SEVERANCE AND SETTLEMENT AGREEMENT
AND MUTUAL RELEASE OF ALL CLAIMS
This Agreement is made and entered into by and between Quantech Ltd. (the
"Company") and R.H. ▇▇▇▇▇▇ ▇▇▇▇ (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee's employment relationship with the Company has ended and
the Employee has ceased to be President and Chief Executive Officer of the
Company, and
WHEREAS, the Employee and the Company have or may have claims against each other
arising out of or related to the Employee's employment with the Company;
NOW, THEREFORE, in exchange for the promises and covenants stated herein, the
Company, as defined herein, and the Employee hereby agree as follows:
1. Definitions. We intend all words used in this Severance and Settlement
Agreement (the "Agreement") to have their plain meanings in ordinary English.
Specific terms we use in this Agreement have the following meanings:
A. The Employee, as used herein, shall include the undersigned Employee and
anyone who has obtained any legal rights or claims through the undersigned
Employee.
B. The Company, as used herein, shall at all times mean Quantech Ltd., its
subsidiaries, successors and assigns, its affiliated and predecessor
companies, their successors and assigns, their affiliated and predecessor
companies and the present or former directors, officers, employees,
representatives and agents (including, without limitation, its accountants
and attorneys) of any of them, whether in their individual or official
capacities, and the current and former trustees or administrators of any
pension or other benefit plan applicable to the employees or former
employees of the Company, in their official or individual capacities.
2. The Company's Obligations. In consideration for the Employee's promises
contained herein, specifically including, but not limited to, the release of all
claims by the Employee, the Employee and the Company agree as follows:
A. Payment of Consultant Fee. The Company agrees to pay the Employee an
amount equal to his salary and will also pay the cost of medical insurance
benefits for a period of six months commencing June 14, 1997. The Employee
will be responsible for payment of state, federal and other income taxes
and any tax withholding payments required to be paid. Payment under this
Section 2 are conditioned upon the Employee's execution of this Severance
and settlement Agreement and Mutual Release of All Claims. Payments will be
made on the Company's established paydays beginning with the first
established payday following the expiration of the Recission periods as
hereinafter defined.
B. Independent Contractor Consultant. During the six month period
identified in Section 2(A), the Company agrees to retain Employee as an
independent contractor consultant.
C. Benefits. The Employee acknowledges that as of June 13, 1997, he was no
longer a full-time employee and, as of that date, he was no longer eligible
for medical insurance benefits or other benefits. Beginning June 13, 1997,
the Company, pursuant to federal and state law, will offer, for a period of
eighteen (18) months following the June 13, 1997 effective date of the
Employee's termination (the "COBRA Period"), a continuation under COBRA of
the group medical insurance and life insurance coverage previously provided
to Employee by the Company. Should the Employee elect COBRA coverage, the
Company will pay for the Employee's medical and life insurance coverage for
a period of six (6) months. After the six month period, the Employee is
required to pay for such coverage for the remaining twelve (12) months of
the COBRA Period.
D. Additional Consideration for Employee. In consideration for the mutual
agreements set forth in this Agreement, and after the fulfillment of all
terms of this Agreement and at the end of the consulting relationship, the
Company agrees to forgive the Employee's obligation to repay a loan made to
Employee by the Company in the amount of $15,520. This provision is
expressly conditioned upon the Employee's fulfillment of all terms of this
Agreement and the Employee's agreement to make all payments required to be
made to Norwest Bank to repay a $30,000 loan made to the Employee by
Norwest Bank and guaranteed by the Company.
E. Automobile. The Company agrees that the automobile which is now leased
by the Company and which is presently in the possession of and being used
by the Employee (the "Company Automobile") may remain in the possession of
the Employee during the period of the lease pertaining to said Company
Automobile. For the remainder of said lease period for the Company
Automobile, the Company agrees to pay the lease payments and to pay for
insurance coverage for said Company Automobile. At the end of the lease
term for the Company Automobile, the Employee agrees to return said Company
Automobile to the Company. During the period of time in which the Company
Automobile is in the possession of the Employee, the Employee is
responsible for all maintenance costs and expenses, and is also responsible
for all gas, oil, and miscellaneous expenses relating to said Company
Automobile.
F. Release. The Company agrees to release and hereby does release the
Employee from any and all claims and damages of any kind or nature against
the Employee of which the Company is now aware including, without
limitation, any claims arising out of the Employee's employment with the
Company. Notwithstanding this Release, nothing in this paragraph shall
release the Employee from the obligations contained in this Agreement.
3. Employee Obligations. As material inducement to the Company in entering into
this Agreement and providing the consideration described in Section 2, the
Employee hereby agrees as follows:
A. Release. Employee agrees to release and hereby does release the Company
from any and all claims and damages of any kind or nature which the
Employee now has or may have against the Company, including, without
limitation, any claims arising out of his employment with the Company, the
termination of his employment, and all claims arising from or relating to
his position as President and Chief Executive Officer of the Company,
including all claims for breach of contract, fraud or misrepresentation,
claims arising under the Age Discrimination in Employment Act, Title VII of
the Civil Rights Act of 1964, the Minnesota Human Rights Act, or any other
federal, state, or local civil rights or employment laws, claims for
defamation, intentional or negligent infliction of emotional distress,
breach of covenant of good faith and fair dealing, promissory estoppel,
negligence, wrongful termination of employment, and any other claims for
unlawful employment practices. The Employee acknowledges that the money and
promises received and to be received by the Employee are in exchange for
the release of the Employee's claims. Notwithstanding this release, nothing
in this paragraph shall release the Company from the obligations contained
in this Agreement.
B. Independent Contractor Consultant. During the six month period
identified in Section 2(A), the Employee agrees to act as a consultant to
the Company and to carry out those tasks which the Company may from time to
time request him to fulfill. During the period of the consulting
relationship, the Employee will provide reasonable services that the
Company has requested by the executive officers of the company. The Company
will pay out-of-pocket expenses incurred by the Employee during the period
of the consulting relationship and which are directly related to the
consulting relationship and which are directly related to the activities so
requested by the executive officers. All such expenses in excess of $50.00
must have prior approval by the Company. The Employee will not come to the
premises of the Company unless requested to do so by the executive
officers. During the six month period of the independent contractor
consultant relationship, the Employee agrees not to become employed by or
render services for any company or entity competing with the Company in the
medical diagnostic field and involved in developing Point of Care
technology, unless the Company gives it prior written approval for the
Employee to obtain such employment or provide such services.
C. Company Property. On or before this Agreement is executed by both
parties, the Employee agrees to return all Company property in his
possession to the Company, including his personal computer and cellular
telephone, unless otherwise agreed to by the Company.
4. Mutual Obligation of Confidentiality. The Employee and the Company agree that
they will keep the terms and conditions of this Agreement strictly confidential.
If the Employee or the Company are required to directly or indirectly disclose
the terms of this Agreement pursuant to any federal, state statute or
regulation, such disclosure shall not be considered a breach of the terms of
this Agreement. Disclosure of the terms of this Agreement by the Company
required by state or federal securities laws is not deemed to be a violation of
this Agreement. The Employee is nevertheless permitted to explain that he has
left the employ of the Company, that he is on good terms with the Company, that
he will be a consultant and remain on the Board of Directors, and such
disclosure will not be deemed to be a violation of this Section 4. If a court
determines that this paragraph has been breached, the party adjudged to have
violated this paragraph shall pay liquidated damages in the amount of $3,000 to
the other party. This paragraph does not prohibit disclosure to attorneys, tax
return preparers, or accountants, nor does it prohibit disclosure required by
law or by court issued subpoena. The Employee also agrees to abide by the terms
of the confidentiality provisions contained in his employment agreement with the
Company.
5. Non-Disparagement. The Employee agrees that he shall not disparage or defame
the Company, or any affiliate, subsidiary organizations or companies in any
respect. Violation of this paragraph 5 shall entitle the Company to bring a
legal action for breach of this paragraph and if the Employee is adjudged to
have violated this Paragraph, he shall pay liquidated damages to the Company in
the amount of $3,000.
6. Cancellation of Agreement By Company. If the Employee exercises his right of
rescission under Section 9C. of this Agreement, the Company will have the right,
exercisable by written notice delivered to the Employee, to terminate this
Agreement in its entirety, in which event the Company will have no obligation
whatsoever to the Employee hereunder. If the Employee exercises his right of
rescission under Section 9C. of this Agreement, and the Company does not
exercise its right to terminate this Agreement hereunder, the remaining
provisions of this Agreement shall remain valid and continue in full force and
effect.
7. Performance By Employee. Nothing contained herein shall operate as a waiver
or an election of remedies by the Company should the Employee fail to perform
any duty or obligation imposed upon him hereunder. Notwithstanding anything
contained herein to the contrary, this Agreement and the duties and obligations
of the Employee hereunder shall continue in full force and effect irrespective
of any violation of any term or provision of this Agreement by the Employee.
8. Employee Acknowledgments. The Employee acknowledges and represents that: (a)
he has read this Agreement and understands its consequences; (b) he has received
adequate opportunity to read and consider this Agreement; (c) he has determined
to execute this Agreement of his own free will and acknowledges that he has not
relied upon any statements or explanations made by the Company regarding this
Agreement; and (d) the promises of the Company made in this Agreement constitute
fair and adequate consideration for the promises, releases and agreements made
by the Employee in this Agreement.
9. Employee's Understandings. The Employee further understands and agrees as
follows:
A. The Employee understands that he has the right to consult with an
attorney concerning the meaning and effect of this Agreement.
B. The Employee understands that he has a period of up to twenty-one (21)
calendar days from the date that he receives an unsigned copy of this
Severance Agreement in which to consider whether to sign this Agreement
(the "Consideration Period"). However, having been advised of the
Consideration Period, the Employee understands that he may elect to sign
this Agreement at any time prior to the expiration of the Consideration
Period.
C. The Employee understands that he may rescind (that is, cancel) this
Agreement within seven (7) calendar days of signing it to reinstate federal
and state claims and within fifteen (15) calendar days of signing it to
reinstate state claims only. To be effective, the Employee's rescission
must be in writing and delivered to the Company in care of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Chief Financial Officer and Executive Vice President of Corporate
Development, Quantech Ltd., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, either by hand or by mail, and the rescission must be:
1. Postmarked within the 7-day period to reinstate federal and state
claims; or
2. Postmarked within the 15-day period to reinstate state claims only;
and
3. Properly addressed to the Company; and
4. Sent by certified mail, return receipt requested.
D. The Employee acknowledges that he has been fully represented by counsel
in connection with the review of and execution of this Agreement, has been
fully advised by his counsel of his right to rescind the Agreement and
hereby agrees to waive his right to rescind the Agreement.
E. The parties acknowledge that they have read this Agreement and
understand its terms.
F. The parties further acknowledge that they have not relied upon any
statements or explanations made by the other party regarding any
interpretation of this Agreement.
10. Remedies. The Employee acknowledges that any breach of any of the promises
set forth in Sections 3, 4, and 5 shall cause the Company irreparable harm for
which there is no adequate remedy at law, and the Employee therefore consents to
the issuance of an injunction in favor of the Company enjoining the breach of
any of those promises by any court of competent jurisdiction. The Employee
acknowledges that if he breaches the promises contained in these sections, all
payments and benefits due under this Agreement will immediately cease. If any
promise made by the Employee in Sections 3, 4, and 5 should be held to be
unenforceable because of its scope, or the area or subject matter covered
thereby, the Employee agrees that the court making such determination shall have
the power to reduce or modify the scope, subject matter or area of that promise
to the extent that allows the maximum scope, subject matter or area permitted by
applicable law. The Employee further agrees that the remedies provided for
herein are in addition to, and are not to be construed as replacements for, or a
limitation of, rights and remedies otherwise available to the Company.
11. Entire Agreement. The Company and the Employee agree that this Agreement
contains all of the agreements between the parties.
12. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota.
13. Effective Date. This Agreement was originally offered to Employee on or
about June 13, 1997. The Employee shall have until the close of business on July
4, 1997, to accept this Agreement. If the Employee desires to accept this
Agreement, the Employee shall execute the Agreement and return the same to the
Company at the address set forth in paragraph 10.C. hereof. If the Employee does
not so accept this Agreement, this Agreement, and the offer contained herein,
shall be null and void as of the close of business on July 4, 1997.
14. Counterparts. This Agreement may be executed in counterparts with an
executed counterpart to be delivered to the other party. Each such executed
counterpart shall be deemed an original but shall constitute one and the same
instrument.
Dated: June 13, 1997 QUANTECH LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: CFO
STATE OF MINNESOTA)
) ss
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me this 13 day of June, 1997,
by ▇▇▇▇ ▇▇▇▇▇▇▇, the CFO of Quantech Ltd., a Minnesota corporation, for and on
behalf of said corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Notary Public
Dated: June 13, 1997 /s/ R. H. ▇▇▇▇▇▇ ▇▇▇▇
R. H. ▇▇▇▇▇▇ ▇▇▇▇
Subscribed and sworn to before me this 13 day of June, 1997.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Notary Public