Exhibit 10.3

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  Arch Therapeutics, Inc.   235 Walnut Street, Suite 6   Framingham, MA 02481

 

SEPARATION AGREEMENT

 

This SEPARATION AGREEMENT (the “Agreement”), dated June 15, 2015, is entered
into by and between Arch Therapeutics, Inc., a Nevada corporation
(the “Company”), and William M. Cotter (“Cotter”), with respect to the following
facts:

 

A.           The Company and Cotter are parties to an Executive Employment
Agreement effective July 2, 2013 and as amended effective March 13, 2014 (the
“EEA”);

 

B.           Cotter desires to (i) retire and resign his position with the
Company (ii) to terminate the EEA and (iii), to be available in an advisory
capacity to the Company and the Company wishes to accept Cotter’s resignation
and engage Cotter in such advisory capacity, effective as of the date hereof,
pursuant to the terms of this Agreement;

 

C.           In connection with such termination and concurrently herewith, the
parties hereto are executing and delivering the Release and Non-Disparagement
Agreement in substantially the form attached hereto as Exhibit A (the “Release
Agreement”).

 

NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth below, the parties hereby agree as follows:

 

1.          Separation of Employment. Effective as of the date hereof, each of
the Company and Cotter terminate the EEA by mutual agreement. Effective as of
such termination, Cotter’s employment with the Company shall terminate in all
respects and all rights and obligations of each of the Company and Cotter under
the EEA shall be deemed satisfied in full and each such party shall have no
further obligations thereunder except as pursuant to the terms of Section 3 of
this Agreement, which by its terms survive termination. Without limiting the
generality of the foregoing, Cotter hereby waives in full any rights he may
have, have had or be deemed to have under the EEA with respect to cash, equity
or other compensation owed by the Company and understands that except as
otherwise provided in this Agreement, Cotter is entitled to nothing further from
the Company or any of the Company Releases including reinstatement by Company.
Cotter shall have returned all Company property in his possession, with the
exception of a laptop and related accessories that he may keep, on or before the
date of this Agreement and acknowledges and agrees to his continuing obligations
under the Company’s Employee Proprietary Information and Inventions Assignment
Agreement (the “Proprietary Information Agreement”).

 

2.          Release. Concurrently herewith and effective as of the date hereof,
the Company and Cotter shall execute and deliver the Release Agreement.

 

3.          Separation Payment and Benefit Continuation.

 

3.1           As consideration for Cotter’s execution, delivery and
non-revocation of this Agreement and for providing the advisory services,
Company shall provide Cotter with a payment in the amount of $60,000 (less
applicable withholding and customary payroll deductions) payable over three
months in accordance with the Company’s pay policies.

 

 

 

 

3.2           Cotter shall also receive monthly healthcare reimbursement for a
three-month period at a rate of 2 (two) times the actual cost per month up to
$2500.00. These costs shall be paid through the Company’s expense reimbursement
process upon submission of an actual bill from insurance carrier.

 

4.          Miscellaneous.

 

4.1           Entire Agreement. This Agreement, together with the other
agreements referenced herein (including without limitation the Release
Agreement, the Proprietary Information Agreement and any agreement relating to
any stock option or other equity award granted to W. Cotter) (a) is intended to
be the final, complete, and exclusive agreement, statement and understanding of
the parties with respect to the subject matter hereof, (b) may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements, and (c) shall supersede and replace in its entirety any prior
agreements, statements or understandings regarding your employment with the
Company or its termination.

 

4.2           Amendments. This Agreement may be amended only in a written
instrument executed and delivered by each of the parties hereto.

 

4.3           Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and together shall be deemed to be
one and the same document.

 

4.4           Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts, without regard
to the conflicts of law principles thereof. Except for actions for injunctive or
other equitable relief, which may be brought in any court of competent
jurisdiction, any legal suit, action or proceeding arising out of or relating to
this Agreement shall be commenced in a federal court in the Commonwealth of
Massachusetts or in state court in the Commonwealth of Massachusetts, and each
party hereto irrevocably submits to the exclusive jurisdiction and venue of any
such court in any such suit, action or proceeding.

 

[The remainder of this page left intentionally blank]

 

2

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

  ARCH THERAPEUTICS, Inc.             By: /s/ Terrence W. Norchi     Name:
Terrence W. Norchi, MD     Title: President, Chief Executive Officer            
/s/ William M. Cotter     William M. Cotter  

 

[Signature Page to Separation Agreement]

 

 

 

 

EXHIBIT A

 

RELEASE AND NON-DISPARAGEMENT AGREEMENT

 

In connection with that certain Separation Agreement, dated concurrently
herewith, by and between the parties hereto (the “Separation Agreement”) and in
consideration of the mutual covenants set forth herein and therein, Arch
Therapeutics, Inc., a Nevada corporation (the “Company”), and William M. Cotter
(“Releasor”) hereby agree to the terms and conditions set forth in this Release
and Non-Disparagement Agreement (this “Agreement”). Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in the
Termination Agreement.

 

1.          Release. Releasor, on his own behalf, on behalf of any entities he
controls and on behalf of his descendants, dependents, heirs, executors,
administrators, assigns and successors, and each of them, hereby acknowledges
full and complete satisfaction of and forever and fully, generally and
specifically, and separately and collectively, releases and discharges and
covenants not to sue the Company, its divisions, subsidiaries, parents,
affiliated companies, officers, directors, agents, stockholders, insurers,
executors, attorneys, administrators, predecessors, successors, assigns, past
and present, and each of them, as well as its and their assignees and successors
(collectively, “Company Releasees”), from and with respect to any and all
claims, agreements, obligations, demands, causes of action, costs, expenses,
attorneys’ fees, damages, indemnities and liabilities of every kind and nature,
at law, in equity or otherwise, known and unknown, discoverable and
undiscoverable, suspected and unsuspected, disclosed and undisclosed, fixed or
contingent, which Releasor or his successors and assigns ever had, now has, or
hereafter can, shall or may claim to have (collectively, the “Claims”), existing
as of the date of this Agreement and arising out of or in any way connected with
the EEA, Releasor’s part-time employment, the termination thereof, including
without limiting the generality of the foregoing, any claim for severance pay,
profit sharing, bonus or similar benefit, pension, retirement, life insurance,
health or medical insurance or any other fringe benefit, or disability, or any
other Claims resulting from or arising out of any act or omission by or on the
part of any Company Releasees committed or omitted prior to the date of this
Agreement, including, without limiting the generality of the foregoing, any
claim under Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Family and Medical Leave Act, The Massachusetts Fair
Employment Practices Act, M.G.L 151B or any other federal, state or local law,
regulation or ordinance; provided, however, that the foregoing release does not
apply to Releasor’s right to file a charge of discrimination with the U.S. Equal
Opportunity Commission (“EEOC”) or with any state or local anti-discrimination
agency or to participate in an investigation conducted by the EEOC or any such
agency; provided further, that Releasor hereby agrees to waive his right to any
damages or other recovery resulting from any action brought by the EEOC or any
other state or local agency on his behalf or on behalf of a class of which he
may be considered a member.

 

2.          Acknowledgement. This Agreement is intended to be effective as a
general release of and bar to each and every Claim hereinabove specified
(collectively, the “Released Claims”). Accordingly, Releasor, on his own behalf,
on behalf of any entities he controls and on behalf of his descendants,
dependents, heirs, executors, administrators, assigns and successors, and each
of them, hereby expressly acknowledges that the release set forth in Section 1
is intended to include a release of presently unknown and unsuspected claims and
expressly waives any and all rights that may exist under any state or federal
statute or common law principle to the contrary, and expressly acknowledges that
he later may discover or sustain Claims or facts in addition to or different
from those which Releasor now knows or believes to exist with respect to the
subject matter of this Agreement, which are unknown and unanticipated as of the
date hereof or are not presently capable of being ascertained and which, if
known or suspected at the time of executing this Agreement, may have materially
affected its terms. Nevertheless, Releasor acknowledges that this Agreement has
been negotiated and agreed in light of that realization and hereby waives, as to
the Released Claims, any Claims that might arise as a result of such different
or additional Claims or facts.

 

3.          ADEA Waiver. Releasor expressly acknowledges and agrees that, by
entering into this Agreement, he is waiving any and all rights or claims that he
may have arising under the Age Discrimination in Employment Act of 1967, as
amended, which have arisen on or before the date of execution of this Agreement.
Releasor further expressly acknowledges, agrees and understands that:

 

(a) In return for this Agreement, he will receive consideration beyond that
which he is otherwise entitled to receive before entering into this Agreement;

 

 

 

 

(b) He is hereby advised in writing by this Agreement to consult with an
attorney before signing this Agreement;

(c) He was given a copy of this Agreement on June 15, 2015 and informed that he
had twenty-one (21) days within which to consider the Agreement; and

(d) He was informed that he has seven (7) days following the date of execution
of the Agreement in which to revoke the Agreement, and this Agreement will not
become effective or enforceable until such seven (7) day revocation period has
expired.

 

4.          Non-Disparagement. Releasor shall not make any negative or
disparaging statements about the Company, the Company Releasees, the Company’s
products, management, business prospects, collaborators, business or strategic
partners, distributors, suppliers or elsewise, whether written, electronic, or
oral. The Company agrees, and agrees to cause the Company Releasees, to not make
any public negative or disparaging statements about Releasor, whether written,
electronic, or oral. Notwithstanding the foregoing, nothing in this Agreement
shall prohibit Releasor from providing truthful testimony in any legal
proceeding, communicating with any governmental agency or representative, or
making any truthful disclosure required under law or by a federal, state or
other governmental agency or representative having proper authority to compel
such testimony, provided, however, that Releasor will use his best efforts to
ensure that this Agreement is complied with to the fullest extent possible. The
foregoing notwithstanding, Releasor nevertheless will be prohibited to the
fullest extent authorized by law from obtaining monetary damages in any such
proceeding in which he does so participate in accordance with this Agreement.

 

5.          Defense Against Future Suit. This Agreement may be pleaded as a full
and complete defense to, and Releasor hereby consents that it may be used as the
basis of dismissal of, any action, suit, or proceeding based on any claims
whatsoever released by this Agreement.

 

6.          Remedies; Waiver. In the event Releasor commits a breach of any
term(s) of this Agreement: (i) the damaged party, whether the Company or any of
the Company Releasees, shall be entitled to recover from Releasor all of the
attorneys’ fees and costs incurred in bringing a successful action on such
breach. The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege. No waiver that may be given by a party hereunder will be applicable
except in the specific instance for which it is given.

 

7.          Governing Law; Venue. This Agreement shall be governed by, and
construed in accordance with the laws of the United States and the Commonwealth
of Massachusetts without regard to Massachusetts principles of choice of laws
applicable in such jurisdiction and, in enforcing such governing laws, any court
of competent jurisdiction shall afford all relief which a Massachusetts court
would afford under similar circumstances. Except for actions for injunctive or
other equitable relief, which may be brought in any court of competent
jurisdiction, any legal suit, action or proceeding arising out of or relating to
this Agreement shall be commenced in a federal court in the Commonwealth of
Massachusetts or in state court in the Commonwealth of Massachusetts, and each
party hereto irrevocably submits to the exclusive jurisdiction and venue of any
such court in any such suit, action or proceeding. EACH PARTY HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THEREBY OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

8.          No Transferred Claims. Each party hereto represents and warrants to
the other that he or it, as applicable, has not heretofore assigned or
transferred to any person not a party to this Agreement any released matter or
any part or portion thereof.

 

9.          Miscellaneous. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, such
provision shall be enforced to the fullest extent permitted by law, and the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect. In the event
that the time period or scope of any provision is declared by a court of
competent jurisdiction to exceed the maximum time period or scope that such
court deems enforceable, then such court shall reduce the time period or scope
to the maximum time period or scope permitted by law. This Agreement may be
amended only in a written instrument executed and delivered by each of the
parties hereto. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, successors and assigns. This Agreement may
be executed in counterparts, each of which shall be deemed to be an original and
together shall be deemed to be one and the same document.

 

2

 

 

The undersigned have read and understand the consequences of this Agreement and
voluntarily sign it. The undersigned declare under penalty of perjury under the
laws of the State of Massachusetts that the foregoing is true and correct.

 

EXECUTED this    15th                     day of
      June                        2015.

 

  Releasor:       /s/ William M. Cotter   William M. Cotter       Company:      
/s/ Terrence W. Norchi   By: Terrence W. Norchi, MD   Its: President, Chief
Executive Officer

 

[Signature Page to Release and Non-Disparagement Agreement]