EMPLOYMENT AGREEMENT
Exhibit
10.5
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of this 11th
day of June, 2010, between HEMISPHERX BIOPHARMA, INC., a Delaware corporation
(the “Company”), and Xxxxxx X. Xxxxxx, of Miami, Florida (the “Employee” or
“Xxxxxx”).
WHEREAS,
the Company desires to employ Equels as its General Counsel, Secretary and
Executive Vice Chairman of its Board of Directors;
WHEREAS,
the Company and Xxxxxx acknowledge that there have been steadily decreasing
sales of Ampligen® and no sales of Alferon N Injection® nor other products
generating revenues for the last fiscal year;
WHEREAS,
the Company desires to retain Xxxxxx to oversee its program to reinstate or
create such revenue generators and provide incentives for commercial
success;
WHEREAS,
due to the volume of litigation and other duties of the General Counsel the
Company wants Xxxxxx on a base salary, rather than at his current hourly
law firm rate;
WHEREAS,
the Employee and the Company wish to state the terms and conditions of the
Agreement herein;
NOW,
THEREFORE, the Company and the Employee hereby agree as follows:
1. Duties of
Employee. The Employee shall, during the Employment Period (as
defined below), be designated as the Executive Vice Chairman of the Board,
Secretary and General Counsel of the Company. In the Employee's capacity
as such, he shall perform such duties and functions for the Company as are
customarily performed by the Executive Vice Chairman of the Board, Secretary and
General Counsel of corporations of a similar size in the medical research
field.
The
Employee's duties and functions shall also include overseeing activities
of the Company related to the sales of product with the goal of generating
substantial revenues through domestic and worldwide markets. The Employee shall
report to the Chairman of the Board of Directors of the Company in connection
with all of his duties and functions. The Employee agrees to work
diligently to promote the business of the Company.
The
Company acknowledges that Employee has other business interests and that
employee may continue said interests, including but not limited to management of
the Xxxxxx Law Firm and Mystic Oaks Farm. It is specifically agreed that Xxxxxx
will no longer xxxx the Company for legal services provided by him as a lawyer
at the Xxxxxx Law Firm, however, to the extent the Company uses the services of
other lawyers from the Xxxxxx Law Firm these other lawyers and paralegals shall
be billed and paid at their preapproved hourly rates.
Employee
shall serve on the Board of Directors of the Company and, when designated, its
affiliates and subsidiaries, providing Employee receives those Director’s fees
at the highest rate then being paid to any other member of the Board compensated
for services as a Director.
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2. Term. This
Agreement shall commence on, June 1, 2010 and shall terminate on December 31,
2015 (the "Initial Termination Date") unless sooner terminated in accordance
with Section 5 hereof or unless renewed as hereinafter provided (such period of
employment together with any extension thereto hereinafter being called the
"Employment Period”). This Agreement shall be automatically renewed for
successive three (3) year periods after the initial Termination Date unless
written notice of refusal to renew is given by one party to the other at least
180 days prior to the Initial Termination Date or the expiration date of any
renewal period. In the event of a change in control as defined in the Company’s
10-K/A filing of April 30, 2010, the term of this agreement shall automatically
be extended for three additional years.
4. Compensation. (a) As
compensation for the services to be performed hereunder,
the Company shall pay to the Employee a salary (the "Salary"), as hereinafter
provided, payable at such times as salaries of other senior executives of the
Company are paid but no less frequently than monthly. The Salary shall be
at a rate of Four Hundred Thousand dollars ($400,000) per year (the "Base
Salary"), which shall be subject to cost-of-living adjustments, as provided in
the succeeding subsection (b).
(b) The
Salary shall consist of the Base Salary, increased as provided in this
subsection. On January 1, 2011, and on January 1 of each succeeding
calendar year during the Employment Period, the Base Rate shall be increased by
a percentage equal to the greater of the percentage average increase in the
Bureau of Labor Statistics "Consumer Price Index — U.S. City Average — All
Items" from December 31st of the
preceding year to January 1st of the
preceding year or a universal, non-discriminatory Cost Of Living
salary adjustment as approved by the Compensation Committee.
(c) For
each calendar year (or part thereof) during which the Agreement is in effect,
the Employee shall be eligible to be paid the following bonuses:
(i) a
performance bonus in an amount up to twenty-five percent (25%) of his current
Base Salary as then in effect, in the sole discretion of the Compensation
Committee of the Board of Directors based on the Employee's performance and/or
the Company's operating results for such year; and
(ii) an
incentive bonus in an amount equal to Five (5%) percent of the Gross Proceeds
paid to the Company as a result of sale of Alferon N Injection®, Alferon®
LDO, Ampligen® or other Company products, or from any joint
ventures or corporate partnering arrangements . For purposes herein, Gross
Proceeds shall mean those cash amounts paid to the Company by the other parties
to the joint venture or corporate partnering arrangement, but shall not include
(i) any amounts paid to the Company as reimbursement of expenses incurred; and
(ii) any amounts paid to the Company in consideration for the Company's assets
(i.e, plant, property, equipment, investments, etc), equity or other
securities. After the termination of this Agreement, for any reason, the
Employee shall be entitled to receive the incentive bonus provided for in this
subsection 3(c)(ii) based upon Gross Proceeds received by the Company during the
3 year period commencing on the termination of this Agreement with respect to
any joint ventures or corporate partnering arrangements entered into by the
Company during the term of this Agreement. Furthermore, Employee shall be
entitled to bonus related to any sale of the Company, or any sale of a
substantial portion of Company assets not in the ordinary course of its
business. The aggregate incentive bonus hereunder as set forth above
shall be capped not to exceed $5,000,000 annually.
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The
performance bonus shall be eligible to be paid in cash within 90 days of the
close of the calendar year. The incentive bonus shall be paid in cash
within 90 days of the receipt of the Gross Proceeds by the Company.
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(d)
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The
Employee is hereby granted non-qualified stock options as additional
compensation for the services to be performed hereunder, the Company shall
issue to the Employee, as of the effective date of Board of Director
approval, non-qualified annual options valid for a ten year period to
purchase 300,000 shares of the Company common stock with an exercise price
equal to 110% of the closing price of the Company stock on the NYSE Amex
on the effective date of trading day before this agreement is effectively
approved by the Board of Directors. A similar option shall be
awarded each year based upon an exercise price equal to 110% of the
closing price of the Company stock on the NYSE Amex on the effective date
of the final trading day of May for each respective year for which Xxxxxx
remains an active employee at that
date.
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4. Fringe
Benefits. During the Employment Period, the Employee shall be
entitled to receive such fringe benefits as shall be applicable from time to
time to the Company's executives generally, including but not limited to such
401(k), vacation, group life and health insurance, and disability benefit plans
as may be maintained by the Company from time to time. Additionally,
during the Employment Period, the Company shall pay, for the benefit of the
Employee, the premiums for a disability insurance policy in the face amount of
$400,000 and the premiums for term life insurance policies in the aggregate face
amount of $3,000,000 insuring the life of the Employee, with the Employee having
the right to designate the beneficiary or beneficiaries thereof.
5. Termination. (a) The
Company may discharge the Employee for cause at any time as provided herein, for
purposes hereof, “cause” shall mean the willful engaging by Employee in illegal
conduct, gross misconduct or gross violation of the Company’s Code of Ethics And
Business Conduct for Officers which is demonstrably and materially injurious to
the Company. For purposes of this Agreement, no act, or failure to act, on
Employee's part shall be deemed "willful" unless done intentionally by
Employee and not in good faith and without reasonable belief that
Employee's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated for Cause unless and until the Company delivers to Employee a copy of
a resolution duly adopted by the affirmative vote of not less than
three-quarters of the directors of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice to Employee and an
opportunity for Employee, together with counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, Employee was guilty of
conduct set forth above and specifying the particulars thereof in
detail.
(b) The
employment of the Employee shall terminate upon the death or disability of the
Employee. For purposes of this subsection (b), “disability” shall mean the
inability of the Employee effectively to carry out substantially all of his
duties hereunder by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.
(c)
The Employee shall have the right to terminate
this Agreement upon not less than thirty (30) days, prior written notice of
termination.
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6. Effect of
Termination.
(a) In
the event that the Employee’s employment is terminated for "cause" pursuant to
subsection 5(a) , the Company shall pay to the Employee, at the time of such
termination, only the compensation and benefits otherwise due and payable to him
under Sections 3 and 4 through the last day of his actual employment by the
Company.
(b) In
the event that the Employee is terminated at any time without "cause", as
defined in subsection 5(a), the Company shall pay to the Employee, at the time
of such termination, the compensation and benefits otherwise due and payable to
him under Sections 3 and 4 through the last day of the then current term of this
Agreement.
(c) In
the event the Employee's employment is terminated at his election pursuant to
subsection 5(c) or due to his death or disability pursuant to 5(b), the
Company shall pay to the Employee, at the time of such termination, the
Base Salary, and applicable benefits, otherwise due and payable to him under
Sections 3 and 4 through the last day of the month in which such termination
occurs and for an additional twelve month period.
(d) Upon
termination of Employee's employment, with or without cause, in accordance with
the terms hereof, Employee shall resign from the Company's Board of
Directors.
7. Employee's Representations
and Warranties. The Employee hereby represents and warrants to the
Company that he has the right to enter into this Agreement, and his execution,
delivery and performance of this Agreement (a) will not violate any contract to
which the Employee is a party or any applicable law or regulation nor give rise
to any rights in any other person or entity and (b) are not subject to the
consent of any other person or entity, including, without limitation, the Xxxxxx
Law Firm and Mystic Oaks Farm.
8. Confidentiality, Invention
and Non-Compete Agreement. The Employee confirms his obligation to
be bound by the terms of a Confidentiality, Invention and Non-Compete Agreement
attached hereto as Exhibit “A”.
9.
Offices.
Xxxxxx may conduct the
business of the Company from a variety of locations. Equels may conduct
primary Company business from his law office in Miami, Florida as a Company
office. Additionally, he may render services from his home office,
the Retreat House, in Philadelphia at office space adjacent to the office
of the Chairman and CEO or his other law firm offices. Additionally,
subject to building and municipal approvals, Xxxxxx shall at no cost to the
Company designate his office in Miami as a Company office at no additional cost
to the Company other that municipal fees and signage so as to allow the Company
conference and work spaces in metropolitan Miami and supplement activities being
conducted at the nearby Retreat House. The Company shall supply that equipment
necessary for full telephone, telefax and internet access at all these locations
and supply a portable computer capable of remote access while employee travels
domestically and internationally on Company business.
10.
Expenses.
The Company shall be responsible for all travel and business
entertainment expenses of Xxxxxx. The expenditures shall be as prescribed or
limited by the Company’s Travel & Expense policies and procedures,. The
Company shall provide Xxxxxx with an unrestricted American Express Platinum card
and a Visa Platinum card to use for all travel, entertainment and business
related expenses of the company, especially those associated with travel
meetings related to sales of product and the various and international meetings
contemplated by this agreement.
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11. Notices. Any
notice or other communication pursuant to this Agreement shall be in writing and
shall be sent by telecopy or by certified or registered mail addressed to the
respective parties as follows:
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(i)
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If
to the Company, to:
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HEMISPHERX
BIOPHARMA, INC.
One
Penn Center
0000
XXX Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx,
Xxxxxxxxxxxx 1910
Telecopier
No.: (000) 000-0000
Attention:
Chief Executive Officer
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(ii)
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If
to the Employee, to:
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Xxxxxx
X. Xxxxxx
0000
X. Xxxxxxxx Xxxxx #000
Xxxxx,
Xxxxxxx, 00000
Telecopier
No.: (000) 000-0000
or
to such other address as the parties shall have designated by notice to the
other parties given in accordance with this section. Any notice or other
communication shall be deemed to have been duly given if personally delivered or
mailed via registered or certified mail, postage prepaid, return receipt
requested, or, if sent by telecopy, when confirmed.
12. Survival.
Notwithstanding anything in section 2 hereof to the contrary, the
Confidentiality, Invention and Non-Compete Agreement shall survive any
termination of this Agreement or any termination of the Employee's
services.
13. Modification.
No modification or waiver of this Agreement or any provision hereof shall be
binding upon the party against whom enforcement of such modification or waiver
is sought unless it is made in writing and signed by or on behalf of both
parties hereto.
14. Miscellaneous. (a)
This Agreement
shall be subject to and construed in accordance with the laws of the State of
Florida. Furthermore, the parties acknowledge that the Company has
had independent counsel representing it in this matter.
(b) The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate and be construed as a waiver or a continuing
waiver by that party of the same or any subsequent breach of any provision of
this Agreement by the other party.
(c) If
any provisions of this Agreement or the application thereof to any person or
circumstance shall be determined by an arbitrator (or panel or arbitrators) or
any court of competent jurisdiction to be invalid or unenforceable to any
extent, the remainder hereof, or the application of such provision to persons or
circumstances other than those as to which it is so determined to be invalid or
unenforceable, shall not - be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by
law.
(d) This
Agreement shall be binding on and inure to the benefit of the parties hereto and
their respective heirs, executors and administrators, successors and
assigns.
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(e)
This Agreement shall not be assignable in whole or in part by either party,
except that the Company may assign this Agreement to and it shall be binding
upon any subsidiary or affiliate of the Company or any person, firm or
corporation with which the Company may be merged or consolidated or which may
acquire all or substantially all of the assets of the Company.
IN WITNESS WHEREOF, this Agreement has been signed by the
parties hereto as of the date first above written.
HEMISPHERX
BIOPHARMA, INC.
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By:
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/s/ Xxxxxxx X. Xxxxxx
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Xx. Xxxxxxx X. Xxxxxx,
Chief Executive
Officer
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By:
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/s/ Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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