Sample Business Contracts


Employment Agreement - NeuroMetrix Inc. and Gary L. Gregory

Employment Forms

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  • Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
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June 19, 2002

Mr. Gary L. Gregory
4951 Mission Hill Place
Tucson, AZ 85718


Dear Gary:

On behalf of NeuroMetrix, Inc. and the Board of Directors, we are pleased to
offer you the position of Executive Vice President of Worldwide Sales. The terms
of this employment offer are as follows:

-    START DATE: July 1, 2002

-    TITLE & RESPONSIBILITIES: Executive Vice President of Worldwide Sales
     reporting only to the Chief Executive Officer, President, Chief Operating
     Officer or Board of Directors. Responsible for the oversight of worldwide
     sales, corporate accounts or any other services and duties in connection
     with the business, affairs and operations of NeuroMetrix as may be assigned
     or delegated to you that are not inconsistent with your title and
     responsibilities from time to time by or under the authority of only the
     Chief Executive Officer, President, Chief Operating Officer or Board of
     Directors.

-    BASE SALARY: At a rate of $200,000 per year. The Base Salary shall not be
     subject to decrease. The Base Salary shall be subject to increase in the
     sole and absolute discretion of the Chief Executive Officer or Board of
     Directors.

-    VARIABLE COMPENSATION:

-    You will be eligible to receive a target of 50% of your annual base salary
     as variable compensation based upon your performance as set forth in more
     detail below. You understand that, as a result of the Variable Compensation
     program, as outlined in this letter, you will not be eligible to take place
     in the Company's annual cash bonus program.

          VARIABLE COMPENSATION FOR REMAINDER OF 2002:

          -    Subject to your continued employment, for the third and fourth
               quarters of 2002 and year end of 2002, the Company will measure
               your performance against certain Initial Management Business
               Objectives (the "Initial MBOs") which the Company shall develop
               in consultancy with you and your targets will be $20,000 per
               quarter and $10,000 at year end. The Initial MBOs will set forth
               certain objectives that are weighted by importance and contain a
               corresponding payout level for over or under performance against
               each objective. The Company shall generally endeavor to make any
               required payment within 45 days but in any event no later than 90
               days following the end of the relevant period.

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          VARIABLE COMPENSATION FOR YEARS AFTER 2002:

          -    Subject to your continued employment, after 2002, your variable
               compensation for each quarter and at year end will be measured by
               a Performance Matrix to be developed by the Company in
               consultancy with you. The Performance Matrix will set forth
               Management Objectives (MBOs) which will be weighted by importance
               and contain a corresponding payout level for over or under
               performance against each objective. The primary MBO, representing
               at least 80% of the variable compensation potential is attainment
               of quarterly and annual sales revenue as defined by the "Sales
               and Marketing Plan" which will be developed by the Company in
               consultancy with you.

          -    The Company will pay you your Variable Compensation at quarterly
               and year-end intervals, with a target of 10% of your then annual
               Base Salary per quarter and 10% of your then annual Base Salary
               at year end. In the event that you meet or exceed the annual MBO
               targets, the quarterly payouts will be reconciled at year end.
               The Company shall generally endeavor to make any required payment
               within 45 days but in any event no later than 90 days following
               the end of the relevant period.

-    STOCK OPTION: The Company will issue you an incentive stock option (the
     "Option") to purchase 440,000 shares of the Company's Common Stock to be
     sold pursuant to a stock option agreement (the "Option Agreement") under
     the Company's Amended and Restated 1998 Equity Incentive Plan (the "Plan")
     at an exercise price of $0.5625 per share. The Option Agreement will
     provide that the Option will be subject to a vesting schedule that will
     require you to remain employed with the Company for three and one-half
     (3.5) years to earn the right to purchase all of the shares. Except as
     provided in the last sentence of this paragraph, pursuant to the Option
     Agreement, you will not be entitled to purchase any shares if your
     employment with the Company terminates for any reason within the first
     twelve months of your employment. The Option Agreement will provide that at
     the end of the twelfth month you will be entitled to purchase 12/42 of the
     shares and then 1/42 per full month of employment thereafter. The Option
     Agreement will provide that in the event of the termination of your
     employment for any reason, you shall be entitled to exercise any vested
     portion of the Option until the tenth anniversary of the date of the
     Option. Your participation in the Plan and the grant of the Option is
     subject to all terms of the Plan and the Option Agreement and is further
     contingent upon your execution of the Company's standard stock-related
     agreements referenced below. Notwithstanding the foregoing, in the event
     you are entitled to severance as provided under the heading "Severance"
     below and you execute the Release (as defined below), (i) if the first day
     of the Severance Period occurs within the first six (6) months of the
     commencement of your employment, then 9/42 of the shares shall be deemed
     vested as of the first day of the Severance Period and (ii) if the first
     day of the Severance Period occurs after the first six months of the
     commencement of your employment, then, 1/42 of the shares for each full
     month of your employment, plus another 9/42 of the shares shall be deemed
     vested as of the first day of the Severance Period.

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     After you have been employed with the Company for two (2) years (but not
     before) in the sole and absolute discretion of the Chief Executive Officer,
     President or Board of Directors, you may be entitled to participate in
     other equity compensation programs available to employees of the Company as
     part of the Company's annual bonus program.

-    RELOCATION ALLOWANCE: The Company will cover up to $70,000 of the
     reasonable and customary actual selling, moving, home acquisition and
     closing costs related to your relocation to the Boston area, based upon
     direct billing to the Company or your submission of supporting receipts on
     a timely basis. You understand and agree that, in the event that you
     voluntarily terminate your employment for any reason other than as
     described in clause (ii) under the heading "Severance" below within the
     first year of commencing work for NeuroMetrix, that you will reimburse the
     Company for the actual expenses incurred by the Company in accordance with
     this provision within 7 days of your resignation and that, to the extent
     you fail to remit the full amount to the Company, the Company will retain
     the right to offset any amounts that you continue to owe against any monies
     due to you by the Company after your resignation, in addition to any other
     legal remedies that the Company may pursue.

-    ALLOWANCE FOR COST OF LIVING INCREASE: Within one month of the commencement
     of your employment, the Company will make a one-time payment to you of
     $25,000 to offset the increase in your cost of living as a result of your
     move to the Boston area. You understand and agree that, in the event that
     you voluntarily terminate your employment for any reason other than as
     described in clause (ii) under the heading "Severance" below within the
     first year of commencing work for NeuroMetrix, that you will reimburse this
     $25,000 to the Company within 7 days of your resignation and that, to the
     extent you fail to remit the full amount to the Company, the Company will
     retain the right to offset any amounts that you continue to owe against any
     monies due to you by the Company after your resignation, in addition to any
     other legal remedies that the Company may pursue.

-    BENEFITS: The Company will provide medical insurance coverage and other
     benefits on the same terms and conditions as provided to the Company's
     employees or other senior executives from time to time.

-    CAR ALLOWANCE: You will receive a monthly car allowance of $600 per month.

-    PAID TIME OFF: You will be eligible to take the following number of paid
     vacation days per full year of employment:

          July 1, 2002 - June 30, 2003:                           10 days
          July 1, 2003 - June 30, 2004:                           10 days
          July 1, 2004 - June 30, 2005 and each year thereafter:  15 days

     Vacation days will accrue on a monthly basis commencing on the first day of
     employment. You also will be eligible for paid-time-off holidays and
     personal days recognized by the Company.

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-    EMPLOYMENT REQUIREMENTS AND TERM: You will be required to sign the
     Company's standard form Confidentiality and Non-compete Agreement.
     Notwithstanding anything to the contrary herein or in any other
     communication between you and the Company, your employment with the Company
     will be on an at-will basis.

-    SEVERANCE: If (i) the Company terminates your employment for any reason
     other than your willful misconduct or (ii) if you resign following not less
     than thirty (30) days' prior written notice to the Company that the Company
     has materially breached this agreement (with such written notice to
     describe such material breach in detail) and provided that such material
     breach has, in fact, occurred and remains uncured by the Company during
     such thirty (30) day period, then you will be entitled to receive
     continuation of your Base Salary and Car Allowance for a period of nine
     months from the date of termination (the "Severance Period") subject to
     your execution of a release of any and all claims that you may then have
     against the Company in connection with your employment (the "Release").
     During the Severance Period, the Company will continue to contribute to
     your medical insurance coverage, which, subject to your eligibility, will
     be extended to you under the law known as COBRA at the same rate as if you
     continued to be employed by the Company.

-    CHANGE IN CONTROL: In the event that a Change in Control (as defined below)
     results in termination of your employment under any circumstances described
     in clauses (i) or (ii) of the preceding paragraph or your resignation as a
     result of your required relocation to a worksite more than 50 miles from
     the Company's then current worksite before the Change in Control, you shall
     be eligible to obtain the severance benefits outlined in the preceding
     paragraph, except that the Option Agreement will provide, upon such
     termination or resignation (if not already vested because of the Change in
     Control), for the automatic vesting of any unvested and outstanding portion
     of the Option. For purposes of this Agreement, a "Change in Control" shall
     mean a consolidation or merger in which the Company is not the surviving
     corporation or which results in the acquisition of substantially all the
     Company's outstanding shares by a single person or entity or by a group of
     persons and/or entities acting in concert, or the sale or transfer of
     substantially all the Company's assets.

-    ARBITRATION OF DISPUTES: Any dispute arising hereunder or arising out of
     your employment, termination thereof, or any other relations with the
     Company, whether sounding in tort or contract, by statute or otherwise,
     including, but not limited to claims of employment discrimination, shall be
     settled by arbitration in Boston, Massachusetts, in accordance with the
     National Rules for the Resolution of Employment Disputes of the American
     Arbitration Association before a single Arbitrator. Notwithstanding the
     foregoing, disputes arising under the Confidentiality and Non-compete
     Agreement shall not be subject to arbitration.

-    TAXATION: You understand that payments made pursuant to this agreement may
     be subject to applicable federal and state withholdings.

-    ENTIRE AGREEMENT: This Agreement, the Confidentiality and Non-Compete
     Agreement and the Option Agreement set forth the entire agreement and
     understanding between you and the Company regarding all subjects covered
     herein, the

<Page>

     terms of which may not be changed or modified except by agreement in
     writing signed by you and an appropriate designee of the Board of
     Directors.

-    SEVERABILITY: Should any provision of this agreement, or portion thereof,
     be found invalid and unenforceable, the remaining provisions shall continue
     in force and effect.

-    GOVERNING LAW: This agreement shall be governed, construed and enforced in
     accordance with the laws of the Commonwealth of Massachusetts, without
     regard to principles of conflict of law.

Please contact me if you have any questions regarding this offer. Should the
above meet with your approval, please acknowledge your acceptance of this offer
by signing as indicated below. This offer shall expire if not accepted in
writing within seven days of the date of this letter.

We are delighted to offer you the opportunity to join NeuroMetrix. We are
confident that you will find the work challenging and rewarding and that you
will bring real value to NeuroMetrix.


Sincerely,


/s/ Shai N. Gozani
------------------
Shai Gozani
Chief Executive Officer


ACCEPTED: /s/ Gary L. Gregory                     Date:  June 24, 2002
          -------------------
             Gary L. Gregory

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