Document:

Unassociated Document

Exhibit 10.63

 

 

CONFIDENTIAL

June 27, 2011

Paul Mieyal

Acting Chief Executive Officer

Nephros, Inc.

41 Grand Avenue

River Edge, NJ  07661

Dear Paul:

We are pleased to propose the arrangements under which DHR International will conduct a search to recruit a Chief Executive Officer who will report to James Scibetta, Chairman of the Board of Directors.

We are guided by your desire to have this individual located as quickly as possible.  Work on the assignment will begin immediately upon our receipt of a signed copy of this agreement.

 

Professional Retainer and Fees

Consistent with the standards of the retained executive search profession, our professional fees are non-contingent and non-refundable and are equal to one-third of the first year estimated total cash compensation; however, we will conduct this assignment at a fixed fee of $100,000 plus an additional fee of $25,000 being payable in equity.  Our fee is payable in three equal installments.  When we are retained, an invoice for the first installment will be payable upon receipt as a non-refundable initial retainer.  Invoices for the second and third installments would normally then be sent in thirty and sixty days and be payable upon receipt.  However, we agree that for this search that the second retainer would not be billed and due until Nephros initiates the first round of candidate interviews and that the third and final retainer would be billable upon the candidate’s acceptance of an offer from Nephros.  Also consistent with executive search practices, DHR International is reimbursed for search-related indirect out-of-pocket expenses which include allocated support expenses such as administrative, communications (voice and data), reproduction and report production, database management, and computer services, which historically have represented twelve percent of the applicable retainer.  These expenses are pro-rated and billed with the three retainers.  Any direct, out-of-pocket expenses such as candidate and consultant travel, lodging and video-conferencing will be billed on a monthly basis as incurred.

Additionally, if any candidate presented by DHR is employed by Nephros, Inc. or any affiliate for a position other than that called for by this assignment, you agree to pay DHR an amount equal to thirty three percent of each additional hire’s projected first year total cash compensation.

 

 

DHR International   |  Asia  |   Europe  |  North America  |  South America  |  www.dhrinternational.com

  

  

  

 

Duration/Scope

 

It is planned that this search assignment can be completed by the end of the traditional three-month retainer period.  Should this not occur, we will continue the search without charge for a period not to exceed six months.

 

Cancellation

 

DHR International recognizes that a client’s recruiting needs may change over time.  If you cancel the search by written confirmation within sixty days, we will forward a final statement for our professional services prorated through the date of cancellation, and for expenses related to the search.

Except as provided above, in no event shall you pay DHR less than the first retainer plus direct and indirect expenses.  It is further understood that our search will include the evaluation of any candidates who may have been or may be identified by you or others, or may be already employed by you, and that any and all such individuals shall be deemed candidates presented by us for purposes of this letter.

If the search is cancelled by either party, your obligations under this agreement, including but not limited to those described in “Professional Retainer and Fees” above, will survive.

 

Two-Year Guarantee

If the employment of a DHR placed executive is terminated (voluntarily or involuntarily) within two years from the hiring date with Nephros, Inc., we will, at your option, refill that position for no additional fee.

Confidentiality

 

DHR International will maintain the confidentiality of all proprietary and confidential information supplied by you, it being understood that proprietary and confidential information does not include, and this obligation will not apply to, any information (i) in the public domain, (ii) which is or comes into DHR’s possession without an obligation of confidentiality, or (iii) which is required by law or Nasdaq/securities exchange requirements to be disclosed.

General

 

This agreement constitutes the entire agreement between the parties with respect to the subject matter and supersedes any previous oral or written arrangements or understanding.  Equal Employment Opportunity is a federal law, and in providing services under this agreement, DHR International will adhere to all prohibitions on discrimination on the basis of race, color, religion, national origin, disability or handicap, sex, age, marital status, sexual orientation, or military veteran’s status.

 

 

DHR International   |  Asia  |   Europe  |  North America  |  South America  |  www.dhrinternational.com

  

  

  

 

It is DHR International’s standard policy to commence work on any search assignment only after written confirmation of the Agreement has been received by DHR.  If you are in agreement with the terms and conditions as stated above, please sign and return a copy of this letter to me as our formal authorization to proceed.

We look forward to the opportunity of working with you and sincerely hope that you select DHR International to conduct this important assignment.

Best regards,

DHR International, Inc.

Donald Kilinski

Managing Director

DK/lk

Accepted:

/s/ Paul  Mieyal

Paul Mieyal

Acting Chief Executive Officer

Nephros, Inc.

7/25/11

Date

 

 

DHR International   |  Asia  |   Europe  |  North America  |  South America  |  www.dhrinternational.comForm of Transition and Consulting Agreement

 Exhibit 10.1 
 TRANSITION AND CONSULTING AGREEMENT 
 This Transition and Consulting
Agreement (this “Agreement”) is made and entered into as of July     , 2011 (“Effective Date”) by and between Peter E. Gorman (the “Executive”) and Harte-Hanks, Inc., a Delaware
corporation (the “Company”). 
 RECITALS: 

The Executive and the Company desire to provide for an orderly transition to the Executive’s successors; and 

The parties also wish to enter into a consulting arrangement upon the termination of the Executive’s employment with the Company.

 For good and valuable consideration, the parties hereto agree as follows: 

1. Employment Transition. Except as hereinafter otherwise provided, the Executive will remain employed as Executive Vice President
and President, Shoppers through August 31, 2011 (the “Transition Date”). The Executive hereby resigns from his positions as officer, director, manager and/or member of all Company subsidiaries and affiliates, and all fiduciary
positions that he may hold with respect to any Company, subsidiary, or affiliate employee benefit plans, effective the Transition Date; provided, however, that the Executive may resign before such time and the Company may terminate the Executive
sooner in accordance with Section 8(b). 
 2. Employment Term. The term of the Executive’s employment under
this Agreement (“Employment Term”) shall commence on the Effective Date and shall terminate on the Transition Date, unless sooner terminated as provided in Section 8. 

3. Employment Duties. During the Employment Term, the Executive agrees that he will devote his full business time, attention, and
energies to performing such duties on behalf of the Company as from time to time may be assigned to him by the Chief Executive Officer of the Company, including without limitation providing assistance with the transition of Executive’s duties
to his successors. 
 4. Compensation During Employment Term. 

(a) Base Salary. During the Employment Term, the Company shall continue to pay the Executive a base salary at his current rate of
$354,600 per annum (“Base Salary”). Such Base Salary shall be payable during the Employment Term in substantially equal installments in accordance with the Company’s standard payroll policy for executives. 

(b) Bonus. The Executive shall not be eligible for a bonus or other incentive compensation for the Executive’s services to
the Company in 2011 or thereafter. 

  
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 (c) Equity Awards. The Executive shall not receive additional equity or long-term
incentive plan awards for services to the Company during the Employment Term or thereafter. 
 (d) Employee Benefits. The
Executive shall continue to be eligible during the Employment Term to participate in the Company’s health, life, and disability insurance plans, and the Company’s retirement plans, in accordance with the terms of the Company’s plans.
Except for any policy conversion rights exercisable at the sole expense of the Executive, the Executive shall not benefit from the Company’s salary continuation program after the last day of the Employment Term. 

(e) Automobile Allowance. During the Employment Term, the Executive shall continue to be entitled to a monthly automobile
allowance in the amount of $975. 
 5. Transition Compensation. 

(a) Transition Payments. Provided this Agreement has not been terminated pursuant to Section 8(b), the Company shall pay the
Executive $110,635.20 each month for ten months beginning in March 2012 (the “Transition Payments”). 
 (b)
Equity Awards. Provided this Agreement is not been terminated pursuant to Section 8(b) or for Good Reason pursuant to Section 8(c), on the Transition Date, the Executive’s then outstanding equity-based awards under the
Company’s 2005 Omnibus Incentive Plan and 1991 Equity Compensation Plan shall become vested (and fully exercisable, as applicable) by the Executive. Awards that have been structured to vest on a performance basis shall accelerate and vest at
the 100% level established for such awards regardless of whether the 100% performance level has been or will be achieved. Each stock option award shall remain exercisable for its original term; provided, however, that the Company has the right to
require the Executive to exercise unexercised stock option awards within 90 days after receipt of written notice to the Executive. To the extent that, after the Company delivers such a notice, the Executive fails to exercise such stock option awards
within such 90-day period, the Company has the right to cancel such stock option awards. 
 (c) COBRA. Unless this
Agreement is terminated prior to the Transition Date pursuant to (x) Sections 8(a) or 8(b) or (y) without Good Reason pursuant to Section 8(c), on or before April 30, 2012, the Company shall pay to the Executive a lump sum cash
payment in the amount necessary for the Executive to make Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage payments under the Company’s group medical and dental plans in which the Executive (and
any spouse or other eligible dependents) is enrolled on the Transition Date, for a period of 18 months following the end of the month in which the Employment Term ends using the COBRA premium rates then in effect at the Company. 

6. Consulting Arrangement. 
 (a) Consulting Period. Except as hereinafter otherwise provided, the Company agrees to engage the Executive as a consultant of the Company effective as of September 1, 2011, and the Executive
agrees to render services as a consultant to the Company as of such date on the terms and conditions set forth below. The term of service as a consultant to the Company will continue through August 31, 2013, unless sooner terminated as provided
in Section 8 (“Consulting Period”). 

  
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 (b) Consulting Duties. During the Consulting Period, the Executive agrees to be
available to provide such consulting services as reasonably requested from to time by the Company, provided that prior approval of the Chief Executive Officer of the Company is required if monthly fees will exceed $5,000. The Executive will use his
good faith efforts to perform such services to the best of his abilities. 
 (c) Consulting Fees. During the Consulting
Period, and provided that the Executive is not in breach of his obligations under this Agreement, the Executive will be paid a consulting fee of $200 per hour worked, payable in arrears promptly after the end of each month in the Consulting Period
provided that the Executive has provided a suitably detailed invoice for the work performed. 
 (d) Consulting Expenses.
The Executive will be reimbursed for all reasonable travel and travel-related expenses that he incurs at the request of the Company in performing services for the Company during the Consulting Period, subject to (i) substantiating such expenses
in accordance with the Company’s reimbursement policies, and (ii) obtaining the prior approval of the Chief Executive Officer of the Company. 
 (e) Independent Contractor Status. The Executive will be performing consulting services as an independent contractor during the Consulting Period, and not as an employee or officer of the Company.
The Executive will be responsible for all taxes and non-reimbursable expenses attributable to the rendition of his consulting services. The consulting arrangement shall not be deemed to constitute a partnership or joint venture between the Company
and the Executive, nor shall the consulting arrangement be deemed to make the Executive an agent of the Company. 
 (f) Level
of Activity. The Company and the Executive reasonably anticipate that the amount of services the Executive will perform for the Company after August 31, 2011, will permanently decrease to no more than 20% of the average level of services
performed by the Executive for the Company during the 36-month period preceding September 1, 2011. 
 7. Restrictive
Covenants. The Executive shall continue to be bound by his Employment Restrictions Agreement dated March 15, 2011, which is made part of, and incorporated by reference into, this Agreement (the “ERA”), except that any
references in the ERA to the termination or end of the Executive’s employment shall be deemed to refer instead to the later of August 31, 2013 or the termination or end of the Executive’s Consulting Period under this Agreement. Except
as modified in this Section 7, the Restrictive Covenants will survive the termination of this Agreement to the extent provided in such agreements. 
 8. Termination of Agreement. 
 (a) Death or Disability. This
Agreement shall automatically terminate upon the death or the “Disability” of the Executive. Under the terms of this Agreement, “Disability” 

  
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means disability as defined for purposes of Section 409A of the Internal Revenue Code of 1986 as amended and the regulations thereunder (“Section 409A” and
“Code”, respectively). In the event of the termination of the Executive’s employment with the Company due to his death or Disability prior to the end of the Employment Term, the Executive, the Executive’s surviving spouse,
the Executive’s conservator or guardian, or the Executive’s estate, as the case may be, shall be entitled to (i) any earned but unpaid Base Salary, (ii) any short-term or long-term disability benefits in accordance with the terms
of such plans, (iii) any benefits owed under any Company-sponsored pension or retirement plans in accordance with the terms of such plans, (iv) any benefits payable to a surviving spouse or beneficiary, as the case may be, under any
Company-sponsored life insurance or death benefit plan and (v) the payments described in Sections 5(a) and 5(c). In the event of the termination of the Executive’s consulting services to the Company due to his death or Disability during
the Consulting Period, the Executive, the Executive’s surviving spouse, the Executive’s conservator or guardian, or the Executive’s estate, as the case may be, shall be entitled to receive (x) any unpaid consulting fees earned
pursuant to Section 6(c), (y) payment for any unreimbursed consulting expenses incurred pursuant to Section 6(b) and 6(d), and (z) the payments described in Sections 5(a) and 5(c). 

(b) Termination by the Company for Cause. The Company may terminate the employment of the Executive at any time for
“Cause.” For purposes of this Agreement, termination by the Company for “Cause” means 
 (i) during
the Employment Term, that the Company’s Board of Directors has determined in good faith that the Executive has (x) committed an act of fraud, dishonesty, gross misconduct or other unethical practices, or (y) materially failed to
perform his duties to the satisfaction of the Chief Executive Officer of the Company, which failure has not been cured within 60 days after receipt of written notice from the Chief Executive Officer, and 

(ii) during the Consulting Period, that the Executive has violated the ERA. 
 If the Company terminates this Agreement for Cause, the Company shall only be obligated to pay the Executive (1) any earned but unpaid Base Salary (or consulting fees, as the case may be),
(2) expenses incurred in accordance with Company policies and this Agreement and (3) any benefits owed under any Company-sponsored pension or retirement plan (subject to and in accordance with the terms of such plans). 

(c) Termination by the Executive. The Executive may terminate his employment or consulting services with the Company for any
reason or no reason by providing the Company with written notice in accordance with the terms of Section 14 hereof at least 30 days’ in advance of the effective date of such termination. In the event of termination of the Executive’s
employment by the Executive for “Good Reason,” the Executive shall be entitled to receive (x) any earned but unpaid Base Salary, (y) any benefits owed under any Company-sponsored pension or retirement plans in accordance with the
terms of such plans, and (z) the payments described in Sections 5(a) and 5(c). For purposes of this Agreement, “Good Reason” means that: 

  
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 (i) during the Employment Term, the Executive shall have terminated his employment
following a material adverse reduction (which is instituted without his consent and which is not cured within 30 days after the Executive delivers written notice of objection to the Chief Executive Officer within 90 days of the occurrence of the
reduction) in his functions, duties or responsibilities (x) to a level that is not commensurate with those of an executive in the position of the Executive prior to such reduction (it being understood that the reassignment of any of the
Executive’s functions, duties or responsibilities to one or more persons who report directly or indirectly to the Executive is not such a reduction), or (y) which causes the Executive’s position with the Company to become one of
lesser importance or scope, as evidenced by (1) a material diminution in authority, duties, or responsibilities, or (2) a material change in the authority, duties or responsibilities of the Executive’s supervisor; or 

(ii) during the Consulting Period, that the Company has materially breached this Agreement and failed to cure such breach within 30 days
after specific notice thereof is delivered in writing to the Chief Executive Officer of the Company. 
 For the avoidance of doubt, if the
Executive terminates this Agreement other than for Good Reason, the Company shall only be obligated to pay the Executive (1) any earned but unpaid Base Salary (or consulting fees, as the case may be), (2) expenses incurred in accordance
with Company policies and this Agreement and (3) any benefits owed under any Company-sponsored pension or retirement plan (subject to and in accordance with the terms of such plans). 

9. Effect of Termination of Agreement. Notwithstanding anything to the contrary in this Agreement, the rights and obligations of
the parties described in Sections 7 (Restrictive Covenants), 11 (Release of Claims), and 12 (Cooperation), of this Agreement shall survive the termination of this Agreement. 
 10. Certain Tax Matters. The parties acknowledge and agree that: (i) Section 409A would subject the Executive to penalty taxes and interest if he receives payments from a
“nonqualified deferred compensation plan” before the date that is six months after the date of the Executive’s “separation from service” from the Company, or if earlier, his death or Disability; (ii) the end of the
Employment Term will be treated as the Executive’s date of separation from service for purposes of Section 409A; (iii) the reimbursement of consulting expenses under Section 6(d) of this Agreement is intended to be a
reimbursement of deductible business expenses that is exempt under 409A; (iv) the payments set forth in Section 5(a) may not be accelerated except as provided in Section 8(a) in the case of death or Disability of the Executive; and
(v) no subsequent elections to defer receipt of the payments owed to the Executive under Section 5 will be permitted. All payments provided under this Agreement shall either be exempt from or comply with the requirements of
Section 409A of the Code and the Treasury Regulations thereunder. All payments and benefits provided under this Agreement or otherwise are subject to applicable tax withholding. 

11. Release of Claims. As a condition to payment of the amounts and benefits set forth in Section 5 of this Agreement, the
Executive agrees to execute immediately prior to the commencement of the Consulting Period a customary release of all claims and causes of action against the Company, its subsidiaries, and their respective officers, directors, and employees, in a
form reasonably acceptable to the Company; provided that if the Company accepts a release during the Consulting Period, such circumstance shall not delay the Transition Payments. 

  
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 12. Cooperation. During the Consulting Period and continuing thereafter, if requested
by the Company the Executive shall cooperate and assist the Company and its subsidiaries and affiliates in any dispute, proceeding, or investigation in which the Company or any subsidiary or affiliate is involved and in which the Executive has been
involved, or which involves facts or events that existed or arose during the period of the Executive’s employment or consultancy with the Company relating to the business of the Company. The Company will reimburse the Executive for all
reasonable out-of-pocket costs incurred by the Executive in fulfilling his obligations under this Section 12. 
 13.
Conditions Applying to Payment of Benefits. The Executive understands and agrees that the payments and benefits to be provided to the Executive under this Agreement are subject to the Executive’s compliance with the terms and conditions
set forth in this Agreement including, without limitation, the Restrictive Covenants. 
 14. Communications. Any notice,
request or other communication required or permitted by this Agreement to be mailed, given or delivered to the Executive shall be in writing, addressed to him at his address as reflected on Company payroll records, or such address as he may furnish
from time to time to the Company for the purposes hereof; and any payment to the Executive under this Agreement may be made by check delivered to him or mailed to or delivered at such address, or by wire transfer to an account designated by the
Executive. Any notice, request or other communication required or permitted by this Agreement to be given to the Company is to be in writing, addressed to the Company, for the attention of the Chief Executive Officer (with a copy to the General
Counsel), Harte-Hanks, Inc., 9601 McAllister Freeway, Suite 610, San Antonio, Texas 78216, or at such other address as the Company shall have furnished to the Executive for the purposes hereof. 

15. Assignability; Binding Effect. This Agreement is binding upon, and inures to the benefit of, the Executive; the obligations of
the Executive hereunder are personal and this Agreement may not be assigned by the Executive. This Agreement is binding upon, and inures to the benefit of, the Company and shall also bind and inure to the benefit of any successor of the Company by
merger or consolidation or any assignee of all or substantially all of its properties, but, except to any such successor or assignor of the Company, this Agreement may not be assigned by the Company. 

16. Governing Law and Interpretation. This Agreement shall be governed by and construed in accordance with the laws of the State
of Texas without regard to its conflict of laws provision. The parties consent to the exclusive jurisdiction of the courts of and for Bexar County, Texas, for resolution of any dispute involving this Agreement. Should any provision of the Agreement
be declared illegal or unenforceable by a court of competent jurisdiction and cannot be modified to be enforceable, excluding Section 7 (Restrictive Covenants) or Section 11 (Released Claims), such provision shall immediately become null
and void, leaving the remainder of this Agreement in full force and effect. If Sections 7 or 11, or any portion thereof, is found by a court of competent jurisdiction to be unenforceable, the Executive agrees that the

  
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Company may rewrite this Agreement to cure the defect, and the Executive shall execute the rewritten agreement upon request of the Company without any additional monies, benefits and/or
compensation thereof. The Executive and the Company affirm that either may institute an action to specifically enforce any term or terms of this Agreement. 
 17. Counterparts. This Agreement may be executed in multiple counterparts, each of which is to be deemed an original, but all of which, together, constitute one and the same instrument. 

18. Entire Agreement and Modification. This Agreement constitutes the entire agreement and understanding between the Company and
the Executive concerning the subject matters contained herein. This Agreement supersedes any and all prior understandings and agreements between the parties concerning these subject matters (including but not limited to the Amended and Restated
Severance Agreement dated May 4, 2011), except for the ERA (as modified by Section 7 of this Agreement). This Agreement may not be modified, terminated, waived, altered, or amended, except in a writing signed by the Executive, and a duly
authorized officer of the Company (other than the Executive). 
 IN WITNESS WHEREOF, the parties hereto knowingly and
voluntarily executed this Agreement as of the date first set forth above. 
  

			
	  

Peter E. Gorman

	  
 HARTE-HANKS, INC.

	  
 By:
	 	  

		 	 Larry D. Franklin

		 	 Chairman, President &

		 	 Chief Executive Officer

  
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