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EMPLOYMENT AGREEMENT
AGREEMENT dated May 19, 1997(the "Effective Date"), by and between
VIRAGEN, INC., a Delaware Corporation ("Employer" or the "Company"), and XXXXXX
X. XXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ 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 of the day immediately preceding the first
anniversary of the Effective Date (the "Employment Term"). 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.
3. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free
to accept full-time 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. Employee represents
and warrants that he is not in breach of any existing confidentiality or
covenant not to complete agreements, if any, the Employee may have executed with
other third parties prior to the Effective Date.
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4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as a Vice President and Officer of
the Company, and as such, shall, subject to the direction of the Company's
President, perform such duties and responsibilities as may be assigned to
Employee from time to time by the Company's President and/or Executive
Committee.
Employee agrees to devote sufficient time, skill, attention and energy
diligently and competently to perform the duties and responsibilities assigned
to him hereunder or pursuant hereto. 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. Employee agrees
not to enter into any other employment agreement with any third party during the
term hereof.
5. COMPENSATION
Employee shall receive a salary of $140,000 during the first
full year of the Employment Term and $151,200 during the second full year of the
Employment Term, payable in accordance with the Company's normal payroll
process, currently bi-weekly. Employee is also entitled to receive fringe
benefits that shall be made available to Employee described in this Agreement.
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 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. Other Expenses. Employer shall reimburse Employee for his
reasonable out-of-pocket costs and expenses, approved by the Company's President
in advance, incurred in connection with the performance of his duties and
responsibilities hereunder. Reimbursement of such expenses shall be subject to
the submission by Employee of appropriate invoices, receipts and other
supporting documentation, consistent with Employer's customary reimbursement
policies and procedures.
C. AUTOMOBILE ALLOWANCE. Employer shall pay directly to
Employee a monthly automobile allowance of $400. Employer shall also pay for the
monthly expenses associated with parking the Employee's car in Manhattan.
Employee shall submit such parking expenses to Employer who shall pay them
directly to the owner or lessor of the parking facility as the case may be.
7. VACATIONS
Employee shall be entitled to normal vacation taken by other
similar employees during the Employment Term. Employee shall not be entitled to
be compensated for any unused
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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 and shall be subject to the approval of the
Executive Committee of the Company (which shall not be unreasonably withheld).
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. Employer agrees to also provide Employee
at Employer's expense during the Employment Term a suitable office in Manhattan
and a secretary should Employee determine one is necessary to carry out
Employee's job function.
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 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 include, but not limited to: (a) conviction for fraud or criminal
conduct (other than conviction of, or a plea of guilty to, a non-DUI related
traffic violation) (b) habitual drunkenness or drug addiction; (c) embezzlement;
(d) 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; (e) material breach or default by Employee of any
of the terms or conditions of this Agreement; 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).
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
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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 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 President 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 during Employee's employment or for
a period of five (5) years after employees termination 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. Confidential
Information does not include information which (i) becomes or has generally been
available to the public other than as a result of disclosure by Employee which
was not so authorized by the Employer, (ii) was available to Employee on a
non-confidential basis from a source other than the Employer, or (iii) becomes
available to Employee on a non-confidential basis from a source other than the
Employer, provided, however, that such source is not bound by a confidentiality
agreement with the Employer.
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
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
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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,
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, director, officer, employee, agent, consultant, partner or
otherwise in, any biopharmaceutical product competitive with products developed
or being developed by Employer or its affiliates during Employee's term of
employment including, but not limited to, natural human leukocyte-derived
interferon alpha and any derivative product therefrom. 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 AND 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee's covenants or agreements provided for in Sections 10
and 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.
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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 good will of Employer and its
affiliates.
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).
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14. STOCK OPTIONS
Effective the Effective Date, Employer hereby grants to
Employee options to acquire up to 300,000 shares of Viragen, Inc. $.01 par value
Common Stock (the "Options"), subject to and upon the following terms and
conditions:
(a) The Options shall be exercisable by Employee (i) with
respect to up to 150,000 shares of Common Stock, during the period commencing
the first Anniversary of the Effective Date and shall end as of the close of
business on the day immediately preceding the end of the 60th month following
the Effective Date (the "First Exercise Period"), and (ii) with respect to up to
150,000 shares of Common Stock, during the period commencing on the second
anniversary of the Effective Date, and shall end as of the close of business on
the day immediately preceding the end of the 60th month following the Effective
Date (the "Second Exercise Period"). The commencement of the First Exercise
Period shall be permanently accelerated upon the date which the average market
price of Common Stock for the 90 previous days has averaged 75% or more above
the Exercise Price. The commencement of the Second Exercise Period shall be
permanently accelerated upon the date which the average price of Common Stock
for the 90 previous days has averaged 150% or more above the Exercise Price. In
no event shall the commencement of the First or Second Exercise Period be
delayed from the dates stated in the first sentence of this paragraph.
The exercise price with respect to the Options shall be the
lower of the market close price of the Common Stock as of the Effective Date or
the date this Agreement has been duly executed (the "Exercise Price").
(b) In the event Employee's employment is terminated with
Cause, all unexercised Options, and all Options which have been exercised but
which exercise has not been consummated by tender of payment for the purchase of
Common Stock, shall automatically terminate on the date of Termination.
(c) In the event Employee dies or becomes Disabled, Employee
or his personal representative shall have a period of twelve (12) months
following the date of Employee's death or the last day of the Disability period
(as the case may be) to exercise all Options which were exercisable on the date
of Employee's death or that he became Disabled (as the case may be).
(d) Employee may exercise the Options by delivering written
notice of exercise to Employer during the First or Second Exercise Period
("Exercise Notice") as the case may be. Such Options may be exercised, in whole
or in part, as specified in the Exercise Notice.
(e) In the event that Employee exercises Options during the
First Exercise Period, the purchase price for the Common Stock to be purchased
by Employee shall be by cashiers check payable to the Employer the amount equal
to the number of shares of Common Stock with respect to which Employee has
exercised the Options, multiplied by the Exercise Price (the "First Option
Purchase Price"). In the event that Employee exercises Options
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during the Second Exercise Period, the purchase price for the Common Stock to be
purchased by Employee shall be by cashiers check payable to the Employer the
amount equal to the number of shares of Common Stock (up to ______) with respect
to which Employee has exercised the Options, multiplied by the Exercise Price
(the "Second Option Purchase Price").
(f) The closing of the purchase of shares of Common Stock
pursuant to the exercise of Options during the First Exercise Period or the
Second Exercise Period (as the case may be, an "Option Closing"), shall occur on
or before the tenth (10th) business day following the date the applicable
exercised Notice was given. At the Option Closing (or at each Option Closing, if
more than one), Employer shall issue to Employee a stock certificate evidencing
the First Option Purchased Stock or the Second Option Purchased Stock, as the
case may be.
(g) At Employee's request, subject to the provisions of any
applicable securities laws, Employee may designate his spouse, children,
siblings, nieces or nephews or a trust for their benefit of which Employee is
sole trustee to own and hold record or beneficial title to all or portions of
the First Option Purchased Stock and Second Option Purchased Stock.
(h) The Options granted hereunder are personal to Employee,
and, except as permitted by subsection (g) above, may not be sold, assigned,
devised, transferred, pledged, hypothecated or in any way disposed of, by
operation of law or otherwise, at any time. Any purported sale, assignment,
devise, transfer, pledge, hypothecation or disposition shall be utterly void and
of no force or effect.
15. EMPLOYEE'S DISCLOSURES AND REPRESENTATIONS
AND WARRANTIES.
Employee hereby acknowledges, represents and warrants to,
and/or agrees with, Employer as follows:
(a) That Employee and his representatives and agents (i) have
received and read and are familiar with this Agreement, and (ii) are familiar
with the business and operations conducted and to be conducted by Employer and
the risks attendant thereto.
(b) That Employee and/or his representatives and agents have
had an opportunity to ask questions of and receive satisfactory answers from
Employer and/or a person or persons authorized to act on Employer's behalf
concerning the terms and conditions of this Agreement, this transaction and
Employer and its currently contemplated business and operations.
(c) That Employee has been represented by such legal and other
professional advisors (if any), each of whom has been personally selected by
Employee, as Employee has found necessary to consult concerning the transactions
contemplated in or by this Agreement.
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(d) That Employee has full right, power and authority to
perform all obligations under this Agreement.
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 inaccuracy in, or breach of, any
representation, warranty or covenant of Employee contained in this Section 15.
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.
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, except as provided for in Section 14(g) herein.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supersedes any and all prior agreements between
the parties hereto both oral and written concerning, the subject matter hereof
and may not be amended, modified or terminated except by a writing signed by the
parties hereto.
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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 thereof, including
reasonable attorneys' and paralegals' fees and costs incurred before and at
trial and at all tribunal levels.
24. CONSULTING
Employee may act as a consultant to the senior management or
Board of up to two companies so long as it shall not interfere or materially
detract with from Employee's duties to the Employer. Employee must submit the
nature of any such consulting arrangement to Employer in advance for Employer's
approval, such approval not to be unreasonably withheld.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on
the day and year first above written.
VIRAGEN, INC.
By: /s/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
Executive Vice President
EMPLOYEE
By: /s/ XXXXXX X. XXXX
Xxxxxx X. Xxxx
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