EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT is made and entered into as of this 6th day of June, 2008,
by and between NEURO-HITECH, INC., a Delaware corporation with offices at Xxx
Xxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000 (the “Corporation”),
and
Xxxxxxx X. Xxxxxxx, Xx., an individual residing at 0 Xxxxxxxxx Xxxxxx, Xxxxxxx
Xxxx, XX, 00000 (the “Employee”),
under
the following circumstances:
RECITALS:
A. The
Corporation desires to secure the services of the Employee upon the terms and
conditions hereinafter set forth; and
B. The
Employee desires to render services to the Corporation, upon the terms and
conditions hereinafter set forth.
C. The
Employee has been offered a position with the Corporation which is of the nature
that Employee will either generate or be entrusted with information, ideas
and
materials pertaining to the Corporation.
NOW,
THEREFORE, the parties mutually agree as follows:
1. Employment.
The
Corporation hereby employs the Employee and the Employee hereby accepts
employment as an employee of the Corporation, subject to the terms and
conditions set forth in this Agreement.
2. Duties
and Location.
The
Employee shall serve as Chief Executive Officer of the Corporation, and shall
devote substantially all of his time to perform his duties as Chief Executive
Officer of the Corporation and perform such other tasks, consistent with his
position, as may be, from time to time, assigned to him by the Board of
Directors of the Corporation (the “Board”).
Certain duties with respect to the “public-company” aspects of the Corporation
shall be shared or divided with the Chairman of the Board and/or the Vice
Chairman of the Board, as the Chairman of the Board or the Vice Chairman of
the
Board may direct. The Employee shall report directly to the Chairman of the
Board, the Vice Chairman of the Board or such other person as the Board directs.
If
the
Board requires, the Employee shall reasonably promptly relocate his residence
to
the greater New York City metropolitan area (which shall be deemed to include
New York City, Long Island, northern New Jersey, Westchester and other locations
within a reasonable commuting distance of New York City).
3. Term
of Employment.
Subject
to Section 5
below,
the term of the Employee’s employment hereunder, unless sooner terminated as
provided herein (the “Initial
Term”),
shall
be for a period of three (3) years commencing on the date hereof. This Agreement
shall be automatically renewed for a period of two (2) years following the
completion of the Initial Term (the “Renewal
Term”)
unless
the Employee provides to the Corporation, or the Corporation provides to the
Employee, as the case may be, with six (6) months written notice that it does
not seek a Renewal Term. For purposes of this Agreement, the Initial Term,
Renewal Term and any term in accordance with Section 5
below
are hereinafter collectively referred to as the “Term.”
4. Compensation
of Employee.
(a) The
Corporation shall pay the Employee as compensation for his services hereunder,
in equal semi-monthly or bi-weekly installments during the Term, the sum of
$332,200 per annum (the “Base
Salary”),
less
such deductions as shall be required to be withheld by applicable law and
regulations. The Corporation shall review the Base Salary on an annual basis
and
has the right but not the obligation to increase it, but has no right to
decrease the Base Salary.
(b) In
addition to the Base Salary set forth in Section 4(a)
above,
provided that the Employee is employed by the Corporation on the last day of
its
fiscal year, the Employee shall be entitled to receive an annual cash bonus
with
respect to such fiscal year in an amount equal
to
0.75% of the Corporation’s consolidated annual gross profits (net revenues less
cost of good sold) for such fiscal year. The Corporation’s consolidated annual
gross profits shall be determined based upon the Corporation’s audited annual
financial statements with respect to such year. Such bonus shall be pro rated
with respect to the portion of the fiscal year from the date of this Agreement
through December 31, 2008.
(c) The
Corporation shall pay or reimburse the Employee for all reasonable out-of-pocket
expenses actually incurred or paid by the Employee in the course of his
employment, consistent with the Corporation’s policy for reimbursement of
expenses from time to time.
(d) The
Employee shall be entitled to participate in such pension, profit sharing,
group
insurance, hospitalization, and group health and benefit plans and all other
benefits and plans, including perquisites, if any, as the Corporation provides
to its employees.
(e) In
addition to the Base Salary and the bonus compensation, the Employee shall
receive options to purchase 2,000,000 shares of the Corporation’s Common Stock.
The option agreement with respect to such options shall provide for such options
to vest twenty-five percent (25%) on the date hereof, and twenty-five percent
(25%) on each remaining anniversary of the date hereof. The exercise price
per
share for such options will be $2.00 per share, subject to adjustment for
dividends, splits, reclassifications and similar transactions.
(f) If
the
Employee is required by the Corporation to relocate from the Buffalo, NY area
to
the greater New York City metropolitan area, he shall be entitled to receive
an
amount equal to his reasonable relocation expenses.
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5. Termination.
(a) This
Agreement and the Employee’s employment hereunder shall terminate upon the
happening of any of the following events:
(i) upon
the
Employee’s death;
(ii) upon
the
Employee’s “Total Disability” (as herein defined);
(iii) upon
the
expiration of the Initial Term of this Agreement or any renewal term thereof,
if
either party has provided a timely notice of non-renewal in accordance with
Section 3, above;
(iv) at
the
Employee’s option, upon ninety (90) days prior written notice to the
Corporation;
(v) at
the
Employee’s option, in the event of an act by the Corporation, defined in Section
5(c), below, as constituting “Good Reason” for termination by the Employee;
(vi) at
the
Corporation’s option, in the event of an act by the Employee, defined in Section
5(d), below, as constituting “Cause” for termination by the Corporation;
and
(vii) at
the
Corporation’s option without “Cause” at any time by providing Employee with
written notice of such termination, which termination shall take effect 60
days
after such notice is provided.
(b) For
purposes of this Agreement, the Employee shall be deemed to be suffering from
a
“Total
Disability”
if
the
Employee has failed to perform his regular and customary duties to the
Corporation for a period of 180 days out of any 360-day period and if before
the
Employee has become “Rehabilitated” (as herein defined) a majority of the
members of the Board, exclusive of the Employee, vote to determine that the
Employee is mentally or physically incapable or unable to continue to perform
such regular and customary duties of employment. As used herein, the term
“Rehabilitated”
shall
mean such time as the Employee is willing, able and commences to devote his
time
and energies to the affairs of the Corporation to the extent and in the manner
that he did so prior to his Total Disability.
(c) For
purposes of this Agreement, the term “Good
Reason”
shall
mean that the Employee has resigned due to (i) any material diminution of
Employee’s responsibilities that is not cured within fifteen (15) days; (ii) any
reduction of or failure to pay Employee compensation provided for herein, except
to the extent Employee consents in writing to any reduction, deferral or waiver
of compensation, which non-payment continues for a period of fifteen (15) days
following written notice to the Corporation by Employee of such non-payment;
or
(iii) any material violation by the Corporation of its obligations under this
Agreement that is not cured within sixty (60) days Agreement after receipt
of
written notice thereof from the Employee. For the avoidance of doubt, the
parties expressly agree that the failure of the parties to agree as to the
need
for or terms of the Employee’s relocation does not constitute “Good
Reason.”
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(d) For
purposes of this Agreement, the term “Cause”
shall
mean:
(i) the
willful or continued failure by Employee to substantially perform his duties,
including, but not limited to, acts of fraud, willful misconduct, gross
negligence or other act of dishonesty (provided that the Corporation shall
have
delivered to Employee a notice of such failure, specifying the particulars
thereof and giving Employee a 15-day period to cure such conduct if such conduct
is capable of being cured);
(ii) a
material violation or material breach of this Agreement which is not cured
within 10 days written notice to Employee;
(iii) misappropriation
of funds, properties or assets of the Company by Employee or any action which
has a materially adverse effect on the Company or its business; or
(iv) the
conviction of, or plea of guilty or no contest to, a felony or any other crime
involving moral turpitude, fraud, theft, embezzlement or dishonesty; or
(v) abuse
of
drugs or alcohol which impairs Employee’s ability to perform his duties.
(e) For
purposes of this Agreement, the term “Change
in Control Transaction”
means
the sale of the Corporation to an un-affiliated person or entity or group of
un-affiliated persons or entities pursuant to which such person, entity or
group
acquires (i) shares of capital stock of the Corporation representing at least
fifty percent (50%) of outstanding capital stock (whether by merger,
consolidation, sale or transfer of shares (other than a merger where the
Corporation is the surviving corporation and the shareholders and directors
of
the Corporation prior to the merger constitute a majority of the shareholders
and directors, respectively, of the surviving corporation (or its parent)))
or
(ii) all or substantially all of the Corporation’s assets determined on a
consolidated basis.
6. Effects
of Termination.
(a) Upon
termination of the Employee’s employment by the Corporation for any reason other
than for “Cause” or by the Employee for “Good Reason” (except with respect to a
Change in Control Transaction, as provided for in Section 6(c)), the Employee
shall be entitled to (i) the lesser of (A) two (2) years Base Salary at the
then
current rate, payable in a lump sum, less withholding of applicable taxes or
any
other compensation or benefits, or (B) Base Salary at the then current rate,
payable in a lump sum, less withholding of applicable taxes or any other
compensation or benefits for the remaining months left in the Term and (ii)
the
lesser of (X) the Employee’s average annual bonus in accordance with Section
4(b) since the start of this Agreement (the “Average
Bonus”)
multiplied by two, payable in a lump sum, less withholding of applicable taxes
or any other compensation or benefits, or (Y) Average Bonus multiplied by a
fraction the numerator of which is the number of remaining months left in the
Term and the denominator of which is 12, payable in a lump sum, less withholding
of applicable taxes or any other compensation or benefits.
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(b) If
the
Corporation shall terminate the Employee without “Cause” or if the Employee
shall resign from the Corporation with “Good Reason,” all unvested options shall
immediately vest and become exercisable. If the Corporation shall terminate
the
Employee for “Cause” or if the employee shall resign without “Good Reason,” all
unvested options shall be forfeited and all vested options shall remain
exercisable in accordance with their terms.
(c) If
the
Corporation consummates any Change in Control Transaction and within twelve
months after the Change in Control Transaction the Employee terminates his
employment for “Good Reason” or the Corporation terminates the Employee without
“Cause,” the Employee shall be entitled to (i) one (1) year’s Base Salary at the
then current rate, payable in a lump sum, less withholding of applicable taxes
or any other compensation or benefits and (ii) the Average Bonus, payable in
a
lump sum, less withholding of applicable taxes or any other compensation or
benefits. Upon such termination of the Employee’s employment with the
Corporation, all of Employee’s unvested options shall immediately vest and
become exercisable.
7. Vacation.
The
Employee shall be entitled to a vacation of four (4) weeks per year, during
which period his salary shall be paid in full. The Employee shall take his
vacation at such time or times as the Employee and the Corporation shall
determine is mutually convenient. Any vacation not taken in one (1) year shall
not accrue, provided that if vacation is not taken due to the Corporation’s
business necessities, up to four (4) weeks’ vacation may carry over to the
subsequent year.
8. Disclosure
of Confidential Information.
The
Employee recognizes, acknowledges and agrees that he has had and will continue
to have access to secret and confidential information regarding the Corporation,
including but not limited to, its products, formulae, patents, sources of
supply, customer dealings, data, know-how and business plans, provided such
information is not in or does not hereafter become part of the public domain,
or
become known to others through no fault of the Employee. The Employee
acknowledges that such information is of great value to the Corporation, is
the
sole property of the Corporation, and has been and will be acquired by him
in
confidence. In consideration of the obligations undertaken by the Corporation
herein, the Employee will not, at any time, during or after his employment
hereunder, reveal, divulge or make known to any person, any information acquired
by the Employee during the course of his employment, which is treated as
confidential by the Corporation, and not otherwise in the public domain. The
provisions of this Section 8 shall survive the termination of the Employee’s
employment hereunder.
9. Covenant
Not To Compete or Solicit.
The
Employee covenants and agrees that for the period equivalent to the period
in
respect of which Employee is entitled to payments pursuant Section 6(a) or
Section 6(c), as applicable, but not less than twelve (12) months after the
date
of this Agreement (the “Restricted
Period”),
he
shall not:
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(a) directly
or indirectly, own, manage, operate, control, finance or participate in the
ownership, management, operation, control or financing of, or be an officer,
director, employee, partner, principal, agent, representative, consultant or
otherwise with, or use or permit his name to be used in connection with, any
business or enterprise (the “Restricted Activities”) which is engaged in any
line of business in which the Corporation was engaged or had a present intent
to
engage, in each case, as of immediately prior to the date hereof (collectively,
the “Business”);
provided, however, that notwithstanding the foregoing, nothing herein shall
prohibit the Employee from (i) engaging in Restricted Activities with a person
or entity that is engaged in, or has a formal plan to engage in, the Business
provided that the Restricted Activities engaged in and compensation received
by
the Employee, if any, are unrelated to the Business, or (iii) owning up to
five
percent (5%) of any class of securities or equity interests of any corporation
or other business entity which is engaged in the Business having a class of
securities registered pursuant to the Securities Exchange Act of 1934, as
amended, but neither the Employee, nor any group of persons including the
Employee may in any way, either directly or indirectly, manage or exercise
control of any such corporation or entity, guarantee any of its financial
obligations, or otherwise take any part in its business other then exercising
its or his rights as a stockholder. The Employee acknowledges that the
Corporation conducts the Business on a national basis (in the United States
and
Canada) and that this covenant cannot be limited to a service area in which
the
Corporation conducts the Business; or
(b) directly
or indirectly, either for himself or any other person (A) solicit or induce,
or
attempt to induce, any employee of, or independent contractor providing services
to the Corporation to leave the employ of or to cease to provide services,
in
whole or in part to the Corporation, or (B) induce or attempt to induce any
customer or supplier of the Corporation, to cease doing business with the
Corporation.
In
the
event of a breach by the Employee of any of the covenants set forth above,
the
term of such covenant shall be extended by the period of the duration of such
breach.
10. Miscellaneous.
(a) The
Employee acknowledges that the services to be rendered by him under the
provisions of this Agreement are of a special, unique and extraordinary
character and that it would be difficult or impossible to replace such services.
Accordingly, the Employee agrees that any breach or threatened breach by him
of
Sections 8 or 9 of this Agreement shall entitle the Corporation, in addition
to
all other legal remedies available to it, to apply to any court of competent
jurisdiction to seek to enjoin such breach or threatened breach. The parties
understand and intend that each restriction agreed to by the Employee
hereinabove shall be construed as separable and divisible from every other
restriction, that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and that one
or
more or all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement
is
more restrictive than permitted by law in the jurisdiction in which the
Corporation seeks enforcement thereof, such restriction shall be limited to
the
extent permitted by law. The remedy of injunctive relief herein set forth shall
be in addition to, and not in lieu of, any other rights or remedies that the
Corporation may have at law or in equity.
6
(b) Neither
the Employee nor the Corporation may assign or delegate any of their rights
or
duties under this Agreement without the express written consent of the other;
provided however that the Corporation shall have the right to delegate its
obligation of payment of all sums due to the Employee hereunder, provided that
such delegation shall not relieve the Corporation of any of its obligations
hereunder.
(c) This
Agreement constitutes and embodies the full and complete understanding and
agreement of the parties with respect to the Employee’s employment by the
Corporation, supersedes all prior understandings and agreements, whether oral
or
written, between the Employee and the Corporation, and shall not be amended,
modified or changed except by an instrument in writing executed by the party
to
be charged. The invalidity or partial invalidity of one or more provisions
of
this Agreement shall not invalidate any other provision of this Agreement.
No
waiver by either party of any provision or condition to be performed shall
be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or any prior or subsequent time.
(d) This
Agreement shall inure to the benefit of, be binding upon and enforceable
against, the parties hereto and their respective successors, heirs,
beneficiaries and permitted assigns.
(e) The
headings contained in this Agreement are for convenience of reference only
and
shall not affect in any way the meaning or interpretation of this
Agreement.
(f) All
notices, requests, demands and other communications required or permitted to
be
given hereunder shall be in writing and shall be deemed to have been duly given
when personally delivered, sent by registered or certified mail, return receipt
requested, postage prepaid, or by private overnight mail service (e.g. Federal
Express) to the party at the address set forth above or to such other address
as
either party may hereafter give notice of in accordance with the provisions
hereof. Notices shall be deemed given on the sooner of the date actually
received or the third business day after sending.
(g) This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without reference to principles of conflicts
of
laws and each of the parties hereto irrevocably consents to the jurisdiction
and
venue of the federal and state courts located in the State of New
York.
(h) This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one of the same instrument. The parties hereto have executed this Agreement
as
of the date set forth above.
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11. Post-Employment
Property.
The
parties agree that any work of authorship, invention, design, discovery,
development, technique, improvement, source code, hardware, device, data,
apparatus, practice, process, method or other work product whatever (whether
patentable or subject to copyright, or not, and hereinafter collectively called
“Discovery”) related to training or marketing methods and techniques that
Employee, either solely or in collaboration with others, has made or may make,
discover, invent, develop, perfect, or reduce to practice during the term of
his
employment, whether or not during regular business hours and created, conceived
or prepared on the Corporation’s premises or otherwise shall be the sole and
complete property of the Corporation. More particularly, and without limiting
the foregoing, Employee agrees that all of the foregoing and any (i) inventions
(whether patentable or not, and without regard to whether any patent therefore
is ever sought), (ii) marks, names, or logos (whether or not registrable as
trade or service marks, and without regard to whether registration therefore
is
ever sought), (iii) works of authorship (without regard to whether any claim
of
copyright therein is ever registered), and (iv) trade secrets, ideas, and
concepts ((i) - (iv) collectively, “Intellectual Property Products”) created,
conceived, or prepared during the term of his employment on the Corporation’s
premises or otherwise, whether or not during normal business hours, shall
perpetually and throughout the world be the exclusive property of the
Corporation, as shall all tangible media (including, but not limited to, papers,
computer media of all types, and models) in which such Intellectual Property
Products shall be recorded or otherwise fixed. Employee further agrees promptly
to disclose in writing and deliver to the Corporation all Intellectual Property
Products created during his engagement by the Corporation, whether or not during
normal business hours. Employee agrees that all works of authorship created
by
Employee during his engagement by the Corporation shall be works made for hire
of which the Corporation is the author and owner of copyright. To the extent
that any competent decision-making authority should ever determine that any
work
of authorship created by Employee during his engagement by the Corporation
is
not a work made for hire, Employee hereby assigns all right, title and interest
in the copyright therein, in perpetuity and throughout the world, to the
Corporation. To the extent that this Agreement does not otherwise serve to
grant
or otherwise vest in the Corporation all rights in any Intellectual Property
Product created by Employee during his engagement by the Corporation, Employee
hereby assigns all right, title and interest therein, in perpetuity and
throughout the world, to the Corporation. Employee agrees to execute,
immediately upon the Corporation’s reasonable request and without charge, any
further assignments, applications, conveyances or other instruments, at any
time
after execution of this Agreement, whether or not Employee is engaged by the
Corporation at the time such request is made, in order to permit the
Corporation, or its assigns, to protect, perfect, register, record, maintain,
or
enhance their rights in any Intellectual Property Product; provided, that,
the
Corporation shall bear the cost of any such assignments, applications or
consequences. Upon termination of Employee’s employment by the Corporation for
any reason whatsoever, and at any earlier time the Corporation so requests,
Employee will immediately deliver to the custody of the person designated by
the
Corporation all originals and copies of any documents and other property of
the
Corporation in Employee’s possession, under Employee’s control or to which he
may have access,
8
IN
WITNESS WHEREOF, this Employment Agreement has been executed on the date and
year first above written.
CORPORATION:
|
/s/
Xxxxx Xxxxxxx
|
|
Name:
|
Xxxxx
Xxxxxxx
|
|
Title:
|
Chief
Financial Officer
|
|
EMPLOYEE:
|
|
|
/s/
Xxxxxxx X. Xxxxxxx, Xx.
|
|
|
Xxxxxxx
X. Xxxxxxx, Xx.
|
|
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