EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 1st day of January, 1998, by and between BIOSHIELD TECHNOLOGIES, INC., a
Georgia corporation (hereinafter called the "Company") and Xxxxxxx X. Xxxxx,
President and Chief Executive Officer (hereinafter called the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive desire to enter into an employment
agreement to establish the rights and obligations of the Executive and the
Company in such employment relationship;
WHEREAS, the terms of this Agreement have been approved by the Compensation
Committee of the Board of Directors of the Company;
NOW, THEREFORE, and in consideration of the mutual covenants herein
contained, the Company and the Executive hereby mutually agree as follows:
1. EMPLOYMENT AND DUTIES. The Company hereby employs the Executive, and
the Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth. The Executive shall serve the Company as its
President and Chief Executive Officer. In such capacity, the Executive shall
have all powers, duties, and obligations as are normally associated with such
position. The Executive shall further perform such other duties related to the
business of the Company, including travel, as may from time to time be
reasonably requested of him by the Company's Board of Directors. The Executive
shall devote all of his skills, time, and attention solely and exclusively to
said position and in furtherance of the business and interests of the Company
except for:
(a) time spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and
(b) periods of vacation to which he is entitled.
Executive shall promptly notify the Company of his election or appointment to
any corporate, civic or charitable boards or committees on or after the date of
this Agreement.
2. TERM OF EMPLOYMENT. The term of employment shall begin, or be deemed
to have begun, on January 1, 1998 (the "Effective Date") and shall expire on
January 1, 2003, (the "Expiration Date") subject, however, to prior termination
or to extension, as herein provided. On each January 1st while this Agreement
is in force beginning January 1, 2001, the term of this Agreement shall
automatically be extended so that new term of the Agreement expires three years
from such date, unless either party notifies the other party in writing of an
intent not to renew at least ninety (90) days prior to the applicable January 1.
3. BASE SALARY. For such services, the Executive shall receive an annual
base salary of $125,000 (the "Base Salary"), which Base Salary shall be reviewed
annually by the Compensation Committee of the Board of Directors and which may
be increased, but not decreased, by the Company during the term of this
Agreement. In the event that the Company increases the Executive's Base Salary,
the amount of the prior Base Salary, together with any increase(s), shall be his
new Base Salary. The Base Salary shall be payable in equal installments, no
less frequently than semi-monthly, in accordance with the Company's regular
payroll practices.
4. BONUS. For each fiscal year of the Company during which he is employed
by the Company on the last day of the fiscal year, the Executive shall be
eligible to receive an annual bonus ("Annual Bonus") under the bonus plan
established by the Compensation Committee of the Board for the Executive. Such
Annual Bonus shall be determined by the Compensation Committee of the Board and
shall not exceed $50,000. Each Annual Bonus shall be paid in cash as soon as
practical after the year for which the Annual Bonus is earned or awarded, unless
electively deferred by the Executive pursuant to any deferral programs or
arrangements that the Company may make available to the Executive.
5. FRINGE BENEFITS. The Company shall further provide the Executive with
all health and life insurance
coverages, sick leave and disability programs, tax-qualified retirement plans,
stock option plans, paid holidays and vacations, expense reimbursement
policies, moving and relocation policies, perquisites, and such other fringe
benefits of employment as the Company may provide from time to time to
actively employed senior executives of the Company who are similarly situated.
Notwithstanding the preceding provisions of this Paragraph 5, during the term
of this Agreement (including extensions thereof) the Company shall provide the
Executive;
(a) reimbursement for all reasonable expenses incurred by the Executive in
connection with the conduct of the Company's business on presentation of
reasonable and appropriate receipts and in accordance with the Company's regular
reimbursement policy applicable to senior executives;
(b) an individual disability insurance policy, at the Company's expense,
in addition to the long-term disability plan maintained by the Company generally
for its employees, which provides long-term disability insurance which replaces
at least $6,000 of the Executive's monthly Base Salary;
(c) a minimum of four (4) weeks of paid vacation per year; and
(d) an automobile allowance of up to $1,200 per month for automobile lease
payments, maintenance, insurance and fuel.
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6. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF EMPLOYMENT OTHER THAN BY EXECUTIVE. The Executive's
employment hereunder may be terminated by the Company without any breach of this
Agreement under the following circumstances:
(1) DEATH OR DISABILITY. The Executive's employment hereunder shall
terminate upon his death, and may be terminated by the Company in the event of
his Disability for a continuous period of at least one hundred eighty (180)
days, provided that the Executive does not return to work on a substantially
full-time basis within thirty (30) days after Notice of Termination is given
by the Company pursuant to the provisions of Paragraphs 6(c) and 6(d)(2). A
return to work of less than thirty (30) days shall not interrupt a continuous
period of Disability.
(2) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause.
(3) WITHOUT CAUSE. The Company may terminate the Executive's
employment hereunder without Cause.
(b) TERMINATION OF EMPLOYMENT BY EXECUTIVE. The Executive may terminate
his employment at any time with or without Good Reason.
(c) NOTICE OF TERMINATION. Any termination of the Executive's employment
by the Company, or by the Executive other than termination upon the Executive's
death, shall be communicated by written Notice of Termination to the other
party. For purposes of this Agreement, a "Notice of Termination" means a notice
that shall indicate the specific termination provision in this Agreement relied
upon, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.
(d) DATE OF TERMINATION. "Date of Termination" means:
(1) If the Executive's employment is terminated by his death, the
date of his death.
(2) If the Executive's employment is terminated by the Company as a
result of Disability pursuant to Paragraph 6(a)(1), the date that is thirty
(30) days after Notice of Termination is given; provided the Executive shall
not have returned to the performance of his duties on a full-time basis during
such thirty (30) day period.
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(3) If the Executive terminates his employment for Good Reason
pursuant to Paragraph 6(b), the date that is ten (10) days after Notice of
Termination is given (provided that the Company does not cure such event
during the ten (10) day period).
(4) If the Executive terminates his employment other than for Good
Reason, the date that is two (2) weeks after Notice of Termination is given;
provided, in the sole discretion of the Company, such date may be any earlier
date after Notice of Termination is given.
(5) If the Executive's employment is terminated by the Company
without Cause pursuant to Section 6(a)(3), the date that is two (2) weeks
after Notice of Termination is given.
(6) If the Executive's employment is terminated by the Company for
Cause pursuant to Paragraph 6(a)(2), the date on which the Notice of
Termination is given.
7. AMOUNTS PAYABLE UPON TERMINATION OF EMPLOYMENT OR DURING DISABILITY.
Upon the termination of the Executive's employment with the Company, the Company
shall have the following obligations (including the obligation to pay the cost
of all benefits provided by the applicable benefit plan to the Executive and the
Executive's family under this Section 7, except normal employee contributions
required by the applicable benefit plan of other participating executives with
comparable responsibilities); provided, however, that any item paid or payable
under this Agreement shall be reduced by any amount paid or payable to the
Executive and the Executive's family with respect to the same type of payment
under any severance plan or policy now maintained or at any time in the future
maintained by the Company. For this purpose, any payment under this Agreement
or any severance plan or policy made over time shall be discounted to present
value at the Interest Rate before reducing any payment under this Agreement by
any amount paid or payable to the Executive under such severance plan or policy.
(a) DEATH. If the Executive's employment is terminated by his death, the
Executive's beneficiary (as designated by the Executive in writing with the
Company prior to his death) shall be entitled to payment of all Accrued
Obligations. Unless otherwise directed by the Executive all Accrued
Obligations shall be paid to the Executive's beneficiaries in a lump sum in
cash within thirty (30) days of the Date of Termination. In the absence of a
beneficiary designation by the Executive, or, if the Executive's designated
beneficiary does not survive the Executive, benefits described in this
Paragraph 7(a) shall be paid to the Executive's estate. In addition, all stock
options that have been granted to the Executive at least six months prior to
the date of his death (measured from the date of grant of each such stock
option), if any, shall be and become fully vested and may be executed by the
estate of the Executive for a period equal to the earlier to occur of five (5)
years from the date of the death of the Executive or the date the option would
have otherwise expired without regard to the Executive's death or other
termination of employment. If the Executive dies after the date of grant of
any stock options, the Executive's estate may exercise any stock options which
were then vested for a period equal to the earlier to occur of five (5) years
from the date of the death of the Executive or the date the option would have
expired without regard to the Executive's death or other termination of
employment.
(b) DISABILITY.
(1) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), the Executive shall continue to receive his base salary
at the rate then in effect for such period until his employment is terminated
pursuant to Paragraph 6(a)(1); provided, however, that payments of Base Salary
so made to the Executive shall be reduced by the sum of the amounts, if any,
that were payable to the Executive at or before the time of any such salary
payment under any disability benefit plan or plans of the Company and that
were not previously applied to reduce any payment of Base Salary.
(2) Upon his termination of employment because of Disability (as
described in Paragraph 6(a)(1)), the Executive shall be entitled to the
payments and benefits described in Paragraph 7(a) as if the Executive had died
on his Date of Termination. In the event of the Executive's death prior to the
time that all payments described in Paragraph 7(a) have been completed, such
payments and benefits shall be paid to the Executive's beneficiary (as
designated pursuant to Paragraph 7(a)), or, in the absence of a beneficiary
designation of the designated beneficiary does not survive the Executive, to
the Executive's estate.
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(3) The Executive and the Executive's family shall be entitled to
receive disability and other welfare plan benefits (other than continued group
long-term disability coverage) generally available to executives with
comparable responsibilities or positions for a period of two (2) years from
the Date of Termination at the same cost to the Executive as is charged to
such executives from time to time for comparable coverage.
(c) TERMINATION BY COMPANY WITHOUT CAUSE OR TERMINATION BY EXECUTIVE FOR
GOOD REASON. In the event that the Company terminates the Executive's
employment without Cause or the Executive terminates his employment for Good
Reason before the expiration of the term of this Agreement, including any
extension thereof, the Executive shall be entitled to the following
payments and benefits:
(1) Those described in Paragraph 7(a) as if the Executive had died
on his Date of Termination.
(2) Payment of an amount equal to the sum of the Base Salary
(assuming no increases) payable to the Executive for remaining term of this
Agreement assuming no termination, plus (B) two (2) times the average of the
Annual Bonuses paid or payable to the Executive during the term of this
Agreement, payable in twelve (12) equal, consecutive monthly installments
commencing no later than thirty (30) days after the Date of Termination.
(3) All outstanding options, stock grants, share of restricted stock
or any other equity, incentive compensation shall be and become fully vested
and nonforfeitable.
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(4) The Executive and the Executive's family shall be entitled to
receive welfare plan benefits (other than continued group long-term disability
coverage) generally available to executives with comparable responsibilities
or positions for a period of the lessor of two (2) years from the Date of
Termination or until the Expiration Date of this Agreement at the same cost to
the Executive as is charged to such executives from time to time for
comparable coverage.
(d) TERMINATION BY EXECUTIVE OTHER THAN FOR GOOD REASON, OR TERMINATION BY
COMPANY FOR CAUSE. In the event that the Executive terminates his employment
other than for Good Reason or the Company terminates his employment for Cause,
the Executive shall not be entitled to any compensation except as set forth
below:
(1) Any Base Salary that is accrued but unpaid, any vacation that is
accrued but unused, and any business expenses that are unreimbursed, all as of
the Date of Termination.
(2) Any other rights and benefits (if any) provided under plans and
programs of the Company (excluding any bonus program), determined in
accordance with the applicable terms and provisions of such plans and
programs.
8. RESTRICTIVE COVENANTS. The Executive agrees that, during the term of
this Agreement, including an extension thereof, and for a period of one year
thereafter, he shall not, directly or indirectly:
(a) on Executive's own behalf or on behalf of any other person or entity,
solicit, contact, call upon, communicate with, or attempt to communicate with
any person or entity who was a customer of the Company at any time within the
one-year period ending on the Date of Termination or any representative of any
such customer of the Company, with the intent or purpose of selling or providing
of any product or service competitive with any product or service sold or
provided or under development by the Company during the period of one year
immediately preceding termination of Executive's employment and which is still
being offered by or is still under development by the Company; and
(b) employ or attempt to employ or assist anyone else in employing in any
Competing Business any person who, at any time within the period commencing one
year prior to the Date of Termination and ending one year after the Date of
Termination, was, is or shall be an employee of the Company (whether or not such
employment is full-time or is pursuant to a written contract with the Company).
9. CONFIDENTIAL INFORMATION. The Executive agrees that:
(a) during the term of this Agreement and, with respect to Confidential
Information, for a period of five (5) years following his Date of Termination,
or with respect to Trade Secrets, for so long as the respective information
qualifies as a trade secret under applicable law, he will receive and hold all
Company Information in trust and in strictest confidence;
(b) he will use his best effort to protect the Company Information from
disclosure and will in no event take any action causing any Company Information
to lose its character as Company Information; and
(c) except as required by Executive's duties in the course of employment
by the Company, he will not, directly or indirectly, use, publish, disseminate
or otherwise disclose any Company Information to any third party without the
prior written consent of the Company, which may be withheld in the Company's
absolute discretion.
All documents or tangible or intangible materials, including computer data,
provided to or obtained by Executive during the course of employment by the
Company which contain Company Information are the property of the
Company(collectively, the "Materials"). Executive will not remove from the
Company's premises or copy or reproduce any Materials (except as Executive's
employment by the Company shall require), and at the termination of Executive's
employment, regardless of the reason for such termination, Executive will leave
with the Company, or immediately return to the Company, all Materials or copies
or reproductions thereof in Executive's possession, power or control.
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10. ACKNOWLEDGMENT; REMEDIES.
(a) Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred to the Company under
Sections 8 and 9 of this Agreement, and hereby acknowledges and agrees that the
same are reasonable in time, necessary to protect the business, interests and
properties of the Company, are designed to eliminate competition which would be
unfair to the Company, do not stifle the inherent skill and experience of
Executive, would not operate as a bar to Executive's sole means of support, are
fully required to protect the legitimate interests of the Company and do not
confer a benefit upon the Company disproportionate to the detriment of
Executive.
(b) In the event of any violation of the provisions of Sections 8 or 9 of
this Agreement by Executive, the parties hereby recognize and acknowledge that
remedy at law will be inadequate and the Company may suffer irreparable injury.
Accordingly, Executive consents to injunctive and other appropriate equitable
relief upon the institution of proceedings therefor by the Company in order to
protect the Company's rights under such Sections. Such relief shall be in
addition to any other relief to which the Company may be entitled at law or in
equity. Covenants contained in Sections 8 or 9 hereof shall be treated the same
as a termination by the Company for Cause and shall entitle the Company to cease
the provision of any welfare plan benefits being afforded to the Executive or
his family after the termination of his employment with the Company, cease any
payments to be made to the Executive pursuant to this Agreement in connection
with such termination (other than accrued and unpaid Base Salary and vacation)
or recover from the Executive any payments made to the Executive under this
Agreement in respect of such termination (other than accrued Base Salary and
vacation). In no event shall such actions preclude the Company from any
equitable relief to which it may otherwise be entitled and such remedies shall
be cumulative.
11. CERTAIN FURTHER PAYMENTS BY THE COMPANY.
(a) Tax Reimbursement Payment. In the event that any amount or benefit
paid or distributed to the Executive by the Company or any Affiliated Company,
whether pursuant to this Agreement or otherwise (collectively, the "Covered
Payments"), is or becomes subject to the tax (the "Excise Tax") imposed under
Section 4999 of the Code or any similar tax that may hereafter be imposed, the
Company shall pay to the Executive, at the time specified in Section 11(e)
below, the Tax Reimbursement Payment (as defined below). The Tax Reimbursement
Payment is defined as an amount, which when added to the Covered Payments and
reduced by any Excise Tax on the Covered Payments and any federal, state and
local income tax and Excise Tax on the Tax Reimbursement Payment provided for by
this Agreement (but without reduction for any federal, state or local income or
employment tax on such Covered Payments), shall be equal to the sum of (i) the
amount of the Covered Payments, and (ii) an amount equal to the product of any
deductions disallowed for federal, state or local income tax purposes because of
the inclusion of the Tax Reimbursement Payment in the Executive's adjusted gross
income and the highest applicable marginal rate of federal, state or local
income taxation, respectively, for the calendar year in which the Tax
Reimbursement Payment is to be made.
(b) DETERMINING EXCISE TAX. For purposes of determining whether any of
the Covered Payments will be subject to the Excise Tax and the amount of such
Excise Tax,
(1) such Covered Payments will be treated as "parachute payments"
within the meaning of Section 280G of the Code, and all "parachute payments"
in excess of the "base amount" (as defined under Section 280G(b)(3) of the
Code) shall be treated as subject to the Excise Tax, unless, and except to the
extent that, in the opinion of the Company's independent certified public
accountants, which, in the case of Covered Payments made after the Change of
Control Date, shall be the Company's independent certified public accountants
appointed prior to the Change of Control Date, or tax counsel selected by such
accountants (the "Accountants"), such Covered Payments (in whole or in part)
either do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of Section
280G(b)(4) of the Code) in excess of the "base amount", or such "parachute
payments" are otherwise not subject to such Excise Tax, and
(2) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance with the
principles of Section 280G of the Code.
(c) APPLICABLE TAX RATES AND DEDUCTIONS. For purposes of determining the
amount of the Tax Reimbursement Payment, the Executive shall be deemed:
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(1) to pay federal income taxes at the highest applicable marginal
rate of federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made,
(2) to pay any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Tax Reimbursement Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from the deduction of such state
or local taxes if paid in such year (determined without regard to limitations
on deductions based upon the amount of the Executive's adjusted gross income),
and
(3) to have otherwise allowable deductions for federal, state and
local income tax purposes at least equal to those disallowed because of the
inclusion of the Tax Reimbursement Payment in the Executive's adjusted gross
income.
(d) SUBSEQUENT EVENTS. In the event that the Excise Tax is subsequently
determined by the Accountants to be less than the amount taken into account
hereunder in calculating the Tax Reimbursement Payment made, the Executive
shall repay to the Company, at the time that the amount of such reduction in
the Excise Tax is finally determined, the portion of such prior Tax
Reimbursement Payment that has been paid to the Executive or to federal, state
or local tax authorities on the Executive's behalf and that would not have
been paid if such Excise Tax had been applied in initially calculating such
Tax Reimbursement Payment, plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Tax Reimbursement Payment to be
refunded to the Company has been paid to any federal, state or local tax
authority, repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Executive, and interest payable to
the Company shall not exceed interest received or credited to the Executive by
such tax authority for the period it held such portion. The Executive and the
Company shall mutually agree upon the course of action to be pursued (and the
method of allocating the expenses thereof) if the Executive's good faith claim
for refund or credit is denied. In the event that the Excise Tax is later
determined by the Accountants to exceed the amount taken into account
hereunder at the time the Tax Reimbursement Payment is made (including, but
not limited to, by reason of any payment the existence or amount of which
cannot be determined at the time of the Tax Reimbursement Payment), the
Company shall make an additional Tax Reimbursement Payment in respect of such
excess (which Tax Reimbursement Payment shall include any interest or penalty
payable with respect to such excess) at the time that the amount of such
excess is finally determined.
(e) DATE OF PAYMENT. The portion of the Tax Reimbursement Payment
attributable to a Covered Payment shall be paid to the Executive within ten
business days following the payment of the Covered Payment. If the amount of
such Tax Reimbursement Payment (or portion thereof) cannot be finally determined
on or before the date on which payment is due, the Company shall pay to the
Executive an amount estimated in good faith by the Accountants to be the minimum
amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax
Reimbursement Payment (which Tax Reimbursement Payment shall include interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than 45 calendar days after
payment of the related Covered Payment. In the event that the amount of the
estimated Tax Reimbursement Payment exceeds the amount subsequently determined
to have been due, such excess shall be repaid or refunded pursuant to the
provisions of Section 11(d) above.
12. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
Affiliated Companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise prejudice such rights as the Executive may have under
any other agreements with the Company or any Affiliated Companies, including,
but not limited to stock option or restricted stock agreements. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company or any Affiliated Companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
13. NOTICE OF TERMINATION FOR GOOD CAUSE. In the event that the Executive
shall in good faith give a Notice of Termination for Good Reason and it shall
thereafter be determined that Good Reason did not take place, the employment of
the Executive shall, unless the Company and the Executive shall otherwise
mutually agree, be deemed to have terminated, at the date of giving such
purported Notice of Termination, by mutual consent of the
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Company and the Executive and, except as provided in the last preceding
sentence, the Executive shall be entitled to receive only those payments and
benefits which he would have been entitled to receive at such date had he
terminated his employment voluntarily at such date under this Agreement.
14. DEFINITIONS.
(a) "Accountants" shall have the meaning set forth in Section 11(b).
(b) "Accrued Obligations" shall mean (i) the Executive's full Base Salary
through the Date of Termination, (ii) the product of the Annual Bonus paid to
the Executive for the last full fiscal year of the Company and a fraction, the
numerator of which is the number of days in the current fiscal year of the
Company through the Date of Termination, and the denominator of which is 365,
(iii) any compensation previously deferred by the Executive (together with any
accrued earnings thereon) and not yet paid by the Company and any accrued
vacation pay for the current year not yet paid by the Company, (iv) any amounts
or benefits owing to the Executive or to the Executive's beneficiaries under the
then applicable employee benefit plans or policies of the Company and (v) any
amounts owing to the Executive for reimbursement of expenses properly incurred
by the Executive prior to the Date of Termination and which are reimbursable in
accordance with the reimbursement policy of the Company described in Section
5(a).
(c) "Affiliated Company" shall mean any company controlling, controlled by
or under common control with the Company.
(d) "Annual Bonus" shall have the meaning set forth in Section 4.
(e) "Base Salary" shall have the meaning set forth in Section 3.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Cause" shall mean either:
(1) any act that constitutes, on the part of the Executive, (A)
fraud, dishonesty, or a felony and (B) that directly results in material
injury to the Company;
(2) Executive's conduct as the President and Chief Executive Officer
of the Company is grossly inappropriate and demonstrably likely to lead to
material injury to the Company; or
(3) the Executive otherwise materially breaches this Agreement;
provided, however, that in the case of Clause (2) or (3) above, such conduct
shall not constitute Cause unless the Board shall have delivered to the
Executive notice setting forth with specificity (A) the conduct deemed to
qualify as Cause, (B) reasonable action that would remedy such objection, and
(C) a reasonable time (not less than thirty (30) days) within which the
Executive may take such remedial action, and the Executive shall not have
taken such specified remedial action within such specified reasonable time.
(h) A "Change of Control" means:
(1) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
voting securities of the corporation where such acquisition causes such person
to own thirty-five percent (35%) or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this Subsection (A), the following
acquisitions shall not be deemed to result in a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (iv) any acquisition by any corporation pursuant to a transaction
that complies with clauses (i), (ii) and (iii) of Subsection (3) below; and
provided further, that if any Person's beneficial ownership of the Outstanding
Company Voting Securities reaches or exceeds thirty-five percent (35%) as a
result of a transaction described in clause (i) or (ii)
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above, and such Person subsequently acquires beneficial ownership of
additional voting securities of the Company, such subsequent acquisition shall
be treated as an acquisition that causes such Person to own thirty-five
percent (35%) or more of the Outstanding Company Voting Securities; or
(2) individuals who as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(3) the approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company ("Business Combination") or, if
consummation of such Business Combination is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Business Combination pursuant to
which (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of the corporation resulting from such Business Combination (including,
without limitation, a corporation that as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Voting Securities, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, thirty-five percent (35%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(4) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred for purposes of this Agreement by reason of any actions or events in
which the Executive participates in a capacity other than in his capacity as
executive (or as a director of the Company or a Subsidiary, where applicable).
(i) "Change of Control Date" shall mean the date on which a Change of
Control shall be deemed to have occurred.
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(k) "Company Information" means Confidential Information and Trade
Secrets.
(l) "Competing Business" means any business engaging in the exploitation
or development of antimicrobial products.
(m) "Confidential Information" means confidential data and confidential
information relating to the business of the Company (which does not rise to the
status of a trade secret under applicable law) which is or has been disclosed
to Executive or of which Executive became aware as a consequence of or through
his employment with the Company and which has value to the Company and is not
generally known to its competitors and which is designated by the Company as
confidential. Confidential Information shall not include any data or
information that (i) has been voluntarily disclosed to the general public by
the Company, (ii) has been
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independently developed and disclosed to the general public by others, or
(iii) otherwise enters the public domain through lawful means.
(n) "Date of Termination" shall have the meaning set forth in Section
6(d).
(o) "Disability" shall mean disability which would entitle the Executive
to receive full long-term disability benefits under the Company's long-term
disability plan on terms substantially similar to those of the long-term
disability plan as in effect on the date of this Agreement.
(p) "Excise Tax" shall have the meaning as set forth in Section 11(a).
(q) "Good Reason" shall mean the occurrence of one of the following events
(provided the Company does not cure such event on a retroactive basis to the
extent possible within thirty days following its receipt of the Executive's
Notice of Termination):
(1) The Executive's title is changed in a materially adverse manner.
(2) The Executive's base salary is reduced for any reason other than
in connection with the termination of his employment.
(3) For any reason other than in connection with the termination of
the Executive's employment, the Company materially reduces any fringe benefit
provided to the Executive under Section 5 below the level of such fringe
benefit provided generally other actively employed similarly situated
executives of the Company. Notwithstanding the foregoing, if the Company
agrees to fully compensate the Executive for any such material reduction for a
period ending on the earlier to occur of (i) the date such fringe benefit is
no longer provided to other actively employed similarly situated executives of
the Company or (ii) four (4) years, then such event shall not constitute Good
Reason.
(4) A change of over fifty (50) miles in the Executive's principal
place of employment in Atlanta, Georgia.
(5) The Company otherwise materially breaches, or is unable to
perform its obligations under this Agreement.
(6) The occurrence of a Change of Control.
Notwithstanding the foregoing, the occurrence of one of the event in Paragraphs
(1) through (6) hereof shall not be considered Good Reason for the Executive's
termination, unless the Executive delivers a Notice of Termination pursuant to
Paragraphs 6(c) and 6(d)(3) hereof, within one hundred eighty (180) days after
the Executive has actual notice of the occurrence of any of the events listed in
Paragraphs (1) through (6) hereof.
(r) "Interest Rate" shall mean the interest rate payable on one year
Treasury Bills in effect on the day that is 30 business days (days other than
Saturday, Sunday or legal holidays in the City of New York) prior to the Date
of Termination.
(s) "Notice of Termination" shall have the meaning as set forth in
Section 6(c).
(t) "Subsidiary" shall mean any majority owned subsidiary of the Company.
(u) "Tax Reimbursement Payment" shall have the meaning set forth in
Section 11(a).
(v) "Trade Secrets" means information of the Company, without regard to
form, including, but not limited to, technical or nontechnical data, formulas,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product or service plans or lists of
actual or potential customers or suppliers which is not commonly known by or
available to the public and which information (1) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and (2) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
11
15. ASSIGNMENT AND SURVIVORSHIP OF BENEFITS. The rights and obligations
of the Company under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Company. If the Company shall
at any time be merged or consolidated into, or with, any other company, or if
substantially all of the assets of the Company are transferred to another
company, then the provisions of this Agreement shall be binding upon and inure
to the benefit of the company resulting from such merger or consolidation or to
which such assets have been transferred, and this provision shall apply in the
event of any subsequent merger, consolidation, or transfer.
16. NOTICES. Any notice given to either party to this Agreement shall be
in writing, and shall be deemed to have been given when delivered personally or
sent by certified mail, postage prepaid, return receipt requested, duly
addressed to the party concerned, at the address indicated below or to such
changed address as such party may subsequently give notice of:
If to the Company: BioShield Technologies, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxxxx
Xxxxx X000
Xxxxxxxx, Xxxxxxx 00000
Attn: Board of Directors
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with a copy to: Xxxx Xxxx Xxxxx & Xxxxx LLP
000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxx 000
1000 Xxxxxxxxx Road, N.E.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
If to the Executive: Xxxxxxx X. Xxxxx
000 Xxxxx Xxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
17. INDEMNIFICATION. The Executive shall be indemnified by the Company,
to the extent provided in the case of officers under the Company's Articles of
Incorporation or Bylaws, to the maximum extent permitted under applicable law.
18. TAXES. Anything in this Agreement to the contrary notwithstanding,
all payments required to be made hereunder by the Company to the Executive shall
be subject to withholding of such amounts relating to taxes as the Company may
reasonably determine that it should withhold pursuant to any applicable law or
regulations. In lieu of withholding such amounts, in whole or in part, however,
the Company may, in its sole discretion, accept other provision for payment of
taxes, provided that is satisfied that all requirements of the law affecting its
responsibilities to withhold such taxes have been satisfied.
19. ENFORCEMENT OF RIGHTS. All legal and other fees and expenses,
including, without limitation, any arbitration expenses, incurred by the
Executive in connection with seeking to obtain or enforce any right or benefit
provided for in this Agreement, or in otherwise pursuing any right or claim,
shall be paid by the Company, to the extent permitted by law, provided that the
Executive is successful in whole or in part as to such claims as the result of
litigation, arbitration, or settlement.
In the event that the Company refuses or otherwise fails to make a payment when
due and it is ultimately decided that the Executive is entitled to such payment,
such payment shall increased to reflect an interest equivalent for the period of
delay, compounded annually, equal to four (4) percentage points over the
Interest Rate in effect as of the date the payment was first due.
20. GOVERNING LAW/CAPTIONS/SEVERANCE. This Agreement shall be construed
in accordance with, and pursuant to, the laws of the State of Georgia. The
captions of this Agreement shall not be part of the provisions hereof, and shall
have no force or effect. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. Except as otherwise specifically provided in this
paragraph, the failure of either party to insist in any instance on the strict
performance of any provision of this Agreement or to exercise any right
hereunder shall not constitute a waiver of such provision or right in any other
instance. The parties hereto consent to the jurisdiction of the state and
federal courts of the State of Georgia located in Xxxxxx County, Georgia, with
respect to any action arising or relating to this Agreement and said courts of
the State of Georgia shall have sole and exclusive jurisdiction with respect to
any such action or related action.
21. ENTIRE AGREEMENT/AMENDMENT. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and the parties
have made no agreement, representations, or warranties relating to the subject
matter of this Agreement that are not set forth herein. This Agreement may be
amended at any time by written agreement of both parties, but it shall not be
amended by oral agreement.
IN WITNESSETH WHEREOF, the parties have executed this Agreement on the date
first above written.
BIOSHIELD TECHNOLOGIES, INC. EXECUTIVE:
---------------------------------- ------------------------------------
By: By: Xxxxxxx X. Xxxxx
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