Exhibit 10.59
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1997, between Interferon Sciences,
Inc., a Delaware corporation with principal executive offices at 000 Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Xxxxxxxx X. Xxxxxx,
residing at 00 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxxxx 00000 ("Employee").
W I T N E S S E T H
WHEREAS, the Company desires to employ Employee upon the terms and
subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants, and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
Section 1. Employment.
The Company hereby agrees to continue to employ Employee, and Employee
hereby agrees to continue to serve the Company, all upon the terms and subject
to the conditions set forth in this Agreement.
Section 2. Capacity and Duties.
Employee is and shall be employed in the capacity of Chief Executive
Officer of the Company and shall have the duties, responsibilities, and
authorities normally performed by the chief executive officer of a company and
such other duties, responsibilities, and authorities as are assigned to him by
the Board of Directors of the Company (the "Board") so long as such additional
duties, responsibilities, and authorities are consistent with Employee's
position and level of authority as Chief Executive Officer of the Company.
Employee shall devote substantially all of his business time and attention to
promote and advance the business of the Company; provided, however, that
Employee shall be permitted to invest his personal assets in a business which
does not compete with the Company if such investment will not require services
of any significance on the part of Employee in the operation of the affairs of
the business in which such investment is made.
Section 3. Term of Employment.
The term of employment of Employee by the Company pursuant to this
Agreement shall be for the period (the "Employment Period") commencing on the
date hereof and ending on December 31, 2001, unless further extended or sooner
terminated in accordance with the provisions of this Agreement. On December 31,
1999, and on each December 31 of each year thereafter, the Employment Period
shall be automatically extended for one additional year unless, not later than
June 30 immediately preceding any such December 31, the Company shall have
delivered to Employee or Employee shall have delivered to the Company written
notice that the Employment Period shall not be further extended.
Section 4. Place of Employment.
Employee's principal place of work shall be located at the principal
offices of the Company, currently located in New Brunswick, New Jersey. The
Company's principal offices shall not be relocated outside of the New York/New
Jersey Metropolitan Area without Employee's consent.
Section 5. Compensation.
During the Employment Period, subject to all the terms and conditions
of this Agreement and as compensation for all services to be rendered by
Employee under this Agreement, the Company shall pay to or provide Employee with
the following:
(a) Base Salary. Commencing January 1, 1997, the Company shall
pay to Employee a base annual salary at the rate of $250,000. Each January 1
during the Employment Period, commencing January 1, 1998, the base annual salary
shall be increased by 6%. The base salary will be payable at such intervals (at
least monthly) as salaries are paid generally to other executive officers of the
Company.
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(b) Bonus. Each December during the Employment Period, the
Board may determine Employee's bonus for the year then ending, based upon the
Company's revenues, profits or losses, financing activities, progress in
clinical trials, and such other factors deemed relevant by the Board. Any bonus
shall be payable to Employee on or after January 2 of the following year.
(c) Options. On the date hereof, the Company shall grant to
Employee under the Company's option plan options to purchase 150,000 shares of
the Company's common stock at an exercise price of $8.50. Such options shall
vest 20% on the date hereof and 20% on each January 1 commencing January 1, 1998
and shall terminate on December 31, 2001. Each December during the Employment
Period, the Board may determine whether to grant Employee additional options,
based upon the Company's revenues, profits or losses, financing activities,
progress in clinical trials, and such other factors deemed relevant by the
Board.
(d) Vacation. Employee shall be entitled to vacation in
accordance with the Company's policy for its senior executives. Vacation may be
carried into the subsequent year if not used in the year earned.
(e) Automobile. The Company shall provide Employee with an
automobile of his choice (comparable to the automobile currently provided by the
Company to Employee) at the Company's expense and shall pay the maintenance,
gas, and insurance expenses in connection with such automobile. Such automobile
shall be equipped with a car phone.
(f) Club Dues. The Company shall pay up to $15,000 per year
for initiation and monthly dues of one country club as shall be specified by
Employee.
(g) Life and Disability Insurance. The Company shall pay up to
$5,000 per year for such term life and disability insurance policies covering
Employee as shall be specified by Employee. Such policies shall be owned by
Employee and Employee shall have the sole right to exercise all rights under
such policies.
(h) Employee Benefit Plans. Employee shall be entitled to
participate in all employee benefit plans maintained by the Company for its
senior executives or employees, including without limitation the Company's
medical and life insurance plans, profit-sharing plan, and 401(k) plan.
Section 6. Expenses.
The Company shall reimburse Employee for all reasonable expenses
(including, but not limited to, business travel and customer entertainment
expenses) incurred by him in connection with his employment hereunder in
accordance with the written policy and guidelines established by the Company for
executive officers. In addition, Employee shall be entitled to receive an
unaccountable expense allowance of $500 per month.
Section 7. Non-Competition.
Employee agrees that he will not during the period he is
employed by the Company under this Agreement or otherwise and for a period of
one year thereafter, directly or indirectly compete with or be engaged in the
same business as the Company, or be employed by, or act as consultant or lender
to, or be a director, officer, employee, owner, or partner of, any business or
organization which, during the period Employee is employed by the Company under
this Agreement or otherwise, directly or indirectly competes with or is engaged
in the same business as the Company, except that in each case the provisions of
this Section 7 will not be deemed breached merely because Employee owns not more
than 1% of the outstanding common stock of a corporation, if, at the time of its
acquisition by Employee, such stock is listed on a national securities exchange,
is reported on NASDAQ, or is regularly traded in the over-the-counter market by
a member of a national securities exchange; provided, however, that this Section
7 shall not apply if (a) in breach of this Agreement, the Company shall
terminate Employee's employment other than pursuant to Section 10(b) or 10(c)
(it being understood that a purported termination pursuant to Section 10(b) or
10(c) which is disputed and finally determined not to have been proper shall be
a termination by the Company in breach of this Agreement) or (b) Employee shall
terminate his employment for Good Reason (as hereinafter defined).
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Section 8. Patents.
Any interest in patents, patent applications, inventions,
copyrights, developments, and processes ("Such Inventions") which Employee now
or hereafter during the period he is employed by the Company under this
Agreement or otherwise may own or develop relating to the fields in which the
Company may then be engaged shall belong to the Company; and forthwith upon
request of the Company Employee shall execute all such assignments and other
documents and take all such other action as the Company may reasonably request
in order to vest in the Company all his right, title, and interest in and to
Such Inventions free and clear of all liens, charges, and encumbrances.
Section 9. Confidential Information.
All confidential information which Employee may now possess,
may obtain during or after the Employment Period, or may create prior to the end
of the period he is employed by the Company under this Agreement or otherwise
relating to the business of the Company or of any its customers or suppliers
shall not be published, disclosed, or made accessible by him to any other
person, firm, or corporation either during or after the termination of his
employment or used by him except during the Employment Period in the business
and for the benefit of the Company, in each case without prior written
permission of the Company. Employee shall return all tangible evidence of such
confidential information to the Company prior to or at the termination of his
employment.
Section 10. Termination.
Employee's employment hereunder may be terminated without any breach of
this Agreement only under the following circumstances:
(a) Death. Employee's employment hereunder shall terminate
upon his death.
(b) Disability. If, as a result of Employee's incapacity due
to physical or mental illness, Employee shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within 30 days after a Notice of Termination (as defined in Section 10(e))
is given shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate Employee's employment hereunder.
(c) Cause. The Company may terminate Employee's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate Employee's employment hereunder upon (i) the willful and
continued failure by Employee to substantially perform his duties or obligations
hereunder (other than any such failure resulting from Employee's incapacity due
to physical or mental illness), after demand for substantial performance is
delivered by the Company that specifically identifies the manner in which the
Company believes Employee has not substantially performed his duties or
obligations, or (ii) the willful engaging by Employee in misconduct which is
materially monetarily injurious to the Company. For purposes of this paragraph,
no act, or failure to act, on Employee's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause without (i) reasonable notice to Employee setting
forth the reasons for the Company's intention to terminate for Cause, (ii) an
opportunity for Employee, together with his counsel, to be heard before the
Board, and (iii) delivery to Employee of a Notice of Termination from the Board
finding that in the good faith opinion of the Board Employee was guilty of
conduct set forth above in clause (i) or (ii) of the preceding sentence, and
specifying the particulars thereof in detail.
(d) Termination by Employee. Employee may terminate his
employment hereunder (i) for Good Reason or (ii) if his health should become
impaired to an extent that makes his continued performance of his duties
hereunder hazardous to his physical or mental health or his life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the Company's
request, Employee shall submit to an examination by a doctor selected by the
Company and such doctor shall have concurred in the conclusion of Employee's
doctor. For purposes of this Agreement, "Good Reason" shall mean (i) a change in
control of the Company (as defined below), (ii) a failure by the Company to
comply with any material provision of this Agreement which has not been cured
within ten days after notice of such noncompliance has been given by Employee to
the Company, or (iii) any purported termination of Employee's employment which
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 10(e) (and for purposes of this Agreement no such purported
termination shall be effective). For purposes of this Agreement, a "change in
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control" of the Company shall mean (i) a change in control of a nature that
would be required to be reported in response to Item 1(a) of Current Report on
Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), (ii) any "person" (as such term is used in Sections 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 20% or more of the combined voting power of the
Company's then outstanding securities, or (iii) at any time individuals who were
either nominated for election by the Board or were elected by the Board cease
for any reason to constitute at least a majority of the Board.
(e) Notice of Termination. Any termination of Employee's
employment by the Company or by Employee (other than termination pursuant to
Section 10(a)) shall be communicated by a Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i)
if Employee's employment is terminated by his death, the date of his death, (ii)
if Employee's employment is terminated pursuant to Section 10(b), 30 days after
Notice of Termination is given (provided that Employee shall not have returned
to the performance of his duties on a full-time basis during such 30 day
period), and (iii) if Employee's employment is terminated for any other reason,
the date specified in the Notice of Termination, which shall not be earlier than
the date on which the Notice of Termination is given; provided that if within 30
days after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
resolved, either by mutual written agreement of the parties or by a judgment,
order, or decree of a court of competent jurisdiction.
Section 11. Compensation Upon Termination or During Disability.
(a) During any period that Employee fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
("disability period"), Employee shall continue to receive his full salary at the
rate then in effect for such period until his employment is terminated pursuant
to Section 10(b), provided that payments so made to Employee during the
disability period shall be reduced by the sum of the amounts, if any, payable to
Employee at or prior to the time of any such payment under disability benefit
plans of the Company and which were not previously applied to reduce any such
payment.
(b) If Employee's employment is terminated by his death, the
Company shall pay to Employee's spouse, or if he leaves no spouse, to his
estate, an amount equal to his full salary at the rate then in effect for a
period of three months after the date of death.
(c) If Employee's employment shall be terminated for Cause,
the Company shall pay Employee his full salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given.
(d) If (i) in breach of this Agreement, the Company shall
terminate Employee's employment other than pursuant to Section 10(b) or 10(c)
(it being understood that a purported termination pursuant to Section 10(b) or
10(c) which is disputed and finally determined not to have been proper shall be
a termination by the Company in breach of this Agreement) or (ii) Employee shall
terminate his employment for Good Reason, then
(A) the Company shall pay Employee his full salary
through the Date of Termination at the rate in effect
at the time Notice of Termination is given;
(B) in lieu of any further salary or bonus payments to
Employee for periods subsequent to the Date of
Termination, the Company shall pay as severance pay
to Employee an amount equal to (1) Employee's average
annual cash compensation received from the Company or
National Patent Development Corporation during the
three full calendar years immediately preceding the
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Date of Termination, multiplied by (2) the greater
of (w)the number of years (including partial years)
that would have been remaining in the Employment
Period if Employee's employment by the Company had
not so terminated and (x) three, such payment to be
made (y) if Employee's termination is based on a
change of control of the Company, in a lump sum on or
before the fifth day following the Date of
Termination, or (z) if Employee's termination results
from any other cause, in substantially equal
semimonthly installments on the fifteenth and last
days of each month commencing with the month in which
the Date of Termination occurs and continuing for the
number of consecutive semimonthly payment dates
(including the first such date as aforesaid) equal to
the product obtained by multiplying the number of
years (including partial years) applicable under
clause (w) above by 24;
(C) all options to purchase the Company's common
stock granted to Employee under the Company's
option plan or otherwise shall immediately become
fully vested and shall terminate on such date as they
would have terminated if Employee's employment by
the Company had not terminated and, if Employee's
termination is based on a change of control of the
Company and Employee elects, not more than 30 days
after the Date of Termination, to surrender any or
all of such options to the Company, the Company shall
pay Employee on or before the fifth day following
such surrender a lump sum cash payment equal to the
excess of (1) the fair market value on the Date of
Termination of the securities issuable upon
exercise of the options surrendered over (2) the
aggregate exercise price of the options surrendered;
and
(D) if termination of Employee's employment arises out of
a breach by the Company of this Agreement, the
Company shall pay all other damages to which Employee
may be entitled as a result of such breach, including
damages for any and all loss of benefits to Employee
under the Company's employee benefit plans which
Employee would have received if the Company had not
breached this Agreement and had Employee's employment
continued for the then remaining term of the
Employment Period, and including all reasonable legal
fees and expenses incurred by him as a result of such
termination.
(e) If Employee shall terminate his employment under Section
10(d)(ii), the Company shall pay Employee his full salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given.
(f) Unless Employee is terminated for Cause, the Company shall
maintain in full force and effect, for the continued benefit of Employee, for a
number of years equal to the greater of (i) the number of years (including
partial years) that would have been remaining in the Employment Period if
Employee's employment by the Company had not so terminated and (ii) three, all
employee benefit plans and programs in which Employee was entitled to
participate immediately prior to the Date of Termination provided that
Employee's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Employee's
participation in any such plan or program is barred, the Company shall arrange
to provide Employee with benefits substantially similar to those which Employee
would otherwise have been entitled to receive under such plans and programs from
which his continued participation is barred.
(g) Employee shall not be required to mitigate the amount of
any payment provided for in this Section 11 by seeking other employment or
otherwise.
(h) Notwithstanding anything in the foregoing to the contrary,
the Company shall not be obligated to pay any portion of any amount otherwise
payable to Employee pursuant to this Section 11 if the Company could not
reasonably deduct such portion solely by operation of Section 280G of the
Internal Revenue Code of 1986, as amended.
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Section 12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and reasonably substance satisfactory to Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
12(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) Employee's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, such rights shall not be
subject to commutation, encumbrance, or the claims of Employee's creditors, and
any attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees, and shall be binding upon and inure to the
benefit of the Company and its successors under Section 12(a). If Employee
should die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Employee's devisee,
legatee, or other designee or, if there be no such designee, to Employee's
estate.
Section 13. No Third Party Beneficiaries.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
Section 14. Fees and Expenses.
The Company shall pay all reasonable legal fees and related expenses
(including the costs of experts, evidence, and counsel) incurred by Employee as
a result of a contest or dispute over Employee's termination of employment if
such contest or dispute is resolved in whole or in part in Employee's favor.
Section 15. Representations and Warranties of Employee.
Employee represents and warrants to the Company that (a) Employee is
under no contractual or other restriction or obligation which is inconsistent
with the execution of this Agreement, the performance of his duties hereunder,
or the other rights of the Company hereunder and (b) Employee is under no
physical or mental disability that would hinder his performance of duties under
this Agreement.
Section 16. Life Insurance.
If requested by the Company, Employee shall submit to such physical
examinations and otherwise take such actions and execute and deliver such
documents as may be reasonably necessary to enable the Company, at its expense
and for its own benefit, to obtain life insurance on the life of Employee.
Employee has no reason to believe that his life is not insurable with a
reputable insurance company at rates now prevailing in the City of New York for
healthy men of his age.
Section 17. Modification.
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements between
them concerning such subject matter, and may be modified only by a written
instrument duly executed by each party.
Section 18. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 18). Notice to the estate of
Employee shall be sufficient if addressed to Employee as provided in this
Section 18. Any notice or other communication given by certified mail shall be
deemed given at the time of certification thereof, except for a notice changing
a party's address which shall be deemed given at the time of receipt thereof.
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Section 19. Waiver.
Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
Section 20. Headings.
The headings in this Agreement are solely for the convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
Section 21. Counterparts; Governing Law.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. It shall be governed by and construed in
accordance with the laws of the State of New Jersey, without giving effect to
conflict of laws.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
Interferon Sciences, Inc.
By:
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Xxxxxxxx X. Xxxxxx
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