EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of January, 1998, by and between BIOSHIELD TECHNOLOGIES, INC.,
a Georgia corporation (hereinafter called the "Company") and Xxxxxxx Xxxxxxx,
Senior Vice President (hereinafter called the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive desire to enter into an
employment agreement to establish the rights and obligations of the Executive
and the Company in such employment relationship;
WHEREAS, the terms of this Agreement have been approved by the
Compensation Committee of the Board of Directors of the Company;
NOW, THEREFORE, and in consideration of the mutual covenants herein
contained, the Company and the Executive hereby mutually agree as follows:
1. Employment and Duties. The Company hereby employs the Executive, and
the Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth. The Executive shall serve the Company as its
Senior Vice President. In such capacity, the Executive shall have all powers,
duties, and obligations as are normally associated with such position. The
Executive shall further perform such other duties related to the business of the
Company, including travel, as may from time to time be reasonably requested of
him by the Company's Board of Directors. The Executive shall devote all of his
skills, time, and attention solely and exclusively to said position and in
furtherance of the business and interests of the Company except for:
(a) time spent in managing his personal, financial and legal
affairs and serving on corporate, civic or charitable boards or committees, in
each case only if and to the extent not substantially interfering with the
performance of such responsibilities, and
(b) periods of vacation to which he is entitled.
Executive shall promptly notify the Company of his election or appointment to
any corporate, civic or charitable boards or committees on or after the date of
this Agreement.
2. Term of Employment. The term of employment shall begin, or be deemed
to have begun, on January 1, 1998 (the "Effective Date") and shall expire on
January 1, 2003, (the "Expiration Date") subject, however, to prior termination
or to extension, as herein provided. On each January 1st while this Agreement is
in force beginning January 1, 2001, the term of this Agreement shall
automatically be extended so that new term of the Agreement expires three years
from such date, unless either party notifies the other party in writing of an
intent not to renew at least ninety (90) days prior to the applicable July 1.
3. Base Salary. For such services, the Executive shall receive an
annual base salary of $125,000 (the "Base Salary"), which Base Salary shall be
reviewed annually by the Compensation Committee of the Board of Directors and
which may be increased, but not decreased, by the Company during the term of
this Agreement. In the event that the Company increases the Executive's Base
Salary, the amount of the prior Base Salary, together with any increase(s),
shall be his new Base Salary. The Base Salary shall be payable in equal
installments, no less frequently than semi-monthly, in accordance with the
Company's regular payroll practices.
4. Bonus. For each fiscal year of the Company during which he is
employed by the Company on the last day of the fiscal year, the Executive shall
be eligible to receive an annual bonus ("Annual Bonus") under the bonus plan
established by the Compensation Committee of the Board for the Executive. Such
Annual Bonus shall be determined by the Compensation Committee of the Board and
shall not exceed $50,000. Each Annual Bonus shall be paid in cash as soon as
practical after the year for which the Annual Bonus is earned or awarded, unless
electively deferred by the Executive pursuant to any deferral programs or
arrangements that the Company may make available to the Executive.
5. Fringe Benefits. The Company shall further provide the Executive
with all health and life insurance coverages, sick leave and disability
programs, tax-qualified retirement plans, stock option plans, paid holidays and
vacations, expense reimbursement policies, moving and relocation policies,
perquisites, and such other fringe benefits of employment as the Company may
provide from time to time to actively employed senior executives of the Company
who are similarly situated. Notwithstanding the preceding provisions of this
Paragraph 5, during the term of this Agreement (including extensions thereof)
the Company shall provide the Executive;
(a) reimbursement for all reasonable expenses incurred by the
Executive in connection with the conduct of the Company's business on
presentation of reasonable and appropriate receipts and in accordance with the
Company's regular reimbursement policy applicable to senior executives;
(b) an individual disability insurance policy, at the
Company's expense, in addition to the long-term disability plan maintained by
the Company generally for its employees, which provides long-term disability
insurance which replaces at least $6,000 of the Executive's monthly Base Salary;
(c) a minimum of four (4) weeks of paid vacation per year; and
(d) an automobile allowance of up to $1,200 per month for
automobile lease payments, maintenance, insurance and fuel.
6. Termination of Employment.
(a) Termination of Employment Other Than by Executive. The
Executive's employment hereunder may be terminated by the Company without any
breach of this Agreement under the following circumstances:
(1) Death or Disability. The Executive's employment hereunder shall terminate
upon his death, and may be terminated by the Company in the event of his
Disability for a continuous period of at least one hundred eighty (180) days,
provided that the Executive does not return to work on a substantially full-time
basis within thirty (30) days after Notice of Termination is given by the
Company pursuant to
the provisions of Paragraphs 6(c) and 6(d)(2). A return to work of less than
thirty (30) days shall not interrupt a continuous period of Disability.
(2) Cause. The Company may terminate the Executive's
employment hereunder for Cause.
(3) Without Cause. The Company may terminate the Executive's employment
hereunder without Cause.
(b) Termination of Employment by Executive. The Executive may
terminate his employment at any time with or without Good Reason.
(c) Notice of Termination. Any termination of the Executive's
employment by the Company, or by the Executive other than termination upon the
Executive's death, shall be communicated by written Notice of Termination to the
other party. For purposes of this Agreement, a "Notice of Termination" means a
notice that 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 the Executive's
employment under the provision so indicated. The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason shall not waive any right of the Executive hereunder or
preclude the Executive from asserting such fact or circumstance in enforcing his
rights hereunder.
(d) Date of Termination. "Date of Termination" means:
(1) If the Executive's employment is terminated by
his death, the date of his death.
(2) If the Executive's employment is terminated by
the Company as a result of
Disability pursuant to Paragraph 6(a)(1), the date that is thirty (30) days
after Notice of Termination is given; provided the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period.
(3) If the Executive terminates his employment for
Good Reason pursuant to Paragraph
6(b), the date that is ten (10) days after Notice of Termination is given
(provided that the Company does not cure such event during the ten (10) day
period).
(4) If the Executive terminates his employment other
than for Good Reason, the date
that is two (2) weeks after Notice of Termination is given; provided, in the
sole discretion of the Company, such date may be any earlier date after Notice
of Termination is given.
(5) If the Executive's employment is terminated by
the Company without Cause pursuant
to Section 6(a)(3), the date that is two (2) weeks after Notice of Termination
is given.
(6) If the Executive's employment is terminated by
the Company for Cause pursuant to
Paragraph 6(a)(2), the date on which the Notice of Termination is given.
7. Amounts Payable Upon Termination of Employment or During Disability.
Upon the termination of the Executive's employment with the Company, the Company
shall have the following obligations (including the obligation to pay the cost
of all benefits provided by the applicable benefit plan to the Executive and the
Executive's family under this Section 7, except normal employee contributions
required by the applicable benefit plan of other participating executives with
comparable responsibilities); provided, however, that any item paid or payable
under this Agreement shall be reduced by any amount paid or payable to the
Executive and the Executive's family with respect to the same type of payment
under any severance plan or policy now maintained or at any time in the future
maintained by the Company. For this purpose, any payment under this Agreement or
any severance plan or policy made over time shall be discounted to present value
at the Interest Rate before reducing any payment under this Agreement by any
amount paid or payable to the Executive under such severance plan or policy.
(a) Death. If the Executive's employment is terminated by his
death, the Executive's beneficiary (as designated by the Executive in writing
with the Company prior to his death) shall
be entitled to payment of all Accrued Obligations. Unless otherwise directed by
the Executive all Accrued Obligations shall be paid to the Executive's
beneficiaries in a lump sum in cash within thirty (30) days of the Date of
Termination. In the absence of a beneficiary designation by the Executive, or,
if the Executive's designated beneficiary does not survive the Executive,
benefits described in this Paragraph 7(a) shall be paid to the Executive's
estate. In addition, all stock options that have been granted to the Executive
at least six months prior to the date of his death (measured from the date of
grant of each such stock option), if any, shall be and become fully vested and
may be executed by the estate of the Executive for a period equal to the earlier
to occur of five (5) years from the date of the death of the Executive or the
date the option would have otherwise expired without regard to the Executive's
death or other termination of employment. If the Executive dies after the date
of grant of any stock options, the Executive's estate may exercise any stock
options which were then vested for a period equal to the earlier to occur of
five (5) years from the date of the death of the Executive or the date the
option would have expired without regard to the Executive's death or other
termination of employment.
(b) Disability.
(1) During any period that the Executive fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness ("Disability
Period"),
the Executive shall continue to receive his base salary at the rate then in
effect for such period until his employment is terminated pursuant to Paragraph
6(a)(1); provided, however, that payments of Base Salary so made to the
Executive shall be reduced by the sum of the amounts, if any, that were payable
to the Executive at or before the time of any such salary payment under any
disability benefit plan or plans of the Company and that were not previously
applied to reduce any payment of Base Salary.
(2) Upon his termination of employment because of
Disability (as described in
Paragraph 6(a)(1)), the Executive shall be entitled to the payments and benefits
described in Paragraph 7(a) as if the Executive had died on his Date of
Termination. In the event of the Executive's death prior to the time that all
payments described in Paragraph 7(a) have been completed, such payments and
benefits shall be paid to the Executive's beneficiary (as designated pursuant to
Paragraph 7(a)), or, in the absence of a beneficiary designation of the
designated beneficiary does not survive the Executive, to the Executive's
estate.
(3) The Executive and the Executive's family shall be
entitled to receive disability
and other welfare plan benefits (other than continued group long-term disability
coverage) generally available to executives with comparable responsibilities or
positions for a period of two (2) years from the Date of Termination at the same
cost to the Executive as is charged to such executives from time to time for
comparable coverage.
(c) Termination by Company Without Cause or Termination by
Executive for Good Reason. In the event that the Company terminates the
Executive's employment without Cause or the Executive terminates his employment
for Good Reason before the expiration of the term of this Agreement, including
any extension thereof, the Executive shall be entitled to the following
payments and benefits:
(1) Those described in Paragraph 7(a) as if the Executive had died on his Date
of Termination.
(2) Payment of an amount equal to the sum of the Base
Salary (assuming no increases)
payable to the Executive for remaining term of this Agreement assuming no
termination, plus (B) two (2) times the average of the Annual Bonuses paid or
payable to the Executive during the term of this Agreement, payable in twelve
(12) equal, consecutive monthly installments commencing no later than thirty
(30) days after the Date of Termination.
(3) All outstanding options, stock grants, share of restricted stock or any
other equity, incentive compensation shall be and become fully vested and
nonforfeitable.
(4) The Executive and the Executive's family shall be
entitled to receive welfare
plan benefits (other than continued group long-term disability coverage)
generally available to executives with comparable responsibilities or positions
for a period of the lessor of two (2) years from the Date of Termination or
until the Expiration Date of this Agreement at the same cost to the Executive as
is charged to such executives from time to time for comparable coverage.
(d) Termination by Executive Other Than for Good Reason, or
Termination by Company for Cause. In the event that the Executive terminates his
employment other than for Good Reason or the Company terminates his employment
for Cause, the Executive shall not be entitled to any compensation except as set
forth below:
(1) Any Base Salary that is accrued but unpaid, any
vacation that is accrued but
unused, and any business expenses that are unreimbursed, all as of the Date of
Termination.
(2) Any other rights and benefits (if any) provided
under plans and programs of the
Company (excluding any bonus program), determined in accordance with the
applicable terms and provisions of such plans and programs.
8. Restrictive Covenants. The Executive agrees that, during
the term of this Agreement, including an extension thereof, and for a period of
one year thereafter, he shall not, directly or indirectly:
(a) on Executive's own behalf or on behalf of any other person
or entity, solicit, contact, call upon, communicate with, or attempt to
communicate with any person or entity who was a customer of the Company at any
time within the one-year period ending on the Date of Termination or any
representative of any such customer of the Company, with the intent or purpose
of selling or providing of any product or service competitive with any product
or service sold or provided or under development by the Company during the
period of one year immediately preceding termination of Executive's employment
and which is still being offered by or is still under development by the
Company; and
(b) employ or attempt to employ or assist anyone else in
employing in any Competing Business any person who, at any time within the
period commencing one year prior to the Date of Termination and ending one year
after the Date of Termination, was, is or shall be an employee of the Company
(whether or not such employment is full-time or is pursuant to a written
contract with the Company).
9. Confidential Information. The Executive agrees that:
(a) during the term of this Agreement and, with respect to
Confidential Information, for a period of five (5) years following his Date of
Termination, or with respect to Trade Secrets, for so long as the respective
information qualifies as a trade secret under applicable law, he will receive
and hold all Company Information in trust and in strictest confidence;
(b) he will use his best effort to protect the Company
Information from disclosure and will in no event take any action causing any
Company Information to lose its character as Company Information; and
(c) except as required by Executive's duties in the course of
employment by the Company, he will not, directly or indirectly, use, publish,
disseminate or otherwise disclose any Company Information to any third party
without the prior written consent of the Company, which may be withheld in the
Company's absolute discretion.
All documents or tangible or intangible materials, including computer data,
provided to or obtained by Executive during the course of employment by the
Company which contain Company Information are the property of the
Company(collectively, the "Materials"). Executive will not remove from the
Company's premises or copy or reproduce any Materials (except as Executive's
employment by the Company shall require), and at the termination of Executive's
employment, regardless of the reason for such termination, Executive will leave
with the Company, or immediately return to the Company, all Materials or copies
or reproductions thereof in Executive's possession, power or control.
10. Acknowledgment; Remedies.
(a) Executive has carefully considered the nature and extent
of the restrictions upon him and the rights and remedies conferred to the
Company under Sections 8 and 9 of this Agreement, and hereby acknowledges and
agrees that the same are reasonable in time, necessary to protect the business,
interests and properties of the Company, are designed to eliminate competition
which would be unfair to the Company, do not stifle the inherent skill and
experience of Executive, would not operate as a bar to Executive's sole means of
support, are fully required to protect the legitimate interests of the Company
and do not confer a benefit upon the Company disproportionate to the detriment
of Executive.
(b) In the event of any violation of the provisions of
Sections 8 or 9 of this Agreement by Executive, the parties hereby recognize and
acknowledge that remedy at law will be inadequate and the Company may suffer
irreparable injury. Accordingly, Executive consents to injunctive and other
appropriate equitable relief upon the institution of proceedings therefor by the
Company in order to protect the Company's rights under such Sections. Such
relief shall be in addition to any other relief to which the Company may be
entitled at law or in equity. Covenants contained in Sections 8 or 9 hereof
shall be treated the same as a termination by the Company for Cause and shall
entitle the Company to cease the provision of any welfare plan benefits being
afforded to the Executive or his family after the termination of his employment
with the Company, cease any payments to be made to the Executive pursuant to
this Agreement in connection with such termination (other than accrued and
unpaid Base Salary and vacation) or recover from the Executive any payments made
to the Executive under this Agreement in respect of such termination (other than
accrued Base Salary and vacation). In no event shall such actions preclude the
Company from any equitable relief to which it may otherwise be entitled and such
remedies shall be cumulative.
11. Certain Further Payments by the Company.
(a) Tax Reimbursement Payment. In the event that any amount or
benefit paid or distributed to the Executive by the Company or any Affiliated
Company, whether pursuant to this Agreement or otherwise (collectively, the
"Covered Payments"), is or becomes subject to the tax (the "Excise Tax") imposed
under Section 4999 of the Code or any similar tax that may hereafter be imposed,
the Company shall pay to the Executive, at the time specified in Section 11(e)
below, the Tax Reimbursement Payment (as defined below). The Tax Reimbursement
Payment is defined as an amount, which when added to the Covered Payments and
reduced by any Excise Tax on the Covered Payments and any federal, state and
local income tax and Excise Tax on the Tax Reimbursement Payment provided for by
this Agreement (but without reduction for any federal, state or local income or
employment tax on such Covered Payments), shall be equal to the sum of (i) the
amount of the Covered Payments, and (ii) an amount equal to the product of any
deductions disallowed for federal, state or local income tax purposes because of
the inclusion of the Tax Reimbursement Payment in the Executive's adjusted gross
income and the highest applicable marginal rate of federal, state or local
income taxation, respectively, for the calendar year in which the Tax
Reimbursement Payment is to be made.
(b) Determining Excise Tax. For purposes of determining
whether any of the Covered Payments will be subject to the Excise Tax and the
amount of such Excise Tax,
(1) such Covered Payments will be treated as
"parachute payments" within the meaning
of Section 280G of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in the opinion
of the Company's independent certified public accountants, which, in the case of
Covered Payments made after the Change of Control Date, shall be the Company's
independent certified public accountants appointed prior to the Change of
Control Date, or tax counsel selected by such accountants (the "Accountants"),
such Covered Payments (in whole or in part) either do not constitute "parachute
payments" or represent reasonable compensation for services actually rendered
(within the meaning of Section 280G(b)(4) of the Code) in excess of the "base
amount", or such "parachute payments" are otherwise not subject to such Excise
Tax, and
(2) the value of any non-cash benefits or any deferred payment or benefit shall
be determined by the Accountants in accordance with the principles of Section
280G of the Code.
(c) Applicable Tax Rates and Deductions. For purposes of
determining the amount of the Tax Reimbursement Payment, the Executive shall be
deemed:
(1) to pay federal income taxes at the highest applicable marginal rate of
federal income taxation for the calendar year in which the Tax Reimbursement
Payment is to be made,
(2) to pay any applicable state and local income
taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Tax Reimbursement
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from the deduction of such state or local taxes if paid
in such year (determined without regard to limitations on deductions based upon
the amount of the Executive's adjusted gross income), and
(3) to have otherwise allowable deductions for
federal, state and local income tax
purposes at least equal to those disallowed because of the inclusion of the Tax
Reimbursement Payment in the Executive's adjusted gross income.
(d) Subsequent Events. In the event that the Excise Tax is
subsequently determined by the Accountants to be less than the amount taken into
account hereunder in calculating the Tax Reimbursement Payment made, the
Executive shall repay to the Company, at the time that the amount of such
reduction in the Excise Tax is finally determined, the portion of such prior Tax
Reimbursement Payment that has been paid to the Executive or to federal, state
or local tax authorities on the Executive's behalf and that would not have been
paid if such Excise Tax had been applied in initially calculating such Tax
Reimbursement Payment, plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in
the event any portion of the Tax Reimbursement Payment to be refunded to the
Company has been paid to any federal, state or local tax authority, repayment
thereof shall not be required until actual refund or credit of such portion has
been made to the Executive, and interest payable to the Company shall not exceed
interest received or credited to the Executive by such tax authority for the
period it held such portion. The Executive and the Company shall mutually agree
upon the course of action to be pursued (and the method of allocating the
expenses thereof) if the Executive's good faith claim for refund or credit is
denied. In the event that the Excise Tax is later determined by the Accountants
to exceed the amount taken into account hereunder at the time the Tax
Reimbursement Payment is made (including, but not limited to, by reason of any
payment the existence or amount of which cannot be determined at the time of the
Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (which Tax Reimbursement Payment
shall include any interest or penalty payable with respect to such excess) at
the time that the amount of such excess is finally determined.
(e) Date of Payment. The portion of the Tax Reimbursement
Payment attributable to a Covered Payment shall be paid to the Executive within
ten business days following the payment of the Covered Payment. If the amount of
such Tax Reimbursement Payment (or portion thereof) cannot be finally determined
on or before the date on which payment is due, the Company shall pay to the
Executive an amount estimated in good faith by the Accountants to be the minimum
amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax
Reimbursement Payment (which Tax Reimbursement Payment shall include interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than 45 calendar days after
payment of the related Covered Payment. In the event that the amount of the
estimated Tax Reimbursement Payment exceeds the amount subsequently determined
to have been due, such excess shall be repaid or refunded pursuant to the
provisions of Section 11(d) above.
12. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
Affiliated Companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any Affiliated Companies, including,
but not limited to stock option or restricted stock agreements. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company or any Affiliated Companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
13. Notice of Termination for Good Cause. In the event that the
Executive shall in good faith give a Notice of Termination for Good Reason and
it shall thereafter be determined that Good Reason did not take place, the
employment of the Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the date of giving
such purported Notice of Termination, by mutual consent of the Company and the
Executive and, except as provided in the last preceding sentence, the Executive
shall be entitled to receive only those payments and benefits which he would
have been entitled to receive at such date had he terminated his employment
voluntarily at such date under this Agreement.
14. Definitions.
(a) "Accountants" shall have the meaning set forth in Section
11(b).
(b) "Accrued Obligations" shall mean (i) the Executive's full
Base Salary through the Date of Termination, (ii) the product of the Annual
Bonus paid to the Executive for the last full fiscal year of the Company and a
fraction, the numerator of which is the number of days in the current fiscal
year of the Company through the Date of Termination, and the denominator of
which is 365, (iii) any compensation previously deferred by the Executive
(together with any accrued earnings thereon) and not yet paid by the Company and
any accrued vacation pay for the current year not yet paid by the Company, (iv)
any amounts or benefits owing to the Executive or to the Executive's
beneficiaries under the then applicable employee benefit plans or policies of
the Company and (v) any amounts owing to the Executive for reimbursement of
expenses properly incurred by the Executive prior to the Date of Termination and
which are reimbursable in accordance with the reimbursement policy of the
Company described in Section 5(a).
(c) "Affiliated Company" shall mean any company controlling,
controlled by or under common control with the Company.
(d) "Annual Bonus" shall have the meaning set forth in Section
4.
(e) "Base Salary" shall have the meaning set forth in Section
3.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Cause" shall mean either:
(1) any act that constitutes, on the part of the Executive, (A) fraud,
dishonesty, or a felony and (B) that directly results in material injury to the
Company;
(2) Executive's conduct as the Senior Vice President of the Company is grossly
inappropriate and demonstrably likely to lead to material injury to the Company;
or
(3) the Executive otherwise materially breaches this
Agreement; provided, however,
that in the case of Clause (2) or (3) above, such conduct shall not constitute
Cause unless the Board shall have delivered to the Executive notice setting
forth with specificity (A) the conduct deemed to qualify as Cause, (B)
reasonable action that would remedy such objection, and (C) a reasonable time
(not less than thirty (30) days) within which the Executive may take such
remedial action, and the Executive shall not have taken such specified remedial
action within such specified reasonable time.
(h) A "Change of Control" means:
(1) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of voting securities of the
corporation where such acquisition causes such person to own thirty-five percent
(35%) or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this Subsection (A), the following acquisitions shall not be
deemed to result in a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction that complies with clauses (i), (ii) and
(iii) of Subsection (3) below; and provided further, that if any Person's
beneficial ownership of the Outstanding Company Voting Securities reaches or
exceeds thirty-five percent (35%) as a result of a transaction described in
clause (i) or (ii) above, and such Person subsequently acquires beneficial
ownership of additional voting securities of the Company, such subsequent
acquisition shall be treated as an acquisition that causes such Person to own
thirty-five percent (35%) or more of the Outstanding Company Voting Securities;
or
(2) individuals who as of the date hereof, constitute
the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(3) the approval by the shareholders of the Company
of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company ("Business Combination") or, if consummation of such
Business Combination is subject, at the time of such approval by shareholders,
to the consent of any government or governmental agency, the obtaining of such
consent (either explicitly or implicitly by consummation); excluding, however,
such a Business Combination pursuant to which (i) all or substantially all of
the individuals and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Voting Securities, (ii) no Person
(excluding any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, thirty-five percent (35%) or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(4) approval by the shareholders of the Company of a
complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred for purposes of this Agreement by reason of any actions or events in
which the Executive participates in a capacity other than in his capacity as
executive (or as a director of the Company or a Subsidiary, where applicable).
(i) "Change of Control Date" shall mean the date on which a
Change of Control shall be deemed to have occurred.
(j) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(k) "Company Information" means Confidential Information and
Trade Secrets.
(l) "Competing Business" means any business engaging in the
exploitation or development of antimicrobial products.
(m) "Confidential Information" means confidential data and
confidential information relating to the business of the Company (which does not
rise to the status of a trade secret under
applicable law) which is or has been disclosed to Executive or of which
Executive became aware as a consequence of or through his employment with the
Company and which has value to the Company and is not generally known to its
competitors and which is designated by the Company as confidential. Confidential
Information shall not include any data or information that (i) has been
voluntarily disclosed to the general public by the Company, (ii) has been
independently developed and disclosed to the general public by others, or (iii)
otherwise enters the public domain through lawful means.
(n) "Date of Termination" shall have the meaning set forth in
Section 6(d).
(o) "Disability" shall mean disability which would entitle the
Executive to receive full long-term disability benefits under the Company's
long-term disability plan on terms substantially similar to those of the
long-term disability plan as in effect on the date of this Agreement.
(p) "Excise Tax" shall have the meaning as set forth in
Section 11(a).
(q) "Good Reason" shall mean the occurrence of one of the
following events (provided the Company does not cure such event on a retroactive
basis to the extent possible within thirty days following its receipt of the
Executive's Notice of Termination):
(1) The Executive's title is changed in a materially
adverse manner.
(2) The Executive's base salary is reduced for any
reason other than in connection
with the termination of his employment.
(3) For any reason other than in connection with the
termination of the Executive's
employment, the Company materially reduces any fringe benefit provided to the
Executive under Section 5 below the level of such fringe benefit provided
generally other actively employed similarly situated executives of the Company.
Notwithstanding the foregoing, if the Company agrees to fully compensate the
Executive for any such material reduction for a period ending on the earlier to
occur of (i) the date such fringe benefit is no longer provided to other
actively employed similarly situated executives of the Company or (ii) four (4)
years, then such event shall not constitute Good Reason.
(4) A change of over fifty (50) miles in the Executive's principal place of
employment in Atlanta, Georgia.
(5) The Company otherwise materially breaches, or is
unable to perform its
obligations under this Agreement.
(6) The occurrence of a Change of Control.
Notwithstanding the foregoing, the occurrence of one of the event in Paragraphs
(1) through (6) hereof shall not be considered Good Reason for the Executive's
termination, unless the Executive delivers a Notice of Termination pursuant to
Paragraphs 6(c) and 6(d)(3) hereof, within one hundred eighty (180) days after
the Executive has actual notice of the occurrence of any of the events listed in
Paragraphs (1) through (6) hereof.
(r) "Interest Rate" shall mean the interest rate payable on
one year Treasury Bills in effect on the day that is 30 business days (days
other than Saturday, Sunday or legal holidays in the City of New York) prior to
the Date of Termination.
(s) "Notice of Termination" shall have the meaning as set
forth in Section 6(c).
(t) "Subsidiary" shall mean any majority owned subsidiary of
the Company.
(u) "Tax Reimbursement Payment" shall have the meaning set
forth in Section 11(a).
(v) "Trade Secrets" means information of the Company, without
regard to form, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, product or service plans
or lists of actual or potential customers or suppliers which is not commonly
known by or available to the public and which information (1) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use; and (2) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
15. Assignment and Survivorship of Benefits. The rights and obligations
of the Company under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Company. If the Company shall at
any time be merged or consolidated into, or with, any other company, or if
substantially all of the assets of the Company are transferred to another
company, then the provisions of this Agreement shall be binding upon and inure
to the benefit of the company resulting from such merger or consolidation or to
which such assets have been transferred, and this provision shall apply in the
event of any subsequent merger, consolidation, or transfer.
16. Notices. Any notice given to either party to this Agreement shall
be in writing, and shall be deemed to have been given when delivered personally
or sent by certified mail, postage prepaid, return receipt requested, duly
addressed to the party concerned, at the address indicated below or to such
changed address as such party may subsequently give notice of:
If to the Company: BioShield Technologies, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxxxx
Xxxxx X000
Xxxxxxxx, Xxxxxxx 00000
Attn: Board of Directors
with a copy to: Xxxx Xxxx Xxxxx & Xxxxx LLP
000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxx 000
1000 Xxxxxxxxx Road, N.E.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
If to the Executive: Xxxxxxx Xxxxxxx
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
17. Indemnification. The Executive shall be indemnified by the Company,
to the extent provided in the case of officers under the Company's Articles of
Incorporation or Bylaws, to the maximum extent permitted under applicable law.
18. Taxes. Anything in this Agreement to the contrary notwithstanding,
all payments required to be made hereunder by the Company to the Executive shall
be subject to withholding of such amounts relating to taxes as the Company may
reasonably determine that it should withhold pursuant to any applicable law or
regulations. In lieu of withholding such amounts, in whole or in part, however,
the Company may, in its sole discretion, accept other provision for payment of
taxes, provided that is satisfied that all requirements of the law affecting its
responsibilities to withhold such taxes have been satisfied.
19. Enforcement of Rights. All legal and other fees and expenses,
including, without limitation, any arbitration expenses, incurred by the
Executive in connection with seeking to obtain or enforce any right or benefit
provided for in this Agreement, or in otherwise pursuing any right or claim,
shall be paid by the Company, to the extent permitted by law, provided that the
Executive is successful in whole or in part as to such claims as the result of
litigation, arbitration, or settlement. In the event that the Company refuses or
otherwise fails to make a payment when due and it is ultimately decided that the
Executive is entitled to such payment, such payment shall increased to reflect
an interest equivalent for the period of delay, compounded annually, equal to
four (4) percentage points over the Interest Rate in effect as of the date the
payment was first due.
20. Governing Law/Captions/Severance. This Agreement shall be construed
in accordance with, and pursuant to, the laws of the State of Georgia. The
captions of this Agreement shall not be part of the provisions hereof, and shall
have no force or effect. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. Except as otherwise specifically provided in this
paragraph, the failure of either party to insist in any instance on the strict
performance of any provision of this Agreement or to exercise any right
hereunder shall not constitute a waiver of such provision or right in any other
instance. The parties hereto consent to the jurisdiction of the state and
federal courts of the State of Georgia located in Xxxxxx County, Georgia, with
respect to any action arising or relating to this Agreement and said courts of
the State of Georgia shall have sole and exclusive jurisdiction with respect to
any such action or related action.
21. Entire Agreement/Amendment. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and the parties
have made no agreement, representations, or warranties relating to the subject
matter of this Agreement that are not set forth herein. This Agreement may be
amended at any time by written agreement of both parties, but it shall not be
amended by oral agreement.
IN WITNESSETH WHEREOF, the parties have executed this Agreement on the
date first above written.
BIOSHIELD TECHNOLOGIES, INC. EXECUTIVE:
By: By: Xxxxxxx Xxxxxxx
