EMPLOYMENT AGREEMENT
EXHIBIT
10.25
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the first day of
January 2005, by and between Xxxxx
X. Xxxxxx
(“Employee”), and APPLIED NEUROSOLUTIONS, INC. ("APNS"), a Delaware corporation
having its principal place of business in Vernon Hills, Illinois (the
“Company”). In consideration of the mutual covenants and conditions set forth
herein, the parties hereby agree as follows:
1. Employment.
The
Company hereby employs Employee to serve as its Chairman and Employee hereby
accepts such employment. In his capacity as Chairman, Employee shall be
responsible for performing the duties of the Chairman as outlined in the
Corporate By-Laws, and agrees to perform such other duties during the term
hereof as the Board of Directors of the Company shall, from time to time,
reasonably direct. Employee agrees to utilize his skills and to render services
to the best of his ability during the term of this Agreement.
2. Term.
Unless
earlier terminated pursuant to the provisions of Paragraph 6 below, Employee’s
employment hereunder shall be for a period of one (1) year commencing on January
1, 2005 and shall be extended automatically for additional one (1) year period,
unless either the Company or the Employee delivers written notice to the other
of its or his election not to extend at least thirty (30) days prior to the
end
of either the initial or any additional term, as applicable. If the Company
decides not to extend this Agreement within the ninety (30) day period described
in the immediately preceding sentence for reasons other than “cause” (as defined
in Paragraph 6a below), the Employee shall receive a severance payment equal
to
the final year’s Base Salary (as defined in Paragraph 3 below) with respect to
the initial or additional term that was last completed, plus the amount of
the
bonus earned by the Employee in such year. Such severance payment shall be
payable over a one (1) year period in the same manner as the Employee had been
paid under this Agreement in such year, with payments to begin within two (2)
weeks of the end of the current term of employment under this
Agreement.
3. Compensation.
a. Base
Salary.
For all
services rendered by Employee under this Agreement, Employee shall receive
a
salary at an annual rate of $48,000 as increased under Paragraphs 3b and 4c
(“Base Salary”), or such higher annual rate as the Board of Directors of the
Company may from time to time establish in its sole direction.
b. Stock
Option Plans.
The
Company has adopted stock option and/or stock purchase plans for the benefit
of
certain Employees of the Company. Employee shall be entitled to participate
in
such plans, consistent with the terms of such plans, applicable law and Company
Policy.
4. Benefits.
a. Medical/Health
and Disability Insurance.
The
Company shall provide Employee with Company paid medical and dental insurance
which covers Employee, his spouse and dependents, in accordance with such
policies as shall be maintained by the Company, which shall be comparable to
that made available to other employees of the Company. The Company’s benefit
plan shall provide disability insurance for the benefit of Employee through
a
Company plan reasonably acceptable to Employee.
b. Expense
Reimbursement.
The
Company shall pay or reimburse Employee for all reasonable travel and other
expenses incurred or paid by Employee in connection with the performance of
services under this Agreement upon presentation of expense vouchers and such
other supporting information as the Company may from time to time reasonably
request.
5. Warranties
and Indemnification.
Employee represents to the Company that Employee is free to enter into this
Agreement and that Employee has no commitment, arrangement or understanding
to,
or with, any third party which restrains or is in conflict with this Agreement;
or which would operate to prevent Employee from performing the services to
the
Company which Employee hereby has agreed to provide. Employee agrees to
indemnify and hold the Company harmless from and against any and all liabilities
or claims, including costs, expenses and reasonable attorney’s fees arising out
of any acts by Employee which, the foregoing representation or warranty to
the
contrary notwithstanding, shall be in violation of or shall constitute a breach
of any such commitment, arrangement or understanding.
6. Termination.
a. The
Company may terminate Employee’s employment hereunder upon thirty (30) days’
prior written notice to Employee for cause, and except as provided below, the
salary and benefits referred to in Paragraphs 3 and 4 above shall cease upon
the
effective date of any such termination for just cause. As used herein, with
respect to termination by the Company, the term “cause” shall mean (i) any
material breach hereof by Employee which is not cured within thirty (30) days
following written notice of such breach given by the Company, provided that
no
such prior notice and opportunity to cure need be given where such breach,
or
similar breach, has been the subject of such a notice and cure period on more
than two prior occasions; or (ii) conviction of Employee for commitment of
a
felony; or (iii) any act of Employee, which in the reasonable judgment of a
majority of the Board of Directors of the Company, constitutes dishonesty,
larceny, fraud, deceit or gross negligence by Employee in the performance of
his
duties to the Company or willful misrepresentation to shareholders, directors
or
officers of the Company.
b. The
Company may, by action of a majority of the Board of Directors, terminate
Employee’s employment at any time upon thirty (30) days’ prior written notice
and without cause; provided, that prior to the effective date of termination,
the Company shall pay to Employee an amount equal to the total Base Salary
otherwise payable through the expiration of the term of this Agreement as set
forth at Paragraph 2 above. Health disability and life insurance, as described
in Paragraph 4(a) above, equivalent to that provided to Employee during last
month of employment, will be provided to Employee for up to twelve months
following the effective date of termination.
c. Employee
may terminate his employment hereunder at any time upon thirty (30) days’ prior
written notice to the Company for cause. The amounts identified in Paragraph
6b
shall be paid to Employee as of the effective date of termination, together
with
the continuing benefits described therein, as Employee’s sole remedy. As used
herein with respect to termination by Employee, “cause” shall mean (i) any
material breach hereof by the Company which is not cured within thirty (30)
days
following written notice of such breach given by Employee; (ii) repeated and
consistent bad faith attempts to bring about Employee’s resignation through
obstruction by the Company of operations and programs of Employee in his
capacity hereunder; (iii) the removal of Employee from the position of Chairman,
or the appointment of another person to perform the duties ordinarily associated
with such position(s) without the formal removal of Employee’s title(s); or (iv)
the transfer of Employee or the relocation of the principal offices from which
the activities of the Company are conducted to an area more than fifty (50)
miles outside the Village of Xxxxxx Hills.
d. If
Employee terminates his employment without cause, such termination shall be
treated as a termination with cause by the Company, as provided in Subparagraph
6a above (but without the necessity of any prior notice by the
Company).
e. Any
dispute between the parties as to the meaning or presence of “cause” for
termination shall be resolved by binding arbitration conducted before a single
arbitrator in the Chicago, Illinois area under the Commercial Arbitration Rules
of the American Arbitration Association, provided that the arbitrator shall
be a
person of extensive experience in the arbitration of disputes under private
employment agreements applicable to management personnel in industries similar
to the Company’s industry.
f. This
Employment Agreement shall be terminated by the death of the Employee. In
addition, this Employment Agreement may be terminated by the Board of Directors
of the Company if the Employee shall be rendered incapable by illness or any
other disability from complying with the terms, conditions and provisions on
his
part to be kept, observed and performed for a period in excess of one hundred
twenty (120) days (whether or not consecutive) during a twelve (12) month period
during the Term of Employment (“Disability”). If this Employment Agreement is
terminated by reason of Disability of the Employee, the Company shall give
written notice to that effect to the Employee in the manner provided herein.
In
the event that the Employee receives disability insurance benefits paid for
by
the Company during any period prior to termination of this Employment Agreement
pursuant to this Section 6f, the Employee’s salary shall be reduced by an amount
equal to such disability insurance benefits during such period.
g. In
the
event this Agreement is terminated by Employer without cause, or by Employee
with cause, all stock, warrants and options of Employee in the Company shall
immediately become vested. Stock options may be exercised any time over the
time
period as originally set forth at their issuance.
7. Confidentiality.
a. Employee
acknowledges that the Company’s business and future success depends on the
preservation of the trade secrets and other confidential information of the
Company and its affiliates, suppliers and customers (the “Secrets”). The Secrets
include existing, to-be-developed or acquired products, processes, techniques,
methods, computer programs, know-how, trade secrets, customers, suppliers,
developments, patents, equipment, or business information made, sold, used,
developed or practiced by the Company in its business or proprietary to the
Company or its affiliates, suppliers or customers. “Secrets” do not include any
of the above information or medium generally known to the industry or which
comes to the attention of Employee through sources other than the Company.
It is
anticipated that all Employees of the Company, including Employee, will xxxx
all
items containing Secrets with prominent confidentiality notices in accordance
with policies to be adopted by the Company. Employee agrees to protect and
to
preserve as confidential during and after the term of his employment all of
the
Secrets at any time known to Employee or in his possession or control (whether
wholly or partially developed by Employee or provided to Employee, and whether
embodied in a tangible medium or merely remembered).
b. Employee
shall neither use nor intentionally allow any other person to use any of the
Secrets in any way, except for the benefit of the Company. All tangible items
embodying or disclosing any portion of the Secrets shall be and remain the
property of the Company and shall be returned to the Company upon the
termination of Employee’s employment. At such time, Employee shall also assemble
all tangible items of work in progress, notes, plans, and other materials
related in any way to Employee’s employment, and will promptly deliver such
items to the Company. The failure to xxxx any item with confidentiality
notice(s) shall not, ipso
facto,
cause
such item to be excluded from classification as a Secret for purposes of this
Section 7.
c. Employee’s
covenants in this Paragraph shall supplement, and shall not supplant, any other
rights or remedies the Company may have under applicable law for the protection
of its properties and trade secrets.
8. Inventions.
a. “Invention(s)”
shall mean discoveries, designs, programs, improvements, developments, new
concepts, methods, agents, materials, and ideas, whether patentable or not,
and
products, processes and know-how related to the use of production
thereof.
b. Employee
agrees that any Invention which Employee has made or may make during the term
of
this Agreement shall be treated as part of the Company Secrets and shall be
the
sole and exclusive property of the Company, whether or not (i) patent
applications or copyright registrations are filed thereon, (ii) the Invention
is
conceived or developed by Employee individually or jointly with others. However,
Employee has no obligation to assign to the Company any Invention for which
no
Company Secrets and no equipment, supplies, or facilities of the Company were
used and which was developed entirely on Employee’s own time,
unless:
(i) the
Invention relates directly to the business of the Company,
(ii) the
Invention relates to actual or demonstrably anticipated research or
development
work of the Company, or
(iii) the
Invention directly results from any work performed by Employee
for
the
Company.
c. Whenever
requested by the Company, Employee agrees to assist and cooperate with the
Company, at the Company’s expense, in the obtaining, maintaining and enforcing
of the United States and foreign patents and copyright registrations for any
Invention which is to be the property of the Company as provided above. This
assistance and cooperation shall include, but is not limited to:
(i) making
application for United States and foreign patents or copyright
registrations
on any Invention if so requested by the Company;
(ii) assigning
all of Employee’s right, title and interest in and to such
Invention
and any patent applications or copyright registrations thereon
to
the
Company or its designees; and
(iii) executing
all documents and rendering all assistance as may be reasonably
necessary
to protect the rights of the Company or its designee and to vest
in
the
Company or its designees, all rights to any such Invention, patent
application,
patent, copyright, or copyright registration.
d. Attached
hereto as Exhibit A is a list of all issued patents, pending patent
applications, registered copyrights, and other inventions which Employee has
owned or has developed prior to being retained by the Company. Any copyright,
patent, pending application, or prospective patent application thus listed
and
not otherwise expressly assigned in writing by Employee to the Company will
be
excluded from the terms of this Agreement.
9. Property.
Upon
termination of the Term of Employment or termination pursuant to Section 6
hereof, the Employee or his personal representative shall promptly deliver
to
the Company all books, memoranda, plans, records and written data of every
kind
relating to the business and affairs of the Company and all other property
owned
by the Company which is then in the Employee’s possession.
10. Insurance.
The
Company shall have the right, at its own cost and expense, to apply for and
to
secure in its own name, or otherwise, life, health or accident insurance or
any
or all of them covering the Employee, and the Employee agrees to submit to
usual
and customary medical examinations and otherwise to cooperate with the Company
in connection with the procurement of any such insurance, and any claims
thereunder.
11. Covenant
Not to Compete.
a. Applicability.
This
Paragraph 11 shall apply following the termination of Employee’s employment only
in the event such termination is (i) by Employer for cause as defined in
Paragraph 6a above, or (ii) by Employee without cause as defined in Paragraph
6c
above.
b. Covenant.
For a
period beginning on the date of the Agreement and ending one year following
the
date of termination of Employee’s employment, Employee hereby agrees that he
will not, directly or indirectly, enter into the employment, or render services
to or acquire an interest whatsoever in (whether for his own account as an
individual proprietor, or as a partner, associate, shareholder, officer,
director, employee, trustee or otherwise), any person or entity engaged in
any
operations in competition in any area of the world with any aspect of the
business of the Company as presently conducted and as said business may evolve
in the ordinary course of business between the date of this Agreement and the
termination of Employee’s employment hereunder (including products under active
development at such time); provided,
however,
that
nothing herein shall prevent the purchase or ownership by Employee of shares
of
stock by way of investment in any corporation or prevent the employment of
or
the rendering of services by Employee, including being on boards of directors
of
companies, where he does not contribute to the development or sale of products
which compete with products of the Company with whose development or sale the
Employee was directly involved. Without limiting the foregoing, Employee agrees
that he will not call on or otherwise solicit business from any of the customers
or potential customers of the Company which, at the time of termination of
his
employment, were listed (or ought to have been listed) in the Company’s records,
as to any product that competes with any product provided or marketed by or
actually under development by the Company at the time of Employee’s termination.
Employee agrees that he will, during the term of his employment with the
Company, promptly and fully disclose to the Company any business opportunity
coming to Employee’s attention, or conceived or developed in whole or in part by
Employee, which relates to the Company’s business or demonstrably anticipated
business. Employee will not at any time exploit such business opportunities
for
his own gain or that of any person or entity other than the
Company.
12. Remedies.
Employee acknowledges that damages for breach of his covenants under Paragraphs
7, 8, 9, 10 and 11 above will be difficult to determine and inadequate to remedy
the harm which may be caused thereby, and therefore agrees that the Company
may
petition or seek to enjoin a putative violation by temporary or permanent
injunction. Any available injunctive relief shall be in addition to, and not
in
place of, any other remedies available at law or equity. Employee believes
that
the provisions of this Agreement are reasonable and that Employee is capable
of
gainful employment without breaching this Agreement. However, should any court
or tribunal decline to enforce any provision of Paragraphs 7 or 11 of this
Agreement as written, the parties hereby agree that this Agreement shall, to
the
extent applicable to that circumstance before such court, be deemed to be
modified to restrict Employee’s competition with the Company to the maximum
extent to time, scope and geography which the court shall find enforceable,
and
such provisions shall be so enforced.
13. Entire
Agreement: Modification.
The
provisions contained herein constitute the entire Agreement between the parties
with respect to the subject matter hereof and any waiver, alteration or
modification of any provisions of this Agreement, or the replacement of this
Agreement, shall not be valid unless in writing and signed by all the parties
signing hereunder.
14. Governing
Law.
This
Agreement shall be governed and construed in accordance with the laws of the
State of Illinois.
15. Agreement
Not Assignable.
Employee may not assign any of his rights or delegate any of his duties
hereunder. Subject to Paragraph 6c, the Company may assign this Agreement to
any
of its Affiliates at any time owned by, owning or under common ownership of
the
Company. In the event of such an assignment by the Company, such affiliates
shall be deemed substituted for the Company at each place where “the Company”
appears herein; provided, however, the Company shall not be released from its
obligations hereunder. Furthermore, the assignment of this Agreement by the
Company shall not enlarge the business activities considered to be conducted
by
the Company for purposes of Paragraphs 7, 8 and 11 hereof. Subject to the
foregoing, this Agreement shall bind parties and their respective heirs,
successors, assigns and personal representatives.
16. Change
in Ownership.
Upon
(a) the sale or transfer of all or substantially all of the assets of the
Company or of more than fifty percent (50%) of the outstanding stock of any
voting class of the Company’s stock to any single person or entity (in any one
or more of a series of related transactions), or (b) the merger of the Company
with or into any other entity (except a wholly-owned subsidiary or a parent
owning all of the outstanding stock of the Company), if the Employee maintains
employment status, then: 1) all terms of the Employment Agreement remain in
effect, and 2) all stock and options of Employee in the Company shall
immediately become vested. If the Employee does not
maintain
employment status, then: 1) Section 6b of the Employment Agreement, termination
by the Company without cause, will apply.
17. Attorney’s
Fees.
In any
action to enforce its rights hereunder, the prevailing party shall be reimbursed
by the other for its costs of enforcement, including without limitation,
reasonable attorney’s fees.
18. Jurisdiction
and Venue.
The
parties each irrevocably consent and submit to the personal jurisdiction of
the
State and Federal courts sitting in Chicago, Illinois and agrees that any
action, suit or proceeding in connection with this Agreement shall be brought
in
such courts to the exclusion of all other courts, other than actions to enforce
judgments or orders entered in such courts sitting in Lake County,
Illinois.
19. Notices.
All
notices required or permitted hereunder shall be given in writing and delivered
in person, transmitted by facsimile, or sent by registered or certified mail,
postage prepaid, or reliable courier service to the parties at the respective
addresses set forth on the signature page hereof, or such other address as
a
party may specify by notice for all subsequent notices to it hereunder. Notices
will be effective upon the earlier of receipt or the second business day after
mailing.
20. No
Waiver.
No
waiver or modification of any of the terms or provisions hereof shall be valid
unless in writing signed by the party against which the enforcement of such
waiver or modification is sought, not shall any waiver or failure to enforce
any
right hereunder be deemed to be a waiver of the same or any other right in
any
other instance.
AGREED:
/s/
Xxxxx X.
Xxxxxx
Xxxxx
X.
Xxxxxx
/s/
Xxxx X.
XxXxxxxxxxx
Xxxx
X.
XxXxxxxxxxx, President & CEO
