CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is entered into this
31st day of May , 2004 (the "Effective Date") by and between CytoDyn, Inc., a
Colorado corporation (the "Company") with its principal place of business at 000
X. XxXxxxxx Xxxxxx, Xxxxx 0, Xxxxx Xx, Xxx Xxxxxx 00000, and Xxxxx X. Xxxxx an
individual residing at 0000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000
("Executive").
1. Definitions.
(a) "Affiliate" means any corporation, partnership, trust
or other entity of which the Company and/or any of its Affiliates
directly or indirectly owns a majority of the outstanding shares of any
class of equity security of such corporation, partnership, trust or
other entity and any corporation, partnership, trust or other entity
which directly or indirectly owns a majority of the outstanding shares
of any class of equity security of the Company or any of its
Affiliates.
(b) "Cause" means:
(i) If Executive materially violates any term of
his employment or any Company policies and such violation is
not substantially remedied within 30 days of written notice
from the Company to Executive;
(ii) Willful misfeasance, gross negligence or
nonfeasance of duty by Executive that is reasonably likely to
be detrimental or damaging or that has the effect of injuring
or damaging the reputation, business or business relationships
of the Company or any of its subsidiaries or any of their
respective officers, directors or employees;
(iii) Any arrest, indictment (defined as any
proceeding in which "probable cause" is found), conviction (or
the civil equivalent) of Executive or a plea of guilty or nolo
contendere by Executive to a charge based on a federal or
state felony or serious criminal or civil offense (even if the
crime is classified under the applicable law as a
"misdemeanor"), including, but not limited to (1) crimes or
civil offenses involving theft, embezzlement, fraud,
dishonesty or moral turpitude; (2) crimes or civil offenses
based on banking or securities laws (including the
Xxxxxxxx-Xxxxx Act of 2002); and (3) civil enforcement actions
brought by federal or state regulatory agencies (including the
Securities and Exchange Commission).
(iv) Willful or prolonged and unapproved absence
from work by the Executive or failure, neglect or refusal by
the Executive to perform his duties and responsibilities as
determined by the board of directors of the Company (the
"Board") in its sole discretion.
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(c) "Change of Control" means the occurrence of one or
more of the following:
(i) Any person (as defined in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as
amended) other than an existing stockholder or an Affiliate
that directly or indirectly becomes the owner of 50% or more
of the Voting Stock;
(ii) A complete liquidation or dissolution of the
Company other than a liquidation or dissolution occurring
after any of the following transactions: the merger or
consolidation of the Company with an Affiliate, the transfer
of 50% or more of the Voting Stock of the Company to an
Affiliate or Affiliates or the sale or other transfer of all
or substantially all of the assets of the Company to an
Affiliate or Affiliates;
(iii) The sale of all or substantially all of the
Company's assets to a single purchaser or group of affiliated
purchasers, other than any Affiliate or Affiliates, in one or
a series of related transactions; or
(iv) The Company engages in a merger or
consolidation with another entity other than an Affiliate and
immediately after that merger or consolidation, the persons or
entities that were stockholders of the Company immediately
prior to that merger or consolidation hold, directly or
indirectly, less than 50% of the Voting Stock of the surviving
entity.
(d) "Good Reason" means any action on the part of the
Company not consented to by Executive in writing (which action shall
not have been cured within 30 days following written notice from
Executive to the Board specifying that such action will give rise to a
termination of Executive's employment hereunder for Good Reason) having
the following effect or effects: (i) a material diminution of
Executive's job duties, responsibilities or requirements that is
detrimentally inconsistent with Executive's then current title and
Executive's prior duties, responsibilities or requirements; (ii) a
reduction in Executive's salary then in effect, other than a reduction
comparable to reductions generally applicable to similarly situated
employees of the Company; (iii) the permanent relocation of Executive
to a facility or location more than 50 miles from the Company's current
location; or (iv) a significant change in the reporting relationship or
title from that existing immediately prior to the Change of Control.
(e) "Voting Stock" means, with respect to a corporation,
the capital stock of any class or classes of that corporation having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect directors of such corporation and, with respect
to any other entity, the securities of that entity having such general
voting power to elect the members of the managing body of that entity.
2. Term. This Agreement shall be for a term beginning on the
Effective Date and terminating on the date on which Executive's employment with
the Company terminates or is terminated.
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3. Termination after Change of Control. If the Company terminates
Executive's employment without Cause, or Executive terminates his employment for
Good Reason, in either case within six months after a Change of Control, then
(i) the Company shall pay to Executive in either a lump-sum or through salary
continuation, at the Company's sole discretion, the amount of Executive's then
current base salary pursuant to Section 2(a) of the Personal Services Agreement
between Executive and the Company for the balance of the term pursuant to
section 1(c) of the Personal Services Agreement and for a period of 12 months
after the term of section 1(c) of the Personal Services Agreement, (ii) the
Company and the Board shall cause all of Executive's unvested stock options to
immediately vest effective as of the date Executive's employment terminates, and
Executive shall have four months to exercise the options vested under this
Section 3, (iii) if Executive elects continued coverage under the Company's
health plan pursuant to the Comprehensive Omnibus Budget Reconciliation Act of
1985, as amended, then the Company shall continue to pay the Company's portion
of the premium for Executive's continued coverage under the Company's health
plan until the first to occur of (A) the date that is 12 months after the date
of termination and (B) the date upon which Executive is employed by a third
party and is eligible for coverage by such third party's health insurance plan
and (iv) if Executive elects continued coverage under the Company's life
insurance plan, then the Company shall continue to pay the Company's portion of
the premium for Executive's continued coverage under the Company's life
insurance plan, or if continued coverage under the Company's life insurance plan
is not available pursuant to the terms of such plan, then the Company shall pay
to Executive the amount of the premium that would otherwise be payable by the
Company if Executive's employment were not terminated until the date that is 12
months after the date of termination. Thereafter, Executive shall not be
entitled to receive, and the Company shall have no obligation to provide
Executive with any additional salary, payments or benefits of any kind.
4. Entire Agreement. The terms of this Agreement are intended by
the parties to be the final and exclusive expression of their agreement with
respect to the relationship between Executive and the Company and may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements. The parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal
proceeding involving this Agreement.
5. Amendments, Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by Executive
and by a duly authorized representative of the Company other than Executive. No
failure to exercise and no delay in exercising any right, remedy, or power under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power under this Agreement preclude
any other or further exercise thereof, or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
6. Assignment; Successors and Assigns. Executive agrees that
Executive will not assign, sell, transfer, delegate or otherwise dispose of,
whether voluntarily or involuntarily, or by operation of law, any rights or
obligations under this Agreement, nor shall Executive's rights be subject to
encumbrance or the claims of creditors. Any purported assignment, transfer, or
delegation shall be null and void. Subject to the foregoing, this Agreement
shall be binding upon Executive and the Company and shall inure to the benefit
of the parties and their respective heirs, legal representatives, successors,
and permitted assigns, and shall not benefit any person or entity other than
those enumerated above.
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7. Severability; Enforcement. If any provision of this Agreement,
or the application thereof to any person, place, or circumstance, shall be held
by a court or arbitrator of competent jurisdiction to be invalid, unenforceable,
or void, the remainder of this Agreement and such provisions as applied to other
persons, places, and circumstances shall remain in full force and effect.
8. Governing Law. The validity, interpretation, enforceability,
and performance of this Agreement shall be governed by and construed in
accordance with the laws of the State of New Mexico, without regard to choice of
law rules. All disputes arising under this Agreement shall be submitted to and
heard by a state or federal court located in the State of New Mexico and each of
the Company and Executive hereby irrevocably consents to the exclusive
jurisdiction and exclusive venue of such courts.
9. Executive Acknowledgment. The parties acknowledge (a) that
they have consulted with or have had the opportunity to consult with independent
counsel of their own choice concerning this Agreement, and (b) that they have
read and understand the Agreement, are fully aware of its legal effect, and have
entered into it freely based on their own judgment and not on any
representations or promises other than those contained in this Agreement.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures to this
Agreement may be transmitted via facsimile and such signatures shall be deemed
to be originals.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
Company Executive
CytoDyn, Inc.
______________________________ ______________________________
Name: Wellington X. Xxxx Xxxxx X. Xxxxx
Title: Chief Financial Officer
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