exv10w2



 







Exhibit 10.2




TRANSITION AGREEMENT




     This Transition Agreement (the “Agreement”) is dated as of March 30, 2006 (the “Effective
Date”). This Agreement is made as a mutually agreed compromise between the Parties (as defined
below) for the settlement of all claims, differences, and alleged causes of action existing between
them as of the Effective Date.



PARTIES




     The Parties to this Agreement are Encysive Pharmaceuticals Inc. (the “Company”) and Stephen L.
Mueller (“Executive”). The Company and Executive are referred to collectively as the “Parties.”



PREAMBLE




     WHEREAS, Executive was previously employed as the Vice President of Finance and
Administration, Secretary and Treasurer of the Company, pursuant to an Agreement (entitled
“Termination Agreement”) dated March 20, 2003, as amended from time to time (the “Employment
Agreement”);



     WHEREAS, the Parties intend to terminate the Employment Agreement as of the Termination Date
August 31, 2006, (except with respect to Executive’s and the Company’s obligations under Sections
4.8, 8, 9, 10, 12.6, 12.7, 12.8, 12.10 and 12.11 thereof) and enter into this Agreement; pursuant
to which Executive will terminate his employment positions August 31, 2006.



     WHEREAS, the Company has advised Executive in writing to consult with independent counsel
respecting this Agreement;



     WHEREAS, Executive has had an opportunity to consult with independent counsel with respect to
the terms, meaning and effect of this Agreement; and



     WHEREAS, Executive understands that the Company regards the above representations as material
and that the Company is relying on these representations in entering into this Agreement.



     WHEREAS, the Company has advised Executive that it is not aware of any pending or threatened
litigation, arbitration, or regulatory or investigative matter that will involve Executive as a
defendant, respondent, target or significant witness, and the Company understands that Executive is
relying on these representations in entering this Agreement



     NOW, THEREFORE, in consideration of the mutual promises and obligations contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:



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1. Definitions.




     1.1 “Base Salary” means the Executive’s annual base salary in effect on the date of this
Agreement, i.e. $250,000.00.



     1.2 “Company and/or its Affiliates” means and includes the Company, its Affiliates, and all of
their predecessors, successors and assigns and parents, subsidiaries, divisions or other affiliated
companies, partners, partnerships, present and former officers, directors, employees, stockholders,
agents, employee benefit plans or programs and their fiduciaries, whether in their individual or
official capacities and all of the successors and assigns of the foregoing. “Affiliates” also
includes a person or entity who, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Company.



     1.3 “Date of Termination” means August 31, 2006.



     Other defined terms are defined as provided herein.


2. Termination of the Employment Agreement. The Parties agree that the Employment
Agreement is terminated and of no further force and effect as of August 31, 2006, and no payments,
benefits, or obligations are due or payable pursuant to the Employment Agreement, except with
respect to Executive’s and Company’s obligations under Section 4.8, Indemnification Agreements,
Section 8, Executive’s Confidentiality Obligation; Section 9, Disclosure of Information Ideas,
Concepts, Improvements, Discoveries and Inventories; Section 10, Ownership of Information, Ideas,
Concepts, Improvements, Discoveries, and Inventions and all Original Works of Authorship; Section
12.7, Corporate Authority, 12.10, Nonalienation, Section 12.8, Defense of Claims of the Employment
Agreement and Section 12.11, Incompetent or Minor Payees.



3. Salary, Duties and Benefits. From the Effective Date until the Date of Termination,
August 31, 2006, Executive will be employed by the Company in such position and with such duties as
determined by the Chief Executive Officer or the Chief Financial Officer of the Company and with
such compensation and benefits as currently provided in Sections 4.1 (except that Executives annual
Base Salary shall be $250,000.00), 4.3, 4.4, 4.5, 4.6, and 4.8 of the Employment Agreement.
Executive shall be paid for any accrued but unused vacation as of August 31, 2006.



4. Resignation by Executive. Effective as of the Date of Termination, August 31, 2006,
Executive shall resign all positions he holds with the Company and/or its Affiliates.



5. Payments and Benefits to Executive. In accordance with Section 6.3 of the Employment
Agreement, and subject to Executive’s execution of a release from liability and waiver of right to
sue the Company and/or its Affiliates, in the form attached hereto as Exhibit A, the Company agrees
to pay Executive severance payments and benefits as follows:




          a. The Company shall, promptly upon submission by the Executive of supporting documentation,
pay or reimburse to the Executive any unreimbursed costs and expenses paid or incurred by the
Executive prior to the Date of Termination which would have




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been payable under Section 4.6 of the Employment Agreement if the Executive’s employment had
not been terminated.




          b. During the 12-month period commencing on the Date of Termination, the Company shall
maintain COBRA (medical and dental) and group life insurance coverage, at the Company’s expense for
the Executive and/or the Executive’s family at least equal to those which would have been provided
to the Executive and his family if the Executive had not been terminated. Alternatively, at the
written direction of Executive, the Company will not maintain COBRA medical coverage but will
instead pay to Executive the cash equivalent of the Employer’s portion of Executive’s medical
insurance premium payment on a monthly basis. After the 12-month period commencing on the Date of
Termination, Executive shall be responsible for all premium payments necessary to continue such
COBRA coverage, should he desire to do so. The Company will not maintain disability benefits after
the Date of Termination. Benefits (including COBRA and/or cash payments) otherwise receivable by
the Executive pursuant to this Section 5b shall be reduced to the extent substantially similar
benefits are actually received by or made available to the Executive by any subsequent employer of
Executive during the same time period for which such benefits would be provided pursuant to this
Section 5b at a cost to the Executive that is commensurate with the cost incurred by the Executive
immediately prior to the Date of Termination; provided, however, that if the Executive becomes
employed by a new employer which maintains a medical plan that either (i) does not cover the
Executive or a family member or dependent with respect to a preexisting condition which was covered
under the applicable Company medical plan, or (ii) does not cover the Executive or a family member
or dependent for a designated waiting period, the Executive’s coverage under the applicable Company
medical plan shall continue (but shall be limited in the event of noncoverage due to a preexisting
condition, to such preexisting condition) until the earlier of the end of the applicable period of
noncoverage under the new employer’s plan or the first anniversary of the Date of Termination. The
Executive agrees to report to the Company any coverage and benefits actually received by the
Executive or made available to the Executive from such other employer(s). The Executive shall be
entitled to elect to change his level of coverage and/or his choice of coverage options (such as
Executive only or family medical coverage) with respect to the benefits to be provided by the
Company to the Executive to the same extent that actively employed senior executive officers of the
Company are permitted to make such changes; provided, however, that in the event of any such
changes the Executive shall pay the amount of any cost increase that would actually be paid by an
actively employed senior executive officer of the Company by reason of making the same change in
his level of coverage or coverage options.




          c. During the 12-month period following the Date of Termination, the Company shall pay to the
Executive, in equal semi-monthly installments, the Executive’s annual Base Salary, i.e.,
$250,000.00, paid on a semi-monthly basis with no offsets for income of Executive from other
employment or business enterprise of the Executive..




          d. During the 12-month period after the Date of Termination, all stock options and restricted
stock held by the Executive will continue to vest and be exercisable in accordance with their terms
in effect on the Date of Termination, provided however that on the conclusion of said 12-month
period, all unexpired, unexercised options and restricted stock shall be fully vested, and
thereafter, all such fully vested stock options will be exercisable by the Executive




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until the earlier to occur of the expiration of the term of each stock option or 12 months
after the date they become fully vested.




          e. Executive’s participation in all other employee benefit plans and programs maintained by
the Company and/or its Affiliates shall cease on the Date of Termination.




          Notwithstanding any of the above to the contrary, Executive will not be entitled to any of the
benefits or payments provided in this Section 5 if (i) Executive breaches this Agreement or the
provisions of Sections 8, 9, 10 or 12.8 of the Employment Agreement, or (ii) Executive fails to
execute a release from liability and waiver of right to sue the Company and/or its Affiliates in
the form attached hereto as Exhibit A. Except as otherwise provided herein or as may be required by
Code Section 409A or by the terms of welfare, benefit and pension plans, all payments to Executive
provided for in this Agreement shall be paid within 10 days after the Effective Date of the Release
Agreement, Exhibit A hereto (as defined therein).




6. Confidentiality and Defense of Claims.



6.1 Both Parties shall keep strictly confidential all the terms and conditions, including amounts
payable, in the Agreement and shall not disclose them to any person other than legal and/or
financial advisors, government officials who seek such information in the course of their official
duties, individuals at the Company responsible for implementing the Agreement, and Executive’s
spouse, unless compelled to do so by law or regulation, or business necessity (including the
Company’s requirement to file this Agreement with the Securities and Exchange Commission, the
Parties’ tax reporting obligations, Executive’s continuing obligation s under Sections 8, 9, 10,
and 12.8 of the Employment Agreement, if disclosure needs to be made to prospective or subsequent
employers of Executive). Nothing in this Section is intended to prevent Executive from disclosing
the fact that he was employed by the Company or from describing his employment duties or
compensation throught August 31, 2006.



6.2 The Executive agrees that from the Effective Date until two (2) years after the Date of
Termination, upon request from the Company, he will reasonably cooperate with the Company and/or
its Affiliates in the defense of any claims or actions that may be made by or against the Company
and/or its Affiliates that affect his prior areas of responsibility, except if the Executive’s
reasonable interests are adverse to the Company and/or its Affiliates in such claim or action. To
the extent travel is required to comply with the requirements of this Section 6.2, the Company
shall, to the extent possible, provide the Executive with notice at least 10 days prior to the date
on which such travel would be required. The Company agrees to promptly pay or reimburse the
Executive upon demand for all of his reasonable travel and other direct expenses incurred, or to be
reasonably incurred, to comply with his obligations under this Section 6.2. In addition, Executive
shall be reimbursed at the rate of $200.00 per hour for the time he is required by the Company to
devote to the fulfillment of his obligations under this Section. Furthermore, the Company’s
requests that Executive fulfill his obligations under this Section shall not unreasonably interfere
with his subsequent employment or business enterprise



7. Consultation With Counsel. The Company advises Executive to consult with independent
counsel prior to executing this Agreement, and Executive acknowledges being given that advice.




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8. No Defamatory Statements. Executive agrees that he will refrain from making any
representation, statement, comment or any other form of communication (hereinafter collectively
referred to as “representation”), whether written or oral, to any person or entity, including but
not limited to the principals, officers, directors, employees, advisors, agents, customers,
suppliers and competitors of Company and/or its Affiliates, which representation has the effect or
tendency to disparage, denigrate, or otherwise reflect negatively on Company and/or its Affiliates
and/or their business, officers, directors, shareholders, employees, agents, advisors or investors.
The Company agrees to give Executive an opportunity to review and make comments on any press
releases the Company may issue describing Executive’s departure from the Company. The Company
agrees that senior executives of the company shall not disparage Executive. This section is not
intended to limit either Party’s right to tell the truth.



9. Return of Company Materials.



Executive agrees to deliver to the Company promptly after the Date of Termination all originals and
copies of Company materials and all other property of the Company and/or its Affiliates in the
Executive’s possession, custody or control.




10. Miscellaneous



10.1 The Parties acknowledge that this Agreement is the result of a compromise and shall never be
construed as, or said by either of them to be, an admission by the other of any liability,
wrongdoing, or responsibility. The Parties expressly disclaim any such liability, wrongdoing,
fault, or responsibility.



10.2 This Agreement and the Release Agreement constitute the entire agreement between the Parties,
except to the extent that it expressly incorporates provisions of the Employment Agreement. This
Agreement may be executed in identical counterparts, each of which shall constitute an original and
both of which shall constitute one and the same agreement. Except as expressly provided herein,
this Agreement supersedes the Employment Agreement and any severance benefit plan or program and
any bonus program at the Company and/or its Affiliates. The parties may (but are not obligated to)
enter into an independent contractor agreement at the hourly rate specified in Section 6.2 of this
Agreement, which, if done, shall be another agreement in addition to this entire agreement.



10.3 The Parties warrant that no representations have been made other than those contained in the
written provisions of this Agreement, and that they do not rely on any representations not stated
in this Agreement.



10.4 The Parties further warrant that they or their undersigned representatives are legally
competent and fully authorized to execute and deliver this Agreement.



10.5 The Parties confirm they have had the opportunity to have this Agreement explained to them by
independent counsel of their choice, and that they execute this Agreement freely, knowingly and
voluntarily. The Company is relying on its own judgment and on the advice of its independent
counsel and not upon any recommendation of Executive or his agents, independent counsel or other
representatives. Likewise, Executive is relying on his own judgment and on the advice of his
independent counsel, and not upon any recommendation of the




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Company or its directors, officers, employees, agents, independent counsel or other
representatives. By voluntarily executing this Agreement, both Parties confirm their competence to
understand and do hereby accept the terms of this Agreement as resolving fully all differences,
disputes and claims that may exist within the scope of this Agreement.



10.6 This Agreement may not be modified or amended except by a writing signed by both Parties. No
waiver of this Agreement or of any of the promises, obligations, terms, or conditions contained in
it shall be valid unless it is in writing signed by the Party against whom the waiver is to be
enforced. The waiver by either Party hereto of a breach of any provision of this Agreement shall
neither operate nor be construed as a waiver of any subsequent breach by any Party. Except as
expressly provided for herein, the failure of either Party hereto to take any action by reason of
any breach will not deprive such Party of the right to take action at any time while such breach
occurs.



10.7 If any part or any provision of this Agreement shall be finally determined to be invalid or
unenforceable under applicable law by a court of competent jurisdiction, that part shall be
ineffective to the extent of such invalidity or unenforceability only, without in any way affecting
the remaining parts of said provision or the remaining provisions of the Agreement.



10.8 The Parties have cooperated in the preparation of this Agreement. Hence, the Agreement shall
not be interpreted or construed against or in favor of either Party by virtue of the identity,
interest, or affiliation of its preparer.



10.9 This Agreement is made and shall be enforced pursuant to the laws of the State of Texas, or
federal law, as applicable, without regard to Texas’ law governing conflicts of law. All
performance required by the terms of this Agreement shall take place in Harris County, Texas.



10.10 The amount of benefits payable under this Agreement shall be paid from the general assets of
the Company and there shall be no separate trust established to pay any benefits under this
Agreement. Executive’s status with respect to the payment of benefits under this Agreement shall
be as a general unsecured creditor of the Company.



10.11 All payments and benefits payable under this Agreement shall be subject to all applicable
federal, state and local taxes and tax requirements and any elections by Executive for payouts or
deferrals under any Company benefit plan or program.



10.12 This Agreement shall be binding on and inure to the benefit of the successors and assigns of
the Parties. No rights or obligations, benefits of or payments to Executive under this Agreement
may be subject to claims of Executive’s creditors, or in any manner may be assigned or transferred
by Executive other than his rights to compensation and benefits that are transferred by will or to
his estate by operation of law.



10.13 All notices and other communications required or permitted hereunder or necessary or
convenient in connection herewith shall be in writing and shall be deemed to have been given when
(i) delivered by hand or sent by facsimile, or (ii) on the third business day following deposit in
the United States mail by registered or certified mail, return receipt requested, to the addresses
as follows (provided that notice of change of address shall be deemed given only when received):




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If to the Company to:



Encysive Pharmaceuticals Inc.

4848 Loop Central Drive, Suite 700

Houston, Texas 77081

Attention: General Counsel

Facsimile No.: (713) 782-8232



If to the Executive to:



Stephen L. Mueller

16502 De Lozier

Houston, Texas 77040



or to such other addresses as the Company or the Executive, as the case may be, shall designate by
notice to the other party hereto in the manner specified in this Section 10.13.



10.14 Titles and headings to Sections are for the purpose of reference only and shall in no way
limit, define or otherwise affect the provisions hereof. Any and all Exhibits referred to in this
Agreement are, by such reference, incorporated herein and made a part hereof for all purposes. The
words “herein”, “hereof”,”hereunder” and other compounds of the word “here” shall refer to the
entire Agreement and not to any particular provision hereof.



10.15 It is the Parties’ intent that this Agreement and all payments and benefits hereunder do not
constitute deferred compensation and are exempt from the requirements of Code Section 409A
applicable to deferred compensation. If either party, upon the advice of counsel based upon
subsequent regulations, rulings or applicable law respecting Code Section 409A, determines that the
Agreement or any payment or benefit hereunder constitutes deferred compensation and is subject to
the requirements of Code Section 409A, such party shall notify the other party of such
determination in writing 15 days before reporting the amount as deferred compensation under Code
Section 409A to any third party, including any governmental entity. If either Party, upon advice
of counsel respecting Code Section 409A, determines that a different payment schedule is required
by Code Section 409A, the Parties shall comply with the schedules required by Code Section 409A.




[SIGNATURE PAGE FOLLOWS]




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	Stephen L. Mueller (“Executive”)	 	ENCYSIVE PHARMACEUTICALS, INC. (“Company”)
	 
	 	 	 	 	 	 
	/s/ Stephen L. Mueller	 	By:	 	/s/ Bruce D. Given, M.D.,
	 	 	 	 	 
	 	 	 	 	with full authority from the Company to
	 	 	 	 	make this Agreement.
	Date:

	 	June 7, 2006
	 	 	 	Printed Name: Bruce D. Given, M.D.                       
                     
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	President and CEO
	 

	 	 	 	 	 	 
	 

	 	 	 	Date:
	 	June 7, 2006
	 

	 	 	 	 	 	 






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