Employment Agreement - Nephros Inc. and Marc Panoff
[LETTERHEAD OF NEPHROS]
June 7, 2004
Mr. Marc Panoff
65 Rockledge Drive
Suffern, NY 10901
RE: Employment Offer
Dear Marc:
We are pleased to confirm our employment offer to you for the position of
Chief Financial Officer reporting to the Chief Executive Officer and the Board
of Directors. You will be paid a bi-weekly salary at an initial annual rate of
$140,000 and will be considered for a possible merit increase in connection with
your performance review, which will be performed prior to January 1, 2005.
In addition, you will be eligible to receive a bonus of up to 20% of your
base salary for achievement of performance objectives, subject to approval of
the Chief Executive Officer and the Compensation Committee of the Board of
Directors; this bonus can be increased above 20% at the discretion of the Chief
Executive Officer and the Compensation Committee of the Board of Directors, in
keeping with Company policy. You will also receive a grant of 200,000 stock
options, subject to the approval of the Compensation Committee of the Board of
Directors, which shall be governed by the terms of Nephros Inc.'s stock option
plan. Your grant will be addressed at the next meeting of the Compensation and
Audit Committees of the Board of Directors after your start date at Nephros.
While the Company will present an option exercise price of $0.68 per share in
requesting the grant, this pricing is subject to the approval of both the
Compensation and Audit Committees of the Board of Directors.
As an employee of Nephros working more than 20 hrs/week, you will be
entitled to the following employee benefits:
. Guardian Healthcare Plan - 20% Premium Employee Paid
. Guardian Dental Plan - 20% Premium Employee Paid
. Life Insurance - Up to 100% of Base Salary - Company Paid
. Long Term Disability Plan - Company Paid
. 401(k) Savings Plan
. Paid Holidays - Six (6) Designated Holidays and Four (4) Floating
Holidays
. Vacation -Ten (10) Days Paid Vacation
. Parking and Commuter Tolls - Company Paid
. Sick Days - as reasonably required
<PAGE>
Mr. Marc Panoff
June 7, 2004
Page 2
The term of your employment will commence on July 12, 2004 and will end on
July 31, 2006, or such later date to which the term may be extended by joint
agreement between you and Nephros.
Nephros may terminate your employment for Cause (as defined below), in
which case the provisions of paragraph (a) below shall apply. Nephros may also
terminate your employment in the event of your Disability (as defined below), in
which case the provisions of paragraph (b) below shall apply. Nephros may also
terminate your employment for any other reason by written notice to you, in
which case the provisions of paragraph (c) below shall apply. If your employment
is terminated by reason of your death, retirement or voluntary resignation, then
the provisions of paragraph (a) below shall apply. Nephros may terminate your
employment at the end of the term hereof by not jointly agreeing with you to
extend the term, in which case paragraph (d) below shall apply.
(a) In the event that your employment hereunder is terminated during
the term (x) by Nephros for Cause (as defined below), (y) by reason of your
death, or (z) by reason of your voluntary resignation or retirement, then
Nephros shall pay to you only your accrued but unpaid base salary for
services rendered through the date of termination. For purposes of this
agreement, "Cause" shall mean (i) conviction of any crime (whether or not
involving Nephros) constituting a felony in the jurisdiction involved; (ii)
engaging in any act which, in each case, subjects, or if generally known
would subject, Nephros to public ridicule or embarrassment; (iii) gross
neglect or misconduct in the performance of your duties hereunder; (iv)
willful failure or refusal to perform such duties as may reasonably be
delegated to you commensurate with your position; or (v) material breach by
you of any provision of this agreement or of a Confidentiality or
Assignment of Invention Agreement; provided, however, that with respect to
clauses (iii), (iv) or (v), if susceptible of cure, you shall have received
written notice from Nephros setting forth the alleged act or failure to act
constituting "Cause" hereunder, and you shall not have cured such act or
refusal to act within 30 business days of you receipt of such notice.
(b) If, as a result of your incapacity due to physical or mental
illness, you shall have failed to perform your 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,
then Nephros may terminate your employment hereunder for "Disability". In
that event, Nephros shall pay to you only your accrued but unpaid base
salary for services rendered through such date of termination. During any
period that you fail to perform your duties hereunder as a result of
incapacity due to physical or mental illness (a "Disability Period"), you
shall continue to receive the compensation and benefits provided by this
agreement until your employment hereunder is terminated; provided, however,
that the amount of compensation and benefits received by you during the
Disability Period shall be reduced by the aggregate amounts, if any,
payable to you under disability benefit plans and programs of Nephros or
under the Social Security disability insurance program.
<PAGE>
Mr. Marc Panoff
June 7, 2004
Page 3
(c) In the event that your employment hereunder is terminated by
Nephros prior to the expiration of the term for any reason other than as
provided in paragraphs (a) or (b) above, then Nephros shall pay to you:
(i) any accrued but unpaid base salary for services rendered
through such date of termination;
(ii) any unpaid bonuses due or payable on or prior to the date
of termination or within 90 days thereafter; and
(iii) the continued payment of your base salary, in the amount
as of the date of termination, for the remainder of the term and
any Sundown Period (as defined in paragraph (d), below), such
payments to be made at the times such base salary would have been
paid had your employment not terminated.
(d) If, on or prior to six months before the date of expiration of
the term of your employment hereunder, Nephros fails to either (i) offer to
extend such term for at least six months or (ii) notify you that it will
terminate your employment hereunder, then Nephros shall continue to pay you
your base salary, in the amount as of the date of termination of your
employment hereunder, until the earlier of (x) six months following the
date Nephros notifies you that it will terminate your employment hereunder
and (y) six months following the end of the term of your employment
hereunder (the period, if any, from the end of the term of your employment
hereunder until the earlier such date is referred to herein as the "Sundown
Period")
Notwithstanding anything to the contrary contained herein, in the event
that you breach the Confidentiality or Assignment of Invention Agreements at any
time, in addition to any other remedies Nephros may have therefor, Nephros 's
obligation under clauses (ii) and (iii) of paragraph (c) above or under
paragraph (d) above shall cease and your rights thereto shall terminate and
shall be forfeited.
Other than providing the compensation provided for in this agreement, upon
termination of your employment, Nephros and its directors, officers, employees,
subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives shall have no further obligation or liability to you or any
other person under this agreement. The payment of any amounts pursuant to this
agreement (other than any payments required by law) is expressly conditioned
upon the delivery by you to Nephros of a release in form and substance
satisfactory to Nephros of any and all claims you may have against Nephros and
its directors, officers, employees, subsidiaries, affiliates, stockholders,
successors, assigns, agents and representatives arising out of or related to
your employment by Nephros and the termination of such employment.
Your rights and obligations hereunder may not be assigned. Nephros may
assign its rights, together with its obligations, hereunder (i) to any affiliate
or (ii) to third parties in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in any event
the obligations of Nephros hereunder shall be binding on its successors or
assigns, whether by merger, consolidation or acquisition of all or substantially
all of its business or assets.
By accepting this position, you acknowledge that there is no other
agreement to which you are a party that would prevent you from accepting this
position on the terms and within the timeframe
<PAGE>
Mr. Marc Panoff
June 7, 2004
Page 4
indicated herein. As a condition of your employment at Nephros, you will be
required to sign Confidentiality and Assignment of Invention Agreements.
If you have any questions regarding the details of this offer, please call
me at (212) 781-5113. Please indicate your formal acceptance of this employment
offer by counter-signing this agreement and returning to me at our New York
offices.
I look forward to having you join us.
Best regards,
/s/ Norman J. Barta
Employment Offer Accepted
/s/ Marc Panoff
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Signatre Date 6/16/04