Document:

exv10w1

 

Exhibit 10.1

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (the “Agreement”) is dated July 6, 2006 and is effective
on the date described in Section 15. This Agreement is made as a mutually agreed compromise
between the Parties (as defined below) for the complete and final 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 Terrance
C. Coyne, M.D. (“Executive”). The Company and Executive are referred to collectively as the
“Parties.”

PREAMBLE

     WHEREAS, Executive was previously employed as the Chief Medical Officer of the Company,
pursuant to that certain Termination Agreement dated September 10, 2003, as amended from time to
time (the “Termination Agreement”);

     WHEREAS, the Parties intend to terminate the Termination Agreement as of the Effective Date
(except with respect to Executive’s and the Company’s continuing obligations under Sections 8, 9,
10, 12 and 13.8 thereof) and enter into this Agreement;

     WHEREAS, the Parties intend that this Agreement shall operate as a complete and final
settlement of all claims, differences and alleged causes of action existing between them as of the
Effective Date of this Agreement;

     WHEREAS, Executive has had at least 21 days to consider this Agreement;

     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.

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

1

 

     1. Definitions.

     1.1 “Base Salary” means the Executive’s base salary in effect on the date of this Agreement.

     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 June 26, 2006.

     Other defined terms are defined as provided herein.

2. Termination of the Termination Agreement. The Parties agree that the Termination
Agreement is hereby terminated and of no further force and effect as of the Effective Date, except
with respect to Executive’s and Company’s obligations under Section 8, Executive’s Confidentiality
Obligation; Section 9, Disclosure of Information Ideas, Concepts, Improvements, Discoveries and
Inventions; Section 10, Ownership of Information, Ideas, Concepts, Improvements, Discoveries, and
Inventions and all Original Works of Authorship; Section 12, Executive’s Non-Competition
Obligation; and Section 13.8, Defense of Claims.

3. Pay Through Date of Termination. Executive acknowledges that he has received all
salary, wages and other compensation earned on or before the Date of Termination.

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

5. Payments to Executive. In accordance with Section 6.3 of the Termination Agreement, and
subject to Executive’s execution of this Agreement containing a release from liability and waiver
of right to sue the Company and/or its Affiliates, the Company agrees to pay Executive payments 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 been payable under Section 4.6 of the
Termination Agreement if the Executive’s employment had not terminated.

          b. During the 12-month period commencing on the Date of Termination, the Company shall
continue benefits (other than disability benefits), at the Company’s expense, to the Executive
and/or the Executive’s family at least equal to those which would have been provided to them under
Section 4.5 of the Termination Agreement if the Executive’s employment had not been terminated.
Benefits otherwise receivable by the Executive pursuant to this Section shall be reduced to the
extent substantially similar benefits are actually received

2

 

by or made available to the Executive by any other employer during the same time period for
which such benefits would be provided pursuant to this Section 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 Base Salary (as in effect on the
Date of Termination).

          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. On the conclusion of said 12-month period, all unexpired,
unexercised options will be fully vested and all restricted stock will be fully vested.
Thereafter, all such fully vested stock options will be exercisable by the Executive 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 Executive breaches this Agreement or the
provisions of Sections 8, 9, 10, 12 or 13.8 of the Termination Agreement.

3

 

6. Additional Payment to Executive. In addition to the payments required pursuant to
Section 6.3 of the Termination Agreement, the Company shall continue the benefits specified in
Section 5.b for an additional six-month period following the first anniversary of the Date of
Termination so that the Executive shall receive such benefits for a total of 18 months. The
Company will also provide the Executive with a three month executive outplacement program with Lee
Hecht Harrison.

7. Release by Executive. Executive unconditionally, fully and forever waives, releases,
discharges, agrees to hold harmless, and promises not to sue the Company and/or its Affiliates,
from and for any claim, action or right of any sort, known or unknown, arising on or before the
Effective Date.

     7.1 This release includes, but is not limited to, any claim arising out of or related to the
following: any claim for any wages, salary, compensation, sick time, vacation time, paid leave or
other remuneration of any kind; any claim for additional or different compensation or benefits of
any sort, including any participation in any severance pay plan; any claim of discrimination or
retaliation on the basis of age, race, sex, religion, marital status, sexual preference, national
origin, handicap or disability, veteran status, or special disabled veteran status; any claim
arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, the Employee Retirement Income Security Act of 1974, the
Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act of
1938, the Texas Commission on Human Rights Act, Chapter 451 of the Texas Labor Code, or the Texas
Payday Law, as such statutes may be amended from time to time; any other claim based on any
statutory prohibition; any claim arising out of or related to an express or implied employment
contract, any other contract affecting terms and conditions of employment, or a covenant of good
faith and fair dealing; any tort claim or other claim for personal injury, death or property damage
or loss; any claim for fraud or misrepresentation; and any personal gain with respect to any claim
arising under any whistleblower or qui tam provisions of any state or federal law.

     7.2 Executive represents that Executive has read and understands this release provision and
that (i) rights and claims under the Age Discrimination in Employment Act of 1967 are among the
rights and claims against the Company that Executive is releasing and (ii) Executive is not
releasing any rights or claims arising after the Date of Termination.

8. Consideration. As consideration for the Executive’s execution and performance of his
obligations under this Agreement, the Company will perform its remaining obligations pursuant to
this Agreement and provide Executive with the additional six months of benefits as described in
Section 6 above. Executive agrees that all of this consideration is in addition to anything of
value to which he already is entitled from the Company.

9. Future Employment. Executive agrees not to seek or accept employment with the Company
and/or its Affiliates and acknowledges that the Company and/or its Affiliates are not obligated to
offer employment to Executive, now or in the future.

10. No Other Claims. Executive represents that Executive has not filed or authorized the
filing of any complaints, charges or lawsuits against the Company and/or its Affiliates with any

4

 

federal, state or local court, governmental agency, or administrative agency, and that if,
unbeknownst to Executive, any such complaint has been filed on Executive’s behalf, Executive will
use Executive’s best efforts to cause it to be withdrawn immediately and dismissed with prejudice.

11. Confidentiality and Defense of Claims.

          11.1 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
requirement to file this Agreement with the Securities and Exchange Commission or tax reporting
obligations). 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.

          11.2 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 11.2, 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 11.2.

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

13. 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 its senior management will not disparage Executive. The Company likewise agrees that
it will make no disparaging statements regarding Executive in any official corporate (1)
publication; (2) broadcast; (3) telecast; or (4) presentation. Executive agrees to advise any
prospective employers to contact the Director of Human Resources at the Company if they need
information regarding the circumstances of Executive’s departure from the Company. In response to
any such inquiry, the Director of Human Resources will respond

5

 

only that Executive’s departure from the Company was without cause and not the result of any
malfeasance on Executive’s part.

14. 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.

15. Revocation of Agreement; Effective Date. Executive, at Executive’s sole discretion,
may revoke this Agreement on or before the expiration of seven calendar days after signing it.
Revocation shall be in writing and effective upon dispatch to the following: Paul S. Manierre,
General Counsel, Encysive Pharmaceuticals Inc., 4848 Loop Central Drive, 7th Floor,
Houston, Texas 77081. If Executive elects to revoke the Agreement, all of the provisions of the
Agreement shall be void and unenforceable. If Executive does not so elect, the Agreement shall
become effective at the expiration of the revocation period (i.e., on the eighth day after
Executive signs the Agreement) (the “Effective Date”).

16. Miscellaneous.

     16.1 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.

     16.2 This Agreement constitutes the entire agreement between the Parties, except to the extent
that it expressly incorporates provisions of the Termination 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 Termination Agreement and any severance benefit plan or program and any bonus
program at the Company and/or its Affiliates.

     16.3 The Parties understand and agree that any breach of the terms of this Agreement may give
rise to liability for money damages and other legal or equitable relief.

     16.4 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.

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

     16.6 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 Company or its directors, officers,
employees, agents, independent counsel or other representatives. By voluntarily executing this
Agreement, both Parties confirm their competence

6

 

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.

     16.7 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.

     16.8 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.

     16.9 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.

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

     16.11 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.

     16.12 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.

     16.13 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.

     16.14 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):

7

 

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:

Terrance C. Coyne, M.D.

3110 Cason Street

Houston, Texas 77005

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 16.14.

     16.15 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.

     16.16 Wherever appropriate to the intention of the parties hereto, the respective rights and
obligations of said parties, including, but not limited to, the rights and obligations set forth in
Sections 11 through 14 hereof and this Section 16, shall survive any termination or expiration of
this Agreement.

[SIGNATURE PAGE FOLLOWS]

8

 

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this
Agreement as of the date indicated below

	 	 	 
	TERRANCE C. COYNE, M.D.
(“Executive”)

	 	ENCYSIVE PHARMACEUTICALS, INC.
(“Company”)
	 
	 	 
	/s/ Terrance C. Coyne, M.D.

	 	By:/s/ Bruce D. Given, M.D.
	 

	 	 
	 

	 	     Bruce D. Given, M.D.,
	 

	 	     Chief Executive Officer
	Date: July 6, 2006

	 	Date:July 11, 2006

	 	 	 
	THE STATE OF TEXAS

	 	§
	 

	 	§
	COUNTY
OF Harris _______

	 	§

     BEFORE ME, the undersigned authority, on this day personally appeared Terrance C. Coyne, M.D.
who, being by me first duly sworn, upon his oath deposed and stated that he has read the foregoing
Agreement; that he has been advised to discuss the provisions of this Agreement with an attorney of
his choice before signing it; that he fully understands the terms and conditions of this Agreement;
that he is legally competent to execute this Agreement; and that he has voluntarily executed this
Agreement for the purposes and consideration therein expressed.

     Given under my hand and seal of office on this 6th day of July, 2006.

	 	 	 	 	 
	 	 	 
	 	     /s/ James Paul
 	 
	 	NOTARY PUBLIC IN AND FOR 	 
	 	THE STATE OF TEXAS 	 
	 

9

 

	 	 	 
	THE STATE OF TEXAS

	 	§
	 

	 	§
	COUNTY OF HARRIS

	 	§

     BEFORE ME, the undersigned authority, on this day personally appeared Bruce D. Given, M.D.,
who being by me first duly sworn, upon his oath deposed and stated that he is the Chief Executive
Officer of Encysive Pharmaceuticals, Inc. (the “Company”); that he has read the foregoing
Agreement; that he has discussed the provisions of this Agreement with any attorney of his choice;
that he fully understands the terms and conditions of this Agreement; that he is legally competent
and fully authorized to execute this agreement on behalf of the Company; and that he has
voluntarily executed this Agreement for the purposes and consideration therein expressed.

     Given under my hand and seal of office on this 11th day of July, 2006.

	 	 	 	 	 
	 	 	 
	 	     /s/ Heather P. Woltz
 	 
	 	NOTARY PUBLIC IN AND FOR 	 
	 	THE STATE OF TEXAS 	 
	 

10exv10w2

 

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:

1

 

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

2

 

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

3

 

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.

4

 

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

5

 

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):

6

 

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]

7

 

	 	 	 	 	 	 	 
	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
	 

	 	 	 	 	 	 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}]]