Document:

Exhibit 10.3

 

SETTLEMENT AND RELEASE AGREEMENT

 

This Settlement and Release

Agreement (the “Settlement and Release Agreement”) is made this 16th

day of August, 2002 (the “Effective Date”), by and between Enchira

Biotechnology Corporation, a Delaware corporation (the “Company”), and Paul G.

Brown, III (“Brown”).

 

R E C I T A L S

 

WHEREAS, Brown and the

Company entered into that certain Employment Agreement dated July 18, 1995, as

amended by that certain First Amendment to Employment Agreement dated April 18,

2000, as further amended by that certain Second Amendment to Employment

Agreement dated April 2, 2002, to be effective as of January 1, 2002

(collectively, the “Employment Agreement”); and

 

WHEREAS, Brown and the

Company entered into that certain Settlement and Release Agreement (the

“Original Release”) dated May 7, 2002 whereby in exchange for certain retention

payments by the Company to Brown, which Brown accepted, Brown agreed to forgo

certain severance obligations set forth in his Employment Agreement and further

agreed to settle any claims that he may have had with the Company and release

the Company from any liability he may claim as of May  7, 2002; and

 

WHEREAS, concurrently with

the execution of the Original Release, the Company paid to Brown an initial

payment of $75,000 and deposited with Southwest Bank of Texas, N.A., a Texas

banking corporation, a second payment in the amount of $75,000 to be held in

escrow (the “Second Payment”) payable to Brown under certain conditions as set

forth in Section 1B. of the Original Release, including, but not limited to,

the termination of the Employment Agreement and the execution of this

Settlement and Release Agreement; and

 

WHEREAS, the Company desires

to engage Brown as a consultant, and Brown desires to accept such engagement as

a consultant of the Company.

 

NOW, THEREFORE, in

consideration of the execution, delivery and performance of this Settlement and

Release Agreement, and for other good and valuable consideration, the parties

hereto intending to be legally bound, mutually agree as follows:

 

1.             Termination, Resignation and Payment.

 

A.            Termination of

Employment Agreement.  As of the

date hereof, the parties hereby terminate the Employment Agreement and except

as provided in B. below, the Company hereby releases Brown from any and all

further obligations arising under the Employment Agreement.  Brown hereby acknowledges termination of the

Employment Agreement and releases the Company from any and all further

obligations arising under the Employment

 

 

Agreement

including, without limitation, the provisions thereof providing for the

Company’s payment of severance to Brown.

 

B.            Termination of

Non-Competition Provisions.  The

Company agrees that upon expiration or termination of the Consulting Agreement,

as defined below, other than for cause, it will release Brown from the

provisions of Section 5.6 of the Employment Agreement and expressly agrees

that Brown shall be permitted to engage in competitive activities following the

date of such termination or expiration; provided, however, that the remaining

nondisclosure, inventions and confidentiality provisions of Section 5 of

the Employment Agreement or such similar provisions as are set forth in the

Consulting Agreement (as defined below) shall continue to survive on the terms

provided therein and Brown shall continue to be bound by the terms thereof.

 

C.            Consulting

Agreement.  Notwithstanding Section

1B. of the Original Release which contemplates Brown’s resignation as an

officer and/or director as a condition to Brown’s receipt of the Second

Payment, the Company desires to engage Brown as a consultant, and Brown desires

to accept such engagement as a consultant of the Company, in accordance with

the terms of that certain Consulting Agreement between Brown and the Company

dated of even date herewith (the “Consulting Agreement”), a form of which is

attached hereto as Exhibit A.

 

D.            Payment by the

Company.  The Company agrees to, and

concurrently with the execution of this Settlement and Release Agreement and

the Consulting Agreement does hereby, pay Brown a lump sum severance payment in

the amount of the Second Payment, with such interest thereon, if any, (the

“Severance Payment”) in consideration for Brown’s termination of the Employment

Agreement, entering into the Consulting Agreement and for the releases

contained herein, among other things. 

The Severance Payment will be subject to all legally required taxes,

deductions and withholdings.  The

Severance Payment paid under this Settlement and Release Agreement is in lieu

and amendment of any other severance benefits that may otherwise be payable to

Brown (including, without limitation, those provided in the Employment

Agreement), except for such benefits required to be provided by law.  The consideration represented by the

Severance Payment is allocated among the waivers and releases contained in this

Section 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 Age

Discrimination Employment Act of 1967, as amended, and (ii) the remaining 95%

of the Severance Payment ($71,250, with any interest thereon) shall be

allocated to Brown’s amendment, waiver and release with respect to the

severance benefits payable to Brown pursuant to the Employment Agreement as

provided in this Section 1.D. and all other remaining claims described in

Section 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 other

liabilities 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 have

against the Company, its officers, directors, shareholders, agents and employees

and the successors and assigns of each, and all other persons, firms,

partnerships, or corporations in control of, under the direction of, or in any

way presently or formerly associated with the Company (the “Company Released

Parties”) of any kind whatsoever, including, but not limited to, allegations of

wrongful termination, breach of contract (other than in connection with this

Settlement and Release Agreement), intentional infliction of emotional

distress, negligent infliction of emotional distress, defamation, invasion of

privacy, any action in tort or contract (including any action under the

Company’s charter documents), any claims arising under and/or for any alleged

violation 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 Civil

Rights Act of 1866, 42 U.S.C. § 1981 et

seq., the Equal Pay Act, 29 U.S.C. § 206; the Employee

Retirement Income Security Act of 1974, as amended (“ERISA”) 29 U.S.C.

§ 1001 et seq. (non-vested

rights), the Americans with 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 and Retraining Notification Act (WARN), 29 U.S.C.,

§ 2101 et seq., the

Occupational Safety and Health Act, as amended, the Texas Commission on Human

Rights Act, Texas Labor Code § 21.001 et

seq., the Texas Payday Act, Texas Labor Code, § 61.01 et seq., the Texas Workers’ Compensation

Statute, Texas Labor Code § 451.0001 et

seq., and any other employment or civil rights act) and any and all

claims 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 Employment

Agreement) and does hereby release and forever discharge all of the Company

Released Parties of and from any and all debts, claims, demands, damages,

actions, causes of action, or liabilities of any nature whatsoever arising in

connection 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 to

any third party the terms and conditions of this Settlement and Release

Agreement including, without limitation, the consideration provided for by this

Settlement and Release Agreement; provided, however, that the foregoing shall

not apply to any disclosure: (i) that may be required to the extent

compelled by legal process, a government agency or court order or otherwise

required by applicable laws or regulations, (ii) that may be required to

enforce either party’s rights hereunder or (iii) to either party’s attorneys,

accountants and other professional advisors to whom disclosure is necessary to

accomplish the professional purposes for which such party has consulted such

professional advisors.  Each party understands

and agrees that in the event such party breaches any of the terms of this

Section 3, such party shall be liable to the other party for actual damages

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, enter

into, consummate and perform this Settlement and Release Agreement.  The execution, delivery and performance of

this Settlement and Release Agreement by the Company have been duly authorized

by all

 

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required corporate and other actions.  The Company has duly executed and delivered

this Settlement and Release Agreement. 

This Settlement and Release Agreement constitutes the legal, valid and

binding obligation of the Company enforceable in accordance with its respective

terms, subject to bankruptcy, insolvency, reorganization, moratorium and other

similar laws relating to the rights of creditors generally and except that the

enforceability of any indemnification provisions contained in this Settlement

and Release Agreement may be subject to considerations of public policy.

 

5.             Effective Date. 

Insofar as this Settlement and Release Agreement relates to the waiver

and release of any claims under ADEA, such waiver and release will become

effective on the next business day following seven (7) days from the date

set 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 of

the State of Texas.

 

7.             Payment of Legal Fees.  If any party is required to engage in any proceedings, legal or

otherwise, to defend or enforce its rights under this Settlement and Release

Agreement, such party, if successful, shall be entitled to recover from the

other party which is in breach of its duties hereunder, in addition to any

other remedy or sums due, the reasonable attorneys’ fees and disbursements and

costs of such proceeding incurred in connection therewith.

 

8.             Counterparts. 

This Settlement and Release Agreement may be executed in more than one

counterpart, each of which shall be an original, but all of which, taken

together, shall be and remain one instrument.

 

9.             Headings. 

The headings of the several sections of this Settlement and Release

Agreement are inserted for convenience only and shall not control or affect the

meaning or construction of any of the provisions hereof.

 

10.           Severability. 

If one or more of the provisions in this Settlement and Release

Agreement are deemed void by law, then the remaining provisions will continue

in full force and effect.

 

11.           Time for Review; Revocation.  Brown understands that insofar as it relates

to the waiver and release of any claims under the ADEA, he has

forty-five (45) days within which to consider this Settlement and Release

Agreement and that the portion of this Settlement and Release Agreement

relating to the waiver and release of any claims under the ADEA is revocable by

him for a period of seven (7) days following the execution of this Settlement

and Release Agreement, and if not so revoked, will become effective and

enforceable after such period of seven (7) days.

 

4

 

12.           Review by Brown and Counsel.  Brown expressly represents and warrants to

the Company that he has completely read this Settlement and Release Agreement

prior to executing it, has had an opportunity to review it with his counsel,

has been offered forty-five (45) days within which to consider this

Settlement and Release Agreement and to understand its terms, contents,

conditions and effects and has entered into this Settlement and Release

Agreement knowingly and voluntarily.

 

IN WITNESS WHEREOF, the

parties hereto have caused this Settlement and Release Agreement to be executed

as 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

  
							

 

5

 

Exhibit A

 

Form of Consulting

Agreement

 

(See attached)EXHIBIT 10.4

 

FOURTH

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Fourth Amendment to Employment Agreement (the “Amendment”) is made

and entered into by and between Enchira Biotechnology Corporation, a Delaware

corporation (the “Company”), and Daniel J. Monticello (the “Employee”), as of

this 15th day of August, 2002 (the “Effective Date”).

 

WHEREAS, the Employee and the Company entered into that certain

Employment Agreement dated January 31, 1996, as amended by that certain First

Amendment to Employment Agreement dated April 10, 1998, as further amended by

that certain Second Amendment to Employment Agreement dated April 9, 2001, and

as further amended by that certain Third Amendment to Employment Agreement

dated April 2, 2002, to be effective as of January 1, 2002 (collectively, the

“Agreement”), all of which are incorporated herein in their entirety by

reference; and

 

WHEREAS, the Company and Employee entered into that certain Settlement

and Release Agreement (the “Original Release”) dated May 7, 2002 whereby in

exchange for certain retention payments by the Company to Employee, which

Employee accepted, Employee agreed to, among other things, forgo certain

severance obligations set forth in his Agreement; and

 

WHEREAS, concurrently with the execution of the Original Release, the

Company paid to Employee an initial payment of $80,000 and deposited with the

Southwest Bank of Texas, N.A., a Texas banking corporation, a second payment in

the amount of $80,000 to be held in escrow (the “Second Payment”) payable to Employee

under certain conditions as set forth in Section 1B. of the Original Release,

including, but not limited to, the termination of the Agreement and the

execution of a settlement and release agreement containing terms substantially

similar to those provided in the Original Release (the “Settlement and Release

Agreement”); and

 

WHEREAS, the Company and Employee entered into the Settlement and

Release Agreement dated of even date herewith which waives the requirements

that the Agreement be terminated and that Employee resign as an officer and/or

director of the Company as conditions to Employee’s receipt of the Second

Payment; and

 

WHEREAS, Employee and the Company desire to extend the term of the

Agreement from its stated expiration date of August 15, 2002.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and

promises and representations contained herein, and other good and valuable

consideration, the receipt and sufficiency of which are acknowledged herein,

the Company and Employee agree as follows:

 

1.        Section 4.1

of the Agreement is hereby amended by deleting the section in its entirety and

substituting the following in replacement thereof:

 

4.1                                 The term of this Agreement shall commence

on the Effective Date and shall continue on a month-to-month basis (i) unless

earlier terminated as

 

 

hereinafter provided or (ii) until the completion of a sale, license or

other disposition of all or substantially all of the assets of the Company.

 

2.        Section 4.9

of the Agreement is hereby amended by deleting the section in its entirety and

substituting the following in replacement thereof:

 

4.9                                 In the event of Employee’s termination of

employment from the Company pursuant to Sections 4.5 or 4.6 hereof, or in the

event that Employee’s employment with the Company, or successor entity, is

terminated within twelve months following a Change of Control, except for

Cause, all outstanding options to purchase stock of the Company held by

Employee and not previously vested (excluding any that have lapsed, terminated

or expired) will vest automatically upon such termination, and Employee shall

have a period of 90 days to exercise such options.

 

3.        Company and

Employee acknowledge that Employee has received his Second Payment of $80,000,

with such interest thereon, if any, as contemplated by the Original Release and

the Settlement and Release Agreement.

 

4.        This

Amendment shall be governed by the laws of the State of Texas.

 

5.        This

Agreement, as amended by this Amendment, and the Settlement and Release

Agreement supersede any and all other agreements, either oral or in writing,

between the Company and Employee with respect to the employment of Employee by

the Company and contains all of the representations, covenants and agreements

between the Company and the Employee with respect to such employment.  The Agreement, as amended hereby, may not be

later modified except by a further writing signed by the Company and the

Employee, and no term of this Agreement may be waived except by writing signed

by the party waiving the benefit of such term.

 

6.        Except as

modified by this Amendment, all other terms of the Agreement shall continue in

full force and effect without modification.

 

7.        This

Amendment may be executed in one or more counterparts, each of which shall be

deemed an original and all of which, taken together, constitute one and the

same instrument.

 

[The remainder of this page left blank intentionally.]

 

2

 

IN WITNESS WHEREOF, the parties have executed this Fifth Amendment to

Employment Agreement in duplicate originals as of the date first above written.

 

	

   

  	

  ENCHIRA

  BIOTECHNOLOGY CORPORATION

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/

  Paul G. Brown, III

  	

   

  
	

   

  	

   

  	

   Paul

  G. Brown, III, President

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

    Daniel

  J. Monticello

  	

   

  
	

   

  	

  Daniel

  J. Monticello

  	

   

  
					

 

3

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