SEPARATION AGREEMENT
This
Separation Agreement (“Agreement”) is an agreement between Xxxx X. Xxxxxxxx, for
himself, his administrators, executors, spouse, heirs, or assigns, and anyone
acting for him, (“Xxxxxxxx”) and PhotoMedex, Inc., a Delaware
corporation (“PhotoMedex”
or the “Company”), made as of the 30th
of April
2006, to be effective on the Effective Date as defined in Section 5(b)
below.
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1.
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Separation
from Employment and Consulting
Arrangement.
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(a) PhotoMedex
and
Xxxxxxxx have agreed that Xxxxxxxx will voluntarily resign from the
employ
of PhotoMedex on or before June 30, 2006 (the “Resignation Date”), at a
date mutually acceptable to them, and Xxxxxxxx and PhotoMedex agree
to
cancel that Employment Agreement dated March 18, 2005, between Xxxxxxxx
and PhotoMedex (the “Employment Agreement”), to the end that Xxxxxxxx xxx
pursue other business interests. Until the Resignation Date, Xxxxxxxx
will
continue on a full-time basis as Executive Vice President, Dermatology,
devoting the majority of his time out of the office and in the field
so as
to prepare the sales force for the transition occasioned by his departure.
Xxxxxxxx will continue to report to Xxxxxxx X’Xxxxxxx and have use of his
office. During the period to the Resignation Date, PhotoMedex shall
be
free to seek a person to replace Xxxxxxxx or to realign Clifford’s duties
to other employees.
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(b) From
the
Resignation Date to the second anniversary thereof, Xxxxxxxx shall
be
available, at PhotoMedex’s request, to act as a consultant and independent
contractor for PhotoMedex, and as of the second anniversary of the
Resignation Date, the consulting arrangement shall expire automatically.
Xxxxxxxx shall be available for reasonable telephone consultation
regarding current and future customers of PhotoMedex and on Company
and
competitors’ personnel. Compensation for consultation shall be subsumed
within the severance to be paid to Xxxxxxxx under Section 2(d) and
within
COBRA premiums described in Section 2(e). If PhotoMedex desires to
engage
Xxxxxxxx for consultation on business development projects, then
such
consultation shall be on terms to be negotiated by, and mutually
acceptable to, Xxxxxxxx and PhotoMedex, it being understood that
Xxxxxxxx
shall be free to decline such consultation for any reason or no reason.
Xxxxxxxx will not have use of an office at PhotoMedex during that
period.
Xxxxxxxx, as an independent consultant, shall be responsible for
his own
expenses; PhotoMedex shall reimburse only for those expenses which
it
specifically has approved in advance and in accordance with Company
policy.
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2.
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Compensation Arrangements. | |
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(a) Until
the
Resignation Date, Xxxxxxxx shall continue to receive his full base
salary
of $300,000 annual in biweekly installments, according to the Company’s
normal payroll procedures.
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(b) Until
the
Resignation Date, Xxxxxxxx shall continue to enjoy health coverage
from
the Company plan and to participate in the Company 401K plan and
shall
continue to earn vacation days and be paid a car allowance, prorated
to
the date of Resignation.
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(c) PhotoMedex
shall make a final payroll and accounting with Xxxxxxxx in the payroll
period following the Resignation Date, including salary, auto allowance,
vacation pay, and expense reimbursement. This accounting will also
include
three payments of $17,500 each, payable on the first day of each
of the
first, second and third months in the second twelve months of consulting
that Xxxxxxxx will render to PhotoMedex from the first anniversary
of the
Resignation Date to the second anniversary thereof, as described
in
Section 1(b), where such payments shall be payable for Clifford’s
consulting without income or other tax withholdings over the second
twelve
months. As part of this accounting, Xxxxxxxx will return to PhotoMedex
any
property which PhotoMedex had provided to Xxxxxxxx for his use in
pursuance of Company business.
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(d) From
the Resignation Date until the first anniversary thereof, Xxxxxxxx
shall
receive, as severance compensation, a fee, payable bi-weekly, equal
to his
gross base salary in effect at the Resignation Date, viz. $300,000,
less
withholding taxes applicable to severance payments. From the Resignation
Date, Xxxxxxxx will cease to have a car allowance or to earn vacation
days
and will not be able to contribute to the 401K plan and will cease
to
participate in any Company benefit programs, except as set forth
in
subparagraph (e) below.
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(e) As
of the
Resignation Date, PhotoMedex shall make available to Xxxxxxxx, in
accordance with COBRA, coverage under the Company’s health plan;
PhotoMedex will pay the premiums for such coverage to the sooner
of the
following dates: the date that Xxxxxxxx attains age 65 (namely, September
30, 2007) or the date that Xxxxxxxx secures comparable, full-time
employment from another employer. In either case, after September
30,
2007, Xxxxxxxx shall be responsible for such premiums equal on a
monthly
basis to the premiums due under the COBRA coverage, for which PhotoMedex
will reimburse him through the second anniversary of the Resignation
Date
in further consideration of Clifford’s continuing service as consultant.
As of the Resignation Date, Xxxxxxxx will cease to be covered by
PhotoMedex’s workers’ compensation policy or to enjoy Company-paid
disability and life insurance coverage; it shall be at Clifford’s election
whether to convert his group life and group disability coverage into
coverage for himself alone, for the premiums of which he would be
solely
responsible.
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3.
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Stock Options. |
3
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(a) Stock
options
granted by PhotoMedex to Xxxxxxxx shall continue to vest up to the
Resignation Date as an officer and employee, and as of the Resignation
Date. Half of any options remaining unvested as of the Resignation
Date
will become fully vested, and the other half will then be canceled.
After the Resignation Date, Xxxxxxxx will
continue as
a consultant of the Company until the second anniversary of the
Resignation Date, and during such period and for three months thereafter,
the vested options will continue to be exercisable by Xxxxxxxx, unless
an
option by its own terms (e.g. 2/18/08) has expired sooner. Set forth
on
Exhibit A is a listing of options granted to Xxxxxxxx, the expected
status
quo of such options as of a hypothetical Resignation Date of June
30,
2006, after vesting 50% of the then-unvested options, and the expiration
dates of the options. The provisions of this Section 3 shall supersede
the
vesting and exercisability provisions of the option agreements covering
the discrete grants and shall supersede the provisions of the stock
option
plans under which such options were granted.
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(b) Any
options not exercised or otherwise expired by 90 days past the second
anniversary of the Resignation Date shall be canceled.
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4.
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Confidentiality, competition. | |
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(a) Xxxxxxxx
will not communicate, prior to the date on which the Company may
be
obliged to make public disclosure of Clifford’s intended resignation,
about his resignation to any person, including those in the industry
or
employees of PhotoMedex, other than Messrs. X’Xxxxxxx, Stewart, McGrath,
Xxxxxxxx and Xxxxx and Mss. Xxxxxxxxxx, Xxxxxx and Xxxxxx, it being
noted
that PHMD may inform members of the Sales management and its professional
advisors before the public disclosure of Clifford’s intended
resignation.
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(b) Until
the Resignation Date, Xxxxxxxx will remain subject to the provisions
of
Sections 6.1 to 6.4 of the Employment Agreement concerning property
rights
and obligations, it being understood that among the trade secrets
of
PhotoMedex are any matters of confidential information of PhotoMedex
not
in the public domain, confidentiality and will remain subject to
the
non-solicitation obligations described in Sections 6.5.1 and 6.5.2
of the
Employment Agreement. These obligations will continue unchanged through
the second anniversary of the Resignation Date, and during the period
that
Xxxxxxxx remains subject to such obligations, he will not disparage
PhotoMedex, nor will PhotoMedex disparage
Xxxxxxxx.
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(c) Until
the
Resignation Date, Xxxxxxxx will likewise remain subject to the
non-competition obligations described in Section 6.5.3 of the Employment
Agreement. In consideration of the severance payment to be made under
Section 2(d), Xxxxxxxx shall likewise remain subject, for the twelve
months following the Resignation Date, to such non-competition
obligations, except that the second sentence of Section 6.5.3 of
the
Employment Agreement is amended to read as follows: “Employee, therefore,
agrees that, for a period of two (2) years after the Resignation
Date, he
will not, as an employee, sole proprietor, partner, or joint venturer,
in
the same or similar capacity in which he worked for Employer Group,
compete with Employer Group in the manufacture, marketing or sales
of
excimer laser technology in connection with interventional cardiology,
psoriasis, or any other field in which Employee has actual knowledge
of
Employer’s use of excimer laser technology.” Furthermore, Xxxxxxxx shall
be permitted, with PhotoMedex’s consent (such consent not to be
unreasonably withheld or delayed), to work as employee or consultant
for
other companies in the skin care market, provided that such companies
do
not market products that are, in PhotoMedex’s sole discretion, competitive
with those of PhotoMedex as of the Resignation Date. Before embarking
on
such work, Xxxxxxxx shall give PhotoMedex at least 15 days’ prior written
notice, and if PhotoMedex does not consent to such work, it shall
advise
Xxxxxxxx of its reasons therefor. If PhotoMedex does not reply to
Clifford’s notice within such 15-day period, then PhotoMedex shall be
deemed to have consented.
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5.
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Waiver and Release. | |
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(a) In
exchange for
the promises made to him under this Separation Agreement, Xxxxxxxx
completely waives, releases and forever discharges PhotoMedex, its
past,
present and future successors
and assigns,
officers, directors, partners,
agents,
associates and
employees, from all claims, damages (including but not limited to
general,
special, punitive, liquidated and compensatory damages) and
causes of action of every kind, nature and character, known or unknown,
in
law or equity, fixed or contingent, which he may now have, or he
ever had
arising from or in any way connected with his employment relationship
or
the termination of his employment with PhotoMedex
or
any other matter occurring at any time in the past up to and including
the
date of this Agreement or involving any continuing effects of any
acts or
practices which may have arisen or occurred prior to the date of
this
Agreement.
This release includes but is not limited to:
any claims of unpaid compensation; all "wrongful discharge" claims;
all
claims relating to any contracts of employment express or implied;
any
covenant of good faith and fair dealing express or implied; any tort
of
any nature; any federal, state, or municipal statute or ordinance;
any
claims for employment discrimination, including sexual harassment,
Pennsylvania Human Relations Act, 43 P.S. Section 951 et seq., Title
VII
of the Civil Rights Act of 1964, as amended, the Age Discrimination
in
Employment Act ("ADEA"), the Older Workers Benefit Protection Act,
42
U.S.C. Section 1981, the Worker Adjustment and Retraining Notification
Act, and any other federal,
state, or municipal laws, ordinances
and regulations relating to employment, and any and all claims for
attorney's fees and costs. Xxxxxxxx understands that this release
does not
apply to any claims arising under the ADEA after the Effective Date
of
this Agreement.
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(b) Xxxxxxxx
acknowledges hereby that he understands that, since he is aged 40
or
older, he has no fewer than 21 days from the date he has received
this
Agreement to consider and sign this Agreement. Xxxxxxxx also understands
that, as he is aged 40 or older, he has seven days to revoke this
Agreement after he signs it. Xxxxxxxx understands that any such revocation
must be in writing and must be received by PhotoMedex's Corporate
Counsel
at
000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx, XX 00000 no
later than
5
p.m.
on the last day of the applicable revocation period. The Effective
Date of
this Agreement is the day after the seven-day revocation period ends.
Xxxxxxxx understands that he will not receive the benefits and privileges
of this Agreement sooner than the Effective Date
and then only if
he has not revoked this Agreement pursuant to this Section
5.
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(c) Except
as to rights provided under this Agreement, Xxxxxxxx acknowledges
that the
benefits inuring to him under this Separation Agreement are provided
to
him in full and complete satisfaction and discharge of any and all
obligations that PhotoMedex has or may have to him as an employee
and that
he has been paid all the salary, bonuses, benefits and other compensation
that are due to him.
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6.
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Agreement Not to Xxx and Damages. | |
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(a) Xxxxxxxx
further agrees not to xxx PhotoMedex for any claims covered by this
Separation Agreement or the Employment Agreement. If Xxxxxxxx should
xxx
in violation of this Agreement and not be the prevailing party in
the
suit, he agrees to pay all costs and expenses incurred by PhotoMedex
in
defending against a suit or enforcing this Agreement, including court
costs, expenses and reasonable attorneys’ fees.
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(b) PhotoMedex
agrees not to xxx Xxxxxxxx for any claims covered by this Agreement
or the
Employment Agreement. If PhotoMedex should xxx in violation of this
Agreement and not be the prevailing party in the suit, it agrees
to pay
all costs and expenses incurred by Xxxxxxxx in defending against
a suit or
enforcing this Agreement, including court costs, expenses and reasonable
attorneys’ fees.
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(c) Excluded
from the release and the covenant not to xxx are any claims which
cannot
be waived by law, including without limitation
an
ADEA claim to the extent such an exception is required by
law, and the filing of a charge with the Equal Employment Opportunity
Commission. But Xxxxxxxx agrees to waive any right to any monetary
recovery, should any government agency pursue any claims on his behalf.
Xxxxxxxx also acknowledges that he has not suffered any on-the-job
injury
for which he has not already filed a claim.
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(d) Xxxxxxxx
further acknowledges and agrees that in the event he may breach the
provisions of this Agreement, PhotoMedex shall: (i) be entitled to
apply
for and receive an injunction to restrain any violation of this Agreement,
and (ii) Xxxxxxxx shall be obligated to pay to PhotoMedex its costs
and
expenses in obtaining such injunction and/or enforcing this Agreement
and
defending against such lawsuit (including court costs, expenses and
reasonable legal fees), and the foregoing shall not affect the validity
of
this Agreement and such relief does not constitute in any way a penalty
or
a forfeiture.
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7.
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Miscellaneous.
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(a) This
Agreement
is deemed made and entered into in the Commonwealth of Pennsylvania,
and
in all respects shall be interpreted, enforced and governed under
the
internal laws of the Commonwealth of Pennsylvania. Any dispute under
this
Agreement shall be adjudicated by a court of competent jurisdiction
in the
Commonwealth of Pennsylvania.
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(b) Xxxxxxxx
represents and warrants that he will not seek, and waives any right
or
claim to, employment now or in the future by
PhotoMedex.
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(c) This
Agreement
resolves all matters between Xxxxxxxx and PhotoMedex and supersedes
any
other written or oral agreement between Xxxxxxxx and PhotoMedex.
The
Employment Agreement of March 18, 2005, is canceled as of the Effective
Date of this Agreement, except as specifically set forth
herein.
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(d) Xxxxxxxx
agrees that he is signing this Agreement knowingly and voluntarily,
that
he has not been coerced or threatened into signing this Agreement
and that
he has not been promised anything not set forth in this Agreement
in
exchange for signing this Agreement. If any part of this Agreement
is
found to be illegal or invalid, the rest of this Agreement will still
be
enforceable.
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(e) This
Agreement
may be executed in two or more counterparts, each of which will be
deemed
an original, but all of which together will constitute one and the
same
instrument. Faxed copies will be effective and binding.
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(f) By
this
Agreement, Xxxxxxxx understands further that he has been advised
to
consult with an attorney of his own choice at his own expense before
signing below.
He has done so. PhotoMedex agrees to pay Clifford’s attorney fees incurred
in the review and negotiation of this Agreement in an amount not
to exceed
$3,000. Any rule of law or decision that would require interpretation
of
any claimed ambiguities in this Agreement against the party that
drafted
it
has no application and is expressly waived.
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(g) This
Agreement
has been individually negotiated and is not part of a group exit
incentive
or other termination program.
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(h) No
modification
of any provision of this Agreement shall be effective unless made
in
writing and signed by both PhotoMedex and Xxxxxxxx.
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IN
WITNESS WHEREOF, this Agreement has been executed and agreed to as of the date
first above written.
| XXXX X. XXXXXXXX | PHOTOMEDEX, INC. | |
| Date:
April 30, 2006 |
Date: |
May
1, 2006
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| Signature: /s/Xxxx X. Xxxxxxxx | By: | /s/ Xxxxxxx X. X’Xxxxxxx |
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Name:
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Xxxxxxx X.
X’Xxxxxxx
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Title:
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President, CEO
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10
Exhibit
A
| Exercise | Grant | Expiry | Vested at | Vested at | |||||||
| Number | Price | Date | Date | 05/31/06 | 06/30/06 | ||||||
| 33,110 | $2.17 | 02/18/98 | 02/18/08* | 33,110 | 33,110 | ||||||
| 99,330 | $1.16 | 08/25/99 | 08/25/09 | 99,330 | 99,330 | ||||||
| 66,220 | $1.07 | 12/13/00 | 12/13/10 | 66,220 | 66,220 | ||||||
| 66,220 | $1.96 | 11/28/01 | 11/28/11 | 66,220 | 66,220 | ||||||
| 99,330 | $2.76 | 05/20/02 | 05/20/12 | 99,330 | 99,330 | ||||||
| 33,110 | $1.65 | 12/15/03 | 12/15/13 | 22,073 | 27,592** | ||||||
| 250,000 | $2.78 | 04/04/05 | 04/04/10 | 85,000 | 167,500*** | ||||||
*
Natural
expiry date is earlier than 9/30/08.
**27,592
= 22,073 + 50% (33,110 - 22,073).
***
167,500 = 85,000 + 50% (250,000 - 85,000).
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