Exhibit 10.1
 
EMPLOYMENT AGREEMENT
 
This Agreement, dated as of February 25, 2011 (this “Agreement”), is by and
between CorMedix Inc., a Delaware corporation with principal executive offices
at 745 Route 202-206, Suite 303, Bridgewater, NJ 08807 (the “Company”), and Mark
A. Klausner, residing at 2332 Town Court North, Lawrenceville, NJ 08648 (the
“Executive”).
 
WITNESSETH:
 
WHEREAS, the Company desires to employ the Executive as Chief Medical Officer of
the Company, and the Executive desires to serve the Company in that capacity,
upon the terms and subject to the conditions contained in this Agreement;
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
 
1.         Employment.
 
(a)  Services.  The Executive will be employed by the Company as its Chief
Medical Officer. The Executive will report to the Chief Executive Officer of the
Company and shall perform such duties as are consistent with his position as
Chief Medical Officer (the “Services”). The Executive agrees to perform such
duties faithfully, and while he remains employed, not to engage in any other
business activity that is in conflict with his duties and obligations to the
Company without the prior written consent of the Chief Executive Officer and the
Board of Directors of the Company (the “Board”).  The Executive further agrees
to carry out and abide by all lawful directions of the Chief Executive Officer
and the Board consistent with his position as Chief Medical Officer.
 
(b)  Acceptance.  The Executive hereby accepts such employment and agrees to
render the Services.
 
2.         Term.  The Executive’s employment under this Agreement (as it may be
extended, the “Term”) shall commence on March 1, 2011 (the “Commencement Date”)
and shall continue for a term of two (2) years, unless sooner terminated
pursuant to Section 8 of this Agreement; provided, however, that the Term shall
be extended automatically for additional one-year periods unless one party shall
advise the other in writing at least sixty (60) days before the initial
expiration of the Term or an anniversary date thereof that this Agreement shall
no longer be so extended. Notwithstanding anything to the contrary contained
herein, the provisions of this Agreement specified in Sections 5, 6, 9 and 10
shall survive the expiration or termination hereof.
 
3.         Best Efforts; Place of Performance.
 
(a)  The Executive shall devote substantially all of his business time,
attention and energies to the business and affairs of the Company and shall use
his best efforts to advance the best interests of the Company and shall not,
during the Term, be actively engaged in any other business activity, whether or
not such business activity is pursued for gain, profit or other pecuniary
advantage, that will interfere with the performance by the Executive of his
duties hereunder or the Executive’s availability to perform such duties or that
the Executive knows, or should reasonably know, will adversely affect, or
negatively reflect upon, the Company.
 
 
 

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(b)  The duties to be performed by the Executive hereunder shall be performed
primarily at the principal executive offices of the Company in Bridgewater, New
Jersey, or wherever the principal executive offices of the Company shall
hereafter be located, subject to reasonable travel requirements on behalf of the
Company, or such other place as the Board may reasonably designate.
 
4.         Compensation.  As full compensation for the performance by the
Executive of his duties under this Agreement, the Company shall pay the
Executive as follows:
 
(a)  Base Salary.  The Company shall pay Executive a salary equal to Three
Hundred Ten Thousand Dollars ($310,000.00) per year (as it may be increased from
time to time the “Base Salary”), less applicable withholdings and deductions.
Payment shall be made in accordance with the Company’s normal payroll practices.
The Board shall annually review the Base Salary to determine whether an increase
in the amount thereof is warranted.
 
(b) Discretionary Bonus.  At the sole discretion of the Board, the Company shall
pay the Executive an additional cash bonus each calendar year during the Term
(the “Discretionary Bonus”) in an amount equal to up to thirty percent (35%) of
the Executive’s aggregate Base Salary, based upon the attainment by the
Executive and the Company of certain financial, clinical development and
business milestones (the “Milestones”) as established annually by the Chief
Executive Officer, in conjunction with the Board (or a committee thereof), after
consultation with the Executive.  Any discretionary bonus will be based on an
assessment of the Executive’s overall contribution and performance by the Chief
Executive Officer, in conjunction with the Board (or a committee thereof), after
consultation with the Executive, as well as the Company’s existing
cash-on-hand.  Milestones for each calendar year shall be established by the
Chief Executive Officer, in conjunction with the Board (or a committee thereof),
after consultation with the Executive, not more than sixty (60) days following
the beginning of each calendar year.  The Discretionary Bonus, if any, shall be
payable in cash as a lump-sum payment no later than seventy-five (75) days after
the end of each calendar year.  The Discretionary Bonus will be prorated during
the first calendar year based upon the Executive’s Commencement Date.
       
(c) Withholding.  The Company shall withhold all applicable federal, state and
local taxes and social security and such other amounts as may be required by law
from all amounts payable to the Executive under this Section 4.
 
(d) Initial Option Grant.  As additional compensation for the Services to be
rendered by the Employee pursuant to this Agreement, the Company shall grant to
the Employee an option to purchase a number of shares of common stock, par value
$0.001 (the “Common Stock”), of the Company representing two percent (2.0%) of
the Common Stock of the Company outstanding as of the Commencement Date on a
fully diluted basis.  The option shall be granted pursuant to the terms of the
Company’s 2006 Stock Incentive Plan, as it may be amended from time to time,
with an exercise price per share equal to the closing price of the Company’s
common stock on the Executive’s Commencement Date and shall vest in three equal
annual installments with the first installment vesting on the first anniversary
of the grant date.
 
 
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(e) Expenses.  The Company shall reimburse the Executive for all normal, usual
and necessary expenses incurred by the Executive in furtherance of the business
and affairs of the Company, including reasonable travel and entertainment, upon
timely receipt by the Company of appropriate vouchers or other proof of the
Executive’s expenditures and otherwise in accordance with any expense
reimbursement policy as may from time to time be adopted by the Company. To the
extent that any such reimbursement would be taxable, the amount of expenses
eligible for reimbursement may not affect the expenses eligible for
reimbursement in any other year; the reimbursement shall be made on or before
the last day of the Executive’s taxable year following the year on which the
expense was incurred; and the right to reimbursement is not subject to
liquidation or exchange for another benefit.
 
(f) Other Benefits.  The Executive shall be entitled to all rights and benefits
for which he shall be eligible under any benefit or other plans (including,
without limitation, dental, medical, medical reimbursement and hospital plans,
pension plans, employee stock purchase plans, profit sharing plans, bonus plans,
prescription drug reimbursement plans, short and long term disability plans,
life insurance and other so-called “fringe” benefits) as the Company shall make
available to its senior executives from time to time.  Executive shall be
designated as a named insured on directors’ and officers’ liability insurance of
the Company.
 
(g) Vacation.  The Executive shall accrue four (4) weeks of paid vacation per
annum, in addition to holidays observed by the Company, to be taken in
accordance with the Company’s employee policies, and subject to the requirement
that no more than two weeks be taken consecutively and that all vacation is
subject to the prior approval of the Chief Executive Officer.  The Executive
shall not be entitled to carry any vacation forward to the next year of
employment and shall not receive any compensation for unused vacation days. 
 
5.         Confidential Information and Inventions.
 
(a) The Executive recognizes and acknowledges that in the course of his duties
he is likely to receive confidential or proprietary information of the Company,
its affiliates or third parties with whom the Company or any such affiliates has
an obligation of confidentiality.  Accordingly, during and after the Term, the
Executive agrees to keep confidential and not disclose or make accessible to any
other person or use for any other purpose other than in connection with the
fulfillment of his duties under this Agreement, any Confidential and Proprietary
Information owned by, or received by or on behalf of the Company or any of its
affiliates.  “Confidential and Proprietary Information” shall include, but shall
not be limited to, confidential or proprietary scientific or technical
information, data, formulas and related concepts, business plans (both current
and under development), client lists, promotion and marketing programs, trade
secrets, or any other confidential or proprietary business information relating
to development programs, costs, revenues, marketing, investments, sales
activities, promotions, credit and financial data, manufacturing processes,
financing methods, plans or the business and affairs of the Company or of any
affiliate or client of the Company.  The Executive expressly acknowledges that
the Confidential and Proprietary Information constitutes a protectable business
interest of the Company.  The Executive agrees: (i) not to use any such
Confidential and Proprietary Information for himself or others; and (ii) not to
take any Company material or reproductions (including but not limited to
writings, correspondence, notes, drafts, records, invoices, technical and
business policies, computer programs or disks) thereof from the Company’s
offices at any time during his employment by the Company, except as required in
the execution of the Executive’s duties to the Company, unless and until such
Confidential and Proprietary Information has become public knowledge without
fault by the Executive.  The Executive agrees to return immediately all Company
material and reproductions (including but not limited, to writings,
correspondence, notes, drafts, records, invoices, technical and business
policies, computer programs or disks) thereof in his possession to the Company
upon request and in any event immediately upon termination of employment.
 
 
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(b)  Except with prior written authorization by the Company, the Executive
agrees that during the Term and thereafter, he will not disclose or publish:
 
                        (i)  any of the Confidential and Proprietary
Information; or
 
                (ii) any confidential, scientific, technical or business
information of any other party to whom the Executive knows, or should reasonably
know, that the Company or any of its affiliates owes an obligation of
confidence.
 
(c)  The Executive agrees that all inventions, discoveries, improvements and
patentable or copyrightable works (“Inventions”) initiated, conceived or made by
him, either alone or in conjunction with others, during the Term shall be the
sole property of the Company to the maximum extent permitted by applicable law
and, to the extent permitted by law, shall be “works made for hire” as that term
is defined in the United States Copyright Act (17 U.S.C.A., Section 101).  The
Company shall be the sole owner of all patents, copyrights, trade secret rights,
and other intellectual property or other rights in connection therewith;
provided, however that this Section 5(c) shall not apply to Inventions which are
not directly or indirectly related to the business of the Company and which are
made and conceived by the Executive not during normal working hours, not on the
Company’s premises and not using the Company’s tools, devices, equipment or
Confidential and Proprietary Information.  Subject to the foregoing, the
Executive hereby assigns to the Company all right, title and interest he may
have or acquire in all Inventions; provided, however, that the Board may in its
sole discretion agree to waive the Company’s rights pursuant to this Section
5(c).

(d)  Executive agrees to cooperate fully with the Company, both during and after
his employment with the Company, with respect to the procurement, maintenance
and enforcement of copyrights, patents, trademarks and other intellectual
property rights (both in the United States and foreign countries) relating to
such Inventions.  Executive shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of attorney, which
the Company may deem necessary or desirable in order to protect its rights and
interests in any Inventions.  Executive further agrees that if the Company is
unable, after reasonable effort, to secure Executive’s signature on any such
papers, any officer of the Company shall be entitled to execute such papers as
his agent and attorney-in-fact and Executive hereby irrevocably designates and
appoints each officer of the Company as his agent and attorney-in-fact to
execute any such papers on his behalf and to take any and all actions as the
Company may deem necessary or desirable in order to protect its rights and
interests in any Inventions, under the conditions described in this paragraph.
 
 
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(e)  The Executive acknowledges that while performing the Services, the
Executive may locate, identify and/or evaluate patented or patentable inventions
having commercial potential in the fields of pharmacy, pharmaceutical,
biotechnology or healthcare which the Executive knows or should reasonably know
may be of potential interest to the Company or one of its subsidiaries (the
“Third Party Inventions”).  The Executive understands, acknowledges and agrees
that all rights to, interests in or opportunities regarding, all Third-Party
Inventions identified by the Company, any of its affiliates or either of the
foregoing persons’ officers, directors, employees (including the Executive),
agents or consultants during the Term and thereafter shall be and remain the
sole and exclusive property of the Company or such affiliate and the Executive
shall have no rights whatsoever to such Third-Party Inventions and will not
pursue for himself or for others any transaction relating to the Third-Party
Inventions which is not on behalf of the Company unless the Company has
expressly abandoned its interest in such Third Party Inventions in writing.
 
(f)  Executive will not assert any rights to any invention, discovery, idea or
improvement relating to the business of the Company or to his duties hereunder
as having been made or acquired by Executive prior to his work for the Company,
except for the matters, if any, described in Appendix A to this Agreement.
 
(g)  During the Term, if Executive incorporates into a product or process of the
Company or any of its affiliated entities anything listed or described in
Appendix A, the Company is hereby granted and shall have a non-exclusive,
royalty-free, irrevocable, perpetual, worldwide license (with the right to grant
and authorize sublicenses) to make, have made, modify, use, sell, offer to sell,
import, reproduce, distribute, publish, prepare derivative works of, display,
perform publicly and by means of digital audio transmission and otherwise
exploit as part of or in connection with any product, process or machine.

(h)  The Executive agrees that he will promptly disclose to the Company all
Inventions initiated, made or conceived or reduced to practice, either alone or
jointly with others, during the Term.
 
(i)  The provisions of this Section 5 shall survive any termination of this
Agreement.
 
 
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6.         Non-Competition, Non-Solicitation and Non-Disparagement.
 
(a)  The Executive understands and recognizes that his services to the Company
are special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information and the Executive agrees that, during the Term and the applicable
Termination Benefits Period (as defined hereinafter), he shall not in any
manner, directly or indirectly, on behalf of himself or any person, firm,
partnership, joint venture, corporation or other business entity (“Person”),
enter into or engage in any business which is engaged in any business directly
or indirectly competitive with the “Business of the Company” (as defined below),
either as an individual for his own account, or as a partner, joint venturer,
owner, executive, employee, independent contractor, principal, agent,
consultant, salesperson, officer, director or shareholder of a Person in such
competitive business within the geographic area in which the Company does
business, which is deemed by the parties hereto to be the United States.  The
Executive acknowledges that, due to the unique nature of the Company’s business,
the Company has a strong legitimate business interest in protecting the
continuity of its business interests and its Confidential and Proprietary
Information and the restriction herein agreed to by the Executive narrowly and
fairly serves such an important and critical business interest of the
Company.  For purposes of this Agreement, “Business of the Company” shall mean
any business relating to the development and commercialization of therapeutics
(including drugs, medical devices and vaccines) for those indications in which
the Company or any of its direct or indirect subsidiaries is actively engaged or
has taken reasonable steps to become engaged at the time of the termination of
the Executive’s employment or during the two-year period prior
thereto.  Notwithstanding the foregoing, nothing contained in this Section 6(a)
shall be deemed to prohibit the Executive from acquiring or holding, solely for
investment, publicly traded securities of any corporation, some or all of the
activities of which are competitive with the business of the Company so long as
such securities do not, in the aggregate, constitute more than four percent (4%)
of any class or series of outstanding securities of such corporation; and
further notwithstanding the foregoing, nothing contained in this Section 6(a)
shall preclude the Executive from becoming an employee of, or from otherwise
providing services to, a separate division or operating unit of a
multi-divisional business or enterprise (a “Division”) if: (i) the Division by
which the Executive is employed, or to which the Executive provides services, is
not engaged in the Business of the Company, (ii) the Executive does not provide
services, directly or indirectly, to any other division or operating unit of
such multi-divisional business or enterprise which is competitive with the
Business of the Company (individually, a “Competitive Division” and
collectively, the “Competitive Divisions”) and (iii) the Competitive Divisions,
in the aggregate, accounted for less than one-third of the multi-divisional
business or enterprise’s consolidated revenues for the fiscal year, and each
subsequent quarterly period, prior to the Executive’s commencement of employment
with or provision of services to the Division.

(b) The Executive hereby acknowledges and agrees that the covenant against
competition provided for pursuant to Section 6(a) is reasonable with respect to
its duration, geographic area and scope.  If, at the time of enforcement of this
Section 6, a court holds that the restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
duration, scope or geographic area legally permissible under such circumstances
will be substituted for the duration, scope or area state herein.
 
(c)  During the Term and the applicable Termination Benefits Period (as defined
hereinafter), the Executive shall not, directly or indirectly, without the prior
written consent of the Company:
 
 
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(i)           solicit or induce any employee of the Company or any of its
affiliates to leave the employ of the Company or any affiliate; or hire for any
purpose any employee of the Company; or hire any former employee who has left
the employment of the Company or any affiliate of the Company within twelve (12)
months of the termination (for any reason) of such employee’s employment with
the Company or any such affiliate; or hire any former employee of the Company in
knowing violation of such employee’s non-competition agreement with the Company
or any such affiliate (provided, that for purposes of this subsection (c)(i),
the parties hereto agree that “affiliates” shall not be deemed to include any
portfolio companies of Paramount Biosciences, LLC);
 
(ii)          solicit, divert or take away, or attempt to divert or take away,
the business or patronage of any agent, client or customer of the Company which
was contacted, solicited or served by the Company during the twelve-month period
prior to the termination of the Executive’s employment with the Company; or
 
(iii)         without the consent of the Board, which shall not be unreasonably
withheld, solicit or accept employment or be retained by any Person, who at any
time during the twelve-month period prior to the termination of the Executive’s
employment with the Company, was an agent, client or customer of the Company or
any of its subsidiaries where his position will be related to the business of
the Company or its subsidiaries.
 
(d)  The Executive agrees that both during the Term and for a period of five (5)
years thereafter, Executive shall not directly or indirectly disparage, whether
or not truthfully, the name or reputation of the Company or any of its
affiliates, including but not limited to, any officer, director, employee or
shareholder of the Company or any of its affiliates.  Notwithstanding this
Section, nothing contained herein shall apply to statements made by Executive
(x) in the course of his responsibility to evaluate the performance and/or
participate in any investigation of the conduct or behavior of officers,
employees and/or others or (y) as part of any judicial, administrative or other
legal action or proceeding, and nothing shall be construed to limit or impair
the ability of Executive to provide truthful testimony in response to any
validly issued subpoena or to file pleadings or respond to inquiries or legal
proceedings by any government agency to the extent required by applicable law.

(e)  In the event that the Executive breaches any provisions of Section 6 or
this Section 6 or there is a threatened breach, then, in addition to any other
rights which the Company may have, the Company shall be entitled, without the
posting of a bond or other security, to seek injunctive relief to enforce the
restrictions contained in such Sections.  The Company and the Executive agree
that any such action for injunctive or equitable relief shall be heard
exclusively in the state courts of the Superior Court of New Jersey, Somerset
County or the federal courts of the District of New Jersey in the vicinage
closest to Somerset County and each of the parties hereto agrees to accept
service of process by registered or certified mail and to otherwise consent to
the exclusive jurisdiction of such courts.
 
(f)   Each of the rights and remedies enumerated in Section 6(e) shall be
independent of the others and shall be in addition to and not in lieu of any
other rights and remedies available to the Company at law or in equity.  If any
of the covenants contained in this Section 6, or any part of any of them, is
hereafter construed or adjudicated to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions.  If any of the covenants contained in this Section 6 is held to be
invalid or unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form such provision shall then be enforceable.
 
 
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(g)  In the event that an actual proceeding is brought in equity to enforce the
provisions of Section 5 or this Section 6, the Executive shall not urge as a
defense that there is an adequate remedy at law nor shall the Company be
prevented from seeking any other remedies which may be available.
 
(h)  The provisions of this Section 6 shall survive any termination of this
Agreement.
 
7.         Representations and Warranties by the Executive.
 
The Executive hereby represents and warrants to the Company as follows:
 
(a)  Neither the execution or delivery of this Agreement nor the performance by
the Executive of his duties and other obligations hereunder conflict with or
constitute a default or breach of any covenant or obligation under (whether
immediately, upon the giving of notice or lapse of time or both) any prior
employment agreement, contract, or other instrument to which the Executive is a
party or by which he is bound.
 
(b)  The Executive has the full right, power and legal capacity to enter and
deliver this Agreement and to perform his duties and other obligations
hereunder.  This Agreement constitutes the legal, valid and binding obligation
of the Executive enforceable against him in accordance with its terms.  No
approvals or consents of any persons or entities are required for the Executive
to execute and deliver this Agreement or perform his duties and other
obligations hereunder.
 
(c)  Executive will not use any confidential information or trade secrets of any
third party in his employment by the Company in violation of the terms of the
agreements under which he had access to or knowledge of such confidential
information or trade secrets.

8.         Termination.  The Executive’s employment hereunder shall be
terminated upon the Executive’s death and may be terminated as follows:
 
(a)   The Executive’s employment hereunder may be terminated by the Company
immediately for Cause.  Any of the following actions by the Executive shall
constitute “Cause”:
 
(i)           The willful failure, disregard or refusal by the Executive to
perform his duties hereunder;
 
 
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(ii)          Any willful, intentional or grossly negligent act by the Executive
having the effect of materially injuring (whether financial or otherwise and as
determined in good-faith by the Board), the business or reputation of the
Company or any of its affiliates, including but not limited to, any officer,
director, executive or shareholder of the Company or any of its affiliates;
 
(iii)         Willful misconduct by the Executive in respect of the duties or
obligations of the Executive under this Agreement, including, without
limitation, willful insubordination with respect to lawful directions received
by the Executive from the Chief Executive Officer or the Board;
 
(iv)         The Executive’s conviction of any felony or a misdemeanor involving
moral turpitude (including entry of a nolo contendere plea);
 
(v)          The determination by the Company, after a reasonable and good-faith
investigation by the Company following an allegation by an employee, contractor
or customer of the Company, that the Executive engaged in some form of
harassment prohibited by Company policy and/or applicable law (including,
without limitation, age, sex or race discrimination);
 
(vi)         Any misappropriation or embezzlement of the property of the Company
or its affiliates (whether or not a misdemeanor or felony);
 
(vii)        Breach by the Executive of any of the provisions of Sections 5, 6
or 7 of this Agreement; or

(viii)       Breach by the Executive of any provision of this Agreement other
than those contained in Sections 5, 6 or 7 which is not cured by the Executive
within thirty (30) days after notice thereof is given to the Executive by the
Company.
 
(b)   The Executive’s employment hereunder may be terminated by the Company due
to the Executive’s Disability.  For purposes of this Agreement, a termination
for “Disability” shall occur (i) when the Company has provided a written
termination notice to the Executive supported by a written statement from a
reputable independent physician to the effect that the Executive shall have
become so physically or mentally incapacitated as to be unable to resume, within
the ensuing six (6) months, his employment hereunder by reason of physical or
mental illness or injury, or (ii) upon rendering of a written termination notice
by the Company after the Executive has been unable to substantially perform his
duties hereunder for 60 or more consecutive days, or more than 90 days in any
consecutive twelve month period, by reason of any physical or mental illness or
injury.  For purposes of this Section 8(b), the Executive agrees to make himself
available and to cooperate in any reasonable examination by a reputable
independent physician retained by the Company.
 
 
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(c)  The Executive’s employment hereunder may be terminated by the Board upon
the occurrence of a Change of Control.  For purposes of this Agreement, “Change
of Control” means, following the Commencement Date:

(i)           the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership of any capital stock of the Company, if, after such
acquisition, such Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 50% or more of the combined voting power of
the then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); or

(ii)          the consummation of a merger, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), unless, immediately following such Business
Combination, all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the combined voting power of the then-outstanding securities
entitled to vote generally in the election of directors of the resulting or
acquiring corporation in such Business Combination (which shall include, without
limitation, a corporation which as a result of such transaction owns the Company
or substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership of
the Outstanding Company Voting Securities immediately prior to such Business
Combination.

(d)  The Executive’s employment hereunder may be terminated by the Executive for
Good Reason.  For purposes of this Agreement, “Good Reason” shall mean:
 
(i)           any reduction by the Company of the Executive’s compensation or
benefits payable hereunder (it being understood that a reduction of benefits
applicable to all employees of the Company, including the Executive, shall not
be deemed a reduction of the Executive’s compensation package for purposes of
this definition);
 
(ii)          without the Executive’s express written consent, any material
reduction by the Company of the Executive’s duties, responsibilities, or
authority as Chief Medical Officer of the Company which causes his position with
the Company to become of less responsibility or authority than his position as
of immediately following the Commencement Date; or
 
(iii)         a relocation of the Company’s principal place of business further
than fifty (50) miles from the Company’s existing principal executive offices
identified herein.

(e)   The Executive’s employment may be terminated by the Company or by the
Executive for any reason or no reason.
 
(f)  The Executive’s employment may terminate by expiration of the Term, as it
may be extended, by notice of non-renewal by either party in accordance with
Section 2 hereof.
 
9.         Compensation upon Termination.  In the event the Executive’s
employment is terminated pursuant to any of the subsections within Section 8,
the Company shall pay to the Executive the Base Salary and benefits otherwise
payable to him under Section 4 through the last day of his actual employment by
the Company, any reimbursable business expenses, and any earned but unpaid
bonuses (together, the “Accrued Compensation”).  In addition to the Accrued
Compensation:
 
 
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(a)  If the Executive’s employment is terminated as a result of his death or
Disability, the Company shall pay to the Executive or to the Executive’s estate,
as applicable, (i) his Base Salary through the date which is ninety (90) days
after his death or Disability, and (ii) such other or additional benefits, if
any, as may be provided under applicable employee benefit plans, programs and/or
arrangements of the Company.  All shares of common stock of the Company held by
Executive that are subject to vesting (“Restricted Shares”) and all options to
purchase shares of common stock of the Company (“Stock Options”) that are
scheduled to vest on or before the next succeeding anniversary of the
Commencement Date shall be accelerated and deemed to have vested as of the
termination date.  All Restricted Shares and Stock Options that have not vested
(or been deemed pursuant to the immediately preceding sentence to have vested)
as of the date of termination shall be forfeited to the Company as of such
date.  Stock Options that have vested as of the Executive’s termination shall
remain exercisable for ninety (90) days following such termination.  All
payments, benefits and/or grants under this Section 9(a) shall be subject to
Executive’s execution and delivery within 21 days of separation from service of
a general release of the Company, its parents, subsidiaries and affiliates and
each of its officers, directors, employees, agents, successors and assigns in a
form that is acceptable to the Company, with such payments, benefits, and/or
grants commencing within 30 days of the Executive’s separation from service.
 
(b)  If the Executive’s employment is terminated by the Company for Cause, then
the Company shall provide such other or additional benefits, if any, as may be
provided under applicable employee benefit plans, programs and/or arrangements
of the Company.  The Executive shall have no further entitlement hereunder to
any other compensation or benefits from the Company except to the extent
otherwise provided by law.  All Restricted Shares and Stock Options that have
not vested as of the date of termination shall be forfeited to the Company as of
such date.  Stock Options that have vested as of the Executive’s termination
shall remain exercisable for ninety (90) days following such termination.
 
(c)  If the Executive’s employment is terminated by the Company other than as a
result of the Executive’s death or Disability and other than for Cause or under
circumstances specified in Section 9(d), or if the Executive’s employment is
terminated by the Executive for Good Reason, then the Company shall (i) continue
to pay to the Executive his Base Salary and benefits for a period of six (6)
months following the termination of the Term (such period of payment referred to
herein as the “Section 9(c) Termination Benefits Period”), or, in the case of
benefits, such time as the Executive receives equivalent coverage and benefits
under plans and programs of a subsequent employer; (ii) provide such other or
additional benefits, if any, as may be provided under applicable employee
benefit plans, programs and/or arrangements of the Company.  In addition, all
Restricted Shares and Stock Options that are scheduled to vest during the twelve
(12) month period following such termination shall be accelerated and deemed to
have vested as of the termination date.  All Stock Options that have vested (or
been deemed pursuant to the immediately preceding sentence to have vested) as of
the date of the Executive’s termination shall remain exercisable for a period of
ninety (90) days.  Notwithstanding anything to the contrary, if any of the
Executive’s benefits pursuant to Section 9(c)(i) hereof cannot be provided to
former employees, the Company shall provide the Executive, in a single lump sum
payment within ninety (90) days of separation from service, with payment in
whatever amount is necessary for the Executive to purchase the equivalent
benefit(s), with the payment grossed up as necessary to comport with the
tax-free nature of the Company’s direct provision of certain of those
benefits.  All payments, benefits and/or grants under this Section 9(c) shall be
subject to Executive’s execution, delivery, and non-revocation within 21 days of
separation (or 45 days, to the extent required by applicable law) from service
of a general release of the Company, its parents, subsidiaries and affiliates
and each of its officers, directors, employees, agents, successors and assigns
in a form that is acceptable to the Company, with such payments, benefits,
and/or grants commencing within 30 days of the Executive’s separation from
service.
 
 
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(d)  If the Executive’s employment is terminated by the Company (or its
successor) within two (2) months prior to or six (6) months following the
occurrence of a Change of Control, and on the date of termination pursuant to
this Section 9(d) the fair market value of the Company’s Common Stock on a
Fully-Diluted basis, in the aggregate, as determined in good faith by the Board
on the date of such Change of Control, is more than $50,000,000, then the
Company (or its successor, as applicable) shall: (i) continue to pay to the
Executive his Base Salary and benefits for a period of three (3) months
following the termination of the Term (such period of payment is referred to
herein as the “Section 9(d) Termination Benefits Period”), or, in the case of
benefits, such time as the Executive receives equivalent coverage and benefits
under plans and programs of a subsequent employer; and (ii) provide such other
or additional benefits, if any, as may be provided under applicable employee
benefit plans, programs and/or arrangements of the Company.  In addition, all
Restricted Shares and Stock Options shall be accelerated and deemed to have
vested as of the termination date.  Stock Options that have vested as of the
Executive’s termination shall remain exercisable for ninety (90) days following
such termination.  Notwithstanding anything to the contrary, if any of the
Executive’s benefits pursuant to Section 9(d)(i) hereof cannot be provided to
former employees, the Company shall provide the Executive, in a single lump sum
payment within ninety (90) days of separation from service, with payment in
whatever amount is necessary for the Executive to purchase the equivalent
benefit(s), with the payment grossed up as necessary to comport with the
tax-free nature of the Company’s direct provision of certain of those
benefits.  All payments, benefits and/or grants under this Section 9(d) shall be
subject to Executive’s execution, delivery, and non-revocation within 21 days of
separation (or 45 days, to the extent required by applicable law) from service
of a general release of the Company, its parents, subsidiaries and affiliates
and each of its officers, directors, employees, agents, successors and assigns
in a form that is acceptable to the Company, with such payments, benefits,
and/or grants commencing within 30 days of the Executive’s separation from
service.

(e)  If the Executive’s employment is terminated by the Executive pursuant to
Section 8(e) or by expiration of the Term pursuant to Section 8(f), the
Executive shall not be entitled to receive any payments or benefits other than
the Accrued Compensation.
 
(f)  This Section 9 sets forth the only obligations of the Company with respect
to the termination of the Executive’s employment with the Company, and the
Executive acknowledges that, upon the termination of his employment, he shall
not be entitled to any payments or benefits which are not explicitly provided in
Section 9, except as required by law or the terms of another employee plan,
program or arrangement covering him.
 
 
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(g) Notwithstanding anything in this Agreement or any other agreement between
the Executive and the Company to the contrary but subject to this Section 9(g),
the Company will make the payments and acceleration of benefits under this
Agreement and other compensatory arrangements without regard to whether Section
280G of the Internal Revenue Code of 1986 (the “Code”) would limit or preclude
the deductibility of such payments or benefits.  However, if reducing, delaying,
or eliminating any payment and/or other benefit (including the vesting of his
options or other equity compensation) would increase the Total After-Tax
Payments (as defined below), then the amounts payable to the Executive will be
reduced, delayed, or eliminated as follows (or in such other manner as the
Company may specify at the applicable time) to the extent necessary to maximize
such Total After-Tax Payments:
 
(i)           first, by reducing or eliminating any cash payments or other
benefits (other than the vesting of any options or stock) and
 
(ii)          second, by reducing or eliminating the vesting of his options and
stock that occurs as a result of a Change of Control or other event covered by
Section 280G of the Code.
 
The Company’s independent, certified public accounting firm will determine
whether and to what extent payments or vesting are required to be reduced in
accordance with the foregoing. If there is ultimately determined to be an
underpayment of or overpayment to the Executive under this provision, the amount
of such underpayment or overpayment will be immediately paid to the Executive or
refunded by him, as the case may be, with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code. For purposes of this
Agreement, “Total After-Tax Payments” means the total value of all “parachute
payments” (as that term is defined in Section 280G(b)(2) of the Code) made to
the Executive or for his benefit (whether made under the Agreement or
otherwise), after reduction for all applicable federal taxes (including, without
limitation, the tax described in Section 4999 of the Code).
 
(h)          The obligations of the Company that arise under this Section 9
shall survive the expiration or earlier termination of this Agreement.

10.       Indemnification.   The Company shall defend and indemnify the
Executive in his capacity as Chief Medical Officer  of the Company to the
fullest extent permitted under to the Delaware General Corporate Law (the
“DGCL”).  The Company shall also establish a policy for indemnifying its
officers and directors, including but not limited to the Executive, for all
actions permitted under the DGCL taken in good faith pursuit of their duties for
the Company, including but not limited to the obtaining of an appropriate level
of Directors and Officers Liability coverage and including such provisions in
the Company’s by-laws or certificate of incorporation, as applicable and
customary.  The rights to indemnification shall survive any termination of this
Agreement.
 
 
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11.       Compliance with Code Section 409A.
 
(a)  If any payment, compensation or other benefit provided to the Executive in
connection with his employment termination is determined, in whole or in part,
to constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Code (“Section 409A”) and the Executive is a specified employee as
defined in Section 409A(2)(B)(i), no part of such payments shall be paid before
the day that is six (6) months plus one (1) day after the termination date (the
“New Payment Date”).  The aggregate of any payments that otherwise would have
been paid to the Executive during the period between the termination date and
the New Payment Date shall be paid to the Executive in a lump sum on such New
Payment Date.  Thereafter, any payments that remain outstanding as of the day
immediately following the New Payment Date shall be paid without delay over the
time period originally scheduled, in accordance with the terms of this
Agreement.
 
(b)  The parties acknowledge and agree that the interpretation of Section 409A
and its application to the terms of this Agreement is uncertain and may be
subject to change as additional guidance and interpretations become
available.  Anything to the contrary herein notwithstanding, all benefits or
payments provided by the Company to the Executive that would be deemed to
constitute “nonqualified deferred compensation” within the meaning of
Section 409A are intended to comply with Section 409A.  If, however, any such
benefit or payment is deemed to not comply with Section 409A, the Company and
the Executive agree to renegotiate in good faith any such benefit or payment
(including, without limitation, as to the timing of any severance payments
payable hereof) so that either (i) Section 409A will not apply or (ii)
compliance with Section 409A will be achieved; provided, however, that any
resulting renegotiated terms shall provide to the Executive the after-tax
economic equivalent of what otherwise has been provided to the Executive
pursuant to the terms of this Agreement, and provided further, that any deferral
of payments or other benefits shall be only for such time period as may be
required to comply with Section 409A.
 
(c)  For purposes of the Agreement, a termination of employment will be
determined consistent with the rules relating to “separation from service” under
Section 409A and the regulations thereunder.
 
(d)  The parties agree that all of the payments set forth in Section 5(c)
qualify for the short term deferral exemption under Section 409A.

12.       Miscellaneous.

(a)  Dispute Resolution.  Any dispute or controversy arising out of, or relating
to, this Agreement, the Executive’s employment or the termination thereof,
including without limitation tort claims shall be construed and enforced in
accordance with the internal laws of the State of New Jersey, without regard to
the choice of law principles thereof.  Except with respect to the Company’s and
the Executive’s  right to seek injunctive or other equitable relief (including,
without limitation, pursuant to Sections 5 and 6 above), any dispute,
controversy or claim based on, arising out of or relating to the interpretation
and performance of this Agreement, the Executive’s employment or any termination
hereof or thereof or any matter relating to the foregoing shall be solely
submitted to and finally settled by arbitration by a single arbitrator in
accordance with the then-current rules of the American Arbitration Association
(“AAA”), including without limitation any claims for discrimination under any
applicable federal, state or local law or regulation.  Any such arbitration
shall be conducted in the New Jersey office of the AAA located closest to the
Company’s New Jersey office.  The single arbitrator shall be appointed from the
AAA’s list of arbitrators by the mutual consent of the parties or, in the
absence of such consent, by application of any party to the AAA.  A decision of
the arbitrator shall be final and binding upon the parties.  The parties agree
that this Section 12 shall be grounds for dismissal of any court action
commenced by either party with respect to this Agreement, other than (i)
post-arbitration actions seeking to enforce an arbitration award, and (ii)
actions seeking appropriate equitable or injunctive relief, including, without
limitation, pursuant to Sections 5 and 6 above.  The Company shall pay the fees
of the arbitrator and each party shall be responsible for its own legal fees,
costs of its experts and expenses of its witnesses. The arbitrator’s remedial
authority shall equal the remedial power that a court with competent
jurisdiction over the parties and their dispute would have.  Any arbitration
award rendered shall be final, binding and conclusive (without the right to an
appeal, unless such appeal is based on fraud by any other party in connection
with the arbitration process) upon the parties and any judgment on such award
may be enforced in any court having jurisdiction, unless otherwise provided by
law.  The Company and the Executive acknowledge that it is the intention of the
parties that this Section 12 shall apply to all disputes, controversies and
claims, including, without limitation, any rights or claims the Executive may
have under the Age Discrimination in Employment Act of 1967, the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964, the Equal Pay Act,
the Lilly Ledbetter Fair Pay Act of 2009, the New Jersey Law Against
Discrimination, the New Jersey Conscientious Employee Protection Act, the New
Jersey Civil Rights Act, and all other federal, state or local laws, rules or
regulations relating to employment discrimination or otherwise pertaining to
this Agreement, the Executive’s employment or termination thereof.  The Company
and the Executive knowingly and voluntarily agree to this arbitration provision
and acknowledge that arbitration shall be instead of any civil litigation,
meaning that the Company and the Executive are each waiving any rights to a jury
trial.
 
 
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(b)   This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective heirs, legal representatives, successors
and permitted assigns.
 
(c)   This Agreement, and the Executive’s rights and obligations hereunder, may
not be assigned by the Executive.  The Company may assign its rights, together
with its obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets.
 
(d)   This Agreement cannot be amended orally, or by any course of conduct or
dealing, but only by a written agreement signed by the parties hereto.
 
(e) The failure of either party to insist upon the strict performance of any of
the terms, conditions and provisions of this Agreement shall not be construed as
a waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect.  No waiver of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
 
 
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(f)  All notices, demands or other communications desired or required to be
given by any party to any other party hereto shall be in writing and shall be
deemed effectively given upon (i) personal delivery to the party to be notified,
(ii) upon confirmation of receipt of telecopy or other electronic facsimile
transmission, (iii) one business day after deposit with a reputable overnight
courier, prepaid for priority overnight delivery, or (iv) five days after
deposit with the United States Post Office, postage prepaid, in each case to
such party at the address set forth on the signature page hereto, or to such
other addresses and to the attention of such other individuals as any party
shall have designated to the other parties by notice given in the foregoing
manner.
 
(g)  This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof.  No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and neither party shall
be bound by or liable for any alleged representation, promise or inducement not
so set forth.
 
(h)  As used in this Agreement, “affiliate” of a specified Person shall mean and
include any Person controlling, controlled by or under common control with the
specified Person.
 
(i)  The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
 
(j)  This Agreement may be executed in any number of counterparts, each of which
shall constitute an original, but all of which together shall constitute one and
the same instrument.
 
(k)  As used in this Agreement, the masculine, feminine or neuter gender, and
the singular or plural, shall be deemed to include the others whenever and
wherever the context so requires.  Additionally, unless the context requires
otherwise, “or” is not exclusive.

[SIGNATURES TO EMPLOYMENT AGREEMENT FOLLOW ON NEXT PAGE]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

CORMEDIX INC.
   
By:
/s/ John Houghton
Name:
John Houghton
Title:
President and Chief Executive Officer
   
EXECUTIVE
 
/s/ Mark A. Klausner
Mark A. Klausner

 
 
 
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