees or to a
member of the general public the terms, amount, or fact of this Agreement, except as may be
required by law or compulsory process.




     4. Employee waives and releases forever any right or rights he or she might have to
employment, reemployment, or reinstatement with the Company or any of the other Releasees, except
as may be provided under the terms of this Agreement.




     5. Upon the expiration of seven (7) days after Employee’s execution of this Agreement, the
Company agrees to pay or provide Employee the Severance Payment as provided (and defined) in the
Employment Agreement.




     6. The parties hereto recognize that, by entering into this Agreement, the Company does not
admit, and does specifically deny, any violation of any local, state, or federal law, common or
statutory. The parties further recognize that this Agreement has been entered into in release and
compromise of any claims which might be asserted by Employee in connection with his or her
employment by the Company, or the termination thereof, and to avoid the expense and burden of any
litigation related thereto.




     7. The parties acknowledge and agree that in the event Employee materially breaches any
provision of this Agreement, (a) Employee will indemnify and hold the Company harmless from and
against any and all resulting damages, expense, or loss incurred by the Company (including, without
limitation, attorneys’ fees and expenses), (b) Employee will immediately repay to the Company in
full any payment made to him or her under the provisions of this Agreement, and (c) the Company
will be entitled to file counterclaims against Employee for breach of the covenant not to sue and
may recover from Employee any payment not repaid to the Company, as required by clause (b) of this
paragraph 7, as well as any and all other resulting actual or consequential damages.




     8. One or more waivers of a breach of any covenant, term, or provision of this Agreement by
either party shall not be construed as a waiver of a subsequent breach of the same covenant, term,
or provision, nor shall it be considered a waiver of any other then existing or subsequent breach
of a different covenant, term, or provision.



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     9. If any provision or term of this Agreement is held to be illegal, invalid, or
unenforceable, (a) such provision or term shall be fully severable, (b) this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision had never
constituted part of this Agreement, and (c) the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision or term there shall be added automatically as a part of this
Agreement another provision or term as similar to the illegal, invalid, or unenforceable provision
as may be possible and that is legal, valid, and enforceable.




     10. The parties agree that should one party sue the other party for a breach of any provision
of this Agreement, the prevailing party shall be entitled to recover its attorneys’ fees and costs
of court. Each party shall have the right to sue for specific performance of this Agreement, and
for declaratory and injunctive relief.




     11. Either party may revoke this Agreement, within seven (7) days of the date of its execution
by Employee (the “Revocation Period”), by written notice to the other party. Employee
agrees that if he or she revokes this Agreement, he or she shall receive none of the benefits
provided for under its terms. Employee further understands and agrees that, unless the Company
receives from Employee, prior to the expiration of the Revocation Period, written notice of his or
her revocation of this Agreement, this Agreement and all of its terms shall have full force and
effect, and Employee shall have forever waived his or her right to revoke this Agreement.




     12. This Agreement constitutes the entire agreement of the parties, and supersedes all prior
and contemporaneous negotiations and agreements, oral or written, between the parties. All prior
and contemporaneous negotiations and agreements are deemed incorporated and merged into this
Agreement and are deemed to have been abandoned if not so incorporated. No representations, oral
or written, are being relied upon by either party in executing this Agreement other than the
express representations of this Agreement. This Agreement cannot be changed or terminated without
the express written consent of the parties.




     13. This Agreement shall be governed by and construed in accordance with the laws of the State
of Texas, except where preempted by federal law.




     14. By executing this Agreement, Employee acknowledges that (a) this Agreement has been
reviewed with him or her by a representative of the Company (see Attachment “A”, which is
attached hereto and incorporated herein by reference), (b) he or she has had at least twenty-one
(21) days to consider the terms of the Agreement (see Attachment “A”), and has considered
its terms for that period of time or has knowingly and voluntarily waived his or her right to do
so, (c) he or she has been advised by the Company in writing to consult with an attorney regarding
the terms of the Agreement (see Attachment “A”), (d) he or she has consulted with, or has
had sufficient opportunity to consult with, an attorney of his or her own choosing regarding the
terms of the Agreement, (e) any and all questions regarding the terms of this Agreement have been
asked and answered to his or her complete satisfaction, (f) he or she has read this Agreement and
fully understands its terms and their import, (g) except as provided by this Agreement, he or she
has no contractual right or claim to the benefits described herein, (h)



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the consideration provided for herein is good and valuable, and (i) he or she is entering into
this Agreement voluntarily, of his or her own free will, and without any coercion, undue influence,
threat, or intimidation of any kind or type whatsoever.



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     EXECUTED in                     ,                      this ___ day of                     
, 200___.



	 	 	 	 	 	 	 
	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 






	 	 	 	 	 	 	 
	THE STATE OF

	 	 	 	§	 	 
	 

	 	 
	 	§	 	 
	COUNTY OF

	 	 	 	§	 	 
	 

	 	 

	 	 	 	 






     BEFORE ME, the undersigned, a Notary Public, on this day personally appeared
                                        , known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he or she executed the same for the purposes and
consideration therein expressed.



     GIVEN
UNDER MY HAND AND SEAL OF OFFICE this ___ day of                     , 200___.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Notary Public, State of	 	 	 	 
	 

	 	 	 	 	 	 





[SEAL]



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     EXECUTED
in ____, Texas, this ___day of                                         , 200___.



	 	 	 	 	 	 	 
	 	 	THE COMPANY:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	THE STATE OF

	 	 	 	§	 	 
	 

	 	 
	 	§	 	 
	COUNTY OF

	 	 	 	§	 	 
	 

	 	 

	 	 	 	 






     BEFORE ME, the undersigned, a Notary Public, on this day personally appeared
                                        ,                                     
     of                                         , known to me to be
the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he or
she executed the same as the act of that company for the purposes and consideration therein
expressed.



     GIVEN
UNDER MY HAND AND SEAL OF OFFICE this ___ day of                     , 200___.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Notary Public, State of	 	 	 	 
	 

	 	 	 	 	 	 





[SEAL]




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ATTACHMENT “A”




NOTICE OF RIGHTS




     Attached hereto you will find a proposed Settlement Agreement, General Release, and Covenant
Not to Sue (“Agreement”) with respect to the termination of your employment. It is
required by law that you be given at least 21 days from the date of receipt of the proposed
Agreement within which to consider its terms. During this period, please feel free to contact the
person listed below to ask any questions regarding the Agreement, including, but not limited to,
the definitions of words which you do not know and the meanings of phrases, sentences, or
paragraphs which you do not understand. It is recommended that you consult with an attorney
regarding your legal rights with respect to the Agreement during this 21-day period.



ACKNOWLEDGMENT OF RECEIPT




     I acknowledge that I received a copy of                                         ’s proposed Settlement
Agreement, General Release, and Covenant Not to Sue at
___:___.m. this ___ day of
___, ___, and that the Agreement and the Notice of Rights above have been reviewed with
me by the person listed below.



	 	 	 	 	 	 	 
	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 






	 	 	 	 	 
	COMPANY:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Its:

	 	 

	 	 
	 

	 	 

	 	 







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