EXHIBIT 10.1
SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE (hereinafter referred to as
the "Agreement") is made and entered into by and between Larry Dalesandro (as
used herein, "Executive" includes Larry Dalesandro and his legal
representatives, agents, heirs, executors, administrators, successors and
assigns), and Lannett Company, Inc., its divisions, parents, subsidiaries,
affiliates or related companies, its and their past, present and future
officers, directors, shareholders, trustees, partners, insurers, attorneys,
legal representatives, employees and agents and all of its and their respective
heirs, executors, administrators, successors and assigns and benefit plans
(hereinafter, "Company"), for the following purpose and with reference to the
following facts:
WHEREAS, Executive has been employed by Company as its Chief Financial
Officer and wishes to resign his employment for personal reasons;
WHEREAS, Executive was given the option of taking a leave of absence, but
elected to resign his employment with Company;
WHEREAS, the parties agree that, pursuant to Executive's Employment
Agreement dated June 17, 2004 (the "Employment Agreement"), Executive would not
be entitled to any severance in connection with the resignation of his
employment with Company;
WHEREAS, in recognition of Executive's years of service to Company, in
exchange for his execution of the Release set forth below, and subject to the
conditions set forth herein, Company wishes to extend to Executive the severance
to which he would have been entitled under his Employment Agreement had he been
terminated without cause;
NOW THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the undersigned agree as follows:
1. Resignation: Executive hereby resigns his employment and office with
Company effective December 1, 2004 and Company accepts his resignation;
2. Separation Payments and Benefits: Company hereby extends the following
payments and benefits to Executive in exchange for the Release set forth in
paragraph 3 below:
(a) continuation of his current base salary at the annualized rate
of $132,860.00, net of applicable payroll deductions and in accordance with
Company's generally-applicable payroll practices, for an additional eighteen
(18) months, i.e., through May 31, 2006.
(b) continuation of his current health and dental insurance coverage
at the same level as Executive participated as of November 31, 2004, in
accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), at no cost to him for an additional eighteen (18) months, i.e.,
through May 31, 2006. If Lannett Company, Inc., or any successor organization,
ceases to offer any health or dental insurance to any employee prior to May 31,
2006, Company shall pay to Executive the premiums that Company would have paid
for health and dental insurance for Executive for the remaining months through
May 31, 2006;
(c) continuation of his current life insurance coverage at the same
level as Executive participated as of November 31, 2004 at no cost to him for an
additional eighteen (18) months, i.e. through May 31, 2006. If Lannett Company,
Inc., or any successor organization, ceases to offer any life insurance to any
employee prior to May 31, 2006, Company shall pay to Executive the premiums that
Company would have paid for life insurance for Executive for the remaining
months through May 31, 2006;
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(d) a pro rated annual cash bonus for the current fiscal year equal
to five-twelfths of the cash bonus Executive would have been entitled to receive
had he remained employed by Company through the remainder of the current fiscal
year. The bonus will be paid to Executive at the time that the balance of the
2005 Management Incentive Bonus Award is paid to active participants in the
program, and will be subject to applicable payroll deductions in accordance with
Company's generally-applicable payroll practices; and
(e) all outstanding Company stock options awarded to Executive prior
to December 1, 2004 will be one hundred percent (100%) vested as of December 1,
2004. The Company agrees to extend, and agrees to cause the Plan Administrator
for the Company's stock option plans to extend, the exercise period for any
non-qualified stock options currently held by Executive through May 31, 2006.
3. Release: In exchange for the payments and other consideration provided
for in this Agreement, Executive waives, releases and gives up any and all
claims and rights which he may have against Company and any of its benefit
plans, or their respective predecessors, successors and assigns (as well as
their respective past or present trustees, officers, directors, agents,
representatives or employees and their respective successors and assigns, heirs,
executors, and personal or legal representatives) ("Released Parties"), based on
any act, event, or omission occurring before the execution of this Agreement,
including but not limited to, any events related to, arising out of or in
connection with Executive's employment with Company or its predecessors and his
separation from employment. Executive specifically waives, releases and gives up
any and all claims arising from or relating to his employment and separation
from Company based on any act, event, or omission occurring before the execution
of this Agreement, including but not limited to any claim which could be
asserted now or in the future under (a) the
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common law, including but not limited to theories of breach of express or
implied contract or duty, tort, defamation, or violation of public policy; (b)
any policies, practices, or procedures of Lannett; (c) any federal, state and/or
local statute or regulations, including but not limited to: the Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C. Section 1001 et
seq.; the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq.;
Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000 (e), et seq.;
the Equal Pay Act, 29 U.S.C. Section 206 (d), et seq.; the Family and Medical
Leave Act, 29 U.S.C. Section 2601, et seq.; and/or the Pennsylvania Human
Relations Act, as amended, 43 P.S. Section 951 et seq.; (d) any contract of
employment, express or implied; (e) any provision of the Constitution or laws of
the United States, the Commonwealth of Pennsylvania, or any other state, or the
City of Philadelphia; (f) any and all claims or actions for attorneys' fees; and
(g) any provision of any other law, common or statutory, of the United States,
Pennsylvania, or any other state.
4.Employment Agreement: The following provisions of the Employment
Agreement shall remain in full force and effect:
(a) "CONFIDENTIAL INFORMATION. During Executive's employment with
Company and at all times after the termination of such employment, regardless of
the reason for such termination, Executive shall hold all Confidential
Information relating to Company in strict confidence and in trust for Company
and shall not disclose or otherwise communicate, provide or reveal in any manner
whatsoever any of the Confidential Information to anyone other than Company
without the prior written consent of Company. `Confidential Information'
includes, without limitation, financial information, related trade secrets
(including, without limitation, Company's business plan, methods and/or
practices) and other proprietary business information of Company which may
include, without limitation, market studies, customer and
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client lists, referral lists and other items relative to the business of
Company. `Confidential Information' shall not include information which is or
becomes in the public domain through no action by Executive or information which
is generally disclosed by Company to third parties without restrictions on such
third parties."
(b) "SOLICITATION OF CUSTOMERS. During his employment with Company
and for a period of eighteen (18) months after the termination of Executive's
employment, regardless of the reason for the termination (the `Non-Competition
Period'), Executive shall not, whether directly or indirectly, for his own
benefit or for the benefit of any other person or entity, or as a partner,
stockholder, member, manager, officer, director, proprietor, employee,
consultant, representative, agent of any entity other than Company, solicit,
directly or indirectly, any customer of Company, or induce any customer of
Company to terminate any association with Company, in connection with those
certain products being offered for sale by Company or in its research and
development pipeline on the date of termination of Executive's employment (The
`Restricted Products') or otherwise attempt to provide services to any customer
of Company in connection with the Restricted Products. Executive shall prevent
such solicitation to the extent he has authority to prevent same and otherwise
shall not interfere with the relationship between Company and its customers.
This provision shall not be interpreted to prohibit, prevent or otherwise impair
the Executive's ability and right to seek and obtain employment from a
competitor of the Company, even if said competitor is currently selling products
to the Company's customers that are the same as Company's products. While the
Executive shall be unrestricted in seeking to sell products to the Company's
customers that are different than the Company's products, it is the intent of
this paragraph to preclude the
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Executive from having said competitor replace the Company as a supplier of a
product or otherwise take existing sales from the Company for the period in
question."
(c) "SOLICITATION OF EXECUTIVES AND OTHERS. During his employment
with Company and during the Non-Competition Period, Executive shall not, whether
directly or indirectly, for his own benefit or for the benefit of any other
person or entity, or as a partner, stockholder, member, manager, officer,
director, proprietor, employee, consultant, representative, agent of any entity
other than Company, solicit, for purposes of employment or association, any
Executive or agent of Company (`Solicited Person'), or induce any Solicited
Person to terminate such employment or association for purposes of becoming
employed or associated elsewhere, or hire or otherwise engage any Solicited
Person as an executive or agent of an entity with whom Executive may be
affiliated or permit such, or otherwise interfere with the relationship between
Company and its employees and agents. For purposes of this Agreement, an
employee or agent of Company shall mean an individual employed or retained by
Company during the term and/or who terminates such association with Company
within a period of six (6) months after the termination of Executive's
employment with Company."
(d) "NON-COMPETITION. Without the written consent of the President
or the Chief Executive Officer, during his employment with Company and during
the Non-Competition Period, Executive shall not directly or indirectly, as an
officer, director, shareholder, member, partner, joint venturer, Executive,
independent contractor, consultant, or in any other capacity:
(1) Engage, own or have any interest in;
(2) Manage, operate, join, participate in, accept employment
with, render advice to, or become interested in or be connected with;
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(3) Furnish consultation or advice to; or
(4) Permit his name to be used in connection with;
Any person or entity engaged in a business in the United States or Canada which
is engaged in the manufacture, distribution or sale of the Restricted Products
or which otherwise competes with the business of Company as it exists from time
to time and, in the case of termination of this Agreement, as it exists on the
termination date. Notwithstanding the foregoing, holding one percent (1%) or
less of an interest in the equity, stock options or debt of any publicly traded
company shall not be considered a violation of this provision."
(e) "DISCLOSURE AND OWNERSHIP OF WORK PRODUCT AND INFORMATION.
(1) Executive agrees to disclose promptly to Company all
ideas, inventions (whether patentable or not), improvements, copyrightable works
of original authorship (including but not limited to computer programs,
compilations of information, generation of data, graphic works, audio-visual
materials, technical reports and the like), trademarks, know-how, trade secrets,
processes and other intellectual property, developed or discovered by Executive
in the course of his employment relating to the business of Company, or to the
prospective business of Company, or which utilizes Company's information or
staff services (collectively, "Work product").
(2) Work product created by Executive within the scope of
Executive's employment, on Company time, or using Company resources (including
but not limited to facilities, staff, Information, time and funding), belongs to
Company and is not owned by Executive individually. Executive agrees that all
works of original authorship created during his employment are "works made for
hire" as that term is used in connection with the U.S. Copyright Act. To the
extent that, by operation of law, you retain any intellectual property rights
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in any Work product, Executive hereby assigns to Company all right, title and
interest in all such Work product, including copyrights, patents, trade secrets,
trademarks and know-how.
(3) Executive agrees to cooperate with Company, at Company's
expense, in the protection of Company's information and the securing of
Company's proprietary rights, including signing any documents necessary to
secure such rights, whether during or after your employment with Company, and
regardless of the fact of any employment with a new company."
(f) "ENFORCEMENT OF AGREEMENT; INJUNCTIVE RELIEF; ATTORNEYS' FEES
AND EXPENSES. Executive acknowledges that violation of this Agreement will cause
immediate and irreparable damage to Company, entitling it to injunctive relief.
Executive specifically consents to the issuance of temporary, preliminary, and
permanent injunctive relief to enforce the terms of this Agreement. In addition
to injunctive relief, Company is entitled to all money damages available under
the law. If Executive violates this Agreement, in addition to all other remedies
available to Company at law, in equity, and under contract, Executive agrees
that Executive is obligated to pay all Company's costs of enforcement of this
Agreement, including attorneys' fees and expenses."
(g) Except as set forth in paragraph 5(c) below, the following
provision of Executive's Employment Agreement shall remain in full force and
effect: "INDEMNIFICATION. To the fullest extent permitted by applicable law, the
Company shall indemnify, defend and hold harmless the Executive from and against
any and all claims, demands, actions, causes of action, liabilities, losses,
judgments, fines, costs and expenses (including reasonable attorneys' fees and
settlement expenses) arising from or relating to his service or status as an
officer, director, employee, agent or representative of the Company or any
affiliate of the Company or in any
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other capacity in which the Executive serves or has served at the request of, or
for the benefit of, the Company or its affiliates. The Company's obligations
under this section shall be in addition to, and not in derogation of, any other
rights the Executive may have against the Company to indemnification or
advancement of expenses, whether by statute, contract or otherwise, and the
Company's obligations pursuant to this Section 18 shall survive termination of
the Executive's employment."
5. Indemnification of Company by Executive; Claims:
(a) Notwithstanding the Indemnification provision set forth in
paragraph 4(g) above, Executive agrees to indemnify Company from and against any
and all claims, demands, actions, causes of action, liabilities, losses,
judgments, fines, costs and expenses (including reasonable attorneys' fees and
settlement expenses) arising from or relating to any claim that Executive
engaged in any acts and/or conduct outside of the scope of his duties as Chief
Financial Officer, where a majority of the Board of Directors concludes after an
internal investigation and consultation with Executive that Executive engaged in
any acts and/or conduct giving rise to the claim (hereinafter, "Claim"). Once a
majority of the Board of Directors concludes after an internal investigation and
consultation with Executive that Executive engaged in acts and/or conduct giving
rise to the Claim, Executive shall have an opportunity within five (5) days to
cause the Company to hire at Executive's expense a neutral third party who will
be selected by Company to promptly investigate whether Executive engaged in any
acts and/or conduct giving rise to the Claim. If the neutral third party concurs
with the Board's findings, Executive shall be required to indemnify Company from
and against the Claim, as set forth above, and the provisions set forth in
paragraphs 5(b) and 5(c) below shall also apply. If the neutral third party
finds that Executive did not engage in any acts and/or conduct giving rise to
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the Claim, Executive shall not be required to indemnify the Company with respect
to the Claim, and the provisions set forth in paragraphs 5(b) and 5(c) below
shall not apply with respect to the Claim. The findings of any such neutral
third party shall be final and binding on Executive and Company.
(b) Should a Claim (as defined in paragraph 5(a) above) be filed
against Company or Executive in any administrative agency or court prior to May
31, 2006, Company's remaining obligations under paragraph 2 of this Agreement,
with the exception of the obligations set forth in paragraph 2(b) of the
Agreement, shall cease. Any salary payments to which Executive would otherwise
have been entitled pursuant to paragraph 2(a) of the Agreement shall be applied
towards his obligation to indemnify the Company as set forth in paragraph 5(a)
above, including towards any settlement of the Claim.
(c) Company shall have no obligation to indemnify Executive with
respect to a Claim pursuant to paragraph 4(g) above or any other provision
should a Claim (as defined in paragraph 5(a) above) be filed against Executive
in any administrative agency or Court.
6. Cooperation: Executive agrees to make himself available and to
cooperate in any reasonable manner in providing reasonable assistance to
Company: (1) in concluding any matters which are presently pending; (2) in
connection with any matters that may arise in the future which relate to his
employment with Company as Chief Financial Officer; (3) in connection with the
transition of the Chief Financial Officer duties to a new interim Chief
Financial Offer; (4) in connection with the Company's preparation of financial
statements with respect to the Company's current fiscal year ending June 30,
2005; and (5) in connection with any Claim. It is agreed and understood by
Company and Executive that, although such cooperation and assistance shall not
interfere with any subsequent employment obtained by Executive, Company
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shall have no obligation to compensate Executive for said time other than as set
forth in this Agreement.
7. Complete Bar: Executive agrees that the parties released above in
paragraph 3 may plead this Agreement as a complete bar to any action or suit
before any court or administrative body with respect to any claim released
herein.
8. Binding Effect: This Agreement shall be binding upon and shall inure to
the benefit of Company and its successors and assigns, including any successor
via merger or consolidation. This Agreement shall be binding upon and inure to
the benefit of Executive, his heirs and personal representatives. This Agreement
is not assignable by Executive.
9. Entire Agreement: This Agreement, including those provisions of the
Employment Agreement recited in paragraph 4 above that shall remain in full
force and effect, contains the entire agreement among the parties, and may be
modified only in a written document executed in the same manner as this
Agreement, and no agreements, representations, or statements of any party not
contained herein shall be binding on such party, except as set forth above.
10. Enforcement: Any party shall have the right specifically to enforce
this Agreement, except for provisions which subsequently may be held invalid or
unenforceable, and/or obtain money damages for its breach, including reasonable
attorneys' fees.
11. Full Knowledge: Executive warrants, represents and agrees that in
executing this Agreement, he does so with full knowledge of any and all rights
which he may have with respect to the Released Parties.
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12. No Reliance: Executive further states that he is not relying and has
not relied on any representation or statement made by the Released Parties, or
any of them, with respect to Executive's rights or asserted rights.
13. Advice of Counsel: Executive represents that he has availed himself of
the advice of counsel prior to signing this Agreement and is satisfied with his
counsel's advice and that he is executing the Agreement voluntarily and fully
intending to be legally bound because, among other things, the Agreement
provides valuable benefits to him which he otherwise would not be entitled to
receive.
14. Controlling Law: This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
15. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original with respect to
any party whose signature appears thereon and all of which shall together
constitute one and the same instrument.
EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS AND APPRECIATES THE CONTENTS OF THIS AGREEMENT AND THAT HE
EXECUTES THE SAME AND MAKES THE SETTLEMENT PROVIDED FOR HEREIN VOLUNTARILY AND
OF HIS FREE WILL.
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IN WITNESS WHEREOF, expressly intending to be legally bound hereby,
Executive and Company have executed this Separation Agreement and General
Release on the dates indicated below.
/s/ Ronald G. Wenger /s/ Larry Dalesandro
- --------------------------------- ---------------------------------
Witness Larry Dalesandro
December 1, 2004 December 1, 2004
- --------------------------------- ---------------------------------
Date Date
LANNETT COMPANY, INC.
/s/ Hilda Cuanola By: /s/ Arthur Bedrosian
- --------------------------------- -----------------------------
Witness Name: Arthur Bedrosian
Title: President
November 24, 2004 November 24, 2004
- --------------------------------- ---------------------------------
Date Date
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