Employment Agreement - NeuroMetrix Inc. and Gary L. Gregory
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
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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
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Shai Gozani
Chief Executive Officer
ACCEPTED: /s/ Gary L. Gregory Date: June 24, 2002
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Gary L. Gregory