ex_10-25.htm


     

    
      

      

    

     

    Execution
Copy

    


    SEPARATION
AGREEMENT

    


    


    THIS SEPARATION AGREEMENT
between Uluru Inc., a Nevada corporation (the "Company"), and Kerry
P. Gray (hereinafter referred to as "Gray"), dated as of
March 9, 2009 (the “Effective Date”);

    


    WHEREAS, Gray is a member of
the Board of Directors of the Company (the “Board”), and
President and Chief Executive Officer of the Company;

    


    WHEREAS, Gray intends to
resign and terminate his employment and all other positions of employment with
the Company and its subsidiaries, including the offices of President and Chief
Executive Officer;

    


    WHEREAS, the Company intends
to accept Gray’s resignation and wishes to provide to Gray certain payments and
to provide Gray with certain other benefits upon such termination and Gray
agrees to give certain releases and provide certain services to the
Company;

    


    NOW, THEREFORE, in
consideration of the mutual promises set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

    


    
      	
              1.

            	
              Resignation and
      Termination.

            


    

    


    
      	
               
      

            	
              1.1.

            	
              Gray
      hereby resigns from all employment positions he currently holds with the
      Company and any subsidiary of the Company, including without limitation
      the positions of President and Chief Executive Officer effective as of the
      Effective Date.  Gray shall remain as a member of the Board of
      Directors, subject to the provisions of Section
  3.5.

            


    

    


    
      	
               
      

            	
              1.2.

            	
              The
      Employment Agreement, dated as of January 1, 2006, by and between the
      Company and Gray is hereby terminated in its entirety as of the Effective
      Date and neither party thereto shall have any further rights or owe any
      further payment, duty or obligation to the other thereunder;
      notwithstanding the foregoing, (a) the non-competition obligation of Gray
      set forth in Section 8 of the Employment Agreement and (b) the
      non-solicitation obligation of Gray set forth in Section 9 of the
      Employment Agreement shall each survive for a period of one year from the
      date of this Agreement.

            


    

    


    2.           Company
Covenants.

    


    
      	
               
      

            	
              2.1.

            	
              Cash
      Payments.  Commencing as of the Effective Date, Gray
      shall be entitled to the following cash
  payments:

            


    

     

    

      
        
          
            
              
                
                  	 	
                          (a)

                        	
                          Commencing
      as of March 2009, the Company shall pay Mr. Gray a cash payment of
      $54,166.66 per month, payable semi-monthly, for a period of six months,
      making an aggregate payment of $325,000 under this Section 2.1(a);
      and

                        
	 	 
      	 
      
	 	
                          (b)

                        	
                          Thereafter
      for a period of fifty-four (54) months, the Company shall pay to Gray a
      payment of $12,500 per month, payable semi-monthly, making an aggregate
      payment of $675,000 under this
  Section 2.1(b).

                        


                

              

            

          

        

      

    

     

     

    
      	
               
      

            	
              2.2.

            	
              Vesting and Exercise
      of Existing Options and Restricted Stock.  On the
      Effective Date, all outstanding Company stock options and shares of
      restricted stock of the Company held by Gray shall immediately and fully
      vest.  All outstanding Company stock options held by Gray shall
      remain exercisable by Gray until March 1, 2012, notwithstanding anything
      to the contrary in documents related to such option grants, and shall
      expire on such date.  As of the Effective Date, Mr. Gray shall
      forfeit 300,000 of the stock options currently held by
  him.

            


    

    


    
      	
               
      

            	
              2.3.

            	
              Consulting.  At
      the Company’s sole discretion, Gray and the Company hereby agree that,
      beginning on  the Effective Date through August 31, 2009, the
      Company may request that Gray serve the Company in the capacity of a
      consultant for the equivalent of up to two full days per
      month.  Mr. Gray shall not be paid for such
      consulting.

            


    

    


    
      	
               
      

            	
              2.4.

            	
              Benefits.  For
      a period of Twenty-Four (24) months following the Effective Date, the
      Company shall, at its sole expense, continue to maintain and provide
      coverage under Gray’s existing health coverage plan.  Gray
      agrees that he shall not be entitled to receive any compensation under the
      Company’s paid time off (PTO) benefit program.  While Mr. Gray
      remains on the Board of Directors of the Company, the Company shall
      maintain for Mr. Gray his current Company e-mail
  address.

            


    

    


    
      	
               
      

            	
              2.5.

            	
              Withholding.  All
      payments required to be made by the Company hereunder to Gray shall be
      subject to the withholding of such amounts, if any, relating to tax and
      other payroll deductions as the Company may reasonably determine it must
      withhold pursuant to any applicable law or
  regulation.

            


    

    


    
      	
               
      

            	
              2.6.

            	
              No Duty to Mitigate
      Damages.  Gray's payments and benefits under Sections
      2.1, 2.2 and 2.4 of this Agreement shall be considered severance pay in
      consideration of his past service and his agreement to comply with the
      provisions of his Employment Agreement relating to noncompetition and as
      an inducement to him to enter into and become bound by this Agreement, and
      his entitlement thereto shall not be dependent upon whether or not Gray
      provides further services of any type to or for the Company or any third
      party.

            


    

    


    
      	
               
      

            	
              2.7

            	
              Default.  Notwithstanding
      any provision in this Agreement to the contrary, but subject to Section
      11.9, in the event that the Company defaults in its obligations to provide
      the payments and benefits in Sections 2.1 or 2.4, then all amounts and
      benefits that otherwise would have been due and payable under the
      Employment Agreement dated as of January 1, 2006 by and between the
      Company and Gray, including without limitation the payments and benefits
      set forth in Section 6.2.1 (less any payments previously made under this
      Agreement) shall become due and payable ten (10) days after written notice
      of default from Mr. Gray if such default is not
  cured.

            


    

    


    3.           Gray
Covenants.  Gray hereby covenants with the Company as
follows:

    


    
      	
               
      

            	
              3.1.

            	
              Non-disclosure.  Gray
      recognizes and acknowledges that he has had and will have access to
      certain highly sensitive, special, unique information of the Company that
      is confidential or proprietary.  Gray hereby covenants and
      agrees not to use or disclose any Confidential Information (as hereinafter
      defined) except for disclosures made solely (i) to authorized
      representatives of the Company; or (ii) as required by any governmental,
      statutory or judicial authority, provided that prior to any such
      disclosure Gray shall provide the Company with notice of such requirement
      as is practicable and shall cooperate with the Company in responding to
      such requirement, including assisting the Company in procuring a
      protective order or other modification of such required
      disclosure.

            


    

    


    
      	
               
      

            	
              3.2.

            	
              Confidential
      Information.  For purposes of this Agreement, "Confidential
      Information"
      means any data or information with respect to the business conducted by
      the Company that is material to the Company and not generally known by the
      public.  To the extent consistent with the foregoing definition,
      Confidential Information includes without limitation; (i) reports,
      pricing, sales manuals and training manuals, selling and pricing
      procedures, and financing methods of the Company, together with any
      techniques utilized by the Company in designing, developing,
      manufacturing, testing or marketing its products or in performing services
      for clients, customers and accounts of the Company and (ii) the
      business plans and financial statements, reports and projections of the
      Company.

            


    

    


    
      	
               
      

            	
              3.3.

            	
              Return of
      Property.  Gray covenants, agrees and acknowledges that
      all Confidential Information is and shall remain the sole, exclusive and
      valuable property of the Company and Gray has and shall acquire no right,
      title or interests therein.  Any and all printed, typed, written
      or other material which Gray may have or obtain shall be and remain the
      exclusive property of the Company, and any and all material (including any
      copies) shall be promptly delivered by Gray to the Company.  The
      Company acknowledges that the personal property listed on Exhibit B is and shall
      remain Gray’s personal property unaffected by this
    Agreement.

            


    

    


    
      	
               
      

            	
              3.4.

            	
              Stock
      Lock-up1.  If requested by investors in
      a financing, Mr. Gray will agree in writing not to sell any shares of the
      common stock of the Company owned or controlled by him, except as
      follows:

            


    

    


    (1)           no
sales for 90 days after the Effective Date

    


    (2)           90%
lock-up for 180 days after the Effective Date

    


    (3)           80%
lock-up for 270 days after the Effective Date

    


    (4)           70%
lock-up for 360 days after the Effective Date

    


    (5)           50%
lock-up for 450 days after the effective Date

    


    (6)           25%
lock-up for 540 days after the Effective Date

    


    In
addition, if requested by investors in a financing, Mr. Gray agrees not to sell
any shares for a period of 90 days after his resignation from the Board of
Directors.  For the avoidance of doubt, the above schedule commences
on the Effective Date of this Separation Agreement, not at the closing of a
financing.  In the event of a breach by the Company of Section 2.1(b),
2.2 or 2.4, the provisions of this lock-up arrangement shall
terminate.

    


    
      	
               
      

            	
              3.5.

            	
              Board
      Membership.  At the request of the Board at any time in
      2009 in connection with a Company financing, Mr. Gray shall resign as a
      member of the Board of Directors and each of its
    subsidiaries.

            


    

    


    4.           Indemnification.  The
Company shall indemnify Gray to the same extent provided to its other directors
and officers by its charter and by-laws against all costs, charges and expenses,
including, without limitation, attorneys’ fees, incurred or sustained by Gray in
connection with any action, suit or proceeding to which Gray may be made a party
by reason of being an officer, director or employee of the Company for acts
undertaken from the time of his employment by the Company through the date of
his resignation as a member of the Board (the “Indemnification Period”), and Gray
will be included as an insured individual under any liability insurance policy
that insures other officers or directors of the Company for acts taken during
the Indemnification Period.

    


    
      	
              5.

            	
              Public Statement,
      Non-disparagement.

            


    

    


    
      	
               
      

            	
              5.1.

            	
              With
      respect to Mr. Gray’s separation from the Company, neither Gray nor the
      Company shall make any public statement other than the Approved Public
      Statement set forth on Exhibit A (the
      “Approved Public Statement”) or statements that are consistent with the
      Approved Public Statement.

            


    

    


    
      	
               
      

            	
              5.2.

            	
              Gray
      shall make no disparaging statements, whether public or private, with
      regard to the Company, its current officers, employees or members of the
      Board unless and to the extent specifically compelled by any governmental
      agency or tribunal to make a
statement.

            


    

    


    
      	
               
      

            	
              5.3.

            	
              The
      Company and the members of the Board shall make no disparaging statements,
      whether public or private, about Gray unless and to the extent
      specifically compelled by any government agency or tribunal to make a
      statement.  In response to an inquiry, or as necessary or
      appropriate to make clear Gray’s status with the Company or the
      circumstances of his departure, the Company and the members of the Board
      shall inform third parties that Gray is a shareholder of the Company
      and/or that he is not an employee, officer, director (as applicable) or
      other agent of the Company by saying that Gray remains a shareholder
      and/or director of the Company and that Gray resigned voluntarily, or
      other words of similar effect.  Neither the Company nor the
      members of the Board shall make any statement that implies or suggests
      that the reason for Gray’s separation from the Company was anything other
      than Gray’s voluntary action.

            


    

    


    
      	
              6.

            	
              Mutual Release and
      Covenant Not to Sue.

            


    

    


    
      	
               
      

            	
              6.1

            	
              Release and Covenant
      Not to Sue from Gray.

            


    

    


    
      	
               
      

            	
              (a)

            	
              Release.  Gray
      hereby releases each of the Company and its officers, employees,
      directors, attorneys, agents, successors, and assigns, from each and every
      right, claim, debt, demand, liability, cost, expense, and/or cause of
      action, which he has or may have had against any of such released parties
      as of the Effective Date, whether known or
  unknown.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Covenant Not to
      Sue.  Gray hereby covenants and agrees not to bring suit
      against any of the Company or any of  its officers, employees,
      directors, attorneys, agents, successors, and assigns based upon any claim
      herein released.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Rights
      Retained.  Notwithstanding anything in this Agreement to
      the contrary, Gray expressly reserves his right to take action against the
      Company to preserve his rights under this Agreement in the event of a
      breach thereof by the Company, subject to Section 7
      below.

            


    

    


    
      	
               
      

            	
              6.2

            	
              Release and Covenant
      Not to Sue from the Company.

            


    

    


    
      	
               
      

            	
              (a)

            	
              Release.  The
      Company hereby releases each of Gray and his attorneys, agents,
      successors, and assigns from each and every right, claim, debt, demand,
      liability, cost, expense, and/or cause of action arising out of Gray’s
      service or status as an employee, officer, director, shareholder (in his
      capacity as such) or representative of shareholders of the Company,
      existing as of the Effective Date and whether known or
      unknown.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Covenant Not to
      Sue.  The Company hereby covenants and agrees not to
      bring suit against each of Gray and his attorneys, agents, successors, and
      assigns based upon any claim herein
released.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Rights
      Retained.  Notwithstanding anything in this Agreement to
      the contrary, the Company expressly reserves its right to take action
      against Gray to preserve its rights under this Agreement in the event of a
      breach thereof by Gray, subject to Section 7
  below.

            


    

    


    
      	
              7.

            	
              Arbitration.  Any
      controversy or claim arising out of or relating to this Agreement, or the
      breach thereof, shall be settled exclusively by single-arbitrator
      arbitration, in Dallas, Texas, in accordance with the Commercial
      Arbitration Rules of the American Arbitration Association then in effect,
      and judgment upon the award rendered by the arbitrator may be entered in
      any court having jurisdiction
thereof.

            


    

    


    
      	
              8.

            	
              Collateral.  Payments
      owed to Gray by the Company pursuant to Section 2 hereof shall be
      secured by, and the Company hereby grants to Gray a first priority
      security interest in and to, the assets of the Company relating to
      Zindaclin, including the patent rights, royalty payments, licensing
      payments and milestone payments.  Any failure to pay timely any
      amount due under Section 2.1(b) shall result, automatically, in the
      full acceleration of all such payments (i) which are not yet paid in full,
      and (ii) which do not constitute deferred compensation within the meaning
      of Section 409A (as defined in Section 11.9(i), below), if such amount due
      is not paid within 10 days after written notice from Gray.  With
      respect to the Company, any commencement of a bankruptcy proceeding,
      assignment for the benefit of creditors or the appointment of a receiver,
      trustee, liquidator or other similar official shall also result,
      automatically, in the full acceleration of all such payments (i) which are
      not yet paid in full, and (ii) which do not constitute deferred
      compensation within the meaning of Section
409A.

            


    

    


    
      	
              9.

            	
              Legal Fees and
      Expenses.  Each party hereto shall pay its own legal fees
      and expenses of counsel reasonably incurred by such party in connection
      with the negotiation, execution and delivery of this Agreement or in
      seeking in good faith to obtain any right or benefit to which such party
      believes it or he is entitled under this Agreement.  In the
      event of a default by the Company with respect to any payments owed to
      Gray under this Agreement, the Company agrees to pay Gray any costs of
      collection, including but not limited to any reasonable attorneys fees,
      which shall be deemed additional payments that are secured pursuant to
      Section 8 hereto.

            


    

    


    
      	
              10.

            	
              Notices.  Any
      notices required to be given under this Agreement shall be in writing and
      shall be deemed given three (3) days after mailing in the continental
      United States by registered or certified mail, or upon personal receipt
      after delivery, telex, telecopy, or telegram, to the party entitled
      thereto at the address stated below or to such changed address as the
      addressee may have given by a similar
notice:

            


    

    


    To the
Company:           Uluru
Inc.

    4452 Beltway Drive

    Addison,
TX 75001

    Attn: Chief Executive
Officer

    


    With a copy
to:             
John J. Concannon III, Esq.

          Bingham McCutchen LLP

          One Federal Street

          Boston, MA 02110

    


    To
Gray:                      
Kerry Gray

    15806
Breedlove Place

    Addison,
TX 75001

    


    11.           General
Provisions.

    


    
      	
              11.1.

            	
              Binding
      Agreement.  This Agreement shall be binding upon and
      inure to the benefit of Gray and be enforceable by his personal or legal
      representatives or successors.  If Gray dies while any amounts
      would still be payable to him hereunder, his rights herein shall still be
      exercisable by such representatives or successors.  Such amounts
      shall be paid to Gray's estate in accordance with the terms of this
      Agreement.  This Agreement shall not otherwise be assignable by
      Gray.

            


    

    


    
      	
              11.2.

            	
              Successors.  This
      Agreement shall inure to and be binding upon the Company's
      successors.  The Company shall require any successor to all or
      substantially all of its business and/or assets by sale, merger (where the
      Company is not the surviving corporation), consolidation, lease or
      otherwise, by agreement in form and substance satisfactory to Gray, to
      assume this Agreement expressly.  This Agreement shall not
      otherwise be assignable by the
Company.

            


    

    


    
      	
              11.3.

            	
              Amendment or
      Modification; Waiver.  This Agreement may not be amended
      or modified unless agreed to in writing by Gray and the
      Company.  No waiver by either party of any breach of this
      Agreement shall be deemed a waiver of any subsequent
    breach.

            


    

    


    
      	
              11.4.

            	
              Severability.  In
      the event that any provision of this Agreement shall be determined to be
      invalid or unenforceable, such provision shall be enforceable in any
      jurisdiction in which valid and enforceable, and in any event the
      remaining provisions shall remain in full force and effect to the fullest
      extent permitted by law.

            


    

    


    
      	
              11.5.

            	
              Rights
      Granted.  This Agreement shall not give Gray any right to
      compensation or benefits from the Company or any affiliate of the Company,
      except for the rights specifically stated herein, including those certain
      severance and other benefits that become payable on or after the Effective
      Date.

            


    

    


    
      	
              11.6.

            	
              Governing
      Law.  The validity, interpretation, performance, and
      enforcement of this Agreement shall be governed by and construed in
      accordance with the internal laws of the State of Texas, without giving
      effect to the principles of choice of law or conflicts of
    law.

            


    

    


    
      	
              11.7.

            	
              Counterparts.  This
      Agreement may be executed in multiple counterparts, each of which shall be
      deemed an original, but all of which taken together shall constitute one
      and the same Agreement.

            


    

    


    
      	
              11.8.

            	
              Section
      Headings.  The descriptive section headings in this
      Agreement have been inserted for convenience of reference only and are not
      intended to be part of, or to affect the meaning or interpretation of,
      this Agreement.

            


    

    


    
      	
              
                11.9

              

            	
               

            	
              Section
      409A.

            


    

    


    (a) Purpose. This section is intended
to help ensure that compensation paid or delivered to Gray pursuant to this
Agreement either is paid in compliance with, or is exempt from,
Section 409A of the Internal Revenue Code of 1986, as amended and the rules
and regulations promulgated thereunder (collectively, “Section 409A”).
However, the Company does not warrant to Gray that all compensation paid or
delivered to him for his services will be exempt from, or paid in compliance
with, Section 409A.  Except as otherwise provided herein, Gray
understands and agrees that he bears the entire risk of any adverse federal,
state or local tax consequences and penalty taxes which may result from payment
of compensation for his services on a basis contrary to the provisions of
Section 409A or comparable provisions of any applicable state or local income
tax laws.

     

    (b) Amounts Payable On Account
of Termination. For the purposes of determining when amounts otherwise
payable on account of Gray's termination of employment under this Agreement will
be paid, which amounts become due because of his termination of employment,
“termination of employment” or words of similar import, as used in this
Agreement, shall be construed as the date that Gray first incurs a “separation
from service” for purposes of Section 409A on or following termination of
employment.  Furthermore, if Gray is a “specified employee” of a
public company as determined pursuant to Section 409A as of his termination
of employment, any amounts payable on account of his termination of employment
which constitute deferred compensation within the meaning of Section 409A and
which are otherwise payable during the first six months following Gray's
termination (or prior to his death after termination) shall be paid to Gray in a
cash lump-sum on the earlier of (1) the date of his death and (2) the first
business day of the seventh calendar month immediately following the month in
which his termination occurs.

     

    (c) Reimbursements.  Any
taxable reimbursement of business or other expenses as specified under this
Agreement shall be subject to the following conditions: (1) the expenses
eligible for reimbursement in one taxable year shall not affect the expenses
eligible for reimbursement in any other taxable year; (2) the reimbursement of
an eligible expense shall be made no later than the end of the year after the
year in which such expense was incurred; and (3) the right to reimbursement
shall not be subject to liquidation or exchange for another
benefit.

     

    (d) Interpretative Rules.
In applying Section 409A to amounts paid pursuant to this Agreement, any right
to a series of installment payments under this Agreement shall be treated as a
right to a series of separate payments.

     

    (e) Deferred Compensation
Taxes.  Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit under this Agreement received or to be
received by Gray (the “Payment”) is
determined to be subject (in whole or part) to the penalties imposed by Section
409A (the “Additional
Taxes”), then Gray shall be entitled to receive an additional payment (a
“Gross-Up
Payment”) in an amount such

     

    that
after payment by Gray of the Additional Taxes imposed upon the Payment, Gray
retains an amount equal to the Payment net of any otherwise applicable taxes and
withholdings (that is, applicable taxes and withholdings other than Additional
Taxes).  Gray shall also be entitled to be reimbursed by the Company
for any costs and expenses relating to any disputes with the IRS relating to
Section 409A.  All determinations required to be made under this
Section 11.9(e), including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by the Company’s accountants or
such other certified public accounting firm reasonably acceptable to the Company
as may be designated by Gray which shall provide detailed supporting
calculations both to the Company and Gray.  Any Gross-Up Payment due
under this paragraph shall be paid to Gray within ten (10) business days after
notice from Mr. Gray that he has made any such payment to the IRS, provided that
in no event may such reimbursement be made to Mr. Gray later than December 31 of
the calendar year following the calendar year in which Gray remits the
Additional Taxes to the applicable authorities.

     

    
      	
              12.

            	
              Exclusive
      Agreement.  It is agreed and understood that this
      Agreement represents the entire agreement between the Company and Gray
      concerning the subject matter hereof and supersedes all prior agreements
      and understandings concerning Gray's rights upon the termination of his
      employment.

            


    

    


    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement under seal as of the day and year
first above written.

     

    
 

        Uluru
Inc.                                                                                     Kerry
Gray

    


    


        By:      /s/ William W.
Crouse                                                    /s/ Kerry
Gray

        Name: William
W. Crouse

        Title:   
Chairman

     

    


    

      

    

      
      


       

      1 This lock-up applies to 5,125,000 shares controlled by Mr. Gray
which initially shall be subject to this lock-up.  It is expected that
ninety days after Mr. Gray is no longer an officer or director that he would not
be an affiliate and his filing obligations with the SEC would relate to updating
his Form 13G while he remains a 5% stockholder of the
Company.