SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (the "Agreement") sets forth the
terms of the agreement between Vion Pharmaceuticals, Inc. ("Vion") and ▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇") relating to the termination of Spears' employment with Vion
and is effective as of April 20, 1999.
WHEREAS, Spears has been employed as the President, Chief Executive
Officer and Director of Vion pursuant to an Employment Agreement, dated as of
January 16, 1998 (the "Employment Agreement"); and
WHEREAS, Vion and Spears have agreed that Spears, who was relieved of
his obligations as Chief Executive Officer previously, will be relieved of his
obligations as President and Director, and will terminate his employment as of
the Effective Date of this Agreement and pursuant to the terms of this Agreement
which are set forth below.
NOW THEREFORE, in consideration of the mutual promises of the parties
and other valuable and sufficient consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Tender of Resignation/Termination of Employment Agreement
(a) On April 7, 1999, Spears irrevocably tendered, and Vion accepted,
Spears' resignation as President of Vion effective at the close of business on
April 7, 1999. Simultaneously with the execution of this Agreement, Spears will
irrevocably tender, and Vion will accept, Spears' resignation as Director of
Vion effective at the close of business on the date of execution of this
Agreement.
(b) The parties acknowledge that, on the Effective Date of this
Agreement, as that term is defined below, Spears' Employment Agreement shall
terminate. Notwithstanding the
foregoing, Spears shall remain an employee of Vion until April 30, 1999, at his
current salary, at which time his employment with Vion shall terminate.
2. Severance Payments/Compensation
(a) From May 1, 1999 up to and including the Termination Date, as that
term is defined below, Vion shall pay to Spears severance payments on the basis
of an annualized gross sum of $246,750 in twenty-four (24) equal increments per
year, less any applicable Federal, State or local withholding taxes (the
"Severance Payments").
(b) Commencing on May 1, 1999, Vion will cease paying health and dental
insurance premiums for Spears, and Spears will become eligible for COBRA
coverage at Spears' sole expense. The cost for COBRA coverage for Spears, as of
the Effective Date of this Agreement, is $588.64 per month for health insurance
coverage, and $93.88 per month for dental insurance coverage. The monthly cost
for COBRA coverage is subject to change subsequent to the Effective Date of this
Agreement and Spears will be notified of any such change in the cost of
coverage.
(c) Commencing on May 1, 1999, Spears will no longer be entitled to
participate in Vion's 401k program and Vion will discontinue payments for
Spears' cellular telephone service.
(d) The parties agree that the bonus due and payable to Spears for the
year 1998 shall be paid within thirty days after the date upon which Vion
completes its next round of financing resulting in gross proceeds of at least
$4,000,000 (the "Vion Private Financing"). The parties agree that the gross
amount of the bonus due and payable to Spears for the year 1998 is $37,012.50,
less applicable withholding taxes. In any event, the 1998 bonus shall be payable
no later than May 31, 1999.
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(e) The "Effective Date" as this term is used in this Agreement means,
as explained below in paragraph 5(d), the eighth day following the date upon
which Spears executes this Agreement.
(f) The "Termination Date" as that term is used in this Agreement means
the earlier of (1) the date upon which Spears secures full-time employment
elsewhere; or (2) January 16, 2001.
(g) In the event Spears secures full-time employment (i.e., a position
requiring approximately 35 hours per week and with benefits available to
full-time employees) elsewhere prior to January 16, 2001, and provided that
Spears executes a Release of Vion as set forth in paragraph 5(e) of this
Agreement, Vion shall pay to Spears subsequent to Spears' notice to Vion
regarding such full-time employment a lump sum payment (less applicable
withholding taxes) of 40% of the balance of payments that would be otherwise
payable to Spears pursuant to paragraph 2(a) of this Agreement (the "Termination
Incentive Payment"). In the event the Termination Incentive Payment shall be
payable, the Termination Incentive Payment shall be paid fifteen days after the
closing of an underwritten public offering by Vion (or private placement with
associated registration rights) resulting in gross proceeds to Vion of at least
$10,000,000 (the "Vion Public Financing"). Vion anticipates the Vion Public
Financing to close on or before October 15, 1999. In the event the Vion Public
Financing does not occur, the Termination Incentive Payment shall not be paid.
(h) Subsequent to the Effective Date of this Agreement and up to the
Termination Date, Vion shall be entitled to offset against the Severance
Payments 75% of the gross income earned by Spears as a part-time employee, an
independent contractor, or a consultant. Spears shall, on a monthly basis,
notify Vion of the receipt and amount of such income.
3. Termination of Employment Agreement/Survival of Confidentiality Covenant
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The Employment Agreement is terminated as of the Effective Date of this
Agreement. Notwithstanding the foregoing, the covenant set forth in paragraph 6
of the Employment Agreement which relates to Spears' duty to keep certain
proprietary information of Vion confidential shall remain in effect
indefinitely, or until such time as any proprietary information becomes public
knowledge through no fault of Spears.
4. Options/Lockup Provision
(a) The stock options granted by Vion to Spears are set forth below in
the chart in subparagraph 4(b) of this Agreement (the "Options"). As used in
this Agreement, the Options designated as "ISO" are incentive stock options
issued pursuant to Section 422 of the Internal Revenue Code of 1986, as amended,
and the parties agree to treat these options for tax purposes in accordance with
the rules applicable to incentive stock options. The Options shall cease vesting
on the Effective Date of this Agreement. Spears shall have ninety (90) days
after the Effective Date within which to exercise the Options, after which time
the Options shall terminate.
(b) The parties acknowledge that as of March 31, 1999 Spears owns the
following Options which are vested as set forth below:
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TITLE OF SECURITY DATE OF TRANSACTION NO. OF EXERCISE PRICE VESTING EXPIRATION DATE ISO/NON-ISO
SHARES STATUS
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Option 4/16/93 60,000 $ 5.00 fully 8/14/2000 ISO
vested
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Option 4/16/93 30,000 $ 0.40 fully 8/14/2000 NON-ISO
vested
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Option 2/02/95 286,312 $ 0.13 fully 8/14/2000 NON-ISO
vested
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Option 10/14/96 15,000 $4.1875 50% 10/14/2006 ISO
vested
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Option 1/29/98 12,000 $3.0313 25% 1/29/2008 ISO
vested
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(c) Lockup Provision: Spears hereby irrevocably agrees that he will
not, without Vion's prior written approval, offer, sell, contract to sell, make
any short sale (including, but not limited to, a "short against the box"),
pledge, or otherwise dispose of directly or indirectly (each a "sale"), except
as set forth in subparagraph (e) below, any shares of Vion common stock, options
to acquire shares of common stock or securities exchangeable or exercisable for
or convertible into shares of, or any other rights to purchase or acquire, Vion
common stock (the "Vion Stock") which he owns directly or indirectly or
beneficially (as defined by the Securities Exchange Act of 1934 and the rules
and regulations thereunder) until the expiration of six (6) months after the
closing of the Vion Public Financing (the foregoing period is hereafter referred
to as the "Lock-Up Period"). Spears further agrees to execute any agreement
regarding the lock-up of Vion Stock that is executed by all of Vion's officers
and directors in connection with the Vion Public Financing. In the event the
Vion Public Financing does not occur by October 15, 1999, the Lockup Period
shall expire on December 31, 1999.
(d) The foregoing restriction is expressly agreed to preclude Spears
from engaging in any hedging or other transaction that is designed to, or is
reasonably expected to lead to, or result in, a disposition of Vion Stock during
the Lock-Up Period even if Spears would dispose of the Vion Stock after the
expiration of the Lock-Up Period.
(e) Notwithstanding the foregoing, Spears shall be entitled to sell any
Vion Stock that he owns:
(i) solely for purposes of paying any personal income tax
liability for Spears for the year 1999 attributable
to Spears' exercise of any Options; and
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(ii) Spears may exchange any shares of Vion Stock that he
has owned for at least six months as of the Effective
Date of this Agreement in connection with the
exercise of the Options; and
(iii) Spears may sell shares of Vion Stock solely for
purposes of paying for (or repaying borrowed funds
necessary to pay for) shares of Vion Stock purchased
upon exercise of the April 16, 1993 Option to
purchase 60,000 shares at $5.00 per share.
(f) Withholding: withholding for Spears' personal income tax liability
resulting from the exercise of the non-ISO Options shall be made as follows:
either (i) Spears shall deliver to Vion cash necessary to pay the withholding
taxes associated with the exercise; or (ii) the parties shall enter into a
mutually acceptable arrangement pursuant to which Spears shall sell the Vion
Stock with instructions that the proceeds necessary to pay the applicable
withholding taxes be delivered to Vion. There will be no withholding upon the
exercise of any ISO Options except as required by IRC Code Sections 421 and 422.
1. Spears' Release of Vion
(a) Spears, on his own behalf and on behalf of his successors and
assigns (hereafter collectively referred to as "Spears"), hereby releases and
forever discharges Vion, its predecessors, successors, corporate affiliates,
agents, representatives, shareholders, directors, officers, and employees (Vion
and such other persons and entities are individually and collectively referred
to hereafter as the "Releasee"), from any and all claims, counterclaims,
demands, debts, actions, causes of action, suits or liabilities of any nature
whatsoever, whether known or unknown, which Spears ever had, now has or
hereafter can, shall or may have against the Releasee, for, upon, or by reason
of any matter, cause or thing whatsoever arising from the beginning of the world
to the day of the date of this Release,
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including, but not limited to, (1) any statutory or common law claims relating
to Spears' employment and the termination of Spears' employment; and (2) any
claims relating to the Employment Agreement. In addition to all other statutory
and common law claims being released herein, Spears is also releasing claims
arising out of the Federal Age Discrimination in Employment Act, The Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866,
the Connecticut Human Rights and Opportunities Law, the Employee Retirement
Income Security Act of 1974, the Americans With Disabilities Act of 1992 and
claims relating to the Connecticut wage laws.
(b) Spears has been advised to consult independent legal counsel before
signing this Agreement and he acknowledges that he has executed this Agreement
after actually consulting with his counsel. Spears further acknowledges that he
had the opportunity to consider the terms of this Agreement for at least
twenty-one (21) days. Spears further represents and warrants that he has read
this Agreement carefully, that he has discussed this Agreement with his
attorney, that he fully understands the terms of this Agreement, and that he has
had sufficient time within which to consider the terms of this Agreement. He
represents and warrants that he is signing this Agreement voluntarily.
(c) Spears represents and warrants that Vion has paid Spears the sum of
$1,000 as consideration for this Agreement. Spears represents that no other
inducements have been offered to Spears by Vion other than the consideration set
forth in this Agreement, and that the consideration set forth herein represents
consideration to which he would not otherwise be entitled but for his execution
of this Agreement.
(d) This Agreement shall not become effective until the eighth day
following the day on which Spears signed it, and Spears may, at any time prior
to the Effective Date, revoke this Agreement by giving notice of revocation to
Vion. Such revocation of this Agreement shall operate to revoke any
consideration paid by Vion to Spears pursuant to this Agreement.
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(e) On the Termination Date, Spears agrees to provide Vion with a
release of any and all claims against Vion arising from the Effective Date of
this Agreement to the Termination Date. The delivery of the release referred to
in this paragraph 5(e) is a condition to the delivery to Spears of the
Termination Incentive Payment.
2. Vion's Release of Spears
Vion, its predecessors, successors, shareholders, directors and
officers (Vion and such other persons and entities are individually and
collectively referred to hereafter as the "Releasor"), hereby releases and
forever discharges Spears and his successors and assigns (hereafter collectively
referred to as "Releasee"), from any and all claims, counterclaims, demands,
debts, actions, causes of action, suits or liabilities of any nature whatsoever,
whether known or unknown, which Releasor ever had, now has or hereafter can,
shall or may have against the Releasee, for, upon, or by reason of any matter,
cause or thing whatsoever arising from the beginning of the world to the day of
the date of this Release, including, but not limited to, (1) any statutory or
common law claims relating to Releasee's employment and the termination of
Releasee's employment; and (2) any claims relating to the Employment Agreement.
3. Confidentiality/References
Spears agrees that, except as permitted or required by applicable
Federal, State or Local law, to maintain the confidentiality of this Agreement
and to make no voluntary statement or take any other action that might
reasonably be expected to result in disclosure of, or any publicity concerning,
the terms hereof or the consideration paid to him by Vion. In the event Vion
receives a written inquiry regarding a reference for Spears, Vion shall respond
to the inquiry by indicating that Spears' decision to step down as Chief
Executive Officer and President was a mutual decision of Spears and Vion. Vion
shall also provide the dates during which Spears was employed, but
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Vion shall provide no other information regarding Spears' employment except that
Vion shall be entitled to make any disclosures required by Federal securities
law or other applicable Federal, State and local laws.
4. Notice
Any notice or other communication under this Agreement shall be in
writing and shall be deemed to have been given when delivered personally against
receipt therefor; one day after being sent by Federal Express or other overnight
delivery service; or three days after being mailed registered or certified mail,
postage prepaid, return receipt requested, to either party at the following
addresses: to Vion, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: Chief
Executive Officer; to Spears, Five ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; or at
such other address as such party shall give by notice hereunder to the other
party.
5. Governing Law
This Agreement shall be governed by, and construed in accordance with
and subject to the laws of the State of Connecticut applicable to agreements
made and to be performed entirely within such State without regard to principles
of conflicts of law.
6. Waivers and Amendments
This Agreement may be amended, modified, superseded, cancelled, renewed
or extended, and the terms and conditions hereof may be waived, only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power, or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
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7. Entire Agreement
This Agreement contains the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior written or
oral contracts and agreements.
8. Successors and Assigns/Assignment
Spears may not assign this Agreement. Vion may, without the consent of
Spears, assign this Agreement and its rights and obligations but only in
connection with any sale, transfer or other disposition of all or substantially
all of its assets or business, whether by merger, consolidation or otherwise, in
which case this Agreement shall become binding upon any successor in interest.
Vion shall make best efforts to cause any successor in interest to agree to
assume the liabilities under this Agreement.
9. Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but both of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
VION PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
___________________________________
Its: President & Chief Executive Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
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