EXHBIIT 10.12
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (this "Agreement") is made as of July 10,
2000 by and among WESTERN CENTER FOR CLINICAL STUDIES, a California
corporation ("WCCS"), and ENTROPIN, INC., A Colorado corporation
("Entropin") (WCCS and Entropin may be referred to herein as the "parties").
RECITALS
WHEREAS, WCCS and Entropin entered into that certain Agreement dated
April 6, 1998, as amended by that certain Second Amendment dated July 21,
1999, that certain Third Amendment dated November 10, 1999, that certain
Amendment dated March 6, 2000, and that certain Amendment dated May 17,
2000 (collectively the agreement as amended shall be referred to herein as,
the "WCCS Agreement") whereby WCCS agreed to perform certain services for
Entropin related to the clinical trials for a new drug product known as
Esterom;
WHEREAS, WCCS and Entropin entered into that certain WCCS Wrap Around
Agreement dated November 10, 1999 (the "Wrap Around Agreement") where WCCS
agreed to assume certain responsibilities under its agreement with
Therapeutic Management Agreement (the WCCS Agreement and the Wrap Around
Agreement shall collectively be referred to herein as, the "Trial
Agreements"); and
WHEREAS, WCCS and Entropin desire to terminate the Trial Agreements
and reach a mutually beneficial settlement of the remaining issues;
NOW, THEREFORE, for mutual consideration contained herein, the
sufficiency of which is hereby acknowledged, WCCS and Entropin hereby agree
as follows:
AGREEMENT
SECTION 1. TERMINATION. Pursuant to Section 7.6 of the WCCS
Agreement, the parties hereby agree to terminate the Trial Agreements and
any other related agreements, whether written or oral, as of the date
hereof and upon the terms and conditions set forth herein.
SECTION 2. RETURN OF PROPERTY. The parties hereby agree to return
the property of the other as set forth below:
2.1 EQUIPMENT AND FURNITURE. All furniture and equipment
shall be retained by WCCS as its sole and exclusive property.
2.2 CONFIDENTIAL INFORMATION OF ENTROPIN. Not later than July
20, 2000, WCCS working in a cooperative and concerted effort with
Entropin's designated representative or representatives (i) shall
return all Entropin's Confidential Information (as defined in the WCCS
Agreement), including, without limitation, all documentation related
to the clinical trials and electronic form of any such
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information to Entropin, and (ii) shall provide an index of all
documentation related to the clinical trials which has been returned
to Entropin. Entropin's designated representative shall promptly
review such information and index upon its receipt, in whole or in
part, and if Entropin's designated representative reasonably believes
that any of Entropin's Confidential Information is missing, such
representative shall promptly inform WCCS, and WCCS shall promptly
provide such Confidential Information or a written, executed
explanation on WCCS Letterhead stating where such Information can be
obtained or why such Information is not in the possession of WCCS.
2.3 CONFIDENTIAL INFORMATION OF WCCS All WCCS Confidential
Information (as defined in the WCCS Agreement), if any, shall be
returned within five (5) days from the date of this Agreement to, or
retained by, WCCS. In the event that WCCS reasonably believes that
any WCCS Confidential Information has not been returned, a duly
authorized officer or representative of WCCS shall deliver notice to
Entropin setting forth a description of the document or information to
be returned. Within five (5) days of receiving such notice, Entropin
shall deliver the WCCS Confidential Information to an authorized
officer or representative of WCCS, or a written, executed explanation
on Entropin Letterhead of why such information is no longer in the
possession of Entropin.
WCCS hereby acknowledges that this Agreement and all payments and
considerations to be received hereunder from Entropin are conditioned on
the return of all material Confidential Information to Entropin and the
further agreement of WCCS to cooperate with Entropin, the Food and Drug
Administration ("FDA") and the Drug Enforcement Agency ("DEA") with respect
to WCCS' work during the term of the Trial Agreements. Entropin agrees to
reimburse WCCS for its reasonable out of pocket expenses incurred in
connection with such cooperation. Notwithstanding the condition set forth
at the beginning of this paragraph, Entropin agrees that so long as WCCS
provides the written explanation contemplated in Section 2.2, the absence
of any Confidential Information will not be a basis for non-payment of the
consideration to be received by WCCS under this Agreement, nor shall it
constitute a claim by Entropin under the Carve Out as defined in Section
6.1 of this Agreement.
SECTION 3. PAYMENT FOR SERVICES RENDERED. Upon the completion of
the delivery of Entropin's Confidential Information required hereunder in
accordance with the preceding Section, Entropin agrees to deliver to WCCS
or its authorized representative $71,600 by certified check. WCCS hereby
agrees to accept $71,600 as payment in full for all amounts due, as of the
date hereof, under the Trial Agreements for the services of WCCS, in
addition to the consideration set forth in the following Section.
SECTION 4. OPTIONS TO PURCHASE THE COMMON STOCK OF ENTROPIN. As
additional consideration for this Agreement and upon completion of the
delivery of Entropin's Confidential Information required hereunder in
accordance with Section 2, Entropin hereby agrees to deliver an option to
purchase 75,000 shares of the common stock of Entropin with an exercise
price of $1.50 per share and an option to purchase 90,000 shares of the
common stock of Entropin with an exercise price of $2.50 per share, all or
a portion of such exercise may be done by cashless
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exercise. Such options shall be fully vested, but subject to all
restrictions and lock-up agreements required by the Securities and Exchange
Commission and all State securities commissions which, Entropin represents,
restricts the sale of securities underlying such options until March 20,
2001. The shares underlying such options are registered under all
applicable securities laws and upon the exercise of such options, the
shares shall be subject only to the restrictions set forth in the Lock-Up
Agreements previously executed by WCCS and its principals.
SECTION 5. SCIENCE MEDICAL ADVISORY BOARD. WCCS has entered into
agreements with certain individuals as members of a Science Medical
Advisory Board ("SMAB"). Under such agreements, WCCS has promised options
to purchase the common stock of Entropin. The SMAB agreements are in
writing and executed by each member of the SMAB. WCCS hereby agrees to
take all reasonable action to obtain the agreement of each SMAB member to
the assignment of his/her agreement to Entropin on or prior to July 20,
2000. Dan Azarnoff shall work together with Thomas Tachovsky to contact
each SMAB member and obtain their consent to such assignment. Upon such
assignment, Entropin agrees to the terms and conditions of such agreements,
including the delivery of options to such members.
SECTION 6. GENERAL RELEASE AND INDEMNIFICATION.
6.1. Entropin, on behalf of itself and its officers, directors,
shareholders, agents, employees, attorneys, representatives,
affiliates, subsidiaries, administrators, successors and assigns
(collectively the "Entropin Releasors"), for good and sufficient
consideration, receipt of which is hereby acknowledged, releases
and forever discharges each and every liability, claim, right and
cause of action, whether in law or equity, whether known or
unknown, that the Entropin Releasors or any of them had, now have
or may hereafter have against WCCS, its officers, directors,
shareholders, agents, employees, attorneys, representatives,
affiliates, subsidiaries, administrators, successors and assigns
(collectively the "WCCS Releasees") or any of them arising out of
or in any way related to, the performance or non-performance, or
in any other way related to the Trial Agreements (the "Entropin
Released Claims") and agrees to indemnify, defend and hold
harmless the WCCS Releasees from and against any and all damages,
claims, losses, expenses, costs, obligations and liabilities,
including without limitation, liabilities for reasonable
attorneys' fees, arising out of or in any way related to the
Entropin Released Claims; provided, however, that this Release
does not release any party from its obligations under this
Agreement and provided further that this release and
indemnification shall not apply to any liability incurred by WCCS
due to WCCS's gross negligence, intentional misconduct, or
violations of material laws, regulations and policies of the
United States, the FDA and the DEA (such laws, regulations and
policies shall be referred to herein as, the "Legal
Requirements") (such proviso for gross negligence, intentional
misconduct and violation of certain laws shall be referred to
herein as a "Carve Out"); provided, further, that Entropin shall
indemnify and hold WCCS harmless for any liability incurred by
WCCS for Entropin's gross negligence, intentional misconduct or
violation of the Legal Requirements.
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6.2. WCCS, on behalf of itself and its officers, directors,
shareholders, agents, employees, attorneys, representatives,
affiliates, subsidiaries, administrators, successors and assigns
(collectively the "WCCS Releasors"), for good and sufficient
consideration, receipt of which is hereby acknowledged, releases
and forever discharges each and every liability, claim, right and
cause of action, whether in law or equity, whether known or
unknown, that the WCCS Releasors or any of them had, now have or
may hereafter have against Entropin, its officers, directors,
shareholders, agents, employees, attorneys, representatives,
affiliates, subsidiaries, administrators, successors and assigns
(collectively the Entropin Releasees") or any of them arising out
of or in any way related to, the performance or non-performance,
or in any other way related to the Trial Agreements (the "WCCS
Released Claims") and agrees to indemnify, defend and hold
harmless the Entropin Releasees from and against any and all
damages, claims, losses, expenses, costs, obligations and
liabilities, including without limitation, liabilities for
reasonable attorneys' fees, arising out of or in any way related
to the WCCS Released Claims; provided, however, that this Release
does not release any party from its obligations under this
Agreement and provided further that this release and
indemnification shall not apply to any liability incurred by
Entropin due to Entropin's gross negligence, intentional
misconduct, or violations of the Legal Requirements; provided,
further, that WCCS shall indemnify and hold Entropin harmless for
any liability incurred by Entropin for WCCS's gross negligence,
intentional misconduct or violation of the Legal Requirements.
SECTION 7. DISPARAGING REMARKS. The parties hereby agree not to
make any disparaging remarks about the other party or participate in any
press releases which discuss any specific reasons for termination of the
Agreement, other than completion of the services rendered as of the date
hereof. Entropin further agrees that certain Memorandum to its counsel
dated July 7, 2000 shall be maintained as confidential information and it
shall not be disclosed to any third party, except in the event of, and only
in connection with, subsequent litigation between WCCS and Entropin or as
otherwise may be required by law or regulations.
SECTION 8. NOTICES. All notices, requests, demands and other
communications pertaining to this Agreement shall be in writing and shall
be given by hand delivery, by prepaid registered or certified mail with
return receipt requested, by an established national overnight courier
providing proof of delivery for next business day delivery, or by
facsimile, addressed as follows:
If to WCCS:
Western Center for Clinical Studies, Inc.
Suite 810
21550 Oxnard Street
Woodland Hills, CA 91367
Attention: Dr. Roy Azarnoff
Facsimile No.: (818) 676-0010
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with a copy (which shall not constitute notice) to:
Musick, Peeler & Garrett LLP
Suite 2000
One Wilshire Boulevard
Los Angeles, CA 90017-3321
Attention: Joseph J. McCann, Jr., Esq.
Facsimile No.: (213) 624-1376
If to Entropin:
Entropin, Inc.
45926 Oasis Street
Indio, CA 92201
Attention: Dr. Thomas G. Tachovsky
Facsimile No.: (760) 347-6563
with a copy (which shall not constitute notice) to:
Brenman Bromberg & Tenenbaum, P.C.
Suite 1001
Mellon Financial Center
1775 Sherman Street
Denver, CO 80203-4314
Attention: A. Thomas Tenenbaum, Esq.
Facsimile No.: (303) 839-1633
The date of any such notice and service thereof shall be deemed to be (i)
the date of delivery if hand-delivered or delivered by overnight courier,
(ii) the date of delivery as indicated on the return receipt if dispatched
by mail, or (iii) the date of facsimile transmission as indicated on the
facsimile transmission report, provided that any facsimile transmission
shall not be effective unless a paper copy is sent by overnight courier on
the date of the facsimile transmission. Any party may change its address
for notice by notice to the others given pursuant to the requirements of
this Section.
SECTION 9. FURTHER ASSURANCES. Each party shall execute and deliver
such additional documents and take further actions as are reasonably
necessary for the purposes of carrying out this Agreement.
SECTION 10. BINDING EFFECT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 11. ENTIRE AGREEMENT. This Agreement, the Schedules and
Exhibits hereto constitute the entire agreement and understanding of the
parties hereto and supersede any and all prior agreements, arrangements and
understandings related to the matters provided for herein.
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SECTION 12. AMENDMENT. This Agreement may be modified or amended
only in a writing signed by the parties hereto.
SECTION 13. WAIVER. No waiver by any party hereto of a breach by
another party hereto of any provision of this Agreement shall be deemed to
constitute a waiver of any proceeding or subsequent breach of the same
provisions or any other provision.
SECTION 14. HEADINGS. The headings set forth in this Agreement are
for convenience only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
SECTION 15. GOVERNING LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of Colorado without
regard to its conflict of laws principles.
SECTION 16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument. A facsimile
signature shall have the same effect as an original signature provided that
the original signature page is sent by overnight courier on the same date
as the facsimile is delivered.
SECTION 17. NO ADMISSION. Neither party, by execution of this
Agreement, or otherwise is making an admission of wrongdoing, negligence or
any other culpability. This Agreement is only a document for the
termination of the Trial Agreements.
SECTION 18. ARBITRATION, DISPUTE RESOLUTION. Any controversy or
claim arising out of or relating to this Agreement, or breach thereof,
shall be settled by arbitration. The arbitration shall be administered by
the Denver, Colorado office of the American Arbitration Association in
accordance with the then current Commercial Arbitration Rules of the
American Arbitration Association. Such arbitration proceedings shall be
conducted in Denver, Colorado, or such other location as the parties may
agree. The dispute will be heard by a panel of three arbitrators, each
with a familiarity with pharmaceutical manufacturing and/or pharmaceutical
research and development. One arbitrator shall be appointed by each of the
parties and the third appointed by the other two arbitrators. The
determination of the arbitrators shall be conclusive and binding upon both
parties. The parties acknowledge and agree that any arbitration judgment
may be enforced against either or both of them in a court of competent
jurisdiction. The arbitrators' award as to the payment of the costs of
arbitration shall be binding upon the parties. The prevailing party in any
arbitration conducted in accordance with this paragraph will be entitled to
attorneys' fees and costs.
SECTION 19. CONFIDENTIALITY. The parties hereby acknowledge that
their respective obligations under that Confidentiality Agreement dated
April 6, 1998, survive this Termination.
[See Page 7 for Signature Pages]
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IN WITNESS WHEREOF, the parties have set forth their respective
signatures on this Agreement as of the date first set forth above.
ENTROPIN, INC., a Colorado corporation
By: \s\ Thomas G. Tachovsky
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Name: Thomas G. Tachovsky
Title: President and Chief Executive Officer
WESTERN CENTER FOR CLINICAL
STUDIES, INC., a California corporation
By: \s\ Daniel L. Azarnoff
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Name: Dan Azarnoff
Title: Vice President
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