Memory Pharmaceuticals Corp. 100 Philips Parkway Montvale, New Jersey 07645
Phone: (201) 802-7104 Fax: (201) 802-7190
  James R. Sulat

www.memorypharma.com
  President & CEO

 
       

May 3, 2006

Dear Mike:

We are pleased to extend an offer to you to join Memory Pharmaceuticals Corp.
(the “Company”) as Vice President of Business Development. We look forward to
you joining our team, and are confident that you will contribute significantly
to the value of our organization. We are therefore pleased to provide you with
the terms of your anticipated employment by the Company.

1. Position. Your position will be Vice President of Business Development, based
out of the Company’s offices currently located in Montvale, New Jersey, and you
will report directly to the Company’s President and Chief Executive Officer. As
Vice President of Business Development, you will be part of the Company’s senior
management team, and will work closely with this team to establish strategic,
value-building relationships with pharmaceutical companies and contract research
organizations. Your responsibilities shall include, but not be limited to,
managing the Company’s business development activities. In addition to
performing duties and responsibilities associated with the position of Vice
President of Business Development, from time to time the Company may assign you
other duties and responsibilities and/or may assign you to a different location.

As a full-time employee of the Company, you will be expected to devote your full
business time and energies to the business and affairs of the Company. You agree
not to engage in any activities outside of the scope of your employment that
would detract from, or interfere with, the fulfillment of your responsibilities
or duties under this letter agreement. You agree that you will not, without the
prior consent of the Company’s Board of Directors, serve as a director or the
equivalent position of any company or entity and you will not render services of
a business, professional or commercial nature to any other person or firm. Your
performance will be reviewed formally after six (6) months of employment and
annually thereafter at the end of each calendar year. You acknowledge that a
performance review does not guarantee a salary increase.

2. Starting Date/Nature of Relationship. It is expected that your employment
will start on June 1, 2006 or on such other date as we may mutually agree (the
“Start Date”). No provision of this letter shall be construed to create an
express or implied employment contract for a specific period of time. Either you
or the Company may terminate the employment relationship at any time and for any
reason, by giving at least thirty (30) days’ prior written notice to the other
party. The Company, in its sole discretion, may elect to terminate your
employment immediately or during such thirty (30) day notice period, but in this
event you will continue to receive an amount equal to your base salary, less
applicable deductions, that you otherwise would have received during the balance
of such thirty (30) day notice period.

3. Compensation.

(a) Your initial base salary will be at the semi-monthly rate of $10,416.67,
less applicable deductions, (annualized at $250,000.00).

(b) You will receive a one-time sign-on bonus of $50,000.00, less applicable
deductions, payable within thirty (30) days of the Start Date (the “Sign-on
Bonus”). If you resign or the Company terminates your employment for Cause (as
defined below) within eighteen (18) months of your Start Date, you will be
obligated to repay the full amount of the Sign-on Bonus to the Company.

(c) On the Start Date, you will receive stock options to purchase 150,000 shares
of the Company’s Common Stock, which will be in the form of incentive stock
options, to the extent permissible under applicable law, and the balance will be
in the form of non-qualified stock options. Such stock options (i) will entitle
you to purchase the Company’s Common Stock at the closing price per share of the
Company’s Common Stock on the Nasdaq National Market (“NASDAQ”) on the Start
Date, in accordance with the Company’s Amended and Restated 2004 Stock Incentive
Plan (the “Plan”), and (ii) shall vest in quarterly increments over a period of
four (4) years commencing on the Start Date, as described in the Company’s
standard form of Stock Option Agreement, which you agree to execute and deliver
to the Company on or before the Start Date.

(d) You will also be entitled to a subsequent grant of stock options to purchase
100,000 shares of the Company’s Common Stock, not later than October 1, 2006,
which will be in the form of incentive stock options to the extent permissible
under applicable law, and the balance will be in the form of non-qualified stock
options. Such stock options (i) will entitle you to purchase the Company’s
Common Stock at the closing price per share of the Company’s Common Stock on the
NASDAQ on the option grant date, as determined by the Board, in accordance with
the Plan and (ii) shall vest in quarterly increments over a period of four
(4) years as described in the standard form of Stock Option Agreement, which you
agree to execute and deliver to the Company on or before the option grant date.

(e) You will be eligible to receive an annual bonus dependent on the performance
of the Company and your individual performance, subject to the discretion of the
Board of Directors. Your target bonus will be equal to twenty five percent (25%)
of your base salary, assuming the achievement of such Company and individual
performance objectives. The actual amount paid, if any, shall be determined by
the Board of Directors in its sole discretion.

(f) Upon termination of your employment for any reason, the Company will pay you
within two (2) weeks of such termination, your current base salary earned
through the termination date, plus accrued and unused vacation, if any, and
other benefits or payments, if any, to which you are entitled. In the event your
employment is terminated by the Company without “Cause” (as defined below) or by
you for “Good Reason” (as defined below), then for the twelve (12) month period
after such termination, the Company will continue to pay you your semi-monthly
rate in effect at the time of termination and provide and pay the Company’s
portion of your medical insurance. Notwithstanding the foregoing, the Company’s
payments for your medical insurance will terminate when you have obtained such
coverage through an alternate source before the end of the twelve (12) month
period following your termination. The Company will reconcile such payments with
you quarterly, and any additional payments owed to you by the Company, and any
payments owed to the Company by you, will be paid respectively within two
(2) weeks following such reconciliation period. The Company will not be
obligated to continue any such payments to you under this paragraph 3(f) in the
event you materially breach the terms of this letter agreement or the
Confidentiality Agreement (as defined below). Notwithstanding any termination of
your employment for any reason (with or without Cause or for Good Reason), you
shall continue to be bound by the provisions of the Confidentiality Agreement.

All payments and benefits provided pursuant to this paragraph 3(f) shall be
conditioned upon your execution and non-revocation of a general release
substantially in the form attached hereto as Exhibit A at the time of
termination. Your refusal to execute a general release shall constitute a waiver
by you of any and all benefits referenced in this paragraph 3(f). The Company
will not be

obligated to continue any such payments to you under this paragraph 3(f) in the
event you materially breach the terms of this letter agreement or the
Confidentiality Agreement.

(g) For the purposes of this paragraph, “Cause” shall include (i) your
conviction of a felony, either in connection with the performance of your
obligations to the Company or otherwise, which adversely affects your ability to
perform such obligations or materially adversely affects the business
activities, reputation, goodwill or image of the Company, (ii) your willful
disloyalty, deliberate dishonesty, breach of fiduciary duty, (iii) your breach
of the terms of this letter agreement, or your failure or refusal to carry out
any material tasks or responsibilities assigned to you by the Company in
accordance with the terms hereof, which breach or failure continues for a period
of more than thirty (30) days after your receipt of written notice thereof from
the Company, (iv) the commission by you of any act of fraud, embezzlement or
deliberate disregard of a rule or policy of the Company known to you or
contained in a policy and procedure manual provided to you which results in
material loss, damage or injury to the Company, or (v) the material breach by
you of any of the provisions of the Confidentiality Agreement.

(h) For the purpose of this paragraph 3, the termination of your employment for
“Good Reason” shall mean the termination by you of your employment with the
Company within eighteen (18) months after a “Change in Control” (as defined
below) or the sale of a majority of the assets, obligations, or business of the
Company (whether by merger, sale of stock or otherwise), provided such
termination occurs:

  (i)   within three (3) months after a material diminution in your
responsibilities (provided that such diminution is not in connection with the
termination of your employment for Cause),

  (ii)   within three (3) months after you no longer report to the Company’s
Chief Executive Officer,

  (iii)   within three (3) months of your principal work location changing to be
more than fifty (50) miles from the Company’s principal offices, or

  (iv)   within three (3) months after the reduction by the Company of the
amount of your base salary, unless such reduction is pursuant to a plan and as a
consequence the base salaries of the Registrant’s executives are reduced
generally.

Provided, however, that with respect to any of the foregoing events, you shall 
be required to provide the Company thirty (30) calendar days prior written
notice of your intention to resign and the Company shall have the opportunity
during such thirty (30) day period to cure such event if such event is capable
of being cured. The Company shall notify you, within sixty (60) days of receipt
of your notice of intent to terminate your employment for Good Reason if the
Company disagrees with your intent to terminate under this paragraph. For the
purposes of this letter agreement, “Change of Control” shall be deemed to have
occurred if the Company is consolidated with or acquired by another entity in a
merger, sale of all or substantially all of the Company’s assets or shares of
stock or otherwise (excluding (A) transactions solely for the purpose of
reincorporating the Company in a different jurisdiction or recapitalizing or
reclassifying the Company’s stock, or (B) any merger or consolidation in which
the shareholders of the Company immediately prior to such merger or
consolidation continue to own at least a majority of the outstanding voting
securities of the Company or the surviving entity after such merger of
consolidation).

4. Benefits. You will be entitled as an employee of the Company to receive such
benefits as are generally provided its employees and executives and for which
you are eligible in accordance with Company policy as in effect from time to
time. The Company retains the right to change, add or cease any particular
benefit relating to its employees and executives generally. At this time, the
Company is offering a benefit program, consisting of medical, dental, life and
short/long term disability insurance, as well as a 401(k) retirement plan and
flexible spending plan. You will be eligible for eleven (11) paid holidays, four
(4) floating holidays and four (4) weeks paid vacation per year, which will be
pro-rated for the 2006 calendar year based on the Start Date. You will accrue
additional vacation days in accordance with Company policy.

5. Relocation Expenses. The Company will pay or reimburse you for all reasonable
out-of-pocket relocation and relocation-related expenses not to exceed
$150,000.00, including any Tax Payment (as defined below) and any Gross-up
Payment (as defined below), which may be billed directly to the Company or paid
by you and submitted for reimbursement, including, without limitation, the
following:

(a) costs of services of moving companies (including packing, transportation and
relocation expenses, including the transportation of automobiles);

(b) costs associated with your search for a new residence (including, without
limitation, the costs of airfare, automobile rental, meals and hotel
accommodations for yourself and your immediate family);

(c) commissions payable to brokers in connection with the sale of your current
residence;

(d) costs attendant to the sale of your current residence and the purchase of a
new residence in the Northern New Jersey area (including, without limitation,
the costs of home inspections, survey, appraisal, title insurance, transfer
fees, attorneys’ fees, accountants’ fees, and closing costs);

(e) loan origination fees (points) related to the purchase of your new residence
in an amount of up to three percent (3%) of the loan amount (and the Company
will provide assistance to you relating to the selection of a mortgage lender
that will pre-qualify you for a mortgage loan to purchase your new residence);

(f) costs associated with commuting from your current residence to the Company’s
offices (including, without limitation, the costs of airfare, automobile rental,
meals and hotel accommodations for you) for a period of up to six months,
subject to extension upon our mutual agreement;

(g) automobile rental charges prior to establishment of a permanent residence in
Northern New Jersey;

(h) rent and other expenses associated with temporary housing for yourself and
your immediate family for a period of up to six months (which may include up to
two months after the purchase and closing of title on your new residence),
subject to extension upon our mutual agreement; and

(i) payment of any duplicate mortgage loan payments and house expenses to
preclude your paying for your current residence and your new residence
concurrently.

All such payments will be subject to the Company receiving reasonably acceptable
documentation evidencing the incurring of such cost, expense or fee. In the
event that it should be determined that any payment shall be due by you for
taxes of any kind or nature relating to amounts paid to you or on your behalf by
the Company in connection with your relocation as provided above (“Taxes”), the
Company will deliver to you a payment equal to the amount of such Taxes (the
“Tax Payment”) plus an additional payment in an amount equal to any additional
taxes payable by you applicable to your receipt of the Tax Payment (the
“Gross-Up Payment”). All such payments are fully refundable to the Company if
you terminate your employment with the Company, for any reason other than Good
Reason, within eighteen (18) months of your Start Date.

6. Confidentiality. The Company considers the protection of its confidential
information and proprietary materials to be very important. Therefore, as a
condition of your employment, you will be required to execute and deliver to the
Company, on or before the Start Date, a Confidentiality and Noncompetition
Agreement substantially in the form of Exhibit B to this letter (the
“Confidentiality Agreement”).

7. General.

(a) This letter agreement, together with the Confidentiality Agreement and the
Stock Option Agreement(s), when executed, will constitute our entire agreement
as to your employment by the Company and will supersede any prior agreements or
understandings, whether in writing or oral.

(b) This letter agreement shall be subject to and contingent upon the
satisfactory results of the Company’s due diligence, such as a medical
examination, satisfactory reference, background and education verification.

(c) This letter agreement shall be subject to our receipt of satisfactory
documentation of your freedom to operate in the CNS field. By signing this
letter agreement, you represent and warrant to the Company that your execution
of this letter and performance by you of the activities contemplated hereby on
behalf of the Company will not conflict with, violate or constitute a breach of
any agreement to which you are a party or by which you may be bound.

(d) This letter agreement and the Company’s obligations hereunder shall be
subject to review and approval by the Company’s Board of Directors and the
Compensation Committee thereof.

(e) This letter agreement shall be governed by the law of the State of New
Jersey. In the event of any legal proceedings relating to this letter agreement
and/or the subject matter thereof, the parties consent to the exclusive
jurisdiction of the courts located in the State of New Jersey. THE PARTIES
HEREBY EXPRESSLY WAIVE THEIR RIGHT TO HAVE A JURY TRIAL.

You may accept this offer of employment and the terms thereof by signing the
enclosed additional copy of this letter agreement and the Confidentiality
Agreement, which execution will evidence your agreement with the terms set forth
herein and therein, and returning them to the Company.

Unless accepted by you prior to May 5, 2006, this offer of employment will
expire at the close of business on May 5, 2006 and is contingent upon your
agreement to commence employment on or before the Start Date. We look forward to
you joining our team, and we believe that your skills will compliment those of
our existing management team, and that you will make a significant contribution
to the Company’s growth. We look forward to your prompt response to this offer
letter.

Sincerely,

Memory Pharmaceuticals Corp.

     
By:
  /s/ James R. Sulat
 
   
Name:
  James R. Sulat
President & CEO

    ACCEPTED AND AGREED:

/s/ Michael Smith

    Michael Smith

Date:      

1

EXHIBIT A

FORM OF GENERAL RELEASE OF CLAIMS

GENERAL RELEASE OF CLAIMS

For and in consideration of the payments and other benefits described in the
letter agreement dated as of April 27, 2006 (the “Letter Agreement”) by and
between Memory Pharmaceuticals Corp. (the “Company”), and Michael Smith
(“Employee”) and for other good and valuable consideration, Employee hereby
releases the Company and its respective divisions, operating companies,
affiliates, subsidiaries, parents, branches, predecessors, successors, assigns,
officers, directors, trustees, employees, agents, shareholders, administrators,
representatives, attorneys, insurers and fiduciaries, past, present and future
(the “Released Parties”), from any and all claims of any kind arising out of or
related to Employee’s employment with the Company, Employee’s separation from
employment with the Company or derivative of Employee’s employment, which
Employee now has or may have against the Released Parties, whether known or
unknown to Employee, by reason of facts which have occurred on or prior to the
date that Employee has signed this General Release of Claims. Such released
claims include, without limitation, any alleged violation of the Age
Discrimination in Employment Act, as amended, the Older Worker Benefits
Protection Act; Title VII of the Civil Rights of 1964, as amended; Sections 1981
through 1988 of Title 42 of the United States Code; the Civil Rights Act of
1991; the Equal Pay Act; the Americans with Disabilities Act; the Rehabilitation
Act; the Family and Medical Leave Act; the Fair Labor Standards Act; the
Employee Retirement Income Security Act of 1974, as amended; the Worker
Adjustment and Retraining Notification Act; the National Labor Relations Act;
the Fair Credit Reporting Act; the Occupational Safety and Health Act; the
Uniformed Services Employment and Reemployment Act; the Employee Polygraph
Protection Act; the Immigration Reform Control Act; the retaliation provisions
of the Sarbanes-Oxley Act of 2002; the Federal False Claims Act; the New Jersey
Law Against Discrimination; the New Jersey Domestic Partnership Act; the New
Jersey Conscientious Employee Protection Act; the New Jersey Family Leave Act;
the New Jersey Wage and Hour Law; the New Jersey Equal Pay Law; the New Jersey
Occupational Safety and Health Law; the New Jersey Smokers’ Rights Law; the New
Jersey Genetic Privacy Act; the New Jersey Fair Credit Reporting Act; the
retaliation provisions of the New Jersey Workers’ Compensation Law (and
including any and all amendments to the above) and/or any other alleged
violation of any federal, state or local law, regulation or ordinance, and/or
contract or implied contract or tort law or public policy or whistleblower
claim, having any bearing whatsoever on Employee’s employment by and the
termination of Employee’s employment with the Company, including, but not
limited to, any claim for wrongful discharge, back pay, vacation pay, sick pay,
wage, commission or bonus payment, money or equitable relief or damages of any
kind, attorneys’ fees, costs, and/or future wage loss.

It is understood that this General Release of Claims is not intended to and does
not affect or release any future rights or any claims arising after the date
hereof.

Employee understands that the consideration provided to him under the terms of
the Letter Agreement or otherwise does not constitute an admission by the
Company that it has violated any law or legal obligation.

Employee agrees, to the fullest extent permitted by law, that he will not
commence, maintain, prosecute or participate in any action or proceeding of any
kind against the Company based on any of the claims waived herein occurring up
to and including the date of his signature. Employee represents and warrants
that he has not done so as of the effective date of this General Release of
Claims. Notwithstanding the foregoing agreement, representation and warranty, if
Employee violates any of the provisions of this paragraph, Employee agrees to
indemnify and hold harmless the Company from and against any and all costs,
attorneys’ fees and other expenses authorized by law which result from, or are
incident to, such violation. This paragraph is not intended to preclude Employee
from (1) enforcing the terms of the Letter Agreement; (2) challenging the
validity of this General Release of Claims; or (3) filing a charge or
participating in any investigation or proceeding conducted by the Equal
Employment Opportunity Commission.

Employee further agrees to waive his right to any monetary or equitable recovery
should any federal, state or local administrative agency pursue any claims on
his behalf arising out of or related to his employment with and/or separation
from employment with the Company and promises not to seek or accept any award,
settlement or other monetary or equitable relief from any source or proceeding
brought by any person or governmental entity or agency on his behalf or on
behalf of any class of which he is a member with respect to any of the claims he
has waived.

Employee acknowledges and agrees that Employee has read this General Release of
Claims carefully, and acknowledges that he has been given at least twenty one
(21) days from the date of receipt of this General Release of Claims to consider
all of its terms and has been advised to consult with any attorney and any other
advisors of the Employee’s choice prior to executing this General Release of
Claims. Employee fully understands that, by signing below, Employee is
voluntarily giving up any right which Employee may have to sue or bring any
other claims against the Released Parties, including any rights and claims under
the Age Discrimination in Employment Act. The terms of this General Release of
Claims shall not become effective or enforceable until eight (8) days following
the date of its execution by Employee, during which time Employee may revoke the
Letter Agreement. Employee may revoke the Letter Agreement by notifying the
Company in writing (to the attention of the President and Chief Executive
Officer with a copy to Vice President of Legal Affairs). For Employee’s
revocation to be effective, written notice must be received by no later than the
close of business on the eighth (8th) day after Employee signs this General
Release of Claims. The terms of this offer to provide the payments and other
benefits described in paragraph 3(e) of the Letter Agreement, will expire if not
accepted during the 21 day review period.

Employee agrees to keep confidential all information contained in this General
Release of Claims and relating to this General Release of Claims, except (1) to
the extent the Company consents in writing to such disclosure; (2) if Employee
is required by process of law to make such disclosure and Employee promptly
notifies the Company of his receipt of such process; or (3) because Employee
must disclose certain terms on a confidential basis to his financial consultant,
attorney or spouse.

This General Release of Claims shall be construed and enforced in accordance
with, and governed by, the laws of the State of New Jersey, without regard to
principles of conflict of laws. If any clause of this General Release of Claims
should ever be determined to be unenforceable, it is agreed that this will not
affect the enforceability of any other clause or the remainder of this General
Release of Claims.

This General Release of Claims is final and binding and may not be changed or
modified except as set forth herein or in a writing signed by both parties. The
parties have executed this General Release of Claims with full knowledge of any
and all rights they may have, and they hereby assume the risk of any mistake in
fact in connection with the true facts involved, or with regard to any facts
which are now unknown to them.

By signing this General Release of Claims, Employee acknowledges that: (1) he
has read this General Release of Claims completely; (2) he has had an
opportunity to consider the terms of this General Release of Claims; (3) he has
had the opportunity to consult with an attorney of his choosing prior to
executing this General Release of Claims to explain this General Release of
Claims and its consequences; (4) he knows that he is giving up important legal
rights by signing this General Release of Claims; (5) he has not relied on any
representation or statement not set forth in this General Release of Claims;
(6) he understands and means everything that he has said in this General Release
of Claims, and he agrees to all its terms; and (7) he has signed this General
Release of Claims voluntarily and entirely of his own free will.

     
     
Date
       
Michael Smith
 
   
     
Date
       
Memory Pharmaceuticals Corp.

2

EXHIBIT B

FORM OF CONFIDENTIALITY AGREEMENT

         
Memory Pharmaceuticals Corp. 100 Philips Parkway Montvale, New Jersey 07645
Phone: (201) 802-7100 Fax: (201) 802-7190 www.memorypharma.com

CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

May 3, 2006

Dear Mr. Smith:

This letter is to confirm our understanding with respect to (i) your agreement
to protect and preserve information and property which is confidential and
proprietary to Memory Pharmaceuticals Corp. or its parent, subsidiaries or
affiliates, if any, (the “Company”), and (ii) your agreement not to compete with
the Company (the terms and conditions agreed to in this letter shall hereinafter
be referred to as this “Agreement”). In consideration of the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, we have agreed as follows:

1. Protected Information. You shall at all times, both during and after the
termination of your employment with the Company, by either you or the Company,
with or without cause, maintain in confidence and shall not, without the prior
written consent of the Company, directly or indirectly use, except in the course
of performance of your duties for the Company, directly or indirectly disclose
or give to others any fact, information or document (whether printed, typed,
handwritten, electronic or stored on computer disks, tapes, hard drives or any
other tangible medium) which was disclosed to or developed by you during the
course of performing services for, and/or receiving training from, the Company,
and is not generally available to the public, including but not limited to,
information, facts and documents concerning business plans, research and
development, customers, suppliers, licensors, licensees, partners, investors,
affiliates or others, training methods and materials, financial information,
sales prospects, client lists, methodologies, formulae, designs, schematics,
charts, Inventions (as defined in Section 2), or any other scientific,
technical, trade or business secret or confidential or proprietary information
(“Confidential Information”) of the Company or of any third party provided to
you during the course of your training and/or employment.

In the event you are questioned by anyone not employed by the Company or by an
employee of or a consultant to the Company not authorized to receive such
information, in regard to any Confidential Information or any other secret or
confidential work of the Company, or concerning any fact or circumstance
relating thereto, or in the event that you become aware of the unauthorized use
of Confidential Information by any party, whether competitive with the Company
or not, you will promptly notify the President and Chief Executive Officer and
Vice President – Legal Affairs of the Company.

2. Ownership of Ideas, Copyrights and Patents.

(a) Property of the Company. You agree that all ideas, discoveries, creations,
manuscripts and properties, innovations, improvements, know-how, Inventions,
designs, developments, apparatus, techniques, algorithms, software, mask works,
methods, and formulae (all of the foregoing being hereinafter referred to as the
“Inventions”) which may be used in the business of the Company, whether
patentable, copyrightable, protectable as mask works or not, which you may
conceive, reduce to practice or develop alone or in conjunction with another, or
others, and whether at the request or upon the suggestion of the Company, or
otherwise, during the period in which you perform services for or at the request
of the Company (the “Term”) and, with respect to Inventions in Field of Interest
(as defined below), for a period of one (1) year thereafter, shall be the sole
and exclusive property of the Company, that you shall promptly disclose any such
Inventions to the Company both during and after the Term, and that you shall not
publish any such Inventions without the prior written consent of the Company.
You hereby assign to the Company all of your rights, title and interests in and
to all of the foregoing. You further represent and agree that to the best of
your knowledge and belief, none of the Inventions will violate or infringe upon
any right, patent, copyright, trademark or right of privacy, or constitute libel
or slander against or violate any other rights of any person, firm or
corporation, and that you will use your best efforts to prevent any such
violation. You also agree that you will neither disclose to the Company or any
of its employees nor use for their benefit any other person’s or company’s trade
secret or proprietary information, or information which you have agreed not to
disclose or use.

(b) Cooperation. At any time during or after the Term, you agree that you will
fully cooperate with the Company, its attorneys and agents in the preparation
and filing of all papers and other documents as may be required to perfect and
protect the Company’s rights in and to any of such Inventions, including, but
not limited to, joining in any proceeding to obtain and enforce letters patent,
copyrights, mask work registrations, trademarks or other legal rights of the
United States and of any and all other countries on such Inventions, provided
that the Company will bear the expense of such proceedings, and that any patent,
copyright, mask work registration, trademark or other legal right so issued to
you, personally, shall be assigned by you to the Company without charge by you.

3. Prohibited Competition.

(a) Certain Acknowledgments and Agreements.

(i) We have discussed, and you recognize and acknowledge the competitive and
proprietary aspects of the business of the Company.

(ii) You further acknowledge and agree that, during the course of your
performing services for the Company, the Company will furnish, disclose or make
available to you Confidential Information related to the Company’s business and
that the Company may provide you with unique and specialized training. You also
acknowledge that such Confidential Information and such training have been
developed and will be developed by the Company through the expenditure by the
Company of substantial time, effort and money. You acknowledge that such
Confidential Information and training, if used by you to compete with the
Company, will cause irreparable harm to the Company. You also acknowledge that
the Company has a legitimate business interest in protecting its Confidential
Information.

(iii) You acknowledge that the Company is engaged in the research, development
or commercialization of agents to affect memory, cognitive abilities or any
related neurological or psychiatric function (the “Field of Interest”) and that
any engagement by you, directly or indirectly, in the Field of Interest will be
deemed competitive. You further acknowledge that the foregoing description is
not exclusive and that the Company’s products and services and planned products
and services will change from time to time without notice to you and without
formal amendment of this Agreement.

(b) Covenants Not to Compete. During the Term and for a period of one (1) year
following the expiration or termination of the Term, whether such termination is
voluntary or involuntary, with or without cause, you shall not, without the
prior written consent of the Company:

(i) for yourself or on behalf of any other person or entity, directly or
indirectly, either as principal, agent, employee, consultant, representative or
in any other capacity, own, manage, operate or control, or be connected or
employed by, or otherwise associate in any manner with, or engage in any
business which is in the Field of Interest within the United States, Europe or
Japan (the “Restricted Territory”); or

(ii) either individually or on behalf of or through any third party, solicit,
divert or appropriate or attempt to solicit, divert or appropriate, for the
purpose or with the effect of competing with the Company in the Field of
Interest or any present or future parent, subsidiary or other affiliate of the
Company which is engaged in a similar business as the Company, any customers or
patrons of the Company, or any prospective customers or patrons with respect to
which the Company has developed or made a sales presentation (or similar
offering of services), located within the Restricted Territory; or

(iii) either individually or on behalf of or through any third party, directly
or indirectly, solicit, entice or persuade or attempt to solicit, entice or
persuade any other employees of or consultants to the Company or any present or
future parent, subsidiary or affiliate of the Company, to leave the services of
the Company or any such parent, subsidiary or affiliate for any reason. You
acknowledge that the Company has invested a substantial amount of time and money
in attracting and retaining its employees and in training its employees in the
Company’s particular business. You acknowledge that the Company has a legitimate
interest in protecting this investment.

(c) Reasonableness of Restrictions. You further recognize and acknowledge that
(i) the types of activities and employment which are prohibited by Section 3 are
narrow and reasonable in relation to the skills which represent your principal
salable asset both to the Company and to your other prospective employers, and
(ii) the geographical scope of the provisions of Section 3 is reasonable,
legitimate and fair to you in light of the geographic scope of the Company’s
business, and in light of the limited restrictions on the type of employment
prohibited herein compared to the types of employment for which you are
qualified to earn your livelihood.

4. Survival of Acknowledgments and Agreements. Your acknowledgments and
agreements set forth in Sections 1, 2 and 3 shall survive the expiration or
termination of this Agreement and the termination of your employment with the
Company for any reason.

5. Disclosure to Future Employers. You agree that you will provide, and that the
Company may similarly provide in its discretion, a copy of the covenants
contained in Sections 1, 2 and 3 of this Agreement to any business or enterprise
which you may directly, or indirectly, own, manage, operate, finance, join,
control or in which you participate in the ownership, management, operation,
financing, or control, or with which you may be connected as an officer,
director, employee, partner, principal, agent, representative, consultant or
otherwise.

6. Records. Upon termination of your relationship with the Company, you shall
deliver immediately to the Company any property of the Company which may be in
your possession including products, materials, memoranda, notes, records,
reports, or other documents or photocopies of the same, including, without
limitation, any of the foregoing recorded on any computer or any machine
readable medium.

7. No Conflicting Agreements. You have set forth on Exhibit 1 hereto all
computer software and/or Inventions made or conceived by you prior to the date
of this Agreement which you own an interest in and wish to exclude from this
Agreement and have listed on Exhibit 1 and attached copies hereto of any
agreements with other parties which may prevent your full compliance with the
terms stated herein. You hereby represent and warrant that, except as set forth
on Exhibit 1, you have no commitments or obligations inconsistent with this
Agreement and you hereby agree to indemnify and hold the Company harmless
against loss, damage, liability or expense arising from any claim based upon
circumstances alleged to be inconsistent with such representation and warranty.

8. General.

(a) Notices. All notices, requests, consents and other communications hereunder
shall be in writing, shall be addressed to the receiving party’s address set
forth below or to such other address as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii) made by telecopy or
facsimile transmission, (iii) sent by overnight courier, or (iv) sent by
registered or certified mail, return receipt requested, postage prepaid.

         
If to the Company:
  Memory Pharmaceuticals Corp.

100 Philips Parkway Montvale, New Jersey 07645
        Attention: President and Chief Executive Officer

With a copy to:
  Sills Cummis Epstein & Gross, P.C.

One Riverfront Plaza Newark, New Jersey 07102 Attention: Ira A. Rosenberg, Esq.
       
If to Employee:
  Michael Smith

All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telecopy or facsimile transmission, at the time that receipt
thereof has been acknowledged by electronic confirmation or otherwise, (iii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (iv) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
made.

(b) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.

(c) Modifications and Amendments. The terms and provisions of this Agreement may
be modified or amended only by written agreement executed by the parties hereto.

(d) Waivers and Consents. The terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.

(e) Assignment. The Company may assign its rights and obligations hereunder to
any person or entity who succeeds to all or substantially all of the Company’s
business or that aspect of the Company’s business in which you are principally
involved. Your rights and obligations under this Agreement may not be assigned
by you without the prior written consent of the Company.

(f) Benefit. All statements, representations, warranties, covenants and
agreements in this Agreement shall be binding on the parties hereto and shall
inure to the benefit of the respective successors and permitted assigns of each
party hereto. Nothing in this Agreement shall be construed to create any rights
or obligations except among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.

(g) Governing Law. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of the
State of New Jersey, without giving effect to the conflict of law principles
thereof.

(h) Jurisdiction and Service of Process. Any legal action or proceeding with
respect to this Agreement shall be brought in the courts of the State of New
Jersey or of the United States District Court for the District of New Jersey. By
execution and delivery of this Agreement, each of the parties hereto accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by certified mail,
postage prepaid, to the party at its address set forth in Section 8(a) hereof.

(i) Severability. The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law; and (ii) if any provision, or part thereof, is
held to be unenforceable because of the duration of such provision or the
geographic area covered thereby, the Company and you agree that the court making
such determination shall have the power to reduce the duration and/or geographic
area of such provision, and/or to delete specific words and phrases
(“blue-pencilling”), and in its reduced or blue-pencilled form such provision
shall then be enforceable and shall be enforced.

(j) Interpretation. The parties hereto acknowledge and agree that the terms and
provisions of this Agreement, shall be construed fairly as to all parties hereto
and not in favor of or against a party, regardless of which party was generally
responsible for the preparation of this Agreement.

(k) Headings and Captions. The headings and captions of the various subdivisions
of this Agreement are for convenience of reference only and shall in no way
modify, or affect the meaning or construction of any of the terms or provisions
hereof.

(l) Injunctive Relief. You hereby expressly acknowledge that any breach or
threatened breach of any of the terms and/or conditions set forth in Sections 1,
2 or 3 of this Agreement will result in substantial, continuing and irreparable
injury to the Company. Therefore, you hereby agree that, in addition to any
other remedy that may be available to the Company, the Company shall be entitled
to injunctive or other equitable relief by a court of appropriate jurisdiction,
without posting a bond, in the event of any breach or threatened breach of the
terms of Sections 1, 2 or 3 of this Agreement.

(m) No Waiver of Rights, Powers and Remedies. No failure or delay by a party
hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any
such right, power or remedy of the party. No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

(n) Expenses. Should any party breach this Agreement, in addition to all other
remedies available at law or in equity, such breaching party shall pay all of
any other party’s costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.

9. Counterparts. This Agreement may be executed in one or more counterparts, and
by different parties hereto on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

If the foregoing accurately sets forth our agreement, please so indicate by
signing and returning to us the enclosed copy of this letter.

Very truly yours,

MEMORY PHARMACEUTICALS CORP.

          By: ___________________________

Name:
  James R. Sulat

Title:
  President & CEO

Accepted and Approved:

     
Michael Smith

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EXHIBIT 1

PRIOR INVENTIONS AND/OR CONFLICTING AGREEMENTS

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