SEPARATION AGREEMENT AND RELEASE
Exhibit
10.6
SEPARATION
AGREEMENT AND RELEASE
This
Separation Agreement and Release (this “Agreement”), dated as of September 19,
2007, is made and entered into by and between Xxxxxxx X. Xxx and Nephros,
Inc.
DEFINITIONS
As
used
throughout this Agreement:
1. “Employee”
refers to Xxxxxxx X. Xxx, his heirs, executors, administrators, agents,
successors, assigns, and dependents.
2. “Company”
refers to Nephros, Inc., together with its past, present and future parents,
subsidiaries, and affiliates, and each of their respective past and present
officers, directors, agents, employees, representatives, successors, and
assigns, in both their individual and corporate capacities.
RECITALS
WHEREAS,
Employee has been employed by Company pursuant to an Employment Agreement made
as of July 1, 2006 (the “Employment Agreement”); and
WHEREAS,
the parties have mutually agreed that Employee’s employment with Company will
terminate; and
WHEREAS,
the parties have agreed to terminate the Employment Agreement on mutually agreed
upon terms set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, and intending to be and being legally bound hereby, the parties
agree
as follows:
AGREEMENT
1. As
of the
Termination Date (defined below), the Employment Agreement and all existing
employment agreements between Employee and Company, whether oral or written,
are
hereby terminated, and neither Employee nor Company shall have any further
rights or obligations under any such agreements, except as otherwise expressly
provided herein. Except as otherwise expressly provided herein, the
parties agree that this Agreement supersedes the Employment Agreement (and
any
other existing employment agreements between the parties).
2. Employee’s
employment with Company shall terminate effective as of September 19, 2007
(the
“Termination Date”). Employee agrees that he shall execute such
documents and take such action (if any) as may be necessary to remove Employee
from all such positions he holds with Company. Employee represents
that he does not have any claim, action, or proceeding pending against
Company.
3. In
full
and complete consideration for Employee’s promises, covenants, and agreements
set forth herein:
a. Company
will tender to Employee, and Employee will accept, an aggregate of $142,500,
paid in equal installments in accordance with the Company’s standard payroll
practices for a period of six months after the Termination Date. Such
payment shall be by wire transfer through the Company’s payroll system to the
Employee’s account shown therein. Upon at least 10 days prior written
notice, the Employee may elect a different account for the wire
transfer. The wire transfer shall be subject to all customary and
legally required withholdings and deductions.
b. Company
will, no later than the next payroll cycle after the Termination Date, pay
to
Employee through the Company’s payroll system any accrued but unpaid Base Salary
(as defined in the Employment Agreement) for services rendered through the
Termination Date.
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c. Employee
currently holds vested stock options to purchase 250,333 shares of the Company’s
common stock (the “Vested Options”). On the Termination Date,
unvested stock options held by Employee to purchase 56,250 shares of the
Company’s common stock will vest and become fully exercisable on the Termination
Date (the “Accelerated Options” and together with the Vested Options, the
“Options”). Employee shall have the right to exercise the Options
within the period commencing on the Termination Date and ending ninety days
after the Termination Date (the “Options Exercise Period”). Any
Options not exercised by Employee within the Options Exercise Period shall
be
cancelled. In all other respects, all such Options shall be governed
by the plans, programs, agreements, and other documents pursuant to which such
Options were granted. Any unvested stock options held by Employee to
purchase shares of the Company’s common stock, other than the Accelerated
Options, shall be forfeited on the Termination Date.
d. For
a
period of six months after the Termination Date, Employee shall continue to
participate in all employee benefit plans, programs, and arrangements providing
health, medical, disability and life insurance benefits in which Employee was
participating immediately prior to termination, the terms of which allow
Employee’s continued participation, as if Employee had continued in employment
with Company during such period. Alternatively, if such plans,
programs, or arrangements do not allow Employee’s continued participation, for
the six month period following the Termination Date, if Employee timely elects
COBRA continuation coverage or similar continuation coverage provided for under
New York law, Company will pay the monthly premiums of such coverage for the
level and types of coverage Employee maintained on the Termination
Date. In any case, at the end of the six month period and with no
further obligation of the Company, Employee may pursue alternative continuation
coverage at his own expense. The Company will provide Employee with
any notification as required by law with respect to such alternative
continuation coverage and reasonable assistance in completing any documents
relating to such alternative continuing coverage. The Company will no longer
make COBRA payments for Employee’s elder daughter.
e. Reasonable
business expenses and disbursements incurred by Employee in connection with
the
performance of his duties prior to the Termination Date will be reimbursed
upon
submission by Employee of all appropriate documentation in accordance with
Company’s standard procedures, provided that any such documentation is submitted
by Employee within ten business days of the Termination Date.
f. Company
will pay Employee $5,000 by check as reimbursement for his advance on the
premium for his directors and officers liability insurance simultaneous with
the
First Closing (as defined in the several subscription agreements between the
Company and each subscriber a party thereto) of (i) the offering by the Company
of up to fifteen million dollars ($15,000,000) aggregate principal amount of
Series A 10% Secured Convertible Notes due 2008 convertible into (A) shares
of
the Company’s common stock, par value $0.001 per share (“Common Stock”) and (B)
Class D Warrants for purchase of shares of Common Stock; and (ii) an exchange
of
its 6% Secured Convertible Notes due 2012 with the holders thereof, for new
Series B 10% Secured Convertible Notes due 2008 in an aggregate principal amount
of $5,300,000 convertible into shares of Common Stock.
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g. Employee
shall not be required to mitigate damages or the amount of any payment provided
to him under this Section 3 by seeking other employment or otherwise, nor shall
the amount of any payments provided to Employee under this Section 3 be reduced
by any compensation earned by Employee as the result of employment by another
employer after the termination of Employee’s employment or otherwise, so long as
such compensation is earned in accordance with this Agreement.
h. Except
as
expressly provided in this Paragraph 3, Employee shall not be entitled to any
money or benefits from Company.
4. Except
as
necessary to enforce the terms of this Agreement, and in exchange for and in
consideration of the promises, covenants, and agreements set forth herein,
Employee hereby agrees, for Employee, Employee’s heirs beneficiaries, devisees,
executors, administrators, attorneys, personal representatives, successors
and
assigns, forever to release, discharge, and covenant not to xxx Company and
any
of Company’s past and present directors, officers, employees, agents and
attorneys, and agents and representatives of such entities, and employee benefit
plans in which Employee is or has been a participant by virtue of his employment
with Company (except to the extent that Employee continues to be entitled to
benefits under such employee benefit plans pursuant to this Agreement or the
terms of such employee benefit plans), to the maximum extent permitted by law,
from any and all claims, debts, demands, accounts, judgments, rights, causes
of
action, equitable relief, damages, costs, charges, complaints, obligations,
promises, agreements, controversies, suits, expenses, compensation,
responsibility and or liability of every kind and character whatsoever
(including attorneys fees and costs), whether in law or equity, known or
unknown, asserted or unasserted, suspected or unsuspected, which he has or
may
have had against such entities based on any events or circumstances arising
or
occurring on or prior to the execution of this Agreement, arising directly
or
indirectly out of, relating to, or in any other way involving in any manner
whatsoever, Employee’s employment with Company and the termination thereof, and
any and all claims arising under federal, state, or local laws relating to
employment, or securities, including
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without
limitation claims of wrongful discharge, breach of express or implied contract,
fraud, misrepresentation, defamation, or liability in tort, claims of any kind
that may be brought in any court or administrative agency, any claims arising
under Title VII of the Civil Rights Act of 1964, as amended, the Americans
with
Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave
Act, the New York State Human Rights Law, the New York City Human Rights Law
and
the New York Executive Law, any claim under the New York Labor Law, any claim
under the Employee Retirement Income Security Act of 1974, any claim under
the
common law, and any claim for attorneys’ fees or costs. Employee
agrees that all disputes and disagreements between Employee and Company and
the
negotiation of this Agreement are and shall remain confidential. Employee
agrees not to disclose or to talk or write about disputes between the parties
and negotiation of this Agreement without the prior written consent of Company,
except (a) as required by law; (b) as required by regulatory authorities; or
(c)
as required in connection with any mediation, arbitration or litigation arising
out of this Agreement.
5. Company
hereby agrees, forever to release, discharge, and covenants not to xxx Employee,
from any and all claims, debts, demands, accounts, judgments, rights, causes
of
action, equitable relief, damages, costs, charges, complaints, obligations,
promises, agreements, controversies, suits, expenses, compensation,
responsibility and liability of every kind and character whatsoever (including
attorneys’ fees and costs) (collectively, “Claims”), which Company has or may
have had against Employee based on any events or circumstances arising or
occurring at any time on or prior to the Termination Date arising directly
or
indirectly out of, relating to, or in any other way involving in any manner
whatsoever, Employee’s employment with Company or the termination thereof, and
any and all Claims arising under federal, state, or
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local
laws relating to employment or securities, in each case, where the Company
has
Knowledge of such Claim; provided, however, that nothing in this Agreement
shall
prevent Company from asserting any Claims against Employee for gross negligence
or willful misconduct by Employee during the course of his employment with
Company. For purposes of this paragraph, “Knowledge” shall mean the
actual knowledge of Xxxxxx X. Xxxxx, the Company’s Chief Executive Officer and a
director, Xxxxxxxx Xxxxxxxx, a director, or Xxxx X. Xxxx, the lead
director. Company agrees that all disputes and disagreements
between Employee and Company and the negotiation of this Agreement are and
shall
remain confidential. Company agrees not to disclose or to talk or write
about disputes between the parties and negotiation of this Agreement without
the
prior written consent of Employee, except (a) as required by law; (b) as
required by regulatory authorities; or (c) as required in connection with any
mediation, arbitration or litigation arising out of this Agreement.
6. No
party
shall have any further obligation under the Employment Agreement, except that
the following provisions, each of which are incorporated by reference herein,
shall remain in full force and effect: Section 6.2 (entitled
“Noncompetition; Nonsolicitation”) (except as provided below), Section 6.3
(entitled “Proprietary Information”), Section 6.4 (entitled “Confidentiality and
Surrender of Records”), Section 6.5 (entitled “Inventions and Patents”), Section
6.6 (entitled “Enforcement”), Section 8 (entitled “Assignability and Transfer”),
Section 9(c) (entitled “Cooperation”), Section 9(e) (entitled “Protection of
Reputation”), Section 9(j) (entitled “Severability”), Section 9(m) (entitled
“Notices”), Section 9(n) (entitled “Assistance in Proceedings, Etc.”), and
Section 9(o) (entitled “Survival ”). Notwithstanding the foregoing,
(i) “Post-Employment Period” in Section 6.2 of the Employment Agreement shall
mean the period beginning on the Termination Date and ending
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six
months after the Termination Date and (ii) any reference in Section 6.2 of
the
Employment Agreement to amounts or benefits that may be paid to Employee after
the effective date of the Employment Agreement (including under Section 3 and
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therein) shall mean amounts or benefits that may be paid to Employee under
this
Agreement.
7. Employee
agrees and recognizes that should he breach any of the obligations set forth
in
Sections 6.2 (as applicable), 6.3, 6.4, 6.5, 8 and 9(e) of the Employment
Agreement, Company shall have the right to seek repayment of all consideration
paid to him under this Agreement, in addition to any other rights and remedies
under the Employment Agreement and applicable law.
8. Without
limiting Section 9(c) of the Employment Agreement in any manner, which section
shall remain in full force and effect, Employee shall cooperate with Company,
as
reasonably requested by Company and without any additional compensation to
Employee, to effect a transition of Employee’s responsibilities and to ensure
that Company is aware of all matters being handled by Employee.
9. Company
agrees that it will not make any official announcements or issue any press
releases which contain any disparaging statements about Employee; provided,
however, that nothing in this paragraph or this Agreement shall restrict
Company’s ability to provide complete information with respect to Employee’s
employment and the termination of such employment when required or expected
to
do so under applicable law, applicable regulatory requirements or pursuant
to
legal process or subpoena, or otherwise in connection with disclosures to
regulatory authorities. The Company agrees to include a favorable
quote from a
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Company
executive or director concerning Employee in any press releases issued relating
to Employee’s termination.
10. Employee
shall direct all requests for references from prospective employers to Company’s
Chief Financial Officer, who shall provide in response to any such inquiry
only
the dates of his employment and the position he occupied at the time of the
separation of employment from Company and state that company policy precludes
the disclosure of additional information.
11. In
executing this Agreement, neither Company nor Employee admits any liability
or
wrongdoing, and the considerations exchanged herein do not constitute an
admission of any liability, error, contract violation, or violation of any
federal, state, or local law or regulation.
12. Employee
confirms that he has returned to Company all keys, files, records (and copies
thereof), equipment (including, but not limited to, computer hardware, software
and printers, wireless handheld devices, cellular phones, pagers, etc.), Company
identification, Company vehicles and any other Company-owned property in his
possession or control and has left intact all electronic Company documents,
including but not limited to those which he developed or helped develop during
his employment. Notwithstanding the foregoing sentence, Employee may
retain his laptop computer and wireless handheld device so long as Employee
deletes or returns to the Company, as instructed by the Company, any Company
information stored therein. Employee understands that the Company no
longer assumes responsibility for any connectivity or service contracts relating
to the laptop computer or the wireless handheld device. Employee
further confirms that he has cancelled all accounts for his
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benefit,
if any, in Company's name, including but not limited to, credit cards, telephone
charge cards, cellular phone and/or pager accounts, computer
accounts.
13. To
the
extent any taxes may be due on the payments to Employee provided in this
Agreement beyond any withheld by Company, Employee agrees to pay them
himself. Employee further agrees to provide any and all information
pertaining to Employee upon request as reasonably necessary for Company and
other entities released herein to comply with applicable tax laws.
14. Company
makes no representations regarding the tax implications of the compensation
and
benefits to be paid to Employee under this Agreement, including, without
limitation, under Section 409A of the Internal Revenue Code (the
“Code”). Employee acknowledges that Company has advised him to
consult his own tax advisor in this regard. Employee and Company
agree that in the event Company reasonably determines that the terms hereof
would result in Employee being subject to tax under Section 409A of the Code,
Employee and Company shall negotiate in good faith to amend this Agreement
to
the extent necessary to prevent the assessment of any such tax, including by
delaying the payment dates of any amounts hereunder.
15. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
16. The
unenforceability or invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions hereof unenforceable or
invalid.
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17. This
Agreement constitutes the entire agreement between the parties and cannot be
altered except in a writing signed by the parties. The parties
acknowledge that they entered into this Agreement voluntarily, that they fully
understand all of its provisions, and that no representations were made to
induce execution of this Agreement, which are not expressly contained
herein. This Agreement has been approved by the Company’s
Compensation Committee pursuant to Exhibit A attached hereto.
18. This
Agreement may be amended only by a writing which makes express reference to
this
Agreement as the subject of such amendment and which is signed by Employee
and,
on behalf of Company, by its duly authorized officer.
19. Any
waiver of any term or provision hereof, or of the application of any such term
or provision to any circumstances, shall be in writing signed by the party
charged with giving such waiver. Waiver by any of the parties hereto
of any breach hereunder by any other party shall not operate as a waiver of
any
other breach, whether similar to or different from the breach
waived. No delay on the part of any of the parties in the exercise of
any of their respective rights or remedies shall operate as a waiver thereof,
and no single or partial exercise by any of the parties of any such right or
remedy shall preclude other or further exercise thereof.
20. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to agreements made and to be wholly performed
within that State, without regard to its conflict of law provisions or where
the
parties are located at the time a dispute arises.
21. Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in New York, New York by
three
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arbitrators
in accordance with the rules of the American Arbitration Association in effect
at the time of submission to arbitration; provided, however, that Company shall
be entitled to commence an action in any court of competent jurisdiction to
enforce Section 10 of the Employment Agreement, in part or in its
entirety. Judgment may be entered on the arbitrators’ award in any
court having jurisdiction. For purposes of entering such judgment or
seeking enforcement of Section 6 of the Employment Agreement, Company and
Employee hereby consent to the jurisdiction of any or all of the following
courts: (i) the United States District Court for the Southern
District of New York; (ii) any of the courts of the State of New York or the
State of Delaware, or (iii) any other court having
jurisdiction. Company and Employee hereby waive, to the fullest
extent permitted by applicable law, any objection which either may now or
hereafter have to such jurisdiction and any defense of inconvenient
forum. Company and Employee hereby agree that a judgment upon an
award rendered by the arbitrators may be enforced in other jurisdictions by
suit
on the judgment or in any other manner provided by law.
22. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original but all of which together shall constitute
one
and the same instrument.
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the dates indicated
below.
NEPHROS,
INC.
/s/
Xxxxxxx X.
Xxx By:
/s/
Xxxxxx X.
Xxxxx
Xxxxxxx
X. Xxx Xxxxxx
X.
Xxxxx
President
and
CEO
Sworn
to
before me this Sworn
to before me
this
19th
day of September, 2007
19th day of September, 2007
Xxxxxxxxx X.
Xxxxxx
Xxxxx
X.
XxXxxxxxx
Notary
Public
Notary Public
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