EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), dated as of the 24th day of
March, 2010, is by and between AspenBio Pharma, Inc., a Colorado corporation
(the “Employer” or “Company”) and Xxxxxxx X. Xxxxx (the
“Executive”). In consideration of the mutual covenants contained in
this Agreement, the Employer agrees to employ the Executive, and the Executive
agrees to be employed by the Employer, upon the terms and conditions hereinafter
set forth.
ARTICLE
1
1.1 Term. The
Executive shall serve at the pleasure of the Board of Directors of the
Company. The term of employment hereunder shall commence as of the
day first written above (the “Commencement Date”) and shall continue until
terminated as provided in Article 5.
ARTICLE
2
2.1 Duties. The
Executive shall be employed with the titles of President and Chief Executive
Officer, with the responsibilities and authorities as are customarily performed
by such positions including, but not limited to, those duties as may from time
to time be assigned to the Executive by the Board of Directors of the
Employer. The Executive shall report to the Executive Chair of the
Board of Directors, and the Executive’s responsibilities and authorities are
subject to the general direction and control of the Board of
Directors.
2.2 Extent and Place of
Duties. The Executive shall devote working time, efforts,
attention and energies to the business of the Employer on a full-time basis;
with such changes as may further be agreed upon between the parties from time to
time. All such duties shall be performed working out of either the
Castle Rock, CO offices of the Company or the Executive’s home office in
addition to regular trips for business and meetings on behalf of the Company as
the Executive and the Company may reasonably agree.
2.3 Election to the Board of
Directors. Upon the Commencement Date, the Executive shall be
elected as a member of the Board of Directors of the Company. During
the term of this Agreement, the Board of Directors shall use reasonable efforts
to nominate the Executive for continued service on the Board of
Directors. The Executive shall receive no additional compensation for
service on the Board of Directors.
ARTICLE
3
3.1 Salary. As
compensation for services rendered under this Agreement, the Executive will
receive a salary of $275,000 per year. The Executive’s salary is
payable in accordance with the Employer’s normal business practices. The parties
agree that the salary and compensation package will be reviewed at the end of
the initial year by the Compensation Committee of the Board of Directors and the
Board of Directors.
3.2 Annual Incentive
Bonus. The Executive’s annual incentive bonus for 2010 shall
be equal to 45% of his base salary at target, with such designated performance
goals as shall be established by the Compensation Committee of the Board of
Directors and confirmed by the Board of Directors as soon as reasonably
practicable following the Commencement Date.
3.3 Stock Incentive
Award. The Executive shall be awarded an initial stock option
award to purchase 400,000 shares of the Company’s common stock. The
date of grant shall be the Commencement Date, provided that the Executive begins
employment with the Company on such date; otherwise the date of grant shall be
the date his employment with the Company begins. The stock option
award shall have a term of ten (10) years, shall constitute an Incentive Stock
Option to the extent possible, shall vest on a time-based basis with one-third
of the award vesting on each of the first, second and third anniversaries of the
date of grant, and shall have accelerated vesting with respect to 100,000 of the
shares underlying the stock option award on the earlier to occur within twelve
months after the Commencement Date of: (a) completion by the Company
of a successful fund-raising transaction; and (b) receipt of clearance for the
Company’s ELISA-based AppyScore product. In accordance with the 2002
Stock Incentive Plan, any unvested stock options shall vest upon the
consummation of a Change in Control of the Company. A “Change in
Control” shall mean, (a) the acquisition, directly or indirectly, by any person
or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934) of the beneficial ownership of more than fifty percent of the
outstanding securities of the Company, (b) a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is incorporated,
(c) the sale, transfer or other disposition of all or substantially all of the
assets of the Company, (d) a complete liquidation or dissolution of the Company,
or (e) any reverse merger in which the Company is the surviving entity but in
which securities possessing more than fifty percent of the total combined voting
power of the Company’s outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to
such merger.
3.4 Benefits. The
Executive shall be entitled, subject to this Section 3.4, to participate in all
of the Employer’s employee benefit plans and employee benefits, including any
retirement, pension, profit-sharing, incentive compensation, stock option,
insurance, hospital or other plans and benefits which now may be in effect or
which may hereafter be adopted, , it being understood that the Executive shall
have the same rights and privileges to participate in such plans and benefits as
any other executive employee during the term of this
Agreement. Participation in any benefit plans shall be in addition to
the compensation otherwise provided for in this Agreement. The
Executive’s health care benefits shall be coordinated with any COBRA benefits
currently held by the Executive. The Executive shall be entitled to
paid vacation time equal to 4 weeks for each 12-month period during the
Term.
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3.5 Expenses. The
Executive shall be entitled to prompt reimbursement for all reasonable expenses
incurred by the Executive in the performance of his duties
hereunder.
3.6 Travel/Relocation. The
Employer does not expect the Executive to relocate to the Castle Rock, CO area
in the near term and will, to the extent consistent with applicable tax law, pay
for lodging and travel costs for the Executive for travel associated with the
Executive’s position with the Company. Domestic air travel shall be
reimbursed at economy fare and international travel at business class
fare.
ARTICLE
4
4.1 During
the term of this Agreement, the Executive may make passive investments in
companies involved in industries in which the Company operates, provided any
such investment does not exceed a 5% equity interest, unless the Executive
obtains consent to acquire an equity interest exceeding 5% by a vote of a
majority of the directors.
4.2 During
the term of this Agreement the Executive, subject to Board approval, which will
not be unreasonably withheld, can join non-competitive boards as an independent
board member, not to exceed a total of three boards at any one
time.
4.3 Except as
provided in this Article 4 hereof, the Executive may not participate in any
business or other areas of business in which the Company is engaged during the
term of this Agreement without the consent from a majority of the
directors.
4.4 (a) The
Executive recognizes and acknowledges that the information, business, list of
the Employer’s customers and any other trade secret or other secret or
confidential information relating to the Employer’s business as they may exist
from time to time are valuable, special and unique assets of the Employer’s
business. Therefore, the Executive agrees as follows:
(1) The
Executive will hold in strictest confidence and not disclose, reproduce, publish
or use in any manner, whether during or subsequent to this employment, without
the express authorization of the Board of Directors of the Employer, any
information, business, customer lists, or any other secret or confidential
matter relating to any aspect of the Employer’s business, except as such
disclosure or use may be required in connection with the Executive’s work for
the Employer.
(2) Upon
request or at the time of leaving the employ of the Employer, the Executive
shall deliver to the Employer, and not keep or deliver to anyone else, any and
all notes, memoranda, documents and, in general, any and all material relating
to the Employer’s business.
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(3) The Board
of Directors of the Employer may from time to time reasonably designate other
subject matters requiring confidentiality and secrecy which shall be deemed to
be covered by the terms of this Agreement.
(b) In
the event of a breach or threatened breach by the Executive of the provisions of
this paragraph 4.4, the Employer shall be entitled to an injunction (i)
restraining the Executive from disclosing, in whole or in part, any information
as described above or from rendering any services to any person, firm,
corporation, association or other entity to whom such information, in whole or
in part, has been disclosed or is threatened to be disclosed; and/or (ii)
requiring that the Executive deliver to the Employer all information, documents,
notes, memoranda and any and all other material as described above upon the
Executive’s leave of the employ of the Employer. Nothing herein shall
be construed as prohibiting the Employer from pursuing other remedies available
to the Employer for such breach or threatened breach, including the recovery of
damages from the Executive.
(c) The
Executive hereby agrees that, upon the execution of this Agreement, he will sign
the Company’s standard forms of Code of Conduct, Confidentiality, Xxxxxxx
Xxxxxxx Policy and Inventions agreements.
4.5 Non-disparagement. During
the Term of the Executive’s employment hereunder and for five (5) years
thereafter (a) the Executive shall not disparage, deprecate, or make any
comments or take any other actions, directly or indirectly, that a reasonable
person would expect at the time would have the effect of diminishing or
constraining the goodwill and good reputation of the Company or its officers,
directors, employees or services and (b) the Employer shall not disparage,
deprecate, or make any comments or take any other actions, directly or
indirectly, that a reasonable person would expect at the time would have the
effect of diminishing or constraining the goodwill and good reputation of the
Executive, except in each case as may be required by law. For the
Executive, this obligation includes, but is not limited to, refraining from
negative statements about the Company’s methods of doing business, the
effectiveness of its business policies, and the quality of any of its services
or personnel. Further, the Executive will refrain from criticizing, or making
(directly or indirectly), or encouraging any other(s) to make, any public
attack(s) against the Company or any of its officers, directors or
employees. This specifically includes any such communications with any
newspaper or other news media.
ARTICLE
5
5.1 Termination. The
Executive’s employment hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(a) By
Executive. Upon the occurrence of any of the following events,
this Agreement may be terminated by the Executive by prior written notice to the
Employer:
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(1) if the
Employer makes a general assignment for the benefit of creditors, files a
voluntary bankruptcy petition, files a petition or answer seeking a
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any law, or there shall have been filed any petition or
application for the involuntary bankruptcy of the Employer, or other similar
proceeding, in which an order for relief is entered or which remains undismissed
for a period of thirty (30) days or more, or the Employer seeks, consents to, or
acquiesces in the appointment of a trustee, receiver, or liquidator of the
Employer or any material part of its assets;
(2) a Change
in Control of the Employer;
(3) a
decision by the Employer, approved by the Board of Directors of the Employer, to
terminate its business and liquidate its assets.
(b) Death. This
Agreement shall terminate upon the death of the Executive.
(c) Disability. The
Employer may terminate this Agreement upon the disability of the
Executive. The Executive shall be considered disabled (whether
permanent or temporary) if he is incapacitated to such an extent that he is
unable to perform substantially all of his duties for Employer that he performed
prior to such incapacitation.
(d) Cause. The
Employer may terminate this Agreement for Cause. For purposes of this
Agreement, “Cause” means (i) the willful and continued failure by the Executive
to substantially perform his duties with the Employer (other than any such
failure resulting from his incapacity due to physical or mental illness) after a
written demand specifically identifies the manner in which the Board of
Directors believes that the Executive has not substantially performed his duties
and responsibilities hereunder, or (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this paragraph, no act or
failure to act on the Executive’s part shall be considered “willful” unless done
or omitted to be done by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the
Employer.
(e) Other Termination by
Company. The Employer may terminate the Executive’s employment
hereunder for any reason.
(f) Other Termination by
Executive. The Executive may terminate the Agreement for any
reason by providing written notice to the Board of Directors at least thirty
(30) days prior to the Date of Termination.
5.2 Notice of
Termination. Any termination of the Executive’s employment by
the Employer or by the Executive (other than termination pursuant to subsection
5.1(b) above) shall be communicated by written Notice of Termination to the
other party.
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5.3 Date of
Termination. “Date of Termination” shall mean (a) if the
Executive’s employment is terminated by his death, the date of his death; (b) if
the Executive’s employment is terminated for Cause, the date on which a Notice
of Termination is received by the Executive; (c) if the Executive is determined
to be disabled, the date of such determination; and (d) if the Executive’s
employment is terminated for any other reason stated above, the date specified
in a Notice of Termination by the Employer or the Executive, which date shall be
no less than thirty (30) days following the date on which Notice of Termination
is first given.
(a) Following
the termination of this Agreement by the Company for Cause as set forth in
Section 5.1(d), or any termination of this Agreement by the Executive pursuant
to Section 5.1(f), the Executive shall be entitled to compensation only through
the Date of Termination.
(b) Following
the termination of this Agreement pursuant to Section 5.1(b), the Employer shall
pay to the Executive’s estate all compensation due through the Date of
Termination plus an amount equal to three (3) months base salary following such
termination for his death.
(c) In
the event of disability of the Executive as described in Section 5.1(c), if the
Employer elects to terminate this Agreement, the Executive shall receive
compensation through the Date of Termination plus an amount equal to three (3)
months base salary following such termination for his
disability.
(d) If
the Executive is terminated by the Employer for any reason other than death,
disability or Cause as set forth in this Article 5, or the Executive terminates
his employment under Section 5.1(a) hereof, then the Executive shall, subject to
execution of a customary release of claims, receive compensation through the
Date of Termination plus severance payments equal to twelve (12) months base
salary following the Date of Termination. The amount of such base
salary shall be the base salary at the Date of Termination unless, in the event
of a Change in Control, a higher base salary was in effect prior to the Change
in Control.
(e) Any
amounts payable under this Section 5.4 shall be paid on the Company’s normal
payroll cycle; provided, however, that all such payments (including by a lump
sum payment as applicable) shall be paid in full by March 15 of the year
following the year containing the Date of Termination or, if applicable,
otherwise so as not to be subject to Section 409A of the Internal Revenue
Code.
5.5 Other Termination
Provisions. The Executive agrees that upon termination of this
Agreement and upon reasonable request by the Board of Directors, the Executive
shall resign from any then effective Board, Officer or Committee Employer
positions.
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5.6 Remedies. Any
termination of this Agreement shall not prejudice any other remedy to which the
Employer or the Executive may be entitled, either at law, equity, or under this
Agreement.
ARTICLE
6
To the
fullest extent permitted by applicable law, the Employer agrees to indemnify,
defend and hold the Executive harmless from any and all claims, actions, costs,
expenses, damages and liabilities, including, without limitation, reasonable
attorneys’ fees, hereafter or heretofore arising out of or in connection with
activities of the Employer or its employees, including the Executive, or other
agents in connection with and within the scope of this Agreement or by reason of
the fact that he is or was a director or officer of the Employer or any
affiliate of the Employer. To the fullest extent permitted by
applicable law, the Employer shall advance to the Executive expenses of
defending any such action, claim or proceeding. However, the Employer
shall not indemnify the Executive or defend the Executive against, or hold him
harmless from any claims, damages, expenses or liabilities, including attorneys’
fees, resulting from the gross negligence or willful misconduct of the
Executive. The duty to indemnify shall survive the expiration or
early termination of this Agreement as to any claims based on facts or
conditions which occurred or are alleged to have occurred prior to expiration or
termination.
ARTICLE
7
7.1 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
7.2 Arbitration. Any
controversy or claim arising out of or relating to this Agreement or the breach
thereof shall be settled by arbitration in the City and County of Denver,
Colorado in accordance with the rules then existing of the American Arbitration
Association and judgment upon the award may be entered in any court having
jurisdiction thereof.
7.3 Entire
Agreement. This Agreement supersedes any and all other
agreements, whether oral or in writing, between the parties with respect to the
employment of the Executive by the Employer. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, oral or otherwise, have been made by either party, or anyone acting
on behalf of any party, that are not embodied in this Agreement, and that no
agreement, statement, or promise not contained in this Agreement shall be valid
or binding.
7.4 Successors and
Assigns. This Agreement, all terms and conditions hereunder,
and all remedies arising herefrom, shall inure to the benefit of and be binding
upon the Employer, any successor in interest to all or substantially all of the
business and/or assets of the Employer, and the heirs, administrators,
successors and assigns of the Executive. Except as provided in the
preceding sentence, the rights and obligations of the parties hereto may not be
assigned or transferred by either party without the prior written consent of the
other party.
7.5 Notices. For
purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
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Executive:
Xxxxxxx X. Xxxxx
00000
Xxxxxxx Xxxxx
Xxxxxx,
XX 00000
Email:
xxxxxx0@xxxxxx.xx.xxx
Cell: (000)
000-0000
Employer:
Attn: Chairman
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Fax: 303/ 000-0000
or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
7.6 Severability. If
any provision of this Agreement is prohibited by or is unlawful or unenforceable
under any applicable law of any jurisdiction as to such jurisdiction, such
provision shall be ineffective to the extent of such prohibition without
invalidating the remaining provisions hereof.
7.7 Section
Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction of any terms of this
Agreement.
7.8 Survival of
Obligations. Termination of this Agreement for any reason
shall not relieve the Employer or the Executive of any obligation accruing or
arising prior to such termination.
7.9 Amendments. This
Agreement may be amended only by written agreement of both the Employer and the
Executive.
7.10
Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original but all of which, when taken together, shall constitute
only one legal instrument. This Agreement shall become effective when
copies hereof, when taken together, shall bear the signatures of both parties
hereto. It shall not be necessary in making proof of this Agreement
to produce or account for more than one such counterpart.
7.11
Fees and
Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys’ fees, costs and necessary disbursements in
addition to any other relief to which that party may be entitled.
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IN
WITNESS WHEREOF, Employer and Executive enter into this Executive Employment
Agreement effective as of the date first set forth above.
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AspenBio
Pharma, Inc. - “EMPLOYER”
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By:
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/s/ Xxxxx X. Xxxxxxxx | |
| Name: Xxxxx X. Xxxxxxxx | |||
| Title: Executive Chairman | |||
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Xxxxxxx
X. Xxxxx - “EXECUTIVE”
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By:
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/s/ Xxxxxxx X. Xxxxx | |
| Xxxxxxx X. Xxxxx, Individually | |||
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