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Exhibit 10.1

July 25, 2012

SEPERATION AGREEMENT
 
Dear Kevin Tully:
 
This letter of agreement and general release (“Agreement”) confirms our mutual
agreement regarding the terms and conditions of your separation from employment
with Insmed, Inc. (“Insmed” or the “Company”) in connection with the Company’s
non-renewal of your Employment Agreement dated January 31, 2011 (“Employment
Agreement”).  You and the Company agree as follows:

1.
Employment.  Your last day of employment with the Company will be December 1,
2012 (“Last Day of Employment”).

 
 
2.
Severance.  Upon execution of this Agreement (which release must be executed on
but not before August 20, 2012 and the release attached as Exhibit A (which
release must be executed on or before your Last Day of Employment with the
Company), the expiration of the seven (7) day revocation period provided for in
Paragraph 14(h) of this Agreement and in Exhibit A, and your return of all
Company property, and provided you remain an employee in good standing and
continue to satisfactorily perform your duties and responsibilities through your
Last Day of Employment, the Company will provide you with the severance program
and transition arrangements set forth in the Summary of Supplemental Severance,
attached hereto as Exhibit B and incorporated herewith (the “Summary”).

 
3.
Release.

 
 
a)
In consideration of (i) the Supplemental Severance set forth in Paragraph 2
hereof and the Summary, and (ii) your eligibility to receive that Supplemental
Severance by working through your Last Day of Employment, you agree to execute
Exhibit A, and, in addition, to the fullest extent permitted by law you waive,
release and forever discharge the Company and each of its past and current
parents, subsidiaries, affiliates and each of its and their respective past and
current directors, officers, trustees, employees, representatives, agents,
employee benefit plans and such plans’ administrators, fiduciaries, trustees,
record-keepers and service providers, and each of its and their respective
successors and assigns, each and all of them in their personal and
representative capacities (collectively the “Company Releasees”) from any and
all claims legally capable of being waived, grievances, injuries, controversies,
agreements, covenants, promises, debts, accounts, actions, causes of action,
suits, arbitrations, sums of money, attorneys’ fees, costs, damages, or any
right to any monetary recovery or any other personal relief, whether known or
unknown, in law or in equity, by contract, tort, law of trust or pursuant to
federal, state or local statute, regulation, ordinance or common law, which you
now have, ever have had, or may hereafter have, based upon or arising from any
fact or set of facts, whether known or unknown to you, from the beginning of
time until the date of execution of this Agreement, arising out of or relating
in any way to your employment relationship with the Company or the Company
Releasees or other associations with the Company or the Company Releasees or any
termination thereof.  Without limiting the generality of the foregoing, this
waiver, release, and discharge includes any claim or right based upon or arising
under any federal, state or local fair employment practices or equal opportunity
laws, including, but not limited to, the New Jersey Law Against Discrimination
(N.J. Stat. Ann. §10:5-1 et seq.), the New Jersey Conscientious Employee
Protection Act (N.J. Stat. Ann. §34:19-3 et seq.), the Age Discrimination in
Employment Act (29 U.S.C. Section 621, et seq.) (“ADEA”), the Older Workers’
Benefits Protection Act, the Rehabilitation Act of 1973, the Worker Adjustment
and Retraining Notification Act, 42 U.S.C. Section 1981, Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the Employee Retirement Income Security
Act (“ERISA”) (including, but not limited to, claims for breach of fiduciary
duty under ERISA), the Americans With Disabilities Act, and the Family and
Medical Leave Act of 1993, including all amendments thereto.

 
 
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b)
Notwithstanding the generality of the foregoing, nothing herein constitutes a
release or waiver by you of, or prevents you from making or asserting:  (i) any
claim or right you may have under COBRA; (ii) any claim or right you may have
for unemployment insurance or workers’ compensation benefits; (iii) any claim to
vested benefits under the written terms of a qualified employee pension benefit
plan; (iv) any claim or right that may arise after the execution of this
Agreement; or (v) any claim or right you may have under this Agreement.  In
addition, nothing herein shall prevent you from filing a charge or complaint
with the Equal Employment Opportunity Commission (“EEOC”) or similar federal or
state agency or your ability to participate in any investigation or proceeding
conducted by such agency; provided, however, that pursuant to Paragraph 3(a),
you are waiving any right to recover monetary damages or any other form of
personal relief in connection with any such charge, complaint, investigation or
proceeding. To the extent you receive any personal or monetary relief in
connection with any such charge, complaint, investigation or proceeding, the
Company will be entitled to an offset for the payments made pursuant to
Paragraph 2 of this Agreement.

 
4.
Violations of Any Law or of the Company’s Code of Conduct.  You hereby agree,
promise and covenant that during your employment with the Company, you did not
violate any federal, state or local law, statute or regulation while acting
within the scope of your employment with the Company, nor did you violate the
Company’s Code of Conduct while acting within the scope of your employment with
the Company.  You acknowledge and understand that if the Company should discover
any such violation after your execution of this Agreement and your separation
from employment with the Company, it will be considered a material breach of
this Agreement, and all of the Company’s obligations to you hereunder will
become immediately null and void.

 
5.
Return of Property.  Upon termination of your employment, with the exception of
your Company-issued laptop computer and Blackberry device, you agree to promptly
return to the Company all of its property, including, but not limited to,
equipment files, documents, identification cards, credit cards, keys, equipment,
software and data, however stored.

 
 
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6.
No Additional Entitlements.  You agree that: (i) you have received all
entitlements due from the Company relating to your employment with the Company,
including but not limited to, all wages earned, sick pay, vacation pay, overtime
pay, and any paid and unpaid personal leave for which you were eligible and
entitled, and that no other entitlements are due to you other than as set forth
in this Agreement; and (ii) the Company shall have the right to deduct from the
amounts payable pursuant to this Agreement any money owed to the Company by you
for a loan or advance paid to you by the Company during your employment, when
allowable by the loan agreement and applicable law.

 
7.
Transition. To the extent the Company deems necessary, you agree that you will
assist the Company with the transition of your responsibilities and continue
faithfully and diligently to perform the Duties as defined in your Employment
Agreement as the Company or the Board may require, including but not limited to
those Duties performed in your role as principal financial and accounting
officer.

 
8.
Cooperation. You agree that upon the Company’s reasonable notice to you, you
shall cooperate with the Company and its counsel (including, if necessary,
preparation for and appearance at depositions, hearings, trials or other
proceedings) with regard to any past, present or future legal or regulatory
matters that relate to or arise out of matters you have knowledge about or have
been involved with during your employment with the Company.  In the event that
such cooperation is required, you will be reimbursed for reasonable expenses
incurred in connection therewith.

 
9.
Confidentiality of the Agreement.  Except as expressly permitted in Paragraph
12 of this Agreement or if otherwise required by law, the parties, including the
Company Releasees, shall not disclose the existence of this Agreement, the terms
of this Agreement, or the circumstances or allegations giving rise to this
Agreement, to any person other than their respective attorneys, immediate family
members, accountants, financial advisors or corporate employees who have a
business need to know such terms in order to approve or implement such terms.

 
10.
Protection of Confidential Information.

 
 
a)
You hereby acknowledge the existing and continuing obligations contained in your
Employment Agreement, dated December 2, 2010 executed by you (the “Employment
Agreement”), which is hereby incorporated by this reference and agree to be
bound by the Employment Agreement on an ongoing basis, including but not limited
to with respect to your non-disclosure, confidentiality and non-compete
obligations;

 
 
b)
In addition, you hereby acknowledge your existing obligation to maintain the
confidentiality of the Company’s information as contained in the Company’s Code
of Conduct.  You affirm that you agreed to be bound by the Code of Conduct when
you signed the Code of Conduct on January 20, 2012 (which is hereby incorporated
by this reference);

 
 
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c)
Without limiting the generality of the foregoing obligations set forth in
Paragraph 10(a) and (b), you agree that, except as expressly permitted in
Paragraph 12 of this Agreement or if otherwise required by law, you will not at
any time, directly or indirectly, disclose any trade secret, confidential or
proprietary information you have learned by reason of your association with the
Company (the “Confidential Information”) or use any such Confidential
Information to the detriment of the Company, its parents, affiliates or
subsidiaries, or to the benefit of any business or enterprise that competes with
the Company, its parents, affiliates or subsidiaries.  Confidential Information
is deemed to include, but is not limited to, information pertaining to Company
strategic plans, advertising and marketing plans, sales plans, formulae,
processes, methods, machines, ideas, concepts, new product developments,
proposed launches, discontinuance of existing products, product and consumer
testing data, sales and market research, technology research and development,
budgets, profit and loss data, raw material costs, identity of suppliers,
customer lists, customer information, employee information, improvements,
inventions, and associations with other organizations that the Company has not
previously made public.  Confidential Information does not include information
that can be shown by written evidence to be in the public domain at the time of
disclosure by you or that is publicized or otherwise becomes part of the public
domain through no fault of your own.

 
11.
Non-Disparagement.

 
 
a)
You agree that you shall not at any time make any written or verbal comments or
statements of a defamatory or disparaging nature regarding the Company and/or
the Company Releasees or their personnel or products and you shall not take any
action that would cause the Company and/or the Company Releasees or their
personnel or products any embarrassment or humiliation or otherwise cause or
contribute to their being held in disrepute.

 
 
b)
The Company agrees that it will use its best efforts to ensure that none of its
representatives makes any written or verbal comments or statements of a
defamatory or disparaging nature regarding you or takes any action that would
cause you any embarrassment or humiliation or otherwise cause or contribute to
your being held in disrepute while they are employed by the Company and acting
in their capacity as Company representatives.

 
12.
Permitted Conduct.  Nothing in this Agreement shall prohibit or restrict you,
the Company, or our respective attorneys from:  (i) making any disclosure of
relevant and necessary information or documents in any action, investigation, or
proceeding relating to this Agreement, including all exhibits, or as required by
law or legal process; or (ii) participating, cooperating, or testifying in any
action, investigation, or proceeding with, or providing information to, any
governmental agency or legislative body, including, but not limited to, the
Company’s Legal Department, the Securities & Exchange Commission, and/or
pursuant to the Dodd-Frank Act or Sarbanes-Oxley Act; providedthat, to the
extent permitted by law, upon receipt of any subpoena, court order or other
legal process compelling the disclosure of any such information or documents,
the disclosing party gives prompt written notice to the other party so as to
permit such other party to protect such party’s interests in confidentiality to
the fullest extent possible.

 
13.
Non-Admission.  It is understood and agreed that neither the execution of this
Agreement, including Exhibit A, nor the terms of the Agreement, including
Exhibit A, constitute an admission of liability to you by the Company or the
Company Releasees, and such liability is expressly denied.  It is further
understood and agreed that no person shall use the Agreement, including Exhibit
A, or the consideration paid pursuant thereto, as evidence of an admission of
liability, inasmuch as such liability is expressly denied.

 
 
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14.
Acknowledgments.  You hereby acknowledge that:

 
 
a)
The Company hereby advises you to consult with an attorney before signing this
Agreement and Exhibit A;

 
 
b)
You have obtained independent legal advice from an attorney of your own choice
with respect to this Agreement and all exhibits or you have knowingly and
voluntarily chosen not to do so;

 
 
c)
You freely, voluntarily and knowingly entered into this Agreement after due
consideration;

 
 
d)
You have had a minimum of twenty-one (21) days to review and consider this
Agreement and all exhibits;

 
 
e)
If you knowingly and voluntarily choose to do so, you may accept the terms of
this Agreement before the twenty-one (21) day consideration period provided for
in Paragraph 14(d) above has expired, and you will accept the terms of Exhibit A
on but not before your Last Day of Employment with the Company;

 
 
f)
You and the Company agree that changes to the Company’s offer contained in this
Agreement, whether material or immaterial, will not restart the twenty-one (21)
day consideration period provided for in Paragraph 14(d) above;

 
 
g)
You have a right to revoke this Agreement and/or Exhibit A by notifying the
undersigned Company representative in writing, via hand delivery, facsimile or
electronic mail, within seven (7) days of your execution of this Agreement
and/or Exhibit A;

 
 
h)
In exchange for your waivers, releases and commitments set forth herein, and in
Exhibit A, including your waiver and release of all claims arising under the Age
Discrimination in Employment Act, the payments, benefits and other
considerations that you are receiving pursuant to this Agreement and all
exhibits exceed any payment, benefit or other thing of value to which you would
otherwise be entitled, and are just and sufficient consideration for the
waivers, releases and commitments set forth herein; and

 
 
i)
No promise or inducement has been offered to you, except as expressly set forth
herein, and you are not relying upon any such promise or inducement in entering
into this Agreement and/or Exhibit A.  Your employment remains at-will and this
Agreement does not confer upon you any right or obligation to continue in the
employ of the Company for any period of time.

 
15.
Revocation by the Company.  You agree that if you fail to execute and return
this Agreement to the Company within the time specified herein for your review
and consideration, the promises and agreements made by the Company herein will
be revoked.

 
 
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16.
Miscellaneous.

 
 
a)
Entire Agreement.  This Agreement, including all exhibits, sets forth the entire
agreement between you and the Company and replaces any other oral or written
agreement between you and the Company relating to the subject matter of this
Agreement and Exhibit A, except for your prior obligations of confidentiality as
provided for in Paragraph 10 above, which shall continue in full force and
effect.

 
 
b)
Governing Law.  This Agreement, including Exhibit A, shall be construed,
performed, enforced and in all respects governed in accordance with the laws of
the State of New Jersey, without giving effect to the principles of conflicts of
law thereof.  Additionally, all disputes arising from or related to this
Agreement and/or exhibits shall be brought in a state or federal court situated
in the State of New Jersey, Mercer County and the parties hereby expressly
consent to the jurisdiction of such courts for all purposes related to resolving
such disputes.

 
 
c)
Severability.  Should any provision of this Agreement, including any exhibit, be
held to be void or unenforceable, the remaining provisions shall remain in full
force and effect, to be read and construed as if the void or unenforceable
provisions were originally deleted.

 
 
d)
Amendments.  This Agreement may not be modified or amended, except upon the
express written consent of both you and the Company.

 
 
e)
Breach.  You acknowledge that if you breach your commitments to the Company
agreed upon in Paragraphs 4, 5, 7, 8, 9, 10 and/or 11, you will forfeit the
Supplemental Severance set forth in Paragraph 2 and be subject to suit by the
Company for damages and equitable relief relating to such breach.

 
 
f)
Waiver.  A waiver by either party hereto of a breach of any term or provision of
the Agreement, including all exhibits, shall not be construed as a waiver of any
subsequent breach.

 
 
g)
Counterparts.  This Agreement, including Exhibit A, may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

 
 
h)
Effective Date.  This Agreement shall become immediately effective upon your
execution below.  However, you will not receive the Supplemental Severance set
forth in Paragraph 2 and the Summary unless and until you execute Exhibit A on
but not before your Last Day of Employment with the Company and the seven (7)
day revocation periods provided for in Paragraph 14(h) and Exhibit A have
expired.

 
 
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If the above accurately states our agreement, including the separation, waiver
and release, kindly sign below and return this original Agreement to me by no
later than August 20, 2012.  I will sign it and return a copy to you.  Please
sign and return Exhibit A on but not before your Last Day of Employment with the
Company.
 

 
Sincerely,
         
INSMED, INC.
         
By:
       
Timothy Whitten
     
President, Chief Executive Officer
            Date:              
UNDERSTOOD, AGREED TO
   
AND ACCEPTED WITH THE
   
INTENTION TO BE LEGALLY BOUND:
               
Kevin Tully
            Date:    

 
Enclosures
 
 
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EXHIBIT A
 
AGREEMENT AND RELEASE
 
In exchange for the payments, benefits and other consideration provided by
Insmed, Inc. (“Insmed” or the “Company”) as set forth in the letter of agreement
and general release dated July 25, 2012 (the “July 25, 2012 Agreement”), which I
acknowledge and agree are just and sufficient consideration for the waivers,
releases and commitments set forth herein, I, Kevin Tully, hereby IRREVOCABLY
AND UNCONDITIONALLY agree to WAIVE, RELEASE AND FOREVER DISCHARGE the Company
and the Company Releases (as defined in Paragraph 3(a) of the July 25, 2012
Agreement) from any and all claims legally capable of being waived, grievances,
injuries, controversies, agreements, covenants, promises, debts, accounts,
actions, causes of action, suits, arbitrations, sums of money, attorneys’ fees,
costs, damages, or any right to any monetary recovery or any other personal
relief, whether known or unknown, in law or in equity, by contract, tort, law of
trust or pursuant to federal, state or local statute, regulation, ordinance or
common law, which I now have, ever have had, or may hereafter have, based upon
or arising from any fact or set of facts, whether known or unknown to me, from
the beginning of time until the date I execute this Exhibit A, arising out of or
relating in any way to my employment relationship with the Company or the
Company Releasees or other associations with the Company or the Company
Releasees or any termination thereof.  Without limiting the generality of the
foregoing, this waiver, release, and discharge includes any claim or right based
upon or arising under any federal, state or local fair employment practices or
equal opportunity laws, including, but not limited to, the New Jersey Law
Against Discrimination (N.J. Stat. Ann. §10:5-1, et seq.), the New Jersey
Conscientious Employee Protection Act (N.J. Stat. Ann. §34:19-3, et seq.), the
Age Discrimination in Employment Act (29 U.S.C. Section 621, et seq.) (“ADEA”),
the Older Workers’ Benefits Protection Act, the Rehabilitation Act of 1973, the
Worker Adjustment and Retraining Notification Act, 42 U.S.C. Section 1981, Title
VII of the Civil Rights Act of 1964, the Equal Pay Act, the Employee Retirement
Income Security Act (“ERISA”) (including, but not limited to, claims for breach
of fiduciary duty under ERISA), the Americans with Disabilities Act, and the
Family and Medical Leave Act of 1993, including all amendments thereto, provided
that nothing herein constitutes a release or waiver of any claim or right that
may arise after the execution of this Exhibit A.
 
I understand and acknowledge that I have received all amounts due from the
Company relating to my employment with the Company, including but not limited
to, all wages earned, sick pay, personal leave pay, vacation pay, and/or
overtime pay, and that no other amounts are due to me other than as set forth in
the July 25, 2012 Agreement and this Exhibit A.
 
Notwithstanding the generality of the foregoing, I understand that nothing
herein constitutes a release or waiver by me of, or prevents me from making or
asserting:  (i) any claim or right I may have under COBRA; (ii) any claim or
right I may have for unemployment insurance or workers’ compensation benefits;
(iii) any claim to vested benefits under the written terms of a qualified
employee pension benefit plan; (iv) any claim or right that may arise after the
execution of this Exhibit A; or (v) any claim or right I may have under the July
25, 2012 Agreement or this Exhibit A.
 
 
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By signing this Exhibit A, I understand and acknowledge that I was advised of
and afforded the opportunity to take advantage of each of the protections set
forth in Paragraph 14 of the July 25, 2012 Agreement, including, but not limited
to: (i) consultation with an attorney before signing this Exhibit A; (ii)
twenty-one (21) days in which to consider Exhibit A; and (iii) seven (7) days
following the execution of Exhibit A to revoke my acceptance of Exhibit A,
provided that the revocation is received by hand, facsimile or electronic mail
by the Company within that seven (7) day period.  I further acknowledge that I
freely, voluntarily and knowingly entered into this Exhibit A after due
consideration.
 
This Exhibit A shall become effective upon the expiration of the seven (7) day
revocation period described above.  I understand and acknowledge that no
payments will be made and no benefits will be provided to me until I have
executed the July 25, 2012 Agreement and this Exhibit A and both seven (7) day
revocation periods have expired.
 
This Exhibit A incorporates by reference, as if set forth fully herein, all
terms and conditions of the July 25, 2012 Agreement between the Company and me,
including the recitation of consideration provided by the Company.  By signing
this Exhibit A, I waive, release and forever discharge any and all claims that
may have arisen through the date of my execution of this Exhibit A.  It is not
my intention to otherwise change, alter or amend any of the terms and conditions
of the July 25, 2012 Agreement, for which I received adequate consideration, and
which Agreement remains in full force and effect.  I acknowledge and agree that
I continue to be bound by the terms and conditions of the July 25, 2012
Agreement.
 

 
UNDERSTOOD, AGREED TO
   
AND ACCEPTED WITH THE
   
INTENTION TO BE LEGALLY BOUND:
               
Kevin Tully
            Date:    

 
 
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EXHIBIT B

NAME: Kevin Tully

SUMMARY OF SUPPLEMENTAL SEVERANCE PROGRAM

I.
INSMED PROVIDES:

(1)
BASE SALARY THROUGH LAST DAY OF EMPLOYMENT

You will receive your regular rate of pay through December 1, 2012, totaling a
gross sum of $109,958.33 (four months’ salary).

(2)
SEVERANCE PAY

You will be eligible to receive severance payments in the gross sum of
$449,454.67 (comprised of (i) nine months base salary plus (ii) prorated bonus
through August 31, 2012, plus (iii) full year 2012 target bonus), payable in a
lump sum within thirty (30) days following your Last Day of Employment.
 
(3)
EXPENSES AND VACATION PAY

You will receive payment of any unpaid or unreimbursed expenses and payment in
lieu of any accrued but unused vacation time for 2012 in a lump sum within
thirty (30) days following your Last Day of Employment.

(4)
EQUITY AWARDS

Immediately prior to your Last Day of Employment, you will receive immediate
vesting in any Equity Awards that have not previously vested and were granted to
you at least one (1) year prior to your Last Day of Employment. You will have
one year from the Termination Date to exercise these Options.

(5)
BENEFIT PLANS

Your benefit coverages are summarized below.  Please note that the full terms
and conditions of your benefits coverages can only be determined by reviewing
the applicable plan documents, which shall control in all cases.  Any benefits
in excess of those to which you are already entitled shall only be provided upon
the execution of this agreement and after the non-revocation (7) day period.

 
Medical, Dental, and Vision Benefits

Health benefits will be provided to you and your covered dependents for eighteen
(18) months following your Last Day of Employment. These benefits will be
provided to you at the same cost applicable to active employees until you
commence employment with any person or entity and, thus, are eligible for health
insurance benefits; provided, however, that as a condition of continuation of
such benefits, the Executive shall have actually elected to continue his health
insurance pursuant to the Consolidated Omnibus Budget Reconciliation Act
(COBRA). The Company will not provide the dollar value equivalent of such health
care coverage.

 
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Group Life, AD&D, STD, LTD,
Coverage will cease as of your Last Day of Employment.

(6)
OUTPLACEMENT      The Company will reimburse you up to a maximum of $15,000.00
within thirty (30) days following your submission of documentation of reasonable
expenses incurred in connection with outplacement services provided by a
reputable company on or before August 20, 2013.

 

If you have any questions on your Benefit Plans, please call Dee Grosso at
(732-997-4524)  or via e-mail.
 
 
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