Filed by Automated Filing Services Inc. (604) 609-0244 - Cyberkinetics Neurotechnology Systems, Inc. - Exhibit 10.1





 Exhibit 10.1 

 EMPLOYMENT AGREEMENT 

                  Agreement,
  made this 3rd day of November, 2004, by and between Cyberkinetics, Inc., a Delaware
  corporation (the "Company") and Timothy R. Surgenor (the "Executive"). 

                Whereas,
  the parties wish to set forth their understanding and agreement regarding the
  employment of the Executive by the Company. 

                 Whereas,
  the Executive is currently President and Chief Executive Officer of the Company
  and the Company desires to continue to benefit from the Executive's knowledge,
  experience, and abilities, and to ensure the Executive's present and continued
  employment and service to the Company as President and Chief Executive Officer
  and to compensate him therefor. 

                  Now
  therefore, in consideration of the mutual covenants herein contained, the
  parties hereto agree as follows: 

 Section 1.       Employment Services. 

                 During
  the Employment Period (as defined herein), the Executive will serve as the Company's
  President and Chief Executive Officer, and will have such duties and responsibilities
  as would normally attach to those positions, including such duties and responsibilities
  as are customary among persons employed in similar capacities for similar companies,
  subject to the authority of the Board of Directors of the Company (the "Board").
  The Executive will faithfully and diligently carry out his duties and responsibilities
  and comply with all of the reasonable and lawful directives of the Board, to
  which the Executive will report. The Executive will, if so elected, serve as
  a director of the Company and an officer or director of any subsidiary or affiliate
  of the Company without compensation in addition to that provided in this Agreement.
  For purposes of this Agreement, an "affiliate" of the Company means any corporation,
  limited partnership, limited liability company or other entity engaged in the
  same business as the Company, or a related business, and which is controlled
  by or is under common control with the Company.

 Section 2.       Term. 

                 The
  Company shall employ the Executive, and the Executive accepts such employment,
  continuing from the date first above written and ending at such time as this
  Agreement has terminated under the provisions of Section 5 hereof (the "Employment
  Period").

 Section 3.       Performance. 

                 During
  the Employment Period, the Executive shall devote his best efforts and all of
  his business time and attention (except for vacation periods and reasonable
  periods 









of illness or other incapacity) to the business of the Company and its affiliates and will not engage in consulting work or in any other trade or business for his own account or for or on behalf of any other person, firm or corporation without the
written consent of the Board of Directors in each case, which shall not be granted if any such activity, in the opinion of the Board of Directors, competes, conflicts or interferes with the performance of his duties hereunder in any material
way.

 Section 4.       Compensation and Benefits.
  

	 	 (a)      	 Salary. For services to the Company rendered by the Executive
      in any capacity during the Employment Period, including without limitation,
      services as a manager, officer, director or member of any committee of the
      Company or of any subsidiary, affiliate or division thereof, the Company
      will pay or cause to be paid to the Executive a base salary at the rate
      of not less than $244,400 per annum (or such higher amount as the Compensation
      Committee of the Board may establish from time to time). The Executive's
      base salary for any partial year will be prorated based upon the number
      of days elapsed in such year. The Executive's base salary will be payable
      periodically in accordance with the Company's customary payroll practices
      for its executives. Such base salary shall be reviewed at least annually
      after the end of each fiscal year, starting with the fiscal year ending
      December 31, 2004, and may be increased based on the Executive's performance,
      but not decreased, by the Board of Directors of the Company (or the Compensation
      Committee thereof) in its discretion, to be effective in the first pay period
      of the ensuing January, starting with January 2005. The term "base salary"
      shall not include any payment or other benefit which is denominated as or
      is in the nature of a bonus, incentive payment, profit-sharing payment,
      performance share award, stock option, stock appreciation right, retirement
      or pension accrual, insurance benefit, other fringe benefit or expense allowance,
      whether or not taxable to the Executive as income. 
	 
	 	 (b)      	 Annual Performance Bonus. The Executive will be eligible to receive
      an annual cash performance bonus of up to $100,000 (the "Annual Performance
      Bonus"). The Compensation Committee shall consider and make a bonus determination
      not later than 60 days after the end of each fiscal year during the Employment
      Period, starting with the fiscal year ending December 31, 2004. Bonus awards
      shall be based upon the performance by the Executive as measured against
      objective and reasonable criteria mutually agreed and approved in advance
      by the Executive, and the Compensation Committee of the Board of Directors,
      which criteria but shall be set forth in Schedule 1 to this Agreement. To
      the extent that less than all of the criteria are achieved, the Executive
      shall be paid a pro rata percentage of the Annual Performance Bonus. 
	 
	 	 (c)      	 Other Benefits. In addition to the compensation described in this
      Section 4, and such other amounts not constituting base salary as may be
    



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	 	 	 provided to the Executive from time to time by the Board, the Executive
      will be entitled during the Employment Period to participate in any retirement
      plans, bonus plans, welfare benefit plans and other employee benefit plans
      of the Company that may be in effect from time to time with respect to executives
      of the Company generally, to the extent the Executive is eligible under
      the terms of those plans. Executive shall also be entitled to 15 days of
      paid vacation per year. The Company shall also reimburse the Executive for
      all reasonable and necessary business expenses incurred by him in the course
      of performing his duties hereunder. 
	 
	 	 (d)      	 Definitions. An "IPO" shall mean the initial underwritten public
      offering and sale of the Company's Common Stock registered under the Securities
      Act of 1933. A "Sale" shall mean the sale of all or substantially all of
      the Company's assets, a merger or combination with or into another entity,
      unless such merger or combination does not result in a change in ownership
      of the Company's voting securities of more than 50%, or the sale or transfer
      of more than 50% of the Company's voting securities, but shall exclude the
      pending transactions with Trafalgar Ventures Inc. 
	 
	 	 (e)      	 Accelerated Vesting of Stock Options. That, subject to completion
      of the Merger, upon any later sale, merger, or other transaction resulting
      in a change in control of Trafalgar or any successor entity (the "Surviving
      Entity") in which the per share consideration to be received by the stockholders
      of the Surviving Entity is equivalent to at least $6 per share, all options
      to purchase shares of the Corporation's Common Stock issued and outstanding
      immediately prior to the effective date of the Merger (which options shall
      be converted into options to purchase shares of common stock of Trafalgar
      as a result of the Merger) shall vest and become exercisable immediately
      prior to such sale, merger or other change of control transaction. For purposes
      of this resolution a change of control shall be deemed to occur upon: (1)
      any sale or exchange of greater than 50% of the voting interest of the Surviving
      Entity; (2) any merger of the Surviving Entity with an unaffiliated third
      party in which the Surviving Entity does not survive the merger; or (3)
      any sale of all or substantially all assets of the Surviving Entity. 


 Section 5.       Termination. 

                 The
  Executive's employment hereunder shall terminate under the following circumstances:


	 	 (a)      	 Death or Disability. This Agreement shall terminate upon the death
      or disability of the Executive. "Disability" shall mean that the Executive
      is no longer able to perform the essential functions of the President and
      Chief Executive Officer of the Company for a continuous period of six (6)
      months or a total of nine (9) months in any one-year period. If any question
      arises as to whether the Executive has been so disabled, the 



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	 	 	 Executive shall submit to an examination by a physician mutually
      acceptable to the Board of Directors of the Company and the Executive and
      following such examination, the physician shall submit to the Company and
      to the Executive a report in reasonable detail setting forth his or her
      opinion as to whether the Executive was so disabled. Such report shall for
      the purposes of this Agreement be conclusive of the issue. Notwithstanding
      the foregoing, in the event of a disability (as defined above), the Company
      shall take no action that violates the applicable provisions of the Americans
      With Disabilities Act. If this Agreement terminates due to the death or
      disability of the Executive, the Company shall promptly pay to the Executive's
      estate or to the Executive any and all amounts then owed to the Executive,
      including all accrued salary, vacation pay, other benefits, and any applicable
      portion of the Annual Performance Bonus. 
	 
	 	 (b)      	 Termination by the Company without Cause.
      The Company may at any time by action of a majority of the entire membership
      of its Board of Directors terminate the Executive's employment without Cause
      (as defined below) by giving the Executive notice of the effective date
      of termination (which effective date may be the date of such notice) (the
      "Date of Termination"). A voluntary termination by the Executive within
      (i) ninety (90) days before or (ii) twelve (12) months after a Sale of the
      Company and after (x) the Company has materially reduced the Executive's
      status or responsibilities, reduced the Executive's salary, relocated the
      Company's corporate offices more than 50 miles from its current location,
      or breached any provision of this Agreement or ( y) the successor
      to the Company in such Sale fails to assume the Company's obligations under
      this Agreement (each a "Deemed Termination Event") will be deemed to be
      termination by the Company without Cause. The Executive will provide thirty
      (30) days prior written notice to the Company of any such voluntary termination
      by reason of a Deemed Termination Event, and during such 30-day period the
      Company shall have an opportunity to cure the Deemed Termination Event.
      If a cure is effected within such 30-day period, the provisions of this
      Section 5(b) shall no longer be applicable with respect to the Event so
      cured. If the Executive terminates his employment due to a Deemed Termination
      Event, 100% of any unvested options granted hereunder that, absent such
      termination, would have otherwise vested in the 18-month period following
      the date of termination shall immediately vest and be exercisable. If the
      Company shall terminate the Executive without Cause hereunder, the Company
      shall have the obligation to pay the Executive the following: 
	 
	 	 	(1) 	Any and all amounts owed to the Executive through the Date of Termination,
      including all accrued salary, vacation pay, and any other benefits. 


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	 	 	 (2)      	 Each month for a period of eighteen (18) months following the Date of
      Termination (the "Severance Period"), the Company shall pay the Executive,
      as a severance payment, 100% of the Executive's Monthly Salary (as defined
      below), less required withholding. Such amounts shall be payable periodically
      in accordance with the Company's customary payroll practices. Promptly after
      the six month anniversary of the Severance Period and promptly following
      each successive six month period during the Severance Period, the Executive
      shall reimburse the Company for any amounts (excluding investment income)
      earned or received by the Executive during the Severance Period and reportable
      as earnings on Form W-2 or Form 1099 (the "Supplementary Income"). Notwithstanding
      the foregoing, the Executive shall not be obligated to reimburse the Company
      for any amounts in excess of the aggregate amount paid by the Company to
      the Executive during the Severance Period. For purposes hereof, "Monthly
      Salary" shall mean the Executive's annual base salary immediately prior
      to the Date of Termination (except if the termination is due to a reduction
      in salary, then the annual base salary in effect immediately prior to the
      decrease in annual base salary) divided by twelve (12). 
	 
	 	 	 (3)      	 A bonus, equal to the average of the Annual Performance Bonuses earned
      by the Executive in each of the two (2) years prior to his termination of
      employment. 
	 
	 	 	 (4)      	 The Executive may continue to participate in the Company's group health,
      life and dental plans during the Severance Period at the same cost to him
      as in effect prior to his termination of employment. 
	 
	 	 	 (5)      	 Notwithstanding anything to the contrary herein, in the event that the
      Executive materially breaches Sections 6, 7, 8 or 9 of this Agreement, the
      Company's obligations under subsections (2) through (5) above shall cease
      in their entirety. 




	 	 (c)      	 Termination by the Company for Cause. The Company shall have the
      right to terminate the Executive's employment effective immediately for
      any of the following reasons (each of which is referred to herein as "Cause")
      by giving the Executive written notice which specifically identifies the
      Cause in reasonable detail: 




	 	 	 (1)      	 the breach of this Agreement, which breach is not cured within thirty
      (30) days after receipt of written notice from the Company; 
	 
	 	 	 (2)      	 any act of willful disloyalty, dishonesty, or breach of fiduciary duty
      with respect to any aspect of the Company's or any affiliate's business;
    


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	 	 	 (3)      	 any act of fraud, embezzlement or deliberate disregard of a rule or policy
      of the Company known by the Executive or contained in a policy and procedure
      manual provided to the Executive which results in material loss, damage
      or injury to the Company; 
	 
	 	 	 (4)      	 the breach of any provision of Sections 6, 7, 8 or 9 of this Agreement;
      or 
	 
	 	 	 (5)      	 conviction of a felony. 


                 If
  the Executive's employment is terminated by the Company pursuant to this Section
  5(c), then (i) the Company shall have no further obligations hereunder accruing
  from and after the effective date of termination and shall have all other rights
  and remedies available under this or any other agreement and at law or in equity;
  and (ii) any unvested options granted hereunder shall immediately expire. Notwithstanding
  the foregoing, the Company shall pay to the Executive on the effective termination
  date any and all amounts then owed to the Executive, including all accrued salary,
  vacation pay, other benefits and any applicable portion of the Annual Performance
  Bonus.

	 	 (d)      	 Termination by the Executive. The Executive may terminate this
      Agreement at any time upon thirty (30) days prior written notice to the
      Company. The Board of Directors of the Company may, in such event, elect
      to waive the period of notice, or any portion thereof, in which event the
      Executive's date of termination shall be that date within the thirty (30)
      day notice period determined by the Board. Upon termination of this Agreement
      by the Executive for any reason other than a breach of this Agreement by
      the Company, or the occurrence of a Deemed Termination Event under Subsection
      5(b) hereof: (i) the Company shall have no further obligations hereunder
      accruing from and after the effective date of termination; and (ii) any
      unvested options granted to the Executive shall immediately expire. Notwithstanding
      the foregoing, the Company shall pay to the Executive on the effective termination
      date any and all amounts then owed to the Executive, including all accrued
      salary, vacation pay, other benefits and any earned portion of the Annual
      Performance Bonus. 


 Section 6.       Confidential Information
  

	 	 (a)      	 While employed by the Company and thereafter, the Executive shall not,
      directly or indirectly, disclose to anyone outside of the Company any Confidential
      Information (as hereinafter defined) or use any Confidential Information
      other than pursuant to Employee's employment by, and for the benefit of,
      the Company. 
	 
	 	 (b)      	 The term "Confidential Information," as used throughout this Agreement,
      means all data or information not generally known outside of the Company
      whether prepared or developed by or for the Company or received by the Company
      from an outside source. Without limiting the scope of this 



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	 	 	definition, Confidential Information includes any trade secrets, any technical
      data, design, pattern, formula, computer program, source code, object code,
      algorithm, manual, product specification, systems, methods, processes or
      plan for a new or revised product; and any business, marketing, financial,
      or sales record, data, plan, or survey; and any other record or information
      relating to the present or future business or products of the Company. All
      Confidential Information and copies thereof are the sole property of the
      Company. 


 Section 7.       Noncompetition and Nonsolicitation

                (a)
        During the term of this Agreement and
  for a period of twelve (12) months following termination of the Executive's
  employment, however caused, the Executive shall not, without prior written consent
  of the Company: 

	 	 	 (1)      	 For himself or on behalf of any other person or entity, directly or indirectly,
      either as principal, agent, stockholder, employee, consultant, representative
      or in any other capacity, own, manage, operate or control, or be concerned,
      connected or employed by, or other associate in any manner with, engage
      in or have a financial have any interest in any business which is directly
      or indirectly competitive with the business of the Company, except that
      nothing contained herein shall preclude the Executive from purchasing or
      owning stock in any such business if such stock is publicly traded and provided
      that the Executive's holdings do not exceed three percent (3%) of the issued
      and outstanding capital stock of such business. 
	 
	 	 	 (2)      	 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 of competing with the Company 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). 
	 
	 	 	 (3)      	 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
      parent or affiliate of the Company to leave the services of the Company
      or any parent or affiliate for any reason. 


                (b)
        For purposes of this Section 7, a business
  will be deemed to be competitive with the Company if it is engaged in a business
  substantially similar, in whole or in part, to the business conducted or planned
  to be conducted by the Company during the term of this Agreement. 


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 Section 8.       Ownership of Ideas, Copyrights
  and Patents.

                (a)
        The Executive agrees that all ideas,
  discoveries, creations, manuscripts and properties, innovations, improvements,
  know-how, inventions, designs, developments, apparatus, techniques, methods,
  processes 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 or not, which the Executive may conceive or develop
  during his employment with the Company, alone or in conjunction with another
  or others, whether during or out of regular business hours, and whether at the
  request or upon the suggestion of the Company or otherwise, shall be the sole
  and exclusive property of the Company, and that the Executive shall not publish
  any of the inventions without the prior written consent of the Company. The
  Executive hereby assigns to the Company all of his right, title and interest
  in and to all of the foregoing.

                (b)
        The Executive further represents and
  agrees that he will use his best efforts to prevent any inventions from violating
  or infringing upon any other right, patent, copyright, trademark or right of
  privacy, or constituting libel or slander against, or violating any other right
  of, any person, firm or corporation.

                (c)
        The Executive agrees that he will fully
  cooperate with the Company, its attorneys and agents, at any time during or
  after his employment, in the preparation and filing of all papers and other
  documents as may be required to perfect the Company's rights in and to any of
  such inventions, including, but not limited to, joining in any proceeding to
  obtain letters patent, copyrights, trademarks or other legal rights in the United
  States and in any and all other countries on such inventions, provided that
  the Company will bear the expense of such proceedings, and that any patent or
  other legal so issued to the Executive personally, shall be assigned by the
  Executive to the Company.

 Section 9.       Disclosure of Covenants
  and Return of Records.

                (a)
        The Executive agrees that he will provide,
  and that the Company may in its discretion similarly provide, a copy of the
  covenants contained in Sections 6, 7, and 8 of this Agreement to any business
  or enterprise which the Executive may directly or indirectly own, manage, operate,
  finance, join, control or participate in the ownership, management, operation,
  financing, control or control of, or with which the Executive may be connected
  as an officer, director, employee, partner, principal agent, representative,
  consultant or otherwise. 

                (b)
        Upon termination of the Executive's
  employment with the Company, the Executive shall deliver to the Company any
  property of the Company which may be in the Executive's possession, including,
  without limitation, products, materials, memoranda, notes, records, reports,
  or other documents or photocopies of the same.


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 Section 10.     Conflicting Agreements. 

                 The
  Executive hereby warrants and covenants that his employment by the Company will
  not result in a breach of the terms, conditions or provisions of any agreement
  to which the Executive is subject, and that he has not made and will not make
  any agreements in conflict with this Agreement. 

 Section 11.      Successors and Assigns.

                 This
  Agreement is intended to bind and inure to the benefit of and be enforceable
  by the Executive and the Company, except that the Executive may not assign any
  of his rights or obligations under this Agreement and the Company may not assign
  any of its rights or obligations under this Agreement without the prior written
  consent of the other party. 

 Section 12.      Severability. 

                 Whenever
  possible, each provision of this Agreement will be interpreted in such manner
  as to be effective and valid under applicable law, but if any provision of this
  Agreement is held to be invalid, illegal or unenforceable in any respect under
  applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability
  will not affect such provision in any other jurisdiction, but this Agreement
  will be reformed, construed and enforced in such jurisdiction as if such invalid,
  illegal or unenforceable provision had never been contained herein.

 Section 13.      Notice. 

                 Any
  notice provided for in this Agreement must be in writing and must be either
  personally delivered, mailed by first class mail (postage prepaid and return
  receipt requested), sent by facsimile transmission or sent by reputable overnight
  courier service, to the recipient at the address indicated below: 


	 	 To the Company:  	 Cyberkinetics, Inc.  
	 	  	 100 Foxborough Boulevard, Suite 240  
	 	  	 Foxborough, MA 02035  
	 	  	 Facsimile: 508-549-9985  
	 	  	 
	 	 To the Executive:  	 Timothy R. Surgenor  
	 	  	 201 Claybrook Road  
	  	  	 Dover, MA 02030  
	  	  	Facsimile: ________________________________________________




or to such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered or sent
or if mailed, five days after so mailed. 

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 Section 14.      Amendments and Waivers. 

                 Any
  provision of this Agreement may be amended or waived only with the prior written
  consent of the Executive and a majority of the Compensation Committee of the
  Board of Directors of the Company. Notwithstanding the foregoing, the failure
  of either party to require the performance of any term or obligation of this
  Agreement, or the waiver by either party of any breach of this Agreement, shall
  not prevent any subsequent enforcement of such term or obligation or be deemed
  a waiver of any subsequent breach. 

 Section 15.      Entire Agreement. 

                 This
  Agreement embodies the complete agreement and understanding between the parties
  and supersedes and preempts any prior understandings, agreements or representations
  by or between the parties, written or oral, which may have related to the subject
  matter hereof in any way, including, without limitation, that certain letter
  agreement between the parties dated, October 4, 2002. Notwithstanding the foregoing,
  that certain Option Certificate No. 2002 ISO – 031, dated January 24, 2003
  shall remain in full force and effect, as amended by Section Section 4(e) hereof.


 Section 16.      Governing Law. 

                 All
  questions concerning the construction, validity and interpretation of this agreement
  will be governed by the internal law, and not the law of conflicts, of the Commonwealth
  of Massachusetts. 

 Section 17.      Remedies.

                 Each
  of the parties to this Agreement will be entitled to enforce his or its rights
  under this Agreement specifically, to recover damages (including, without limitation,
  reasonable fees and expenses of counsel) by reason of any breach of any provision
  of this Agreement and to exercise all other rights existing in his or its favor.
  The parties hereto agree and acknowledge that money damages may not be an adequate
  remedy for any breach or threatened breach of the provisions of this Agreement
  and that any party may in his or its sole discretion apply to any court of law
  or equity of competent jurisdiction for specific performance and/or injunctive
  relief in order to enforce or prevent any violations of the provisions of this
  Agreement. 

 Section 18.      Captions. 

                 The
  captions set forth in this Agreement are for convenience only, and shall not
  be considered as part of this Agreement or as in any way limiting or amplifying
  the terms and provisions hereof. 

 [This space intentionally left blank.] 

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                 In
  witness whereof, the parties have signed, sealed and delivered this Agreement
  as of the date first above written. 


	 	 CYBERKINETICS, INC.  
	 	 	  
	 	 	 
	 	 	 
	 	By:  	  
	 	 	  
	 	 	 Name:  
	 	 	 Title:  
	 	 	 
	 	 	 
	 	 	 
	 	 EXECUTIVE:  
	 	 	  
	 	 	 
	 	 	 
	 	 Timothy R. Surgenor  




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 SCHEDULE 1 

  TO 

  EMPLOYMENT AGREEMENT 

 


ANNUAL PERFORMANCE BONUS CRITERIA