EXHIBIT 10.10
SEPARATION AND MUTUAL RELEASE AGREEMENT
This SEPARATION AND MUTUAL RELEASE AGREEMENT ("Agreement") is made and
entered into by and between Terren S. Peizer ("Peizer") and Hollis-Eden
Pharmaceuticals, Inc. (the "Company") (collectively, Peizer and the Company
shall be referred to as the "Parties" and individually as "Party"), effective as
of February 25, 1999.
W I T N E S S E T H
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WHEREAS, Peizer has voluntarily tendered his resignation as President, Vice
Chairman and Director and all other positions he may hold with the Company to
pursue other business interests;
WHEREAS, the Company has accepted Peizer's voluntary resignation as
President, Vice Chairman and Director and all other positions he may hold with
the Company;
WHEREAS, the Parties agree that, except as set forth in Section 6 hereof,
this Agreement shall supercede and replace any previous agreements between
Peizer and the Company, including the Employment Agreement dated February 6,
1997 and the Amendment thereto dated April 1, 1997; and
WHEREAS, the Parties desire to settle and discharge any and all actual or
potential claims and controversies between them, known or unknown, and further
desire to effectuate the terms of the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is agreed by and between the Parties hereto as follows:
1. VOLUNTARY RESIGNATION. Peizer has tendered and the Company has
accepted his resignation as Director on the Board of Directors (the "Board") and
President, Vice Chairman and all other positions that he may hold with the
Company, effective February 25, 1999 (the "Separation Date").
2. ACCRUED SALARY AND VACATION. The Company will, within ten (10)
business days of Peizer's execution of this Agreement, pay Peizer thirty (30)
days of accrued and unused vacation benefits earned prior to the Separation
Date, subject to standard payroll deductions and withholdings. Peizer is
entitled to this payment regardless of whether he signs this Agreement.
3. EXPENSE REIMBURSEMENT. Within forty-five (45) business days of
Peizer's execution of this Agreement, he will submit his final documented
expense reimbursement statement reflecting all business expenses he incurred
through the Separation Date, if any, for which he seeks reimbursement. The
Company shall reimburse Peizer's expenses in accordance with Company policy and
regular business practice. The Company will reimburse Peizer for the costs
related to the termination of Peizer's lease for his residence in San Diego;
provided, however, that the aggregate of such reimbursements for the San Diego
residence shall not exceed $1,000. The Company will pay for one month of the
Quotron contract, not to exceed $600, which is currently in Peizer's name. After
such one-month period, Peizer, at his option, will
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either (i) assign the contract and deliver the Quotron software (together with
any related documentation and materials, if any) to the Company, in which case
the Company would assume any ongoing payment obligations pursuant to the
contract, or (ii) keep the contract and the software (together with any related
documentation and materials, if any) and assume any remaining payment
obligations pursuant thereto.
4. NONSOLICITATION. Peizer agrees that for one year after the Separation
Date, he will not, either directly or through others, solicit or attempt to
solicit any person (including any entity) who is then an employee, consultant or
independent contractor of the Company to terminate his, her or its relationship
with the Company in order to become an employee, consultant or independent
contractor to or for any other person or entity.
5. SEVERANCE PAYMENT. Although the Company has no policy or procedure for
providing severance benefits, in exchange for the promises and covenants set
forth herein, and in consideration thereof, the Company agrees to make severance
payments to Peizer in the form of continuation of Peizer's base salary in effect
on the Separation Date through December 31, 1999. These payments will be made
on the Company's ordinary payroll dates, and will be subject to standard payroll
deductions and withholdings.
6. STOCK OPTION. In exchange for the promises and covenants set forth
herein, and in consideration thereof, the Company agrees that, as part of this
Agreement, it hereby amends Peizer's stock option agreement, as amended (the
"Option Agreement"), such that (i) the total number of shares of Common Stock
subject to the Option Agreement shall be One Million Two Hundred Thousand
(1,200,000), which are all vested as of the Separation Date and the term of
which shall be ten (10) years from the date of original vesting; (ii) the
options and the shares of Common Stock underlying such options shall be freely
transferable, subject to (a) compliance with securities laws, (b) the Company's
trading window period applicable to all officers, directors and affiliates of
the Company, provided that this restriction shall be applicable only during the
90-day period following the Separation Date, and (c) if the transferee
beneficially holds (as a result of such transfer) at least 100,000 shares of the
Company's Common Stock, such transferee shall agree in writing to be subject to
the second sentence of Section 11 hereof. Except as provided in the preceding
sentence, the Option Agreement shall remain in full force and effect. Peizer
agrees that he will also comply with volume restrictions and insider trading
restrictions and other relevant securities laws and regulations in connection
with receipt of stock options or Common Stock under this Agreement and the
Option Agreement. Except as provided herein, Peizer agrees and acknowledges that
all vesting under any stock compensation award from the Company shall cease upon
the Separation Date.
7. HEALTH INSURANCE. The Company will pay Peizer, within ten (10)
business days of Peizer's execution of this Agreement, a lump sum payment of
$1,460, which represents the Company's portion of Peizer's health insurance
premium through December 31, 1999.
8. OTHER COMPENSATION AND BENEFITS. Except as expressly provided herein,
Peizer acknowledges that he will not receive (nor is he entitled to) any
additional compensation, benefits, severance, stock options, stock or any other
ownership interest from the Company, notwithstanding any prior agreements to the
contrary.
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9. PROPRIETARY INFORMATION OBLIGATIONS. Peizer hereby acknowledges his
continuing obligations under the Company's Secrecy Agreement, a copy of which is
attached hereto as Exhibit A. Peizer acknowledges that irreparable damage would
result to the Company if he breaches the provisions of this paragraph 9, and the
Company would not have an adequate remedy at law for such a breach or threatened
breach. In the event of such a breach or threatened breach, Peizer agrees that
the Company, may, notwithstanding anything to the contrary herein contained, and
in addition to the other remedies which may be available to it, seek to enjoin
him, together with all those persons associated with him, from the breach or
threatened breach of such covenants.
10. COMPANY PROPERTY. Peizer agrees to return to the Company, within five
(5) days of the execution of the Agreement, all Company documents (and all
copies thereof) and other Company property in his possession, or his control.
The Company acknowledges that Peizer will have the opportunity, upon reasonable
notice to the Company and at a reasonable time, to enter the Company premises
with a member of management to retrieve any property belonging to Peizer
remaining at the Company's premises. Peizer will also have an opportunity, at
reasonable times and in a reasonable manner, to communicate with his former
secretary for the purpose of transitioning his personal matters.
11. MUTUAL NONDISPARAGEMENT; SUPPORT OF MANAGEMENT. Neither Peizer nor
the executive officers or directors of the Company shall at any time disparage
the other Party in any manner likely to be harmful to the other Party, its
business reputation or, in the case of the Company, the personal or business
reputation of its directors, stockholders or employees, provided that each Party
shall respond accurately and fully to any question, inquiry or request for
information when required by legal process. For a period of two years from the
Separation Date, Peizer agrees to support, and vote all of his shares of Common
Stock of the Company in favor of, any management or Board proposals subject to a
stockholder vote. On a reasonable basis in the reasonable discretion of the
Company, Peizer shall be permitted to meet periodically with senior management
of the Company to discuss publicly available information concerning the Company.
12. STOCKHOLDER COMMUNICATIONS. Peizer further agrees that, with respect
to any communication between Peizer and any actual or potential stockholder of
the Company, Peizer shall not (i) make any disparaging statements regarding the
Company, its management, board members, employees or affiliates, (ii) disclose
any confidential information regarding the Company or any aspect of its business
or (iii) for a period of two years from the Separation Date, encourage any such
stockholder or potential stockholder to (a) vote against any management or Board
proposal subject to stockholder vote or (b) submit a proposal not previously
approved in writing by the Board.
13. CONFIDENTIALITY AND PUBLICITY. The provisions of this Agreement and
the Option Agreement shall be held in strictest confidence by Peizer and the
Company and shall not be publicized or disclosed in any manner whatsoever other
than pursuant to the press release issued by the Company on the Separation Date,
a copy of which is attached hereto as Exhibit B. Notwithstanding the prohibition
in the preceding sentence: (a) the Parties may disclose this Agreement and the
Option Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors (and, in the case of Peizer, to
members of his immediate family); (b) the Company may disclose this Agreement
and the Option Agreement as
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legally required corporate reporting or disclosure requirements; and (c) the
Parties may disclose this Agreement and the Option Agreement insofar as such
disclosure may be necessary to enforce its terms or as otherwise required by
law. In particular (and without limitation), the Parties agree not to discuss
the contents of this Agreement or the Option Agreement with present or former
Company employees or other personnel or with Company stockholders, except to
disclose the mere fact of Peizer's resignation from the Company.
14. RELEASE OF CLAIMS BY PEIZER. Except as otherwise set forth in this
Agreement, Peizer hereby releases, acquits and forever discharges the Company,
its officers, directors, agents, attorneys, servants, employees, stockholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys' fees, damages and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
and including the execution date hereof, including but not limited to: any and
all such claims and demands directly or indirectly arising out of or in any way
connected with Peizer's employment with the Company or the termination of that
employment, including but not limited to claims arising from his Employment
Agreement dated February 6, 1997, the Amendment thereto dated April 1, 1997 and
the Option Agreement (except as such Option Agreement is amended by the terms of
Section 6 hereof); claims or demands related to salary, bonuses, commissions,
stock, stock options, or any other ownership interests in the Company, vacation
pay, fringe benefits, expense reimbursements, sabbatical benefits, severance
benefits, or any other form of compensation; claims pursuant to any federal,
state or local law or cause of action including, but not limited to, the federal
Civil Rights Act of 1964, as amended; the federal Age Discrimination in
Employment Act of 1967, as amended; the federal Americans with Disabilities Act
of 1990; the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing.
Notwithstanding the foregoing, this release (i) shall not include any claims
based on obligations created by or reaffirmed in this Agreement and (ii) is not
intended to release any indemnification rights that Peizer may have in
connection with any third party action or claim against Peizer.
15. RELEASE OF CLAIMS BY THE COMPANY. Except as otherwise set forth in
this Agreement, the Company, on its behalf and its directors, successors,
assigns and affiliates, hereby releases, acquits and forever discharges Peizer,
his heirs, legatees, successors and assigns of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys' fees,
damages and obligations of every kind and nature, in law, equity, or otherwise,
known and unknown, suspected and unsuspected, disclosed and undisclosed, arising
out of or in any way related to agreements, events, acts or conduct at any time
prior to and including the execution date hereof. Notwithstanding the foregoing,
this release (i) shall not include any claims based on obligations created by or
reaffirmed in this Agreement or the Secrecy Agreement and (ii) is not intended
to release any indemnification rights that the Company may have in connection
with any third party action or claim against the Company.
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16. SECTION 1542 WAIVER. The Parties acknowledge that they have read and
understand Section 1542 of the Civil Code of the State of California which reads
as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
The Parties hereby expressly waive and relinquish all rights and benefits under
that section and any law or legal principle of similar effect in any
jurisdiction with respect to the release granted in this Agreement.
17. RESIGNATION. Peizer will execute the Resignation Letter attached
hereto as Exhibit C concurrent with the execution of this Agreement.
18. NO ADMISSIONS. It is understood and agreed by Peizer and the Company
that this Agreement represents a compromise settlement of various matters, and
that the promises and payments in consideration of this Agreement shall not be
construed to be an admission of any liability or obligation by either Party to
the other Party or to any other person.
19. NOTICES. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (a) by registered or certified
mail, return receipt requested, postage prepaid, or (b) via a reputable express
courier service, in each case to the address set forth below. Any such notice,
instruction or communication shall be deemed to have been delivered three
business days after it is mailed, by certified mail, postage prepaid, return
receipt requested, or one business day after it is sent via a reputable
nationwide overnight courier service.
If to the Company: Hollis-Eden Pharmaceuticals, Inc.
9333 Genesee Avenue, Suite 110
San Diego, California 92121
Attn: Chief Executive Officer
With a copy to: Eric J. Loumeau, Esq.
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, California 92121
If to Peizer: Terren S. Peizer
723 Pacific Coast Highway, Suite 322
Santa Monica, California 90402
With a copy to: Robert H. Platt, Esq.
Manatt, Phelps & Phillips, LLP
11355 W. Olympic Boulevard
Los Angeles, California 90064
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Any Party may give any notice, instruction or communication in connection with
this Agreement using any other means (including personal delivery, telecopy or
ordinary mail), but no such notice, instruction or communication shall be deemed
to have been delivered unless and until it is actually received by the Party to
whom it was sent. Any Party may change the address to which notices,
instructions or communications are to be delivered by giving the other Party to
this Agreement notice thereof in the manner set forth in this paragraph 19.
20. REMEDIES OF THE COMPANY. Peizer acknowledges that irreparable damage
would result to the Company if he breaches any provision of this Agreement, and
the Company would not have an adequate remedy at law for such a breach or
threatened breach. In the event of such a breach or threatened breach, Peizer
agrees that the Company, may, notwithstanding anything to the contrary herein
contained, and in addition to the other remedies which may be available to it,
seek to enjoin him, together with all those persons associated with him, from
the breach or threatened breach of such covenants. Notwithstanding any breach by
Peizer of any provision of this Agreement, the Company shall not withhold the
issuance of Common Stock upon proper exercise of Peizer's options in accordance
with the Option Agreement.
21. ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto, and
the Option Agreement (as amended by Section 6 hereof), constitutes the complete,
final and exclusive embodiment of the entire agreement between Peizer and the
Company with regard to the subject matter hereof, and supercedes that certain
Employment Agreement dated February 6, 1997, the Amendment thereto dated April
1, 1997 and the Option Agreement (except as amended pursuant to Section 6
hereof) between Peizer and the Company. It is entered into without reliance on
any promise or representation, written or oral, other than those expressly
contained herein. It may not be modified except in a writing signed by Peizer
and a duly authorized officer of the Company. Each Party has carefully read this
Agreement, has been afforded the opportunity to be advised of its meaning and
consequences by his or its respective attorneys, and signed the same of his or
its own free will.
22. SUCCESSORS AND ASSIGNS. This Agreement shall bind the heirs, personal
representatives, successors, assigns, executors, and administrators of each
Party, and inure to the benefit of each Party, its heirs, successors and
assigns.
23. APPLICABLE LAW. This Agreement shall be deemed to have been entered
into and shall be construed and enforced in accordance with the laws of the
State of California as applied to contracts made and to be performed entirely
within California.
24. SEVERABILITY. If a court of competent jurisdiction determines that
any term or provision of this Agreement is invalid or unenforceable, in whole or
in part, then the remaining terms and provisions hereof shall be unimpaired.
Such court will have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
that most accurately represents the Parties' intention with respect to the
invalid or unenforceable term or provision.
25. ARBITRATION. To ensure rapid and economical resolution of any
disputes which may arise under this Agreement, Peizer and the Company agree that
any and all disputes or controversies of any nature whatsoever, arising from or
regarding the interpretation,
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performance, enforcement or breach of this Agreement shall be resolved by
confidential, final and binding arbitration (rather than trial by jury or court
or resolution in some other forum) to the fullest extent permitted by law. Any
arbitration proceeding pursuant to this Agreement, shall be conducted by the
American Arbitration Association ("AAA") in San Diego under the then existing
AAA arbitration rules. If for any reason all or part of this arbitration
provision is held to be invalid, illegal, or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not effect any other portion of this arbitration provision
or any other jurisdiction, but this provision will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable part
or parts of this provision had never been contained herein, consistent with the
general intent of the Parties insofar as possible.
26. ATTORNEYS' FEES. In any legal action or other proceeding brought to
enforce or interpret the terms of this Agreement, the prevailing Party shall be
entitled to all reasonable attorneys' fees and out-of-pocket expenses. The
Company shall, within ten (10) business days of Peizer's execution of this
Agreement, pay Peizer $3,500 for attorneys' fees in connection with the
severance of Peizer's employment as contemplated hereunder.
27. SECTION HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
28. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Agreement to be executed as follows:
TERREN S. PEIZER HOLLIS-EDEN PHARMACEUTICALS
an individual
/s/ TERREN S. PEIZER By: /s/ RICHARD HOLLIS
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Terren S. Peizer Richard Hollis
Date: February 25, 1999 Date: February 25, 1999
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