EMPLOYMENT AGREEMENT
This
EMPLOYMENT
AGREEMENT (this
“Agreement”), made in New York, New York as of the 1st day of April 2008 (the
“Effective Date”), between Nephros, Inc., a Delaware corporation having its
executive offices and principal place of business at 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (the “Company”), and Xxxxxx Xxxxxxxxx (“Executive”).
RECITALS
WHEREAS,
the Company desires to employ Executive, and Executive desires to accept such
employment on the terms and conditions hereinafter set forth:
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, the Company and Executive agree as follows:
1. Term.
The
term of this Agreement shall be the period commencing on the date first written
above, and ending on March 31, 2011 (the “Expiration Date,” and collectively,
the “Term”). Each period of April 1 through March 31 shall hereinafter be
designated a “Term Year”. Your employment shall be on an “at-will” basis,
subject to the terms of this Agreement.
2. Employment.
2.1 Employment
by the Company.
Executive agrees to be employed by the Company during the Term upon the terms
and subject to the conditions set forth in this Agreement. Executive shall
serve
as Vice President and Chief Financial Officer (CFO), reporting to the Chairman
and CEO of the Company (the "CEO"), and shall have such duties as may be
prescribed by the CEO and the Board of Directors from time to time and which
are
commonly performed by CFOs of similar sized companies conducting similar
business, such as, but not limited to, corporate planning and oversight of
the
financial functions of the organization.
2.2 Performance
of Duties.
Throughout the Term, Executive shall faithfully and diligently perform
Executive's duties in conformity with the directions of the CEO and serve the
Company to the best of Executive's ability. Executive shall devote Executive's
entire working time to the business and affairs of the Company, subject to
vacations and sick leave in accordance with Company policy and as otherwise
permitted herein.
2.3 Place
of Performance.
During
his employment with the Company, Executive will work at the Company's offices
in
New York, New York, as necessary or appropriate, or at such other location
in
the greater New York City area as the Company may determine. Throughout the
Term, Executive agrees to maintain Executive's personal residence within
reasonable access to Executive's place of employment. Executive recognizes
that
his duties will require, from time to time and at the Company's expense (subject
to Section 3.7 below), travel to domestic and international
locations.
3. Compensation
and Benefits.
3.1 Base
Salary.
The
Company agrees to pay to Executive a base salary ("Base Salary") at the annual
rate of $185,000 payable in equal installments consistent with the Company's
payroll practices. For the first year of your employment, Nephros will pay
Executive a non-accountable commuting allowance of $10,000. This amount will
be
paid after completing 12 months of employment, in accordance with the Company’s
regular payroll practices. In addition, The Company will also pay up to $10,000
of moving costs since it is expected that you will relocate at a future date.
The Compensation Committee (the “Compensation Committee”) of the Board (or the
independent members of the Board, if there is no Compensation Committee) shall
review the Executive’s Base Salary annually and shall determine whether such
Base Salary should be increased but not decreased, which decision shall be
within the Compensation Committee’s sole discretion.
Performance
Bonus.
The
target discretionary bonus is 20%
of
annual base salary, as determined by the Company in its sole discretion. You
are
eligible to receive this bonus for the period from start date to December 31,
2008 on a pro-rated basis. The bonus amount will be based in part on attainment
of personal objectives as determined by the Executive and CEO, and based in
part
on the Company achieving overall corporate targets.
3.2 Grant
of Options and Terms Thereof.
Upon
execution of this Agreement, the Company shall grant to Executive a one-time
option (the "Option"), pursuant to the Nephros 2004 Stock Incentive Plan or
successor plans, if applicable, to purchase 250,000 shares of the Company's
common stock (the "Option Shares"), subject to vesting and forfeiture as
described in the Schedule
A.
3.3 Benefits
and Perquisites.
Executive shall be entitled to participate in, to the extent Executive is
otherwise eligible under the terms thereof, the benefit plans and programs,
and
receive the benefits and perquisites, generally provided to the Company’s
eligible employees. The Executive shall be entitled to receive four weeks of
annual paid vacation.
3.4 Travel
and Business Expenses.
Upon
submission of itemized expense statements in the manner specified by the
Company, Executive shall be entitled to reimbursement for reasonable travel
and
other reasonable business expenses duly incurred by Executive in the performance
of Executive's duties under this Agreement in accordance with the policies
and
procedures established by the Company from time to time for executives of the
same level and responsibility as Executive.
3.5 No
Other Compensation or Benefits; Payment.
The
compensation and benefits specified in this Section 3 and in Section 4 of this
Agreement shall be in lieu of any and all other compensation and benefits.
Payment of all compensation and benefits to Executive hereunder shall be made
in
accordance with the relevant Company policies in effect from time to time to
the
extent the same are consistently applied, including normal payroll practices,
and shall be subject to all applicable employment and withholding taxes and
other withholdings.
3.6 Cessation
of Employment.
In the
event Executive shall cease to be employed by the Company for any reason, then
Executive's compensation and benefits shall cease on the date of such event,
except as otherwise provided herein or in any applicable employee benefit plan
or program.
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4. Termination
of Employment.
4.1 Termination.
The
Company may terminate Executive's employment for Cause (as defined below),
in
which case the provisions of Section 4.2 of this Agreement shall apply. The
Company may also terminate Executive's employment in the event of Executive's
Disability (as defined below), in which case the provisions of Section 4.4
of
this Agreement shall apply. The Company may also terminate Executive's
employment for any other reason by written notice to Executive, in which case
the provisions of Section 4.5 of this Agreement shall apply. If Executive's
employment is terminated by reason of Executive's death, retirement or voluntary
resignation, the provisions of Section 4.3 of this Agreement shall
apply.
4.2 Termination
for Cause.
In the
event that Executive's employment hereunder is terminated during the Term by
the
Company for Cause (as defined below), then the Company shall pay to Executive
only the (i) accrued, but unpaid Base Salary for services rendered through
the
date of termination, and (ii) any Milestone Bonuses due and payable under the
terms of this Agreement through such date of termination (collectively, the
“Accrued Obligations”), which Milestone Bonuses shall be paid at the same time
as provided under Section 3.2 hereof and any and all unvested Options shall
automatically be cancelled and forfeited by the Executive as of the date of
termination. Executive shall have the right to exercise any and all vested
Options within the period commencing on the date of termination and ending
ninety days after the date of such termination (the “Options Exercise Period”).
Any Options not exercised by Executive 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. For purposes of this Agreement, "Cause" shall mean (i) conviction
of any crime (whether or not involving the Company) constituting a felony in
the
jurisdiction involved; (ii) engaging in any act which, in each case, subjects,
or if generally known would subject, the Company to public ridicule or
embarrassment; (iii) gross neglect or misconduct in the performance of
Executive's duties hereunder; or (iv) material breach of any provision of this
Agreement by Executive; provided, however, that with respect to clauses (iii)
or
(iv), Executive shall have received written notice from the Company setting
forth the alleged act or failure to act constituting "Cause" hereunder, and
Executive shall not have cured such act or refusal to act within 10 business
days of his actual receipt of notice.
4.3 Termination
by Reason of Death or Retirement or Voluntary Resignation.
In the
event that Executive's employment hereunder is terminated during the Term (x)
by
reason of Executive's death, or (y) by reason of Executive's voluntary
resignation or retirement, then the Company shall pay to Executive only the
(i)
accrued, but unpaid Base Salary for services rendered through the date of
termination, and (ii) any Milestone Bonuses due and payable under the terms
of
this Agreement through such date of termination and those that become due and
payable within 90 days of such date of termination, which Milestone Bonuses
shall be paid at the same time as provided under Section 3.2 hereof. Any and
all
unvested Options shall automatically be cancelled and forfeited by the Executive
as of the date of Executive's death or Executive's voluntary resignation or
retirement, except upon exercise of Executive’s Change of Control Termination
Option. Executive shall have the right to exercise any and all vested Options
within the period commencing on the date of termination and ending ninety days
after the date of such termination (the “Options Exercise Period”). Any Options
not exercised by Executive 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.
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4.4 Disability.
If, as
a result of Executive's incapacity due to physical or mental illness, Executive
shall have failed to perform Executive's duties hereunder on a full time basis
for either (i) one hundred twenty (120) days within any three hundred sixty-five
(365) day period, or (ii) ninety (90) consecutive days, the Company may
terminate Executive's employment hereunder for "Disability". In that event,
the
Company shall pay to Executive only the accrued, but unpaid, Base Salary for
services rendered through such date of termination. Any and all unvested Options
shall be cancelled as of the date of termination. During any period that
Executive fails to perform Executive's duties hereunder as a result of
incapacity due to physical or mental illness (a "Disability Period"), Executive
shall continue to receive the compensation and benefits provided by Section
3 of
this Agreement until Executive's employment hereunder is terminated; provided,
however, that the amount of compensation and benefits received by Executive
during the Disability Period shall be reduced by the aggregate amounts, if
any,
payable to Executive under disability benefit plans and programs of the Company
or under the Social Security disability insurance program. Additionally, the
vesting of the Executive’s Options shall be tolled during the Disability Period
and in the event of a termination of this Agreement as a result of the
Executive’s Disability, any and all unvested Options shall automatically be
cancelled and forfeited by the Executive as of the date of such termination.
Executive (or as applicable, his spouse or estate) shall have the right to
exercise any and all vested Options within the period commencing on the date
of
termination and ending ninety days after the date of such termination (the
“Options Exercise Period”). Any Options not exercised by Executive 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.
4.5 Termination
by Company for Any Other Reason.
In the
event that Executive's employment hereunder is terminated by the Company prior
to the expiration of the Term for any reason other than as provided in Sections
4.2, 4.3 or 4.4 of this Agreement, any and all unvested Options shall
automatically be cancelled and forfeited by the Executive as of the date of
such
termination and the Company shall pay to Executive:
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(i)
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any
accrued, but unpaid Base Salary for services rendered through such
date of
termination;
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(ii)
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the
continued payment of the Base Salary, in the amount as of the date
of
termination, for a period (the “Severance Term”) consisting of the lesser
of (x) the Maximum Severence Period (as defined below), or (y) the
remaining term of the contract from the date of termination, such
payments
to be made at the times such Base Salary would have been paid had
Executive’s employment not
terminated.
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As
used
herein, the “Maximum Severence Period” shall mean three months, until Executive
has been employed hereunder for at least one year, and, thereafter, shall mean
six months.
Notwithstanding
anything to the contrary contained herein, in the event that Executive shall
breach Sections 5, 6 or 7 of this Agreement at any time, in addition to any
other remedies the Company may have in the event Executive breaches this
Agreement, the Company's obligation under clauses (i) and (ii) of this Section
4.5 shall cease and Executive's rights thereto shall terminate and shall be
forfeited.
4.6 Release.
Except
for any Accrued Obligations, the severance payments described in Section 4.5
will be provided to Executive only if the following conditions are satisfied:
(i) Executive agrees to continue to be bound by and complies with all surviving
provisions of the confidentiality and/or non-compete provisions of this
Agreement; and (ii) Executive executes and delivers to the Company, and does
not
revoke, a full general release, in a form acceptable to the Company, releasing
all claims, known or unknown, that Executive may have against the Company,
and
any subsidiary or related entity, their officers, directors, employees and
agents, arising out of or any way related to Executive’s employment or
termination of employment with the Company.
4.7 Notwithstanding
the due date of any post-employment payments, if at the time of the termination
of employment the executive is a “specified employee” (as defined in Section
409Aof the Internal Revenue Code of 1986, as amended) as determined by the
Compensation Committee of the Board, Executive will not be entitled to any
payments upon termination of employment until the earlier of (i) the date which
is six (6) months after the termination of employment for any reason other
than
death or (ii) the date of the Executive’s death. The provisions of this
paragraph will only apply if and to the extent required to avoid any “additional
tax” under Section 409A.
4.8 Termination
by Executive.
In the
event that Executive's employment hereunder is terminated by Executive prior
to
the expiration of the Term for any reason other than Executive’s exercise of the
Change of Control Termination Option (as defined in Section 8.1), Executive
shall be entitled to receive the same payments and other treatment as if the
Company had terminated Executive’s employment hereunder for Cause, as provided
for in Section 4.2.
5. Exclusive
Employment; Noncompetition.
5.1 No
Conflict; No Other Employment.
During
the period of Executive's employment with the Company, Executive shall not:
(i)
engage in any activity which conflicts or interferes with or derogates from
the
performance of Executive's duties hereunder nor shall Executive 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 Executive 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 Executive receives the prior written
approval of the Board of Directors of the Company.
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5.2 No
Competition.
Executive 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 payment by the Company to Executive of amounts
that may hereafter be paid to Executive pursuant to this Agreement (including,
without limitation, pursuant to Sections 3 and 4 hereof) and other obligations
undertaken by the Company hereunder, Executive agrees that during (i) his
employment with the Company and (ii) the period beginning on the date of
termination of employment for any reason and ending on the last day of the
Severance Term as defined in Section 4.5(iii), Executive 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 5.2 will not be deemed breached
merely because Executive owns less than 1% of the outstanding common stock
of a
publicly-traded company. Additionally, the Company shall have the option to
extend the No Competition Period for an additional six months in return for
a
six-month extension of the Severance Term. For purposes of this Agreement,
“Competing Business” shall mean (i) any business in which the Company is
currently engaged anywhere in the world, including but not limited to (A) the
development of medical equipment in the hemodiafiltration realm for use in
ESRD
chronic therapy, and (B) the development of cold water or air purification
systems.
5.3 Non-Solicitation.
In
further consideration of the payment by the Company to Executive of amounts
that
may hereafter be paid to Executive pursuant to this Agreement (including,
without limitation, pursuant to Sections 3 and 4 hereof) and other obligations
undertaken by the Company hereunder, Executive agrees that during his employment
and the Post-Employment 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 Executive’s efforts. For purposes of
this Section 5.3 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 termination of
Executive’s employment.
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5.4 During
Executive’s employment with the Company and during the Severance Term, Executive
agrees that upon the earlier of Executive’s (i) negotiating with any Competitor
(as defined below) concerning the possible employment of Executive by the
Competitor, (ii) receiving an offer of employment from a Competitor, or (iii)
becoming employed by a Competitor, Executive will (A) immediately provide
written notice to the Company of such circumstances and (B) provide copies
of
Section 5 of this Agreement to the Competitor. Executive further agrees that
the
Company may provide notice to a Competitor of Executive’s obligations under this
Agreement, including without limitation Executive’s obligations pursuant to
Section 5 hereof. 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.
5.5 Executive
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 any amounts or benefits
provided under Sections 3 and 4 hereof and other obligations undertaken by
the
Company hereunder, is sufficient to justify the restrictions contained in such
provisions. In consideration thereof and in light of Executive’s education,
skills and abilities, Executive 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.
6. Inventions
and Proprietary Property.
6.1 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.
6.2 Assignment
of Proprietary Property to the Company or its Subsidiaries.
Executive hereby agrees to assign, transfer and set over, and Executive does
hereby assign, transfer and set over, to the Company (or, as applicable, a
subsidiary of the Company), without further compensation, all of Executive's
rights, title and interest in and to any and all Proprietary Property which
Executive, either solely or jointly with others, has conceived, made or
suggested or may hereafter conceive, make or suggest, in the course of
Executive's 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, Executive 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. Executive 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).
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6.3 Works
for Hire.
Executive acknowledges that all original works of authorship or other creative
works which are made by Executive (solely or jointly with others) within the
scope of the employment of Executive 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, Executive 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.
6.4 Disclosure
of Proprietary Property and Execution of Documents.
Executive further agrees to promptly disclose to the Company any and all
Proprietary Property which Executive has assigned, transferred and set over
or
will assign, transfer and set over as provided in Section 6.2 above, and
Executive 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 Executive, 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.
6.5 Enforcement
of Proprietary Rights.
Executive 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 Executive 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, Executive 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 Executive 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 Executive at a mutually agreed
upon
fee, in addition to any expenses, after such termination.
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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 Executive on
any
document needed in connection with the actions specified in the preceding
paragraph, Executive 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 Executive,
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 Executive. Executive hereby waives
and
quitclaims to the Company or, as applicable, a subsidiary of the Company, any
and all claims, of any nature whatsoever, which Executive now or may hereafter
have for infringement of any proprietary rights assigned hereunder to the
Company or such subsidiary.
6.6 Third
Party Information.
To the
extent Executive has or possesses any Confidential Information (as hereinafter
defined) belonging to Executive or to others, Executive 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. Executive
will promptly advise the Company in writing if any of Executive's involvement
with the Company or any subsidiary of the Company might result in the possible
violation of Executive's undertakings to others or the use of any Confidential
Information of Executive or of others.
7. Confidential
Information.
7.1 Existence
of Confidential Information.
The
Company owns and has developed and compiled, and the Company and its
subsidiaries will develop and compile, 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 Executive,
but also information developed or learned by Executive 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 to 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.
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7.2 Protection
of Confidential Information.
Executive acknowledges and agrees that in the performance of Executive's duties
hereunder, the Company or a subsidiary of the Company may disclose to and
entrust Executive with Confidential Information which is the exclusive property
of the Company or such subsidiary and which Executive may possess or use only
in
the performance of Executive's duties to the Company. Executive also
acknowledges that Executive 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. Executive 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 Executive's assigned duties and for the benefit of the Company, any
Confidential Information, either during the Term or thereafter. In the event
Executive desires to publish the results of Executive's work for or experiences
with the Company or its subsidiaries through literature, interviews or speeches,
Executive will submit requests for such interviews or such literature or
speeches to the Board of Directors of the Company at least fourteen (14) days
before any anticipated dissemination of such information for a determination
of
whether such disclosure is in the best interests of the Company and its
subsidiaries, including whether such disclosure may impair trade secret status
or constitute an invasion of privacy. Executive agrees not to publish, disclose
or otherwise disseminate such information without the prior written approval
of
the Board of Directors of the Company.
7.3 Delivery
of Records.
In the
event Executive's employment with the Company ceases for any reason, Executive
will not remove from the Company's premises without its prior written consent
any records (written or electronic), files, drawings, documents, equipment,
materials and writings received from, created for or belonging to the Company
or
its subsidiaries, including those which relate to or contain Confidential
Information, or any copies thereof. Upon request or when employment with the
Company terminates, Executive will immediately deliver the same to the
Company.
8. Assignment
and Transfer.
8.1 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). As soon as reasonable prior to such an event (a “Change of Control”)
(but no later than 31 days prior thereto), the Company shall advise Executive
of
this pending occurrence (the “Change of Control Notice”). Executive shall then
have 31 days from the date of the Change of Control Notice to discuss, negotiate
and confer with any successor entity regarding the terms and conditions of
Executive's continued employment with the successor Company following a Change
of Control. If Executive, acting reasonably, is unable to reach an agreement
through good faith negotiations with any successor to the Company during such
31
day period, then Executive may elect (the “Change of Control Termination
Option”) to terminate his employment with the Company and receive the payments
and bonuses outlined in Section 4.5 hereof.
8.2 Executive.
Executive's rights and obligations under this Agreement shall not be
transferable by Executive by assignment or otherwise, and any purported
assignment, transfer or delegation thereof shall be void; provided, however,
that if Executive shall die, all amounts then payable to Executive hereunder
shall be paid in accordance with the terms of this Agreement to Executive's
devisee, legatee or other designee or, if there be no such designee, to
Executive's estate.
10
9. Miscellaneous.
9.1 Other
Obligations.
Executive represents and warrants that neither Executive's employment with
the
Company or Executive's performance of Executive's obligations hereunder will
conflict with or violate or otherwise are inconsistent with any other
obligations, legal or otherwise, which Executive may have. Executive covenants
that he shall perform his duties hereunder in a professional manner and not
in
conflict or violation, or otherwise inconsistent with other obligations legal
or
otherwise, which Executive may have.
9.2 Nondisclosure;
Other Employers.
Executive will not disclose to the Company or any of its subsidiaries, or use,
or induce the Company or any of its subsidiaries to use, any proprietary
information, trade secrets or confidential business information of others.
Executive represents and warrants that Executive does not possess any property,
proprietary information, trade secrets and confidential business information
belonging to prior employers.
9.3 Cooperation.
Following termination of employment with the Company for any reason, Executive
shall cooperate with the Company, as requested by the Company, to effect a
transition of Executive's responsibilities and to ensure that the Company is
aware of all matters being handled by Executive.
9.4 No
Duty to Mitigate.
Executive shall be under no duty to mitigate any losses or damage to the Company
with respect to any amounts payable pursuant to Section 4 of this
Agreement.
9.5 Protection
of Reputation.
During
the Term and thereafter, Executive agrees that he will take no action which
is
intended, or would reasonably be expected, to harm the Company or any of its
subsidiaries or its or their reputations or which would reasonably be expected
to lead to unwanted or unfavorable publicity to the Company or any of its
subsidiaries, other than those required in order to permit Executive to comply
with applicable law or those made in connection with legal or arbitral process.
During the Term and thereafter, the Company agrees that it will take no actions
which are intended, or would reasonably be expected, to harm Executive or his
reputation or which would reasonably be expected to lead to unwanted or
unfavorable publicity to the executive, other than those required in order
to
permit the Company to comply with applicable law or those made in connection
with legal or arbitral process. Notwithstanding the foregoing, this paragraph
shall not prevent the Company or Executive from exercising any of their
respective rights under this Agreement.
9.6 Governing
Law.
This
Agreement shall be governed by and construed (both as to validity and
performance) and enforced in accordance with the internal laws of the State
of
New York applicable to agreements made and to be performed wholly with such
jurisdiction, without regard to principles of the conflict of laws thereof
or
where the parties are located at the time a dispute arises.
11
9.7 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.
9.8 Entire
Agreement.
This
Agreement (including all exhibits hereto) contains the entire agreement and
understanding between the parties hereto in respect of Executive's employment
and supersedes, cancels and annuls any prior or contemporaneous written or
oral
agreements, understandings, commitments and practices between them respecting
Executive's employment, including all prior employment agreements, if any,
between the Company and Executive, which agreement(s) hereby are terminated
and
shall be of no further force or effect.
9.9 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.
9.10 Severability.
If any
term, provision, covenant or condition of this Agreement or part thereof, or
the
application thereof to any person, place or circumstance, shall be held to
be
invalid, unenforceable or void by a court of competent jurisdiction, the
remainder of this Agreement and such term, provision, covenant or condition
shall remain in full force and effect, and any such invalid, unenforceable
or
void term, provision, covenant or condition shall be deemed, without further
action on the part of the parties hereto, modified, amended and limited, and
the
court shall have the power to modify, to the extent necessary to render the
same
and the remainder of this Agreement valid, enforceable and lawful. In this
regard, Executive acknowledges that the provisions of Sections 5, 6 and 7 of
this Agreement are reasonable and necessary for the protection of the
Company.
9.11 Construction.
The
headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this Agreement.
The
language in all parts of this Agreement shall be in all cases construed
according to its fair meaning and not strictly for or against the Company or
Executive. The use herein of the word "including," when following any general
provision, sentence, clause, statement, term or matter, shall be deemed to
mean
"including, without limitation." As used herein, "Company" shall mean the
Company and its subsidiaries and any purchaser of, successor to or assignee
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
of
all or substantially all of the Company's business or assets which is obligated
to perform this Agreement by operation of law, agreement or otherwise. As used
herein, the words "day" or "days" shall mean a calendar day or days. As used
herein, "Compensation Committee" means the Compensation Committee of the Board
or, if no such committee is then serving, at least two members of the Board
as
selected by the Board.
12
9.12 Remedies
for Breach.
The
parties hereto agree that Executive is obligated under this Agreement to render
personal services during the Term 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 Executive 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, Executive 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 Executive in
the
event of a breach or threatened breach of Sections 5, 6 or 7 of this Agreement.
The rights and remedies of the Executive and Company are cumulative and shall
not be exclusive, and Executive and 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 Executive or Company shall in no
way
preclude Executive or Company from pursuing, at the same time or subsequently,
any and all other rights and remedies available to Executive or
Company.
9.13 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, to Executive's residence, as reflected
in the Company's records or as otherwise designated by Executive, or 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: Xxxxx X. Xxxxxxxx, Esq., Xxxxxx and Xxxxx, LLP, 000 Xxxx 00x Xxxxxx,
Xxx Xxxx, XX 00000, as the case may be. All such notices, requests, consents
and
approvals shall be effective upon being deposited in the United States mail.
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. 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
9.14 Assistance
in Proceedings, Etc.
Executive shall, without additional compensation during the Term and with
complete reimbursement of expenses after the expiration of the Term, upon
reasonable notice, furnish such information and proper assistance to the Company
as may reasonably be required by the Company in connection with any legal or
quasi-legal proceeding, including any external or internal investigation,
involving the Company or any of its subsidiaries or in which any of them is,
or
may become, a party.
13
9.15 Survival.
Cessation or termination of Executive's employment with the Company shall not
result in termination of this Agreement. The respective obligations of
Executive, and rights and benefits afforded to the Company, as provided in
this
Agreement, including, without limitation, Sections 5, 6, 7 and 9.13, shall
survive cessation or termination of Executive's employment
hereunder.
[Signature
page follows]
14
IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
as
of April 1, 2008, to be deemed effective as of the date first written
above.
|
NEPHROS,
INC.
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|
|
By:
|
/s/
Xxxxxx X. Xxxxx
|
|
Name:
Xxxxxx X. Xxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
EXECUTIVE
|
|
|
Xxxxxx
Xxxxxxxxx
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|
15
SCHEDULE
A
Options
|
Employment
Options:
|
Options
to purchase 250,000 shares of Common Stock. The Options shall vest
in four
equal installments on each of March 31, 2009, March 31, 2010, March
31,
2011 and March 31, 2012; provided that Executive remains employed
by the
Company at such time; and provided further that such Options shall
become
exercisable in full immediately upon the occurrence of a Change in
Control
(as defined in the Company’s 2004 Stock Incentive Plan). The Options shall
be exercisable at an exercise price equal to the Common Stock’s closing
price on the American Stock Exchange on the date of
grant.
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16
