Exhibit 10.2
EXECUTION
COPY
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement
(the “ Agreement ”) is made as of this 4th day
of May, 2006, by and between DISCOVERY LABORATORIES, INC., a
Delaware corporation (the “ Company ”), and JOHN
G. COOPER (the “ Executive ”).
WHEREAS, the Executive is currently employed by
the Company as its Executive Vice President and Chief Financial
Officer pursuant to that certain revised and amended employment
agreement dated as of January 1, 2004, by and between the Company
and the Executive (the “ Employment Agreement
”); and
WHEREAS, the Company and the Executive desire to
amend and restate the Employment Agreement in its entirety as set
forth herein.
NOW, THEREFORE, in consideration of the
covenants contained herein, and for other valuable consideration,
the Company and the Executive hereby agree to amend and restate the
Employment Agreement in its entirety to read as follows:
1. Certain Definitions . Certain definitions used herein shall have
the meanings set forth on Exhibit A attached hereto.
2. Term of the Agreement . The term (“ Term ”) of this
Agreement shall commence on the date first above written and shall
continue through May 3, 2008; provided, however, that commencing on
May 4, 2008, and on each May 4th thereafter, the term of this
Agreement shall automatically be extended for one additional year,
unless at least 90 days prior to such May 4th date, the Company or
the Executive shall have given notice that it does not wish to
extend this Agreement. Upon the occurrence of a Change of Control
during the term of this Agreement, including any extensions
thereof, this Agreement shall automatically be extended until the
end of the Effective Period if the end of the Effective Period is
after the then current expiration date of the Term. Notwithstanding
the foregoing, this Agreement shall terminate prior to the
scheduled expiration date of the Term on the Date of
Termination.
3. Executive's Duties and Obligations
.
(a) Duties . The Executive shall continue to serve as the
Company's Executive Vice President and Chief Financial Officer. The
Executive shall continue to be responsible for all duties
customarily associated with this title. The Executive shall at all
times report directly to the Company’s Chief Executive
Officer.
(b) Location of Employment . The Executive's principal place of business
shall continue to be at the Company's headquarters to be located
within thirty (30) miles of Doylestown, Pennsylvania; provided,
that the Executive acknowledges and agrees that the performance by
the Executive of his duties shall require frequent travel
including, without limitation, overseas travel from time to
time.
(c) Proprietary Information and Inventions
Matters . In
consideration of the covenants contained herein, and further in
consideration of the Term extension provided by this Agreement in
relation to the Employment Agreement, the Executive hereby agrees
to execute the Company's standard form of Proprietary Information
and Inventions Agreement (the “ Confidentiality
Agreement ”), a copy of which is attached to this
Agreement as Exhibit B. The Executive shall comply at all times
with the terms and conditions of the Confidentiality Agreement and
all other reasonable policies of the Company governing its
confidential and proprietary information.
4. Devotion of Time to Company's
Business .
(a) Full-Time Efforts . During his employment with the Company, the
Executive shall devote substantially all of his time, attention and
efforts to the proper performance of his implicit and explicit
duties and obligations hereunder to the reasonable satisfaction of
the Company.
(b) No Other Employment . During his employment with the Company, the
Executive shall not, except as otherwise provided herein, directly
or indirectly, render any services of a commercial or professional
nature to any other person or organization, whether for
compensation or otherwise, without the prior written consent of the
Executive Committee or the Board.
(c) Non-Competition During and After
Employment . During the
Term and for 12 months from the Date of Termination, the Executive
shall not, directly or indirectly, without the prior written
consent of the Company, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate
officer, director, or in any other individual or representative
capacity (X) compete with the Company in the business of developing
or commercializing pulmonary surfactants or any other category of
compounds which forms the basis of the Company's material products
or any material products under development on the Date of
Termination, or (Y) solicit, encourage, induce or endeavor to
entice away from the Company, or otherwise interfere with the
relationship of the Company with, any person who is employed or
engaged by the Company as an employee, consultant or independent
contractor or who was so employed or engaged at any time during the
preceding six (6) months; provided , that nothing herein
shall prevent the Executive from engaging in discussions regarding
employment, or employing, any such employee, consultant or
independent contractor (i) if such person shall voluntarily
initiate such discussions without any such solicitation,
encouragement, enticement or inducement prior thereto on the part
of the Executive or (ii) if such discussions shall be held as a
result of or employment be the result of the response by any such
person to a written employment advertisement placed in a
publication of general circulation, general solicitation conducted
by executive search firms, employment agencies or other general
employment services, not directed specifically at any such
employee, consultant or independent contractor.
(d) Injunctive Relief . In the event that the Executive breaches any
provisions of Section 4(c) or of the Confidentiality Agreement or
there is a threatened breach thereof, then, in addition to any
other rights which the Company may have, the Company shall be
entitled, without the posting of a bond or other security, to
injunctive relief to enforce the restrictions contained therein. In
the event that an actual proceeding is brought in equity to enforce
the provisions of Section 4(c) or the Confidentiality Agreement,
the Executive shall not urge as a defense that there is an adequate
remedy at law nor shall the Company be prevented from seeking any
other remedies which may be available.
(e) Reformation . To the extent that the restrictions imposed by
Section 4(c) are interpreted by any court to be unreasonable in
geographic and/or temporal scope, such restrictions shall be deemed
automatically reduced to the extent necessary to coincide with the
maximum geographic and/or temporal restrictions deemed by such
court not to be unreasonable.
5. Compensation and Benefits
.
(a) Base Compensation . During the Term, the Company shall pay to the
Executive (i) base annual compensation (“ Base Salary
”) of at least $292,000, payable in accordance with the
Company's regular payroll practices and less all required
withholdings and (ii) additional compensation, if any, and benefits
as hereinafter set forth in this Section 5. The Base Salary shall
be reviewed at least annually for the purposes of determining
increases, if any, based on the Executive's performance, the
performance of the Company, inflation, the then prevailing salary
scales for comparable positions and other relevant factors;
provided , however , that any such increase in Base
Salary shall be solely within the discretion of the
Company.
(b) Bonuses . During the Term, the Executive shall be
eligible for such year-end bonus, which may be paid in either cash
or equity, or both, as is awarded solely at the discretion of the
Compensation Committee of the Board after consultation with the
Company’s Chief Executive Officer, provided , that the
Company shall be under no obligation whatsoever to pay such
discretionary year-end bonus for any year. Any such equity bonus
shall contain such rights and features as are typically afforded to
other Company employees of similar level in connection with
comparable equity bonuses awarded by the Company.
(c) Benefits . During the Term, the Executive shall be
entitled to participate in all employee benefit plans, programs and
arrangements made available generally to the Company's senior
executives or to its employees on substantially the same basis that
such benefits are provided to such executives or employees
(including, without limitation profit-sharing, savings and other
retirement plans (e.g., a 401(k) plan) or programs, medical,
dental, hospitalization, vision, short-term and long-term
disability and life insurance plans or programs, accidental death
and dismemberment protection, travel accident insurance, and any
other employee welfare benefit plans or programs that may be
sponsored by the Company from time to time, including any plans or
programs that supplement the above-listed types of plans or
programs, whether funded or unfunded); provided ,
however , that nothing in this Agreement shall be construed
to require the Company to establish or maintain any such plans,
programs or arrangements. Anything contained herein to the contrary
notwithstanding, throughout the Term, Executive shall be entitled
to receive life insurance on behalf of Executive’s named
beneficiaries in the amount of Executive’s then current
annual salary for the Term of this Agreement at no cost to the
Executive, except the Company shall have no liability whatsoever
for any taxes (whether based on income or otherwise) imposed upon
or incurred by Executive in connection with any such
insurance.
(d) Vacations . During the Term, the Executive shall be
entitled to 15 days paid vacation per year, to be earned ratably
throughout the year, 5 days of which may be carried over from year
to year ( provided , that in no event shall the aggregate
number of such vacation days carried over to any succeeding year
exceed 10 days).
(e) Reimbursement of Business Expenses
. The Executive is authorized to
incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall
reimburse him for all such expenses, in accordance with reasonable
policies of the Company.
6. Change of Control Benefits.
(a) Bonus . The Executive shall be awarded an annual cash
bonus for each fiscal year of the Company ending during the
Effective Period at least equal to the Highest Annual
Bonus.
(b) Options . Notwithstanding any provision to the contrary
in the Company’s Amended and Restated 1998 Stock Incentive
Plan or any stock option or restricted stock agreement between the
Company and the Executive, all shares of stock and all options to
acquire Company stock held by the Executive shall accelerate and
become fully vested and, with respect to restricted stock, all
restrictions shall be lifted upon the Change of Control Date. In
the case of any Change of Control in which the Company’s
common stockholders receive cash, securities or other consideration
in exchange for, or in respect of, their Company common stock, (i)
the Executive shall be permitted to exercise his options at a time
and in a fashion that will entitle him to receive, in exchange for
any shares acquired pursuant to any such exercise, the same per
share consideration as is received by the other holders of the
Company’s common stock, and (ii) if the Executive shall elect
not to exercise all or any portion of such options, any such
unexercised options shall terminate and cease to be outstanding
following such Change of Control, except to the extent assumed by a
successor corporation (or its parent) or otherwise expressly
continued in full force and effect pursuant to the terms of such
Change of Control.
7. Termination of Employment
.
(a) Termination by the Company for Cause or
Termination by the Executive without Good Reason, Death or
Disability .
(i) In the event of a termination of the
Executive’s employment by the Company for Cause, a
termination by the Executive without Good Reason, or in the event
this Agreement terminates by reason of the death or Disability of
the Executive, the Executive shall be entitled to any unpaid
compensation accrued through the last day of the Executive's
employment, a lump sum payment in respect of all accrued but unused
vacation days ( provided , that in no event shall the
aggregate number of such accrued vacation days exceed 10 days) at
his Base Salary in effect on the date such vacation was earned, and
payment of any other amounts owing to the Executive but not yet
paid. The Executive shall not be entitled to receive any other
compensation or benefits from the Company whatsoever (except as and
to the extent the continuation of certain benefits is required by
law).
(ii) In the case of a termination due to death or
disability, notwithstanding any provision to the contrary in any
stock option or restricted stock agreement between the Company and
the Executive, all shares of stock and all options to acquire
Company stock held by the Executive shall accelerate and become
fully vested upon the Date of Termination (and all options shall
thereupon become fully exercisable), and all stock options shall
continue to be exercisable for the remainder of their stated
terms.
(b) Termination by the Company without Cause or by
the Executive for Good Reason . If (x) the Executive’s employment is
terminated by the Company other than for Cause, death or Disability
(i.e., without Cause) or (y) the Executive terminates employment
with Good Reason, then the Executive shall be entitled to receive
the following from the Company:
(i) The amounts set forth in Section
7(a)(i);
(ii) Within 10 days after the Date of Termination, a
lump sum cash payment equal to the Highest Annual Bonus multiplied
by the fraction obtained by dividing the number of days in the year
through the Date of Termination by 365;
(iii) Within 10 days after the Date of Termination, a
lump sum cash payment in an amount equal to the sum of (A) the
Executive’s Base Salary then in effect (determined without
regard to any reduction in such Base Salary constituting Good
Reason) and (B) the Highest Annual Bonus;
(iv) For one year from the Date of Termination, the
Company shall either (A) arrange to provide the Executive and his
dependents, at the Company’s cost (except to the extent such
cost was borne by the Executive prior to the Date of Termination,
and further, to the extent that such post-termination coverages are
available under the Company’s plans), with life, disability,
medical and dental coverage, whether insured or not insured,
providing substantially similar benefits to those which the
Executive and his dependents were receiving immediately prior to
the Date of Termination, or (B) in lieu of providing such coverage,
pay to the Executive no less frequently than quarterly in advance
an amount which, after taxes, is sufficient for the Executive to
purchase equivalent benefits coverage referred to in clause (A);
provided , however , that the Company’s
obligation under this Section 7(b)(iv) shall be reduced to the
extent that substantially similar coverages (determined on a
benefit-by-benefit basis) are provided by a subsequent
employer;
(v) Notwithstanding any provision to the contrary in
any stock option or restricted stock agreement between the Company
and the Executive, all shares of stock and all options to acquire
Company stock held by the Executive shall accelerate and become
fully vested upon the Date of Termination (and all options shall
thereupon become fully exercisable), and all stock options shall
continue to be exercisable for the remainder of their stated
terms;
(vi) Any other additional benefits then due or earned
in accordance with applicable plans and programs of the Company;
and
(vii) The Company will provide out-placement
counseling assistance in the form of reimbursement of the
reasonable expenses incurred for such assistance within the
12-month period following the Date of Termination. Such
reimbursement amount shall not exceed $40,000.
(c) Termination in connection with a Change of
Control . If the
Executive’s employment is terminated by the Company other
than for Cause or by the Executive for Good Reason during the
Effective Period, then the Executive shall be entitled to receive
the following from the Company:
(i) All amounts and benefits described in Section
7(a)(i) above;
(ii) Within 10 days after the Date of Termination, a
lump sum cash payment equal to the Highest Annual Bonus multiplied
by the fraction obtained by dividing the number of days in the year
through the Date of Termination by 365;
(iii) Within 10 days after the Date of Termination, a
lump sum cash payment in an amount equal to the product of two (2)
times the sum of (A) the Executive’s Base Salary then in
effect (determined without regard to any reduction in such Base
Salary constituting Good Reason) and (B) the Highest Annual
Bonus;
(iv) For two years from the Date of Termination, the
Company shall either (A) arrange to provide the Executive and his
dependents, at the Company’s cost (except to the extent such
cost was borne by the Executive prior to the Date of Termination,
and further, to the extent that such post-termination coverages are
available under the Company’s plans), with life, disability,
medical and dental coverage, whether insured or not insured,
providing substantially similar benefits to those which the
Executive and his dependents were receiving immediately prior to
the Date of Termination, or (B) in lieu of providing such coverage,
pay to the Executive no less frequently than quarterly in advance
an amount which, after taxes, is sufficient for the Executive to
purchase equivalent benefits coverage referred to in clause (A);
provided , however , that the Company’s
obligation under this
