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EMPLOYMENT AGREEMENT
AGREEMENT dated as of March 1, 1997 (the "Effective Date") by and
between VIRAGEN, INC., a Delaware corporation ("Employer or the "Company"), and
XXXXXX XXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ the Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to Employee's
employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employs Employee, and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set forth.
2. TERM
Subject to the provisions for earlier termination set forth in
Section 9 hereof, this Agreement shall commence on the Effective Date and shall
end as of the close of business on February 28, 1999 (the "Employment Term").
The term "first year", as used herein, means the period commencing on the
Effective Date and ending as of the close of business on February 28, 1998, the
term "second year", as used herein, means the period commencing on March 1, 1998
and ending as of the close of business on February 28, 1999, and the term
"year", as used herein, means, as the context requires, the first year or the
second year. Notwithstanding any of the foregoing to the contrary, if this
Employment Agreement is terminated prior to the expiration of the Employment
Term, a year shall mean, with respect to the year during which termination
occurs, the period commencing on the first day of such year and ending as of the
close of business of the day of termination of Employee's employment, and
"Employment Term" shall mean the period commencing on the Effective Date and
ending as of the close of business of the day of termination of Employee's
employment.
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3. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free
to accept employment with Employer as contemplated herein and has no other
written or oral obligations or commitments of any kind or nature which would in
any way interfere with his acceptance of employment pursuant to the terms hereof
or the full performance of his obligations hereunder or the exercise of his best
efforts in his employment hereunder.
4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as Employer's President and, as
such, shall, subject to the direction of Employer's Board of Directors,
supervise the conduct of all of Employer's operations and affairs, and perform
such other duties and responsibilities as may be assigned to Employee from time
to time consistent with such title by Employer's Board of Directors. Employee
agrees to devote sufficient time, skill, attention and energy diligently and
competently to perform the duties and responsibilities reasonably assigned to
him hereunder or pursuant hereto to the best of his abilities. Employee shall
use his best efforts to be loyal and faithful at all times and constantly
endeavor to improve his ability and his knowledge of the business of Employer in
an effort to increase the value of his services for the mutual benefit of
Employer and Employee. Employer acknowledges that Employee is Chairman and
President of Cytoferon Corp. and a consultant to Tablelamps USA, Inc.
("Tablelamps") and Employer consents to Employee continuing to act as Chairman
and President of Cytoferon Corp. and consultant to Tablelamps. Employee has
informed Employer that Employee's duties for Tablelamps are minimal and such
duties will not interfere with the satisfactory performance of his obligations
under this Agreement. Employee agrees not to enter into any other employment
agreement, other than with subsidiaries and/or affiliates of the Company as may
be approved by the Company's Board of Directors, during the term hereof.
5. COMPENSATION
Employee shall receive an annual salary during the Employment
Term as follows: $190,000 for the period March 1, 1997 to February 28, 1998, and
$200,000 for the period March 1, 1998 to February 28, 1999. Employee's salary
shall be payable in accordance with the Company's normal payroll process,
currently bi-weekly. Additional consideration payable to Employee hereunder
consists of (a) the grant to Employee of options to acquire 1,000,000 shares of
common stock of Employer (as further described herein), and (b) fringe benefits,
if any, that shall be made available to Employee further described herein.
6. FRINGE BENEFITS AND EXPENSES
A. Employee Plans. Employee shall be eligible (subject to the
terms and conditions of particular plans and programs) to participate in such
medical, hospitalization, group health, accident, disability and life insurance
programs and plans, such pension, profit
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sharing, stock option, incentive compensation and stock purchase plans and such
other employee benefit programs to the same extent such plans and programs are
made generally available from time to time by Employer to all of its other
similarly-situated employees; provided, however, Employer shall be under no
obligation to make any of such plans or programs available to its employees or
continue any which currently or in the future exist, except as otherwise
required by law.
B. Automobile. For the term of this Agreement, Employer shall
provide to Employee an automobile and shall pay all gas, maintenance, insurance
and other expenses related thereto, for performance of Employee's duties on
behalf of Employer as specified herein.
C. Other Expenses. Employer shall promptly pay directly or
reimburse Employee for his reasonable out-of-pocket costs and expenses incurred
in connection with the performance of his duties and responsibilities hereunder
subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer's customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal vacation (of not less
than two weeks) taken by other members of senior management during each
twelve-month period of the Employment Term. Employee shall not be entitled to be
compensated for any unused vacation upon termination of this Agreement. The
periods during which Employee will be absent from work shall be determined by
Employee taking into account the needs of Employer's business.
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as it
reasonably determines is adequate for Employee's performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions of this
Agreement to the contrary, Employee's employment may be terminated by Employer
with Cause (as hereinafter defined) effective upon the delivery of written
notice to Employee. In addition, Employee's employment shall terminate (i) upon
Employee's death or (ii) upon Employee becoming Disabled (as hereinafter
defined).
B. Definition of Disabled. For purposes of this Agreement,
Employee shall be deemed to be "Disabled" when, by reason of physical or mental
illness or of injury, he is unable to perform substantially all of the duties
and responsibilities required of him in connection with his employment
hereunder. No disability shall be deemed to exist until
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after Employee shall be unable to perform his duties hereunder for ninety (90)
consecutive days (the "Disability Period"). If Employee shall have been under a
disability but shall have returned to work prior to the end of the Disability
Period, any new disability commencing within thirty (30) days of the termination
of the prior disability shall be a continuation of the prior disability, and the
period of all such disabilities shall be added together to determine whether, or
how much of, the Disability Period has elapsed.
C. Definition of Cause. For purposes of this Agreement,
"Cause" shall be: (a) conviction for fraud or criminal conduct (other than
conviction of, or a plea of guilty to, a traffic violation), from which no
appeal can be taken; (b) habitual drunkenness or drug addiction; (c)
embezzlement; (d) material sanctions against Employee in his capacity as an
employee of Employer by regulatory agencies governing Employer or against
Employer because of wrongful acts or conduct of Employee which have a material
adverse affect upon the Employer and its business; (e) material breach or
default by Employee of any of the material terms or conditions of this
Agreement, and the continuation of such material breach or default by Employee
for a period of seven (7) days following the date of receipt of written notice
from Employer specifying the breach or default of Employee; or (f) the
resignation or quitting of Employee prior to the end of the Employment Term (in
this last event, Employee's employment shall be deemed terminated with Cause on
the date that he resigns or quits).
If Employee's employment is terminated by Employer without
Cause as defined in this Section, Employee shall be given sixty (60) days
written notice of termination by Employer and be entitled to receive the greater
of (i) two years compensation and fringe benefits/expenses as provided for in
Sections 5 & 6 hereof or (ii) compensation and fringe benefits/expenses as
provided for in sections 5 & 6 payable through the remainder of the Employment
Term as provided for in Section 2 hereof. Additionally, in the event of
termination without Cause, or non-renewal of this Agreement at the end of the
Employment Term, any outstanding but unexercised stock options or warrants
granted to Employee shall continue to be fully exercisable through their stated
respective Exercise Period(s).
D. Termination Following a Change of Control.
i. In the event that a "Change of Control" as hereinafter
defined, of the Company shall occur at any time during the Employment Term, the
Employee shall have the right to terminate the Employee's employment under this
Agreement upon thirty (30) days written notice given at any time within one year
after the occurrence of such event, and such termination of the Employee's
employment with the Company pursuant to this Subsection 9D, then, in any such
event, such termination shall be deemed to be a Termination by the Company Other
than for Cause and the Employee shall be entitled to such Compensation and
Benefits as set forth in Subsection 9D of this Agreement.
ii. For purposes of this Agreement, a "Change of Control" of
the Company shall mean a change in control (A) as set forth in Section 280G of
the Internal Revenue Code or (B) of a nature that would be required to be
reported in response to Item 1 of the current report on Form 8K, as in effect on
the date hereof, pursuant to Section 13 or
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15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); provided
that, without limitation, such a change in control shall be deemed to have
occurred at such time as:
(A) any person (as such term is used in Section 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company's outstanding securities then having the right to vote at elections
of directors; or,
(B) the individuals who at the commencement date of this
Agreement the Board of Directors cease for any reason to constitute a majority
thereof unless the election, or nomination for election, of each new director
was approved by a vote of at least two thirds of the directors then in office
who were directors at the commencement of this Agreement; or
(C) there is a failure to elect five or more (or such number
of directors as would constitute a majority of the Board of Directors)
candidates nominated by management of the Company to the Board of Directors; or
(D) the business of the Company for which the Employee's
services are principally performed is disposed of by the Company pursuant to a
partial or complete liquidation of the Company, a sale of assets (including
stock of a subsidiary of the Company) or otherwise.
Anything herein to the contrary notwithstanding, this Subsection 9D will not
apply where the Employee gives the Employee's explicit written waiver stating
that for the purposes of this Subsection 9D a Change in Control shall not be
deemed to have occurred. The Employee's participation in any negotiations or
other matters in relation to a Change in Control shall in no way constitute such
a waiver which can only be given by an explicit written waiver as provided in
the preceding sentence.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. Confidential Information. Employee acknowledges that
Employee has been informed that it is the policy of Employer to maintain as
secret and confidential all information relating to (i) the financial condition,
businesses and interests of Employer and its affiliates, (ii) the systems,
know-how, products, services, costs, inventions, patents, patent applications,
formulae, research and development procedures, notes and results, computer
software programs, marketing and sales techniques and/or programs, methods,
methodologies, manuals, lists and other trade secrets heretofore or hereafter
acquired, sold, developed and/or used by Employer and its affiliates and (iii)
the nature and terms of Employer's and its affiliates' relationships with their
respective customers, clients, suppliers, lenders, vendors, consultants,
independent contractors and employees (all such information being hereinafter
collectively referred to as "Confidential Information"), and Employee further
acknowledges that such Confidential Information is of great value to
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Employer and its affiliates and, in and by reason and as a result of Employee's
employment by Employer, Employee will be making use of, acquiring and/or adding
to such Confidential Information. Therefore, Employee understands that it is
reasonably necessary to protect Employer's and its affiliates' trade secrets,
good will and business interests that Employee agree and, accordingly, Employee
does hereby agree, that Employee will not directly or indirectly (except where
authorized by the Board of Directors of Employer for the benefit of Employer
and/or its affiliate(s) and/or as required in the course of his employment) at
any time hereafter divulge or disclose for any purpose whatsoever to any
persons, firms, corporations or other entities other than Employer or its
affiliates (hereinafter referred to collectively as "Third Parties"), or use or
cause or authorize any Third Parties to use, any such Confidential Information,
except as otherwise required by law.
B. Employer's Materials. In accordance with the foregoing,
Employee furthermore agrees that (i) Employee will at no time retain or remove
from the premises of Employer or its affiliates any research and development
materials, drawings, notebooks, notes, reports, formulae, software programs or
discs or other containers of software, manuals, data, books, records, materials
or documents of any kind or description for any purpose unconnected with the
strict performance of Employee's duties with Employer and (ii) upon the
cessation or termination of Employee's employment with Employer for any reason,
Employee shall forthwith deliver or cause to be delivered up to Employer any and
all research and development materials, drawings, notebooks, notes, reports,
formulae, software programs or discs or other containers of software, manuals,
data, books, records, materials and other documents and materials in Employee's
possession or under Employee's control relating to any Confidential Information
or any property or information which is otherwise the property of Employer or
its affiliates.
11. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or
disclosed to Employee, because of the know-how acquired and to be acquired by
Employee, and as a material inducement to Employer to enter into this Agreement,
issue the Options (as defined below) and continue to employ Employee, Employee
covenants and agrees that, so long as Employee is employed by Employer and for a
period of two (2) years after Employee ceases for any reason to be employed by
Employer, Employee shall not, directly or indirectly, (i) divert business from,
(ii) solicit or transact any business competitive with Employer or its
affiliates with, or (iii) sell any products or services sold or offered by
Employer or its affiliates to, any customer or former customer of Employer or
its affiliates. In addition, Employee covenants and agrees that, so long as
Employee is employed by Employer and for a period of two (2) years after
Employee ceases for any reason to be employed by Employer, Employee hereby
agrees to refrain from, anywhere in the world (the "Geographical Area"),
directly or indirectly owning, managing, operating, controlling or financing, or
participating in the ownership, management, control or financing of, or being
connected with or having an interest in, or otherwise taking any part as a
stockholder (other than deminimus amounts as a passive investor), director,
officer, employee, agent, consultant, partner or otherwise in, any
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business competitive with that engaged in or being developed by Employer or its
affiliates during Employee's term of employment. Without limitation of the
foregoing, Employer's business is acknowledged to include the development,
manufacture and sale of human leukocyte interferon therapy and products and
other natural or recombinant technologies aimed at enhancing the human immune
system. Employee acknowledges that Employer's business is anticipated to be
international in scope, that a similar business could effectively compete with
Employer's and its affiliates businesses from any location in the world, and
that, therefore, the restricted Geographical Area is reasonable in scope to
protect Employer's and its affiliates' trade secrets and legitimate business
interests.
12. EMPLOYER'S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee's covenants or agreements provided for in Sections 10
or 11 hereof, Employer and/or its affiliates shall be entitled to an accounting
and repayment of all profits, compensation, commissions, remunerations or
benefits which Employee directly or indirectly has realized or realizes as a
result of, growing out of or in connection with any such violation or breach. In
addition, in the event of a breach or violation or threatened or imminent breach
or violation of any provisions of Sections 10 or 11 hereof, Employer and/or its
affiliates shall be entitled to a temporary and permanent injunction or any
other appropriate decree of specific performance or equitable relief, without
posting of bond, from a court of competent jurisdiction in order to prevent,
prohibit or restrain any such breach or violation or threatened or imminent
breach or violation by Employee, by Employee's partners, agents,
representatives, servants, employers or employees and/or by any third parties.
Employer shall be entitled to such injunctive or other equitable relief in
addition to any damages which are suffered, and the prevailing party shall be
entitled to reasonable attorneys' and paralegals' fees and costs and other costs
incurred in connection with any such litigation, both before and at trial and at
all tribunal levels. Resort by Employer and/or its affiliates to such injunctive
or other equitable relief shall not be deemed to waive or to limit in any
respect any other rights or remedies which Employer or its affiliates may have
with respect to such breach or violation.
13. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any breach or
violation of Sections 10 or 11 hereof will cause irreparable injury and damage
and incalculable harm to Employer and its affiliates and that it would be very
difficult or impossible to measure the damages resulting from any such breach or
violation. Employee further acknowledges that Employee has carefully read and
considered the provisions of Sections 10, 11 and 12 hereof and, having done so,
agrees that the restrictions and remedies set forth in such Sections (including,
but not limited to, the time period, geographical and types of restrictions
imposed) are fair and reasonable and are reasonably required for the protection
of the business, trade secrets, interests and goodwill of Employer and its
affiliates.
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B. Severability. Employee understands and intends that each
provision and restriction agreed to by Employee in Sections 10, 11 and 12 hereof
shall be construed as separate and divisible from every other provision and
restriction and that, in the event that any one of the provisions of, or
restrictions in, Sections 10, 11 and/or 12 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof and restrictions therein shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable provisions or restrictions had not been included therein, and any
one or more of such valid provisions and restrictions may be enforced in whole
or in part as the circumstances warrant. In the event that any such provision
relating to time period and/or geographical and/or type of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum or
permissible time period, geographical area or type of restriction such court
deems reasonable and enforceable, said time period and/or geographical and/or
type of restriction shall be deemed to become and shall thereafter be the
maximum time period and/or geographical restriction and/or type of restriction
which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments, covenants
and agreements of Employee set forth in Sections 10, 11, 12 and 13 of this
Agreement shall survive any termination of this Agreement or of Employee's
employment (for any reason, including expiration of the Employment Term).
D. Comparable Restrictions. Employer agrees that it will use
its best efforts to have other senior executives execute and observe agreements
containing similar provisions as are contained in Sections 10, 11 and 12 hereof.
14. STOCK OPTIONS
Effective the Effective Date, Employer hereby grants to
Employee, pursuant to Employer's 1997 Stock Option Plan (the "Plan"), options to
acquire 1,000,000 shares of the Company's Common Stock (the "Options"), for a
period of five (5) years from the date hereof, in accordance with the Stock
Option Agreement attached hereto (Exhibit A) and made a part hereof. Such
Options shall vest in full upon execution of this Employment Agreement.
Employer represents and warrants that (i) all shares
underlying the Options will be issued from shares authorized by and subject to
the provisions of the Plan (ii) the Company shall use its best efforts to
register the Plan and the shares underlying the Options under the applicable
regulations of the Securities and Exchange Commission on Form S-8 and (iii) such
registration covering the shares underlying the Options will be maintained as
effective for the longer of (a) the Employment Term or (b) the Exercise Period
of the Options as defined in Exhibit A.
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15. EMPLOYEE'S DISCLOSURES & REPRESENTATIONS
& WARRANTIES.
Employee hereby acknowledges, represents and warrants to,
and/or agrees with, Employer as follows:
(a) Subject to Employee's right to designate family members to
own the stock acquired through exercise of the Options, that Employee is
acquiring the Options for his own account, for investment purposes only, and not
with a view to the public sale or distribution thereof, except as applicable
under the Form S-8 Registration to be filed by the Company covering the Shares
underlying the Options.
(b) That Employee has full right, power and authority to
perform all obligations under this Agreement.
(c) That Employee understands that the Options are
nonassignable, and that the Shares acquired through exercise of the Options may
be sold or transferred only pursuant to the Form S-8 Registration to be filed by
the Company covering the Shares underlying the Options.
Employee hereby agrees to indemnify and hold harmless Employer
and its shareholders, directors, officers, employees and agents from and against
any and all loss, damage, liability, cost or expense (including reasonable
attorneys' and paralegals' fees and costs before and at trial and at all
appellate levels) due to or arising out of any material inaccuracy in, or
material breach of, any material representation, warranty or covenant of
Employee contained herein.
16. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or
were advised and fully understand that they are entitled to be represented by
independent legal counsel with respect to all matters contemplated herein from
the commencement of negotiations at all times through the execution hereof.
17. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Florida, without giving effect to conflicts of laws
principles.
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18. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principal office, in the case
of Employer.
19. SUCCESSION
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives, heirs,
assignees and/or successors in interest of any kind whatsoever; provided,
however, that Employee acknowledges and agrees that he cannot assign or delegate
any of his rights, duties, responsibilities or obligations hereunder to any
other person or entity.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supersedes any and all prior agreements, both
oral and written, between the parties hereto, except as related to rights of the
Employee and obligations related thereto of Employer regarding previously
granted stock options and previously purchased stock, as may have been modified
from time to time. The subject matter hereof may not be amended, modified or
terminated except by a writing signed by the parties hereto.
21. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision and shall not
in any way affect or render invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if such invalid or
unenforceable provision were not contained herein.
22. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver of
any future or past breach or violation. No oral waiver shall be binding.
23. ATTORNEYS' FEES
In the event that either of the parties to this Agreement
institutes suit against the other party to this Agreement to enforce any of his
or its rights hereunder, the prevailing party in such action shall be entitled
to recover from the other party all reasonable costs
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