Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), is effective as of June 10, 2014
(the “Effective Date”), and executed June 4, 2014, between Ampio
Pharmaceuticals, Inc., a Delaware corporation headquartered at 5445 DTC Parkway,
Suite 925, Greenwood Village, CO 80111 USA, hereinafter referred to as the
“Company”, and Gregory A. Gould (“Employee”).

RECITALS

WHEREAS, the Company is a duly organized Delaware corporation, with its
principal place of business within the State of Colorado, and is in the business
of developing and marketing pharmaceutical products; and

WHEREAS, the Company desires assurance of the continued association and services
of the Employee in order to continue to retain the Employee’s experience,
skills, abilities, background and knowledge, and is willing to continue to
engage the Employee’s services on the terms and conditions set forth in this
Agreement; and

WHEREAS, Employee desires to be in the continued employ of the Company, and is
willing to accept such continued employment on the terms and conditions set
forth in this Agreement.

NOW, THEREFORE, the parties hereto agree to the terms and conditions of this
Agreement as follows:

1. Employment for Term. The Company hereby agrees to employ Employee and
Employee hereby accepts such employment with the Company for the period of 36
months beginning on the Effective Date. The term of this Agreement (the “Term”)
shall continue until the termination of Employee’s employment in accordance with
the provisions of this Agreement. The termination of Employee’s employment under
this Agreement shall end the Term, but shall not terminate Employee’s or the
Company’s other obligations that are intended to survive the termination of this
Agreement (including without limitation, the payments under Section 7 and 8 and
Employee’s obligations under Section 9).

2. Position and Duties. During the Term, Employee shall serve as Chief Financial
Officer of the Company, and perform such duties as are consistent with this
position. The Employee shall report to the Chief Executive Officer of the
Company. During the Term, Employee shall also hold such additional positions and
titles as the Chief Executive Officer or the Board of Directors of the Company
(the “Board”) may determine from time to time. During the Term, Employee shall
devote his full business time to his duties as the Chief Financial Officer of
the Company. Notwithstanding the foregoing, the Company hereby acknowledges that
it consents to Employee’s participation in those outside activities described on
Exhibit A hereto. During the Term of this Agreement, Employee agrees not to
acquire, assume or participate in, directly or indirectly, any position,
investment or interest known by the Employee to be adverse to the Company, its
business or prospects, its financial position, or otherwise or in any company,
person or entity that is, directly or indirectly, in competition with the
business of the Company or any of its affiliates. On termination of Employee’s
employment, regardless of the reason for such termination, Employee shall
immediately (and with contemporaneous effect) resign any directorships, offices
or other positions that Employee may hold in the Company or any affiliate,
unless otherwise agreed in writing by the parties.

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3. Compensation.

(a) Base Salary. The Company shall pay Employee a base salary of $250,000 per
annum, payable at least monthly on the Company’s regular pay cycle for executive
officers (the “Base Salary”). Except as specifically otherwise provided herein,
the Base Salary may be increased only by recommendation of the Compensation
Committee of the Board and ratified by the Compensation Committee or a majority
of the independent members of the Board.

(b) Annual Review. The Base Salary shall be reviewed at the end of each calendar
year (the first such review to occur at the end of calendar year 2014).

(c) Equity Compensation. In connection with the execution of this Agreement, and
subject to approval of the Company’s Compensation Committee, which may not occur
until the Effective Date, the Company hereby agrees to grant initial equity
compensation to Employee in the aggregate amount of 300,000 options to purchase
shares of Company Common Stock. These options shall vest in accordance with the
terms and schedule set forth in Exhibit B hereto. Such vesting schedule will be
accelerated, to the extent provided in Section 8 of this Agreement.

(d) Other and Additional Compensation. Subsections (a) and (c) above establish
Employee’s compensation during the Term which shall not preclude the Board from
awarding Employee a higher salary or any bonuses or stock options, restricted
stock or other forms of additional equity awards in the discretion of the Board
during the Term at any time. The Employee shall be eligible for an annual
discretionary bonus (hereinafter referred to as the “Bonus”) with a target of
fifty percent (50%) of the Base Salary, subject to standard deductions and
withholdings. The actual Bonus will be determined in good faith by the
Compensation Committee, and will be based upon the Employee’s individual
achievement and Company performance objectives as set by the Board or the
Compensation Committee (the “Performance Milestones”) on an annual basis. The
initial Performance Milestones for the remainder of 2014 are as set forth on
Exhibit B. The Employee’s Bonus target will be reviewed annually and may be
adjusted by the Board or the Compensation Committee in its discretion, provided
however, that the Bonus target may only be reduced upon Employee’s written
consent. The Employee must be employed on the date the Bonus is awarded to be
eligible for the Bonus, subject to the termination provisions hereof Bonuses
shall be paid during the calendar quarter following the calendar quarter for
which such Bonus was earned when Performance Milestones are met during a
calendar quarter. Fourth quarter Bonuses, Bonuses calculated on the basis of
partial Performance Milestone satisfaction and Bonuses based upon annual
milestones shall be paid by March 15 of the following year.

4. Employee Benefits. During the Term, Employee shall be entitled to participate
at the same level as other senior executive officers of the Company in any group
insurance, hospitalization, medical, health and accident, disability, fringe
benefit and tax-qualified retirement plans or programs of the Company now
existing or hereafter established to the extent that he is eligible under the
general provisions thereof. For the term of this Agreement,

 

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Employee shall be entitled to paid vacation at the rate of (4) weeks per annum.
In accordance with Company policy, unused vacation earned in one year may not be
carried over beyond December 31st of the following year, but individual
vacations shall not exceed 3 weeks in duration.

5. Expenses. The Company shall reimburse Employee for actual, reasonable
out-of-pocket expenses incurred by him in the performance of his services for
the Company upon the receipt of appropriate documentation of such expenses which
shall be submitted in such form, and with such supporting documentation, as
called for or required by Company policy.

6. Termination.

(a) General. The Term shall end immediately upon Employee’s death. Employee’s
employment may also be terminated by the Company immediately upon notice with or
without Cause or as a result of Employee’s Disability, or by Employee with or
without Good Reason (as such terms are defined below).

(b) Notice of Termination. Either party shall give written notice of termination
to the other party If the Employee terminates employment hereunder with or
without Good Reason, Employee shall provide the Company with 30 days’ prior
written notice of termination. Notwithstanding the foregoing, in the event that
the Employee gives a notice of termination to the Company, the Company may
unilaterally accelerate the date of termination and such acceleration shall not
result in a termination by the Company for purposes of this Agreement.

(c) Notification of New Employer. In the event that Employee leaves the employ
of the Company, Employee grants consent to notification by the Company to
Employee’s new employer about his rights and obligations under this Agreement
and the PIA (hereinafter defined).

7. Severance Benefits.

(a) Cause Defined. “Cause” means (i) willful malfeasance or willful misconduct
by Employee in connection with his employment; (ii) Employee’s gross negligence
in performing any of his duties under this Agreement; (iii) Employee’s
conviction of, or entry of a plea of guilty to, or entry of a plea of nolo
contendre with respect to, any crime other than a traffic violation; or an
infraction which is a misdemeanor (iv) Employee’s willful and deliberate
violation of a Company policy, (v) Employee’s unintended but material breach of
any written policy applicable to all employees adopted by the Company which, to
the extent curable, is not cured to the reasonable satisfaction of the Board of
Directors within thirty (30) business days after notice thereof; (vi) the
Employee’s unauthorized use or disclosure of any proprietary information or
trade secrets of the Company or any other party as to which the Employee owes an
obligation of nondisclosure as a result of the Employee’s relationship with the
Company, (vii) the Employee’s willful and deliberate breach of his obligations
under this Agreement, or (viii) any other material breach by Employee of any of
his obligations in this Agreement which, to the extent curable, is not cured to
the reasonable satisfaction of the Board of Directors within thirty (30)
business days after notice thereof.

 

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(b) Disability Defined. “Disability” shall mean (i) Employee’s incapacity due to
a physical or mental condition and, if reasonable accommodation is required by
law, after any reasonable accommodation, that results in Employee being
substantially unable to perform his duties hereunder for six consecutive months
(or for six months out of any nine month period) or (ii) a qualified independent
physician mutually acceptable to the Company and Employee determines that
Employee is incapacitated due to a physical or mental condition and, if
reasonable accommodation is required by law, after any reasonable accommodation
so as to be unable to regularly perform the duties of his position and such
condition is expected to be of a permanent or near-permanent duration. Until
such time as Employee is terminated for Disability under this paragraph (b),
Employee shall continue to receive his Base Salary hereunder, provided that if
the Company provides Employee with disability insurance coverage, payments of
Employee’s Base Salary shall be reduced by the amount of any disability
insurance payments received by Employee due to such coverage. The Company shall
give Employee written notice of termination due to Disability, which shall take
effect sixty (60) days after the date it is sent to Employee unless Employee
shall have returned to the performance of his duties hereunder during such sixty
(60) day period (whereupon such notice shall become void).

(c) Good Reason Defined. For purposes of this Agreement, “Good Reason” shall
mean, without Employee’s written consent: (i) there is a material reduction of
the level of Employee’s compensation (excluding any bonuses) (except where there
is a general reduction applicable to the management team generally, provided,
however, that in no case may the Base Salary be reduced below the amount stated
in Section 3(a)), (ii) there is a material reduction in Employee’s overall
responsibilities or authority, or scope of duties (it being understood that the
occurrence of a Change in Control shall not, by itself, necessarily constitute a
reduction in Employee’s responsibilities or authority); or (iii) there is a
material change in the principal geographic location at which Employee must
perform his services (it being understood that the relocation of Employee to a
facility or a location within forty (40) miles of the State Capitol Building in
Denver, Colorado shall not be deemed material for purposes of this Agreement).
No event shall be deemed to be “Good Reason” if the Company has cured the event
(if susceptible to cure) within 30 days of receipt of written notice from
Employee specifying the event or events which, absent cure, would constitute
“Good Reason.” Notice of Good Reason must be provided by Employee to the Company
within 30 business days following the initial existence or event of Good Reason.

(d) Accrued Compensation Defined. Accrued Compensation shall mean an amount,
which shall include all amounts earned or accrued by Employee through the date
of termination of this Agreement but not paid as of such date, including
(i) Base Salary, (ii) reimbursement for business expenses incurred by the
Employee on behalf of the Company, pursuant to the Company’s expense
reimbursement policy in effect at such time, (iii) any expense allowance
pursuant to Company policy, (iv) accrued but unused vacation pay per Company
policy, and (v) bonuses and incentive compensation earned and awarded prior to
the date of termination. Accrued Compensation shall be paid on the first regular
pay date after the date of termination (or earlier, if required by applicable
law).

 

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(e) Termination.

(i) Cause; Without Good Reason; Death. If the Company ends the Term for Cause,
if Employee resigns as an employee of the Company for reasons other than an
event of Good Reason, or the Employee dies, then the Company shall pay to
Employee the Accrued Compensation but shall have no obligation to pay Employee
any amount, whether for salary, benefits, bonuses, or other compensation or
expense reimbursements of any kind, accruing after the end of the Term, and such
rights shall, except as otherwise required by law or pursuant to the applicable
award agreement or plan, be forfeited immediately upon the end of the Term. For
the sake of clarity, any stock options, restricted stock or other equity
compensation shall, to the extent vested on the date of resignation without Good
Reason, the date the Company ends the Term for Cause, or the date of Employee s
death, remain outstanding and exercisable to the extent provided in the
applicable award agreement or plan, by the Employee or his personal
representative or executor.

(ii) Without Cause; Good Reason. In the event that the Company terminates
Employee’s employment hereunder without Cause, Employee terminates his
employment with Good Reason, he shall be entitled to the Accrued Compensation
and, subject to Section 21 and 22 below,

(A) A lump sum payment equal to 2 times his Base Salary in effect at the date of
termination, less applicable withholding will be paid to Employee within 60 days
of the date of termination of employment.

(B) Continued participation (via state or federal insurance continuation laws
such as COBRA, to the extent available) in the health and welfare plans (or
comparable plans, if continued participation in the Company’s plans is not
available) provided by the Company to Employee at the time of termination for a
period of two years from the date of termination or, if earlier, until he is
eligible for comparable coverage with a subsequent employer. The Company agrees
to reimburse the payments Employee makes for such coverage, whether via
continuation or separate comparable policy. Premium reimbursements shall be made
by the Company to Employee consistent with the Company’s normal expense
reimbursement policy, provided that Employee submits documentation to the
Company substantiating his payments for insurance coverage. Employee shall give
the Company prompt notice of his eligibility for comparable coverage.

(C) All vested stock options shall remain exercisable from the date of
termination until the expiration date of the applicable award. So long as the
Section 8 below does not apply, then all options which are unvested at the date
of termination Without Cause or for Good Reason shall be accelerated as of the
date of termination such that the number of such option shares equal to 1/36th
the number of such option shares multiplied by the number of full months of
Employee’s employment hereunder shall be deemed vested and immediately
exercisable by the Employee. Any unvested options over and above the foregoing
shall be cancelled and of no further force or effect, and shall not be
exercisable by the Employee.

 

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(D) Any severance payments and/or other separation benefits contemplated by this
Agreement are conditional on Employee: (i) continuing to comply with the terms
of this Agreement and the PIA (as defined herein); (ii) delivering prior to or
contemporaneously with any such severance payments, and not revoking, (x) a
customary general release of claims relating to Employee’s employment and/or
this Agreement against the Company or its successor, its subsidiaries and their
respective directors, officers and stockholders and (y) a customary affirmation
of Employee’s continuing obligations hereunder and under the PIA.

Unless otherwise required by law, no severance payments and/or benefits under
this Agreement will be paid and/or provided until after the expiration of any
relevant revocation period.

8. Change in Control Payments. The provisions of this paragraph 8 set forth the
terms of an agreement reached between Employee and the Company regarding
Employee’s rights and obligations upon the occurrence of a “Change in Control”
(as hereinafter defined) of the Company during the Term. These provisions are
intended to assure and encourage in advance Employee’s continued attention and
dedication to his assigned duties and his objectivity during the pendency and
after the occurrence of any such Change in Control. The following provisions
shall apply in the event of a Change in Control, in addition to any payment or
benefit that may be required pursuant to Section 7.

(a) Equity. Upon the occurrence of a Change in Control, all stock options,
restricted stock and other stock-based grants to Employee by the Company or that
may be granted in the future shall, irrespective of any provisions of his award
agreements, immediately and irrevocably vest and become exercisable and any
restrictions thereon shall lapse. All stock options shall terminate immediately
upon a Change in Control

(b) Definitions. For purposes of this paragraph 8, the following terms shall
have the following meanings:

“Change in Control” shall mean any of the following:

(1) the acquisition by any individual, entity, or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (the “Acquiring Person”),
other than the Company, or any of its Subsidiaries, of beneficial ownership
(within the meaning of Rule 13d-3- promulgated under the Exchange Act) of 50% or
more of the combined voting power or economic interests of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (excluding any issuance of securities by the Company in a transaction
or series of transactions made principally for bona fide equity financing
purposes); or

(2) the acquisition of the Company by another entity by means of any transaction
or series of related transactions to which the Company is party (including,
without limitation, any stock acquisition, reorganization, merger or
consolidation but excluding any issuance of securities by the Company in a
transaction or series of transactions made principally for bona fide equity
financing purposes), other than a transaction or series of related transactions
in which the holders of the voting securities of the Company outstanding
immediately prior to such transaction or series of related transactions retain,
immediately after such transaction or

 

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series of related transactions, as a result of shares in the Company held by
such holders prior to such transaction or series of related transactions, at
least a majority of the total voting power represented by the outstanding voting
securities of the Company or such other surviving or resulting entity (or if the
Company or such other surviving or resulting entity is a wholly-owned subsidiary
immediately following such acquisition, its parent); or

(3) the sale or other disposition of all or substantially all of the assets of
the Company in one transaction or series of related transactions.

9. Proprietary Information and Inventions Agreement. As a condition of
Employee’s employment with the Company, Employee agrees to sign the Company’s
standard form of Proprietary Information and Inventions Agreement (“PIA”).

10. Successors and Assigns.

(a) Employee. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Employee may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. All rights and benefits
of Employee shall be for the sole personal benefit of Employee, and no other
person shall acquire any right, title or interest under this Agreement by reason
of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against Employee. Except as so provided, this Agreement shall inure to the
benefit of and be binding upon Employee and his personal representatives,
distributees and legatees.

(b) The Company. This Agreement shall be binding upon the Company and inure to
the benefit of the Company and of its successors and assigns, including (but not
limited to) any Company that may acquire all or substantially all of the
Company’s assets or business or into or with which the Company may be
consolidated or merged. Any such successor of the Company will be deemed
substituted for the Company under the terms of this Agreement for all purposes.
For this purpose, “successor” means any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise,
directly or indirectly acquires all or substantially all of the assets or
business of the Company.

11. Entire Agreement. This Agreement (together with the equity award agreements
referred to herein) represents the entire agreement between the parties
concerning Employee’s employment with the Company and supersedes all prior
negotiations, discussions, understanding and agreements, whether written or
oral, between Employee and the Company relating to the subject matter of this
Agreement.

12. Amendment or Modification, Waiver. No provision of this Agreement may be
amended or waived unless such amendment or waiver is agreed to in writing signed
by Employee and by a duly authorized officer of the Company. No waiver by any
party to this Agreement or any breach by another party of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same time, any
prior time or any subsequent time.

 

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13. Notices. Any notice to be given under this Agreement shall be in writing and
delivered personally or sent by overnight courier or registered or certified
mail, postage prepaid, return receipt requested, addressed to the party
concerned at the address indicated below, or to such other address of which such
party subsequently may give notice in writing.

 

If to Employee:      To the address specified in the payroll records of the
Company. If to the Company:     

Ampio Pharmaceuticals, Inc.

5445 DTC Parkway, Suite 925

Greenwood Village, CO 80111 USA

Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date mailed.

14. Severability. If any provision of this Agreement or the application of any
such provision to any party or circumstances shall be determined by any court of
competent jurisdiction or arbitrator acting pursuant to Section 19 below to be
invalid and unenforceable to any extent, the remainder of this Agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable shall not be
affected, and each provision of this Agreement shall be validated and shall be
enforced to the fullest extent permitted by law. If for any reason any provision
of this Agreement containing restrictions is held to cover an area or to be for
a length of time that is unreasonable or in any other way is construed to be too
broad or to any extent invalid, such provision shall not be determined to be
entirely null, void and of no effect; instead, it is the intention and desire of
both the Company and Employee that, to the extent that the provision is or would
be valid or enforceable under applicable law, any court of competent
jurisdiction or arbitrator acting pursuant to Section 19 below shall construe
and interpret or reform this Agreement to provide for a restriction having the
maximum enforceable area, time period and such other constraints or conditions
(although not greater than those currently contained in this Agreement) as shall
be valid and enforceable under the applicable law.

15. Survivorship. The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.

16. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.

17. Withholding Taxes. All salary, benefits, reimbursements and any other
payments to Employee under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of any federal, state or local authority.

18. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together
constitute one and same instrument. The parties agree that facsimile signatures
shall have the same force and effect as original signatures.

 

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19. Applicable Law; Arbitration. The validity, interpretation and enforcement of
this Agreement and any amendments or modifications hereto shall be governed by
the laws of the State of Colorado, as applied to a contract executed within and
to be performed in such State. The parties agree that any disputes shall be
definitively resolved by binding arbitration before the American Arbitration
Association in Denver, Colorado in accordance with its rules of arbitration
procedure then in effect. The parties consent to the jurisdiction to the federal
courts of the District of Colorado or, if there shall be no jurisdiction, to the
state courts located in Arapahoe County, Colorado, to enforce any arbitration
award rendered with respect thereto. Each party shall choose one arbitrator and
the two arbitrators shall choose a third arbitrator. All costs and fees related
to such arbitration (and judicial enforcement proceedings, if any) shall be
borne by the Company unless Employee’s claim is deemed to be frivolous by the
arbitrator(s) or judge.

20. Legal Fees. The Company shall pay the reasonable expenses of Employee’s
counsel in negotiating this Agreement.

21. Section 409A. Notwithstanding anything to the contrary in this Agreement, if
Employee is a “specified employee” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the final regulations
and any guidance promulgated thereunder (“Section 409A”) at the time of
Employee’s termination (other than due to death), and the severance payable to
Employee, if any, pursuant to this Agreement, when considered together with any
other severance payments or separation benefits which may be considered deferred
compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”) will not and could not under any circumstances, regardless of when
such termination occurs, be paid in full by March 15 of the year following
Employee’s termination, then only that portion of the Deferred Compensation
Separation Benefits which do not exceed the Section 409A Limit (as defined
below) may be made within the first six (6) months following Employee’s
termination of employment in accordance with the payment schedule applicable to
each payment or benefit. For these purposes, each severance payment is hereby
designated as a separate payment and will not collectively be treated as a
single payment. Any portion of the Deferred Compensation Separation Benefits in
excess of the Section 409A Limit shall accrue and, to the extent such portion of
the Deferred Compensation Separation Benefits would otherwise have been payable
within the first six (6) months following Employee’s termination of employment,
will become payable on the first payroll date that occurs on or after the date
six (6) months and one (1) day following the date of Employee’s termination. All
subsequent Deferred Compensation Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or benefit
Notwithstanding anything herein to the contrary, if Employee dies following his
termination but prior to the six (6) month anniversary of his termination, then
any payments delayed in accordance with this paragraph will be payable in a lump
sum as soon as administratively practicable after the date of Employee’s death
and all other Deferred Compensation Separation Benefits will be payable in
accordance with the payment schedule applicable to each payment or benefit. The
foregoing provision is intended to comply with the requirements of Section 409A
so that none of the severance payments and benefits to be provided hereunder
will be subject to the additional tax imposed under Section 409A, and any
ambiguities herein will be interpreted to so comply. The Company and Employee
agree to work

 

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together in good faith to consider amendments to this Agreement and to take such
reasonable actions which are necessary, appropriate or desirable to avoid
imposition of any additional tax or income recognition prior to actual payment
to Employee under Section 409A. For purposes of this Agreement, “Section 409A
Limit” will mean the lesser of two (2) times: (A) Employee’s annualized
compensation based upon the annual rate of pay paid to Employee during the
Company’s taxable year preceding the Company’s taxable year of Employee’s
termination of employment as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with
respect thereto: or (B) the maximum amount that may be taken into account under
a qualified plan pursuant to Section 401(a)(17) of the Code for the year in
which Employee’s employment is terminated. The payment of the severance payments
contemplated by this Agreement is subject to the above-referenced release
becoming irrevocable within 60 days of the date of termination of employment. If
such 60-day period begins in one calendar year and ends in a second calendar
year, the severance payments shall be paid in the second calendar year by the
last day of the 60-day period.

22. Application of Internal Revenue Code Section 280G. If any payment or benefit
Employee would receive pursuant to a Change in Control from the Company or
otherwise (“Payment”) would (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for this sentence, be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
such Payment shall be equal to the Reduced Amount. The “Reduced Amount” shall be
either (x) the largest portion of the Payment that would result in no portion of
the Payment being subject to the Excise Tax or (y) the largest portion, up to
and including the total, of the Payment, whichever amount, after taking into
account all applicable federal, state and local employment taxes, income taxes,
and the Excise Tax (all computed at the highest applicable marginal rate),
results in Employee’s receipt, on an after-tax basis, of the greater economic
benefit notwithstanding that all or some portion of the Payment may be subject
to the Excise Tax. If a reduction in payments or benefits constituting
“parachute payments” is necessary so that the Payment equals the Reduced Amount,
reduction shall occur in the manner that results in the greatest economic
benefit for Employee. If more than one method of reduction will result in the
same economic benefit, the items so reduced will be reduced pro rata.

In the event it is subsequently determined by the Internal Revenue Service that
some portion of the Reduced Amount as determined pursuant to clause (x) in the
preceding paragraph is subject to the Excise Tax, Employee agrees to promptly
return to the Company a sufficient amount of the Payment so that no portion of
the Reduced Amount is subject to the Excise Tax. For the avoidance of doubt, if
the Reduced Amount is determined pursuant to clause (y) in the preceding
paragraph, Employee will have no obligation to return any portion of the Payment
pursuant to the preceding sentence.

Unless Employee and the Company agree on an alternative accounting firm, the
accounting firm engaged by the Company for general tax compliance purposes as of
the day prior to the effective date of the Change in Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The Company shall
bear all expenses with respect to the determinations by such accounting firm
required to be made hereunder.

 

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The Company shall use commercially reasonable efforts to cause the accounting
firm engaged to make the determinations hereunder to provide its calculations,
together with detailed supporting documentation, to the Employee and the Company
within fifteen (15) calendar days after the date on which Employee’s right to a
Payment is triggered (if requested at that time by the Employee or the Company)
or such other time as requested by Employee or the Company.

23. Indemnification. As a condition to the effectiveness of this Agreement, the
Company and Employee shall enter into a mutually acceptable indemnification
agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

AMPIO PHARMACEUTICALS, INC.     EMPLOYEE By:  

/s/ Philip H. Coelho

   

/s/ Gregory A. Gould

Name:   PHILIP H. COELHO     Name:   Gregory A. Gould  

Chairman, Compensation Committee

Board of Directors

     

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EXHIBIT A

Outside Activities

 

1. Serve on the Board of Directors of no more than one private or public company
the business of which is not competitive with that of the Company. Employee
shall notify the Company of the identity of the company.

Note: No outside activity may interfere with Employee’s best efforts in meeting
the responsibilities of Chief Financial Officer of the Company, and may not
require Employee to devote more than 10 hours per month to these outside
activities.

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EXHIBIT B

Terms of Compensation

Management equity grant:

 

  •   300,000 total options to purchase shares of the Company’s common stock.
The strike price for all options will be the last sale price of the Company’s
common stock as reported on Nasdaq.com on the Effective Date.

 

  •   All options fully vest upon change in control, death, disability,
termination without cause, termination for good reason

 

  •   100,000 options are fully vested on the day this agreement becomes
effective.

 

  •   100,000 options vest 365 days thereafter

 

  •   100,000 options vest 730 days thereafter

Specific goals and responsibilities that will be considered by the CEO and the
Board of Directors in the determination of Employees annual bonuses.

Finance

 

  •   In consultation with the Chairman of the Audit Committee and our
Accounting firm, choose, purchase, install and manage a new labor efficient
accounting system suitable for the comprehensive management and tracking of our
expanded operations, including the manufacturing of Ampion and the financial
relationships with Luoxis and Vyrix.

 

  •   Develop and maintain a budget that tracks and controls all discretionary
expenses, including legal and accounting and the monthly manufacturing costs of
the key products of Ampio, Luoxis and Vyrix.

 

  •   Identify all items that are critical to manufacturing any of the products
of Ampio, Luoxis and Vyrix and negotiate back-up supply sources for every
critical item

 

  •   Accomplish the accurate reporting of financial statements and the timely
filing of all required SEC reports,

Managing Relationships with Institutional Investors and the Public

 

  •   Prepare and execute an effective plan to persuade key Institutional
investors to take significant positions in, and become long term holders of,
Ampio stock. Set quarterly goals for your performance and circulate them to the
CEO and BOD at the start of each quarter.

 

  •   Develop and continually refine a solid and defensible model of Ampio’s
projected financial performance (EPS, EBITDA, etc.) with which you will engage
the financial analysts of Institutional Investors, potential licensees or
acquirers and the CEO and the BOD.

 

  •   Develop and manage a cost effective public relations program with
measureable goals that will allow early termination if not effective.

Other

 

  •   Any other goals that the CEO or the BOD deems necessary to meet the
operating goals of the company