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EXHIBIT 1
EMPLOYMENT AGREEMENT
This Agreement made as of the 17th day of October, 1996, by and
between ADVANCED VIRAL RESEARCH CORP., a Delaware corporation, with offices
located at 0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx., Xxxxxxxxxx, XX 00000, a Florida
corporation (the "Corporation") and XX. XXXXXX X. XXXXXXXXX, with an address at
0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Employee"):
W I T N E S S E T H:
In consideration of the covenants and agreements herein contained and
the monies and other compensation to be paid to Employee hereunder, the
Corporation agrees to hire the Employee, and the Employee agrees to become an
employee of and provide services to the Corporation upon the following terms
and conditions:
1. Duties of Employee and Corporation:
(a) The Employee is hereby employed by the Corporation to serve in the
capacity of Chief Executive Officer and President. The Corporation shall cause
Employee to be nominated to serve as a director of the Corporation for the
duration of his term of employment as set forth herein, and any extension or
amendment of this Agreement.
(b) During the term of the Agreement, Xx. Xxxxxxx Xxxxxxxxx and Xxxxxxx
Xxxxxxx agree that they shall vote all shares owned or voted by them in favor
of Employee as a member of the Board of Directors of the Corporation. This
Agreement by Xx. Xxxxxxxxx and Xx. Xxxxxxx shall not restrict or otherwise
limit their right to sell their shares to third parties without restriction.
(c) In addition to the foregoing duties, Employee shall also serve as
the Corporation's Chief Scientific Officer and Chairman of its Scientific
Advisory Board, which Scientific Advisory Board the Corporation shall authorize
to be established as soon after the effective date of this Agreement and the
commencement of the Employee's duties hereunder as may be reasonably
practicable consistent with the Board of Directors' discretion.
(d) It is expressly agreed by the parties that the duties of the
Employee, in his capacity as Chief Executive Officer,
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President and a director of the Corporation shall include supervising day to
day operations of the Corporation, including management of scientific, medical,
financial, regulatory and corporate matters.
(e) It is expressly agreed that Employee's duties shall also include
the authority to establish an appropriate laboratory, executive and other
facilities for the Corporation, consistent with its business goals and
objectives, as well as its financial resources. The Employee is also authorized
and directed by this Agreement to lead the Corporation's efforts to raise
additional capital by means consistent with and appropriate to the
Corporation's objectives, as determined from time to time by its Board of
Directors. Nothing contained herein shall require Employee to relocate outside
of the New York metropolitan area.
(f) During the term of this Agreement, Employee shall take no action
which shall preclude Xxxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxx from being nominees
as directors of the Corporation and Employee shall vote all shares owned or
voted by him in favor of Xxxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxx as members of
the Board of Directors of the Corporation.
2. Devotion of Time to Employment: The Employee shall devote his full
business time and attention to the business and affairs of the Corporation as
shall be necessary to carry out his duties hereinabove, and as may be amended
from time to time consistent with the Corporation's business development.
3. Compensation and Benefits:
(a) The Corporation shall pay to the Employee as compensation for his
services an annual salary at $325,000 per year, payable in equal monthly
installments commencing October 17th, 1996.
(b) The Corporation, during the term of this Agreement only, shall
purchase, at its expense, a major medical insurance policy, disability policy
and dental policy insuring the Employee and his dependents, which policy shall
be reasonably acceptable to the parties hereto. The Corporation shall also
purchase a term life insurance policy at least in the amount $1,000,000, with a
beneficiary to be designated by the Employee, and Employee shall cooperate with
the Corporation to purchase a "key man" life insurance
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policy, with the Corporation as beneficiary.
(c) The Corporation agrees that, in addition to presently outstanding
Options granted to Employee, it shall take such action as may be necessary to
permit Employee to be entitled to participate in stock option or stock bonus
plans or similar plans including plans for stock appreciation rights (SAR's) as
are established by the Corporation (collectively, the "Stock Plans").
4. Term of Agreement: Subject to the provisions of paragraph 10 hereof
regarding termination, the term of this employment shall commence on the date
first set forth above, and shall continue thereafter for a period of three (3)
years unless extended by the parties hereto, provided, however, that this
Agreement may be terminated by either party if the Corporation does not
receive, on or before December 31, 1997, funding from whatever source (the
"Funding") of at least $3,000,000, excluding traditional institutional and/or
bank debt financing and excluding the proceeds received by the Corporation upon
the Employee's exercise of stock options or the Employee's purchase of any of
the Corporation's securities. In the event either party terminates this
Agreement as a result of the Corporation not receiving the Funding, all
Stock Rights (as defined hereinbelow) granted to Employee subsequent to the
date of this Agreement may be canceled by the Corporation.
5. Automobile: The Corporation shall lease or purchase for the Employee,
at Employee's discretion, an automobile selected and to be used by Employee,
having a list price not in excess of $40,000, it being understood and agreed
that such automobile shall be necessary by Employee in the conduct of the
Corporation's business as a condition of his employment. The Corporation shall
pay for all gas, oil, repairs, and maintenance, as well as the lease or
purchase payments, as applicable.
6. Reimbursable Expenses: Except as herein otherwise provided, the
Corporation shall reimburse the Employee for all expenses, or the Employee is
entitled to charge to the Corporation all expenses incurred by him, in and
about the course of his employment by the Corporation, provided that said
expenses are deductible under the current tax law and sufficient proof is
furnished by Employee. Such
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expenses shall include but not be limited to:
(a) License fees, membership dues in professional organizations, and
subscriptions to professional journals.
(b) The Employee's necessary travel, hotel and entertainment expenses
incurred in connection with overnight, out-of-town trips for educational,
professional, financial, or other related meetings, and/or in connection with
other events that contribute to the benefit of the Corporation in the
reasonable determination of the Employee.
(c) The Employee's necessary travel and entertainment expenses in
connection with in-town events for education, professional, financial, or other
related meetings or in connection with other events that contribute to the
benefit of the Corporation in the reasonable determination of the Employee.
(d) All other expenses that may be pre-approved by the Board of
Directors.
7. Vacation: The Employee shall be entitled to such vacation as shall be
authorized by the Corporation from time to time, but not less than four (4)
weeks during each calendar year.
8. Sick or Other Leave: The Employee shall be entitled to such sick or
other leave on the same basis as the Corporation shall establish for all its
employees.
9. Patents: The parties agree that if any patents shall be developed by
Employee or any patents shall result from the knowledge Employee acquires while
performing his duties to the Corporation under this Agreement, Employee agrees
to assign such patents to the Corporation.
10. Termination of Agreement:
(a) The Corporation may terminate this Agreement at any time
"for cause" if: the Employee becomes unfit to properly render services to
Corporation hereunder because of alcohol or drug related abuses, as defined
under and is consistent with applicable laws: conviction of a crime of moral
turpitude that constitutes a felony under federal or state law; material breach
of this Agreement which is
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not cured within sixty (60) days after written notice is given by Corporation
to Employee. Such termination except for material breach shall be effective
sixty (60) days after the delivery of written notice thereof to the Employee,
or at such later time as may be designated in said notice. The Employee shall
vacate the offices of the Corporation on or before such effective date unless
such termination for cause may be subject to cure by Employee. All compensation
due hereunder shall cease as of said effective date of the termination, except
accrued compensation that shall remain unpaid at such date, and except for the
continued right of Employee to exercise stock options, or receive benefits
under stock bonus plans or SAR's (collectively, the "Stock Rights") as shall be
vested at the date of any termination hereunder, subject to the discretion of
the Board of Directors to cancel such Stock Rights.
(b) (i) The Employee may elect to terminate this Agreement at any time
for cause provided he delivers written notice of such intention to terminate
not less than sixty (60) days prior to the date of such termination. As used in
this subparagraph 10(b)(i), the term "for cause" shall mean if Corporation
materially changes Employee's duties, responsibilities or working conditions or
takes any other actions which impede Employee in the performance of his duties
hereunder. If the Employee terminates this Agreement for cause, Corporation
shall be required to pay Employee the compensation, remuneration, benefits and
allowance and expenses specified in paragraphs 3, 5, 6 and 7 hereinabove for
the remainder of the term of this Agreement
(ii) The Employee may elect to terminate this Agreement at any time
not for cause provided he delivers written notice of such intention to
terminate not less than sixty (60) days prior to the date of such termination.
All compensation and other benefits, including Stock Rights granted after the
date of this Agreement, shall cease and be cancelled as of the effective date
specified in such notice.
11. Limitations on Authority: Without the express written consent from the
Board of Directors of the Corporation, and other than in the ordinary course of
business, the Employee shall have no apparent or implied authority to:
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(a) Pledge the credit of the Corporation or any of its other
employees.
(b) Bind the Corporation under any note, mortgage or other monetary
obligation under a monetary instrument.
(c) Release or discharge any debt due the Corporation unless the
Corporation has received the full amount thereof.
(d) Sell, mortgage, transfer or otherwise dispose of all or
substantially all of the assets of the Corporation.
12. Covenant Not to Compete and Confidentiality:
(a) In order to induce Corporation to enter into an employment
relationship, but if and only if this Agreement is terminated by Corporation
for cause as specified in paragraph 10(a) or by Employee without cause as
specified in paragraph 10(b)(ii) and under no other circumstance, Employee
covenants and agrees for a period of three (3) year after termination of
Employee's employment, Employee will not directly or indirectly, as sole
proprietor, independent contractor, employee, consultant, agent, partner or
joint venturer, or as an officer, director, stockholder, agent, servant or
employee of any firm, person, entity, partnership or corporation, or otherwise,
engage or participate in or attempt to engage or participate in any manner in
the same, a similar or a directly or indirectly competitive business, to that
of Corporation.
(b) If and only if this Agreement is terminated by Corporation for
cause as specified in paragraph 10(a) or by Employee without cause as specified
in paragraph 10(b)(ii) and under no other circumstance, for a period of one (1)
year from and after the termination of Employee's employment, the Employee
agrees that he shall refrain from soliciting and shall not, directly or
indirectly, as sole proprietor, independent contractor, employee, consultant,
agent, partner, or joint venturer, or as an officer, director, stockholder,
agent or employee of any firm, person, entity, partnership or corporation, or
otherwise solicit the employees of the Corporation to leave the service of
Corporation.
(c) The parties agree that all information concerning the Corporation's
product, RETICULOSE, is highly confidential and is the sole and exclusive
property of the Corporation. The parties
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acknowledge that Employee shall have access to confidential information
concerning the Corporation and specifically concerning RETICULOSE, including
methodology of manufacture of RETICULOSE, among other confidential data and
information. Employee expressly agrees to refrain from disclosing to any person
or entity, other than at the direction and approval of the Board of Directors,
any confidential information regarding RETICULOSE, either directly or
indirectly, or seek to exploit RETICULOSE, other than through and with the
approval of the Corporation.
(d) (i) It is agreed and understood by and among the parties to this
Agreement that the restrictive covenants and agreements set forth in
subparagraphs (a), (b) and (c) of this paragraph 12 are each individually
essential elements of this Agreement and that, but for agreement of the
Employee to comply with such covenants and agreements, the Corporation would
not have agreed to employ Employee. Further, Employee expressly acknowledges
that the restrictions contained in subparagraphs (a), (b) and (c) of this
paragraph 12 are reasonable and necessary to accomplish the mutual objectives
of the parties associated with the employment relationship and to protect the
Corporation's legitimate interests and protecting its business and business
relationships. Employee further acknowledges that enforcement of the
restrictions contained herein will not deprive him, or any of his agents,
servants or employees, or any of them, of the ability to earn a reasonable
living and that any violation of the restrictions contained in this Agreement
will cause irreparable injury to Corporation. Such covenants and agreements of
the Employee shall be construed as agreements independent of any other
provision of this Agreement and of each other. The existence of any claim or
cause of action of the Employee against the Corporation, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Corporation of such restrictive covenants and agreements.
(ii) It is agreed by the parties hereto that if any portion of the
restrictive covenants and agreements set forth in subparagraphs (a), (b) and (c)
of this paragraph 12 are held to be invalid, unreasonable, arbitrary or against
public policy, then each such agreement shall be considered divisible both as to
time, geographical area and any other relevant feature, with each month of a
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specified period being deemed a separate period of time and each geographical
market area being deemed a separate geographical area, it being the intention
of the parties that a lesser period of time, geographical area or other
relevant feature shall be enforced so long as the same is not unreasonable,
arbitrary or against public policy. The parties hereto further agree that, in
the event any court of competent jurisdiction determines that a specified time
period, a specified geographical area or any other relevant feature is
unreasonable, arbitrary or against public policy, a lesser time period,
geographical area or other relevant feature which is determined to be
reasonable, non-arbitrary and not against public policy may be enforced against
the Employee and Employee agrees to be bound thereby.
(iii) The parties hereto agree that damages at law, including but
not limited to monetary damages, will be insufficient remedy to the
Corporation in the event that the restrictive covenants of subparagraphs (a),
(b) and (c) of this paragraph 12 are violated and that, in addition to any
remedies or rights that may be available to the Corporation, all of which other
remedies or rights shall be deemed to be cumulative, retained by Corporation
and not waived by the enforcement of any remedy available hereunder, including
but not limited to the right to xxx for monetary damages; Corporation also
shall be entitled, upon application to a court of competent jurisdiction, to
obtain injunctive relief, including but not limited to a temporary restraining
order or temporary, preliminary or permanent injunction, to enforce the
provisions of this paragraph as well as an equitable accounting of all profits
or benefits arising out of any such violation, all of which shall constitute
rights and remedies to which the Corporation may be entitled.
(d) Employee recognizes that the restrictions set forth in this
paragraph are reasonable and properly required for the adequate protection of
the business of the Corporation.
13. Survival of Representations and Warranties: The warranties,
representations, covenants and agreements set forth herein shall be continuous
and shall survive the termination of this Agreement or any part hereof.
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14. Entire Agreement: This Agreement contains the entire understanding
between the parties hereto with respect to the transactions contemplated
hereby, and this Agreement supersedes in all respects all written or oral
understandings and agreements heretofore existing between the parties hereto.
15. Amendment and Waiver: This Agreement may not be modified or
amended except by an instrument on writing duly executed by the parties hereto.
No waiver of compliance with any provision or condition hereof and no consent
provided for herein shall be effective unless evidenced by an instrument in
writing duly executed by the party hereto sought to be charged with such waiver
or consent.
16. Notices: Notices and requests required or permitted hereunder
shall be deemed to be delivered hereunder if mailed with postage prepaid or
delivered, in writing as follows:
If to the Corporation: 0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx.,
Xxxxxxxxxx, Xx 00000 or such other address as the Corporation shall designate
in writing.
If to Employee: 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
17. Counterparts: This Agreement may be executed in one or more
counterparts, and all such counterparts shall constitute one and the same
instrument.
18. Captions: Captions used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing it.
19. Execution of Documents: At any time and from time to time, the
parties hereto shall execute such documents as are necessary to effect this
Agreement.
20. Arbitration: Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, or regarding the
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failure or refusal to perform the whole or any part of this Agreement shall be
settled by arbitration in Dade County, Florida, or in such other County and
State of jurisdiction as the Corporation shall then have its corporate
headquarters, in accordance with the rules of the American Arbitration
Association, and the judgment upon the award rendered may be entered in any
court having jurisdiction hereof. Any decision made by an arbitrator or by the
arbitrators under this provision shall be enforceable as a final and binding
decision as if it were a final decision or decree of a court of competent
jurisdiction.
21. General Provisions:
(a) Assignability. This Agreement shall not be assignable by any of
the parties to this Agreement without the prior written consent of all other
parties to this Agreement.
(b) Governing Law. This Agreement has been negotiated and prepared and
shall be performed in the State of Florida, and the validity, construction and
enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of the State of Florida (except that if any choice of
law provision under Florida law would result in the application of the law of a
state or jurisdiction other than the State of Florida, such provision shall not
apply).
(c) Severability of Provisions. The invalidity or unenforceability of
any particular provision hereof shall not affect the remaining provisions of
this Agreement, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
(d) Successors and Assigns. The rights and obligations of the parties
hereunder shall inure to the benefit of, and be binding and enforceable upon
the respective heirs, successors, assigns and transferees of either party.
(e) Reliance. All representations and warranties contained herein, or
any certificate or other instrument delivered in connection herewith, shall be
deemed to have been relied upon by the parties hereto, notwithstanding any
independent investigation made by or on behalf of such parties.
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IN WITNESS WHEREOF, the undersigned have hereunto caused this Agreement
to be executed the day and year first above written.
ADVANCED VIRAL RESEARCH CORP.
By:/s/ Xxxxxxx Xxxxxxx (Seal)
Xxxxxxx Xxxxxxx, Secretary, Treasurer
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
(For purposes of Section 1(b) only.)
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxxxx Xxxxxxxxx
XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX
