Exhibit 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
first day of November, 2004, by and between ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("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 Chief
Financial Officer (CFO) and Corporate Secretary and Employee hereby accepts such
employment. In his capacity as Chief Financial Officer and Corporate Secretary,
Employee shall be responsible for performing the duties of the Chief Financial
Officer and Corporate Secretary 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 three (3)
years commencing on November 1, 2004 and shall be extended automatically for
additional three (3) year periods, unless either the Company or the Employee
delivers written notice to the other of its or his election not to extend at
least ninety (90) 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 (90) 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 third 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 third 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 third 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 $174,000 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. Annual Increases. The Base Salary shall be increased at the end
of each year of service by a minimum amount equal to (i) a percentage equal to
the increase, if any, in the United States Department of Labor Consumer Price
Index for Chicago urban areas, all items, over the previous twelve months. If
the index specified in this paragraph is discontinued or not available, a
substitute index shall be selected by arbitration in the manner contemplated by
Paragraph 6e unless the parties mutually agree on a substitute index.
c. Auto and Cellular Phone Allowance. Employee is entitled to a
monthly non-accountable allowance not less than $300.00 to cover the use of his
automobile, cellular phone and other business related purposes.
d. 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. Vacation/Sick Leave. Employee shall be entitled to vacation and
sick leave in accordance with Company policy, provided, Employee shall be
entitled annually to (i) a minimum of four (4) weeks of paid vacation, and (ii)
a minimum of three (3) days of paid sick leave for each ten (10) weeks of
consecutive employment. When Employee has completed ten (10) years of service
with the Company, such paid vacation will be increased to five (5) weeks.
c. 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
greater of (i) the total Base Salary otherwise payable through the expiration of
the term of this Agreement as set forth at Paragraph 2 above; or (ii) twelve
(12) months' Base Salary and bonus - both based on the prior year's Base Salary
plus bonus. 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 Chief Financial Officer and Corporate Secretary, 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 ▇▇▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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:
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President & CEO