Document:

Exhibit 10.5

 

SETTLEMENT AND RELEASE AGREEMENT

 

This Settlement and Release

Agreement (the “Settlement and Release Agreement”) is made this 15th

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

Biotechnology Corporation, a Delaware corporation (the “Company”), and Daniel

J. Monticello (“Monticello”).

 

R E C I T A L S

 

WHEREAS, Monticello 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, as further amended by that certain Third

Amendment to Employment Agreement dated April 2, 2002, to be effective as of

January 1, 2002, and as further amended by that certain Fourth Amendment to

Employment Agreement dated August 15, 2002 (collectively, the “Employment

Agreement”); and

 

WHEREAS, Monticello 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 Monticello, which Monticello accepted, Monticello 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 Monticello an

initial payment of $80,000 and deposited with 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 Monticello under certain conditions

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

to, the execution of this Settlement and Release Agreement; and

 

WHEREAS, the Company desires

to retain Monticello as an employee of the Company, and Monticello desires to

remain an employee 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.             Employment Agreement and Payment.

 

A.            Employment

Agreement.  Notwithstanding Section

1B. of the Original Release which contemplates the termination of the

Employment Agreement and Monticello’s resignation as an officer and/or director

as conditions to Monticello’s receipt of the Second

 

 

Payment,

the Company desires to retain Monticello as an officer and/or director of the

Company, and Monticello desires to remain an officer and/or director of the

Company, in accordance with the terms of his Employment Agreement; provided,

however, Monticello agrees to release the Company from any all obligations

arising under the Employment Agreement as they relate to payment of severance

to Monticello.

 

B.            Termination of

Non-Competition Provisions.  The

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

other than for cause, it will release Monticello from the provisions of

Section 5.6 of the Employment Agreement and expressly agrees that

Monticello 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 shall continue to survive on the terms provided

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

 

C.            Payment by the

Company.  The Company agrees to, and

concurrently with the execution of this Settlement and Release Agreement and

the Fourth Amendment to Employment Agreement does hereby, pay Monticello a lump

sum payment in the amount of the Second Payment, with such interest thereon, if

any, in consideration for Monticello’s amendment to the Employment Agreement

and for the releases contained herein, among other things.  The Second Payment will be subject to all

legally required taxes, deductions and withholdings.  The Second Payment paid under this Settlement and Release

Agreement is in lieu and amendment of any other severance benefits that may

otherwise be payable to Monticello (including, without limitation, those

provided in the Employment Agreement), except for such benefits required to be

provided by law.  The consideration

represented by the Second Payment is allocated among the waivers and releases

contained in this Section 1.C. and Section 2 as follows:  (i) 5% of the Second Payment ($4,000, with

any interest thereon) shall be allocated to Monticello’s waiver and release of

any claims under the Age Discrimination Employment Act of 1967, as amended, and

(ii) the remaining 95% of the Second Payment ($76,000, with any interest

thereon) shall be allocated to Monticello’s amendment, waiver and release with

respect to the severance benefits payable to Monticello pursuant to the

Employment Agreement as provided in this Section 1.C. and all other remaining

claims described in Section 2.

 

2.             Waiver and Release by Monticello.  Monticello hereby waives any and all claims,

charges, complaints, liabilities, obligations, promises, agreements, contracts,

damages, actions, causes of action, suits, accrued benefits or other

liabilities of any kind or character, whether known or hereafter discovered,

arising in connection with or otherwise relating to the Employment Agreement

and his relationship 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

 

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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) occurring prior

to the Effective Date hereof, 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

and his relationship with the Company, occurring prior to the Effective Date

hereof that Monticello 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 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.

 

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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 Monticello 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.  Monticello 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.

 

12.           Review by Monticello and Counsel.  Monticello 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.

 

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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/ Paul G. Brown, III

  
	

   

  	

   

  	

   

  	

  Name:

  	

  Paul G. Brown, III

  
	

   

  	

   

  	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  MONTICELLO

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

    /s/ Daniel J. Monticello

  
	

   

  	

   

  	

   

  	

  Daniel J. Monticello

  
							

 

5Exhibit 10.6

 

October 15, 2002

Daniel J. Monticello, Ph.D.

152 N. Mill Trace

The Woodlands, TX 77381

 

Re:          Termination

of Employment Agreement

 

Dear Dr. Monticello:

 

This letter (the “Letter”) will reflect our agreement

relative to the termination of your employment agreement with Enchira

Biotechnology Corporation (the “Company”) and outline a number of practical

administrative issues resulting therefrom as well as the potential sale of

certain assets of the Company to you.

 

1.             Effective

October 15, 2002, your 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, as further amended by that certain Third Amendment to

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

2002, and as further amended by that certain Fourth Amendment to Employment

Agreement dated August 15, 2002 (collectively, the “Employment Agreement”) is

hereby terminated.

 

2.             Notwithstanding

the termination of the Employment Agreement, you have agreed to remain a

part-time employee of the Company on an as-needed basis in the same capacity

until the first to occur of (i) a Sale (as defined below) or (ii) a Dissolution

(as defined below).  Your duties shall

include, but not be limited to, evaluating proposals relating to a merger or

sale of all or substantially all of the remaining assets or capital stock of

the Company (a “Sale”) and assisting with the dissolution and liquidation of

the Company (a “Dissolution”), as well as certain administrative duties

including, but not limited to, answering the Company’s telephone, collecting

and processing the Company’s mail, and monitoring and responding to the Company’s

e-mail.

 

3.             As

contemplated by Section 1.B of that certain Settlement and Release Agreement

dated August 15, 2002 between you and the Company, the Company hereby releases

you from the provisions of Section 5.6 of the Employment Agreement and expressly

agrees that you shall be permitted to engage in competitive activities as of

the date hereof; provided, however, that except as provided in Paragraphs 4 and

5 below, the remaining nondisclosure, inventions and confidentiality provisions

of Section 5 of the Employment Agreement shall continue to survive on the terms

provided therein and you shall continue to be bound by the terms thereof.  You hereby release the Company from any and

all further obligations arising under the Employment Agreement.

 

4.             As

consideration for all services to be rendered and performed pursuant to this

Letter, the Company agrees to assign or transfer to you those certain SBIR

grant applications (as

 

 

more particularly described on Exhibit A hereto).  You acknowledge and agree that you will not

be paid any monetary fees in connection with your services provided pursuant to

this Letter.  Notwithstanding Paragraph

3 above, the Company hereby releases you from any nondisclosure, inventions and

confidentiality provisions of Section 5 of the Employment Agreement applicable

to the SBIR Grant applications.

 

5.             In

addition to the above, the Company agrees to negotiate with you in good faith

regarding the transfer or assignment of certain assets, intellectual property,

technology and know-how relating to the Anti-Cancer Ligand (ACL) technology

(specifically, IGF-I and EGF assays, enrichment and production methods, know

how, customer/collaborator contact lists and the notebooks and reports

(“bullets”) described on Exhibit B hereto) (the “Technology”) to you or

to your subsequent employer (either one, the “Assignee”) on such terms as may

be mutually acceptable to the Company and to Assignee.  Notwithstanding Paragraph 3 above, in the

event the Company transfers and assigns the Technology to you, the Company

agrees to release you from any nondisclosure, inventions and confidentiality

provisions of Section 5 of the Employment Agreement applicable to the

Technology.  Notwithstanding the above,

such transfer of the Technology to Assignee shall not be required in the event

that there is a Sale of the Company or a sale of such Technology to a third

party which is approved by the Board of Directors of the Company.

 

6.             Nothing

in this agreement shall be construed to grant you or your subsequent employer

any rights, license or sublicense to any technology and/or materials that are

subject to arbitration and/or litigation with Maxygen, Inc. or any order or

ruling resulting therefrom.

 

Please sign below to acknowledge your receipt,

understanding and agreement with all of the foregoing.

 

	

   

  	

  Sincerely,

  
	

   

  	

   

  
	

   

  	

  Enchira Biotechnology Corporation

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Paul G. Brown , III

  	

   

  
	

   

  	

  Name:

  	

   

  	

  Paul G. Brown, III

  	

   

  
	

   

  	

  Title:

  	

   

  	

  President

  	

   

  
	

   

  
	

   

  
	

  Acknowledged:

  
	

   

  
	

   

  
	

    /s/ D. J. Monticello

  	

   

  
	

  Printed Name:

  	

    D. J. Monticello

  	

   

  
	

  Date:

  	

    11/01/02

  	

   

  
										

 

 

Exhibit A

 

SBIR Grant Applications:

 

1.  Improving the activation of CPT-11 by hCE-2

 

NCI Grant #:  1 R43 CA96076

 

2. Creating

clinically relevant EGFR antagonists

 

NCI Grant # 1 R43 CA095930-01

 

 

Exhibit B

 

Enchira Anti-Cancer Ligand Technology & Know How

 

1.             Enchira R&D

2001-2002 “Bullets” related to IGF-I and EGF enrichments, assays and production

methods.

 

2.             Enchira laboratory

notebooks:

 

340, 341, 343,

344, 346, 347, 348, 349, 350, 351, 352, 353, 355, 356, 358, 359, 360, 361, 363,

364, 365

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