EXHIBIT 10(DD)
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SETTLEMENT AGREEMENT AND GENERAL RELEASE
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This
Settlement Agreement
and General Release (this "Agreement") is hereby
entered into as of
this 31st day of March, 2006 by and among Robert J. Aholt,
Jr., an individual (the "Executive"), and Phase III Medical,
Inc., a Delaware
corporation (the "Company").
RECITALS
A.
The Executive was employed by the Company
pursuant to an
Employment
Agreement by and between the Company and the Executive dated as of
September 13,
2004, as amended
pursuant to an
amendment thereto
dated as of August 12, 2005
(the "Employment Agreement"), serving as the Company's Chief
Operating Officer;
B.
The Executive's
employment has terminated as of February 19, 2006 (the
Termination Date"); and
C.
Each of the
parties hereto believes it to be in their respective best
interests to enter into an agreement to set forth the terms of
their respective
rights and obligations relating to the Executive's separation from
the Company.
AGREEMENT
In
consideration of the mutual promises contained herein and for other
good
and valuable
consideration,
the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1.
EFFECTIVE
DATE. This Agreement shall be effective
on the date hereof
(the "Effective Date").
2.
END OF
EMPLOYMENT.
The Executive's status as an employee and an
officer of the Company has previously terminated. Each party hereto understands
that, except as
otherwise provided
under this Agreement,
each party hereto is
entitled to nothing further from the other party (whether arising
out of (i) the
Employment Agreement or the termination thereof, or (ii) Employee's
employment
with the Company or the termination thereof or otherwise).
3. SEPARATION PAYMENT. As consideration for the
Executive's
execution,
delivery, and
non-revocation
of this Agreement, the Company shall pay to
Executive the
aggregate amount of $250,000 (less applicable Federal and
California state and local withholdings and payroll deductions), payable in 51
consecutive biweekly
installments
of $4,807.69 each (less in each case
applicable Federal
and California State and local withholdings and payroll
deductions ("Payroll
Taxes")) commencing on
April 7, 2006 and continuing every
two weeks thereafter until the full amount of $250,000 (less
applicable Federal
and California state and local withholdings and payroll
deductions) is paid
in
full; except that (a)
the first payment (and only the first payment) will be in
an amount of $9,615,38 less Payroll Taxes and (b) the first payment
will be made
on the later of April
7, 2006 or the date
that the rescission rights under
Section 10 have expired.
4.
STOCK
OPTIONS. Nothing in this Agreement shall adversely effect
Executive's stock option agreement ("Stock Option Grant Agreement")
pursuant to
which he was granted,
under the Company's 2003 Equity Participation Plan (the
<PAGE>
"EPP"), an option to
purchase 1,500,000
shares of the
Company's common stock,
$.001 par value (the "Common Stock"), which agreement shall remain
in full force
and effect in accordance with its terms and the terms of the
EPP.
5.
ACKNOWLEDGMENT
OF COMPENSATION. The
Executive acknowledges and agrees
that, except as
otherwise specifically
set forth herein,
the payments
under
Section 3 of this Agreement shall extinguish any and all
obligations for monies,
additional stock options, additional equity grants, or
compensation or benefits
of any kind that the
Executive claims or could claim to have earned or are
otherwise owed to him as a result of his employment by the Company
through the
date hereof, under the Employment Agreement or otherwise.
6.
STATUS OF
RELATED AGREEMENTS OR PURPORTED AGREEMENTS.
(a) AGREEMENTS OR
PURPORTED AGREEMENTS
BETWEEN THE EXECUTIVE AND THE
COMPANY. The Executive
and the Company agree that, except for this Agreement,
the Employment
Agreement and the Stock Option Grant
Agreement,
there are no
other executed
agreements or purported agreements between the Company and the
Executive.
(b) EMPLOYMENT
AGREEMENT.
Except as otherwise
provided herein,
the
parties agree
that the Employment Agreement has been terminated as of the
Termination Date.
Notwithstanding the termination of the Employment Agreement,
the Executive
acknowledges that the
duties and obligations
set forth therein
relating to
confidentiality,
non-solicitation and
noncompetition as set forth
below (the "Surviving
Employment Agreement
Provisions") extend beyond the date
hereof. In the event
that any provision of this Agreement conflicts with such
Surviving Employment
Agreement Provisions, the terms and provisions of the
following Surviving Employment Agreement Provisions shall
control.
"You
acknowledge
that, as COO, you will have access to the Company's
confidential
information and that
all confidential
information
shall be and
remain the sole
property of the Company and that you will not at any time,
now
or in the future,
disclose, disseminate
or otherwise make public any of the
confidential information without the express written permission of
the Company.
You
acknowledge
and agree that your services pursuant to this Letter
Agreement are unique and extraordinary; that the Company will be dependent
upon
you for development, financial, marketing and other expertise; and
that you will
have access to and
control of
confidential
information of the
Company. You
further acknowledge
that the business of
the Company is international in scope
and cannot
be confined to any particular geographic area. You further
acknowledge that the
scope and duration of the restrictions set forth in this
paragraph are
reasonable
in light of the
specific nature and
duration of the
transactions
contemplated by this Letter Agreement. For the foregoing reasons
and to induce the Company to enter this Letter Agreement, you
covenant and agree
that during the Term and the period beginning at the end of the Term
and ending
one (1) year after the
end of the Term,
you shall not unless with written
consent of the Company:
(i)
engage in any business
directly related to the business of
providing
capital and
guidance to companies, within the medical pharmaceutical and
biotechnology sector,
or in any other business conducted by the Company
during
the Term
(collectively, the
"Prohibited
Activity") in the
world for your own
account;
(ii)
become interested in any individual, corporation, partnership or
other
business entity (a
"Person") engaged in
any Prohibited
Activity in the world,
directly or
indirectly,
as an individual, partner, shareholder, officer,
director, principal,
agent, employee, trustee, consultant or in any other
<PAGE>
relationship or
capacity; provided, however, that you may own directly or
indirectly, solely as
an investment,
securities of any Person which are traded
on any national
securities exchange if you (x) are not a controlling person of,
or a member of a group which controls, such person or (y) do not,
directly or
indirectly, own 5% or more of any class of securities of such
person; or
(iii) directly or indirectly hire, employ or retain any person who at
any
time during the last
twelve (12) months of the Term was an
employee of the
Company or directly or indirectly solicit, entice, induce or encourage any
such
person to become employed by any other person.
You hereby acknowledge
that the covenants and agreements contained in the
immediately preceding
paragraph are
reasonable
and valid in all
respects and
that the Company is entering into this Letter Agreement on such
acknowledgment.
If you breach,
or threaten to commit a breach, of any of the restrictive
covenants set forth in this Letter Agreement (the "Restrictive
Covenants"), the
Company shall have the following rights and remedies, each of which rights and
remedies shall be independent of the other and severally
enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu
of, any other
rights and remedies
available to the
Company under law or
in equity: (i) the
right and remedy to have the Restrictive Covenants specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed
that any such
breach or threatened
breach will cause
irreparable
injury to the Company
and
that money damages will not provide an adequate remedy to the
Company; and (ii)
the right and remedy to require you to account for and pay over to the
Company
such damages
as are recoverable at law as the result of any transactions
constituting a breach of any of the "Restrictive Covenants."
For purposes of interpretation of the Surviving Employment
Agreement Provisions,
the last day of the "Term" shall be deemed to have been the
Termination Date.
7.
RELEASES.
(a) The Executive, for himself and his heirs, executors,
administrators,
assigns, affiliates,
successors and agents, as well as (in his
capacity as trustee) for and on behalf of the Robert J. Aholt,
Jr. Family Trust
(collectively, the "Executive's Affiliates") hereby fully and
without limitation
irrevocably releases and forever discharges the Company, its
affiliates and each
of its and
their respective agents, representatives, officers, directors,
shareholders, members,
partners, employees,
consultants,
attorneys, auditors,
accountants,
investigators,
affiliates, successors
and assigns (collectively,
the "Company Releasees"), both individually and
collectively, from any
and all
rights, claims, demands, liabilities, actions, causes of action,
suits, charges,
controversies,
damages, losses,
costs, expenses and compensation, of whatever
nature whatsoever, known or unknown, fixed or contingent, which the
Executive or
any of the Executive's
Affiliates has or may
have or may claim to have against
the Company Releasees
by reason of any
matter, cause, or thing whatsoever,
arising on or
prior to the Effective Date ("Claims"), including, without
limiting the generality of the foregoing, any Claims arising out
of, based upon,
or relating to the
recruitment,
hiring, employment, or termination of the
Executive by any of the Company Releasees, the Executive's tenure
as an employee
and/or an officer of any of the Company Releasees, any agreement or
compensation
arrangement between
the Executive and any of the Company Releasees (including,
without limitation,
the Employment Agreement), or any act or occurrence in
connection with any actual, existing, proposed, prospective or
claimed ownership
interest of any nature of the Executive or the Executive's
Affiliates in
equity
capital or rights in equity capital or other securities of any of the Company
Releasees to the maximum extent permitted by law. The Executive
specifically and
expressly releases
any Claims
arising out of or based on: the New York
State
Human Rights Law,
the New York City
Human Rights
Law; the California Fair
Employment and Housing
Act, as amended;
Title VII of the Civil
Rights Act of
1964, as amended;
the Civil Rights Act
of 1991; the Family
and Medical Leave
<PAGE>
Act; the Vietnam Era Veterans Readjustment Act; the Fair Credit Reporting
Act;
the Americans With
Disabilities Act; the
Sarbanes-Oxley
Act of 2002; the
Age
Discrimination in
Employment Act; the National Labor Relations Act, as amended;
the Equal Pay Act;
ERISA; any
provision of the California Labor Code; the
California common
law on fraud, misrepresentation, negligence, defamation,
infliction of emotional distress or other tort, breach of
contract or covenant,
violation of public
policy or wrongful
termination; state or
federal wage and
hour laws; state of
federal whistleblower
laws; or any other
state or federal
law, rule, or regulation dealing with the employment relationship.
This Section
7(a) releases all
Claims including
those of which
Executive is not aware
and
those not mentioned in this Agreement. Nothing in this Agreement shall
preclude
the Executive from
participating in any manner in an investigation, hearing or
proceeding conducted
by the Equal Employment Opportunity Commission, but the
Executive hereby
waives any and all rights to recover under, or by virtue of,
any such
investigation, hearing
or proceeding.
Notwithstanding the foregoing,
nothing in this Section 7(a) shall be deemed to release
Company Releasees from
actions and claims by Executive against any Company Releasee for contribution
and/or indemnification
if a third party has
brought an action or claim against
Executive arising
out of a Company Releasee's willful misconduct or gross
negligence while employed by, or serving as an officer or director
of, Company.
(b) In consideration of the releases by Executive set forth in
Section 7(a) above, the Company, for itself and its, affiliates, subsidiaries,
successors, and
assigns (collectively
the "Company
Group") hereby fully and
without limitation
irrevocably
releases and forever
discharges the Executive,
and the Executive Affiliates, (collectively, the "Executive Releasees"),
both
individually and
collectively,
from any and all rights, claims, demands,
liabilities, actions, causes of action, suits, charges,
controversies,
damages,
losses, costs, expenses and compensation, of whatever nature whatsoever,
known
or unknown, fixed or
contingent, which the
Company or any of the Company Group
has or may have or may claim to have against the Executive Releasees by reason
of any matter, cause, or thing whatsoever, arising on or prior to the
Effective
Date ("Claims"),
including without
limitation, any and
all actions,
charges,
controversies,
demands, causes
of action, suits, rights, and/or claims
whatsoever that the Company may have against Executive arising out of: (i) the
Employment Agreement
and/or the
termination
of the Employment Agreement or
otherwise arising out of Executive's employment with, or position as an
officer
of, the Company or termination of Executive's employment with, or
position as an
officer of, the Company; or (ii) by reason of any other matter,
cause, or thing
whatsoever from
the date of the Executive's employment to the date this
Agreement is executed by Company and delivered to Executive, whether arising
directly or
indirectly
from any act or omission, whether intentional or
unintentional. This
Section 7(b) releases all Company Claims including those of
which Company is not aware and those not mentioned in this Agreement up to the
date of Company's
execution and delivery of this Agreement to Executive.
Notwithstanding the
foregoing, nothing in
this Section 7(b) shall be deemed to
release Employee
from (i) any of
Executive's
acts or omissions
involving or
arising from fraud,
deceit or theft, (ii) Executive's obligations with respect
to the Surviving Employment Agreement Provisions, or (iii) actions
and claims by
Company against Executive for contribution and/or indemnification of any action
or claim brought by any third party person arising out of Executive's willful
misconduct or gross
negligence while
employed by, or serving as an officer of,
Company; provided,
however, that exceptions (i) and (iii) are
exceptions from
the release only if the Company would generally have a cause of action against
any officer if such officer's conduct was as described in clauses
(i) and (iii).
8.
WAIVER OF CIVIL
CODE SECTION 1542.
(a) Both parties hereto understand and agree that the release
provided herein
extends to all Claims
and Company Claims
released in
Section
7(a) and 7(b),
respectively, above,
whether known or unknown, suspected or
unsuspected. Both parties expressly waive and
