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EMPLOYMENT AGREEMENT
AGREEMENT dated as of March 1, 1997 (the "Effective Date") by and between
VIRAGEN, INC., a Delaware corporation ("Employer or the "Company"), and XXXXXX
X. XXXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ the 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 on February 28, 1999 (the "Employment Term").
The term "first year", as used herein, means the period commencing on the
Effective Date and ending as of the close of business on February 28, 1998, the
term "second year", as used herein, means the period commencing on March 1, 1998
and ending as of the close of business on February 28, 1999, and the term
"year", as used herein, means, as the context requires, the first year or the
second year. 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.
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3. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free to
accept 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.
4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as Employer's Executive Vice President
and Chief Financial Officer and, as such, shall, subject to the direction of
Employer's President, supervise the conduct the Employer's operations and
affairs as assigned by the President, and perform such other duties and
responsibilities as may be assigned to Employee from time to time consistent
with such title by Employer's President. Employee agrees to devote sufficient
time, skill, attention and energy diligently and competently to perform the
duties and responsibilities reasonably assigned to him hereunder or pursuant
hereto to the best of his abilities. 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, other than with subsidiaries
and/or affiliates of the Company as may be approved by the Company's Board of
Directors, during the term hereof.
5. COMPENSATION
Employee shall receive an annual salary during the Employment Term
as follows: $95,000 for the period March 1, 1997 to February 28, 1998, and
$100,000 for the period March 1, 1998 to February 28, 1999. Employee's salary
shall be payable in accordance with the Company's normal payroll process,
currently bi-weekly. Additional consideration payable to Employee hereunder
consists of (a) the grant to Employee of options to acquire 300,000 shares of
common stock of Employer (as further described herein), and (b) fringe benefits,
if any, that shall be made available to Employee further described herein.
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
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programs available to its employees or continue any which currently or in the
future exist, except as otherwise required by law.
B. Automobile. For the term of this Agreement, Employer
shall provide to Employee an automobile, acceptable to the Employer's
President, and shall pay all gas, maintenance, insurance and other
expenses related thereto, for performance of Employee's duties on behalf
of Employer as specified herein.
C. Other Expenses. Employer shall promptly pay directly or reimburse
Employee for his reasonable out-of-pocket costs and expenses incurred in
connection with the performance of his duties and responsibilities hereunder
subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer's customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal vacation (of not less than two
weeks) taken by other members of senior management during each twelve-month
period of the Employment Term. Employee shall not be entitled to be compensated
for any unused 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.
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.
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
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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 be: (a) conviction for fraud or criminal conduct (other than conviction
of, or a plea of guilty to, a traffic violation), from which no appeal can be
taken; (b) habitual drunkenness or drug addiction; (c) embezzlement; (d)
material 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 which have a material adverse affect upon
the Employer and its business; (e) material breach or default by Employee of any
of the material terms or conditions of this Agreement, and the continuation of
such material breach or default by Employee for a period of seven (7) days
following the date of receipt of written notice from Employer specifying the
breach or default of Employee; 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).
If Employee's employment is terminated by Employer without Cause as
defined in this Section, Employee shall be given sixty (60) days written notice
of termination by Employer and be entitled to receive the greater of (i) two
years compensation and fringe benefits/expenses as provided for in Sections 5 &
6 hereof or (ii) compensation and fringe benefits/expenses as provided for in
sections 5 & 6 payable through the remainder of the Employment Term as provided
for in Section 2 hereof. Additionally, in the event of termination without
Cause, or non-renewal of this Agreement at the end of the Employment Term, any
outstanding but unexercised stock options or warrants granted to Employee shall
continue to be fully exercisable through their stated respective Exercise
Period(s).
D. Termination Following a Change of Control.
i. In the event that a "Change of Control" as hereinafter
defined, of the Company shall occur at any time during the Employment Term, the
Employee shall have the right to terminate the Employee's employment under this
Agreement upon thirty (30) days written notice given at any time within one year
after the occurrence of such event, and such termination of the Employee's
employment with the Company pursuant to this Subsection 9D, then, in any such
event, such termination shall be deemed to be a Termination by the Company Other
than for Cause and the Employee shall be entitled to such Compensation and
Benefits as set forth in Subsection 9D of this Agreement.
ii. For purposes of this Agreement, a "Change of Control" of
the Company shall mean a change in control (A) as set forth in Section 280G of
the Internal Revenue Code or (B) of a nature that would be required to be
reported in response to Item 1 of the current report on Form 8K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 0000 (xxx "Xxxxxxxx Xxx"); provided that, without limitation, such a change
in control shall be deemed to have occurred at such time as:
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(A) any person (as such term is used in Section 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company's outstanding securities then having the right to vote at elections
of directors; or,
(B) the individuals who at the commencement date of this
Agreement the Board of Directors cease for any reason to constitute a majority
thereof unless the election, or nomination for election, of each new director
was approved by a vote of at least two thirds of the directors then in office
who were directors at the commencement of this Agreement; or
(C) there is a failure to elect five or more (or such
number of directors as would constitute a majority of the Board of Directors)
candidates nominated by management of the Company to the Board of Directors; or
(D) the business of the Company for which the Employee's
services are principally performed is disposed of by the Company pursuant to a
partial or complete liquidation of the Company, a sale of assets (including
stock of a subsidiary of the Company) or otherwise.
Anything herein to the contrary notwithstanding, this Subsection 9D will not
apply where the Employee gives the Employee's explicit written waiver stating
that for the purposes of this Subsection 9D a Change in Control shall not be
deemed to have occurred. The Employee's participation in any negotiations or
other matters in relation to a Change in Control shall in no way constitute such
a waiver which can only be given by an explicit written waiver as provided in
the preceding sentence.
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 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
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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 Board
of Directors 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 hereafter
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.
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,
issue the Options (as defined below) 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 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 of, or being
connected with or having an interest in, or otherwise taking any part as a
stockholder (other than deminimas amounts as a passive investor), director,
officer, employee, agent, consultant, partner or otherwise in, any business
competitive with that engaged in or being developed by Employer or its
affiliates during Employee's term of employment. Without limitation of the
foregoing, Employer's business is acknowledged to include the development,
manufacture and sale of human
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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 & 11
Employee covenants and agrees that if Employee shall violate or
breach any of Employee's covenants or agreements provided for in Sections 10 or
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.
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 goodwill 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
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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).
D. Comparable Restrictions. Employer agrees that it will use its
best efforts to have other senior executives execute and observe agreements
containing similar provisions as are contained in Sections 10, 11 and 12 hereof.
14. STOCK OPTIONS
Effective the Effective Date, Employer hereby grants to Employee,
pursuant to Employer's 1997 Stock Option Plan (the "Plan"), options to acquire
up to 300,000 shares of the Company's Common Stock (the "Options"), for a period
of five (5) years from the date hereof, in accordance with the Stock Option
Agreement attached hereto (Exhibit A) and made a part hereof. Such Options shall
vest in full upon execution of this Employment Agreement.
Employer represents and warrants that (i) all shares underlying the
Options will be issued from shares authorized by and subject to the provisions
of the Plan (ii) the Company shall use its best efforts to register the Plan and
the shares underlying the Options under the applicable regulations of the
Securities and Exchange Commission on Form S-8 and (iii) such registration
covering the shares underlying the Options will be maintained as effective for
the longer of (a) the Employment Term or (b) the Exercise Period of the Options
as defined in Exhibit A.
15. EMPLOYEE'S DISCLOSURES AND REPRESENTATIONS
AND WARRANTIES.
Employee hereby acknowledges, represents and warrants to, and/or
agrees with, Employer as follows:
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(a) Subject to Employee's right to designate family members to
own the stock acquired through exercise of the Options, that Employee is
acquiring the Options for his own account, for investment purposes only, and not
with a view to the public sale or distribution thereof, except as applicable
under the Form S-8 Registration to be filed by the Company covering the Shares
underlying the Options.
(b) That Employee has full right, power and authority to
perform all obligations under this Agreement.
(c) That Employee understands that the Options are
nonassignable, and that the Shares acquired through exercise of the Options may
be sold or transferred only pursuant to the Form S-8 Registration to be filed by
the Company covering the Shares underlying the Options.
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 material inaccuracy in, or
material breach of, any material representation, warranty or covenant of
Employee contained herein.
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
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cannot assign or delegate any of his rights, duties, responsibilities or
obligations hereunder to any other person or entity.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between the
parties with respect to, and supersedes any and all prior agreements, both oral
and written, between the parties hereto, except as related to rights of the
Employee and obligations related thereto of Employer regarding previously
granted stock options and previously purchased stock, as may have been modified
from time to time. The subject matter hereof may not be amended, modified or
terminated except by a writing signed by the parties hereto.
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. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
be an original, but both of which together shall constitute one and the same
instrument.
25. INDEMNITY OF EMPLOYEE
Employer shall indemnify and hold harmless Employee from and against
any and all claims, judgments, fines, penalties, liabilities, losses, costs and
expenses (including reasonable attorneys' fees and costs) asserted against or
incurred by Employee as a result of acts or omissions of Employee taken or made
in the course of performing his duties for
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Employer or by reason of Employee acting or having acted as a director or
officer of Employer, to the maximum extent permitted by law, including Section
607.0850, Florida Statutes (including the advancement of expense provisions
thereof); provided, however, that such indemnity shall not apply to acts or
omissions of Employee which constitute misconduct, gross negligence or which
were intended by Employee to personally benefit Employee, directly or
indirectly, at the expense of Employer, unless the matter which benefits
Employee was first fully disclosed to the Board of Directors of Employer and
approved by said Board.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
day and year first above written.
VIRAGEN, INC.
By: /s/ XXXXXX XXXXX
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Xxxxxx Xxxxx
President
EMPLOYEE
/s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
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