EMPLOYMENT AGREEMENT
EXHIBIT
10.31
THIS
AGREEMENT is
effective as of the 1st
day of
April, 2002 by and between GENEREX
BIOTECHNOLOGY CORPORATION
(the
“Company”), a Delaware corporation and XXXXXX
XXXXXXXXX, M.D.
("Executive"), an individual residing at 00 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx
00000.
WITNESSETH:
WHEREAS,
the Company is engaged, directly and through subsidiary corporations (all of
which, for the purposes of this Agreement, are included and encompassed by
any
reference in this Agreement to the Company) in the research, development,
testing and commercialization of drug delivery technologies, including drug
technologies for oral administration of pharmaceuticals such as peptidic drugs,
vaccines and hormones using a buccal spray device (collectively, the
“Technology”); and
WHEREAS,
the Company wishes to engage the Executive to provide certain services, as
more
particularly described below, and the Executive agrees to provide such services,
all on the terms and conditions set forth herein.
NOW
THEREFORE, in consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as
follows:
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1.
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Employment
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1.1
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The
Company agrees to employ the Executive and the Executive agrees to
serve
the Company pursuant to the terms of this Agreement as Vice President
of
Medical Affairs of the Company (hereinafter the "Employment"), reporting
to Xxxx X. Xxxxxxx, President of the
Company.
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1.2
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The
term of this Agreement shall be for the period commencing on the
date
hereof and expiring three years thereafter, subject to earlier termination
in accordance with the provisions of Section 5 of this
Agreement.
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1.3
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The
Executive hereby warrants and undertakes to the Company (in the knowledge
that the Company is relying on such undertaking by agreeing to enter
into
this Agreement) that:
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| 1.3.1 |
by
entering into this Agreement and performing his obligations hereunder,
he
is not and will not be in breach of any other contract of employment
or
other agreement (whether still in effect or not) and neither he nor
the
Company will be liable to any action relating to any such contract;
and
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1.3.2
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he
is not or will not on commencement of this Agreement and thereafter
be
subject to any restriction or obligation, howsoever arising, which
may
hinder or restrict him from performing fully any of the duties required
under the terms of this Agreement.
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1.4
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The
Company hereby warrants and undertakes to the Executive (in the knowledge
that the Executive is relying on such undertaking by agreeing to
enter
into this Agreement) that during the Employment the Executive shall
be
primarily based in the State of New York, unless the Executive otherwise
agrees with the Company, and that the Executive shall be insured
from
liability arising from his status, actions or omissions as an officer
of
the Company to the extent of the coverage provided by the Company’s
directors’ and officers’ liability insurance policy as in effect from time
to time and subject to the limitations and exclusions set forth in
such
policy. Notwithstanding anything to the contrary herein, the Company,
without limiting the rights of Executive to compensation and benefits
hereunder, shall have the right at any time to assign this Agreement
and
the Executive’s Employment hereunder to any business entity which is
controlling, controlled by or under common control with the Company
(“Affiliates”). In the event of such assignments, (i) any amounts paid to
or for the benefit of Executive by the Affiliate shall be credited
against
amounts payable to Executive by the Company under this Agreement,
and (ii)
references to the “Company” in Sections 2, 5 and 6 of this Agreement shall
be deemed to include, in addition to the Company, any Affiliate to
which
this Agreement shall have been
assigned.
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2.
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Duties
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The
Executive covenants and agrees that during the Employment he will:
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2.1
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faithfully
and diligently perform the duties of Vice President of Medical Affairs
as
may be assigned to or vested in him from time to time by the Company
and
which shall be consistent with the responsibilities generally entrusted
to
senior management of a corporation in the same business as that of
the
Company, and will use his best efforts to promote the interests of
the
Company and its shareholders;
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2.2
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comply
with all laws, rules and regulations applicable to the Company's
business
and in accordance with all applicable policies or guidelines (including
any applicable policies or guidelines pertaining to disclosure of
conflicts of interest) of any institution or organization with which
the
Executive is affiliated;
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2.3
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give
to the President and/or the Board of Directors such information regarding
the affairs of the Company as they may
request;
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2.4
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agree
to comply with all laws and regulations under the U.S. federal securities
laws and regulations against misuse or miscommunication of material
non-public information about the Company and acknowledge that he
is aware
of these prohibitions;
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2.5
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devote
the whole of his business time, attention and skills to the business
and
affairs of the Company and will not, except with the prior consent
by the
President and/or the Board of Directors, be directly or indirectly
engaged
or concerned in the conduct of any other business, whether or not
competing in any respect with the business of the Company; provided,
however, that the Executive (a) may continue to serve during the
term of
this Agreement as a director or trustee of the American Diabetes
Association or of any affiliated foundation thereof, (b) may serve
during
the term of this Agreement, subject to the prior consent of the President
and/or the Board of Directors (which may be withheld for any reason
or no
reason), as a director or trustee of any other organization, (c)
may
maintain or establish during the term of this Agreement an affiliation
with any medical institution or educational institution (including,
without limitation, as an adjunct or emeritus faculty member or as
a
physician with admitting privileges), provided that such affiliation
does
not detract in any material way from the available time and the ability
of
the Executive to fulfill his obligations under this Agreement, and
(d) may
continue to serve as a consultant in connection with a legal proceeding
for which he was engaged as a medical expert prior to the effective
date
of this Agreement until the resolution or conclusion of such proceeding,
provided that such activity does not detract in any material way
from the
available time and the ability of the Executive to fulfill his obligations
under this Agreement.
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3.
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Compensation
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3.1
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During
the Employment the Company will pay to the Executive, a base salary
at the
annual rate of $150,000 (or such higher rate
as
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may
from
time to time be determined by the Company and notified to the Executive), which
salary will be payable in equal monthly installments (less customary
withholdings) in arrears.
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3.2
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In
addition to payments provided in Paragraph 3.1, the Company shall
pay to
the Executive advances, bonuses, options and other compensation in
such
amounts and on such terms as are described in Exhibit A
hereto.
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3.3
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The
Company will be entitled at any time during the Employment, and in
all
events on termination howsoever arising, to deduct from the Executive's
compensation under this Agreement or from any other sums owed by
the
Company to the Executive any monies due from him to the Company,
including, but not limited to, any outstanding loans or advances
taken
(including advances pursuant to Exhibit
A).
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4.
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Benefits.
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4.1
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During
the Employment, the Executive will be
entitled:
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4.1.1
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to
paid vacation during each year to be accrued and taken in accordance
with
the Company's vacation policy as set forth in the Company's Employee
Manual;
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| 4.1.2 |
to
payment of or reimbursement for health insurance premiums to continue
(i)
Executive’s health insurance in the form of his Medicare Supplement (at an
annual cost at the present time of approximately $4,100.00) and (ii)
his
wife’s individual health insurance policy (at an annual cost at the
present time of approximately $6,900.00);
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| 4.1.3 |
to
reimbursement for the cost of Executive’s professional expenses (e.g.
journals, professional societies) in the amount of no more than $4,000
annually; and
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4.1.4
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for
the Company to bear the costs of any reasonable and necessary costs
for
travel and lodging incurred by the Executive at the request of the
Company. To the extent practicable, the Executive will make travel
and
lodging arrangements through the Company or agents designated by
the
Company. To the extent practicable, the Company shall bear such expenses
for its own account. If it is not feasible for the Company to bear
an
expense directly for its own account, the Executive will submit expenses
borne by the Executive for reimbursement of expenses. The
Executive
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shall
provide receipts in support of any request hereunder for reimbursement of
expenses. Individual expenses in excess of $200 must be arranged through the
Company or agents of the Company and approved in advance by the Company in
order
to be eligible for reimbursement. Notwithstanding anything to the contrary
set
forth herein, the Executive will not be entitled to reimbursement for expenses
incurred by the Executive (regardless of the dollar amount) that could
reasonably have been arranged through the Company or agents of the Company
and
were not.
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Termination
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| 5.1 |
Either
party may terminate its obligations under this Agreement (except
for the
payment of sums having become due) in its or his absolute discretion,
upon
written notice to the other party of not less than ninety (90)
days.
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5.2
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The
Company may terminate its obligations hereunder for cause (effective
immediately upon the giving of notice to the Executive except as
set forth
in Section 5.2.5) if the Executive shall
have:
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5.2.1
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become
disqualified or prohibited by law, rule or regulation from carrying
out
the material duties or functions he is employed under this Agreement
to
carry out; or
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5.2.2
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been
convicted of any felony or other crime which has the effect of bringing
the Company into disrepute; or
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5.2.3
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committed
any act of misconduct in the course of the Employment which had the
effect
of bringing the Company into disrepute or which caused material harm
to
the Company; or
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5.2.4
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made
any material misrepresentation in connection with his securing the
Employment; or
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5.2.5
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failed
to carry out any of the material duties provided in this Agreement
to be
performed by him after having received notice of such non-performance
from
the Board of Directors of the Company and after having had a reasonable
opportunity, not to exceed 30 days, to cure the non-performance specified
in such notice.
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| 5.3 |
The
Company may terminate its obligations hereunder for other than cause
(effective immediately upon the giving of written notice to the Executive)
if the Executive shall have:
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5.3.1
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been
unable to perform his regular duties for the Company by reason of
a
disability for more than 9 months in any 12 month period;
or
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5.3.2
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in
the event of Executive's death.
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5.4
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The
Executive may terminate his obligations under this Agreement upon
written
notice in the event of a material breach or default by the Company
of any
of its material obligations hereunder, provided that in respect to
termination of this Agreement by the Executive pursuant
hereto:
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5.4.1
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notice
of termination given by the Executive hereunder shall not be effective
unless the Executive first shall have given written notice to the
Company
specifying any breach or default by the Company and such breach or
default
shall not have been cured within 14 days after the receipt of such
notice;
and
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5.4.2
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not
later than 14 days following the date of notice given by the Executive
hereunder, the Company shall pay to Executive an amount equal to
the sum
of (i) the lesser of (x) $150,000 or (y) the aggregate amounts payable
to
Executive by way of base salary under Paragraph 3.1 from the date
of such
notice to the date on which this Agreement would have expired in
accordance with its terms, plus (ii) all amounts earned or credited
to the
account of the Executive to the date of such notice under any bonus
or
other incentive or deferred compensation plan maintained by the Company
but which were not paid to the Executive by reason of the delay or
deferral provisions of such plan; payment of the amounts described
in this
subparagraph 5.4.2 shall be the Executive's exclusive right and remedy
for
breach of this Agreement and Executive shall not be entitled to any
other
damage or remedies for breach of this Agreement including equitable
relief
or special, incidental or consequential
damages.
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5.5
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In
the event of a termination by the Executive (except a termination
pursuant
to Section 5.4) or by the Company pursuant to Sections 5.2 or 5.3,
the
Executive shall receive only that portion of the Executive's salary
due
and owing as of his last day
worked,
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less
any
applicable set-off pursuant to Section 3.3. The Executive shall not be entitled
to any bonus or incentive compensation.
If
the
Company gives notice of termination of the Executive's employment pursuant
to
Section 5.1 (not under circumstances under which the Company could terminate
its
obligations for cause pursuant to Section 5.2 or to Section 5.3), the Executive
shall be entitled to severance payments in the form of base salary continuation
for the lesser of twelve months or the remainder of the term of this Agreement
(which severance payments shall not include any bonus or incentive compensation
other than amounts earned or credited to the account of the Executive to the
date of such notice under any bonus or other incentive or deferred compensation
plan maintained by the Company but which were not paid to the Executive by
reason of the delay or deferral provisions of such plan).
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5.6
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Upon
the Executive's ceasing to be an employee of the Company for any
reason,
the Executive will:
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5.6.1
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on
or before the date upon which the Executive ceases to perform services
as
an employee of the Company ("Termination Date"), deliver up to the
Company
or its authorized representative all property, including (without
limitation) all documents, copies of documents, records, keys,
correspondence, discs, tapes, credit cards or other items in his
possession which are the property of the Company or which were made
by
Executive from media which were the property of the
Company;
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5.6.2
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not
at any time wrongfully represent himself as being employed by or
connected
with the Company; and
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5.6.3
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make
himself reasonably available to the Company and its counsel, without
cost
to the Executive, to provide information and testimony in connection
with
any litigation involving activities of the Executive while he was
employed
by the Company.
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| 6. |
Covenants
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6.1
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The
Executive acknowledges that the Company has developed and/or possesses,
and will continue to develop and/or possess, valuable business and
scientific and technical information, including scientific, technical,
medical, financial and other data; test formulations; research and
development projects; devices,
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methods,
systems, solutions, processes and applications relating to the preparation,
administration or delivery of formulations; and other know-how and trade secrets
that are proprietary or are otherwise or a confidential nature (collectively,
“Confidential Information”). The obligations set forth in this Section 6 with
regard to Confidential Information shall not apply to information which is
generally known to the public or in the future becomes generally known to the
public other than through a direct or indirect breach of this Section 6 by
the
Executive.
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6.2
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The
Executive agrees that all information, work product, data, equipment,
methods, systems, expertise, know-how, solutions, processes, applications,
inventions, discoveries, developments, concepts and ideas provided
to or
developed by the Executive in the course of his employment hereunder
which
relate to the Technology or which are based in whole or part on
Confidential Developments (collectively, “Developments”), as well as
embodiments and representations thereof (such as, for example, manuals,
reports, schematics, drawings, blueprints, software, tapes and disks,
workpapers, narratives, programming and manufacturing materials and
visual
aids)(collectively, “Materials”), whether or not patentable or protectable
and whether or not conceived, developed or reduced to practice by
Executive alone or in conjunction with others, or both, are exclusive
property of the Company.
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6.3
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Consultant
agrees (i) not to disclose (other than within the Company or to authorized
representatives of the Company), utilize or exploit any Confidential
Information, Developments or Materials without the prior consent
of the
Company, (ii) to take reasonable precautions against unauthorized
disclosure of Confidential Information, Developments or Materials;
(iii)
to advise the Company of any Developments and will make prompt full
written disclosure of same to the Company, (iv) at the request of
the
Company, to acknowledge in writing the Company’s full right, title and
interest in and to all Developments and Materials and to assign worldwide
rights in the same to the Company, and (v) at the Company’s cost and
expense, to execute all and any applications for patents, trademarks,
copyrights or other commercial protection and to do such other acts
(including the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable
at any
time or times in order to effect the full ownership and enjoyment
of the
Company of all Developments and
Materials.
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6.4
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At
the termination of this Agreement, Executive will promptly return
to the
Company all Materials and all other writings and other tangible
embodiments reflecting or containing Confidential Information or
Developments.
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6.5
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The
Executive undertakes that except as set forth at the end of this
Section
6.5, for a period of twelve months immediately following the Termination
Date or if the Agreement has not yet expired, the period between
the
Termination Date and the expiration of the then remaining term of
the
Agreement, whichever is longer, he will
not
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6.5.1
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induce
or procure or attempt to induce or procure any person who on the
Termination Date is an employee or consultant of or under contract
of
services to the Company to terminate such relationship, whether or
not
such person would commit any breach of his or her employment or
appointment by reason of leaving the service of the
Company;
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6.5.2
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accept
into employment or otherwise engage or use the services of any person
who
is on the Termination Date an employee or consultant of the Company;
or
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6.5.3
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compete
with the Company, anywhere in Canada or the United States or in any
other
jurisdiction where the Company, during Executive's employment or
at the
time of his termination from employment engages in operations, either
alone or together with another or others, for his own account or
for the
account of any entity, as an employee, partner, stockholder or other
investor (other than as a stockholder or investor in an entity whose
equity securities are publicly traded and in which he, together with
other
former employees of the Company, own less than two percent of the
outstanding capital stock or other equity interests), agent or contractor
of any other person (except for employment as an employee, and not
as a
consultant or independent contractor, by a single governmental entity).
The term "compete with the Company” means to be involved or engaged in the
development of non-injection methods of administering insulin (or
any
variants, analogs or mimetics thereof) or to be employed by or engaged
as
an advisor, consultant or director by any entity or person involved
or
engaged in such development.
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6.6
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Each
of the restrictions contained in this Paragraph 6 is considered by
the
parties to be reasonable in all the circumstances. However if any
one or
more of such restrictions shall be determined to be invalid by reason
of
breadth or duration, but would be valid and enforceable if any particular
restriction or restrictions were modified, the offending restriction
shall
be deemed to be reduced to a scope or period which is valid, and
as so
reduced shall be binding and enforceable against the
Executive.
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6.7
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Executive
agrees that (i) upon his breach, threatened breach, or violation
of any of
his obligations set forth in this Section 6, the Company shall be
entitled
as a matter of right to obtain relief in any court of competent
jurisdiction enjoining such breach, or violation, in addition to
all other
remedies provided to the Company at law, in equity or under this
Agreement; and his obligations under this Section 6 shall survive
the
expiration or earlier termination of this
Agreement.
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6.8
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Notwithstanding
anything to the contrary elsewhere in this Agreement, all rights,
obligations and waivers under Paragraphs 6 and 7 will continue in
force in
accordance with their terms after termination of the Employment for
any
reason and will be binding upon the Executive's personal
representative(s), receiver or trustee (as the case may be), except
in the
case of a termination of this Agreement by the Executive pursuant
to the
terms of Paragraph 5.4.
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7.
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Miscellaneous
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7.1
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This
Agreement sets out the entire terms and conditions of Employment
and
supersedes all prior agreements between Executive and the Company
relating
to the Executive's employment, consultancy with the Company or otherwise,
and any variation or amendment of this Agreement shall be valid only
if
expressed in writing and signed on behalf of both the Executive and
the
Company.
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7.2
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To
be effective all notices, consents, approvals and requests relating
to
this Agreement must be in writing and may be delivered in person
or sent
by certified mail, return receipt requested, or facsimile transmission
to
the party to be served.
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7.3
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This
Agreement will be governed by and interpreted in accordance with
the laws
of the State of Delaware.
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| 7.4 |
This
Agreement is binding only upon the parties hereto, and may-not be
assigned
or transferred by either party, with the sole exception that the
Company
may assign its interests in this Agreement (i) pursuant to Paragraph
1.4,
above or (ii) to its secured lender for the purpose of obtaining
financing
and, in the event of such assignment, the secured lender may assign
its
interest in this Agreement to a buyer of the business of the
Company.
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IN
WITNESS WHEREOF,
the
parties hereto, intending to be legally bound, have executed this Agreement
on
the date first above written.
GENEREX
BIOTECHNOLOGY CORPORATION
By:
/s/
Xxxx
X. Xxxxxxx
Xxxx
X.
Xxxxxxx, President
/s/
Xxxxxx Xxxxxxxxx, M.D.
XXXXXX
XXXXXXXXX, M.D.
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EXHIBIT
A
Description
of Compensation
In
addition to the compensation described in Section 3 of this Agreement, the
Company will provide Executive with the following:
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Discretionary
cash bonuses in amounts, if any, to be determined for each fiscal
year
(from August 1 through July 31 of each year) by the Company’s Board of
Directors within four months after the end of each such fiscal
year.
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Cash
bonuses, if any, for any partial fiscal year will be prorated, except
that
for the fiscal year ended July 31, 2002, the Company will provide
the
Executive with service credit for the months of April, May, June
and July
and two additional months in recognition of his service at forty
percent
(40%) of full time as a consultant to the Company during the prior
six
months (i.e. for the year ended July 31, 2002, the Executive will
be
entitled to fifty percent (50%) of the full cash bonus rate, if any,
set
by the Company’s Board of
Directors).
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Advances
against potential cash bonuses in the sum of $2,500 per month shall
be
paid by the Company to the Executive with his base salary on an ongoing
basis. Such advances will be credited as set-off against any cash
bonus
awarded. In the event that such cash bonuses for a particular fiscal
year
amounts to less than actual advances the Company provides to the
Executive, then the net amount will be treated as set-off against
the
Executive’s base salary until the net amount is zero. The Company and the
Executive may by mutual agreement decide to discontinue such
advances.
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Options
exercisable for the 50,000 shares of the Company’s common stock will be
granted to the Executive for each contract year during the term of
this
Agreement. The options for each contract year will be granted on
or before
the end of each anniversary of the effective date of this Agreement.
The
options will be exercisable at the fair market value at the time
of grant.
The Board of Directors of the Company will determine the applicable
fair
market value in its discretion at the time of grant.
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