THIS EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered as of
May 15, 2006 between ADVANCED VIRAL RESEARCH CORP., a Delaware
corporation (“Employer”), and STEPHEN M. ELLISTON
(“Employee”).
A. Employee
and Employer desire to enter into this Agreement to memorialize the
employment relationship between Employer and Employee.
B. Subject to
the terms and conditions of this Agreement, Employee is to be the
President and Chief Executive Officer of Employer.
NOW, THEREFORE, in
consideration of the mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto mutually agree as
follows:
1.
RECITALS. The above
stated Recitals are true and correct and are incorporated by
reference into this Agreement.
2.
TERM. The term of this
Agreement shall be one (1) year commencing as of May 15,
2006 (the “Effective Date”) and ending on May 14,
2007 unless terminated earlier as provided herein (the
“Term”).
3.1. In
General . Upon the terms and subject to the conditions of this
Agreement, Employer hereby employs Employee and Employee hereby
accepts such employment with Employer for the term of this
Agreement as the President, Chief Executive Officer of Employer.
Employee shall have the powers and duties with respect to
Employer’s business interests (the “Businesses”)
as set forth in the Bylaws of Employer for its Chief Executive
Officer and President and such other executive and managerial
duties as normally associated with such positions, subject to the
direction of the Board of Directors in accordance with the
reasonable policies adopted from time to time by the Board of
Directors and communicated by written notice to Employee (the
“Duties”). During the term of this Agreement and
subject to Section 3.5 below , Employee shall devote
substantially all of his business time, attention, skill and
efforts to the faithful performance of the Duties.
3.2. Place of
Performance . The Duties shall be performed in Yonkers, New
York, except for such travel in the ordinary course of
Employer’s business as may from time to time be reasonably
required. Employee’s principal place of business shall be at
the executive offices of Employer in Yonkers, New York.
3.3. Delegation.
Notwithstanding anything to the contrary contained in this
Section 3, Employee shall have the right and authority to
delegate responsibility to one or more personnel as he
deems
appropriate, and is hereby authorized to hire on behalf of Employer
additional agents, employees and other representatives which in his
reasonable opinion are necessary to handle the affairs of Employer,
and to terminate the employment of any and all agents, employees
and other representatives of Employer, other than appointed
officers of Employer, the termination of whom shall be subject to
the prior approval by Employer’s Board of
Directors.
3.4. Other
Activities . Employee shall use his best efforts for the
benefit of Employer by whatever activities he reasonably deems
appropriate to maintain and improve Employer’s standing in
the community generally and among other members of the industries
in which Employer is from time to time engaged, including such
entertaining for business purposes as he reasonably considers
appropriate. Employee shall not, without the approval of the Board
of Directors of Employer, render services of a business nature to
any other person or entity, if such activities would interfere with
the performance of Employee’s Duties as required under this
Agreement or otherwise prevent Employee from devoting substantially
all of his business time, attention, skill and efforts to the
performance of Employee’s Duties as required under this
Agreement. Subject to the foregoing limitations, the following
activities shall be deemed to be permissible: (i) owning or
managing real or personal property owned by Employee or his family
members; (ii) owning any business which does not compete,
directly or indirectly, with Employer; and (iii) holding
directorships or similar positions in any organization which is not
competing with Employer and which is approved by the Board of
Directors of Employer.
4.
COMPENSATION AND OTHER BENEFITS.
4.1.
Compensation and Employee Benefit Plans . For all services
rendered by Employee in any capacity during his employment under
this Agreement (including any renewals hereof), Employer shall pay
to Employee as compensation the sum of the amounts set forth in the
following subparagraphs (a) through (d).
(a)
Base Salary . Commencing upon the Effective Date, Employee
shall be paid the sum of Two Hundred Fifty Thousand Dollars
($250,000) on an annualized basis (the “Base Salary”),
which amount shall be paid in accordance with Employer’s
customary payroll practices . On each anniversary of the
Effective Date, during the term of this Agreement and any
extensions thereof, Employer will review the Base
Salary.
(b)
Bonus . Employee shall be entitled to receive a bonus
payment as determined by Employer’s Board of Directors in its
sole and absolute discretion.
(c)
Benefit Plans . During the term of Employee’s
employment with Employer, Employee shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other executives of Employer
(“Investment Plans”) and Employee and his family shall
be eligible for participation in and shall receive all benefits
under, welfare benefit plans, practices, policies and programs
applicable generally to other executives of Employer, including but
not limited to comprehensive medical and dental coverage,
disability and basic and supplemental life insurance
(“Welfare Plans”).
(d) Dues.
Employer shall pay the dues of such professional associations and
societies of which Employee is a member in furtherance of his
Duties.
4.2. Business
Expenses . Employee is authorized to incur reasonable expenses
to execute and/or promote the Businesses of Employer, including,
but not limited to, expenses related to
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maintenance of
professional licenses and expenses for reasonable entertainment,
travel, and similar items, in each case, in accordance with the
policies, practices and procedures of Employer. Employer will
reimburse Employee for all reasonable travel or other expenses
incurred while on business. Employer agrees and acknowledges that
reasonable travel expenses will include expenses related to
Employee’s travel between Yonkers, NY and Raleigh, North
Carolina and moderately priced accommodations near Employer’s
headquarters.
4.3.
Vacation . Employee will be entitled to four (4) weeks
paid vacation annually or such other time as authorized by the
Board of Directors during which time his compensation shall be paid
in full. Vacation Days unused in any calendar year may not be
accumulated and carried forward and used in future
years.
5.
TERMINATION OF EMPLOYMENT.
5.1.
Termination by Employee . Employee may terminate his
employment with Employer at any time upon notice to Employer for
“Good Reason.” As used herein, “Good
Reason” shall mean:
(a) Employer’s
material breach of this Agreement; provided, however, that in the
event Employee believes that this Agreement has been materially
breached, he shall provide Employer with written notice of such
breach and provide Employer with a thirty (30) day period in
which to cure or remedy such breach;
(b) Assignment
to Employee of regular duties inconsistent with his position, or
status with Employer; or
(c) The
relocation of Employer’s principal executive offices to a
location more than seventy-five (75) miles outside of Yonkers,
New York without Employee’s prior consent.
5.2.
Termination by Employer . Employee’s employment may be
terminated by Employer at any time upon notice to Employee for
“Cause.” As used herein, the term “Cause”
shall mean:
(a) Employee’s
material breach of any provision of this Agreement; provided,
however, that in the event Employer believes that this Agreement
has been breached, it shall provide Employee with written notice of
such breach and provide Employee with a thirty (30) day period
in which to cure or remedy such breach. For the avoidance of doubt,
it shall constitute a material breach of this Agreement if Employee
fails to perform his Duties hereunder by way of intentional neglect
or chronic absenteeism (excluding Disability);
(b) The
commission by Employee of a crime, or an act of fraud or dishonesty
against Employer, its subsidiaries or affiliates; or
(c) The
use by Employee of an illegal substance, including, but not limited
to, marijuana, cocaine, heroin, and all other illegal substances,
and/or the dependence by Employee upon the use of alcohol, which,
in any case, in the opinion of both Employee’s family
physician and a physician chosen by Employer, materially impairs
Employee’s ability to perform his Duties hereunder, which
dependence is not cured or rehabilitated, as determined by
Employee’s physician, within three (3) months of receipt of
written notice from Employer to Employee.
5.3. Death or
Disability . This Agreement shall terminate upon the death or
the Disability of Employee. Employee or his heirs or estate (as the
case may be) shall be entitled to the compensation
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provided for
with respect to a termination by death or Disability in this
Agreement. As used in this Agreement, the term
“Disability” means (A) Employee’s incapacity
due to a permanent mental or physical illness that prevents
Employee from performing his duties hereunder for 26 consecutive
weeks or (B) a physical condition that renders the performance
by Employee of his duties hereunder a serious threat to the health
and well being of Employee. Disability shall be determined by a
physician selected by Employee (or his legal representative) and
reasonably acceptable to Employer.
5.4. Payments
Upon Termination .
(a)
Termination by Employer for Cause; Voluntary Unilateral Decision
by Employee Without Good Reason; Death or Disability . If
Employee ‘ s employment is terminated (i) by
Employer for Cause; (ii) by Employee by a voluntary unilateral
decision by Employee without Good Reason; or (iii) as a result
of Employee’s death or Disability, then Employee shall be
entitled to: (1) the base salary pursuant to
Section 4.1(a) earned through the date of termination;
(2) all applicable reimbursements from Employer due under
Section 4.2 hereof; and (3) accrued vacation under
Section 4.3 hereof.
(b)
Other Termination . If Employee’s employment is
terminated for any reason by either party other than pursuant to
Sections 5.1, 5.2 or 5.3 above, then Employee shall be
entitled to the following (collectively, the “Severance
Benefits”): (1) that amount which is equivalent to
Employee’s base salary for the remainder of the Term, which
amount shall be paid in accordance with Employer’s customary
payroll practices; and (2) all applicable reimbursements from
Employer due under Section 4.2 hereof. Payment of the
Severance Benefits shall be conditioned upon the execution by
Employee of a valid release, to be prepared by Employer, in which
Employee releases Employer, to the maximum extent permitted by law,
from any and all claims Employee may have against Employer that
relate to or arise out of Employee’s employment or
termination of employment.
5.5.
Termination of Obligations . Upon the resignation of
Employee or termination of Employee’s employment in
accordance with the provisions of this Section 5, all
obligations of Employee and Employer hereunder shall be terminated
except as otherwise provided herein.
5.6.
Resignation . Any termination of employment under this
Agreement, whether or not voluntary, will automatically constitute
a resignation of Employee as an officer of
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