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).
(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.
(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
