Document:

EMPLOYMENT
      AGREEMENT

     

    This
      EMPLOYMENT
      AGREEMENT (this
      “Agreement”), made in New York, New York as of the 1st day of April 2008 (the
“Effective Date”), between Nephros, Inc., a Delaware corporation having its
      executive offices and principal place of business at 3960 Broadway, New York,
      New York 10032 (the “Company”), and Gerald Kochanski (“Executive”).

     

    RECITALS

     

    WHEREAS,
      the Company desires to employ Executive, and Executive desires to accept such
      employment on the terms and conditions hereinafter set forth:

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements hereinafter
      set forth, the Company and Executive agree as follows:

     

    1. Term.
      The
      term of this Agreement shall be the period commencing on the date first written
      above, and ending on March 31, 2011 (the “Expiration Date,” and collectively,
      the “Term”). Each period of April 1 through March 31 shall hereinafter be
      designated a “Term Year”. Your employment shall be on an “at-will” basis,
      subject to the terms of this Agreement. 

     

    2. Employment.

     

    2.1 Employment
      by the Company.
      Executive agrees to be employed by the Company during the Term upon the terms
      and subject to the conditions set forth in this Agreement. Executive shall
      serve
      as Vice President and Chief Financial Officer (CFO), reporting to the Chairman
      and CEO of the Company (the "CEO"), and shall have such duties as may be
      prescribed by the CEO and the Board of Directors from time to time and which
      are
      commonly performed by CFOs of similar sized companies conducting similar
      business, such as, but not limited to, corporate planning and oversight of
      the
      financial functions of the organization.

     

    2.2 Performance
      of Duties.
      Throughout the Term, Executive shall faithfully and diligently perform
      Executive's duties in conformity with the directions of the CEO and serve the
      Company to the best of Executive's ability. Executive shall devote Executive's
      entire working time to the business and affairs of the Company, subject to
      vacations and sick leave in accordance with Company policy and as otherwise
      permitted herein. 

     

    2.3 Place
      of Performance.
      During
      his employment with the Company, Executive will work at the Company's offices
      in
      New York, New York, as necessary or appropriate, or at such other location
      in
      the greater New York City area as the Company may determine. Throughout the
      Term, Executive agrees to maintain Executive's personal residence within
      reasonable access to Executive's place of employment. Executive recognizes
      that
      his duties will require, from time to time and at the Company's expense (subject
      to Section 3.7 below), travel to domestic and international
      locations.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    3. Compensation
      and Benefits.

     

    3.1 Base
      Salary.
      The
      Company agrees to pay to Executive a base salary ("Base Salary") at the annual
      rate of $185,000 payable in equal installments consistent with the Company's
      payroll practices. For the first year of your employment, Nephros will pay
      Executive a non-accountable commuting allowance of $10,000. This amount will
      be
      paid after completing 12 months of employment, in accordance with the Company’s
      regular payroll practices. In addition, The Company will also pay up to $10,000
      of moving costs since it is expected that you will relocate at a future date.
      The Compensation Committee (the “Compensation Committee”) of the Board (or the
      independent members of the Board, if there is no Compensation Committee) shall
      review the Executive’s Base Salary annually and shall determine whether such
      Base Salary should be increased but not decreased, which decision shall be
      within the Compensation Committee’s sole discretion.

     

    Performance
      Bonus.
      The
      target discretionary bonus is 20%
      of
      annual base salary, as determined by the Company in its sole discretion. You
      are
      eligible to receive this bonus for the period from start date to December 31,
      2008 on a pro-rated basis. The bonus amount will be based in part on attainment
      of personal objectives as determined by the Executive and CEO, and based in
      part
      on the Company achieving overall corporate targets.

     

    3.2 Grant
      of Options and Terms Thereof.
      Upon
      execution of this Agreement, the Company shall grant to Executive a one-time
      option (the "Option"), pursuant to the Nephros 2004 Stock Incentive Plan or
      successor plans, if applicable, to purchase 250,000 shares of the Company's
      common stock (the "Option Shares"), subject to vesting and forfeiture as
      described in the Schedule
      A.
      

     

    3.3 Benefits
      and Perquisites.
      Executive shall be entitled to participate in, to the extent Executive is
      otherwise eligible under the terms thereof, the benefit plans and programs,
      and
      receive the benefits and perquisites, generally provided to the Company’s
      eligible employees. The Executive shall be entitled to receive four weeks of
      annual paid vacation.

     

    3.4 Travel
      and Business Expenses.
      Upon
      submission of itemized expense statements in the manner specified by the
      Company, Executive shall be entitled to reimbursement for reasonable travel
      and
      other reasonable business expenses duly incurred by Executive in the performance
      of Executive's duties under this Agreement in accordance with the policies
      and
      procedures established by the Company from time to time for executives of the
      same level and responsibility as Executive.

     

    3.5 No
      Other Compensation or Benefits; Payment.
      The
      compensation and benefits specified in this Section 3 and in Section 4 of this
      Agreement shall be in lieu of any and all other compensation and benefits.
      Payment of all compensation and benefits to Executive hereunder shall be made
      in
      accordance with the relevant Company policies in effect from time to time to
      the
      extent the same are consistently applied, including normal payroll practices,
      and shall be subject to all applicable employment and withholding taxes and
      other withholdings.

     

    3.6 Cessation
      of Employment.
      In the
      event Executive shall cease to be employed by the Company for any reason, then
      Executive's compensation and benefits shall cease on the date of such event,
      except as otherwise provided herein or in any applicable employee benefit plan
      or program.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    4. Termination
      of Employment.
      

     

    4.1 Termination.
      The
      Company may terminate Executive's employment for Cause (as defined below),
      in
      which case the provisions of Section 4.2 of this Agreement shall apply. The
      Company may also terminate Executive's employment in the event of Executive's
      Disability (as defined below), in which case the provisions of Section 4.4
      of
      this Agreement shall apply. The Company may also terminate Executive's
      employment for any other reason by written notice to Executive, in which case
      the provisions of Section 4.5 of this Agreement shall apply. If Executive's
      employment is terminated by reason of Executive's death, retirement or voluntary
      resignation, the provisions of Section 4.3 of this Agreement shall
      apply.

     

    4.2 Termination
      for Cause.
      In the
      event that Executive's employment hereunder is terminated during the Term by
      the
      Company for Cause (as defined below), then the Company shall pay to Executive
      only the (i) accrued, but unpaid Base Salary for services rendered through
      the
      date of termination, and (ii) any Milestone Bonuses due and payable under the
      terms of this Agreement through such date of termination (collectively, the
      “Accrued Obligations”), which Milestone Bonuses shall be paid at the same time
      as provided under Section 3.2 hereof and any and all unvested Options shall
      automatically be cancelled and forfeited by the Executive as of the date of
      termination. Executive shall have the right to exercise any and all vested
      Options within the period commencing on the date of termination and ending
      ninety days after the date of such termination (the “Options Exercise Period”).
      Any Options not exercised by Executive within the Options Exercise Period shall
      be cancelled. In all other respects, all such Options shall be governed by
      the
      plans, programs, agreements, and other documents pursuant to which such Options
      were granted. For purposes of this Agreement, "Cause" shall mean (i) conviction
      of any crime (whether or not involving the Company) constituting a felony in
      the
      jurisdiction involved; (ii) engaging in any act which, in each case, subjects,
      or if generally known would subject, the Company to public ridicule or
      embarrassment; (iii) gross neglect or misconduct in the performance of
      Executive's duties hereunder; or (iv) material breach of any provision of this
      Agreement by Executive; provided, however, that with respect to clauses (iii)
      or
      (iv), Executive shall have received written notice from the Company setting
      forth the alleged act or failure to act constituting "Cause" hereunder, and
      Executive shall not have cured such act or refusal to act within 10 business
      days of his actual receipt of notice.

     

    4.3 Termination
      by Reason of Death or Retirement or Voluntary Resignation.
      In the
      event that Executive's employment hereunder is terminated during the Term (x)
      by
      reason of Executive's death, or (y) by reason of Executive's voluntary
      resignation or retirement, then the Company shall pay to Executive only the
      (i)
      accrued, but unpaid Base Salary for services rendered through the date of
      termination, and (ii) any Milestone Bonuses due and payable under the terms
      of
      this Agreement through such date of termination and those that become due and
      payable within 90 days of such date of termination, which Milestone Bonuses
      shall be paid at the same time as provided under Section 3.2 hereof. Any and
      all
      unvested Options shall automatically be cancelled and forfeited by the Executive
      as of the date of Executive's death or Executive's voluntary resignation or
      retirement, except upon exercise of Executive’s Change of Control Termination
      Option. Executive shall have the right to exercise any and all vested Options
      within the period commencing on the date of termination and ending ninety days
      after the date of such termination (the “Options Exercise Period”). Any Options
      not exercised by Executive within the Options Exercise Period shall be
      cancelled. In all other respects, all such Options shall be governed by the
      plans, programs, agreements, and other documents pursuant to which such Options
      were granted.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.4 Disability.
      If, as
      a result of Executive's incapacity due to physical or mental illness, Executive
      shall have failed to perform Executive's duties hereunder on a full time basis
      for either (i) one hundred twenty (120) days within any three hundred sixty-five
      (365) day period, or (ii) ninety (90) consecutive days, the Company may
      terminate Executive's employment hereunder for "Disability". In that event,
      the
      Company shall pay to Executive only the accrued, but unpaid, Base Salary for
      services rendered through such date of termination. Any and all unvested Options
      shall be cancelled as of the date of termination. During any period that
      Executive fails to perform Executive's duties hereunder as a result of
      incapacity due to physical or mental illness (a "Disability Period"), Executive
      shall continue to receive the compensation and benefits provided by Section
      3 of
      this Agreement until Executive's employment hereunder is terminated; provided,
      however, that the amount of compensation and benefits received by Executive
      during the Disability Period shall be reduced by the aggregate amounts, if
      any,
      payable to Executive under disability benefit plans and programs of the Company
      or under the Social Security disability insurance program. Additionally, the
      vesting of the Executive’s Options shall be tolled during the Disability Period
      and in the event of a termination of this Agreement as a result of the
      Executive’s Disability, any and all unvested Options shall automatically be
      cancelled and forfeited by the Executive as of the date of such termination.
      Executive (or as applicable, his spouse or estate) shall have the right to
      exercise any and all vested Options within the period commencing on the date
      of
      termination and ending ninety days after the date of such termination (the
      “Options Exercise Period”). Any Options not exercised by Executive within the
      Options Exercise Period shall be cancelled. In all other respects, all such
      Options shall be governed by the plans, programs, agreements, and other
      documents pursuant to which such Options were granted.

     

    4.5 Termination
      by Company for Any Other Reason.
      In the
      event that Executive's employment hereunder is terminated by the Company prior
      to the expiration of the Term for any reason other than as provided in Sections
      4.2, 4.3 or 4.4 of this Agreement, any and all unvested Options shall
      automatically be cancelled and forfeited by the Executive as of the date of
      such
      termination and the Company shall pay to Executive:

     

    
      	 	
              (i)

            	
              any
                accrued, but unpaid Base Salary for services rendered through such
                date of
                termination;

            

    

     

    
      	 	
              (ii)

            	
              the
                continued payment of the Base Salary, in the amount as of the date
                of
                termination, for a period (the “Severance Term”) consisting of the lesser
                of (x) the Maximum Severence Period (as defined below), or (y) the
                remaining term of the contract from the date of termination, such
                payments
                to be made at the times such Base Salary would have been paid had
                Executive’s employment not
                terminated.

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    As
      used
      herein, the “Maximum Severence Period” shall mean three months, until Executive
      has been employed hereunder for at least one year, and, thereafter, shall mean
      six months.

     

    Notwithstanding
      anything to the contrary contained herein, in the event that Executive shall
      breach Sections 5, 6 or 7 of this Agreement at any time, in addition to any
      other remedies the Company may have in the event Executive breaches this
      Agreement, the Company's obligation under clauses (i) and (ii) of this Section
      4.5 shall cease and Executive's rights thereto shall terminate and shall be
      forfeited.

     

    4.6 Release.
      Except
      for any Accrued Obligations, the severance payments described in Section 4.5
      will be provided to Executive only if the following conditions are satisfied:
      (i) Executive agrees to continue to be bound by and complies with all surviving
      provisions of the confidentiality and/or non-compete provisions of this
      Agreement; and (ii) Executive executes and delivers to the Company, and does
      not
      revoke, a full general release, in a form acceptable to the Company, releasing
      all claims, known or unknown, that Executive may have against the Company,
      and
      any subsidiary or related entity, their officers, directors, employees and
      agents, arising out of or any way related to Executive’s employment or
      termination of employment with the Company.

     

    4.7 Notwithstanding
      the due date of any post-employment payments, if at the time of the termination
      of employment the executive is a “specified employee” (as defined in Section
      409Aof the Internal Revenue Code of 1986, as amended) as determined by the
      Compensation Committee of the Board, Executive will not be entitled to any
      payments upon termination of employment until the earlier of (i) the date which
      is six (6) months after the termination of employment for any reason other
      than
      death or (ii) the date of the Executive’s death. The provisions of this
      paragraph will only apply if and to the extent required to avoid any “additional
      tax” under Section 409A.

     

    4.8 Termination
      by Executive.
      In the
      event that Executive's employment hereunder is terminated by Executive prior
      to
      the expiration of the Term for any reason other than Executive’s exercise of the
      Change of Control Termination Option (as defined in Section 8.1), Executive
      shall be entitled to receive the same payments and other treatment as if the
      Company had terminated Executive’s employment hereunder for Cause, as provided
      for in Section 4.2.

     

    5. Exclusive
      Employment; Noncompetition.

     

    5.1 No
      Conflict; No Other Employment.
      During
      the period of Executive's employment with the Company, Executive shall not:
      (i)
      engage in any activity which conflicts or interferes with or derogates from
      the
      performance of Executive's duties hereunder nor shall Executive engage in any
      other business activity, whether or not such business activity is pursued for
      gain or profit, except as approved in advance in writing by the Board of
      Directors of the Company; provided, however, that Executive shall be entitled
      to
      manage his personal investments and otherwise attend to personal affairs,
      including charitable activities, in a manner that does not unreasonably
      interfere with his responsibilities hereunder, or (ii) accept any other
      employment, whether as an executive or consultant or in any other capacity,
      and
      whether or not compensated therefor, unless Executive receives the prior written
      approval of the Board of Directors of the Company.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    5.2 No
      Competition.
      Executive acknowledges and recognizes the highly competitive nature of the
      Company’s business and that access to the Company’s confidential records and
      proprietary information renders him special and unique within the Company’s
      industry. In consideration of the payment by the Company to Executive of amounts
      that may hereafter be paid to Executive pursuant to this Agreement (including,
      without limitation, pursuant to Sections 3 and 4 hereof) and other obligations
      undertaken by the Company hereunder, Executive agrees that during (i) his
      employment with the Company and (ii) the period beginning on the date of
      termination of employment for any reason and ending on the last day of the
      Severance Term as defined in Section 4.5(iii), Executive shall not, directly
      or
      indirectly, engage (as owner, investor, partner, stockholder, employer,
      employee, consultant, advisor, director or otherwise) in any Competing Business,
      provided that the provisions of this Section 5.2 will not be deemed breached
      merely because Executive owns less than 1% of the outstanding common stock
      of a
      publicly-traded company. Additionally, the Company shall have the option to
      extend the No Competition Period for an additional six months in return for
      a
      six-month extension of the Severance Term. For purposes of this Agreement,
      “Competing Business” shall mean (i) any business in which the Company is
      currently engaged anywhere in the world, including but not limited to (A) the
      development of medical equipment in the hemodiafiltration realm for use in
      ESRD
      chronic therapy, and (B) the development of cold water or air purification
      systems.

     

    5.3 Non-Solicitation.
      In
      further consideration of the payment by the Company to Executive of amounts
      that
      may hereafter be paid to Executive pursuant to this Agreement (including,
      without limitation, pursuant to Sections 3 and 4 hereof) and other obligations
      undertaken by the Company hereunder, Executive agrees that during his employment
      and the Post-Employment Period, he shall not, directly or indirectly, (i)
      solicit, encourage or attempt to solicit or encourage any of the employees,
      agents, consultants or representatives of the Company or any of its affiliates
      to terminate his, her, or its relationship with the Company or such affiliate;
      (ii) solicit, encourage or attempt to solicit or encourage any of the
      employees of the Company or any of its affiliates to become employees or
      consultants of any other person or entity; (iii) solicit, encourage or attempt
      to solicit or encourage any of the consultants of the Company or any of its
      affiliates to become employees or consultants of any other person or entity,
      provided that the restriction in this clause (iii) shall not apply if (A) such
      solicitation, encouragement or attempt to solicit or encourage is in connection
      with a business which is not a Competing Business and (B)
      the
      consultant’s rendering of services for the other person or entity will not
      interfere with the consultant’s rendering of services to the Company; (iv)
      solicit or attempt to solicit any customer, vendor or distributor of the Company
      or any of its affiliates with respect to any product or service being furnished,
      made, sold or leased by the Company or such affiliate, provided that the
      restriction in this clause (iv) shall not apply if such solicitation or attempt
      to solicit is (A) in connection with a business which is not a Competing
      Business and (B) does not interfere with, or conflict with, the interests of
      the
      Company or any of its affiliates; or (v) persuade or seek to persuade any
      customer of the Company or any affiliate to cease to do business or to reduce
      the amount of business which any customer has customarily done or contemplates
      doing with the Company or such affiliate, whether or not the relationship
      between the Company or its affiliate and such customer was originally
      established in whole or in part through Executive’s efforts. For purposes of
      this Section 5.3 only, the terms “customer,” “vendor” and “distributor” shall
      mean a customer, vendor or distributor who has done business with the Company
      or
      any of its affiliates within twelve months preceding the termination of
      Executive’s employment.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    5.4 During
      Executive’s employment with the Company and during the Severance Term, Executive
      agrees that upon the earlier of Executive’s (i) negotiating with any Competitor
      (as defined below) concerning the possible employment of Executive by the
      Competitor, (ii) receiving an offer of employment from a Competitor, or (iii)
      becoming employed by a Competitor, Executive will (A) immediately provide
      written notice to the Company of such circumstances and (B) provide copies
      of
      Section 5 of this Agreement to the Competitor. Executive further agrees that
      the
      Company may provide notice to a Competitor of Executive’s obligations under this
      Agreement, including without limitation Executive’s obligations pursuant to
      Section 5 hereof. For purposes of this Agreement, “Competitor” shall mean any
      entity (other than the Company or any of its affiliates) that engages, directly
      or indirectly, in any Competing Business.

     

    5.5 Executive
      understands that the provisions of this Section 5 may limit his ability to
      earn
      a livelihood in a business similar to the business of the Company or its
      affiliates but nevertheless agrees and hereby acknowledges that the
      consideration provided under this Agreement, including any amounts or benefits
      provided under Sections 3 and 4 hereof and other obligations undertaken by
      the
      Company hereunder, is sufficient to justify the restrictions contained in such
      provisions. In consideration thereof and in light of Executive’s education,
      skills and abilities, Executive agrees that he will not assert in any forum
      that
      such provisions prevent him from earning a living or otherwise are void or
      unenforceable or should be held void or unenforceable.

     

    6. Inventions
      and Proprietary Property.

     

    6.1 Definition
      of Proprietary Property.
      For
      purposes of this Agreement, "Proprietary Property" shall mean designs,
      specifications, ideas, formulas, discoveries, inventions, improvements,
      innovations, concepts and other developments, trade secrets, techniques,
      methods, know-how, technical and non-technical data, works of authorship,
      computer programs, computer algorithms, computer architecture, mathematical
      models, drawings, trademarks, copyrights, customer lists, marketing plans,
      and
      all other matters which are legally protectable or recognized as forms of
      property, whether or not patentable or reduced to practice or to a
      writing.

     

    6.2 Assignment
      of Proprietary Property to the Company or its Subsidiaries.
      Executive hereby agrees to assign, transfer and set over, and Executive does
      hereby assign, transfer and set over, to the Company (or, as applicable, a
      subsidiary of the Company), without further compensation, all of Executive's
      rights, title and interest in and to any and all Proprietary Property which
      Executive, either solely or jointly with others, has conceived, made or
      suggested or may hereafter conceive, make or suggest, in the course of
      Executive's employment with the Company.

     

    The
      assignment of Proprietary Property hereunder includes without limitation all
      rights of paternity, integrity, disclosure and withdrawal and any other rights
      that may be known as or referred to as moral rights ("Moral Rights"). To the
      extent that such Moral Rights cannot be assigned under applicable law and to
      the
      extent the following is allowed by the laws in the various countries where
      Moral
      Rights exist, Executive hereby waives such Moral Rights and consents to any
      action of the Company or any subsidiary of the Company that would violate such
      Moral Rights in the absence of such consent. Executive also will endeavor to
      facilitate such use of any such Moral Rights as the Company, or, as applicable,
      a subsidiary of the Company, shall reasonably instruct, including confirming
      any
      such waivers and consents from time to time as requested by the Company (or,
      as
      applicable, a subsidiary of the Company).

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    6.3 Works
      for Hire.
      Executive acknowledges that all original works of authorship or other creative
      works which are made by Executive (solely or jointly with others) within the
      scope of the employment of Executive by the Company and which are protectable
      by
      copyright are "works made for hire," pursuant to United States Copyright Act
      (17
      U.S.C., Section 101). To the extent such original work of authorship or other
      creative works are not works made for hire, Executive hereby assigns to the
      Company (or, as directed by the Company, to a subsidiary of the Company) all
      of
      the rights comprised in the copyright of such works.

     

    6.4 Disclosure
      of Proprietary Property and Execution of Documents.
      Executive further agrees to promptly disclose to the Company any and all
      Proprietary Property which Executive has assigned, transferred and set over
      or
      will assign, transfer and set over as provided in Section 6.2 above, and
      Executive agrees to execute, acknowledge and deliver to the Company (or, as
      applicable, to a subsidiary of the Company), without additional compensation
      and
      without expense to Executive, any and all instruments reasonably requested,
      and
      to do any and all lawful acts which, in the reasonable judgment of the Company
      or its attorneys (or, as applicable, a subsidiary of the Company or its
      attorneys) may be required or desirable in order to vest in the Company or
      such
      subsidiary all property rights with respect to such Proprietary
      Property.

     

    6.5 Enforcement
      of Proprietary Rights.
      Executive will assist the Company (or, as applicable, a subsidiary of the
      Company) in every proper way to obtain, assign to the Company (or, as directed
      by the Company, to a subsidiary), confirm and from time to time enforce, United
      States and foreign patent trade secret, trademark, copyright, mask work, and
      other intellectual property rights relating to Proprietary Property in any
      and
      all countries. To that end Executive will execute, verify and deliver such
      documents and perform such other acts (including appearances as a witness)
      as
      the Company, or, as applicable, a subsidiary of the Company, may reasonably
      request for use in applying for, obtaining, perfecting, evidencing, sustaining
      and enforcing such proprietary rights and the assignment of such Proprietary
      Property. In addition, Executive will execute, verify and deliver assignments
      of
      such Proprietary Property and all rights therein to the Company, its subsidiary
      or its or their designee. The obligation of Executive to assist the Company,
      or,
      as applicable, a subsidiary of the Company, with respect to proprietary rights
      relating to such Proprietary Property in any and all countries shall continue
      beyond the termination of employment, but the Company, or as applicable, a
      subsidiary of the Company, shall compensate Executive at a mutually agreed
      upon
      fee, in addition to any expenses, after such termination.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    In
      the
      event the Company, or, as applicable, a subsidiary of the Company, is unable
      for
      any reason, after reasonable effort, to secure the signature of Executive on
      any
      document needed in connection with the actions specified in the preceding
      paragraph, Executive hereby irrevocably designates and appoints the Company
      and
      its duly authorized officers and agents as agent and attorney in fact, which
      appointment is coupled with an interest, to act for and on behalf of Executive,
      to execute, verify and file any such documents and to do all other lawfully
      permitted acts to further the purposes of the preceding paragraph with the
      same
      legal force and effect as if executed by Executive. Executive hereby waives
      and
      quitclaims to the Company or, as applicable, a subsidiary of the Company, any
      and all claims, of any nature whatsoever, which Executive now or may hereafter
      have for infringement of any proprietary rights assigned hereunder to the
      Company or such subsidiary.

     

    6.6 Third
      Party Information.
      To the
      extent Executive has or possesses any Confidential Information (as hereinafter
      defined) belonging to Executive or to others, Executive shall not use or
      disclose to the Company or its subsidiaries or induce the Company or its
      subsidiaries to use any such Confidential Information unless the Company or
      its
      subsidiaries have a legal rights to use such Confidential Information. Executive
      will promptly advise the Company in writing if any of Executive's involvement
      with the Company or any subsidiary of the Company might result in the possible
      violation of Executive's undertakings to others or the use of any Confidential
      Information of Executive or of others.

     

    7. Confidential
      Information.

     

    7.1 Existence
      of Confidential Information.
      The
      Company owns and has developed and compiled, and the Company and its
      subsidiaries will develop and compile, certain proprietary techniques and
      confidential information, which have and will have great value to their
      businesses (referred to in this Agreement, collectively, as "Confidential
      Information"). Confidential Information includes not only information disclosed
      by the Company (or, as applicable, a subsidiary of the Company) to Executive,
      but also information developed or learned by Executive during the course or
      as a
      result of employment with the Company, which information shall be the property
      of the Company or, as applicable, such subsidiary. Confidential Information
      includes all information that has or could have commercial value or other
      utility in the business in which the Company or any of its subsidiaries is
      engaged or contemplates engaging, and all information of which the unauthorized
      disclosure could be detrimental to the interests of the Company or its
      subsidiary, whether or not such information is specifically labeled as
      Confidential Information by the Company or such subsidiary. By way of example
      and without limitation, Confidential Information includes any and all
      information developed, obtained, licensed by or to or owned by the Company
      or
      any of its subsidiaries concerning trade secrets, techniques, know-how
      (including designs, plans, procedures, merchandising, marketing, distribution
      and warehousing know-how, processes, and research records), software, computer
      programs and designs, development tools, all Proprietary Property, and any
      other
      intellectual property created, used or sold (through a license or otherwise)
      by
      the Company or any of its subsidiaries, electronic data information know-how
      and
      processes, innovations, discoveries, improvements, research, development, test
      results, reports, specifications, data, formats, marketing data and plans,
      business plans, strategies, forecasts, unpublished financial information,
      orders, agreements and other forms of documents, price and cost information,
      merchandising opportunities, expansion plans, budgets, projections, customer,
      supplier, licensee, licensor and subcontractor identities, characteristics,
      agreements and operating procedures, and salary, staffing and employment
      information.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    7.2 Protection
      of Confidential Information.
      Executive acknowledges and agrees that in the performance of Executive's duties
      hereunder, the Company or a subsidiary of the Company may disclose to and
      entrust Executive with Confidential Information which is the exclusive property
      of the Company or such subsidiary and which Executive may possess or use only
      in
      the performance of Executive's duties to the Company. Executive also
      acknowledges that Executive is aware that the unauthorized disclosure of
      Confidential Information, among other things, may be prejudicial to the
      Company's or its subsidiaries' interests, an invasion of privacy and an improper
      disclosure of trade secrets. Executive shall not, directly or indirectly, use,
      make available, sell, disclose or otherwise communicate to any corporation,
      partnership or other entity, individual or other third party, other than in
      the
      course of Executive's assigned duties and for the benefit of the Company, any
      Confidential Information, either during the Term or thereafter. In the event
      Executive desires to publish the results of Executive's work for or experiences
      with the Company or its subsidiaries through literature, interviews or speeches,
      Executive will submit requests for such interviews or such literature or
      speeches to the Board of Directors of the Company at least fourteen (14) days
      before any anticipated dissemination of such information for a determination
      of
      whether such disclosure is in the best interests of the Company and its
      subsidiaries, including whether such disclosure may impair trade secret status
      or constitute an invasion of privacy. Executive agrees not to publish, disclose
      or otherwise disseminate such information without the prior written approval
      of
      the Board of Directors of the Company.

     

    7.3 Delivery
      of Records.
      In the
      event Executive's employment with the Company ceases for any reason, Executive
      will not remove from the Company's premises without its prior written consent
      any records (written or electronic), files, drawings, documents, equipment,
      materials and writings received from, created for or belonging to the Company
      or
      its subsidiaries, including those which relate to or contain Confidential
      Information, or any copies thereof. Upon request or when employment with the
      Company terminates, Executive will immediately deliver the same to the
      Company.

     

    8. Assignment
      and Transfer.

     

    8.1 Company.
      This
      Agreement shall inure to the benefit of and be enforceable by, and may be
      assigned by the Company to, any purchaser of all or substantially all of the
      Company's business or assets, any successor to the Company or any assignee
      thereof (whether direct or indirect, by purchase, merger, consolidation or
      otherwise). As soon as reasonable prior to such an event (a “Change of Control”)
      (but no later than 31 days prior thereto), the Company shall advise Executive
      of
      this pending occurrence (the “Change of Control Notice”). Executive shall then
      have 31 days from the date of the Change of Control Notice to discuss, negotiate
      and confer with any successor entity regarding the terms and conditions of
      Executive's continued employment with the successor Company following a Change
      of Control. If Executive, acting reasonably, is unable to reach an agreement
      through good faith negotiations with any successor to the Company during such
      31
      day period, then Executive may elect (the “Change of Control Termination
      Option”) to terminate his employment with the Company and receive the payments
      and bonuses outlined in Section 4.5 hereof.

     

    8.2 Executive.
      Executive's rights and obligations under this Agreement shall not be
      transferable by Executive by assignment or otherwise, and any purported
      assignment, transfer or delegation thereof shall be void; provided, however,
      that if Executive shall die, all amounts then payable to Executive hereunder
      shall be paid in accordance with the terms of this Agreement to Executive's
      devisee, legatee or other designee or, if there be no such designee, to
      Executive's estate.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    9. Miscellaneous.
      

     

    9.1 Other
      Obligations.
      Executive represents and warrants that neither Executive's employment with
      the
      Company or Executive's performance of Executive's obligations hereunder will
      conflict with or violate or otherwise are inconsistent with any other
      obligations, legal or otherwise, which Executive may have. Executive covenants
      that he shall perform his duties hereunder in a professional manner and not
      in
      conflict or violation, or otherwise inconsistent with other obligations legal
      or
      otherwise, which Executive may have.

     

    9.2 Nondisclosure;
      Other Employers.
      Executive will not disclose to the Company or any of its subsidiaries, or use,
      or induce the Company or any of its subsidiaries to use, any proprietary
      information, trade secrets or confidential business information of others.
      Executive represents and warrants that Executive does not possess any property,
      proprietary information, trade secrets and confidential business information
      belonging to prior employers.

     

    9.3 Cooperation.
      Following termination of employment with the Company for any reason, Executive
      shall cooperate with the Company, as requested by the Company, to effect a
      transition of Executive's responsibilities and to ensure that the Company is
      aware of all matters being handled by Executive.

     

    9.4 No
      Duty to Mitigate.
      Executive shall be under no duty to mitigate any losses or damage to the Company
      with respect to any amounts payable pursuant to Section 4 of this
      Agreement.

     

    9.5 Protection
      of Reputation.
      During
      the Term and thereafter, Executive agrees that he will take no action which
      is
      intended, or would reasonably be expected, to harm the Company or any of its
      subsidiaries or its or their reputations or which would reasonably be expected
      to lead to unwanted or unfavorable publicity to the Company or any of its
      subsidiaries, other than those required in order to permit Executive to comply
      with applicable law or those made in connection with legal or arbitral process.
      During the Term and thereafter, the Company agrees that it will take no actions
      which are intended, or would reasonably be expected, to harm Executive or his
      reputation or which would reasonably be expected to lead to unwanted or
      unfavorable publicity to the executive, other than those required in order
      to
      permit the Company to comply with applicable law or those made in connection
      with legal or arbitral process. Notwithstanding the foregoing, this paragraph
      shall not prevent the Company or Executive from exercising any of their
      respective rights under this Agreement.

     

    9.6 Governing
      Law.
      This
      Agreement shall be governed by and construed (both as to validity and
      performance) and enforced in accordance with the internal laws of the State
      of
      New York applicable to agreements made and to be performed wholly with such
      jurisdiction, without regard to principles of the conflict of laws thereof
      or
      where the parties are located at the time a dispute arises.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    9.7 Consent
      to Jurisdiction, Waiver of Jury Trial.
      Each of
      the parties hereby irrevocably and unconditionally consents to the exclusive
      jurisdiction of any federal or state court of New York sitting in New York
      County and irrevocably agrees that all actions or proceedings arising out of
      or
      relating to this Agreement or the transactions contemplated hereby shall be
      litigated exclusively in such Courts. Each of the parties agrees not to commence
      any legal proceeding related hereto except in such Courts. Each of the parties
      irrevocably waives any objection which it may now or hereafter have to the
      laying of the venue of any such proceeding in any such Court and hereby further
      irrevocably and unconditionally waives and agrees not to plead or claim in
      any
      such Court that any such action, suit or proceeding brought in any such court
      has been brought in an inconvenient forum. Each of the parties irrevocably
      waives any right it may have to a trial by jury in any such action, suit or
      proceeding. Each of the parties agrees that the prevailing party in any action
      or proceeding arising out of or relating to this Agreement or the transactions
      contemplated hereby shall be entitled to recover its reasonable fees and
      expenses in connection therewith, including legal fees.

     

    9.8 Entire
      Agreement.
      This
      Agreement (including all exhibits hereto) contains the entire agreement and
      understanding between the parties hereto in respect of Executive's employment
      and supersedes, cancels and annuls any prior or contemporaneous written or
      oral
      agreements, understandings, commitments and practices between them respecting
      Executive's employment, including all prior employment agreements, if any,
      between the Company and Executive, which agreement(s) hereby are terminated
      and
      shall be of no further force or effect.

     

    9.9 No
      Amendment/Waiver.
      This
      Agreement may not be amended or modified in any manner nor may any of its
      provisions be waived except by written amendment executed by the parties. A
      waiver, modification or amendment by a party shall only be effective if (a)
      it
      is in writing and signed by the parties, (b) it specifically refers to this
      Agreement and (c) it specifically states that the party, as the case may be,
      is
      waiving, modifying or amending its rights hereunder. Any such amendment,
      modification or waiver shall be effective only in the specific instance and
      for
      the specific purpose for which it was given.

     

    9.10 Severability.
      If any
      term, provision, covenant or condition of this Agreement or part thereof, or
      the
      application thereof to any person, place or circumstance, shall be held to
      be
      invalid, unenforceable or void by a court of competent jurisdiction, the
      remainder of this Agreement and such term, provision, covenant or condition
      shall remain in full force and effect, and any such invalid, unenforceable
      or
      void term, provision, covenant or condition shall be deemed, without further
      action on the part of the parties hereto, modified, amended and limited, and
      the
      court shall have the power to modify, to the extent necessary to render the
      same
      and the remainder of this Agreement valid, enforceable and lawful. In this
      regard, Executive acknowledges that the provisions of Sections 5, 6 and 7 of
      this Agreement are reasonable and necessary for the protection of the
      Company.

     

    9.11 Construction.
      The
      headings and captions of this Agreement are provided for convenience only and
      are intended to have no effect in construing or interpreting this Agreement.
      The
      language in all parts of this Agreement shall be in all cases construed
      according to its fair meaning and not strictly for or against the Company or
      Executive. The use herein of the word "including," when following any general
      provision, sentence, clause, statement, term or matter, shall be deemed to
      mean
      "including, without limitation." As used herein, "Company" shall mean the
      Company and its subsidiaries and any purchaser of, successor to or assignee
      (whether direct or indirect, by purchase, merger, consolidation or otherwise)
      of
      all or substantially all of the Company's business or assets which is obligated
      to perform this Agreement by operation of law, agreement or otherwise. As used
      herein, the words "day" or "days" shall mean a calendar day or days. As used
      herein, "Compensation Committee" means the Compensation Committee of the Board
      or, if no such committee is then serving, at least two members of the Board
      as
      selected by the Board.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    9.12 Remedies
      for Breach.
      The
      parties hereto agree that Executive is obligated under this Agreement to render
      personal services during the Term of a special, unique, unusual, extraordinary
      and intellectual character, thereby giving this Agreement special value, and,
      in
      the event of a breach or threatened breach of any covenant of Executive herein,
      the injury or imminent injury to the value and the goodwill of the Company's
      and
      its subsidiaries' businesses could not be reasonably or adequately compensated
      in damages in an action at law. Accordingly, Executive acknowledges that the
      Company (and as applicable, one or more of its subsidiaries) shall be entitled
      to seek injunctive relief or any other equitable remedy against Executive in
      the
      event of a breach or threatened breach of Sections 5, 6 or 7 of this Agreement.
      The rights and remedies of the Executive and Company are cumulative and shall
      not be exclusive, and Executive and Company shall be entitled to pursue all
      legal and equitable rights and remedies and to secure performance of the
      obligations and duties of the other under this Agreement, and the enforcement
      of
      one or more of such rights and remedies by Executive or Company shall in no
      way
      preclude Executive or Company from pursuing, at the same time or subsequently,
      any and all other rights and remedies available to Executive or
      Company.

     

    9.13 Notices.
      Any
      notice, request, consent or approval required or permitted to be given under
      this Agreement or pursuant to law shall be sufficient if in writing, and if
      and
      when sent by certified or registered mail, return receipt requested, with
      postage prepaid, or by overnight courier, to Executive's residence, as reflected
      in the Company's records or as otherwise designated by Executive, or to the
      Company's principal executive office, attention: Chairman of the Compensation
      Committee of the Board of Directors with a copy (which shall not constitute
      notice) to: David M. Zlotchew, Esq., Haynes and Boone, LLP, 153 East 53d Street,
      New York, NY 10022, as the case may be. All such notices, requests, consents
      and
      approvals shall be effective upon being deposited in the United States mail.
      However, the time period in which a response thereto must be given shall
      commence to run from the date of receipt on the return receipt of the notice,
      request, consent or approval by the addressee thereof. Rejection or other
      refusal to accept, or the inability to deliver because of changed address of
      which no notice was given as provided herein, shall be deemed to be receipt
      of
      the notice, request, consent or approval sent

     

    9.14 Assistance
      in Proceedings, Etc.
      Executive shall, without additional compensation during the Term and with
      complete reimbursement of expenses after the expiration of the Term, upon
      reasonable notice, furnish such information and proper assistance to the Company
      as may reasonably be required by the Company in connection with any legal or
      quasi-legal proceeding, including any external or internal investigation,
      involving the Company or any of its subsidiaries or in which any of them is,
      or
      may become, a party.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    9.15 Survival.
      Cessation or termination of Executive's employment with the Company shall not
      result in termination of this Agreement. The respective obligations of
      Executive, and rights and benefits afforded to the Company, as provided in
      this
      Agreement, including, without limitation, Sections 5, 6, 7 and 9.13, shall
      survive cessation or termination of Executive's employment
      hereunder.

     

    [Signature
      page follows]

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
      as
      of April 1, 2008, to be deemed effective as of the date first written
      above.

     

    
      	
              EMPLOYER

            
	 
	
              NEPHROS,
                INC.

            
	 	 
	
              By:
                

            	
              /s/
                Norman J. Barta

            
	
              Name:
                Norman J. Barta

            
	
              Title:
                Chief Executive Officer

            
	 
	
              EXECUTIVE

            
	 
	
              /s/
                Gerald Kochanski

            
	
              Gerald
                Kochanski

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    SCHEDULE
      A

    

    Options

    

    
      	
              Employment
                Options:

            	
              Options
                to purchase 250,000 shares of Common Stock. The Options shall vest
                in four
                equal installments on each of March 31, 2009, March 31, 2010, March
                31,
                2011 and March 31, 2012; provided that Executive remains employed
                by the
                Company at such time; and provided further that such Options shall
                become
                exercisable in full immediately upon the occurrence of a Change in
                Control
                (as defined in the Company’s 2004 Stock Incentive Plan). The Options shall
                be exercisable at an exercise price equal to the Common Stock’s closing
                price on the American Stock Exchange on the date of
                grant.

            

    

     

    
      
         

      

      
        16Unassociated Document

    SEPARATION
      AGREEMENT AND RELEASE

    

    This
      Separation Agreement and Release (“Agreement”)
      is
      entered into by and between Nephros, Inc., and its affiliates and subsidiaries
      (the “Company”),
      and
      Mark W. Lerner (“Lerner”),
      as of
      April 28, 2008 (the “Effective
      Date”).
      The
      Company and Lerner are referred to herein as the “Parties.”
      This
      Agreement cancels and supersedes all prior agreements relating to Lerner’s
      employment with the Company except as provided in this Agreement.

    

    WHEREAS,
      Lerner
      is employed as Chief Financial Officer of the Company pursuant to an Offer
      of
      Employment dated March 3, 2006, and effective as of March 6, 2006
      (the“Employment
      Agreement”)
      under
      which the Parties agreed to certain terms and conditions relating to Lerner’s
      employment with the Company;

     

    WHEREAS,
      because
      of his employment as an executive of the Company, Lerner has obtained intimate
      and unique knowledge of all aspects of the Company’s business operations,
      current and future plans, financial plans and other confidential and proprietary
      information;

     

    WHEREAS,
      Lerner
      and the Company entered into an Employee Patent and Confidential Information
      Agreement dated February 28, 2006 (the “Confidentiality
      Agreement”);

     

    WHEREAS,
      Lerner
      and the Company mutually desire to terminate their employment relationship
      and
      Lerner desires to resign his position as Chief Financial Officer of the Company,
      and all other director, officer and employee positions, if any, held by Lerner
      in the Company or any of its subsidiaries or affiliates effective as of the
      Effective Date;

     

    WHEREAS,
      Lerner
      and the Company mutually desire that, in exchange for continuation of his
      current salary and benefits for a period of up to 17 days following the
      Effective Date (the “Transition
      Period”)
      during
      which Lerner shall consult with officers, directors and agents of the Company
      and otherwise provide assistance in the Company’s transition to a new Chief
      Financial Officer as reasonably requested by the Company (the “Transition
      Role”);

     

    WHEREAS,
      Lerner
      acknowledges that the Confidentiality Agreement shall survive this Agreement;
      and

     

    WHEREAS,
      the
      Parties desire to finally, fully and completely resolve all disputes that now
      or
      may exist between them, including, but not limited to those concerning Lerner’s
      job performance and activities while employed by the Company and his hiring,
      employment and termination from the Company, and all disputes over benefits
      and
      compensation connected with such employment, and specifically, but not limited
      to, any disputes arising from the terms of Lerner’s employment as set forth in
      the Employment Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and mutual covenants and agreements hereinafter
      set forth, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Company and Lerner agree
      as
      follows:

     

    1. End
      of Lerner’s Employment.
      The
      Parties agree that the Employment Agreement shall terminate on the Effective
      Date. Lerner’s last day of employment with the Company will be May 15, 2008, or
      such earlier date, if any, that the Company may choose to terminate the
      Transition Period in the event that the Company determines in its sole
      discretion that Lerner’s services in the Transition Role are not satisfactory
      (the “Separation
      Date”).
      Effective as of the Effective Date, Lerner hereby resigns his position as Chief
      Financial Officer and all other director, officer, and employee positions with
      the Company and any of the Company’s subsidiaries or affiliates, other than the
      Transition Role. On the Effective Date, Lerner will execute a resignation letter
      in the form attached hereto, and provide any other documents, if necessary,
      to
      effect his resignation(s).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. Certain
      Payments and Benefits.

     

    (a) Accrued
      Obligations.
      Within
      five (5) days following the Separation Date, the Company shall pay Lerner
for
      all
      unpaid salary, reimbursement for unpaid reimbursable company-related expenses
      for which Lerner has submitted expense requests and supporting documentation
      within three (3) days of the Separation Date, and any accrued but unused
      vacation through the Separation Date (“Accrued
      Obligations”). 
      Except
      as stated in this Agreement or as required by law, all other compensation and
      benefits which relate to Lerner’s employment with the Company, including any
      benefits set forth in the Employment Agreement or in any other employee benefit
      plan, policy or program, except as memorialized in this Agreement, shall cease
      as of the Separation Date.

     

    (b) Separation
      Payments.
      The
      Company will pay Lerner
      his
      current base salary for a period of three months following the Separation Date
      (the “Separation
      Period”),
      minus
      normal payroll withholdings and taxes, if applicable (“Separation
      Payments”),
      payable
      in accordance with the Company’s normal payroll practices beginning with the
      first payroll period following execution of this Agreement. The Separation
      Payments will
      not be
      treated as compensation under the Company’s 401(k) Plan or any other retirement
      plan.

     

    (c) Outplacement
      Assistance.
      The
      Company will reimburse Lerner for up to $5,000 of reasonable expenses for
      professional outplacement assistance, upon an accounting therefor. Such
      outplacement services must commence during the Separation Period. Any additional
      professional outplacement assistance shall be at Lerner's sole
      expense.

     

    (d) Waiver
      of Additional Compensation or Benefits.
      Other
      than the Separation Payments and other obligations provided for in this
      Agreement, Lerner shall not be entitled to any additional compensation,
      benefits, payments or grants under any benefit plan, severance
      plan or
      bonus or incentive program established by the Company or any of the Company’s
      affiliates. Any vested interest held by Lerner in the Company’s 401(k) Plan,
      retirement plan and any other plans in which Lerner participates, including
      the
      401(k) matching payments for contributions made up to and including the
      Separation Date, shall be distributed in accordance with the terms of the plan
      and applicable law. Lerner agrees that the release in Paragraph 4 covers
      any claims he might have regarding his compensation, bonuses, stock options
      or
      grants and any other benefits he may or may not have received during his
      employment with the Company.

     

    3. Press
      Release.
      In
      connection with the termination of Lerner’s employment with the Company, Lerner
      hereby agrees to the Company’s issuance of a press release, and internal
      communications and external communications regarding his separation from his
      employment; provided
      that the
      Parties shall mutually approve the language of any press release, provided
      further
      that
      Lerner shall not unreasonably withhold his approval.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4. Mutual
      Release and Waiver. 

     

    (a) By
      Lerner.
      In
      consideration of the payments and other consideration provided for in this
      Agreement, that being good and valuable consideration, the receipt, adequacy
      and
      sufficiency of which are acknowledged by Lerner, Lerner, on his own behalf
      and
      on behalf of his agents, administrators, representatives, executors, successors,
      heirs, devisees and assigns (collectively, the “Releasing
      Parties”)
      hereby
      fully releases, remises, acquits and forever discharges the Company and all
      of
      its affiliates, and each of their respective past, present and future officers,
      directors, shareholders, equity holders, members, partners, agents, employees,
      consultants, independent contractors, attorneys, advisers, successors and
      assigns (collectively, the “Released
      Parties”),
      jointly and severally, from any and all claims, rights, demands, debts,
      obligations, losses, causes of action, suits, controversies, setoffs,
      affirmative defenses, counterclaims, third party actions, damages, penalties,
      costs, expenses, attorneys’ fees, liabilities and indemnities of any kind or
      nature whatsoever, whether known or unknown, suspected or unsuspected, accrued
      or unaccrued, whether at law, equity, administrative, statutory or otherwise,
      and whether for injunctive relief, back pay, fringe benefits, reinstatement,
      reemployment, or compensatory, punitive or any other kind of damages, which
      any
      of the Releasing Parties ever have had in the past or presently have against
      the
      Released Parties, and each of them, arising from or relating to Lerner’s
      employment with the Company or its affiliates or the termination of that
      employment or any circumstances related thereto, or any other matter, cause
      or
      thing whatsoever, including without limitation all claims arising under or
      relating to employment, employment contracts (including the Employment
      Agreement), employee benefits or purported employment discrimination or
      violations of civil rights of whatever kind or nature, including without
      limitation all claims arising under the Age Discrimination in Employment Act
      (“ADEA”),
      the
      Americans with Disabilities Act of 1990, the Family and Medical Leave Act of
      1993, the Equal Pay Act of 1963, the Rehabilitation Act of 1973, Title VII
      of
      the United States Civil Rights Act of 1964, 42 U.S.C. § 1981, the Civil Rights
      Act of 1991, the Civil Rights Acts of 1866 and/or 1871, the Sarbanes-Oxley
      Act,
      the New York State Labor Laws or any other applicable federal, state or local
      employment discrimination statute, law or ordinance, including, without
      limitation, any workers’ compensation or disability claims under any such laws,
      claims for wrongful discharge, breach of express or implied contract or implied
      covenant of good faith and fair dealing, and any other claims arising under
      state or federal law, as well as any expenses, costs or attorneys’ fees. Lerner
      further agrees that Lerner will not file or permit to be filed on Lerner’s
      behalf any such claim. Notwithstanding the preceding sentence or any other
      provision of this Agreement, this release is not intended to interfere with
      Lerner’s right to file a charge with the Equal Employment Opportunity Commission
      (the “EEOC”)
      in
      connection with any claim he believes he may have against the Company or its
      affiliates. However, by executing this Agreement, Lerner hereby waives the
      right
      to recover in any proceeding Lerner may bring before the EEOC or any state
      human
      rights commission or in any proceeding brought by the EEOC or any state human
      rights commission on Lerner’s behalf. This release shall not apply to any of the
      Company’s obligations under this Agreement, or any vested 401(k), retirement
      plan, health, medical or dental insurance or continuing benefits or perquisites
      to which Lerner is entitled under this Agreement or any tax qualified pension
      plan of the Company or its affiliates, COBRA continuation coverage benefits
      or
      any other similar benefits required to be provided by statute. Lerner does
      not
      release his right to enforce the terms of this Agreement. Lerner acknowledges
      that certain of the payments and benefits provided for in Section 2 of this
      Agreement constitute good and valuable consideration for the release contained
      in this Section 4.

     

    (b) By
      the Company.
      In
      consideration of the mutual promises contained in this Agreement, including
      Lerner’s promises to comply with the provisions of the Confidentiality
      Agreement, on behalf of itself and all of its subsidiaries, and their present
      and former agents, employees, officers, directors, attorneys, stockholders,
      plan
      fiduciaries, successors and assigns, irrevocably and unconditionally releases,
      waives, and forever discharges, Lerner and his heirs, executors, successors
      and
      assigns (the “Lerner
      Released Parties”),
      from
      any and all claims, demands, actions, causes of action, costs, fees, and all
      liability whatsoever, whether known or unknown, fixed or contingent, which
      the
      Company has, had, or may have against the Lerner Released Parties relating
      to or
      arising out of Lerner’s employment with the Company or its affiliates or the
      termination of that employment or any circumstances related thereto, that do
      not
      relate to or arise out of Lerner’s gross negligence or intentional misconduct.
      This Agreement includes, without limitation, claims at law or equity or sounding
      in contract (express or implied) or tort, claims arising under any federal,
      state or local laws, or any other statutory or common law claims related to
      Lerner’s employment or retirement as Chief Financial Officer of the
      Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5. Return
      of the Company Property.
      Within
      seven (7) days of the Separation Date, Lerner shall, to the extent not
      previously returned or delivered: (a) return all equipment, records, files,
      programs or other materials and property in his possession which belongs to
      the
      Company or any one or more of its affiliates, including, without limitation,
      all, computer access codes, Blackberries, credit cards, keys and access cards;
      and (b) deliver all original and copies of notes, materials, records, plans,
      technical data or other documents, files or programs (whether stored in paper
      form, computer form, digital form, electronically or otherwise), other than
      this
      Agreement and copies of this Agreement, that relate or refer to (1) the Company
      or any one or more of its affiliates, or (2) the Company or any one or more
      of the Company’s affiliates’ financial statements, business contacts, and sales.
      By signing this Agreement, Lerner represents and warrants that he has not
      retained and has or will timely return and deliver all the items described
      or
      referenced in subsections (a) or (b) above; and, that should he later discover
      additional items described or referenced in subsections (a) or (b) above, he
      will promptly notify the Company and return/deliver such items to the Company.
      Before Lerner returns any computers, Blackberry, personal digital assistant
      or
      other electronic storage device, Lerner may delete any personal
      information.

     

    6. Material
      Breach of Agreement.
      In the
      event Lerner knowingly fails to materially fulfill any of his obligations in
      this Agreement or under the Confidentiality Agreement during the Separation
      Period,
      or
      Lerner or anyone acting on his behalf brings suit against the Company seeking
      to
      declare any term of this Agreement void or unenforceable and if one or more
      material terms of this Agreement are ruled by a court or arbitrator to be void
      or unenforceable or subject to reduction or modification, then
      the
      Company shall be entitled to (i) terminate
      the Agreement, (ii) terminate any remaining Separation Payments set forth in
      Section 2, and Lerner will not be entitled to receive any remaining Separation
      Payments, (iii) recover Separation Payments and all other benefits set
      forth in Section 2 already paid to Lerner upon court order, (iv) recover
      attorneys’ fees, expenses and costs the Company incurs in any such action,
      and/or (v) recover any and all other relief and damages to which the
      Company may be entitled at law or in equity as a result of a breach of this
      Agreement.

     

    7. Mutual
      Non-Disparagement.

     

    (a) Lerner
      agrees that he will not, directly
      or
      indirectly, disclose, communicate, or publish any disparaging information
      concerning the Company, its affiliates, its officers and directors, its
      customers or clients, operations, technology, proprietary or technical
      information, or software whatsoever, or cause others to disclose, communicate,
      or publish any disparaging information concerning the same. Lerner further
      agrees that he will not disclose, directly or indirectly, communicate, or
      publish any disparaging information concerning the terms of his employment
      with the
      Company, any other circumstance that arose from his employment with the Company
      or separation from employment, or any action or event that occurred during
      his
      employment with the Company, or cause others to disclose, communicate,
      or
      publish any disparaging information concerning the same;

     

    (b) The
      Company, including its officers and directors,
      agrees
      that it will not, directly or indirectly, disclose, communicate, or publish
      any
      disparaging information concerning Lerner, or cause others to disclose,
      communicate, or publish any disparaging information concerning the same. the
      Company further agrees that it will not disclose, directly or indirectly,
      communicate, or publish any disparaging information concerning the terms of
      Lerner’s employment with the Company or separation from employment, any other
      circumstance that arose from Lerner’s employment with the Company, or any action
      or event that occurred during Lerner’s employment with the Company, or cause
      others to disclose, communicate, or publish any disparaging information
      concerning the same.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8. Not
      An Admission of Wrongdoing.
      This
      Agreement shall not in any way be construed as an admission by any party of
      any
      acts of wrongdoing, violation of any statute, law or legal or contractual
      right.

     

    9. Voluntary
      Execution of the Agreement.
      Lerner
      and the Company represent and agree that they have had an opportunity to review
      all aspects of this Agreement, and that they fully understand all the provisions
      of the Agreement and are voluntarily entering into this Separation Agreement
      and
      the General Release. Lerner further represents that he has not transferred
      or
      assigned to any person or entity any claim involving the Company or any portion
      thereof or interest therein.

     

    10. Confidentiality
      of Agreement.
      The
      Company and Lerner agree to keep confidential the specific terms of this
      Agreement and shall not disclose same to any person except that Lerner may
      inform (i) his spouse and his financial, tax, professional, pastoral and
      legal advisors of the contents or terms of this Agreement, and (ii) prospective
      employers of the relevant terms of this Agreement. Lerner agrees to keep
      confidential Lerner’s separation from employment from the Company and the
      circumstances relating to his separation until it is disclosed to the general
      public, and until such time, Lerner will only discuss his separation from
      employment with his spouse and his financial, tax and legal advisors or as
      otherwise directed by the Company or its agents. Before sharing the Agreement
      or
      its terms with his spouse or his financial, tax and legal advisors, Lerner
      agrees to notify them of this confidentiality requirement. If Lerner or the
      Company is required to disclose the Agreement to others by legal process, the
      party so ordered shall to the extent practical under the circumstances first
      give notice to the other parties in order that such other party may have an
      opportunity to seek a protective order. The Company and Lerner shall cooperate
      with each other, should either decide to seek a protective order with all costs
      and expenses being borne by the party seeking such order. This Agreement may
      be
      disclosed or appended as an exhibit to any securities filing required to be
      made
      by the Company or its affiliates. 

     

    11. Binding
      Effect.
      This
      Agreement shall be binding upon the Company and upon Lerner and his heirs,
      administrators, representatives, executors, successors and assigns. In the
      event
      of Lerner’s death, this Agreement shall operate in favor of his estate and all
      payments, obligations and consideration will continue to be performed in favor
      of his estate. 

     

    12. Severability.
      Should
      any provision of this Agreement be declared or determined to be illegal or
      invalid by any government agency or court of competent jurisdiction, the
      validity of the remaining parts, terms or provisions of this Agreement shall
      not
      be affected and such provisions shall remain in full force and
      effect.

     

    13. Entire
      Agreement.
      This
      Agreement sets forth the entire agreement between the parties, and fully
      supersedes any and all prior agreements, understandings, or representations
      between the parties pertaining to Lerner’s employment with the Company, the
      subject matter of this Agreement or any other term or condition of the
      relationship between the Company and Lerner including the Employment Agreement;
      except
      that the
      provisions of the Confidentiality Agreement shall survive this Agreement. Lerner
      represents and acknowledges that in executing this Agreement, he does not rely,
      and has not relied, upon any representation(s) by the Company or its agents
      except as expressly contained in this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14. Knowing
      and Voluntary Waiver.
      Lerner,
      by Lerner’s free and voluntary act of signing below, (i) acknowledges that he
      has been given a period of twenty-one (21) days to consider whether to agree
      to
      the terms contained herein, (ii) acknowledges that he has been advised to
      consult with an attorney prior to executing this Agreement, (iii) acknowledges
      that he understands that this Agreement specifically releases and waives all
      rights and claims he may have under the Age Discrimination in Employment Act,
      as
      amended, prior to the date on which he signs this Agreement, and (iv) agrees
      to
      all of the terms of this Agreement and intends to be legally bound thereby.
      The
      parties hereto acknowledge and agree that each party has reviewed and negotiated
      the terms and provisions of this Agreement and has contributed to its
      preparation (with advice of counsel). Accordingly, the rule of construction
      to
      the effect that ambiguities are resolved against the drafting party shall not
      be
      employed in the interpretation of this Agreement. Rather, the terms of this
      Agreement shall be construed fairly as to both parties hereto and not in favor
      of or against either party, regardless of which party generally was responsible
      for the preparation of this Agreement.

     

    Lerner
      understands and acknowledges that he has seven (7) days after he executes this
      Agreement to revoke the release of his claims under the ADEA. During this
      seven-day revocation period, Lerner may revoke his agreement to release claims
      under the ADEA by indicating in writing to the Company his intention to revoke.
      If Lerner exercises his right to revoke such release, he shall forfeit his
      right
      to receive any of the payments or benefits provided for herein, and to the
      extent such payments or benefits have already been made, Lerner agrees that
      he
      will immediately reimburse the Company for the amounts of such payments and
      benefits.

     

    15. Notices.
      All
      notices and other communications hereunder will be in writing. Any notice or
      other communication hereunder shall be deemed duly given if it is sent by
      registered or certified mail, return receipt requested, postage prepaid, and
      addressed to the intended recipient as set forth:

     

    If
      to
      Lerner:

    

    Mark
      W.
      Lerner

    23
      White
      Deer Lane

    West
      Harrison, NY 10604

    

    If
      to the
      Company:

    

    Nephros,
      Inc.

    ATTN:
      President and CEO

    3960
      Broadway

    New
      York,
      NY 10032

    

    Any
      party
      may send any notice or other communication hereunder to the intended recipient
      at the address set forth using any other means (including personal delivery,
      expedited courier, messenger services, fax, ordinary mail or electronic mail),
      but no such notice or other communication shall be deemed to have been duly
      given unless and until it is actually received by the intended recipient. Any
      party may change the address to which notices and other communications are
      to be
      delivered by giving the other party notice.

    

    16. Governing
      Law.
      This
      Agreement shall in all respects be interpreted, enforced, and governed under
      the
      laws of the State of New York. The Company and Lerner agree that the language
      on
      this Agreement shall, in all cases, be construed as a whole, according to its
      fair meaning, and not strictly for, or against, any of the parties. Venue of
      any
      litigation arising from this Agreement shall be in a court of competent
      jurisdiction in New York County, New York.

     

    17. Counterparts.
      This
      Agreement may be executed in counterparts, each of which when executed and
      delivered (which deliveries may be by facsimile) shall be deemed an original
      and
      all of which together shall constitute one and the same instrument.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    18. No
      Assignment Of Claims.
      Lerner
      represents and agrees that he has not transferred or assigned, to any person
      or
      entity, any claim involving the Company, or any portion thereof or interest
      therein.

     

    19. No
      Waiver.
      This
      Agreement may not be waived, modified, amended, supplemented, canceled or
      discharged, except by written agreement of the Company and Lerner. Failure
      to
      exercise and/or delay in exercising any right, power or privilege in this
      Agreement shall not operate as a waiver. No waiver of any breach of any
      provision shall be deemed to be a waiver of any preceding or succeeding breach
      of the same or any other provision, nor shall any waiver be implied from any
      course of dealing between or among the Company and Lerner. 

     

    20. Acknowledgments
      by the Company.
      The
      Company acknowledges that (i) this Agreement is not an employment contract
      as defined in 11 U.S.C. § 548; (ii) the Company and Lerner are entering into
      this Agreement in good faith and in the ordinary course of business; and (iii)
      by entering into this Agreement, the Company does not intend to hinder, delay,
      or defraud any creditors of either the Company or both.

     

    [Remainder
      of Page Intentionally Left Blank]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    I
      ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, 
THAT I
      UNDERSTAND ALL OF ITS TERMS AND THAT I AM RELEASING CLAIMS AND 
THAT I AM
      ENTERING INTO IT VOLUNTARILY.

    

    AGREED
      TO
      BY:

     

    
      	
              /s/
                Mark W. Lerner 

            	 	
              May
                7, 2008

            
	
              Mark
                W. Lerner

            	 	
              Date

            

    

     

    STATE
      OF
      NEW YORK

    

    COUNTY
      OF
      NEW YORK

    

    Before
      me, a Notary Public, on this day personally appeared MARK W. LERNER, known
      to me to be the person whose name is subscribed to the foregoing instrument,
      and
      acknowledges to me that he has executed this Agreement on behalf of himself
      and
      his heirs, for the purposes and consideration therein expressed.

    

    Given
      under my hand and seal of office this 7th
      day of
May,
      2008.

     

    
      	/s/
	
              Notary
                Public in and for the State of New
                York

            

    

    

    (PERSONALIZED
      SEAL)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NEPHROS,
      INC.

     

    By:          
      /s/
      Norman J. Barta

    

    Title:       
      President
      and Chief Executive Officer 

    

    Date:        May
      7,
      2008 

     

    STATE
      OF
      NEW YORK

    

    COUNTY
      OF
      NEW YORK

    

    Before
      me, a Notary Public, on this day personally appeared NORMAN J. BARTA,
      known
      to me to be the person and officer whose name is subscribed to the foregoing
      instrument and acknowledged to me that the same was the act of NEPHROS, INC.,
      and that he has executed the same on behalf of said corporation for the purposes
      and consideration therein expressed, and in the capacity therein
      stated.

    

    Given
      under my hand and seal of office this 7th day of May, 2008.

     

    
      	
              /s/

            
	
              Notary
                Public in and for the State of New
                York

            

    

    

    (PERSONALIZED
      SEAL)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]