SEPARATION AGREEMENT AND RELEASE
SEPARATION
AGREEMENT AND RELEASE
This
Separation Agreement and Release (“Agreement”)
is
entered into by and between Nephros, Inc., and its affiliates and subsidiaries
(the “Company”),
and
Xxxxxx X. Xxxxx (“Xxxxx”),
as of
September 15, 2008 (the “Effective
Date”).
The
Company and Xxxxx are referred to herein as the “Parties.”
WHEREAS,
Xxxxx
is employed as Chairman, President and Chief Executive Officer of the Company
pursuant to an Employment Agreement, dated as of July 1, 2007
(the“Employment
Agreement”),
under
which the Parties agreed to certain terms and conditions relating to Xxxxx’x
employment with the Company;
WHEREAS,
because
of his employment as an executive of the Company, Xxxxx has obtained intimate
and unique knowledge of all aspects of the Company’s business operations,
current and future plans, financial plans and other confidential and proprietary
information;
WHEREAS,
Xxxxx
and the Company mutually desire to terminate their employment relationship
and
Xxxxx desires to resign as a member of the Company’s Board of Directors and to
resign his positions as Chairman, President, Chief Executive Officer, Secretary
and Treasurer of the Company, and all other director, officer and employee
positions (other than the Transition Role, as defined below), if any, held
by
Xxxxx in the Company or any of its subsidiaries or affiliates effective as
of
the Effective Date;
WHEREAS,
Xxxxx
and the Company mutually desire that, Xxxxx shall be employed by the Company
in
the Transition Role after his termination as an officer, subject the terms
and
conditions set forth herein;
WHEREAS,
the
Parties desire to finally, fully and completely resolve all disputes that now
or
may exist between them, including, but not limited to those concerning Xxxxx’x
job performance and activities while employed by the Company and his hiring,
employment and termination from the Company, and all disputes over benefits
and
compensation connected with such employment, and specifically, but not limited
to, any disputes arising from the terms of Xxxxx’x employment as set forth in
the Employment Agreement.
NOW,
THEREFORE,
in
consideration of the premises and mutual covenants and agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxx agree as
follows:
1. Termination;
Transition.
(a)
Termination.
The
Parties agree that the Employment Agreement shall terminate on the Effective
Date. Effective as of the Effective Date, Xxxxx hereby resigns his positions
as
Chairman of the Board, President, Chief Executive Officer, Secretary and
Treasurer and all other director, officer, and employee positions with the
Company and any of the Company’s subsidiaries or affiliates, other than the
Transition Role (as defined below). On the Effective Date, Xxxxx will execute
a
resignation letter in the form attached hereto as Exhibit
A,
and
provide any other documents, if necessary, to effect his
resignation(s).
(b)
Transition.
The
Parties hereby agree that for a period of
up to
26 days following the Effective Date (the
“Transition
Period”),
Xxxxx
shall consult as reasonably needed and not necessarily on a full time basis
with
officers, directors and agents of the Company and otherwise provide assistance
in the Company’s transition to a new chief executive officer as reasonably
requested by the Company (the “Transition
Role”);
provided, however, that the Company may choose to terminate the Transition
Period at any time in the event that Xxxxx does not render the services required
by this Section in the Transition Role. During
the Transition Period, Xxxxx shall be paid an amount equal to his current
pre-Transition Period salary, which shall be paid in the same manner as prior
to
the Transition Period, and shall be provided with the same benefits as his
current pre-Transition Period benefits for the Transition Period. Transition
Period payments shall be by wire transfer or direct deposit through the
Company’s payroll system to Xxxxx’x account shown therein. Upon at least seven
(7) days prior written notice, Xxxxx may elect a different account for the
wire
transfer or direct deposit. Xxxxx’x last day of employment with the Company in
any capacity will not be later than October 10, 2008 (the “Separation
Date”).
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2. Certain
Payments and Benefits.
(a) Accrued
Obligations.
On or
prior to the third day following the Separation Date, Xxxxx
shall submit expense requests and supporting documentation for
any
unpaid reimbursable company-related expenses, and within five
(5)
days following the Separation Date, the Company shall pay Xxxxx for
reimbursement for unpaid reimbursable company-related expenses for which Xxxxx
has timely submitted expense requests and supporting documentation, and for
all
unpaid salary, other earned but unpaid benefits relating to Xxxxx’x employment
with the Company, and any accrued but unused vacation through the Separation
Date (the “Accrued
Obligations”).
Except
as stated in this Agreement or as required by law, all other compensation and
benefits which relate to Xxxxx’x employment with the Company, including any
benefits set forth in the Employment Agreement or in any other employee benefit
plan, policy or program, except as memorialized in this Agreement, shall cease
as of the Separation Date.
(b)
Milestone Bonus payment.
Within
five (5) days following the Separation Date, the Company shall pay Xxxxx $18,000
in fulfillment of the contractual Milestone Bonus stipulated upon successful
completion of the clinical trial of the XXxxxXX
X0XXX
Hemodiafiltration Module and XXxxxXX
XX000
Hemodiafilter in the United States.
(c) Separation
Payments.
The
Company will pay Xxxxx
his
current pre-Transition Period base salary for a period of six months following
the Separation Date (the “Severance
Period”),
minus
normal payroll withholdings and taxes, if applicable (“Separation
Payments”),
payable
in accordance with the Company’s normal payroll practices beginning with the
first payroll period following the Separation Date. Separation
Payments
shall be by wire transfer or direct deposit through the Company’s payroll system
to Xxxxx’x account shown therein. Upon at least seven (7) days prior written
notice, Xxxxx may elect a different account for the wire transfer or direct
deposit. Xxxxx shall be entitled to submit a revised and restated IRS Form
W-4
and/or New York Form IT-2104 to Company with regard to income tax withholding
amounts. The
Separation Payments will
not be
treated as compensation under the Company’s 401(k) Plan or any other retirement
plan.
(d)
Benefits.
For a
period of six (6) months after the Separation Date, Xxxxx shall continue to
participate in all employee benefit plans, programs, and arrangements providing
health, medical, disability and life insurance benefits in which Xxxxx (or
as
applicable, his spouse or estate) may be entitled pursuant to the plans and
programs of the Company in which Xxxxx was participating prior to the Transition
and Severance Periods, the terms of which allow Xxxxx’x continued participation,
as if Xxxxx had continued in employment with Company during the Severance
Period. Alternatively, if such plans, programs, or arrangements do not allow
Xxxxx’x continued participation for the six (6) month period following the
Separation Date, if Xxxxx timely elects COBRA continuation coverage or
similar continuation coverage provided for under New York or New Jersey law,
Company will pay the monthly insurance premiums of such coverage for the levels
and types of coverage Xxxxx maintained for Xxxxx’x benefit prior
to
the Transition and Severance Periods. In any case, at the end of the six (6)
month period, Xxxxx may pursue alternative continuation insurance coverage
at
his own expense. The Company will provide Xxxxx with any notification as
required by law with respect to such alternative coverage and reasonable
assistance in completing any documents relating to such alternative continuing
insurance coverage.
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(e) Options.
The
parties acknowledge that Xxxxx has been granted certain options (collectively,
the “Options”) under equity incentive plans of the Company, including the
Amended and Restated Nephros 2000 Equity Incentive Plan and the Nephros, Inc.
2004 Stock Incentive Plan, which are represented by certain Option Agreements
(the “Option Agreements”) that will survive the termination of Xxxxx’x
employment. Pursuant to the terms of such Option Agreements, 347,221 of shares
subject to the Options granted on November 8, 2007 remain unvested as of the
Effective Date and shall automatically be cancelled and forfeited by Xxxxx
as of
the Separation Date. The shares subject to the Options granted on January 24,
2000, December 14, 2004, and November 8, 2007 that vested prior to the
Separation Date shall remain exercisable until three months after the Separation
Date, in accordance with the terms of the respective Option Agreements. The
Option granted on January 30, 2003 shall remain exercisable until nine months
after the Separation Date, in accordance with the terms of such Option
Agreement.
(f) Waiver
of Additional Compensation or Benefits.
Other
than the Separation Payments and other obligations provided for in this
Agreement, Xxxxx shall not be entitled to any additional compensation,
benefits, payments or grants under any benefit plan, severance
plan or
bonus or incentive program established by the Company or any of the Company’s
affiliates. Any vested interest held by Xxxxx in the Company’s 401(k) Plan,
retirement plan and any other plans in which Xxxxx participates, including
the
401(k) matching payments for contributions made up to and including the
Separation Date, shall be maintained and/or distributed at Xxxxx’x direction,
e.g., rolled over or otherwise, in accordance with the terms of the plan and
applicable law. Xxxxx agrees that the release in Paragraph 4 covers any
claims he might have regarding his compensation, bonuses, stock options or
grants and any other benefits he may or may not have received during his
employment with the Company.
(g) No
Duty to Mitigate.
Xxxxx
shall be under no duty to mitigate any losses or damage to Company with respect
to any amounts payable pursuant to Section 2 of this Agreement, by seeking
other
employment or otherwise, nor shall the amount of any payments provided under
this Section 2 be reduced by any compensation earned by Xxxxx as the result
if
employment by another employer after the termination of Xxxxx’x employment or
otherwise.
(h) Life
InsuranceTransfer.
Company
shall cooperate with Xxxxx regarding the transfer of ownership to Xxxxx, named
beneficiaries, payee addresses, and otherwise under any life insurance policies,
more particularly, without limitation, policy number 00-000-000, Plan 75, with
ISA Number 00-000-00; provided
that
Xxxxx assumes all of the Company’s obligations with respect to such policies and
the relevant insurer provides the Company with an acknowledgement and/or consent
to such assignment and assumption (which may include a release of the Company)
in form and substance satisfactory to the Company.
3. Press
Release.
In
connection with the termination of Xxxxx’x employment with the Company, Xxxxx
hereby agrees to the Company’s issuance of a press release, and internal
communications and external communications regarding his separation from his
employment; provided
that the
Parties shall mutually approve the language of any press release; provided
further
that
Xxxxx shall not unreasonably withhold his approval or that Company shall not
unreasonably propose and impose language for the press release and other
communications on Xxxxx. Any such announcements or statements shall not contain
any disparaging statements about Xxxxx. The Company agrees to include a
favorable quote from the lead director of the Board of Directors concerning
Xxxxx in any press release and other communications issued relating to Xxxxx’x
resignation.
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4. Mutual
Release and Waiver.
(a) By
Xxxxx.
In
consideration of the payments and other consideration provided for in this
Agreement, that being good and valuable consideration, the receipt, adequacy
and
sufficiency of which are acknowledged by Barta, Barta, on his own behalf and
on
behalf of his agents, administrators, representatives, executors, successors,
heirs, devisees and assigns (collectively, the “Releasing
Parties”)
hereby
fully releases, remises, acquits and forever discharges the Company and all
of
its affiliates, and each of their respective past, present and future officers,
directors, shareholders, equity holders, members, partners, agents, employees,
consultants, independent contractors, attorneys, advisers, successors and
assigns (collectively, the “Released
Parties”),
jointly and severally, from any and all claims, rights, demands, debts,
obligations, losses, causes of action, suits, controversies, setoffs,
affirmative defenses, counterclaims, third party actions, damages, penalties,
costs, expenses, attorneys’ fees, liabilities and indemnities of any kind or
nature whatsoever, whether known or unknown, suspected or unsuspected, accrued
or unaccrued, whether at law, equity, administrative, statutory or otherwise,
and whether for injunctive relief, back pay, fringe benefits, reinstatement,
reemployment, or compensatory, punitive or any other kind of damages, which
any
of the Releasing Parties ever have had in the past or presently have against
the
Released Parties, and each of them, arising from or relating to Xxxxx’x
employment with the Company or its affiliates or the termination of that
employment or any circumstances related thereto, or any other matter, cause
or
thing whatsoever, including without limitation all claims arising under or
relating to employment, employment contracts (including the Employment
Agreement), employee benefits or purported employment discrimination or
violations of civil rights of whatever kind or nature, including without
limitation all claims arising under the Age Discrimination in Employment Act
(“ADEA”),
the
Americans with Disabilities Act of 1990, the Family and Medical Leave Act of
1993, the Equal Pay Act of 1963, the Rehabilitation Act of 1973, Title VII
of
the United States Civil Rights Act of 1964, 42 U.S.C. § 1981, the Civil Rights
Act of 1991, the Civil Rights Acts of 1866 and/or 1871, the Xxxxxxxx-Xxxxx
Act,
the New York State Labor Laws or any other applicable federal, state or local
employment discrimination statute, law or ordinance, including, without
limitation, any workers’ compensation or disability claims under any such laws,
claims for wrongful discharge, breach of express or implied contract or implied
covenant of good faith and fair dealing, and any other claims arising under
state or federal law, as well as any expenses, costs or attorneys’ fees. Xxxxx
further agrees that Xxxxx will not file or permit to be filed on Xxxxx’x behalf
any such claim. Notwithstanding the preceding sentence or any other provision
of
this Agreement, this release is not intended to interfere with Xxxxx’x right to
file a charge with the Equal Employment Opportunity Commission (the “EEOC”)
in
connection with any claim he believes he may have against the Company or its
affiliates. However, by executing this Agreement, Xxxxx hereby waives the right
to recover in any proceeding Xxxxx may bring before the EEOC or any state human
rights commission or in any proceeding brought by the EEOC or any state human
rights commission on Xxxxx’x behalf. This release shall not apply to any of the
Company’s obligations under this Agreement, or any vested 401(k), retirement
plan, health, medical or dental insurance or continuing benefits or perquisites
to which Xxxxx is entitled under this Agreement or any tax qualified pension
plan of the Company or its affiliates, COBRA continuation coverage benefits
or
any other similar benefits required to be provided by statute. Xxxxx does not
release his right to enforce the terms of this Agreement. Xxxxx acknowledges
that certain of the payments and benefits provided for in Section 2 of this
Agreement constitute good and valuable consideration for the release contained
in this Section 4.
(b) By
the Company.
In
consideration of the mutual promises contained in this Agreement, that being
good and valuable consideration, the receipt, adequacy, and sufficiency which
are acknowledged by the Company, on behalf of itself and all of its
subsidiaries, and their present and former representatives, agents, employees,
officers, directors, attorneys, stockholders, plan fiduciaries, successors
and
assigns, irrevocably and unconditionally releases, waives, and forever
discharges, Xxxxx and his heirs, executors, successors and assigns (the
“Xxxxx
Released Parties”),
jointly and severally, from any and all claims, rights, demands, debts,
obligations, losses, causes of action, suits, controversies, setoffs,
affirmative defenses, counterclaims, third party actions, damages, penalties,
costs, expenses, attorneys’ fees, liabilities and indemnities of any kind or
nature whatsoever, whether known or unknown, suspected or unsuspected, accrued
or unaccrued, whether at law, equity, administrative, statutory or otherwise,
and whether for injunctive relief, or compensatory, punitive or any other kind
of damages, which any of the Released Parties ever have had in the past or
presently have against the Xxxxx Released Parties, and each of them, arising
from or relating to Xxxxx’x employment with the Company or its affiliates or the
termination of that employment or any circumstances related thereto, or any
other matter, cause or thing whatsoever, including without limitation all claims
arising under or relating to employment, employment contracts (including the
Employment Agreement), that do not relate to or arise out of Xxxxx’x xxxxx
negligence or intentional misconduct. This Agreement includes, without
limitation, claims at law or equity or sounding in contract (express or implied)
or tort, claims arising under any federal, state or local laws, or any other
statutory or common law claims related to Xxxxx’x employment or retirement as
Chairman, Chief Executive Officer, Secretary, and Treasurer of the
Company.
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5. Exclusive
Employment; Noncompetition.
(a) No
Conflict; No Other Employment.
Until
the Separation Date, Xxxxx shall not: (i) engage in any activity which
conflicts or interferes with or derogates from the performance of Xxxxx’x duties
hereunder nor shall Xxxxx engage in any other business activity, whether or
not
such business activity is pursued for gain or profit, except as approved in
advance in writing by the Board of Directors of the Company; provided, however,
that Xxxxx shall be entitled to manage his personal investments and otherwise
attend to personal affairs, including charitable activities, in a manner that
does not unreasonably interfere with his responsibilities hereunder, or
(ii) accept any other employment, whether as an executive or consultant or
in any other capacity, and whether or not compensated therefor, unless Xxxxx
receives the prior written approval of the Board of Directors of the Company.
(b) No
Competition.
Xxxxx
acknowledges and recognizes the highly competitive nature of the Company’s
business and that access to the Company’s confidential records and proprietary
information renders him special and unique within the Company’s industry. In
consideration of the termination of the Employment Agreement (which includes
restrictions substantially similar to those provided by this Section 5) and
the
payment by the Company to Xxxxx of amounts that may hereafter be paid to Xxxxx
pursuant to this Agreement and other obligations undertaken by the Company
hereunder, Xxxxx agrees that during (i) his employment with the Company and
(ii) the period beginning on the Separation Date and ending on the last day
of the Severance Period, Xxxxx shall not, directly or indirectly, engage (as
owner, investor, partner, stockholder, employer, employee, consultant, advisor,
director or otherwise) in any Competing Business, provided that the provisions
of this Section 5(b) will not be deemed breached merely because Xxxxx owns
less than 1% of the outstanding common stock of a publicly-traded company.
Additionally, the Company, upon sixty (60) days written notice to Xxxxx shall
have the option subject to Xxxxx’x mutual approval, which shall not be
unreasonably withheld, to extend the No Competition Period for an additional
six
months in return for a six (6) month extension of the Severance Period in
consideration for continued Separation Payments under Section 2(c) hereof and
continued welfare coverage under Section 2(d) hereof during such extended
Severance Period. For purposes of this Agreement, “Competing Business” shall
mean (i) any business in which the Company is engaged as of the Effective
Date in the geographic locations set forth on Schedule
A
hereto,
including without limitation with regard to the businesses of (A) the
development of medical equipment in the hemodiafiltration realm for use in
ESRD
chronic therapy, and (B) the development of cold water purification systems.
(c) Non-Solicitation.
In
further consideration of the termination of the Employment Agreement (which
includes restrictions substantially similar to those provided by this Section
5)
and the payment by the Company to Xxxxx of amounts that may hereafter be paid
to
Xxxxx pursuant to this Agreement and other obligations undertaken by the Company
hereunder, Xxxxx agrees that until the end of the Severance Period, he shall
not, directly or indirectly, (i) solicit, encourage or attempt to solicit or
encourage any of the employees, agents, consultants or representatives of the
Company or any of its affiliates to terminate his, her, or its relationship
with
the Company or such affiliate; (ii) solicit, encourage or attempt to solicit
or
encourage any of the employees of the Company or any of its affiliates to become
employees or consultants of any other person or entity; (iii) solicit, encourage
or attempt to solicit or encourage any of the consultants of the Company or
any
of its affiliates to become employees or consultants of any other person or
entity, provided that the restriction in this clause (iii) shall not apply
if
(A) such solicitation, encouragement or attempt to solicit or encourage is
in
connection with a business which is not a Competing Business and (B) the
consultant’s rendering of services for the other person or entity will not
interfere with the consultant’s rendering of services to the Company; (iv)
solicit or attempt to solicit any customer, vendor or distributor of the Company
or any of its affiliates with respect to any product or service being furnished,
made, sold or leased by the Company or such affiliate, provided that the
restriction in this clause (iv) shall not apply if such solicitation or attempt
to solicit is (A) in connection with a business which is not a Competing
Business and (B) does not interfere with, or conflict with, the interests of
the
Company or any of its affiliates; or (v) persuade or seek to persuade any
customer of the Company or any affiliate to cease to do business or to reduce
the amount of business which any customer has customarily done or contemplates
doing with the Company or such affiliate, whether or not the relationship
between the Company or its affiliate and such customer was originally
established in whole or in part through Xxxxx’x efforts. For purposes of this
Section 5(c) only, the terms “customer,” “vendor” and “distributor” shall mean a
customer, vendor or distributor who has done business with the Company or any
of
its affiliates within twelve months preceding the Separation Date.
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(d) Until
the
end of the Severance Period, Xxxxx agrees that upon the earlier of Xxxxx’x (i)
negotiating with any Competitor (as defined below) concerning the possible
employment of Xxxxx by the Competitor, (ii) receiving an offer of employment
from a Competitor, or (iii) becoming employed by a Competitor, Xxxxx will (A)
immediately provide written notice to the Company (the “Competition Notice”) of
such circumstances and (B) provide copies of Section 5 of this Agreement to
the
Competitor and, at Xxxxx’x discretion, any other Sections and/or subsections of
this Agreement. Xxxxx further agrees that should the Company reasonably consider
Xxxxx’x proposed employment to be in violation of the terms of this Agreement,
the Company may provide notice to a Competitor of Xxxxx’x obligations under this
Agreement, including without limitation Xxxxx’x obligations pursuant to Section
5 hereof, subject to Xxxxx first receiving five (5) days prior written notice
of
Company’s intent to notify any such Competitor and the basis for asserting such
a violation hereof. Xxxxx shall not accept employment with a Competitor until
at
least ten (10) days after the Company receives the Competition Notice with
respect thereto. For purposes of this Agreement, “Competitor” shall mean any
entity (other than the Company or any of its affiliates) that engages, directly
or indirectly, in any Competing Business.
(e) Xxxxx
understands that the provisions of this Section 5 may limit his ability to
earn
a livelihood in a business similar to the business of the Company or its
affiliates but nevertheless agrees and hereby acknowledges that the
consideration provided under this Agreement, including without limitation the
termination of the Employment Agreement, which includes restrictions
substantially similar to those provided by this Section 5, and the other
obligations undertaken by the Company hereunder, is sufficient to justify the
restrictions contained in such provisions. In consideration thereof and in
light
of Xxxxx’x education, skills and abilities, Xxxxx agrees that he will not assert
in any forum that such provisions prevent him from earning a living or otherwise
are void or unenforceable or should be held void or unenforceable.
(f) Xxxxx
shall, prior to the end of the Severance Period and Subsequent thereto, if
necessary, 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.
6. Invention
and Proprietary Property.
(a) Definition
of Proprietary Property.
For
purposes of this Agreement, “Proprietary Property” shall mean designs,
specifications,
ideas,
formulas, discoveries, inventions, improvements, innovations, concepts and
other
developments, trade secrets, techniques, methods, know-how, technical and
non-technical data, works of authorship, computer programs, computer algorithms,
computer architecture, mathematical models, drawings, trademarks, copyrights,
customer lists, marketing plans, and all other matters which are legally
protectable or recognized as forms of property, whether or not patentable or
reduced to practice or to a writing.
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(b) Assignment
of
Proprietary Property to the Company or its Subsidiaries.
Xxxxx
hereby agrees to assign, transfer and set over, and Xxxxx does hereby assign,
transfer and set over, to the Company (or, as applicable, a subsidiary of the
Company), without further compensation, all of Xxxxx’x rights, title and
interest in and to any and all Proprietary Property which Xxxxx, either solely
or jointly with others, has conceived, made or suggested or may hereafter
conceive, make or suggest, in the course of Xxxxx’x employment with the
Company.
The
assignment of Proprietary Property hereunder includes without limitation all
rights of paternity, integrity, disclosure and withdrawal and any other rights
that may be known as or referred to as moral rights (“Moral Rights”). To the
extent that such Moral Rights cannot be assigned under applicable law and to
the
extent the following is allowed by the laws in the various countries where
Moral
Rights exist, Xxxxx hereby waives such Moral Rights and consents to any action
of the Company or any subsidiary of the Company that would violate such Moral
Rights in the absence of such consent. Xxxxx also will endeavor to facilitate
such use of any such Moral Rights as the Company, or, as applicable, a
subsidiary of the Company, shall reasonably instruct, including confirming
any
such waivers and consents from time to time as requested by the Company (or,
as
applicable, a subsidiary of the Company).
(c) Works
for Hire.
Xxxxx
acknowledges that all original works of authorship or other creative works
made
by Xxxxx (solely or jointly with others) within the scope of the employment
of
Xxxxx by the Company and which are protectable by copyright are “works made for
hire,” pursuant to United States Copyright Act (17 U.S.C., Section 101). To the
extent such original work of authorship or other creative works are not works
made for hire, Xxxxx hereby assigns to the Company (or, as directed by the
Company, to a subsidiary of the Company) all of the rights comprised in the
copyright of such works.
(d) Disclosure
of Proprietary Property and Execution of Documents.
Xxxxx
further agrees to promptly disclose to the Company any and all Proprietary
Property which Xxxxx has assigned, transferred and set over or will assign,
transfer and set over as provided in Section 6(b) above, and Xxxxx agrees to
execute, acknowledge
and
deliver to the Company (or, as applicable, to a subsidiary of the Company),
without additional compensation and without expense to Xxxxx, any and all
instruments reasonably requested, and to do any and all lawful acts which,
in
the reasonable judgment of the Company or its attorneys (or, as applicable,
a
subsidiary of the Company or its attorneys) may be required or desirable in
order to vest in the Company or such subsidiary all property rights with respect
to such Proprietary Property.
(e) Enforcement
of Proprietary Rights.
Xxxxx
will assist the Company (or, as applicable, a subsidiary of the Company) in
every proper way to obtain, assign to the Company (or, as directed by the
Company, to a subsidiary), confirm and from time to time enforce, United States
and foreign patent trade secret, trademark, copyright,
mask
work, and other intellectual property rights relating to Proprietary Property
in
any and all countries. To that end Xxxxx will execute, verify and deliver such
documents and perform such other acts (including appearances as a witness)
as
the Company, or, as applicable, a subsidiary of the Company, may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining
and enforcing such proprietary rights and the assignment of such Proprietary
Property. In addition, Xxxxx will execute, verify and deliver assignments of
such Proprietary Property and all rights therein to the Company, its subsidiary
or its or their designee. The obligation of Xxxxx to assist the Company, or,
as
applicable, a subsidiary of the Company, with respect to proprietary rights
relating to such Proprietary Property in any and all countries shall continue
beyond the termination of employment, but the Company, or as applicable, a
subsidiary of the Company, shall compensate Xxxxx at a mutually agreed upon
fee,
in addition to any expenses, after such termination.
7
In
the
event the Company, or, as applicable, a subsidiary of the Company, is unable
for
any reason, after reasonable effort, to secure the signature of Xxxxx on any
document needed in connection with the actions specified in the preceding
paragraph, Xxxxx hereby irrevocably designates and appoints the Company and
its
duly authorized officers and agents as agent and attorney in fact, which
appointment is coupled with an interest, to act for and on behalf of Xxxxx,
to
execute, verify and file any such documents and to do all other lawfully
permitted acts to further the purposes of the preceding paragraph with the
same
legal force and effect as if executed by Xxxxx. Xxxxx hereby waives and
quitclaims to the Company or, as applicable, a subsidiary of the Company, any
and all claims, of any nature whatsoever, which Xxxxx now or may hereafter
have
for infringement of any proprietary rights assigned hereunder to the Company
or
such subsidiary.
(f) Third
Party Information.
To the
extent Xxxxx has or possesses any Confidential Information (as hereinafter
defined) belonging to Xxxxx or to others, Xxxxx shall not use or disclose to
the
Company or its subsidiaries or induce the Company or its subsidiaries to use
any
such Confidential Information unless the Company or its subsidiaries have a
legal rights to use such Confidential Information. Xxxxx will promptly advise
the Company in writing if any of Xxxxx’x involvement with the Company or any
subsidiary of the Company might result in the possible violation of Xxxxx’x
undertakings to others or the use of any Confidential Information of Xxxxx
or of
others.
7. Confidential
Information.
(a) Existence
of Confidential Information.
The
Company and its subsidiaries own and have developed and compiled, and the
Company and its subsidiaries will develop and compile during the Transition
Period, certain proprietary techniques and confidential information, which
have
and will have great value to their businesses (referred to in this Agreement,
collectively, as “Confidential Information”). Confidential Information includes
not only information disclosed by the Company (or, as applicable, a subsidiary
of the Company) to Xxxxx, but also information developed or learned by Xxxxx
during the course or as a result of employment with the Company, which
information shall be the property of the Company or, as applicable, such
subsidiary. Confidential Information includes all information that has or could
have commercial value or other utility in the business in which the Company
or
any of its subsidiaries is engaged or contemplates engaging, and all information
of which the unauthorized disclosure could be detrimental to the interests
of
the Company or its subsidiary, whether or not such information is specifically
labeled as Confidential Information by the Company or such subsidiary. By way
of
example and without limitation, Confidential Information includes any and all
information developed, obtained, licensed by or owned by the Company or any
of
its subsidiaries concerning trade secrets, techniques, know-how (including
designs, plans, procedures, merchandising, marketing, distribution and
warehousing know-how, processes, and research records), software, computer
programs and designs, development tools, all Proprietary Property, and any
other
intellectual property created, used or sold (through a license or otherwise)
by
the Company or any of its subsidiaries, electronic data information know-how
and
processes, innovations, discoveries, improvements, research, development, test
results, reports, specifications, data, formats, marketing data and plans,
business plans, strategies, forecasts, unpublished financial information,
orders, agreements and other forms of documents, price and cost information,
merchandising opportunities, expansion plans, budgets, projections, customer,
supplier, licensee, licensor and subcontractor identities, characteristics,
agreements and operating procedures, and salary, staffing and employment
information. Confidential Information shall not include any information once
it
has been disclosed to the public or becomes part of the public domain other
than
as a result of any breach hereof by Xxxxx.
8
(b) Protection
of Confidential Information.
Xxxxx
acknowledges and agrees that in the performance of Xxxxx’x duties under the
Employment Agreement as well as his continuing duties hereunder, the Company
or
a subsidiary of the Company may have disclosed to and entrusted, or during
the
Transition Period may disclose to and entrust, Xxxxx with Confidential
Information which is the exclusive property of the Company or such subsidiary
and which Xxxxx may possess or use only in the performance of Xxxxx’x duties to
the Company. Xxxxx also acknowledges that Xxxxx is aware that the unauthorized
disclosure of Confidential Information, among other things, may be prejudicial
to the Company’s or its subsidiaries’ interests, an invasion of privacy and an
improper disclosure of trade secrets. Xxxxx shall not, directly or indirectly,
use, make available, sell, disclose or otherwise communicate to any corporation,
partnership or other entity, individual or other third party, other than in
the
course of Xxxxx’x assigned duties and for the benefit of the Company, any
Confidential Information, either before the Separation Date or
thereafter.
8. Return
of the Company Property.
Within
seven (7) days of the Separation Date, Xxxxx shall, to the extent not previously
returned or delivered: (a) return all equipment, records, files, programs
or other materials and property in his possession which belongs to the Company
or any one or more of its affiliates, including, without limitation, all,
computer access codes, Blackberries, credit cards, keys and access cards, except
as otherwise stated in this Section; and (b) deliver all original and copies
of
notes, materials, records, plans, technical data or other documents, files
or
programs (whether stored in paper form, computer form, digital form,
electronically or otherwise), other than this Agreement and copies of this
Agreement, that relate or refer to (1) the Company or any one or more of its
affiliates, or (2) the Company or any one or more of the Company’s
affiliates’ financial statements, business contacts, and sales. By signing this
Agreement, Xxxxx represents and warrants that he has not retained and has or
will timely return and deliver all the items described or referenced in
subsections (a) or (b) above; and, that should he later discover additional
items described or referenced in subsections (a) or (b) above, he will promptly
notify the Company and return/deliver such items to the Company. Before Xxxxx
returns any computers, Blackberry, personal digital assistant or other
electronic storage device, Xxxxx may delete any personal information. The
desktop and laptop computers used by and in the possession of Xxxxx (the “Xxxxx
Computers”) shall remain the property of Xxxxx. With respect to Company
information contained in the Xxxxx Computers, Xxxxx shall delete any such
Company information, after first providing the Company with a copy of such
Company information, while retaining his personal information. The desk created
by Xxxxx and maintained in his office at the Company is Xxxxx’x property and may
be removed by him.
9. Material
Breach of Agreement.
(a)
In
the event Xxxxx knowingly fails to materially fulfill any of his obligations
in
this Agreement during the Severance Period,
or
Xxxxx or anyone acting on his behalf brings suit against the Company seeking
to
declare any term of this Agreement void or unenforceable and if one or more
material terms of this Agreement are ruled by a court or arbitrator to be void
or unenforceable or subject to reduction or modification, then
the
Company shall be entitled to (i) terminate
the Agreement, (ii) terminate any remaining Separation Payments set forth in
Section 2, and Xxxxx will not be entitled to receive any remaining Separation
Payments, (iii) recover attorneys’ fees, expenses and costs the Company
incurs in any such action, and/or (iv) recover any and all other relief and
damages to which the Company may be entitled at law or in equity as a result
of
a breach of this Agreement. Among other things, any breach of Sections 5, 6
or 7
of this Agreement shall be deemed a Material Breach of this Agreement
immediately, if not susceptible to cure, or if uncured for seven (7) days after
notice thereof has been delivered to Xxxxx
(b)
In
the event Company knowingly fails to materially fulfill any of its obligations
in this Agreement during the Transition Period and/or Severance Period,
or
Company or anyone acting on its behalf brings suit against Xxxxx seeking to
declare any term of this Agreement void or unenforceable and if one or more
material terms of this Agreement are ruled by a court or arbitrator to be void
or unenforceable or subject to reduction or modification, then
Xxxxx shall be entitled to (i) terminate
the Agreement, (ii) continue to receive any remaining Transition Payments,
Separation Payments and other benefits to which he is entitled pursuant to
Section 2 of this Agreement, (iii) terminate the exclusive employment and
noncompetition provisions of Section 5 of this Agreement, (iv) recover
attorneys’ fees, expenses and costs Xxxxx incurs in any such action, and/or
(v) recover any and all other relief and damages to which the Xxxxx may be
entitled at law or in equity as a result of a breach of this Agreement.
Nonpayment of Transition Payments, Separation Payments, and/or any other
benefits to be paid to Xxxxx under Section 2 shall be deemed a Material Breach
of this Agreement if uncured for seven (7) days after notice thereof has been
delivered to the Company.
9
10. Mutual
Non-Disparagement.
(a) Xxxxx
agrees that he will not, directly
or
indirectly, disclose, communicate, or publish any disparaging information
concerning the Company, its affiliates, its officers and directors, its
customers or clients, operations, technology, proprietary or technical
information, or software whatsoever, or cause others to disclose, communicate,
or publish any disparaging information concerning the same. Xxxxx further agrees
that he will not disclose, directly or indirectly, communicate, or publish
any
disparaging information concerning the terms of his employment
with the
Company, any other circumstance that arose from his employment with the Company
or separation from employment, or any action or event that occurred during
his
employment with the Company, or cause others to disclose, communicate,
or
publish any disparaging information concerning the same;
(b) The
Company, including its officers and directors, agrees that it will not, directly
or indirectly, disclose, communicate, or publish any disparaging information
concerning Xxxxx, or cause others to disclose, communicate, or publish any
disparaging information concerning the same. The Company further agrees that
it
will not disclose, directly or indirectly, communicate, or publish any
disparaging information concerning the terms of Xxxxx’x employment with the
Company or separation from employment, any other circumstance that arose from
Xxxxx’x employment with the Company, or any action or event that occurred during
Xxxxx’x employment with the Company, or cause others to disclose, communicate,
or publish any disparaging information concerning the same.
11. Not
An Admission of Wrongdoing.
This
Agreement shall not in any way be construed as an admission by any party of
any
acts of wrongdoing, violation of any statute, law or legal or contractual
right.
12. Entire
Agreement. This
Agreement (including all exhibits hereto) contains the entire agreement and
understanding between the Parties in respect of Xxxxx’x employment, termination
and related issues and supersedes, cancels and annuls any prior or
contemporaneous written or oral agreements, understandings, commitments and
practices between them respecting Xxxxx’x employment, termination and related
issues, including the Employment Agreement and all similar agreements, if any,
between the Company and Xxxxx, which agreements are hereby terminated and shall
be of no further force or effect.
13.
Voluntary Execution of the Agreement.
Xxxxx
and the Company represent and agree that they have had an opportunity to review
all aspects of this Agreement, and that they fully understand all the provisions
of the Agreement and are voluntarily entering into this Separation Agreement
and
the General Release. Xxxxx further represents that he has not transferred or
assigned to any person or entity any claim involving the Company or any portion
thereof or interest therein.
14. Binding
Effect.
This
Agreement shall be binding upon the Company and upon Xxxxx and his heirs,
administrators, representatives, executors, successors and assigns. In the
event
of Xxxxx’x death, this Agreement shall operate in favor of his estate and all
payments, obligations and consideration will continue to be performed in favor
of his estate.
10
15. Severability.
Should
any provision of this Agreement be declared or determined to be illegal or
invalid by any government agency or court of competent jurisdiction, the
validity of the remaining parts, terms or provisions of this Agreement shall
not
be affected and such provisions shall remain in full force and
effect.
16. Entire
Agreement.
This
Agreement sets forth the entire agreement between the parties, and fully
supersedes any and all prior agreements, understandings, or representations
(written or oral) between the parties pertaining to Xxxxx’x employment with the
Company, the subject matter of this Agreement or any other term or condition
of
the relationship between the Company and Xxxxx including the Employment
Agreement. Xxxxx represents and acknowledges that in executing this Agreement,
he does not rely, and has not relied, upon any representation(s) by the Company
or its agents except as expressly contained in this Agreement.
17. Knowing
and Voluntary Waiver.
Xxxxx,
by Xxxxx’x free and voluntary act of signing below, (i) acknowledges that he was
provided with an initial draft of this Agreement on September 5, 2008 and has
been given a period of twenty-one (21) days to consider whether to agree to
the
terms contained herein, (ii) acknowledges that he has been advised to consult
with an attorney prior to executing this Agreement, (iii) acknowledges that
he
understands that this Agreement specifically releases and waives all rights
and
claims he may have under the Age Discrimination in Employment Act, as amended,
prior to the date on which he signs this Agreement, and (iv) agrees to all
of
the terms of this Agreement and intends to be legally bound thereby. The parties
hereto acknowledge and agree that each party has reviewed and negotiated the
terms and provisions of this Agreement and has contributed to its preparation
(with advice of counsel). Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor of or
against either party, regardless of which party generally was responsible for
the preparation of this Agreement.
Xxxxx
understands and acknowledges that he has seven (7) days after he executes this
Agreement to revoke the release of his claims under the ADEA. During this
seven-day revocation period, Xxxxx may revoke his agreement to release claims
under the ADEA by indicating in writing to the Company his intention to revoke.
If Xxxxx exercises his right to revoke such release, he shall forfeit his right
to receive any of the payments or benefits provided for herein, and to the
extent such payments or benefits have already been made, Xxxxx agrees that
he
will immediately reimburse the Company for the amounts of such payments and
benefits.
18. Notices.
Any
notice, request, consent or approval required or permitted to be given under
this Agreement or pursuant to law shall be sufficient if in writing, and if
and
when sent by certified or registered mail, return receipt requested, with
postage prepaid, or by overnight courier: if to Xxxxx, to Xxxxx’x at 00 Xxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, or as otherwise designated by Xxxxx, with
a
copy (which shall not constitute notice) to Xxxxxxxxx & Xxxxxxx, LLC, 0000
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000, attention: Xxxxxx
X.
Xxxxxxxxx, Esq.; or, if to the Company, to the Company’s principal executive
office, attention: Chairman of the Compensation Committee of the Board of
Directors, with a copy (which shall not constitute notice) to Xxxxxx and Xxxxx,
LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, attention: Xxxxx X.
Xxxxxxxx, Esq. All such notices, requests, consents and approvals shall be
effective upon being deposited in the United States mail or with the overnight
courier service, as applicable. However, the time period in which a response
thereto must be given shall commence to run from the date of receipt on the
return receipt of the notice, request, consent or approval by the addressee
thereof. Intentional rejection or other refusal to accept, or the inability
to
deliver because of changed address of which no notice was given as provided
herein, shall be deemed to be receipt of the notice, request, consent or
approval sent. Any party may change the address to which notices and other
communications are to be delivered by giving the other party notice in
accordance with this Section
18.
11
19. Governing
Law.
This
Agreement shall in all respects be interpreted, enforced, and governed under
the
laws of the State of New York. The Company and Xxxxx agree that the language
on
this Agreement shall, in all cases, be construed as a whole, according to its
fair meaning, and not strictly for, or against, any of the parties.
20. Consent
to Jurisdiction; Waiver of Jury Trial.
Each of
the parties hereby irrevocably and unconditionally consents to the exclusive
jurisdiction of any federal or state court of New York sitting in New York
County and irrevocably agrees that all actions or proceedings arising out of
or
relating to this Agreement or the transactions contemplated hereby shall be
litigated exclusively in such Courts. Each of the parties agrees not to commence
any legal proceeding related hereto except in such Courts. Each of the parties
irrevocably waives any objection which it may now or hereafter have to the
laying of the venue of any such proceeding in any such Court and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any
such Court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of the parties irrevocably
waives any right it may have to a trial by jury in any such action, suit or
proceeding. Each of the parties agrees that the prevailing party in any action
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby shall be entitled to recover its reasonable fees and
expenses in connection therewith, including legal fees.
21. Counterparts.
This
Agreement may be executed in counterparts, each of which when executed and
delivered (which deliveries may be by facsimile) shall be deemed an original
and
all of which together shall constitute one and the same instrument.
22. No
Assignment Of Claims.
Each of
the Company and Xxxxx represents to the other that it has not transferred or
assigned, to any person or entity, any claim involving the other party, the
Employment Agreement or Xxxxx’x employment by the Company, or any portion
thereof or interest therein.
23. Assignment
and Transfer.
(a) Company.
This
Agreement shall inure to the benefit of and be enforceable by, and may be
assigned by the Company to, any purchaser of all or substantially all of the
Company’s business or assets, any successor to the Company or any assignee
thereof (whether direct or indirect, by purchase, merger, consolidation or
otherwise) and shall thereafter become binding upon such purchasers, successors
and/or assignees of the Company.
(b) Xxxxx.
Xxxxx’x
rights and obligations under this Agreement shall not be transferable by Xxxxx
by assignment or otherwise, and any purported assignment, transfer or delegation
thereof shall be void; provided, however, that if Xxxxx shall die, all amounts
then payable to Xxxxx hereunder shall be paid in accordance with the terms
of
this Agreement to Xxxxx’x devisee, legatee or other designee or, if there be no
such designee, to Xxxxx’x estate.
24. Cooperation.
Following the Effective Date (including during the Transition Period), the
parties hereto shall cooperate with each other, as reasonably requested by
the
other party , to effect a transition of Xxxxx’x responsibilities and to ensure
that the Company is aware of all matters being handled by Xxxxx and to
effectuate the consideration being paid to Xxxxx during the Transition Period
and the Severance Period.
25. No
Amendment/Waiver.
This
Agreement may not be amended or modified in any manner nor may any of its
provisions be waived except by written amendment executed by the parties. A
waiver, modification or amendment by a party shall only be effective if (a)
it
is in writing and signed by the parties, (b) it specifically refers to this
Agreement and (c) it specifically states that the party, as the case may be,
is
waiving, modifying or amending its rights hereunder. Any such amendment,
modification or waiver shall be effective only in the specific instance and
for
the specific purpose for which it was given.
12
26. Remedies
for Breach.
The
parties hereto agree that Xxxxx is obligated under this Agreement to render
personal services during the Transition Period and the Severance Period of
a
special, unique, unusual, extraordinary and intellectual character, thereby
giving this Agreement special value, and, in the event of a breach or threatened
breach of any covenant of Xxxxx herein, the injury or imminent injury to the
value and the goodwill of the Company’s and its subsidiaries’ businesses could
not be reasonably or adequately compensated in damages in an action at law.
Accordingly, Xxxxx acknowledges that the Company (and as applicable, one or
more
of its subsidiaries) shall be entitled to seek injunctive relief or any other
equitable remedy against Xxxxx in the event of a breach or threatened breach
of
Sections 5, 6 or 7 of this Agreement. The rights and remedies of Xxxxx and
the
Company are cumulative and shall not be exclusive, and each of Xxxxx and the
Company shall be entitled to pursue all legal and equitable rights and remedies
and to secure performance of the obligations and duties of the other under
this
Agreement, and the enforcement of one or more of such rights and remedies by
Xxxxx or the Company shall in no way preclude such party from pursuing, at
the
same time or subsequently, any and all other rights and remedies available
to
it.
27. Survival.
Cessation or termination of Xxxxx’x employment with the Company upon the
Separation Date or otherwise shall not result in termination of this Agreement.
The respective obligations, rights and benefits of Xxxxx and the Company, as
provided in this Agreement, including, without limitation, Sections 5, 6 and
7
hereof, shall survive cessation or termination of Xxxxx’x employment hereunder
or termination of this Agreement; provided,
however,
that
Section
5
hereof
may be terminated under certain circumstances in accordance with Section 9(b)
hereof.
28. Acknowledgments
by the Company.
The
Company acknowledges that (i) this Agreement is not a fraudulent transfer
as described in 11 U.S.C. § 548; (ii) the Company and Xxxxx are entering into
this Agreement in good faith and in the ordinary course of business; (iii)
by
entering into this Agreement, the Company does not intend to hinder, delay,
or
defraud any creditors of either the Company or both; and, (iv) the Company
received at least a reasonably equivalent value in exchange for its obligations
hereunder.
[Remainder
of Page Intentionally Left Blank]
13
I
ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT,
THAT I UNDERSTAND ALL OF ITS TERMS AND THAT I AM RELEASING CLAIMS AND
THAT I AM ENTERING INTO IT VOLUNTARILY.
THAT I UNDERSTAND ALL OF ITS TERMS AND THAT I AM RELEASING CLAIMS AND
THAT I AM ENTERING INTO IT VOLUNTARILY.
AGREED
TO
BY:
| /s/ Xxxxxx X. Xxxxx | 9-16-2008 | ||
| Xxxxxx X. Xxxxx | Date |
STATE
OF
NEW JERSEY
COUNTY
OF
XXXXXX
Before
me, a Notary Public, on this day personally appeared XXXXXX X. XXXXX, known
to
me to be the person whose name is subscribed to the foregoing instrument, and
acknowledges to me that he has executed this Agreement on behalf of himself
and
his heirs, for the purposes and consideration therein expressed.
Given
under my hand and seal of office this 16th
day of
September,
2008.
| /s/ | |
| Notary Public in and for the State of New Jersey |
(PERSONALIZED
SEAL)
NEPHROS,
INC.
| By: | /s/ Xxxxxx X. Xxxxxxxxx | 9-15-2008 | ||
| Name: Xxxxxx X. Xxxxxxxxx | Date | |||
| Title: V.P. & CFO |
STATE
OF
NEW YORK
COUNTY
OF
NEW YORK
Before
me, a Notary Public, on this day personally appeared Xxxxxx
X. Xxxxxxxxx,
known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of NEPHROS, INC.,
and that he has executed the same on behalf of said corporation for the purposes
and consideration therein expressed, and in the capacity therein
stated.
Given
under my hand and seal of office this 15th
day of
September,
2008.
| /s/ | |
| Notary Public in and for the State of New York |
(PERSONALIZED
SEAL)
EXHIBIT
A
__________________,
2008
Nephros,
Inc.
| ATTN: | |||
I
hereby
resign from the Board of Directors of Nephros, Inc. (the “Company”),
and
resign my positions as Chairman of the Board, President, Chief Executive
Officer, Secretary and Treasurer with the Company, and all other officer,
director and employee positions of the Company and its subsidiaries and
affiliates, other than the Transition Role (as defined in the Separation
Agreement between the Company and me, as previously presented to me), effective
immediately.
Sincerely,
Xxxxxx
X.
Xxxxx
SCHEDULE
A
ESRD
Therapy:
United
States
European
Union
Japan
Water
Filtration:
United
States
European
Union
Japan
