EXHIBIT 10.57
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement"), is made and entered into as
of the 5th day of March, 1998, by and between Discovery Laboratories, Inc., a
Delaware corporation ("Discovery"), and Acute Therapeutics, Inc., a Delaware
corporation ("ATI").
RECITALS
A. Discovery, ATI and ATI Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Discovery ("Acquisition Subsidiary"), have entered
into an Agreement and Plan of Merger and Reorganization dated as of the date
hereof (the "Merger Agreement"), pursuant to which ATI will become a
wholly-owned subsidiary of Discovery through a merger of Acquisition Subsidiary
into ATI, upon the terms and subject to the conditions set forth in the Merger
Agreement (the "Merger"). Capitalized terms used in this Agreement and not
otherwise defined herein shall have the same meanings as in the Merger
Agreement.
B. Discovery is a development stage pharmaceutical company engaged in the
development of proprietary pharmaceuticals to treat post-menopausal
osteoporosis, cystic fibrosis and other diseases. ATI is a development stage
pharmaceutical company engaged in the development of acute care pharmaceuticals
to treat Acute Respiratory Distress Syndrome, Meconium Aspiration Syndrome and
Idiopathic Respiratory Distress Syndrome.
C. The closing under the Merger Agreement (the "Closing") is scheduled to
occur following satisfaction of all of the conditions to Closing set forth in
the Merger Agreement but no later than July 15, 1998.
D. Discovery and ATI wish to provide for a smooth and efficient transition
and integration of the businesses of Discovery and ATI, pending the closing of
the transactions provided for in the Merger Agreement. In furtherance of this
transition, Discovery has requested and ATI has agreed that the ATI management
personnel (the "ATI Management Team") will manage the operations of both
Discovery and ATI through the effective date of the Merger (the "Effective
Date"), with each member of the ATI Management Team assuming responsibilities on
behalf of, and a title at, Discovery comparable to the responsibilities and
title held by such individual at ATI.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, IT IS AGREED AS FOLLOWS:
I. Management Services:
A. Subject to the terms and conditions set forth in this Agreement,
Discovery hereby engages ATI to provide, and ATI hereby accepts such engagement
and agrees to provide, operational, transition and integration management
services to Discovery. ATI shall provide such services by making available to
Discovery each member of the ATI Management Team whose entry into an employment
agreement with Discovery is a condition to any party's obligations under the
Merger Agreement. During the term of this Agreement, the ATI Management Team
shall be responsible for the overall management of the operations of Discovery
and shall report to, and shall be subject to the policies established by,
Discovery's Board of Directors. Notwithstanding the foregoing, no member of the
ATI Management Team shall have the authority by virtue of this Agreement to
participate in any meeting of the Board of Directors of Discovery or any
committee thereof except upon invitation. Moreover, Discovery does not delegate
to ATI under this Agreement any powers, duties or responsibilities which it is
prohibited by law from delegating.
B. Each member of the ATI Management Team shall have duties and
responsibilities on behalf of Discovery comparable to the duties and
responsibilities of such individual at ATI. Each such individual shall have the
same title at Discovery as he or she has at ATI, with the additional designation
"Acting," as set forth on Schedule A hereto.
C. During the term of this Agreement, management and supervisory personnel
of Discovery shall report to Xxxxxx X. Xxxxxxxx, Ph.D., who will serve as the
Acting President and Chief Executive Officer of Discovery.
II. Option Grants. The ATI Management Team shall be granted, on the date
of this Agreement, options to purchase an aggregate of 126,500 shares of
Discovery Common Stock (allocated as per attached Schedule B), which shall vest
in accordance with Schedule B. Notwithstanding Schedule B, if the Merger has not
occurred by July 15, 1998, due to the failure of Discovery or its stockholders
to perform any of their obligations under the Merger Agreement, all such options
shall be immediately vested in full.
III. Term and Termination. The term of this Agreement ("Term") shall
commence on the date of this Agreement and shall terminate on the earliest to
occur of (i) the Effective Date or (ii) termination of the Merger Agreement.
IV. Compensation. If the Merger is consummated, no compensation shall be
payable to ATI or the ATI Management Team other than the options granted
pursuant to Section II hereof. If the Merger is not consummated on or prior to
July 15, 1998 due to the failure of Discovery or its stockholders to perform any
of their obligations under the Merger Agreement, Discovery shall pay to ATI on
the date of termination or July 15, 1998, whichever occurs first (the "Date of
Termination"), 50% of the salary expense attributable to the ATI Management
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Team from the date of this Agreement through the Date of Termination and all the
options granted pursuant to Section II hereof shall be immediately vested in
full.
V. Indemnification.
A. Benefits Indemnification. Except as specifically provided in
Section IV hereof, Discovery and ATI shall each be liable for any wages or
benefits earned or accrued by each of its employees and owing to them under
applicable law, their respective policies and procedures or otherwise and each
of Discovery and ATI shall indemnify, defend and hold harmless each other party
and its respective employees from and against any and all costs, expenses and
liabilities with respect thereto (the "Benefits Indemnity"). The parties
specifically acknowledge and agree that in the event of the termination of this
Agreement other than upon the Closing, such Benefits Indemnity shall survive the
termination of this Agreement.
B. Director and Officer Indemnification. The ATI Management Team
shall be indemnified by Discovery with respect to their actions as acting
officers of Discovery during the term of this Agreement to the same extent that
Discovery's officers and directors are indemnified by Discovery.
VI. Assignment. This Agreement and the duties hereunder shall not be
assigned or delegated in whole or in part by either party, it being understood
and agreed that this Agreement is personal to Discovery and ATI.
VII. Notices. All notices required or permitted hereunder shall be given
in writing and shall be delivered in the manner and at the addresses set forth
in the Merger Agreement.
VIII. Relationship of the Parties. The relationship of the parties shall
be that of independent contractors and all acts performed by ATI during the Term
by ATI shall be deemed to be performed in its capacity as an independent
contractor. Nothing contained in this Agreement is intended to or shall be
construed to give rise to or create a partnership or joint venture between
Discovery, its successors and assigns on the one hand, and ATI, its successors
and assigns on the other hand. With respect to situations that involve a
potential conflict of interest between Discovery and ATI in the course of ATI's
duties under this Agreement, unless otherwise specifically agreed between
Discovery and ATI, the employees of ATI shall be deemed to act only on behalf of
ATI and the employees of Discovery shall be deemed to act only on behalf of
Discovery.
IX. Entire Agreement, Governing Law. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
shall be binding upon and inure to the benefit of their successors, and shall be
interpreted, construed, governed and enforced in accordance with the laws of the
State of New York, without regard to conflicts of law principles of such state.
This Agreement may not be modified or amended except by written
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instrument signed by both of the parties hereto.
X. Captions. The captions used herein are for convenience of reference
only and shall not be construed in any manner to limit or modify any of the
terms hereof.
XI. Severability. In the event one or more of the provisions contained in
this Agreement is deemed to be invalid, illegal or unenforceable in any respect
under applicable law, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be impaired thereby.
XII. Cumulative; No Waiver. A right or remedy herein conferred upon or
reserved to either of the parties hereto is intended to be cumulative of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder, or now or
hereafter legally existing upon the occurrence of an event of default hereunder.
The failure of either party hereto to insist at any time upon the strict
observance or performance of any of the provisions of this Agreement or to
exercise any right or remedy as provided in this Agreement shall not impair any
such right or remedy or be construed as a waiver or relinquishment thereof with
respect to subsequent defaults. Every right and remedy given by this Agreement
to the parties hereof may be exercised from time to time and as often as may be
deemed expedient by the parties thereto, as the case may be.
XIII. Authorization for Agreement. Each of Discovery and ATI represents
and warrants that the execution and performance of this Agreement by Discovery
and ATI have been duly authorized by all necessary resolutions and corporate
action, and this Agreement constitutes the valid and enforceable obligations of
Discovery and ATI in accordance with its terms.
XIV. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all such counterparts
shall together constitute but one and the same Agreement.
XV. No Effect on Merger Agreement. Each of the parties hereby acknowledges
and agrees that entry into this Agreement, and the performance of their
respective obligations hereunder, shall have no effect on the Merger Agreement
including, without limitation, the
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satisfaction of the conditions thereto or any rights of the parties with
respect to termination thereof.
IN WITNESS WHEREOF, the parties have hereto caused this Agreement to be
duly executed, as of the day and year first above written.
DISCOVERY LABORATORIES, INC.
/s/ Xxxxx X. Xxx
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By: Xxxxx X. Xxx, M.D.
Its: Chairman of the Board
ACUTE THERAPEUTICS, INC.
/s/ Xxxxxx X. Xxxxxxxx
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By: Xxxxxx X. Xxxxxxxx, Ph.D.
Its: President and Chief Executive Officer
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SCHEDULE A
ATI MANAGEMENT TEAM
Name Title
---- -----
Xxxxx X. Xxxxxxxx, Ph.D. Acting Vice President of Pharmaceutical
Development
Xxxxxx X. Xxxxxxxx, Ph.D. Acting President and Chief Executive Officer
Xxxxxxx Xxxxx Acting Controller
Xxxxxxxx X. Xxxx, Ph.D. Acting Vice President of Project Administration
and Clinical Administration
Xxxx Xxxxxxxxxxx Acting Director of Clinical Evaluation
Xxxxxxxxxxx Xxxxxxx Acting Vice President of Regulatory Affairs
and Quality Assurance
Xxxx Xxxx, Ph.D. Acting Vice President of Biometrics
Xxxxxx Xxxxxxx, M.D. Acting Vice President of Clinical Research
Xxxx Xxxxx Xxxxx
SCHEDULE B
Name Options to be Issued*
---- ---------------------
Xxxxx X. Xxxxxxxx, Ph.D. 14,813
Xxxx Xxxxx Xxxxx 670
Xxxxxx X. Xxxxxxxx, Ph.D. 43,010**
Xxxxxxx Xxxxx 4,428
Xxxxxxxx X. Xxxx, Ph.D. 14,813
Xxxx Xxxxxxxxxxx 4,326
Xxxxxxxxxxx Xxxxxxx 14,813
Xxxx Xxxx, Ph.D. 14,813
Xxxxxx Xxxxxxx, M.D. 14,813
Total 126,500
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* All options, other than those granted to Xxxxxx X. Xxxxxxxx, will vest in
three equal annual installments, the first installment of which will vest
on the first year anniversary of the Closing of the Merger;
notwithstanding the foregoing, if the Merger has not occurred by July 15,
1998 due to the failure of Discovery or its stockholders to perform any of
their obligations under the Merger Agreement, all such options shall be
immediately vested in full.
** These option vest in full on the date of grant.
