EMPLOYMENT AGREEMENT
Exhibit
10.3
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 Dr. Xxxxxxx Xxxxxx of Xxxxxxxxx, Florida (the “Employee” or
“Xx. Xxxxxx”).
WHEREAS,
the Company desires to employ Xx. Xxxxxx as its Chief Executive
Officer and Chairman of its Board of Directors;
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 Chief Executive Officer and Chairman
of the Board of the Company. In the Employee's capacity as such, he shall
perform such duties and functions for the Company as are customarily performed
in corporations of a similar size in the medical research field. Company
acknowledges that Xxxxxx has other business interests which may, from time to
time, require his time and attention. Xxxxxx may continue such
business interests not inconsistent with his Chief Executive Officer and
Chairman of the Board duties.
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. This obligation shall be retroactive to January 1,
2010.
2.
Term. This
Agreement shall commence on, June 15, 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.
3. 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 Five Hundred Thousand dollars ($500,000) 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 the 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.
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(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 Two and One Half ( 2.5%) percent of the
Gross Proceeds paid to the Company to the Company as a result of sales 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 (iii) 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 a 5% 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.
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.
(d)
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 500,000
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. For future years of this agreement, a similar option shall be
awarded on July 15th of each
year thereafter based upon an exercise price equal to 110% of the closing price
of the Company stock on the NYSE Amex on the effective trading date of June
30th
of that year for which Xx. 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
$500,000 and the premiums for term life insurance policies in the aggregate face
amount of $6,000,000 insuring the life of the Employee, with the Employee having
the right to designate the beneficiary or beneficiaries thereof.
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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 or 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 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.
6. Effect of
Termination.
(a) In
the event that the Employees 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.
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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.
8.
Confidentiality, Invention
and Non-Compete Agreement. The Employee confirms his obligation to
be bound by the terms of the Confidentiality, Invention and Non-Compete
Agreement attached hereto as Exhibit B, executed
as of July 1, 1993.
9.
Offices. Xx.
Xxxxxx may conduct the business of the Company from a variety of
locations, including but not limited to those offices of the Chairman and CEO in
Philadelphia, his home office, and from the Retreat House in Tavernier.
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 Xx. Xxxxxx. The expenditures shall be as prescribed or
limited by the Company’s Travel & Expense policies and procedures. The
Company shall provide Xx. 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 contemplated by this agreement.
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 00000
Telecopier
No.: (000) 000-0000
Attention:
Xxxxxx X. Xxxxxx
General
Counsel, Secretary, Executive Vice Chairman
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(ii)
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If
to the Employee, to:
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Xx.
Xxxxxxx X. Xxxxxx, M.D.
HEMISPHERX
BIOPHARMA, INC.
One
Penn Center
0000
XXX Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx,
Xxxxxxxxxxxx 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.
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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.
(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/ Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx, Secretary
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By:
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/s/ Xxxxxxx X. Xxxxxx
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Xx.
Xxxxxxx X. Xxxxxx
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