1
EXHIBIT 10. LXXVII
EMPLOYMENT AGREEMENT
AGREEMENT dated July 1, 1999 (the "Effective Date") by and between
VIRAGEN (SCOTLAND) LIMITED, a company registered in Scotland with registered
number 155387 and having a place of business at Xxxxxxxxx Xxxxxxx Xxxx, Xxxx
Xxxx, Xxxxxxxx, Xxxxxxxxxx XX00 0XX ("Employer"), and XX. XXXXXX XXXXXX
NICOLSON, Xxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxx X00 0XX ("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. DEFINITIONS
In this Agreement unless the context otherwise requires, the
following expressions have the following meanings:
"THE BOARD" means the Board of Directors for the time
being of Employer or any committee duly
appointed by the Board of Directors;
"THE EMPLOYMENT" means the Employee's employment under this
Agreement;
"GROUP COMPANY" means any holding company for the time being
of Employer or any subsidiary for the time
being of Employer or of any such holding
company (other than Employer) (for which
purpose the expressions "holding company" and
"subsidiary" shall have the meaning ascribed
thereto by Section 736 of the Companies Act
1985).
2. EMPLOYMENT
Employer hereby employs Employee, and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set
forth.
2
3. TERM
Subject to the provisions for earlier termination set forth in
Section 15 hereof and, notwithstanding the date of this Agreement, this
Agreement commenced on 1st July 1999 and shall continue until the close
of business on 30th June 2001 (the "Employment Term").
4. CONTINUOUS EMPLOYMENT
Employee's employment with Employer in terms of this Agreement is
continuous with his previous employment with Employer which commenced on
1st April 1996.
5. 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.
6. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as Employer's Managing Director and
Chief Operations Officer of the Group Companies Viragen (Europe) and
Viragen, Inc. The employee shall also act as Vice President of New
Product Development for Viragen Inc. As such, Employee shall, subject to
the direction of the Board, supervise and conduct the Employer's
operations and affairs as assigned by the Board, and perform such other
duties and responsibilities as may be assigned to Employee from time to
time consistent with such title by the Board including where such duties
require Employee to work for any Group Company. Employee accepts that he
may be required to perform other tasks or duties outwith the scope of his
normal duties. 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. Employer may at its sole discretion transfer this Agreement or
second Employee to any Group Company at any time.
Employer reserves the right to suspend all or any of Employee's
duties and powers on such terms as it considers expedient (including a
term that Employee shall not attend at Employer's premises) or to require
Employee to
3
carry out the duties of another position of equivalent status either in
addition to or instead of his duties as Managing Director of Employer and
Chief Operations Manager of the Group Company, Viragen Inc. During any
period of suspension, Employee will not be entitled to work either on his
own account or on behalf of any other person, business or company.
7. OTHER INTERESTS
Employee shall not (except with the prior consent of the Board)
accept any appointment to any office in relation to any body, whether
corporate or not, or be directly or indirectly employed, engaged,
concerned or interested in any other business or undertaking, provided
that this shall not prohibit the holding (directly or through nominees)
of investments listed on the London Stock Exchange or in respect of which
dealing takes place in the Alternative Investment Market on the London
Stock Exchange or any recognised stock exchange provided that not more
than 5 per cent of the issued shares or other securities of any class of
any one company shall be so held without the prior sanction of a
resolution of the Board. Employee shall immediately notify Employer of
any actual or potential conflict of interest with the Employment
including without limitation to the foregoing generality any transaction
or dealing which involves, or might involve, a relative of Employee or
any employee of such relative.
Subject to any regulations issued by Employer, Employee shall not
be entitled to receive or obtain directly or indirectly any discount,
rebate or commission in respect of any sale or purchase of goods effected
or other business transacted (whether or not by him) or by or on behalf
of Employer and if he (or any firm or company in which he is interested)
shall obtain any such discount, rebate or commission he shall account to
Employer for the amount received by him (or a due proportion of the
amount received by such company or firm having regard to the extent of
his interest therein).
8. HOURS AND PLACE OF WORK
Employee agrees that he shall work such hours as are necessary for
the proper performance of his duties, including any such hours which
exceed the maximum weekly working time limit of 48 hours imposed by the
Working Time Regulations 1998 or any re-enactment thereof. Employee shall
work a minimum of 37.5 hours per week from 9.30am to 6pm Monday to
Friday, with a break of one hour for lunch each day.
Employee's place of work will initially be Employer's offices at
Penicuik but Employer may require Employee to work at any place within
the United Kingdom on either a temporary or an indefinite basis. Employee
will be given reasonable notice of any change in his place of work.
4
Employee undertakes to use reasonable endeavours to relocate his
residence closer to Employer's offices.
9. REMUNERATION
Employee shall receive an annual salary during the Employment Term
of (pound)103,000. Employee's salary shall be payable in accordance with
the Company's normal payroll process, currently monthly in arrears on or
around the 18th day of each month. Employee may also be entitled to such
fringe benefits, if any, that shall be made available to Employee further
described herein. The remuneration in this clause shall be inclusive of
any fees to which Employee may be entitled as a director of Employer or
any Group Company.
10. FRINGE BENEFITS AND EXPENSES
A. EMPLOYEE PLANS
Employee shall be eligible during the continuance of
Employment to participate in such medical, hospitalisation,
group health, accident, disability and life insurance
schemes and plans, such pension, 401 K and such other
employee benefit schemes to the same extent such plans and
schemes 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 schemes available to its
employees or continue any which currently or in the future
exist, except as otherwise required by law. Entitlement to
such benefits is subject always to:
o the terms and conditions of the schemes or arrangements
from time to time;
o the insurer of the scheme or arrangement honouring
Employer's claim in respect of Employee or his spouse or
children; and
o Employee's acceptance of such variations to his terms
and conditions of employment as may from time to time be
requested by Employer.
All payments under the schemes or arrangements will be
subject to such deductions as may be required by law and
also a sum equivalent to any employer's National Insurance
contributions which are payable by Employer in respect of
any payment under the scheme or arrangements, as
appropriate, and which are not reimbursed by the insurer
under the scheme or arrangement.
5
Where any payments are made under the permanent health
insurance scheme or arrangement all other benefits provided
to or in respect of Employee by the Employer will cease
immediately (if they have not done so already) except those
benefits for which the Employer receives reimbursement in
full of the total cost to it of the benefit from the
insurer under the appropriate scheme or arrangement.
B. CAR
During the continuance of the Employment, the Employer
shall provide to Employee for performance of Employee's
duties on behalf of Employer as specified herein a car, of
a size and type commensurate (in the opinion of the Board)
with Employee's position for the time being. Employer shall
pay all petrol, maintenance, insurance and other expenses
related thereto. Employee will be permitted to use the car
for reasonable private journeys. If Employee shall be
convicted of any offence under the Road Traffic Acts or is
involved in any accident involving the car, he shall
forthwith notify the Board and supply such information in
connection therewith as the Board may request. Employee
shall at all times maintain a current full driving licence
and shall not do or omit to do anything which would or
might make void or prejudice any insurance policy
maintained by Employer.
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 including but not limited to
reasonable travel, accommodation and subsistence expenses
incurred by Employee should the Employee be temporarily
required to carry out his duties elsewhere, in the UK or
abroad, than at his normal place of work but always subject
to the submission by Employee of appropriate invoices,
receipts and other supporting documentation, consistent
with Employer's customary reimbursement policies and
procedures.
D. DEDUCTIONS
For the purposes of the Employment Rights Xxx 0000,
sections 13-27, Employee hereby authorises the Employer to
deduct from his salary and/or any other sums due under this
Agreement any sums due from him to Employer including,
without limitation, any overpayments, loans or advances
made to him by the Employer, and any losses suffered by the
Employer as a result of any negligence or breach of duty by
Employee.
6
11. HOLIDAY
Employer's holiday year runs from 1st January to 31st December.
Employee shall be entitled to annual holiday (of not less than 20 days).
Holidays may only be taken with advance permission from the Board.
Employee may not carry any unused holiday entitlement forward to a
subsequent holiday year. Holiday entitlement is accrued PRO RATA
throughout the holiday year, depending on Employee's length of service
within that year. Accrued holiday entitlement will be rounded up to the
nearest whole day.
Upon notice of termination of Employee's employment being served
by either party, Employer may either require Employee to take any unused
holidays accrued at that time during any notice period or may, at its
discretion, make a payment in lieu of such holiday entitlement. Employee
will be required to make a payment to Employer in lieu of any holiday
taken in excess of Employee's holiday entitlement accrued at the date of
termination of the Employment. Any sums so due may be deducted from any
money owing to Employee.
12. SICKNESS
Without prejudice to the terms of clause 15, Employer shall
continue to pay Employee's salary during any period of absence on medical
grounds for up to a maximum period of 13 weeks in any period of 12
consecutive months (such twelve month period beginning on the first day
of absence), provided that Employee shall from time to time if required:
o inform Employer without delay of any injury or incapacity;
o supply Employer with medical certificates covering any period of
sickness or incapacity exceeding seven consecutive days (including
weekends); and
o undergo at Employer's expense a medical examination by a doctor
appointed by Employer.
Payment of Employee's salary pursuant to this clause 12 shall be
made less any amount of Statutory Sick Pay or other benefits to which
Employee may be entitled hereunder or under any relevant legislation.
Once entitlement to salary under this clause 12 lapses, Employee
shall have no right to any benefit or emolument from Employer except to
any permanent health insurance benefit which may be payable in accordance
with clause 10.
7
If Employee's absence shall be occasioned by the actionable
negligence of a third party in respect of which damages are recoverable,
then all sums paid by Employer during the period of absence in terms of
this clause 12 shall constitute loans to Employee, who shall:
o forthwith notify Employer of all the relevant circumstances and of
any claim, compromise, settlement or judgement made or awarded in
connection therewith;
o if Employer so requires, refund to Employer such sum as Employer may
determine, not exceeding the lesser of:
(i) the amount of damages recovered by him in respect of
loss of earnings during the period of absence under
any compromise, settlement or judgement; and
(ii) the sums advanced to him by Employer in respect of
the period of incapacity.
13. 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.
14. PENSIONS
Employer does not operate a pension scheme.
15. TERMINATION OF EMPLOYMENT
A INCAPACITY
For the purposes of this Agreement, Employee shall be
deemed to be "Incapacitated" 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 incapacity shall be deemed to exist until
after Employee shall be unable to perform his duties
hereunder for ninety (90) consecutive days (the "Incapacity
Period"). If Employee shall have been incapacitated but
shall have returned to work prior to the end of the
Incapacity Period, any new incapacity commencing within
thirty (30) days of the termination of the prior incapacity
shall be a continuation of the prior incapacity, and the
period of all such disabilities shall be added together to
determine whether, or how much of, the Incapacity Period
has elapsed.
8
The Employment may be subject to termination by the
Employer by notice if Employee becomes Incapacitated
provided that if at any time during the currency of such
notice Employee can provide a medical certificate
satisfactory to the Board and to the effect that he has
fully recovered his physical and/or mental health and that
no recurrence of illness or incapacity can reasonably be
anticipated, Employer shall withdraw the notice.
B. 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 upon Employee
reaching the Employer's normal retirement age of 65.
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 minor traffic
offence), from which no appeal can be taken; (b) habitual
drunkenness or drug addiction; (c) fraud or theft in
respect of Employer; (d) material sanctions against
Employee in his capacity as an employee of Employer by
regulatory agencies governing Employer or against Employer
because of deliberate 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,
or the continuation of any 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; (f) the resignation 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); (g)
disqualification as a director by reason of any order made
under the Company Directors Disqualification Act 1986 or
any other enactment; (h) the bankruptcy or insolvency of
Employee; or (i) gross misconduct or gross negligence of
Employee.
D. TERMINATION WITHOUT CAUSE
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
9
receive two years compensation and fringe benefits/expenses
as provided for in Sections 9 & 10 hereof.
E. TERMINATION FOLLOWING A CHANGE OF CONTROL
(i) In the event that a "Change of Control", as
hereinafter defined, of Employer is followed by a
related "Good Reason" as hereinafter defined at any
time during the Employment Term, Employee shall have
the right to terminate his employment under this
Agreement upon thirty (30) days written notice given
at any time within one year after the occurrence of
such events, and such termination of Employee's
employment with Employer pursuant to this Subsection
15E, then, in any such event, such termination shall
be deemed to be a Termination by Employer Other than
for Cause and Employee shall be entitled to such
Compensation and Benefits as set forth in Subsection
15D of this Agreement.
(ii) For purposes of this Agreement, a "Change of
Control" of Employer shall mean a change in the
legal person holding, directly or indirectly, the
shares which carry 50% or more of the voting rights
in either Employer or its holding company, for which
purpose "holding company" shall have the meaning
ascribed thereto by Section 736 of the Companies Xxx
0000.
(iii) For the purposes of this Agreement, "Good Reason"
shall mean, without the Employee's express written
consent, the occurrence of any of the following
events after a Change in Control:
I. a reduction by the Employer of the Employee's basic rate of
remuneration (excluding any performance related or
discretionary bonuses);
II. the failure of the Employer to continue in effect any
Employee benefit plan or compensation plan in which the
Employee was participating following the Change in Control,
unless the Employee is permitted to participate in other
plans providing substantially comparable benefits, or the
taking of any action by the Employer which would adversely
affect the Employee's participation in or materially reduce
benefits under any such plan, PROVIDED, HOWEVER, that
changes affecting the participation or benefits of all
similarly situated employees shall not be treated as Good
Reason hereunder;
III. a materially adverse change in the level of the Employee's
employment responsibilities, PROVIDED, HOWEVER, that
changes in
10
title or changes in the Group Company which employs the
Employee shall not be treated as Good Reason hereunder; or
IV. a relocation of Employer's offices such that Employee would
be required to relocate his primary residence to provide
for a reasonable daily travel distance to such new
location.
This Subsection 15E will not apply where the Employee gives Employer his
explicit written waiver stating that for the purposes of this Subsection
15E 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.
F. TERMINATION PROVISIONS
If Employer becomes entitled to terminate the Employment pursuant
to this clause 15, it shall be entitled (but without prejudice to
its right subsequently to terminate the Employment on the same or
any other ground) to suspend Employee on full pay for so long as
it may think fit.
Employer reserves the right to give Employee pay in lieu of any
notice of termination (whether given by Employer or by Employee).
For this purpose, Employee agrees that pay in lieu of notice will
consist of his basic salary for the relevant period of notice and
any bonus/commission/share of profit and any other emolument
referable to the Employment. For the avoidance of doubt, the right
of Employer to make a payment in lieu of notice does not give rise
to any right of Employee to receive such a payment.
The giving of any period of notice of termination (whether given
by Employer or Employee), does not limit the Employer's right to
suspend any of Employee's duties and powers under clause 6 and
Employer shall be under no obligation to assign any duties to
Employee and shall be entitled to exclude him from its premises.
Throughout any such period of suspension, Employee shall continue
to receive his normal salary and other contractual benefits to
which he is entitled under this Agreement and shall not be
entitled to work either on his own account or for any other
person, company or business. Alternatively, Employer may, during
the whole or part of such period of notice, require Employee to
perform duties (including any modified duties arising from an
exercise by Employer of its rights under clause 6) at such
locations as the Company may require consistent with clause 8.
On the termination of the Employment or on either Employer or
Employee having served notice of such termination, Employee shall:
11
o at the request of Employer resign as a Director and/or from
any office held in Employer or any Group Company and shall
transfer without payment to Employer or as Employer may
direct, any shares or other securities held by Employee as
nominee or trustee for Employer or any Group Company
provided however that such resignation shall be without
prejudice to any claims which Employee may have against
Employer or any Group Company arising out of the
termination of the Employment; and
o forthwith deliver to Employer all materials within the
scope of clause 16 and all credit cards, cars, car keys and
other property of or relating to the business of Employer
or of any Group Company which may be in his possession or
under his power or control;
and if Employee should fail to do so Employer is hereby
irrevocably authorised to appoint some person in his name
and on his behalf to sign any documents and do any things
necessary or requisite to give effect thereto.
16. NON-DISCLOSURE QF 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
Group Companies, (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 Group Companies and (iii) the nature and terms of
Employer's and its Group Companies' 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 Group Companies 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
12
necessary to protect Employer's and its Group Companies'
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 authorised by the Board for the benefit of
Employer and/or its Group Companies and/or as required in
the course of his employment) at any time hereafter use for
his own purposes or divulge or disclose for any purpose
whatsoever to any persons, firms, corporations or other
entities other than Employer or its Group Companies
(hereinafter referred to collectively as "Third Parties"),
or use or cause or authorise any Third Parties to use, or
through any failure to exercise due care and diligence,
cause any unauthorised disclosure of 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 Group Companies 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) all such materials shall be and remain the property
of the Employer; and
(iii) 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 Group Companies.
17. INVENTIONS AND OTHER INTELLECTUAL PROPERTY
The parties foresee that Employee may make inventions or
create other industrial or intellectual property in the course of his
duties under this Agreement and agree that in this respect Employee
has a special responsibility to further the interests of Employer and
the Group Companies.
Any discovery, development, invention, or improvement, design,
process, formula, method, database, information, computer program,
13
copyright work, semi conductor or other topography, copyright work,
trade xxxx or trade name or get-up made, created, devised, developed
or discovered by Employee during the continuance of the Employment
(whether capable of being patented or registered or not and whether
or not made or discovered in the course of the Employment) either
alone or with any other person in connection with or in anyway
affecting or relating to the business of Employer or any Group
Company or capable of being used or adapted for use therein or in
connection therewith ("WORKS") shall forthwith be disclosed to
Employer and shall (subject to sections 39 to 43 Patents Act 1977)
belong to and be the absolute property of Employer or such Group
Company as Employer may direct.
Employee if and whenever required so to do by Employer shall
at the expense of Employer or such Group Company as Employer may
direct:
o apply or join with Employer or such Group Company in applying
for letters patent, registered design, design right, trade
xxxx or other protection or registration in the United
Kingdom and in any other part of the world for any Works; and
o execute all instruments and do all things necessary for
vesting such works or patents, registered designs, design
rights, trade marks or other protection or registration when
obtained and all right, title and interest to and in the same
absolutely and as sole beneficial owner in Employer or such
Group Company or in such other person as Employer may
specify; and
o sign and execute all such documents and do all such acts as
the Company may reasonably require in connection with any
proceedings in respect of such applications and any
publication or application for revocation of such patents,
registered designs, design rights, trade marks or other
protection.
Employee hereby irrevocably and unconditionally waives all
rights under Chapter IV Copyright, Designs and Patents Xxx 0000 and
any other moral rights which he may have in the Works or in
connection with the authorship of any existing or future copyright
work in the course of the Employment, in whatever part of the world
such rights may be enforceable including, without limitation:
o the right conferred by section 77 of that Act to be
identified as the author of any such work; and
o the right conferred by section 80 of that Act not to have any
such work subjected to derogatory treatment.
14
Employee hereby irrevocably appoints Employer to be his
Attorney in his name and on his behalf to execute any such act and to
sign all deeds and documents and generally to use his name for the
purpose of giving to Employer the full benefit of this clause.
Employee agrees that with respect to any third parties a certificate
signed by any duly authorised officer of Employer that any act or
deed or document falls within the authority hereby conferred shall be
conclusive evidence that this is the case.
Nothing in this clause shall be construed as restricting the
rights of Employee or Employee under sections 39 to 43 Patents Xxx
0000.
18. COVENANT - NOT-TO-COMPETE
A. DEFINITIONS
For the purposes of clause 18B the following words have the
following meanings:
"COMPANY GOODS" means any product researched into, developed,
manufactured, distributed or sold by Employer with which the Employee was
materially concerned or for which he was responsible during the two years
immediately preceding the Termination Date;
"COMPANY SERVICES" means any services (including but not
limited to technical and product support, technical advice and customer
services) supplied by Employer with which the duties of Employee were
materially concerned or for which he was responsible during the two years
immediately preceding the Termination Date;
"CONFIDENTIAL INFORMATION" has the meaning given to it in
clause 16;
"CUSTOMER" means any person, firm, company or other
organisation whatsoever to whom or which Employer distributed, sold or
supplied Company Goods or Company Services during the two years
immediately preceding the Termination Date and with whom or which, during
such period:
(i) Employee had material dealings in the course of
his employment; or
(ii) any employee who was under the direct or
indirect supervision of Employee had material
dealings in the course of his employment;
but in the case of a firm, company or other organisation shall not
include any division, branch or office of such firm, company or other
organisation with which Employee and/or any such employee had no dealings
during the said period;
15
"PROSPECTIVE CUSTOMER" means any person, firm, company or
other organisation whatsoever with whom or which Employer shall have had
negotiations or discussions regarding the possible distribution, sale or
supply of Company Goods or Company Services during the 12 months
immediately preceding the Termination Date and with whom or which, during
such period:
(i) Employee shall have had material dealings in the
course of his employment by Employer; or
(ii) any employee who was under the direct or
indirect supervision of Employee shall have had
material dealings in the course of his
employment by the Company;
but in the case of a firm, company or other organisation shall not
include any division, branch or office of such firm, company or other
organisation with which Employee and/or any such employee had no dealings
during the said period;
"RESTRICTED AREA" means:
(i) Scotland and;
(ii) any other country in the world where, on the
Termination Date, Employer was engaged in the
research into, development, manufacture,
distribution, sale or supply or otherwise dealt
with Company Goods or Company Services;
"RESTRICTED GOODS" means any product of the same type or
materially similar to Company Goods;
"RESTRICTED SERVICES" means any services of the same type or
materially similar to Company Services;
"RESTRICTED PERIOD" means the period of 12 months immediately
following the Termination Date;
"SENIOR EMPLOYEE" means an employee of the Company who in the
opinion of the Company is a key employee to the Company and who earns a
salary of at least (pound)35,000 per annum at the Termination Date;
"TERMINATION DATE" means the date of termination of the
Employment.
B. RESTRICTIONS
16
Employee hereby undertakes with Employer that he will not
either during the Employment nor during the Restricted
Period without the prior written consent of Employer whether
by himself, through his employees or agents or otherwise
howsoever and whether on his own behalf or on behalf of any
other person, firm, company or other organisation, directly
or indirectly:
(i) in competition with Employer within the Restricted
Area, be employed or engaged or otherwise interested
in the business of researching into, developing,
manufacturing, distributing, selling, supplying or
otherwise dealing with Restricted Goods or Restricted
Services;
(ii) in competition with Employer, in respect of
Restricted Goods or Restricted Services, solicit
business from or canvass any Customer or Prospective
Customer;
(iii) in competition with Employer, in respect of
Restricted Goods or Restricted Services, accept
orders from, or have any business dealings with, any
Customer or Prospective Customer;
(iv) solicit or induce or endeavor to solicit or induce
any person who, on the Termination Date, was a Senior
Employee of Employer with whom Employee had dealings
during the last 12 months of the Employment to cease
working for or providing services to Employer,
whether or not any such person would thereby commit a
breach of contract;
(v) employ or otherwise engage in the business of
researching into, developing, manufacturing,
distributing, selling, supplying or otherwise dealing
with Restricted Goods or Restricted Services any
person who, during the 12 months preceding the
Termination Date, was employed or otherwise engaged
by Employer and who by reason of such employment or
engagement is in possession of any trade secrets or
Confidential Information relating to the business of
Employer or who has acquired influence over its
Customers and Prospective Customers (defined in
clause 18A, but so that references to Employee shall
be replaced by references to the relevant employee).
C. LIMITATION OF SUSPENSION
If Employer exercises its right to suspend Employee's duties
and powers under clause 6 during any period after notice of
termination of the Employment has been given by Employer or
Employee, the aggregate of the period of the suspension and
the period after the
17
Termination Date for the which the covenants in sub-clause 18B
shall apply shall not exceed 12 months and, if the aggregate
of the two periods would exceed 12 months, the period after
the Termination Date for which the covenants in sub-clause 18B
shall apply shall be reduced accordingly.
D. GROUP COMPANIES
Clause 18B shall also apply as though references to "Employer"
include references to each Group Company in relation to which
Employee has in the course of his duties for Employer or by
reason of rendering services to or holding office in such
Group Company:
(i) acquired knowledge of its trade secrets or Confidential
Information; or
(ii) had personal dealings with its Customers or Prospective
Customers; or
(iii) supervised directly or indirectly employees having
personal dealings with its Customers or Prospective
Customers,
but so that references in clause 18A to "Employer" shall for this
purpose be deemed to be references to the relevant Group Company. The
obligations undertaken by Employee pursuant to this clause 18D shall,
with respect to each such Group Company, constitute a separate and
distinct covenant and the invalidity or unenforceability of any such
covenant shall not affect the validity or enforceability of the
covenants in favour of any other Group Company or Employer.
E. ASSOCIATION
Employee hereby undertakes with Employer that he will not at
any time:
(i) during the continuance of the Employment or after the
Termination Date engage in any trade or business or
be associated with any other person, firm or company
engaged in any trade or business using the name(s)
Viragen or incorporating the word(s) Viragen;
(ii) after the termination of the Employment in the course
of carrying on any trade or business, claim,
represent or otherwise indicate any present
association with Employer or any Group Company or for
the purpose of carrying on or retaining any business
or custom, claim, represent or otherwise indicate any
18
past association with Employer or any Group Company
to its detriment.
F. SEVERABILITY
The restrictions in this clause 18 (on which Employee has had
the opportunity to take independent advice, as Employee hereby
acknowledges) are separate and severable restrictions and are considered
by the parties to be reasonable in all the circumstances. It is agreed
that if any such restrictions, by themselves, or taken together, shall be
adjudged to go beyond what is reasonable in all the circumstances for the
protection of the legitimate interests of Employer or a Group Company but
would be adjudged reasonable if part or parts of the wording thereof were
deleted, the relevant restriction or restrictions shall apply with such
deletion(s) as may be necessary to make it or them valid and effective.
19. EMPLOYEE'S DISCLOSURES AND REPRESENTATIONS AND WARRANTIES
Employee hereby acknowledges, represents and warrants to, and/or
agrees with, Employer as follows:
(a) That Employee has full right, power and authority to perform all
obligations under this Agreement.
(b) 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 legal fees and costs due to or arising out
of any material inaccuracy in, or material breach of, any material
representation, warranty or covenant of Employee contained herein.
19
20. INDEPENDENT ADVICE
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 representation with respect to all matters contemplated
herein from the commencement of negotiations at all times through to the
execution hereof.
21. LAW APPLICABLE
This Agreement shall be governed by and construed in accordance
with the law of Scotland.
22. NOTICES
Any notice or other document to be given under this Agreement
shall be in writing and may be given personally to Employee or to the
Secretary of Employer (as the case may be) or may be sent by first class
post or other fast postal service or by facsimile transmission to, in the
case of Employer, its registered office for the time being and in the
case of Employee either to his address shown on the face hereof or to his
last known place of residence.
Any such notice shall be deemed served when in the ordinary course
of the means of transmission it would first be received by the addressee
in normal business hours.
23. COLLECTIVE AGREEMENTS
There are no collective agreements applicable to the Employment.
24. DATA PROTECTION
Employee acknowledges and agrees that Employer is permitted to
hold personal information about Employee as part of its personnel and
other business records and may use such information in the course of
Employee's business. Employee agrees that Employer may disclose such
information to third parties in the event that such disclosure is in
Employer's view required for the proper conduct of Employer's business or
that of any Group Company. This clause applies to information held used
or disclosed in any medium.
25. SUCCESSION
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors in interest of any
kind whatsoever; provided, however, that Employee acknowledges and agrees
that he cannot assign, delegate or transfer any of his rights, duties,
responsibilities or obligations hereunder to any other person or
entity.
20
26. ENTIRE AGREEMENT
This Agreement constitutes the entire 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 his statutory waiver of claims on expiry of
this contract. This Agreement can only be amended in writing.
27. NO WAIVER
A waiver of any breach of any term, provision or covenant
contained herein shall not be deemed a continuing waiver or a waiver of
any future or past breach. No oral waiver shall be binding.
28. 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 legal 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
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
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.
21
IN WITNESS WHEREOF, these presents printed on this and the 16 preceding
pages are executed as follows:-
Signed for and on behalf of the said
Viragen (Scotland) Limited
At
On
Nineteen Hundred and Ninety Nine:-
Witness
------------------------ -------------------------------
Xxxxxx X. Xxxxxx Director
Address
------------------------
------------------------
Occupation
------------------------
Signed by the said Xx. Xxxxxx Xxxxxx Nicolson
At
On
Nineteen Hundred and Ninety Nine:-
Witness
------------------------ -------------------------------
Xx. Xxxxxxxx
Address
------------------------
------------------------
Occupation
------------------------
22
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 1, 1999 (the "Effective Date") between
Viragen, Inc. a Delaware Corporation (the "Company") and Xx. Xxxxxx Xxxxxx
Nicolson ("Optionee").
The Company, pursuant to the provisions of its 1997 Stock Option Plan (the
"Plan"), hereby grants to Optionee an Incentive Stock Option ("ISO") to acquire
Common Stock, par value $.01 per share, of the Company (the "Common Stock"),
subject to the following terms and conditions:
1. GRANT OF OPTION. The Company hereby grants to Optionee (the
"Option") to purchase up to 200,000 shares of Common Stock (the "Shares"), to be
transferred upon the exercise thereof, fully paid and nonassessable.
2. EXERCISE PRICE. The exercise price of the Shares subject to the
Option shall be at market at the Grant Date, $0.625 per share. The Company shall
pay all original issue or transfer taxes upon the exercise of the Option by
Optionee.
3. EXERCISABILITY OF OPTION; RIGHTS AND PRIVILEGES. Subject to
the provisions of Paragraph 6 hereof, the Option shall be
exercisable by Optionee for a period of five (5) years
commencing:
i) one third on the Effective Date,
ii) one third on the first anniversary of the Effective
Date and,
iii) one third on the second anniversary of the Effective
Date.
All granted but unexercised Options shall continue to be fully exercisable in
accordance with the provisions herein:
(i) if there occurs any corporate transaction (which
shall include a series of corporate transactions occurring within 60 days or
occurring pursuant to a plan), that has the result that shareholders of the
Company immediately before such transaction cease to own at least 66 2/3 percent
of the voting stock of the Company in a (a) reorganization, (b) consolidation,
(c) merger, (d) liquidation or (e) a similar of corporate transaction;
(ii) if the shareholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
23
(iii) if the shareholders of the Company shall
approve a plan for the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).
4. NON-ASSIGNABILITY OF OPTION. The Option shall not be given, granted,
sold, exchanged, transferred, pledged, encumbered, assigned or otherwise
disposed of by Optionee, other than by will or the laws of descent and
distribution, and during the lifetime of Optionee, shall not be exercisable by
any other person, but only by Optionee.
5. METHOD OF EXERCISE OF OPTION. Optionee shall notify the Company by
written notice, in the form of the Notice of Exercise attached hereto
(Attachment A), delivered to the Company's principal office, attention: Chief
Financial Officer. At the Optionee's option, the payment for the Shares may be
made either by Optionee's check payable to the order to the Company in full
payment for the total exercise price of the number of Shares purchased or by
execution and delivery by the Optionee to the Company of a Note(s), in similar
form and content as Notes previously used by the Company for similar purposes
("Note(s)"), dated as of each Notice of Exercise. As soon as practicable after
the receipt of such Notice of Exercise and accompanying payment for the purchase
of Shares, the Company shall, at its principal office, tender to Optionee a
certificate or certificates issued in Optionee's name evidencing the Shares
purchased by Optionee hereunder.
6. TERMINATION OF OPTION. To the extent exercisable but not exercised,
the Option shall terminate upon the first to occur of the following dates:
(a) five (5) years from the Exercise Date as defined herein;
or
(b) the expiration of ninety (90) days following the date
Optionee's employment terminates with the Company and/or any of its subsidiaries
included in the Plan with Cause, as defined in Optionee's Employment Agreement
attached hereto.
Subject to the provisions of this paragraph, in the event of Optionee's death,
the exercisable but unexercised portion of the Option may be exercised by the
estate of Optionee, or by the person who acquired the right to exercise the
Option by bequest or inheritance or by reason of the death of Optionee.
In the event of Employee's termination without Cause, all granted but
unexercised Options shall continue to be fully exercisable in accordance with
the provisions herein. Additionally, in the event this Agreement is not renewed
at the end of the Employment Term, then all granted but unexercised Options
shall continue to be fully exercisable in accordance with the provisions herein.
7. PLEDGE OF SHARES. If payment for the purchase of Shares under this
Option is made through execution and delivery of a Note(s), effective upon
Optionee's purchase(s) of the Shares and the delivery of the Note(s), in order
to secure the Company's obligations under the Note(s), Optionee hereby pledges,
assigns and sets over
2
24
to the Company, and grants to the Company a security interest in, the Shares.
The Shares pledged pursuant hereto shall be maintained in escrow with Atlas,
Xxxxxxxx, Trop & Borkson, P.A. pursuant to the terms of a Pledge and Escrow
Agreement previously used by the Company for similar purposes, which shall be
executed by Optionee and the Company upon delivery of a Note(s). As long as any
Shares remain subject to the lien of the Pledge, such Shares may not be further
pledged or encumbered in any manner, and shall not be sold, transferred or
otherwise disposed of. The Escrow Agent shall not be required to relinquish the
Pledge or the Escrow Agent's possession of the certificates evidencing the
Shares, unless no later than concurrently with the sale of the Shares pursuant
to an S-8 registration, all Notes which are secured by such Shares are paid in
full. In the event any of the Shares are to be titled in the name of an
immediate family member of Optionee or a trust pursuant to the terms herein, as
a condition thereto the designated title holder(s) of such Shares shall execute
and deliver to the Company a pledge and escrow agreement, in form and content
reasonably satisfactory to the Company and its counsel, consistent with the
terms herein. No transfer of Shares to, or designation by Optionee of (for the
purposes of owning Shares) any person or entity shall relieve Optionee of any of
his obligations under the Note(s) or this Agreement. With respect to each Note
under which a voluntary prepayment is made by Optionee, provided that interest
payments on such Note are current through the date of prepayment and such Note
is not in default and has not been accelerated, for each $6,250 of principal
paid by Optionee under such Note, 10,000 Shares of the Shares pledged to secure
such Note shall be released from the lien of the Pledge. As long as no event of
default has occurred with respect to a Note and no event giving right to
accelerate such Note has occurred, Optionee shall retain all voting rights with
respect to all Shares securing such Note. Following an event of default or an
acceleration event, the Company shall have and may exercise all voting rights
with respect to such Shares. Optionee hereby irrevocably appoints the Company
Optionee's attorney-in-fact for such purpose, it being acknowledged that such
appointment is coupled with an interest. Any dividends or distributions payable
in respect of any Shares subject to the Pledge shall automatically be applied to
pay down the Note(s) in inverse order of their respective maturity date(s). In
the event of a default under any Note, in addition to and not in limitation or
lieu of any other rights or remedies the Company may have against Optionee as a
result of such default, the Company may exercise all of its rights at law and in
equity as a secured party, including without limitation under the Uniform
Commercial Code, with respect to all Shares then securing the Note with respect
to which the default has occurred. Upon a default, without limiting any of the
Company's other rights and remedies, the Company may conduct a public or private
foreclosure sale of the Shares securing the Note with respect to which the
default has occurred. Optionee agrees that 10 days notice to him of any private
sale is fair and reasonable. The Company may be the purchaser at any public
foreclosure sale, and may bid any commercially reasonable amount at such sale.
In all events, in the event of a public or private foreclosure sale, Optionee
shall be liable for any deficiency. All of the Company's rights and remedies
under the Note(s), the Pledge and this Agreement, and at law or in equity, are
cumulative, and none is intended to be in substitution or in lieu of, nor is the
exercise of one intended to be a waiver of, any other. The Company shall have no
obligation to proceed against the Shares before proceeding against Optionee with
respect to any default under any of the Notes.
3
25
8. SECURITIES LAWS. 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 Plan and the shares underlying
the Options shall be registered 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 herein.
9. ADJUSTMENT OF SHARES. If at any time prior to the expiration or
exercise in full of the Option, there shall be any increase or decrease in the
number of issued and outstanding shares of the Common Stock through the
declaration of a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of the Common Stock, then and in such
event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so optioned;
and
(ii) appropriate adjustment shall be made in the number of
Shares, and the exercise price per Share thereof, that remain unexercised under
the Option, so that the same percentage of the Company's issued and outstanding
shares of Common Stock shall remain subject to purchase at the same aggregate
exercise price.
Except as otherwise expressly provided herein, the issuance by the Company of
shares of its capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with a direct sale of upon
the exercise of rights or warrants to subscribe therefore, or upon conversions
of shares or obligations the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of exercise price of the Shares that remain
unexercised under the Option.
Without limiting the generality of the foregoing, the existence of unexercised
Shares under the Option shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; (ii) any merger or consolidation of the Company;
(iii) any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares issuable upon exercise of the Option;
(iv) the dissolution or liquidation of the Company; (v) any sale, transfer or
assignment of all or any part of the assets or business of the Company; or (vi)
any other corporate act or proceeding, whether of a similar character or
otherwise.
10. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
stockholder of the Company in respect of the Shares as to which the Option shall
not have been exercised and payments made therefore as herein provided.
4
26
11. BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
heirs, legal representatives, successors and permitted assigns. Optionee
acknowledges that Optionee has read and understands the Plan and agrees to abide
by its terms.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
conflict of laws principles thereof. All terms not defined in this Agreement
shall have the same meaning as in the Plan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
VIRAGEN, INC.
By:
----------------------------
Xxxxxx X. Xxxxxx
Executive Vice President
OPTIONEE
----------------------------
Xx. Xxxxxx Xxxxxx Nicolson
5
27
ATTACHMENT A
------------
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise the within Option to the
extent of purchasing __________ shares of Common Stock of Viragen, Inc., a
Delaware Corporation, and hereby makes payments of $________ in payment
therefor.
--------------------------
Signature
--------------------------
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK AND CORPORATE RECORDS
--------------------------------------------------------
Name:
---------------------------------------------
(Please type or print in block letters)
Address:
---------------------------------------------
---------------------------------------------
Social Security #:
--------------------------------------------
Phone #: ( )
-------------------------------------------------------
Fax #: ( )
-------------------------------------------------------
6
