January 30, 2007
Dov Elefant
1107 Cambridge Road
Teaneck, NJ 07666
Re: Separation from EpiCept Corporation
Dear Dov:
This letter sets forth the terms and conditions of our agreement (the
“Agreement”) regarding your separation from EpiCept Corporation (the “Company”).
This Agreement shall be effective as of the date that it is signed by you (the
“Effective Date”). As part of this Agreement, the Company will support your
transition to another career opportunity by providing you the separation package
outlined below.
1. Separation Date. Your last day of employment with the Company shall occur on
a date at the Company’s option (the “Separation Date”) during a period
commencing February 20, 2007 and ending March 30, 2007 (the “Separation
Period”).
2. Severance Payment. Although the Company has no policy or procedure for
providing severance benefits, in exchange for the promises and covenants set
forth herein, and in consideration thereof, the Company agrees to make severance
payments to you in the form of continuation of your base salary in effect on the
Separation Date until the earlier of (i) July 31, 2007, or (ii) four (4) months
from the date in which you voluntarily terminate your employment during the
Separation Period (“Severance Period”). These payments will be made on the
Company’s ordinary payroll dates, and will be subject to standard payroll
deductions and withholdings.
3. Completion bonus. The Company agrees to pay you a Completion Bonus,
consisting of an Initial Bonus of $15,000 should you stay with the Company until
the commencement of the Separation Period, and a Final Bonus of $10,000 if you
stay with the Company until the end of the Separation Period. If you leave prior
to the commencement of the Separation Period, the Company shall have no
obligation to pay you any Completion Bonus. In the event the Company terminates
your employment prior to the end of the Separation Period, you shall be entitled
to receive both the Initial Bonus and the Final Bonus. You shall receive your
Completion Bonus at the first scheduled pay period after the respective payment
has been earned.

 

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4. Exercise of Vested Stock Options. Your employee stock options shall continue
to vest in accordance with their terms until the Separation Date.
Notwithstanding the terms of your employee stock options, the Company agrees
that you shall have the right to exercise any of your vested stock options for a
period of two years after the Separation Date.
5. Expense Reimbursement. Within five (5) business days of the Separation Date,
you agree to submit all final documented expense reimbursement statements
reflecting all business expenses you incurred prior to and including the date
hereof, if any, for which you seek reimbursement. The Company shall reimburse
your expenses pursuant to Company policy and regular business practice.
6. Other Compensation and Benefits. Except as expressly provided herein, you
acknowledge and agree that you are not entitled to and will not receive any
additional compensation, severance, stock options, stock or benefits from the
Company. Nothwithstanding the foregoing, you will receive the unused amount of
your accrued vacation time in the first regular pay cycle following your
termination from the Company.
7. COBRA. To the extent provided by the federal COBRA law or, if applicable,
state insurance laws, and by the Company’s current group health insurance
policies, you will be eligible to continue your health insurance benefits after
the Separation Date. Later, you may be able to convert to an individual policy
through the provider of the Company’s health insurance, if you wish. You will be
provided with a separate notice of your COBRA rights following your Separation
Date. In the event that you elect continued coverage under COBRA, the Company,
as part of this Agreement, will pay your COBRA health insurance premiums at the
same level of coverage that you elected prior to the Separation Date during the
Severance Period. Thereafter, you shall be solely responsible for the payment of
your COBRA premiums.
8. Return of Company Property. On or before March 30 2007, you shall return to
the Company all Company documents (and all copies thereof) and other Company
property that you have had in your possession at any time, including, but not
limited to, Company files, notes, notebooks memoranda, correspondence drawings,
books and record, plans and forecasts, financial information, personnel
information, sales and marketing information, research and development
information, specifications, computer-recorded information, tangible property,
credit cards, entry cards, equipment, identification badges and keys; and any
materials of any kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof); and laptop computer
and all computer related equipment.
9. Proprietary Information and Inventions Agreement. You acknowledge your
continuing obligation to comply with your Employee Proprietary Information and

 

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Inventions Agreement, a copy of which I attached hereto as Exhibit A. This
includes all data gathered by the Company.
10. Nondisparagement. You agree that you will not at any time disparage the
Company or its officers, directors, employees, shareholders and agents, in any
manner likely to be harmful to them or their business, business reputation or
personal reputation, and the Company, its officers and directors likewise agree
that it will not disparage you in any manner likely to be harmful to you, your
business or personal reputation; provided that you shall respond accurately and
fully to any questions, inquiry or request for information when required by
legal process.
11. Confidentiality. The provisions of this Agreement shall be held in strictest
confidence by you and the Company and shall not be publicized or disclosed in
any manner whatsoever. Notwithstanding the prohibition in the preceding
sentence: (a) you may disclose this Agreement, in confidence, to your immediate
family; (b) the parties may disclose this Agreement in confidence to their
respective attorneys, accountants, auditors, tax preparers, and financial
advisors; (c) the Company may disclose this Agreement as necessary to fulfill
standard or legally required corporate reporting or disclosure requirements; and
(d) the parties may disclose this Agreement insofar as such disclosure may be
necessary to enforce its terms or as otherwise required by law.
12. Cooperation and Assistance. You and the Company agree that you will not
voluntarily provide assistance, information or advice, directly or indirectly
(including through agents or attorneys), to any person or entity in connection
with any pending or future civil action of any kind against the Company, its
officers or its directors; nor shall you induce or encourage any person or
entity to do so. You and the Company agree that the foregoing sentence shall not
prohibit you from testifying truthfully under subpoena. Further, if requested to
do so by the Company, you agree to provide (voluntarily and without legal
compulsion) reasonable cooperation (in light of your then professional
activities) and accurate and complete information to the Company in connection
with any litigation against the Company, its officers or its directors.
13. Release of Claims. Except as otherwise set forth in this Agreement, in
exchange for the consideration provided to you by this Agreement that you are
not otherwise entitled to receive, you hereby generally and completely release
the Company and its directors, officers, employees, shareholders, members,
partners, agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, Affiliates, and assigns from any and all claims, liabilities
and obligations, both known and unknown, that arise out of or are in any way
related to events, acts, conduct, or omissions occurring prior to your signing
this Agreement. This general release includes, but is not limited to: (1) all
claims arising out of or in any way related to your employment with the Company
or the termination of that employment; (2) all claims related to your
compensation or benefits from the Company, including salary, bonuses,
commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company;
(3) all claims

 

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for breach of contract, wrongful termination, and breach of the implied covenant
of good faith and fair dealing; (4) all tort claims, including claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and
(5) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”). The Company hereby generally
releases you from any and all claims, liabilities, and obligations, both known
and unknown, that arise out of or are in any way related to events, acts,
conduct, or omissions occurring prior to your signing this Agreement. You and
the Company agree to execute additional mutual general releases consistent with
the terms herein as of the last date of your actual employment with the Company.
Notwithstanding this agreement, the Company also acknowledges that your rights
to indemnification as an officer of the Company remain unchanged and in effect.
14. No Admissions. The parties hereto hereby acknowledge that this is a
compromise settlement of various matters, and it shall not be construed to be an
admission of any liability or obligation by either party to the other party or
to any other person whomsoever.
15. Arbitration. To ensure rapid and economical resolution of any disputes which
may arise under this Agreement, you and the Company agree that any and all
disputes or controversies of any nature whatsoever, arising from or regarding
the interpretation, performance, enforcement or breach of this Agreement shall
be resolved by confidential, final and binding arbitration (rather than trial by
jury or court or resolution in some other forum). Any arbitration proceeding
pursuant to this Agreement shall be conducted by American Arbitration
Association (“AAA”) in New York, under the then-existing AAA rules.
16. Entire Agreement. This Agreement, including all exhibits, constitutes the
complete, final and exclusive embodiment of the entire Agreement between you and
the Company with regard to the subject matter hereof. This Agreement is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and supercedes any such promises or
representations. This Agreement may not be modified except in a writing signed
by you and a duly authorized officer of the Company. Each party has carefully
read this Agreement, has been afforded the opportunity to be advised of its
meaning and consequences by his or its respective attorneys, and signed the same
of his or its free will.
17. Successors and Assigns. This Agreement shall bind the heirs, personal
representatives successors, assigns, executors, and administrators of each
party, and inures to the benefit of each party, its agents, directors, officers,
employees, servants, heirs, successors and assigns.

 

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18. Applicable Law. This Agreement shall be deemed to have been entered into and
shall be construed and enforced in accordance with the laws of the State of New
York as applied to contracts made and to be performed entirely within New York.
19. Severability. If a court, arbitrator, or other authority of competent
jurisdiction determines that any term or provision of this Agreement is invalid
or unenforceable, in whole or in part, then the remaining terms and provisions
hereof shall be unimpaired, and the invalid or unenforceable term or provision
shall be replaced with a valid and enforceable term or provision that most
accurately represents the parties’ intention with respect to the invalid or
unenforceable term or provision.
20. Authority. You warrant and represent that there are no liens or claims of
lien or assignments in law or equity of otherwise of or against any of the
claims or causes of action released herein and that you are duly authorized to
give the release granted herein.
21. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, all of which together shall constitute one
and the same instrument.
22. Section Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Please confirm your agreement to the foregoing terms and conditions by signing
and returning a copy of this letter to me.
Sincerely,
Jack Talley
President & Chief Executive Officer
Attachment:
Exhibit A — Employee Proprietary Information and Inventions Agreement
Having read the foregoing, I hereby agree to the terms and conditions stated
above.

             
 
           
 
      Dated:                  
Dov Elefant