Exhibit 10.1
EXECUTIVE
EMPLOYMENT AGREEMENT
This Agreement is made to be effective as of the 1st day of May
2008,
by and between Vitro Diagnostics, Inc., a Nevada corporation (the
"Company") and
James R. Musick ("Employee").
W I T N E S S E T H:
WHEREAS, the Company wishes to engage Employee's services upon
the
terms and conditions hereinafter set forth; and
WHEREAS, Employee wishes to be employed by the Company upon the
terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
promises
set forth herein, the sufficiency of which is hereby acknowledged,
the parties
agree as follows:
1. Employment; Duties. The Company hereby agrees to employ
Employee
effective as of the Effective Date (defined below) as its
President, CEO and
Chairman of the Board of Directors. Employee's principal area of
responsibility,
subject to modification by the Company, shall be to serve as the
Chairman of the
Board and Chief Executive Officer with all the duties and
responsibilities
customarily associated with those positions. His job duties will
also include
management of all technical aspects of the operations of the
Company, including
research and development, manufacturing and marketing. He will also
assume
management responsibility for maintenance and further development
of the
intellectual property portfolio of the company and manage all
issues related to
regulatory affairs.
2. Best Efforts. Employee agrees to use his best efforts to promote
the
interests of the Company and shall, except for illness, reasonable
vacation
periods and leaves of absence, devote his full business time and
energies to the
business and affairs of the Company. Employee shall be permitted to
perform
outside business endeavors only with the approval of the Board of
Directors,
subject to non-competition agreements with the Company and provided
that such
outside activities do not interfere with the performance of
Employee's duties.
Employee may also engage in work for charitable, benevolent, civic
or
educational purposes so long as such endeavors do not interfere
with Employee's
duties hereunder.
3. Term of Agreement. The term of this Agreement shall commence on
the
date first above written (the "Effective Date") and shall continue,
unless
earlier terminated in accordance with the terms of Paragraph 5, for
a period of
three years (the "Original Term"). The Original Term shall be
extended
automatically for an additional three-year period (a "Renewal
Term") unless
either party gives notice to the other that this Agreement will not
be extended
at least 90 days prior to the expiration of the Original Term or
any Renewal
Term. The period of employment of Employee by the Company,
commencing with the
Effective Date and continuing until termination of the employment
by notice
hereunder, in accordance with Paragraph 5 or otherwise shall be
known as the
"Term of Employment."
4. Compensation.
4.1 Base Salary. The following table sets forth the
compensation
payable to the Employee during the initial three years of the Term
of
Employment:
Year
Base Salary
----
-----------
1
$80,000
2
$85,000
3
$90,000
<PAGE>
4.2 Bonuses
and Stock Options.
In addition to the base salary described in section 4.1
(above), Employee shall be entitled to incentive compensation
designed
to encourage accomplishment of specific corporate goals. Upon
the
Company's achievement of gross annual product sales of
$250,000,
$500,000 or $1,000,000 per annum (measured from November 1 to
October
31 of each fiscal year as reported in the Statement of
Operations
included in the Company's report in Form 10-K), the Employee will
be
entitled to profit sharing bonuses as follows:
Minimum Annual Product Sales
% of Net Income to Employee
----------------------------
---------------------------
$250,000
80%
$500,000
60%
$1,000,000
40%
For purposes of this Paragraph 4.2, Net Income shall mean the
Net Income as provided on the Statement of Operations referenced
above.
These bonuses, if earned, will be paid within 30 days of the
Company's
filing of its Form 10-K. Such bonuses will not preclude the vesting
of
stock options as described below.
A stock option shall be granted to the Employee upon execution
of this Agreement to purchase up to one million (1,000,000) shares
of
the Company's common stock; at an exercise price of $0.19 per
share
(the closing market price at July 29, 2008, the date this Agreement
was
approved by the Company's Board of Directors). The options shall
vest
according to the following schedule:
(a) 100,000 shares if the market capitalization of the Company
exceeds $5 million for a period of at least 5 consecutive trading
days,
an additional 100,000 shares if the market capitalization of
the
Company exceeds $6 million for a period of at least 5
consecutive
trading days, and an additional 100,000 shares if the market
capitalization of the Company exceeds $7 million for a period of
at
least 5 consecutive trading days;
(b) An additional 100,000 shares if the Company licenses one
of its patents to a third party and an additional 100,000 shares if
the
Company executes an in-license of a patent owned by a third party,
that
expands the revenue generation capacity of the Company.
(c) An additional 100,000 shares if the Company raises at
least $1 million in equity financing, an additional 100,000 shares
if
the
Company raises $2 million in equity financing, and an
additional
100,000 shares if the Company raises $5 million in equity
capital;
(d) An additional 100,000 shares if the Company merges with,
acquires or spins off another company, with minimum annual revenues
of
$500,000 and
(e) An additional 100,000 shares if a registration statement
filed with the SEC for the purpose of conducting a secondary
offering
of not less than $2,000,000 of the Company's securities becomes
effective.
These Stock Options shall be exercisable beginning with the date
of
vesting and for a period of 10 years from the date of grant.
The option granted to the Employees shall be represented by an
option
agreement in form and substance satisfactory to the Company, and
shall be
granted under the Company's Equity Incentive Plan ("Plan"). To the
extent
permitted by the terms of the Plan, the options shall be incentive
options
within applicable provisions of the Internal Revenue Code. All
options would be
granted with a provision for cashless exercise whereby a portion of
the option
shares could be redeemed at market price at the time of exercise
(closing bid)
to satisfy the cost of exercising the option. The Company also
agrees that all
stock options as provided herein shall immediately vest to the
employee upon the
acquisition of the Company or substantially all of its assets by a
third party.
2
<PAGE>
4.3 Benefits. Employee shall be entitled to participate in all
benefit
programs established by the Company and generally applicable to the
Company's
executive employees. Employee shall also be reimbursed for
reasonable and
necessary business expenses incurred in the course of his
employment with the
Company pursuant to Company policies as established from time to
time.
5. Termination of Employment Relationship.
5.1 Death or Incapacity. This Agreement shall terminate
immediately
upon the death or Total Disability of Employee, and in such event,
the Employee
shall have no further claim against the Company for compensation or
benefits
hereunder. The Board of Directors shall make a determination of the
Total
Disability of the Employee based upon the definition of disability
and terms
contained in the Company's disability insurance policy, or if none,
based upon
the inability of the Employee to perform the material functions of
his job. Any
such determination by the Board shall be evidenced by its written
opinion
delivered to the Employee. Such written opinion shall specify with
particularity
the reasons supporting such opinion and be manually signed by at
least a
majority of the Board.
5.2 Termination by the Company. This Agreement may be terminated by
the
Company for "Cause" and, in such event, the term of employment
shall terminate
at the termination date designated by the Company. For the purpose
of this
paragraph, "Termination for Cause" or "Cause" shall include the
following:
(a) Breach of fiduciary duty or criminal conduct by the
Employee having the effect of materially adversely affecting
the
Company and/or its reputation;
(b) Willful failure by the Employee to substantially perform
his duties hereunder;
(c) Engagement by the Employee in the use of narcotics or
alcohol to the extent that the performance of his duties is
materially
impaired;
(d) Material breach of the terms of this Agreement by the
Employee or failure to substantially comply with proper
instructions of
the Company's Board of Directors;
(e) Misconduct by the Employee which is materially injurious
to the Company; or
(f) Any act or omission on the part of the Employee not
described above, but which constitutes material and willful
misfeasance, malfeasance, or gross negligence in the performance of
his
duties to the Company.
Determination of any event or events and circumstances
constituting
"Cause" shall be at the sole discretion of the Board of
Directors.
5.3 Termination by Employee. Employee may terminate this Agreement
for
"Good Reason"; provided, however, that Employee's obligations under
Paragraph 6
shall survive any termination of this Agreement by Employee, by the
Company or
otherwise. For purposes of this paragraph, Good Reason shall
mean:
(a)
Any
assignment to the Employee of any duties
materially inconsistent with the position described in Section
1
hereof,
(b) Any material diminution of the duties of the Em
