Attached files
EXHIBIT 10(bb)
EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is made by and between Geert R.
Kersten, Esq. ("EMPLOYEE") and CEL-SCI Corporation ("CEL-SCI" or "the Company")
as of September 01, 2011 (the "Effective Date").
RECITALS
EMPLOYEE has been an EMPLOYEE of CEL-SCI since February 1987. CEL-SCI and
EMPLOYEE wish to set forth in this AGREEMENT the terms and conditions under
which EMPLOYEE is to be employed by CEL-SCI from the date of execution forward.
EMPLOYEE has worked for CEL-SCI since 1987. Employee and CEL-SCI entered
into an Employment Agreement, dated as of October 31, 1991 (the "Original
Employment Agreement"), and subsequently amended five times. The employment
agreement currently is continuing until August 31, 2011. Both parties wish to
extend the employment agreement by an additional 5 years, until August 31, 2016.
The signing by both parties of this new AGREEMENT supersedes any of the old
agreements and releases both EMPLOYEE and CEL-SCI from any of the rights and
obligations agreed to in any of the previous agreements.
In consideration of EMPLOYEE's agreement to continue providing services to
CEL-SCI, CEL-SCI's agreement to employ EMPLOYEE on the terms and conditions set
forth herein and the mutual agreements set forth herein, the parties hereto
agree as follows:
1. Term And Nature Of Employment
-----------------------------
CEL-SCI hereby employs EMPLOYEE as Chief Executive Officer of CEL-SCI for a
period from September 1, 2011 and ending on the August 31, 2016, unless said
period of employment (the "Employment Period") is terminated earlier in
accordance with the terms of this AGREEMENT. Thereafter, EMPLOYEE shall be
employed on an at-will basis and may terminate and may be terminated from his
employment with or without cause, subject to the severance payment provisions
set forth in this AGREEMENT. EMPLOYEE hereby accepts such employment and agrees
to devote his full business time and attention, best efforts, energy and skills
to the business and affairs of CEL-SCI. EMPLOYEE agrees to perform such other
duties as may from time to time be assigned to him by the Board of Directors of
CEL-SCI and shall act at all times in accordance with the best interests of
CEL-SCI. EMPLOYEE agrees that he shall comply with all applicable governmental
laws, rules and regulations and with all of CEL-SCI's policies, rules and/or
regulations applicable to the Employees of CEL-SCI. The employment relationship
between CEL-SCI and EMPLOYEE may be terminated by CEL-SCI or by EMPLOYEE after
August 31, 2016, with or without cause, subject to the terms and conditions of
this AGREEMENT.
1
2. Wage Compensation
-----------------
2.1 Until August 31, 2011 Employee will be compensated as he currently is
at an annual salary of $464,004.45, less applicable withholding taxes. Employee
will receive at least the same salary increases per year as do other senior
executives of CEL-SCI. Increases beyond those, if any, shall be made at the sole
discretion of the Board of Directors of CEL-SCI. Nothing in this section 2.1
shall be construed to limit CEL-SCI's right to terminate this AGREEMENT in
accordance with the terms hereof.
2.2 Payment.
Salary payments will be made to EMPLOYEE semi-monthly or otherwise in
accordance with CEL-SCI's pay period practices applicable to executive officers.
3. Other Benefits.
---------------
3.1 During the Employment Period, EMPLOYEE shall be entitled to receive any
other benefits which are provided to CEL-SCI's executive officers or other full
time Employees, in accordance with CEL-SCI's policies and practices and subject
to EMPLOYEE's satisfaction of any applicable condition of eligibility.
3.2 Reimbursement of Expenses. CEL-SCI shall reimburse EMPLOYEE for all
reasonable business expenses incurred by EMPLOYEE on behalf of CEL-SCI provided
that: (i) such reasonable expenses are ordinary and necessary business expenses
incurred on behalf of CEL-SCI, and (ii) EMPLOYEE provides CEL-SCI with itemized
accounts, receipts and other documentation for such reasonable expenses as are
reasonably required by CEL-SCI. Any expenses found not to be reasonable business
expenses by the auditors or the IRS, will be reimbursed to the Company by the
EMPLOYEE. EMPLOYEE has the right to fly Business Class or equivalent if he
chooses to do so.
4. Former Employment
-----------------
No Conflict. EMPLOYEE represents and warrants that the execution and
delivery by him of this AGREEMENT, his employment by CEL-SCI and his performance
of duties under this AGREEMENT will not conflict with and will not be
constrained by any prior employment or consulting agreement or relationship, or
any other contractual obligations.
5. Termination
-----------
5.1.a Termination of AGREEMENT Due to Death or Disability. EMPLOYEE's
employment and this AGREEMENT shall terminate upon EMPLOYEE's death. In the
event that EMPLOYEE's employment ends due to his death, CEL-SCI's obligations
under this AGREEMENT shall immediately cease, except that the EMPLOYEE's legal
representatives shall be entitled to receive all compensation otherwise payable
to EMPLOYEE through the last day of the month in which the EMPLOYEE's death
occurred. If EMPLOYEE dies while employed by CEL-SCI, any options or bonus
shares of CEL-SCI then held by EMPLOYEE shall automatically accelerate and
2
become fully vested. This provision shall not otherwise limit any benefits
available under CEL-SCI's benefit plans. The expiration date of any options
which would expire during the four year period following the Employee's death
will be extended to the date which is four years after the Employee's death.
5.1.b. If EMPLOYEE becomes mentally or physically incapacitated or disabled
so as to be unable to perform EMPLOYEE's duties under this agreement, the
AGREEMENT shall terminate. Employee's inability to adequately perform services
under this AGREEMENT for a period of ninety (90) consecutive days will be
conclusive evidence of such mental or physical incapacity or disability, unless
such inability to adequately perform such services under this AGREEMENT is
pursuant to a mental or physical incapacity or disability covered by the Family
Medical Leave Act ("FMLA"). If EMPLOYEE becomes disabled while employed by
CEL-SCI, any options or bonus shares of CEL-SCI then held by EMPLOYEE shall
become fully vested. This provision shall not otherwise limit any benefits
available under CEL-SCI's benefit plans. The expiration date of any options
which would expire during the four year period following the EMPLOYEE's
disability will be extended to the date which is four years after the EMPLOYEE's
disability.
5.2 "Termination for Cause". Notwithstanding anything to the contrary
herein, EMPLOYEE's employment and this AGREEMENT may be terminated by CEL-SCI
upon written notification upon the occurrence of any of the following:
a. Willful misconduct that has a material adverse effect on CEL-SCI's
operations, prospects, and business.
b. Acts of fraud against CEL-SCI.
c. EMPLOYEE breaches any of the terms or conditions set forth in this
agreement within 30 days after EMPLOYEE's receipt from CEL-SCI of written
notice of such breach, which notice shall describe in reasonable detail
CEL-SCI's belief that EMPLOYEE is in breach hereof (notwithstanding the
following, no cure period shall be applicable to breaches by EMPLOYEE of
paragraphs 6 and 7 or to the extent CEL-SCI has provided EMPLOYEE more than
2 notices of substantially the same breach within any 12 month period).
In the event that EMPLOYEE's employment is terminated by stocktickerCEL-SCI
pursuant to this Section 5.2, stocktickerCEL-SCI obligations under this
AGREEMENT shall immediately cease.
Termination of EMPLOYEE pursuant to this Section 5.2 shall be without
prejudice to any other right or remedy to which CEL-SCI may be entitled at law,
in equity, or under this AGREEMENT.
5.3 Involuntary Termination For Other Than Cause ("Constructive
Termination").
"Constructive Termination" shall occur if EMPLOYEE resigns his employment
within ninety (90) days of the occurrence of any of the following events: ( (i)
3
a relocation (or demand for relocation) of EMPLOYEE's place of employment to a
location more than thirty-five (35) miles from EMPLOYEE's current place of
employment, (ii) a significant and material reduction in EMPLOYEE's authority,
job duties or level of responsibility or the imposition of significant and
material limitations on EMPLOYEE's autonomy in his position, or (iii) if a
Change of Control event has occurred.
"Change of Control" shall mean a change in ownership or control of the
Company as a result of any of the following transactions:
a. a merger, consolidation or reorganization approved by the Company's
stockholders, unless securities representing more that 50% of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly, and in
substantially the same proportion, by the persons who beneficially owned the
company's outstanding voting securities immediately prior to such transaction,
or
b. any stockholder-approved transfer or other disposition of all or
substantially all of the Company's assets, or
c. the acquisition, directly or indirectly by any person or related group
of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company), of
beneficial ownership (within the meaning of Rule 13d3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total voting power of
the Company's outstanding securities pursuant to a tender or exchange offer made
directly to the Company's shareholders which was not approved by a majority of
the Company's directors, or
d. a change in the composition of the Board over a period of thirty-six
(36) months or less such that a majority of the Board members, by reason of one
or more contested elections for Board membership, are no longer comprised of
individuals who (A) were Board members at the beginning of such period or (B)
have been elected or nominated for election as Board members during such period
by at least a majority of Board members described in clause (A).
In the event a Constructive Termination has occurred, other than Change of
Control, EMPLOYEE may, in his sole discretion, provide Company with his written
notice of resignation to be effective not less than 30 days after receipt by
Company, whereupon EMPLOYEE shall cease to be employed by the Company and both
parties shall be relieved of further responsibility or liability to the other
except as provided by this Agreement.
In the event of a Change of Control, EMPLOYEE may in his sole discretion,
provide Company with his written notice of resignation to be effective not less
than 30 days after receipt by Company, whereupon EMPLOYEE shall cease to be
employed by the Company. Upon receipt of such notice of resignation, Company
shall promptly pay to EMPLOYEE by certified check, wire transfer funds, or other
form of payment reasonably acceptable to EMPLOYEE, a lump sum amount equal to
the larger of twenty-four (24) months salary of the EMPLOYEE at such
compensation rate as is then in effect under the terms of this Agreement, and
any extension or renewal thereof, or the amount of all salary and benefits which
4
would otherwise be payable pursuant to this Agreement, whichever is greater (the
"Payment"). The Payment shall not be reduced by any charges, expenses, debts,
set-offs or other deductions of any kind whatsoever except for required
withholding taxes.
In the event of a Constructive Termination, whether or not followed by
termination of EMPLOYEE's employment, any options or bonus shares of the Company
then held by EMPLOYEE shall become fully vested. The expiration date of any
options which would expire during the four year period following the date of the
Constructive Termination will be extended to the date which is four years after
the date of the Constructive Termination.
In the event EMPLOYEE resigns as a result of a Constructive Termination,
CEL-SCI shall also provide the following benefits to EMPLOYEE:
a. The EMPLOYEE's existing coverage under the Company's group health plan
(and, if applicable, the existing group health coverage for eligible dependents)
will end on the last day of the month in which the EMPLOYEE's termination of
employment becomes effective. The EMPLOYEE and his eligible dependents may then
be eligible to elect temporary continuation coverage under the Company's group
health plan in accordance with the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"). The EMPLOYEE (and, if applicable, his
eligible dependents) will be provided with a COBRA election form and notice
which describe his rights to continuation coverage under COBRA. If the EMPLOYEE
elects COBRA continuation coverage, then the Company will pay for COBRA coverage
(such payments shall not include COBRA coverage with respect to the Company's
Section 125 health care reimbursement plan) for (i) eighteen (18) months, or
(ii) the maximum period permitted under COBRA. If EMPLOYEE exhausts the
applicable COBRA period, the Company will reimburse EMPLOYEE for the cost of a
family health insurance policy in an amount not to exceed the amount of the
monthly COBRA premium previously paid by the Company pursuant to this paragraph
for the remainder of the 18 month period following EMPLOYEE's termination of
employment. After such period of Company-paid coverage, the EMPLOYEE (and, if
applicable, his eligible dependents) may continue coverage at his own expense in
accordance with COBRA or other applicable laws. No provision of this agreement
will affect the continuation coverage rules under COBRA. In the event, however,
the EMPLOYEE becomes eligible for benefits under another plan prior to the
expiration of the period in which the Company is paying health insurance
premiums, the Company shall no longer be obligated to pay such health insurance
premiums. The EMPLOYEE is required to notify the Company of eligibility for
benefits under another plan and is expected to enroll in any new group plan at
the first eligible opportunity unless EMPLOYEE chooses, at EMPLOYEE's sole
expense, to continue COBRA benefits through the Company. If EMPLOYEE fails to
notify the Company of EMPLOYEE's eligibility for alterative benefits, the
Company shall have the right to discontinue payment of COBRA premiums upon
thirty (30) days' notice to EMPLOYEE. In no event shall a cash payment be made
to EMPLOYEE in lieu of the payment of COBRA premiums. The payment of COBRA
premiums by the Company shall not extend the maximum eligible COBRA coverage
period.
5
b. Outplacement Services. The Company will make available to EMPLOYEE, upon
his request, outplacement services provided by a reputable outplacement
counselor selected by the Company for a period of nine months following the
effective date of EMPLOYEE's termination of employment. The Company will assume
the cost of all such outplacement services. In no event will a cash payment be
made in lieu of outplacement benefits.
6. Confidential Information, Patents and Copyrights
------------------------------------------------
6.1 In view of the fact that the EMPLOYEE's work for the Company will bring
him into close contact with many confidential affairs of the Company not readily
available to the public, the EMPLOYEE agrees:
6.1.1 To keep secret and retain in the strictest confidence, all
confidential matters of the Company, including, without limitation, inventions
and related proprietary information, trade secrets, patents, customer lists,
methods, scientific results and related documentation in connection with any
research and development undertaken by, or at the direction of, the Company,
confidential pricing policies, confidential utilization review protocols and
screens, confidential and proprietary operational methods and other confidential
and proprietary business affairs and plans of the Company and its affiliates,
learned by him heretofore or hereafter; and not to disclose them to anyone
outside the Company, except in the course of performing his duties hereunder or
with the Company's express written consent; and
6.1.2 To promptly deliver to the Company upon the termination of his
employment with the Company, or at any time the Company may so request, all
memoranda, notes, records, reports, manuals, and other documents (and all copies
thereof) relating to the Company's business and all property associated
therewith, which he may then possess or have under his control.
6.2 All inventions made by the Employee during the employment term, which
inventions apply to the Company's business, will be assigned to the Company. In
the event any of such inventions are of a patentable nature, Employee agrees to
apply for a patent on the invention and assign any patent rights relating to the
invention to the Company. The Company will bear the costs of any such patent
applications. Employee understands that his duties may involve writing or
drafting various documents, brochures or publications for the Company. Employee
hereby assigns any and all rights to such documents, brochures or publications
to the Company, together with the right to secure copyright therefore and all
extensions and renewals of copyright throughout the entire world. The Company
shall have the right to make any and all omissions, additions, changes and
adaptations, in whole or in part, with respect to such documents, brochures or
publications.
6.3 If the EMPLOYEE commits a breach, or threatens to commit a breach, of
any of the provisions of Section 6.1 or 6.2 hereof, the Company shall have the
following rights and remedies:
6.3.1 The rights and remedy to have the provisions of this Agreement
specifically enforced by any court of competent jurisdiction, it being
6
acknowledged that any such breach or threatened breach shall cause irreparable
injury to the Company, and that money damages shall not provide an adequate
remedy to the Company;
6.3.2 The right and remedy to require the EMPLOYEE to reimburse the Company
for all money damages, direct, consequential, or incidental, suffered by the
Company as a result of any transactions constituting a breach of any of the
provisions of the preceding paragraph.
Each of the rights and remedies enumerated above shall be independent of
the other and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
7. Non-Competition and Non-Solicitation of Employees
-------------------------------------------------
EMPLOYEE agrees and promises that if his employment is terminated, then,
for the period of time described below, he will not be engaged in any other
business or as a consultant to or general partner, Employee, officer or director
of any partnership, firm, corporation, or other entity, or as an agent for any
person, or otherwise, if: (1) such other business, partnership, firm,
corporation, entity or person is engaged in for-profit activity in the
pharmaceutical industry within the United States and competes with CEL-SCI in
the field of natural cytokine mixtures for the treatment of any cancer
indication CEL-SCI is pursuing in clinical trials; and (2) EMPLOYEE either (a)
is the President, Chief Executive Officer or Chairman of such other business,
partnership, firm, corporation, entity or person; or (b) participates in or
directs the development of drugs for the treatment of cancer for such other
business, partnership, firm, corporation, entity or person. This agreement to
refrain from engaging in competitive activities shall continue for a two year
period following the termination of this Agreement.
The EMPLOYEE further agrees and represents that during the EMPLOYEE's
employment by the Company and during the period in which EMPLOYEE is subject to
the Non-Competition provisions of this AGREEMENT, the EMPLOYEE will not,
directly or indirectly, on the EMPLOYEE's own behalf or in the service of, or on
behalf of any other individual or entity, divert, or attempt to divert, solicit
or hire away, to or for any individual or entity which is engaged in providing
business services, any person employed by the Company, whether or not such
EMPLOYEE is employed pursuant to a written agreement and whether or not such
EMPLOYEE is employed for a determined period or at-will.
8. Notices
-------
All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by prepaid electronic
transmission or mailed first-class, postage prepaid, by registered or certified
mail or delivered by an overnight courier service (notices sent by electronic
transmission, mail or courier service shall be deemed to have been given on the
date sent), as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):
7
9. Arbitration
-----------
The parties agree that any and all disputes that they have with one another
which arise out of EMPLOYEE's employment or under the terms of this AGREEMENT
shall be resolved through final and binding arbitration, as specified herein.
This shall include, without limitation, disputes relating to this AGREEMENT,
EMPLOYEE's employment by CEL-SCI or the termination thereof, claims for breach
of contract or breach of the covenant of good faith and fair dealing, and any
claims of discrimination or other claims under any federal, state or local law
or regulation now in existence or hereinafter enacted and as amended from time
to time concerning in any way the subject of EMPLOYEE's employment with CEL-SCI
or its termination. The only claims not covered by this paragraph 9 are claims
for benefits under the workers' compensation laws or claims for unemployment
insurance benefits, which will be resolved pursuant to those laws. Binding
arbitration will be conducted in the Washington, D.C. metropolitan area, in
accordance with the rules and regulations of the American Arbitration
Association. Each party will bear one half of the cost of the arbitration filing
and hearing fees, and the cost of the arbitrator. Each party will bear its own
attorneys' fees, unless otherwise decided by the arbitrator. EMPLOYEE
understands and agrees that the arbitration shall be instead of any civil
litigation and that the arbitrator's decision shall be final and binding to the
fullest extent permitted by law and enforceable by any court having jurisdiction
thereof.
10. General
-------
10.1 This Agreement shall be governed by, and enforced in accordance with,
the laws of the Commonwealth of Virginia.
10.2 The article and section headings in this Agreement are for reference
only and shall not in any way affect the interpretation of this Employment
Agreement.
10.3 This Agreement sets forth the entire agreement and understanding of
the parties relating to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof.
10.4 This Agreement, and the Employee's rights and obligations hereunder,
may not be assigned by the Employee. The Company may assign this Agreement and
its rights, together with its obligations, hereunder in connection with any
sale, transfer or other disposition of all or substantially all of its business
or assets subject to Section 5.3 hereof; in any event, the obligations of the
Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation of acquisition of all or substantially all of its business
or assets.
10.5 This Agreement may be amended, modified, superseded, cancelled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument executed by both of the parties hereto or, in the case of a waiver,
by the party waiving compliance. The failure of either party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement, whether by conduct
8
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant in this Agreement.
11. Subsidiaries and Affiliates.
---------------------------
As used herein, the term "subsidiary" shall mean any corporation or other
business entity controlled by CEL-SCI; and the term "affiliate" shall mean and
include any corporation or other business entity controlling, controlled by, or
under common control with CEL-SCI.
12. Survival.
---------
Sections 6, 7 and 9 of this Agreement shall survive termination of this
Agreement for any reason.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CEL-SCI CORPORATION
/s/ Maximillian de Clara
-----------------------------
By: Maximillian de Clara
Its: President
EMPLOYEE
/s/ Geert R. Kersten
------------------------------
Geert R. Kersten
