Document:

ex10-1.htm

Exhibit 10.1

 

ENERGY RECOVERY, INC.

CHANGE IN CONTROL SEVERANCE PLAN

Article 1. Establishment, Term and Purpose

 

1.1     Establishment and Term of the Plan. The Energy Recovery, Inc. Change in Control Severance Plan (“Plan”) is designed to provide severance benefits to certain executives and other key employees of the Company in the event that their employment is terminated without cause or for good reason as a result of a change in control of the Company.  The Plan will commence on March 5, 2012 (the “Effective Date”) and will continue in effect in accordance with Article 5.

 

1.2     ERISA. This Plan is intended to be (i) an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), and (ii) an unfunded plan maintained by the Company for a select group of management or highly compensated employees within the meaning of Sections 201, 301, and 401 of ERISA, and any ambiguities herein shall be interpreted consistent with such intentions.

 

Article 2.    Definitions

 

As used in this Plan, the following capitalized terms will have the meanings set forth below:

 

(a)     “Affiliate” means any company Controlled by, or under common Control with, the Company.  “Control” means the Company’s right to vote 50% or more of the outstanding shares of the voting stock of the subject company.

 

(b)     “Board” means the Board of Directors of the Company.

 

(c)     “Cause” means, in the context of employment termination:

 

(i)           Any act by Participant in the course of employment or Participant’s performance of any act which, if Participant were prosecuted, would constitute a felony;

 

(ii)          Participant’s failure to carry out his or her material duties, after not less than thirty (30) days prior written notice of such failure, and which failure is unrelated to an illness or disability of not greater than twelve (12) work weeks;

 

(iii)         Participant’s dishonesty towards or fraud upon the Company which is injurious to the Company;

 

(iv)         Participant’s violation of confidentiality obligations to the Company or misappropriation of Company assets; or

 

(v)          Participant’s death or disability, as defined in the Company long-term disability plan in which the Participant participates or, if the Participant does not participate in such a plan, the principal long-term disability plan that covers the Company’s senior-level executives

 

(d)     “Change in Control” means:

 

(i)           an acquisition of 50% or more of the outstanding common stock or voting securities of the Company by an person or entity, other than the Company, a Company employee benefit plan or a corporation controlled by the Company’s shareholders;

 

(ii)           changes in the composition of the Board over a rolling twelve-month period, which changes result in less than a majority of the directors consisting of Incumbent Directors.  “Incumbent Directors” include directors who are or were either

 

  

  

  

 

	
  

	
(x)

	
members of the Board as of the Effective Date or

 

	
  

	
(y)

	
elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination.  Incumbent Directors do not include any individual not otherwise an Incumbent Director whose election or nomination resulted from an actual or threatened proxy contest (relating to the election of directors to the Board); or

 

(iii)           consummation of a complete liquidation or dissolution of the Company, or a merger, consolidation or sale of all or substantially all of the Company’s then existing assets (collectively, a “Business Combination”), other than a Business Combination:

 

	
  

	
(x)

	
in which the stockholders of the Company immediately prior to the Business Combination receive 50% or more of the voting stock resulting from the Business Combination,

 

	
  

	
(y)

	
through which at least a majority of the members of the Board are Incumbent Directors; and

 

	
  

	
(z)

	
after which no individual, entity or group (excluding any corporation resulting from the Business Combination or any employee benefit plan of such corporation or of the Company) owns 50% or more of the stock of the corporation resulting from the Business Combination who did not own such stock immediately before the Business Combination.

 

(e)     “Committee” means the Compensation Committee of the Board.

 

(f)     “Company” means Energy Recovery, Inc., a Delaware corporation.

 

(g)     “Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

(h)     “Effective Date” has the meaning ascribed to it in Section 1.1.

 

(i)     “ERISA” has the meaning ascribed to it in Section 1.2.

 

(j)     “Good Reason” means, the occurrence of any one or more of the following without the Participant’s express written consent:

 

(i)           the termination or material breach of this Plan by the Company;

 

(ii)          the failure by the Company to have any successor, or any assignee of all or substantially all of the Company’s assets, assume this Plan;

 

(iii)         any material diminishment in Participant’s title, position, duties, responsibilities or status than those in effect immediately prior to the Change in Control (including, in the case of a Participant who is the Chief Executive Officer who reports directly to the Board or a Participant who is the Chief Financial Officer or General Counsel who reports directly to the Chief Executive Officer immediately prior to the Change, if, after such Change in Control, the Chief Executive Officer no longer reports directly to the Board of a public company and the Chief Financial Officer and/or General Counsel no longer reports directly to the Chief Executive Officer of a public company), it being understood that in the case of a Participant other than the Chief Executive Officer, Chief Financial Officer, or General Counsel, a Participant’s reporting to a business unit head instead of to the Chief Executive Officer will not constitute a material diminishment if the Participant’s duties and responsibilities otherwise remain substantially the same;

 

(iv)         any material reduction in, limitation of, or failure to pay or provide, any compensation provided to the Participant under any agreement or understanding between the Participant and the Company, or pursuant to the Company’s policies and past practices, as of the date immediately prior to the Change in Control;

 

  

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(v)          any material reduction in the Participant’s base salary or target bonus opportunity from the amounts in effect immediately prior to the Change in Control; or

 

(vi)         any change in the Participant’s place of employment that increases Participant’s commuting distance by more than 30 miles over his or her commuting distance immediately prior to the Change in Control.

 

Good Reason will only be deemed to exist if the Participant provides notice of the condition(s) constituting Good Reason within 30 days of the existence of the condition and gives the Company 30 days from its receipt of such notice to remedy the condition.  If the condition is remedied, Good Reason will not be deemed to exist.

 

(k)     “Participant” means any full-time employee of the Company or an Affiliate whom the Committee, in its sole discretion, makes a participant of the Plan.  The Committee or its delegate also may, from time to time and by written notice to the affected Participant(s), remove any previously selected Participant(s) from continued participation in this Plan.  Any removal of a Participant will not be effective until 12 months after such notice is delivered to the Participant.

 

(l)      “Plan” means this Change in Control Severance Plan, as may be amended from time to time.

 

(m)     “Qualifying Termination” has the meaning ascribed to it in Section 6(a).

 

(n)      “Severance Benefits” has the meaning ascribed to it in Section 3.2.

 

(o)      “Severance Benefits Payment Date” has the meaning ascribed to it in Section 3.3.

 

Article 3.    Change in Control Severance Benefits

 

3.1     Protected Termination.  In the event that, within eighteen months after a Change in Control, Participant is terminated without Cause or terminates his or her employment voluntarily with Good Reason, Participant will be entitled to the Severance Benefits defined below.

 

3.2     Severance Benefits.  Upon termination without Cause or with Good Reason within eighteen months after a Change in Control, Participant will receive all payments required by applicable local law, including all earned and unpaid salary, any accrued and unused vacation pay and all earned but unpaid and un-deferred bonus attributable to the year that ends immediately before the year in which the Participant’s termination occurs, less deductions required or permitted by law.  Participants will also be entitled to receive the following additional benefits (“Severance Benefits”) in exchange for an agreement to release all claims known or unknown against the Company and for the restrictive covenants set forth in Article 8:

 

(a)     an additional payment equal to the sum of: (i) 12 months’ severance pay determined by Participant’s regular base rate of pay for work for the Company and/or Affiliates in effect as of the date of the employment termination and (ii) 100% of Participant’s target annual bonus under the Company’s bonus program (or any successor bonus program) for the fiscal year in which the Change in Control occurs, less deductions required or permitted by applicable law (the “Additional Payment”);

 

(b)     immediate vesting of all unvested equity compensation held by the Participant as of the date of termination; in the case of unvested equity compensation where the amount payable is based on the satisfaction of performance criteria, the amount of unvested equity will be determined by deeming all performance criteria satisfied at 100% of target, less deductions required or permitted by applicable law; to the extent the equity compensation is subject to Code section 409A, the vesting acceleration of the equity compensation shall not cause any distribution or payment under the equity compensation to be made before the earliest date it may be made without violating Code section 409A.

 

  

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(c)     if the Participant timely elects to continue Participant’s medical, dental, and vision benefits under COBRA (including, if applicable, continuation of coverage for the Participant’s spouse and dependents), then, contingent upon the Participant paying his or her share of the monthly COBRA premium, the Company will pay its share of the monthly premium under COBRA to the same extent it pays for coverage under the Company’s group plans for active employees and their dependents, if applicable, for 12 months after the Participant’s termination, unless  the Participant becomes eligible for group medical, dental, and vision coverage through another employer.  Participant will have an obligation to notify the Company upon becoming eligible for group medical, dental and vision benefits from another employer during the 12 month period. At the end of any Company-paid period of COBRA coverage, the Participant may, at his own expense, continue COBRA coverage for the remainder of the period for which the Participant is eligible.  The preceding provisions will be modified to the extent medical, dental, and vision benefits are not provided through the purchase of insurance, but are provided by the Company on a self-insured basis.  In that case, the Participant will be required to initially pay the entire monthly premium, but will be reimbursed each month an amount equal to the monthly amount (if any) that the Company would pay (or would incur as its share of the cost) each month for an active employee with the same coverage; and

 

(d)     payment by the Company for the reasonable costs of outplacement services for the Participant during the six months following termination in an amount up to $10,000.  No payment, however, will be made in lieu of outplacement services.

 

3.3     Timing of Severance Benefits; Form of Additional Payment.  Participant will be entitled to the Severance Benefits ten (10) days after the “Separation from Service” or ten (10) days after the Company’s receipt of the signed unrevoked release agreement, whichever is later (the “Severance Benefit Payment Date”).  The Additional Payment shall be made in the form of a lump sum payment on the Severance Benefit Payment Date, but in any event within 90 days following the Participant’s Separation from Service, subject to any delay that may be required pursuant to Section 9.2 hereof.  “Separation from Service” shall have the meaning ascribed to it under Code section 409A.

 

3.4     Payment Obligation. Except as otherwise provided, Severance Benefits under the Plan will not be reduced or affected by any offset, counterclaim, recoupment, defense or other right which the Company may have against the Participant or anyone else.  Company, however, reserves all rights to pursue any and all causes of action that it otherwise might have against the Participant.  In addition, any violation by Participant of Article 8 will result in a cessation of the Company’s obligation to provide Severance Benefits and will entitle the Company to seek repayment of any payments previously made.

 

3.5     Other Benefits.   Participant will not be required to mitigate the amount of the Severance Benefits by seeking alternative employment or other work.  With the exception of COBRA payments, the amount of the Severance Benefits will not be reduced by amounts earned by Participant as a result of employment by another employer or other work after the date of termination.  All payments, benefits and amounts provided under this Plan will be in addition to and not in substitution for any disability, workers’ compensation or other Company benefit plan distribution that a Participant is entitled to at his or her date of termination.  Notwithstanding the preceding sentence or anything else contained herein to the contrary, a Participant’s Severance Benefits under this Plan shall be reduced by the severance benefits that the Participant may be entitled to under any applicable laws or any other plan, program, agreement or other arrangement with the Company or an Affiliate, including, without limitation, any such benefits provided for by an employment agreement.  To the extent any Severance Benefits constitute nonqualified deferred compensation subject to Code section 409A, the Severance Benefits shall be reduced in a manner that complies with Code Section 409A.

 

3.6     General Release.  Any other provision of this Plan notwithstanding, Section 3.1 above will not apply unless Participant has executed a general release in a form reasonably satisfactory to the Company of all known and unknown claims that Participant may then have against the Company or persons affiliated with the Company and has expressly agreed in writing not to prosecute any legal action or other proceeding based on any of such claims.  Such release must be signed and returned within 45 days of the date of the Participant’s Qualifying Termination and remain unrevoked for any revocation required by applicable law.

 

  

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3.7     Employment Status.  Unless otherwise provided in another written agreement between a Participant and the Company or an Affiliate or by applicable law, the employment of the Participant by the Company is “at will,” and, prior to the effective date of a Change in Control, may be terminated by the Company or an Affiliate at any time, subject to applicable law.  Participant’s eligibility for Severance Benefits under this Plan does not affect the Company’s continuing right to terminate Participant at any time or absent a Change in Control, subject to any limitations imposed by contract or applicable law.

 

Article 4.   Acceleration of Equity Award Vesting upon Change in Control.

 

Notwithstanding any provisions to the contrary in this Plan and to the extent permitted under the equity compensation plan of the Company under which the equity compensation was granted, if a Change in Control occurs and a Participant’s equity compensation is not converted, assumed, or replaced by a successor entity with an equivalent award, then immediately prior to the Change in Control the Participant’s equity compensation shall become fully exercisable and vested and all forfeiture restrictions on such equity compensation shall immediately lapse.  In the case of equity compensation, the amount of which is based on the satisfaction of performance criteria, all performance criteria will be deemed satisfied at target.  The conversion, assumption or replacement of an equity award for an equity award over stock that is not publicly traded shall not be considered to be an equivalent award for purposes of this Plan.  To the extent the equity compensation is subject to Code section 409A, the vesting acceleration of the equity compensation shall not cause any distribution or payment under the equity compensation to be made before the earliest date it may be made without violating Code section 409A.

 

Article 5.Term

 

On December 31, 2012 and on each anniversary thereafter, the Plan will be extended automatically for an additional year, unless the Committee delivers written notice, at least six months prior to the end of each such term, to each Participant that this Plan will not be extended.  If such notice is timely given, this Plan will terminate at the end of the term then in progress.  Notwithstanding the preceding sentences, however, this provision for automatic extension will have no application following a Change in Control of the Company. In the event a Change in Control occurs during the initial or any extended term, this Plan will remain in effect for the longer of: 12 months beyond the month in which such Change in Control occurred; or (ii) until all obligations of the Company hereunder have been fulfilled and until all benefits required hereunder have been paid to Participants.  For all purposes of this Plan, only one Change in Control will be taken into account (i.e., if a Change in Control is followed by a second Change in Control during the term of  this Plan, the second Change in Control will be ignored for all purposes).

 

Article 6.   Restrictive Covenants

 

By accepting participation in this Plan and receiving the benefits provided for by Section 3.1 of this Plan, each Participant will be deemed to, and does, agree to each of the following subsections:

 

(a)     Non-Compete and Non-Solicit.  For one (1) year after any termination under the Plan that gives rise to benefits under the Plan (a “Qualifying Termination”), Participant will not, directly or indirectly, engage in or render any service of a business, commercial or professional nature to any other person, entity or organization, whether for compensation or otherwise, that is in competition with Company (or the employing Affiliate) anywhere in the world.  In accordance with this restriction, but without limiting its terms, Participant will not: (i) enter into or engage in any business which competes with the business of Company (or Affiliate) ; (ii) solicit customers, business, patronage or orders for, or sell, any products or services in competition with, or for any business that competes with, the business of Company (or Affiliate); (iii) divert, entice, or take away any customers, business, patronage or orders of Company (or Affiliate) or attempt to do so; or (iv) promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the business of Company (or Affiliate).

 

(b)     Scope of Restricted Activities.  For the purposes of Section 8(a),  but without limitation thereof, Participant will be in violation thereof if Participant engages in any or all of the activities set forth therein directly as an individual on Participant’s own account, or indirectly as a stockholder, partner, joint venturer, participant, agent, salesperson, consultant, officer and/or director of, or by virtue of the ownership by Participant’s spouse, child or parent of any equity interest in, any firm, association, partnership, corporation or other entity engaging in any or all of such activities; provided, however, Participant’s or Participant’s spouse’s, child’s or parent’s ownership of less than 1% of the issued equity interest in any publicly traded corporation will not alone constitute a violation of Article 8.

 

  

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(c)     Scope of Covenants.  Company and Participant acknowledge that the time, scope, geographic area and other provisions of this section have been specifically negotiated by sophisticated commercial parties and agree that they consider the restrictions and covenants contained in this section to be reasonable and necessary for the protection of the interests of the Company, but if any such restriction or covenant will be held by any court of competent jurisdiction to be void but would be valid if deleted in part or reduced in application, such restriction or covenant will apply with such deletion or modification as may be necessary to make it valid and enforceable.  The restrictions and covenants contained in each provision of this Article 8 will be construed as separate and individual restrictions and covenants and will each be capable of being severed without prejudice to the other restrictions and covenants or to the remaining provisions of this Article 8.  Without in any way limiting the remedies otherwise available to the Company for breach of any provision of this Plan, the Company will be entitled to the repayment of Severance Benefits paid to a Participant under this Plan for any violation of Article 8 by Participant.

 

(d)     No Solicitation/Interference.  While employed by Company and until the one year anniversary of any Qualifying Termination, Participant will not directly or indirectly, at any time attempt to disrupt, damage, impair or interfere with the business of the Company or any Affiliate by raiding any of Company’s or Affiliate’s employees or soliciting any of them to resign from their employment by Company or Affiliate, or by disrupting the relationship between Company or any Affiliate and any of their respective consultants, agents, representatives or vendors.  Participant acknowledges that this covenant is necessary to enable Company and Affiliates to maintain a stable workforce and remain in business.

 

(e)     Non-Disparagement.  While employed by the Company and until the one year anniversary of such a Qualifying Termination, (i) the Participant shall not make or encourage or induce others to make statements or representations that disparage or otherwise impair the reputa­tion, goodwill or commercial interests of the Company or its Affiliates or their officers, directors, employees, shareholders, agents or products.  The foregoing shall not be violated by truthful statements in connection with required governmental testimony or filings, or judicial, administrative or arbitral proceedings (including, without limitation, depositions or testimony in connection with such proceedings).

 

Article 7.   Excise Tax Limitation and Compliance with Section 409A

 

7.1     Parachute Rules. This section applies to the extent that any or all of the Severance Benefits provided for in this Plan, either alone or in conjunction with other compensatory payments, would give rise to a “parachute payment” under Sections 280G and 4999 of the Code (collectively, the “Parachute Rules”) and, if after taking into account any applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the Code, the payment of reduced Severance Benefits pursuant to the waiver described in the following sentence would result in the receipt by the Participant, on an after-tax basis, of a greater payment than had the payment of Severance Benefits not been reduced.  The waiver described in this section is the Participant’s waiving the parachute payment to the minimum extent necessary so that the remaining value of the parachute payment equals one dollar less than the amount which would result in any compensatory payments being subject to the excise tax imposed by Section 4999 of the Code, with the result that the Participant receives only the amount of such payment which would not constitute an “excess parachute payment” under the Parachute Rules.  Reduction will occur in the following order:

 

(i)           cancellation of acceleration of vesting on any equity awards that are in the nature of a right to exercise, such as options or stock appreciation rights;

 

(ii)          reduction in the benefits described in Section 3.2(c) and (d) (with such reduction being applied to the benefits in the manner having the least economic impact to the Participant and, to the extent the economic impact is equivalent, such benefits will be reduced in the reverse order of when the benefits would have been provided to the Participant, that is, benefits payable later will be reduced before benefits payable earlier);

 

(iii)         reduction of the Additional Payment;

 

  

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(iv)         cancellation of acceleration of vesting of equity awards not covered under (i) above; provided, however, that in the event that acceleration of vesting of equity award compensation is to be canceled, such acceleration of vesting will be canceled in the reverse order of the date of grant of such equity awards; that is, later equity awards will be canceled before earlier equity awards.

 

Anything to the contrary in the foregoing notwithstanding, payments or benefits that constitute nonqualified deferred compensation subject to Section 409A of the Code shall be reduced or eliminated last in time.  In no event will the Company or any Affiliate be required to gross up any payment or benefit to the Participant to avoid the effects of the Parachute Rules or to pay any regular or excise taxes arising from the application of the Parachute Rules.  Unless the Company or an Affiliate and the Participant otherwise agree in writing, any parachute payment calculation will be made in writing by independent public accountants agreed to by the Company or an Affiliate and the Participant, whose calculations will be conclusive and binding upon the Company or an Affiliate and the Participant for all purposes. The Company or Affiliate and the Participant will furnish to the accountants such information and documents as the accountants may reasonably request in order to make a parachute payment determination.    

 

7.2     Code Section 409A.

 

(i)           The reimbursements, payments and benefits to which the Participant could become entitled to under this Plan are intended be exempt from Code section 409A under the separation pay plan and short-term deferral exception to the maximum extent permitted under Code section 409A and the guidance promulgated thereunder, and the Plan shall be interpreted and administered in a manner consistent with such intent.  If the Company believes, at any time, that any of such reimbursement, payment or benefit is not exempt or does not comply with Code section 409A, the Company may amend the terms of Plan to avoid the application of Code section 409A in a particular circumstance or as necessary or desirable to satisfy any of the requirements under Code section 409A (with the most limited possible economic effect on the Participant and the Company) or to mitigate any additional tax, interest and/or penalties that may apply under Code section 409A if exemption or compliance is not practicable, but the Company shall not be under any obligation to make any such amendment.  Nothing in this Plan shall provide a basis for any person to take action against the Company or any Affiliate based on matters covered by Code section 409A, including the tax treatment of any amount paid under the Plan, and neither the Company nor any of its Affiliates shall under any circumstances have any liability to any Participant or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Plan, including taxes, penalties or interest imposed under Code section 409A.

 

(ii)          Anything in this Section 7.2 to the contrary notwithstanding, no Severance Benefits that are non-qualified deferred compensation subject to Code section 409A, as determined in the Committee’s sole discretion, will be paid unless the Participant experiences a Separation from Service, and, if the Participant is a “Specified Employee,” within the meaning of Code section 409A, as of the date of the Separation from Service, such amount will instead be paid or provided to the Participant on the earlier of the first business day after the date that (i) is six months following the Participant’s Separation from Service or (ii) of the Participant’s death, to the extent such delayed payment is required to avoid a prohibited distribution under Code section 409A(a)(2), or any successor provision thereof.  To the extent any Severance Benefits constitute non-qualified deferred compensation subject to Code section 409A and the payment period specified in Section 3.3 begins in one calendar year and ends in the subsequent calendar year, the Severance Benefits shall be paid in the second calendar year.  The provisions of this Section 7.2 will qualify and supersede all other provisions of this Plan as necessary to fulfill the foregoing intention.

 

Article 8.   Claims Procedures

 

8.1     Committee Review. Any Participant or beneficiary of a deceased Participant (such Participant or beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from this Plan. Such claim will be delivered to the Committee in care of the Company in accordance with the notice provisions of Section 12.3. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 60 days after such notice was received by the Claimant. All other claims must be made within 270 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

 

  

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8.2     Notification of Decision. The Committee will consider a Claimant’s claim pursuant to Section 10.1 within a reasonable time, but no later than 90 days after receiving the claim.  If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension will be furnished to the Claimant prior to the termination of the initial 90 day period. In no event will such extension exceed a period of 90 days from the end of the initial period. The extension notice will indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. The Committee will notify the Claimant in writing:  (a) that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or (b)  that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant: (i) the specific reason(s) for the denial of the claim, or any part of it; (ii) specific reference(s) to pertinent provisions of this Plan upon which such denial was based; (iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; (iv) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and (v) a statement of the Claimant’s right to seek arbitration pursuant to Section 10.3.

 

8.3     Arbitration of Claims.  A Claimant’s compliance with the foregoing provisions of this Article 10 is a mandatory prerequisite to a Claimant’s right to commence arbitration pursuant to this section with respect to any claim for benefits under this Plan.  Any dispute, controversy or claim arising hereunder or in any way related to this Plan, its interpretation, enforceability or applicability that cannot be resolved by mutual agreement of the parties (the “arbitrable claims”) will be submitted to binding arbitration. The parties agree that arbitration is the parties’ only recourse for such claims and hereby waive the right to pursue such claims in any other forum, unless otherwise provided by law.  Any court action involving a dispute which is not subject to arbitration will be stayed pending arbitration of arbitrable disputes.  The arbitrator will have the authority to issue provisional relief. The Participant and the Company further agree that each has the right, pursuant to California Code of Civil Procedure section 1281.8, to apply to a court for a provisional remedy in connection with an arbitrable dispute so as to prevent the arbitration from being rendered ineffective.  Any demand for arbitration will be in writing and must be communicated to the other party prior to the expiration of the applicable statute of limitations.

 

The arbitration will be administered by JAMS pursuant to its Employment Arbitration Rules and Procedures. The arbitration will be conducted in the San Francisco Bay area (unless the parties mutually agree on another location) by a former or retired judge or attorney with at least 10 years experience in employment-related disputes, or a non-attorney with like experience in the area of dispute, who will have the power to hear motions, control discovery, conduct hearings and otherwise do all that is necessary to resolve the matter. The parties must mutually agree on the arbitrator. If the parties cannot agree on the arbitrator after their best efforts, an arbitrator will be selected from JAMS pursuant to its Employment Arbitration Rules and Procedures. The Company will pay the costs of the arbitrator’s fees.  The arbitration will be decided upon a written decision of the arbitrator stating the essential findings and conclusions upon which the award is based. The arbitrator will have the authority to award damages, if any, to the extent that they are available under applicable law(s). The arbitration award will be final and binding, and may be entered as a judgment in any court having competent jurisdiction. Either party may seek review pursuant to California Code of Civil Procedure section 1286, et seq.  It is expressly understood that the parties have chosen arbitration to avoid the burdens, costs and publicity of a court proceeding, and the arbitrator is expected to handle all aspects of the matter, including discovery and any hearings, in such a way as to minimize the expense, time, burden and publicity of the process, while assuring a fair and just result. In particular, the parties expect that the arbitrator will limit discovery by controlling the amount of discovery that may be taken (e.g., the number of depositions or interrogatories) and by restricting the scope of discovery only to those matters clearly relevant to the dispute. However, at a minimum, each party will be entitled to at least one deposition and will have access to essential documents and witnesses as determined by the arbitrator.  The provisions of this Section will survive the expiration or termination of the Plan, and will be binding upon the parties.

 

  

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Article 9.   Successors and Assignment

 

The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the business and/or assets of the Company or of any division or subsidiary thereof (the business and/or assets of which constitute at least 50%  of the total business and/or assets of the Company) to expressly assume and agree to perform the Company’s obligations under this Plan in the same manner and to the same extent that the Company would be required to perform them if such succession had not taken place.   This Plan will inure to the benefit of and be enforceable by each Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If a Participant dies while any amount would still be payable to him or her hereunder had he or she continued to live, all such amounts, unless otherwise provided herein, will be paid to the Participant’s beneficiary in accordance with the terms of this Plan.

 

Article 10.   General

 

10.1     Modification. Except as set forth below, no provision of this Plan may be modified, waived, or discharged unless as to a Participant such modification, waiver, or discharge is agreed to in writing and signed by each affected Participant and by an authorized member of the Committee or its designee, or by the respective parties’ legal representatives and successors.  The consent requirement of the preceding sentence will not apply to the extent that (i) amendments provide additional benefits to Participants or are required so that the plan complies with applicable law (including Section 409A) or (ii) the amendment is not effective until one year after it is communicated to all affected Participants.

 

10.2     Notice of Termination. Any termination by the Company for Cause or by a Participant for Good Reason will be communicated by a written notice which states the specific termination provision in this Plan relied upon, and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under that provision.

 

10.3     Notice.  For purposes of this Plan, notices, including a Notice of Termination, and all other communications provided for in this Plan will be in writing and will be deemed to have been duly given when delivered or on the date stamped as received by the U.S. Postal Service for delivery by certified or registered mail, postage prepaid and addressed: (i) if to the Participant, to his or her latest address as reflected on the records of the Company, and (ii) if to the Company: Energy Recovery, Inc., 1717 Doolittle Drive, San Leandro, CA  94577, Attention:  Chief Financial Officer or to such other address as the Company may furnish to the Participant in writing with specific reference to this Plan and the importance of the notice, except that notice of change of address will be effective only upon receipt.

 

10.4     Limitation on Assignment.  Except as otherwise provided herein or by law, no right or interest of any Plan under the Plan will be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof will be effective; and no third party creditors of a Participant will have any right or interest in any Participant’s rights or interests under the Plan.  When a payment is due under this Plan to a severed employee who is unable to care for his or her affairs or dies after accruing benefit rights under the Plan, payment may be made directly to his or her legal guardian or personal representative, executor or estate administrator, as the case may be.

 

10.5     Applicable Law. To the extent not preempted by ERISA or any other laws of the United States, the laws of the State of California will be the controlling law in all matters relating to this Plan (without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of laws of any other jurisdiction). Any statutory reference in this Plan will also be deemed to refer to all applicable final rules and final regulations promulgated under or with respect to the referenced statutory provision.

 

10.6     Unfunded Plan.  The Plan will not be required to be funded unless such funding is authorized by the Board in its sole discretion.  Regardless of whether the Plan is funded, no Participant will have any right to, or interest in, any assets of any Company which may be applied by the Company to the payment of benefits or other rights under this Plan.

 

10.7     Withholding.  All benefits hereunder will be reduced by withholding of federal, state and local income or other taxes, and any foreign taxes, and will be subject to applicable tax reporting, as the Company may deem necessary or appropriate for purposes of compliance with applicable tax laws.

 

 

9COWN EX 10.17

Exhibit 10.17

October 31, 2011

George M.L. LaBranche, IV

Dear Mike:

This Separation Agreement and Release (“Separation Agreement”) contains the terms and conditions of your separation from employment with Cowen Capital, LLC (together with Cowen Group, Inc. and its affiliates, subsidiaries, and predecessors, including LaBranche & Co. Inc., the “Company”).  Your employment will terminate as of the Effective Date of this Separation Agreement (your “Termination Date”).  
1. Separation Payment and Benefits.  Provided you execute this Separation Agreement by November 21, 2011, and do not revoke it, and in return for the full and complete release of all claims as set forth in Paragraph 4, the Company is offering you the following:
A.    Accrued Obligations.  You will be entitled to all Accrued Obligations (as defined in your Employment Agreement, dated February 16, 2011 (your “Employment Agreement”), through your Termination Date.
B.    Separation Payments.  The Company will make you severance payments at the same rate as your annualized base salary for twenty-four (24) months from the Effective Date, payable in accordance with the Company's regular payroll practices and subject to applicable taxes and deductions. 
C.    Benefits.  Provided you timely elect continuation coverage under COBRA of any medical, dental, or vision insurance that you participated in as of your Termination Date, the Company will pay directly for the full cost of the premiums for such continuation of coverage for twenty-four (24) months from the Effective Date, or until you are eligible to be covered under another group health insurance plan with substantially similar benefits and premium costs to you, whichever occurs earlier.  You will need to submit the paperwork you will receive under separate cover from our third party healthcare vendor, or register online, to participate in this coverage.  Our third party healthcare vendor will also provide you with information regarding the premium that will be charged to you for COBRA continuation coverage, including any changes to the premium during your period of continuation coverage.      
D.     Use of Facilities.  For so long as the Company is leasing space at 1221 Sixth Avenue, New York, New York, the Company will provide you with, for up to twenty four (24) months from the Effective Date, (a) reasonable use of office space, including access to a computer, printer, telephone, and internet service, at the Company's premises at 1221 Sixth Avenue, so long as the Company is leasing space at that address, and (b) an administrative assistant (Toni Faia, as long as she is employed by the Company in her current position, from which the Company agrees not to terminate her, except based on a determination made in good faith and not for an arbitrary reason, during this twenty-four (24) month period).  Your use of the Company's facilities under this paragraph is subject to the Company's Compliance Department's continuing approval, which will not be unreasonably withheld.  You agree that you will be responsible for any other separately identifiable costs associated with your use of the Company's facilities, and that you will not be entitled to reimbursement for business expenses. 
E.    Reimbursement for Bloomberg Fees.  The Company will reimburse you for the licensing fee for obtaining a Bloomberg terminal through your own account for twenty-four (24) months.
F.    Referral Fee Arrangement.  After your Termination Date, in the event that you serve as a source for client referrals that result in transactions or assets under management that generate revenue for the Company or its affiliates, the Company agrees to enter into a reasonable referral fee agreement.  
G.    License.  You will have the perpetual, royalty free right to use the LaBranche name in connection with any personal or business matters that would not violate the restrictive covenants in this Separation Agreement or your Confidentiality, Non-Interference, and Invention Agreement, dated February 16, 2011 (your “Non-Interference Agreement”).  The Company shall transfer the LaBranche.com domain name to you without charge.   
H.    Legal Fees.  The Company agrees to reimburse you up to five thousand dollars ($5,000) for your reasonable attorney's fees and expenses incurred in connection with review of this Separation Agreement; provided that you submit a reasonably detailed invoice of such fees and expenses to the Company.

2. Board Membership.  Concurrently with the execution of this Agreement, you will tender your resignation from Cowen's Board of Directors and any other directorships, committee memberships, and any other positions you hold with the Company or its subsidiaries or affiliates.  You acknowledge that your resignation from such positions results from this Separation Agreement, and will not constitute a resignation by you with or without Good Reason under your Employment Agreement.

3.  No Other Entitlement.  It is understood and agreed that the payments and benefits provided for in Paragraph 1 incorporate any other form of separation pay or benefits to which you may be entitled.  You further understand and acknowledge that the payment and any other benefits provided in this Separation Agreement are in exchange for your promises, covenants, representations and warranties set forth herein as well as the waiver and release of all claims you may have against the Company and Releasees (as defined below) arising out of or relating to your employment or the termination thereof, as more fully set forth below.  Accordingly, no payments, benefits or other consideration set forth in this Separation Agreement shall be owed or paid if the Separation Agreement is not fully executed and returned.  It is also understood and agreed that, other than the above and any payment under the Company's retirement or other program in which you are vested, you will not be provided with, and you waive any and all rights to, any other compensation, bonus, severance payment, unvested securities or other form of payment or benefits by the Company, subsequent to your separation from employment, including any payments or rights under your Employment Agreement.

4.  Release.  

A.    In return for the payments and other consideration set forth above, which is consideration to which you are not otherwise entitled, you hereby and forever discharge the Company and its parent, subsidiaries, affiliated companies, partnerships, and joint ventures, and their past and present shareholders, officers, members, directors, agents, owners, attorneys, employees, employee benefits plans and plan administrators, fiduciaries, trustees, service providers, insurers, and predecessor companies, including LaBranche & Co. Inc., and each of their respective successors and assigns and any other persons or entities acting on behalf of these persons or entities (collectively, “Releasees”) from any and all claims, rights, demands, debts, actions, causes of action, suits, agreements, damages, and liabilities, known or unknown, which exist or have existed up to and including the date you signed this Separation Agreement or which arise out of, are in any way connected with, or relate to your employment or termination of employment with the Company including, but not limited to, wrongful discharge claims, breach of contract claims, claimed violations of fair employment practices, anti-discrimination, or civil rights laws (including, but not limited to, any claims of discrimination on the basis of race, sex, age, religion, national origin, sexual orientation, handicap, veteran status or any other protected classification) asserted under Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Age Discrimination in Employment Act, as amended by the Older Workers' Benefit Protection Act (“ADEA”), the Americans With Disabilities Act, the Family and Medical Leave Act, the Workers Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act (“ERISA”) (including, but not limited to, claims for breach of fiduciary duty under ERISA), the New York State Human Rights Law, the New York State Constitution, the New York Civil Rights Law, the New York Executive Law, New York City Human Rights Law, the New York State WARN Act, New York Labor Law, or any other federal, state or local law, statute, ordinance or regulation, tort claims, statutory claims, constitutional claims, claims for wages, bonuses, incentive compensation, commissions, allowances, vacation or holidays, severance or any other compensation or benefits, claims for compensatory or punitive damages or attorneys' fees, and claims under the laws of the United States or any of its states; provided, however, that you are not waiving any right to indemnification that you may have under the Company's directors and officers insurance plan. You release and waive your right to file any such claim in any arbitral or judicial forum.  This release of claims is intended by you to be completely effective and binding, irrespective of whether any such claims have been asserted and irrespective of any present lack of knowledge on your part of any such claim.  If it is determined that any claim covered by this paragraph cannot be released as a matter of law, you expressly agree that this release of claims will remain valid and fully enforceable as to the remaining releasable claims.

B.     Nothing in this Separation Agreement constitutes a release of any claim:  (a) under COBRA; (b) for unemployment insurance benefits or workers' compensation benefits; (c) for vested benefits under the written terms of a qualified employee pension benefit plan; and (d) that cannot be waived as a matter of law pursuant to federal, state or local law, including whistleblower claims under the Corporate and Criminal Fraud Accountability Act of 2002 (Sarbanes-Oxley), the Securities and Exchange Commission Whistleblower Program, and the Commodities Futures Trading Commission Whistleblower Program.  You acknowledge and agree that as of the date you sign this Separation Agreement:  (i) you have advised the Company of all facts that you believe may constitute a violation of the Company's Code of Business Conduct and Ethics, compliance policies, and/or legal obligations, including under federal securities laws; (ii) the Company has resolved those issues to your satisfaction; (iii) you are not aware of any current violations of the Company's Code of Business Conduct and Ethics, compliance policies, and or legal obligations, including under federal securities laws; and (iv) you have not suffered any adverse action as a result of your conduct in this regard.

C.    Nothing in this Separation Agreement prevents you from filing a complaint with the federal Equal Employment Opportunity Commission (EEOC) or similar federal or state agency, or participating in any investigation conducted by such agency; 

provided, however, that you acknowledge and agree that you have waived any relief available to you (including without limitation, monetary damages, equitable relief and reinstatement) under any of the claims and/or causes of action waived in this Separation Agreement.  Therefore, you agree that you will not accept any award or settlement from any source or proceeding (including, but not limited to, any proceeding brought by any other person or by any government agency) with respect to any claim or right waived in this Separation Agreement.   

5. References.  In accordance with its policy on employment references, the Company will provide prospective employers with its standard verification of employment data.  Specifically, the Company shall confirm your dates of employment and the position held at the time of separation.  All requests must be in writing and addressed to the Company's Human Resources Department located in New York City.

6.  Non-Disparagement; Publicity

A.You agree that you will not make any disparaging or defamatory comments regarding (a) any member of the Company, or their current or former directors, officers, senior executives, or managing directors in any respect, (b) any aspect of your relationship with any member of the Company, or (c) any conduct or event which precipitated any termination of your employment from the Company.  Your obligations under this paragraph shall not apply to disclosures required by applicable law, regulation or order of a court or governmental agency or in connection with any legal proceeding.

B.The Company agrees to instruct its directors, officers, and key employees not to make any disparaging or defamatory remarks against you, including remarks regarding any aspect of your relationship with any member of the Company or any conduct or events which precipitated the termination of your employment from the Company.  The Company's obligations under this paragraph shall not apply to disclosures required by applicable law, regulation or order of a court or governmental agency or in connection with any legal proceeding.

C.The Company agrees that in any internal or external announcement or formal communication, or in response to questions regarding the termination of your employment and/or resignation from the Board, the Company will convey that you were a valued executive and/or Board member and that your departure was amicable.  

7.  Company Property.  Subject to the use of Company facilities under Paragraph 1, you acknowledge that you have delivered to the Company and have not removed any Company property or any originals or duplicates of your work product including, but not limited to, any laptop computers, computer disks, DVDs, CD-ROMs, thumb drives, files, equipment, documents, tapes, Blackberries, cell phones or other electronic devices, all corporate credit cards and any company keys, passes, identification cards or badges (“Company Property”) belonging to the Company or Releasees, or to any customers or others doing business with, or any person employed by, or otherwise affiliated with, the Company or Releasees.  You further acknowledge and agree that the Company shall have no obligation to make the payment(s) and provide the benefits referred to in Paragraph 1 unless and until you have satisfied all your obligations pursuant to this paragraph.

8.  Confidentiality, Non-Interference, and Invention Agreement.  Except as set forth in this Separation Agreement, you agree to abide by your post-employment obligations set forth in your Non-Interference Agreement.

9.  Non-Interference.  You agree, for a period of twenty-four (24) months from your Termination Date, to refrain from (a) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit or induce, any person employed by, or providing consulting services to, any member of the Company to terminate such person's employment with or services to (or in the case of a consultant, materially reducing such services) the Company; (b) hiring any individual who was employed by the Company within the six (6) month period prior to such date of hiring; or (c) encouraging, soliciting or inducing, or in any manner attempting to encourage, solicit or induce any current or prospective client, customer, licensee, or other business relation of the Company, or any such relation that was a client, customer, licensee, supplier, or other business relation within the six (6) months prior to your Termination Date, to whom you provided services, or with whom you transacted business, or whose identity became known to you in connection with your relationship with or employment with the Company, to cease doing business with or reduce the amount of business conducted with the Company, or interfering with the relationship between such business relations and the Company; provided, however, that the Company will not enforce this paragraph as to your solicitation or hiring of William (“Chip”) J. Burke, III or Toni Faia.

10.  Non-Competition.  You agree that, for a period of twenty-four (24) months from your Termination Date, you will not, directly or indirectly, without the Company's prior written consent, individually or on behalf of any person, company, enterprise or entity, or as a sole proprietor, partner, stockholder, director, officer, principal or agent, or executive, or in any other capacity or relationship, (a) engage in any business activity that was conducted by LaBranche & Co., Inc, within the one (1) year prior to the its acquisition by Cowen; or (b) provide brokerage services to institutional clients as an institutional brokerage, including the 

execution or trading of securities, ETFs, foreign exchange products, options and commodities for institutional investors in liquid markets, anywhere in the United States or in any jurisdiction in which the Company conducts business (“Competition”); provided, however, that you shall be permitted to passively hold two percent (2%) or less interest in the equity or debt securities of any publicly traded company.

11.  Indemnification.  The Indemnification section of your Employment Agreement will continue in effect after your Termination Date.  

12.  Confidentiality.  You understand and agree that the existence and terms of this Separation Agreement are confidential and shall not be disclosed to or discussed with anyone except with your immediate family or tax or legal advisors or as required by process of subpoena or a court of competent jurisdiction.  However, neither this confidentiality provision nor any other non-disclosure provision in this Separation Agreement prohibits or restricts you (or your attorney) from responding to any inquiry or providing testimony about this Separation Agreement or its underlying facts and circumstances by, or before, the Securities and Exchange Commission, FINRA, any other self-regulatory organization, or any other federal or state regulatory authority; provided, however, that to the extent permitted by law, upon the receipt of any inquiry or legal process compelling the disclosure of any such information, you shall give the Company written notice so as to permit it to protect its interests in confidentiality to the fullest extent possible.  

13.  Expense Claims.  You certify that you have submitted any and all outstanding business expense claims for consideration and reimbursement.  All such expense claims will be evaluated in accordance with the Company's regular expense reimbursement policy.  Expense claims submitted after the date this Separation Agreement is signed will not be considered and any debit balances that might exist will be payable by you personally.

14.  Cooperation.  You agree that you will reasonably cooperate with the Company in connection with any formal or informal investigation or legal proceeding relating to any matter that occurred during your employment in which you were involved, of which you have knowledge, or which fell within your ultimate responsibility or authority by virtue of your position with the Company, by providing necessary information or cooperation including, but not limited to, meeting with representatives of the Company, or their respective legal counsel, or providing testimony when necessary, relating to any matter that occurred during your employment in which you were involved or have knowledge.  The Company agrees to reimburse you for reasonable out-of-pocket expenses incurred in connection with such cooperation.  You also agree that, in the event you are subpoenaed by any person or entity (including, but not limited to, any government agency) to give testimony or provide documents (in a deposition, court proceeding, or otherwise) that in any way relates to your employment by the Company, you will give prompt notice of such request to the Company and make no disclosure until the Company has had a reasonable opportunity to contest the right of the requesting party to such disclosure, provided that such delay is not in violation of any legal obligation and would not subject you to any financial or other penalty. 

15.  Arbitration.  Any controversy or claim arising out of or relating to your employment or this Separation Agreement shall be settled by arbitration before a single arbitrator in New York County, in accordance with the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association (the “AAA”).  The decision of the arbitrator shall be final and binding on the parties hereto and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction over the matter.  By agreeing to arbitrate, you understand that you are waiving your right to a trial by a jury.  The cost of such proceedings, including all filing and session fees, and all attorneys' fees, shall be assessed in accordance with the AAA rules or as otherwise determined by the arbitrator.  This paragraph does not apply to:  (a) a claim for injunctive relief, for which jurisdiction shall be reserved in the federal and/or state courts in New York County, and with respect to which the parties consent to personal jurisdiction; and (b) any claim arising under Sarbanes-Oxley. 

16.  Breach.  You acknowledge and agree that if you breach any of the terms of this Separation Agreement, any such breach shall constitute a material breach of this Separation Agreement and the Company may seek all available relief at law and equity including, but not limited to, the cessation by the Company of any payments to you, the recovery from you of all payments made to you pursuant to Paragraph 1 of this Separation Agreement, and to an award of all attorney's fees and costs incurred by the Company in enforcing the Company's rights under this Separation Agreement.  Provided, however, that this paragraph shall not apply to your exercising your right under the Older Workers Benefit Protection Act of 1990 to challenge the validity of your waiver of ADEA claims set forth in this Separation Agreement. 

17.  Entire Agreement.  You represent and acknowledge that this Separation Agreement and your post-employment obligations in your Non-Interference Agreement represent the entire agreement between you and the Company, supersede any prior written, oral or implied agreement between you and the Company regarding your employment and the termination of your employment, and may not be amended or modified except by a writing signed by you and the Company.  You further acknowledge that you are not relying upon any representations or statements, written or oral, made by or on behalf of the Company that are not expressly 

set forth herein.  

18.  No Admission of Liability.  This Separation Agreement is not intended, and should not be construed, as evidence of any wrongdoing on the part of the Company and Releasees, or as any admission of liability under any federal, state or local law or regulation of any nature whatsoever without application of any conflict of law principles.  The Company and Releasees expressly deny any wrongdoing of any kind in regard to your employment or your separation from the Company.  Nor may you admit, or seek to admit, either the terms or existence of this Separation Agreement in any proceeding, arbitration or hearing, except to enforce this Separation Agreement.  

19.  Applicable Law.  This Separation Agreement shall be construed and governed in accordance with the laws of the State of New York without application of any conflict of law principles.  

20.  Binding Effect.  This Separation Agreement shall be enforceable against, and is intended to cover you, your successors, assigns, heirs, beneficiaries and estate.   

21.  Successors and Assigns.  This Separation Agreement and all of the rights and covenants hereunder shall be binding upon and be enforceable by, the Company and its successors and assigns.  You may not assign this Separation Agreement or the terms and conditions stated herein; provided, however, in the event of your death (a) your estate or any beneficiary shall succeed to all rights to any payments and benefits which would otherwise have been paid or provided to you in accordance with the terms of this Separation Agreement; and (b) you may assign the license to use of the LaBranche name in accordance with the Paragraph 1F. above.

22.  Severability.  The provisions of this Separation Agreement are severable.  If a court or arbitrator of competent jurisdiction rules that any provision of this Separation Agreement is invalid or unenforceable, such a ruling shall not affect the validity or enforceability of any other provision of this Separation Agreement, and the relevant provision shall be construed or modified so as to provide the Company with the maximum protection that is enforceable.  However, in the event that the release and waiver of claims set forth in paragraph 4 above shall in any respect be found to have been void or unenforceable, the Company shall rewrite paragraph 4 to correct the defect.  You agree that you shall then re-execute the revised document, and that you will not be entitled to any additional monies, benefits, and/or compensation thereafter.  Provided, however, that this paragraph shall not apply to your exercising your right under the Older Workers Benefit Protection Act of 1990 to challenge the validity of your waiver of ADEA claims set forth in this Separation Agreement.

23.  Section 409A.  The Company may deduct or withhold from any compensation or benefits any applicable federal, state or local tax or employment withholdings or deductions resulting from any payments or benefits provided under this Separation Agreement.  In addition, it is the Company's intention that all payments or benefits provided under this Separation Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including without limitation the six month delay for payments of deferred compensation to “key employees” upon separation from service pursuant to Section 409A(a)(2)(B)(i) of the Code (if applicable), and this Separation Agreement shall be interpreted, administered and operated accordingly.  If under this Separation Agreement an amount is to be paid in installments, each installment shall be treated as a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii).  Notwithstanding anything to the contrary herein, the Company does not guarantee the tax treatment of any payments or benefits under this Separation Agreement including without limitation under the Code, federal, state, local or foreign tax laws and regulations.

24.  Notices.  All notices in connection with or provided for under this Separation Agreement shall be in writing and delivered personally or by mail with a record of receipt (e.g., via registered or certified mail, return receipt, Federal Express, UPS, etc.) as follows:
If to you:
George M.L. LaBranche, IV
P.O. Box 130
Cold Spring Harbor, NY  11724

If to the Company:
Jane Gerhard
Head of Human Resources
Cowen Group
599 Lexington Avenue, 20th Floor
New York, NY  10022

or at another address that a party designates by giving notice under this paragraph.  Notice shall be deemed to be given upon receipt.

25.  Representations and Acknowledgments.  By signing this Separation Agreement and returning it to us, you acknowledge that:
A.    you have had sufficient time to review and consider the provisions of the Separation Agreement;
B.    you have carefully read and fully understand the terms of this Separation Agreement;
C.    you are entering into the Separation Agreement knowingly and voluntarily; 
D.    you have been advised to seek advice from an attorney of your choosing prior to signing this Separation Agreement; have been given a reasonable opportunity to seek such advice; and you have obtained legal advice, or you have knowingly and voluntarily chosen not to seek legal advice; 
E.    any changes made to the Company's offer in this Separation Agreement, whether material or immaterial, will not restart the consideration period;
F.    in exchange for your commitments and releases, including your release of all claims arising under the Age Discrimination in Employment Act, the payment and benefits that you are receiving pursuant to this Separation Agreement exceed that to which you would otherwise be entitled and are sufficient consideration to support the commitments and releases in this Separation Agreement.
26.   Consideration Period.  You may signify your acceptance of the terms and conditions of this Separation Agreement by signing it and returning it to me by November 21, 2011.  If you have not returned the executed Separation Agreement within the time permitted, the promises and offers contained in the Separation Agreement shall become null and void and you will not be eligible to receive the payments and benefits described herein.  If you have returned the executed Separation Agreement within the time permitted, you may revoke the Separation Agreement within seven (7) days of signing, by delivering written notice of revocation at the address indicated above.  Unless revoked, the Separation Agreement shall become effective and enforceable on the eighth day after it is executed and returned to the Company (the “Effective Date”).

We wish you well in your future endeavors.

Yours very truly,

Cowen Capital, LLC

By:    /s/ Peter A. Cohen    
Peter A. Cohen
Chairman and Chief Executive Officer 

ACCEPTED AND AGREED TO:

/s/ George M.L. LaBranche, IV            
George M.L. LaBranche, IV

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