Exhibit 10.12

 

December 23, 2015

 

 

Blake M. Paterson

 

Re:     Separation Agreement

Dear Blake:

This letter sets forth the substance of the separation agreement (the
“Agreement”) which Cerecor Inc. (the “Company”) is offering to you to aid in
your employment transition.

1.         Separation.    The Company has accepted your resignation from
employment with the Company effective December 31, 2015 (the “Separation Date”).
   The letter agreement between you and the Company dated April 28, 2011 (the
“Employment Agreement”), requires you to resign from the Company’s Board of
Directors and as an officer of the Company when your employment terminates for
any reason.  Therefor you agree to execute and deliver to Uli Hacksell the
resignation letter attached as Exhibit A (the “Resignation Letter”).

2.         Accrued Salary and Vacation.  On the next regular payroll date
following the Separation Date, the Company will pay you all accrued salary, all
accrued and unused vacation earned through the Separation Date, and an annual
bonus for the year ending on December 31, 2015, in the amount of $207,500.00,
 each subject to standard payroll deductions and withholdings.  You will receive
these payments regardless of whether or not you sign this Agreement.

3.         Severance Benefits.  If you execute this Agreement on or after
December 31, 2015 and do not revoke it,  and execute and deliver the Resignation
Letter attached as Exhibit A, the Company will provide you with the following
“Severance Benefits”:

a.        The Company will make severance payments to you in the form of
continuation of your base salary in effect on the Separation Date (which the
parties agree is currently $415,000.00 on an annualized basis) for twelve  (12)
months following the Separation Date.  These payments will be subject to
standard payroll deductions and withholdings and will be made on the Company’s
ordinary payroll dates, beginning with the first such date which occurs at least
sixty  (60) days following the Separation Date (“Initial Severance Payment
Date”), provided the Company has received the executed Agreement from you on or
before that date.    The first payment under this clause shall be equal to the
aggregate amount of payments that the Company would have paid through the
Initial Severance Payment Date had such payments commenced on the Separation
Date, with the balance of the payments paid thereafter on the schedule described
above.   

b.        The Company will pay you $112,500.00.  This additional payment will be
subject to standard payroll deductions and withholdings and will be paid in
twelve (12) equal

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monthly installments following the Separation Date, with the first payment on
the Company’s first ordinary payroll date that occurs at least six (6) months
following the Separation Date (the “Six Month Payment Date”), provided the
Company has received the executed Agreement from you in accordance with the
terms of this Agreement.  The first payment under this clause shall be equal to
the aggregate amount of payments that the Company would have paid through the
Six Month Payment Date had such payments commenced on the Separation Date, with
the balance of the payments paid thereafter on the schedule described above.

c.        If you timely elect continued coverage under COBRA for yourself and
your covered dependents under the Company’s group health plans following the
Separation Date, then the Company will pay the COBRA premiums necessary to
continue your health insurance coverage in effect for yourself and your covered
dependents on the Separation Date until the earliest of (A) the first
anniversary of the Separation Date, (B) the expiration of your eligibility for
the continuation coverage under COBRA, or (C) the date when you become eligible
for substantially equivalent health insurance coverage (such period from the
Separation Date through the earliest of (A) through (C), the “COBRA Payment
Period.”    Notwithstanding the foregoing, if at any time the Company determines
that its payment of COBRA premiums on your behalf would result in a violation of
applicable law (including, but not limited to, the 2010 Patient Protection and
Affordable Care Act, as amended by the 2010 Health Care and Education
Reconciliation Act), then in lieu of paying COBRA premiums pursuant to this
Section, the Company will pay you on the last day of each remaining month of the
COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium
for such month, subject to applicable tax withholding (such amount, the “Special
Severance Payment”), for the remainder of the COBRA Payment Period.  Nothing in
this Agreement shall deprive you of your rights under COBRA or ERISA for
benefits under plans and policies arising under your employment by the Company. 
If you become eligible for coverage under another employer's group health plan
or otherwise cease to be eligible for COBRA during the COBRA Payment Period, you
must immediately notify the Company of such event, and all payments and
obligations under this clause will cease.

4.         Benefit Plans.    

If you are currently participating in the Company’s group health insurance
plans, your participation as an employee will end on December 31, 2015.
 Thereafter, to the extent provided by the federal COBRA law or, if applicable,
state insurance laws, and by the Company’s current group health insurance
policies, you will be eligible to continue your group health insurance benefits
at your own expense, with the option for certain COBRA payments to be made by
the Company as described in Section 3 above.  Later, you may be able to convert
to an individual policy through the provider of the Company’s health insurance,
if you wish.    

 

Your participation in Employer-Sponsored Group Life Insurance and Short and Long
Term Disability Insurance will cease as of December 31, 2015. 

 

Deductions for the 401(k) Plan will end with your last regular paycheck.  You
will receive information by mail concerning 401(k) plan rollover procedures
should you be a participant in this program. 

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You have the right to continue your current Health Care Spending Account if you
are participating in this program.  Enclosed as Exhibit B is the information
concerning how to continue this benefit.  Dependent Care Spending Accounts can
not be continued.  Your last full Spending Account payroll deductions will be
processed in the December 31, 2015 pay period.  Unless you elect to continue
your Health Care Spending Account, you will only be eligible to claim expenses
that you incurred prior to December 31, 2015.

 

5.         Stock Options.    On a post-split basis, you were granted three
separate options to purchase shares of the Company’s common stock (each, an
“Option”) in the share amounts of 107,142 shares (granted May 8, 2012, pursuant
to the Company’s 2011 Stock Incentive Plan (the “2011 Plan”)), 54,353 shares
(granted July 10, 2014, pursuant to the 2011 Plan), and 160,000 shares (granted
on or about October 20, 2015 through Board action taken on September 2, 2015,
pursuant to the 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”)). 
For the grants made on May 8, 2012 and July 10, 2014, all shares subject to such
Options are fully vested as of the Separation Date in accordance with the terms
of the stock option agreements governing such grants.  If you timely return and
do not revoke this fully signed Agreement to the Company, then (i) the vesting
of the Option granted to you on or about October 20, 2015 will be fully
accelerated such that 100% of the shares subject to such Option shall be
exercisable by you effective as of the Separation Date and (ii) notwithstanding
anything to the contrary in the 2011 Plan, the 2015 Plan, the option grant
notices, and the stock option agreements entered into by you and the Company and
any other documents between you and the Company setting forth the terms of your
Options (the “Option Documents”), your Options will be amended such that you may
exercise any vested Options on or before the expiration of the applicable term
set forth in the Option Documents governing the applicable Option.  You and the
Company hereby consent to the modification and amendment of the terms governing
your Options and the Option Documents to conform to the provisions of this
Agreement, with such modification to occur within thirty (30) days of your
execution of the Agreement, provided that you have not revoked your acceptance
of the Agreement.  Except as modified by this Agreement, all terms, conditions
and limitations applicable to the Options will remain in full force and effect
pursuant to the applicable Option Documents. 

6.         Other Compensation or Benefits.    You acknowledge and agree that the
Severance Benefits set forth herein are in lieu of, and in full satisfaction of,
any severance or benefits from the Company to which you may be entitled or
eligible, and that the Company’s provision of the Severance Benefits under this
Agreement supersedes and extinguishes any obligation of the Company to provide
you with any severance or benefits under any other agreements.  You further
acknowledge that, except as expressly provided in this Agreement, you have not
earned and will not receive from the Company any additional compensation,
severance or benefits after the Separation Date, with the sole exception of any
benefit the right to which has vested as of the Separation Date under the
express terms of a Company benefit plan document.

7.         Expense Reimbursements.  You agree that, within ten (10) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek

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reimbursement.  The Company will reimburse you for reasonable business expenses
pursuant to its regular business practice.

8.         Return of Company Property.    By the Separation Date, you shall
return all property belonging to the Company or its affiliates (including, but
not limited to, any Company-provided laptops, computers, cell phones, wireless
electronic mail devices or other equipment, or documents and property belonging
to the Company.  Please coordinate return of Company property with Teresa
Winhauer. Receipt of the Severance Benefits described in Section 3 of this
Agreement is expressly conditioned upon return of all Company Property.    

9.         Proprietary Information and Post-Termination Obligations.  Both
during and after your employment you acknowledge your continuing obligations
under Section 9 of the Employment Agreement (the “Restrictive Covenants”), as
modified below, not to use or disclose any confidential or proprietary
information of the Company, to refrain from certain solicitation and competitive
activities, and not to disparage the Company.  A copy of your Employment
Agreement, including the Restrictive Covenants, is attached hereto as Exhibit
C.  If you have any doubts as to the scope of the restrictions in your
agreement, you should contact Mariam Morris immediately to assess your
compliance.  As you know, the Company will enforce its contract rights.  Please
familiarize yourself with your obligations under the Restrictive Covenants,
which are contained in a document that you signed.  The parties agree that
Section 9(b) of the Employment Agreement will be modified as follows:

 

Non-Competition.  Executive acknowledges that he performs services of a unique
nature for the Company that are irreplaceable, and that his performance of such
services to a competing business will result in irreparable harm to the
Company.  Accordingly, during the Executive’s employment hereunder and for a
period of one (1) year thereafter, Executive agrees that he will not, directly
or indirectly, solicit, perform, or provide Conflicting Services (whether as an
employee, consultant, independent contractor or otherwise, and whether or not
for compensation) in any locale of any country in which the Company conducts
business (in the case of the one (1) year period following termination, in any
locale of a country in which the Company was conducting business in the one (1)
year period prior to the termination date).  For purposes of this
Agreement, “Conflicting Services”  means any product, service, or process or the
research and development thereof, of any person or organization other than the
Company that directly competes with a product, service, or process, including
the research and development thereof, of the Company with which Executive worked
directly or indirectly during his employment by the Company or about which he
acquired proprietary information during his employment by the
Company.  Notwithstanding the foregoing, nothing herein shall prohibit Executive
from being a passive owner of not more than two percent (2%) of the equity
securities of a publicly traded corporation engaged in a business that is in
competition with the Company or any of its subsidiaries or affiliates. 

 

10.         Confidentiality.  The provisions of this Agreement will be held in
strictest confidence by you and will not be publicized or disclosed in any
manner whatsoever; provided, however, that:  (a) you may disclose this Agreement
to your immediate family; (b) you may disclose this Agreement in confidence to
your attorney, accountant, auditor, tax preparer, and financial advisor; and (c)
you may disclose this Agreement insofar as such disclosure may be

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required by law. Notwithstanding the foregoing, nothing in this Agreement shall
limit your right to discuss your employment with the Equal Employment
Opportunity Commission, United States Department of Labor, the National Labor
Relations Board, other federal government agency or similar state or local
agency or to discuss the terms and conditions of your employment with others to
the extent expressly permitted by Section 7 of the National Labor Relations
Act. 

11.         Cooperation after Termination.  During the time that you are
receiving payments under this Agreement, you agree that you will respond to
reasonable requests, at reasonable times and places, and provide information
with regard to matters in which you have knowledge as a result of your
employment with the Company, and will provide reasonable assistance to the
Company, its affiliates and their respective representatives in defense of any
claims that may be made against the Company or its affiliates, and will assist
the Company and its affiliates in the prosecution of any claims that may be made
by the Company or its affiliates, to the extent that such claims may relate to
the period of your employment with the Company.  You agree to promptly inform
the Company if you become aware of any lawsuits involving such claims that may
be filed or threatened against the Company or its affiliates.  You also agree to
promptly inform the Company (to the extent that you are legally permitted to do
so) if you are asked to assist in any investigation of the Company or its
affiliates (or their actions), regardless of whether a lawsuit or other
proceeding has then been filed against the Company or its affiliates with
respect to such investigation, and shall not do so unless legally
required.  Upon presentation of appropriate documentation, the Company shall pay
or reimburse you for all reasonable out-of-pocket travel, duplicating or
telephonic expenses incurred by you in complying with this Section.

12.         Release.  In exchange for the payments and other consideration under
this Agreement, to which you would not otherwise be entitled, and except as
otherwise set forth in this Agreement, you, on behalf of yourself and, to the
extent permitted by law, on behalf of your spouse, heirs, executors,
administrators, assigns, insurers, attorneys and other persons or entities,
acting or purporting to act on your behalf (collectively, the “Employee
Parties”), hereby generally and completely release, acquit and forever discharge
the Company, its parents and subsidiaries, and its and their officers,
directors, managers, partners, agents, representatives, employees, attorneys,
shareholders, predecessors, successors, assigns, insurers and affiliates (the
“Company Parties”) of and from any and all claims, liabilities, demands,
contentions, actions, causes of action, suits, costs, expenses, attorneys’ fees,
damages, indemnities, debts, judgments, levies, executions and obligations of
every kind and nature, in law, equity, or otherwise, both known and unknown,
suspected and unsuspected, disclosed and undisclosed, arising out of or in any
way related to agreements, events, acts or conduct at any time prior to and
including the execution date of this Agreement, including but not limited
to:  all such claims and demands directly or indirectly arising out of or in any
way connected with your employment with the Company or the termination of that
employment; claims or demands related to salary, bonuses, commissions, stock,
stock options, or any other ownership interests in the Company, vacation pay,
fringe benefits, expense reimbursements, severance pay, or any other form of
compensation; claims pursuant to any federal, state or local law, statute, or
cause of action; tort law; or contract law (individually a “Claim” and
collectively “Claims”).  The Claims you are releasing and waiving in this
Agreement include, but are not limited to, any and all Claims that any of the
Company Parties:

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has violated its personnel policies, handbooks, contracts of employment, or
covenants of good faith and fair dealing;

has discriminated against you on the basis of age, race, color, sex (including
sexual harassment), national origin, ancestry, disability, religion, sexual
orientation, marital status, parental status, source of income, entitlement to
benefits, any union activities or other protected category in violation of any
local, state or federal law, constitution, ordinance, or regulation, including
but not limited to: the Age Discrimination in Employment Act, as amended
(“ADEA”); Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; 42 U.S.C. § 1981, as amended; the Equal Pay Act; the
Americans With Disabilities Act; the Genetic Information Nondiscrimination Act;
the Family and Medical Leave Act; Delaware Discrimination in Employment Act; the
Delaware Equal Accommodations Law; the Delaware Persons With Disabilities
Employment Protections Act;  the Fair Employment Practice Act of Maryland, Md.
Code  Ann., State Government, tit. 20; the Employee Retirement Income Security
Act; the Employee Polygraph Protection Act; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the anti-retaliation
provisions of the Sarbanes-Oxley Act, or any other federal or state law
regarding whistleblower retaliation; the Lilly Ledbetter Fair Pay Act; the
Uniformed Services Employment and Reemployment Rights Act; the Fair Credit
Reporting Act; and the National Labor Relations Act;

has violated any statute, public policy or common law (including but not
limited to Claims for retaliatory discharge; negligent hiring, retention or
supervision; defamation; intentional or negligent infliction of emotional
distress and/or mental anguish; intentional interference with contract;
negligence; detrimental reliance; loss of consortium to you or any member of
your family and/or promissory estoppel).

Notwithstanding the foregoing, other than events expressly contemplated by this
Agreement you do not waive or release rights or Claims that may arise from
events that occur after the date this waiver is executed and you are not
releasing any right of indemnification you may have for any liabilities arising
from your actions within the course and scope of your employment with the
Company or within the course and scope of your role as a member of the Board of
Directors or officer of the Company.  Also excluded from this Agreement are any
Claims which cannot be waived by law, including, without limitation, any rights
you may have under applicable workers’ compensation laws and your right, if
applicable, to file or participate in an investigative proceeding of any
federal, state or local governmental agency. Nothing in this Agreement shall
prevent you from filing, cooperating with, or participating in any proceeding or
investigation before the Equal Employment Opportunity Commission, United States
Department of Labor, any other federal government agency, or similar state or
local agency, or exercising any rights pursuant to Section 7 of the National
Labor Relations Act.  However, you are waiving, to the fullest extent permitted
by law, your right to any monetary recovery should any governmental agency or
entity, such as the Equal Employment Opportunity Commission, the United States
Department of Labor or the National Labor Relations Board, pursue any Claims on
your behalf.  If any Claim is not subject to

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release, to the extent permitted by law, you waive any right or ability to be a
class or collective action representative or to otherwise participate in any
putative or certified class, collective or multi-party action or proceeding
based on such a Claim in which any of the Company Parties is a party.  This
Agreement does not abrogate your existing rights under any Company benefit plan
or any plan or agreement related to equity ownership in the Company; however, it
does waive, release and forever discharge Claims against the Company existing as
of the date you execute this Agreement pursuant to any such plan or agreement.

 

13.         Your Acknowledgments and Affirmations/ Effective Date of Agreement. 
You acknowledge that you are knowingly and voluntarily waiving and releasing any
and all rights you may have under the ADEA, as amended.  You also acknowledge
and agree that (i) the consideration given to you in exchange for the waiver and
release in this Agreement is in addition to anything of value to which you were
already entitled, and (ii) that you have been paid for all time worked, have
received all the leave, leaves of absence and leave benefits and protections for
which you are eligible, and have not suffered any on-the-job injury for which
you have not already filed a Claim. You affirm that all of the decisions of the
Company Parties regarding your pay and benefits through the date of your
execution of this Agreement were not discriminatory based on age, disability,
race, color, sex, religion, national origin or any other classification
protected by law.  You affirm that you have not filed or caused to be filed, and
are not presently a party to, a Claim against any of the Company Parties.  You
further affirm that you have no known workplace injuries or occupational
diseases.  You acknowledge and affirm that you have not been retaliated against
for reporting any allegation of corporate fraud or other wrongdoing by any of
the Company Parties, or for exercising any rights protected by law, including
any rights protected by the Fair Labor Standards Act, the Family Medical Leave
Act or any related statute or local leave or disability accommodation laws, or
any applicable state workers’ compensation law. You further acknowledge and
affirm that you have been advised by this writing that:  (a) your waiver and
release do not apply to any rights or Claims that may arise after the execution
date of this Agreement; (b) you have been advised hereby that you have the right
to consult with an attorney prior to executing this Agreement; (c) you have been
given twenty-one (21) days to consider this Agreement (although you may choose
to voluntarily execute this Agreement earlier and if you do you will sign the
Consideration Period waiver below); (d) you have seven (7) days following your
execution of this Agreement to revoke this Agreement; and (e) this Agreement
shall not be effective until the date upon which the revocation period has
expired unexercised (the "Effective Date"), which shall be the eighth day after
this Agreement is executed by you.

14.         No Admission. This Agreement does not constitute an admission by the
Company of any wrongful action or violation of any federal, state, or local
statute, or common law rights, including those relating to the provisions of any
law or statute concerning employment actions, or of any other possible or
claimed violation of law or rights.  The Company agrees not to disparage you in
any manner likely to be harmful to you or your business, business reputation or
personal reputation; provided that the Company will respond accurately and fully
to any question, inquiry or request for information when required by legal
process.  The Company’s obligations under this Section are limited to Company
representatives with knowledge of this provision.

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15.         Breach. The parties agree that a material breach of this Agreement
by one party excuses performance by the other party.  Further, you acknowledge
that it may be impossible to assess the damages caused by your violation of the
terms of Sections 8, 9, and 10 of this Agreement and further agree that any
threatened or actual violation or breach of those Sections of this Agreement
will constitute immediate and irreparable injury to the Company.  You therefore
agree that any such breach of this Agreement is a material breach of this
Agreement, and, in addition to any and all other damages and remedies available
to the Company upon your breach of this Agreement, the Company shall be entitled
to an injunction to prevent you from violating or breaching this Agreement.  If
either party is successful in whole or part in any legal or equitable action to
enforce this Agreement, then the enforcing party can recover from the other
party all of the costs, including reasonable attorneys’ fees, incurred in
enforcing the terms of this Agreement.

16.         Section 409A.  The Company is offering severance to you in reliance
on Treasury Regulation Section 1.409A-1(b)(9) and the short term deferral
exemption in Treasury Regulation Section 1.409A-1(b)(4).  Any payments made in
reliance on Treasury Regulation Section 1.409A-1(b)(4) will be made not later
than March 15, 2016.  For purposes of Code Section 409A, your right to receive
any installment payments under this letter (whether severance payments,
reimbursements or otherwise) shall be treated as a right to receive a series of
separate payments and, accordingly, each installment payment hereunder shall at
all times be considered a separate and distinct payment.

17.         Miscellaneous.  This Agreement, including Exhibits A and B,
constitutes the complete, final and exclusive embodiment of the entire agreement
between you and the Company with regard to this subject matter.  It is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such
promises, warranties or representations.  This Agreement may not be modified or
amended except in a writing signed by both you and a duly authorized officer of
the Company.  This Agreement will bind the heirs, personal representatives,
successors and assigns of both you and the Company, and inure to the benefit of
both you and the Company, their heirs, successors and assigns.  If any provision
of this Agreement is determined to be invalid or unenforceable, in whole or in
part, this determination will not affect any other provision of this Agreement
and the provision in question will be modified by the court so as to be rendered
enforceable.  This Agreement will be deemed to have been entered into and will
be construed and enforced in accordance with the laws of the State of Delaware
as applied to contracts made and to be performed entirely within Delaware.

If this Agreement is acceptable to you, please sign below and return the
original to me on or before the date that is twenty-one (21) days after you have
received this letter, but no earlier than December 31, 2015.  The Company’s
offer contained herein will automatically expire if we do not receive the fully
signed Agreement by that date.

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I wish you good luck in your future endeavors.

Sincerely,

CERECOR INC.

 

 

 

 

By:

/s/ Mariam E. Morris

 

 

Mariam E. Morris

 

 

Chief Financial Officer

 

 

 

AGREED TO AND ACCEPTED:

 

 

 

/s/ Blake M. Paterson

 

Blake M. Paterson

 

 

 

 

 

January 1, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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