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SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

Release Agreement

SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE | Document Parties: DISCOVERY LABORATORIES INC /DE/ | Discovery Laboratories, Inc You are currently viewing:
This Release Agreement involves

DISCOVERY LABORATORIES INC /DE/ | Discovery Laboratories, Inc

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Title: SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE
Governing Law: Delaware     Date: 7/18/2011
Industry: Biotechnology and Drugs     Sector: Healthcare

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Exhibit 10.1

 

SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

 

THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (this “Agreement”) is made as of July 12, 2011 between Discovery Laboratories, Inc. (the “Company”) and David L. Lopez, Esq., C.P.A. (“Executive”) (hereinafter collectively referred to as the “Parties”).

 

WHEREAS, the Company and Executive are parties to an employment agreement dated May 4, 2006, as amended on January 3, 2008 (the “Employment Agreement”);

 

WHEREAS, Executive desires to resign all of his positions with the Company and Executive and the Company wish to mutually agree on matters relating to Executive’s resignation, on the terms set forth in this Agreement; and

 

NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, Executive and the Company agree as follows:

 

1.            Resignation from Employment; Transition Duties .

 

(a)          Resignation . Effective at the close of business on July 31, 2011 (the “Resignation Date”), Executive’s employment with the Company and all related job duties and responsibilities with the Company, including, without limitation, his positions as Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary shall terminate.  Executive acknowledges and understands that the Employment Agreement and his employment with the Company under the Employment Agreement or otherwise will automatically terminate on the Resignation Date and that his last day of employment with the Company will be the Resignation Date; provided, however, that Section 4(c) of the Employment Agreement (as modified by Section 5(e) of this Agreement) and the Confidentiality Agreement (as defined in Section 3(c) of the Employment Agreement, the “Confidentiality Agreement”) shall survive. Executive acknowledges and agrees that, except as otherwise specifically provided in this Agreement, Executive has received all compensation and benefits to which Executive is entitled under the Employment Agreement or otherwise as a result of Executive's employment with the Company.  Terms not otherwise defined in this Agreement shall have the meaning given to them in the Employment Agreement.

 

(b)          Transition . As a condition to Executive's receipt of the payments and benefits set forth in Section 2 hereof, Executive is required to comply with the Company’s policies and procedures and the terms of this Agreement and, as the Chief Executive Officer of the Company may designate, to perform certain duties before the Resignation Date, and complete before the Resignation Date, to the reasonable satisfaction of the Company, the transition of Executive’s duties and responsibilities to other employees of the Company (the “Transition Services”).

 

2.            Severance Payments and Benefits to Executive .

 

(a)          Resignation Payments .   Company shall pay to Executive on August 1, 2011, a lump sum cash payment in an amount equal to the sum of (i) all unpaid salary and compensation accrued through the Resignation Date, and any unreimbursed employee business expenses (subject to  appropriate approval and submission of documentation), and (ii) any accrued but unpaid vacation pay as well as the accrued value of Executive’s “Vacation Day Bank” for all unused vacation days in excess of permitted carryovers, calculated at Executive’s Base Salary in effect on the date any such vacation day was earned.

 

 

 


 

 

(b)          Repayment of Promissory Note; Severance Payments .  Subject to the terms and conditions of this Agreement, including non-revocation by Executive of the release set forth in Section 3(a), on February 1, 2012, (i) if not previously paid in full, Executive shall pay the outstanding aggregate principal amount and accrued and unpaid interest on the Promissory Note dated July 23, 2001, issued by Executive to the Company (the “Note) and (ii) the Company shall pay to Executive $400,000.  The obligation of the Parties to make the payment required by clauses (b)(i) and (b)(ii) shall be conditioned on each Party’s payment to the other Party; provided, that (X) if Executive fails to pay the Note pursuant to clause (b)(i) on February 1, 2012, the amount payable by the Company pursuant to clause (b)(ii) shall be reduced by the amount of such payment failure, and (Y) if the Company fails to make the payment required by clause (b)(ii) on February 1, 2012, the Note shall be deemed to have been paid in full and the amount owing to the Executive pursuant to clause (b)(ii) shall be reduced by the outstanding aggregate principal amount and accrued and unpaid interest owing on the Note on February 1, 2012.  Upon payment of the Note in full, the Company shall provide Executive with confirmation of the cancellation of the Note and evidence that the Note has been cancelled and satisfied in full, the Executive’s obligation to pay the principal amount and any interest on the Promissory Note shall be discharged, and the Executive shall have no further liability on the Note.  Upon request of the Executive at least five business days in advance of February 1, 2012, the Company may, in its sole discretion, permit a netting or offset of such transactions on such terms, if any, as it deems advisable taking into account its economic and tax considerations.

 

(c)          Severance Period Benefits .  Subject to the terms and conditions of this Agreement, including non-revocation by Executive of the release set forth in Section 3(a), during the period beginning as of the Resignation Date and ending on January 31, 2013 (the “Benefits Period”), the Company shall provide Executive and his dependents continuation of medical, hospitalization, vision, dental and life insurance coverage as appropriate initially pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”)(excluding disability) at the same level that Executive is receiving benefits immediately prior to the Resignation Date.  The Company shall continue to pay for such benefits at the same level as borne by the Company prior to the Resignation Date and Executive shall continue to pay for such benefits at the same level as borne by him prior to the Resignation Date.  At the time and to the extent that Executive qualifies for substantially similar benefits (determined on a benefit by benefit basis) from a subsequent employer, the benefits provided under this Agreement shall cease.

 

(d)          Stock Options .  Executive’s options to purchase shares of common stock, par value $.001 per share, of the Company (“Common Stock”) that are vested as of the Resignation Date shall be exercisable in accordance with the terms and conditions of the applicable stock option agreements for 90 days after the Resignation Date, after which they will terminate and cease to be exercisable.

 

(e)          Restricted Stock .  Subject to the terms and conditions of this Agreement, including non-revocation by Executive of the release set forth in Section 3(a), from and after the Resignation Date, Section 4(b) of the Restricted Stock Agreement dated as of September 27, 2010, between Executive and the Company (collectively, the “Restricted Stock Agreement”), is terminated. Accordingly,  notwithstanding that Executive’s employment with the Company shall terminate on the Resignation Date, the 15,000 restricted shares of Common Stock (the “Restricted Stock”), of the Company granted to Executive pursuant to the Restricted Stock Agreement and related Notice of Award,  shall continue to be subject to vesting in accordance with the terms and conditions of the Restricted Stock Agreement without any requirement that Executive be actively providing Service (as such term is defined in the Restricted Stock Agreement).

 

 

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(f)           Outplacement . Subject to the terms and conditions of this Agreement, including non-revocation by Executive of the release set forth in Section 3(a), if Executive has not secured full time employment as a practicing attorney or corporate professional by May 1, 2012, the Company shall reasonably promptly and in any event by February 28, 2013 reimburse Executive for up to $10,000 incurred during 2012 for outplacement services of a firm of Executive’s choosing (subject to reasonably timely submission of appropriate documentation no later than February 15, 2013).

 

(g)          Other Miscellaneous Severance Matters .  Executive acknowledges and agrees that, from and after the date of this Agreement, Executive shall not be entitled to any benefits or employment rights set forth in his Employment Agreement, during the Benefits Period or otherwise, other than the benefits set forth in this Agreement.

 

(h)          Survival of Obligations .  The obligations of the Company and Executive under this Section 2 shall survive the death of Executive.  Any amounts remaining due under Section 2 at the time of or after Executive’s death shall be paid on the dates set forth in this Agreement and shall be payable by or to his surviving spouse or his estate or legal representative, as the case may be.  If the Company remains obligated to provide any benefits after the time of Executive’s death, such benefits shall be provided to surviving participants and/or beneficiaries under the Company’s health and welfare and other benefit plans, in accordance with any applicable provisions of COBRA and the provisions of such plans pursuant to the terms of this Agreement.

 

(i)          Acknowledgements .  All payments made to Executive under this Agreement shall be subject to applicable federal, state and local withholding taxes.  The Parties hereby acknowledge that they may not be otherwise entitled to receive some of the benefits described in this Agreement unless the Parties sign this Agreement.  Executive further acknowledges that, other than the foregoing payments described in this Section 2, he has received payment in full for all of the compensation, wages, benefits and payments of any kind otherwise due him from the Company, including compensation, bonuses, commissions, lost wages, severance, expense reimbursements, payments to benefit plans, accrued but unused vacation and personal or sick time as provided in the Employment Agreement or otherwise.  The Parties acknowledge that the consideration described in Sections 2, 3, 4 and 5 represents good, valuable, and sufficient consideration for the mutual promises and duties set forth in this Agreement.

 

3.            Complete Release by Executive; Indemnity by Company .

 

(a)          Release .  As of the Resignation Date, for and in consideration of the payments and promises contemplated by Section 2 of this Agreement and for other good and valuable consideration as more fully described herein, the receipt and adequacy of which is hereby acknowledged, Executive hereby waives, releases and gives up any claim or cause of action that Executive, Executive’s heirs, executors, administrators, successors and assigns may have against the Company, its subsidiaries and affiliates and their employee benefit plans and the trustees, fiduciaries and administrators of those plans, and any of the foregoing present or past employees, officers, shareholders, managers, directors, agents and contractors, and each of their predecessors, successors and assigns (the “Released Parties”), based on any event that has occurred before Executive signs this Agreement and through the Resignation Date, or arising from or based upon Executive’s employment with the Company and/or separation from employment and/or termination of the Employment Agreement, including, but not limited to, any claims for salary, bonuses, severance pay, vacation pay or any benefits under the Employee Retirement Income Security Act of 1974, as amended; any claims of harassment or discrimination based upon race, color, national origin, ancestry, religion, marital status, sex, sexual orientation, harassment, retaliation, citizenship status, pregnancy, leave of absence (including, but not limited to, the Family Medical Leave Act or any other federal, state or local leave laws), medical condition or disability, under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act, Section 1981 of the Civil Rights Act of 1866, or any other federal, state or local law prohibiting discrimination in employment; any claims of age discrimination under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act of 1990 (“ADEA”), or under any federal, state or local law prohibiting age discrimination; the Worker Adjustment and Retraining Notification Act; whistleblower claims; claims of breach of implied or express contract, breach of promise, misrepresentation, negligence, fraud, estoppel, defamation, infliction of emotional distress, violation of public policy, wrongful or constructive discharge or any other employment-related tort; any claim for costs, fees or other expenses, including attorneys’ fees; and all claims under any other federal, state or local law relating to employment, including the Sarbanes-Oxley Act of 2002.  This waiver includes a waiver of claims that Executive may know about and claims that Executive may not know about.  However, the foregoing waiver shall not apply to, and Executive does not hereby waive, release or give up (i) any claim for workers’ compensation benefits, (ii) any vested benefits (if any) under the terms of any retirement savings, insurance, or other qualified plan(s) maintained by the Company, (iii) any right to unemployment benefits that Executive may have, (iv) any rights that Executive may have to purchase health benefit continuation coverage under COBRA, (v) any rights that Executive may have under this Agreement, the Indemnification Agreement (as defined below), the Agreements between the Company and Executive related to Executive’s Options Agreements and Restricted Stock Agreements, (vi) any rights of Executive under the Company’s Certificate of Incorporation, as amended from time to time, and the Company’s Bylaws, as amended from time to time, and any insurance policies maintained by the Company, including directors and officers liability and product and general liability policies, and (vii) any rights or claims that may not be waived or released under applicable law.

 

(b)          Claims .  Executive represents and warrants that Executive has not filed, commenced or lodged against or relating to the Company, or permitted to be filed, commenced or lodged against or relating to the Company on Executive’s behalf, any complaints, charges, claims, actions or other proceedings of any nature or description in or before any court, administrative agency or other forum.  To the extent permitted by law, Executive hereby agrees that neither Executive, nor any non-governmental person, organization or other entity acting on Executive’s behalf, has in the past or will in the future file any lawsuit or arbitration asserting any claim that is waived under Section 3(a) of this Agreement.  If Executive breaks this promise and files a lawsuit or arbitration making any claim waived in this Agreement, Executive shall pay for all costs, including reasonable attorneys’ fees, incurred by the Company in defending against any such claim.

 

 

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(c)          Executive Indemnity .  The Company hereby acknowledges that the Indemnification Agreement, effective as of September 15, 2000 (“Indemnification Agreement”), between Executive and the Company shall survive the termination of the Employment Agreement and any expiration of the Severance Period and remain in full force and effect in accordance with its terms.

 

(d)          Consideration Period, ADEA Claims .  Executive further acknowledges with respect to the release of claims under the ADEA (to the extent that Executive may


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