1
[ALTEON LETTERHEAD]
EXHIBIT 10.35
September 15, 1997
Xx. Xxxxxxx X. Xxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xxx:
This letter will confirm certain matters related to your employment by Alteon
Inc. (the "Company") and shall constitute an amendment to your employment
agreement with the Company dated February 27, 1995 (the "Employment
Agreement").
Your Term of Employment, as defined in Paragraph 1 of your Employment
Agreement, is due to expire on February 27, 1998. Assuming satisfactory
performance of your obligations under your Employment Agreement until February
27, 1998, the Term of Employment will, effective February 28, 1998, be defined
as beginning on February 28, 1998, and terminating three (3) years from such
date.
Your Salary will be $195,000 for the first year during the Term of Employment,
$205,000 for the second year and $215,000 for the third year. In addition, at
the end of each calendar year during the Term of Employment, you will be
eligible to receive a bonus, pursuant to the terms of Paragraph 3 of your
Employment Agreement and consistent with the 1997 Management Bonus Plan
previously approved by the Board, in an amount of up to $15,000 and up to
30,000 stock options. The number of options awarded, if any, and the vesting
schedule and exercise price for these options will be determined by the
Compensation Committee of the Board at the end of each calendar year.
You will be entitled to four (4) weeks vacation per year during the Term of
Employment. Further, the Company will pay up to $5,000 in 1998 for you to
complete a cutting edge leadership training program selected by you and
approved by me.
On February 28, 1998, the Company shall issue and deliver to you options to
purchase 200,000 shares of the Company's common stock at an exercise price of
$3.875 (the fair market value of Alteon stock on June 10, 1997, when the
Compensation Committee and the Board approved this award). The options will be
subject to the terms and conditions
2
Xx. Xxxxxxx X. Xxxx
September 15, 1997 Page 2
of the Company's Amended 1995 Stock Option Plan and the Company's standard
Incentive/Non-Qualified Stock Option Grant Agreement (the "New Grant
Agreement"). One hundred and twenty thousand (120,000) of these options will
vest at a rate of 5,000 per month during the two (2) year period beginning on
February 28, 1999, and ending on February 28, 2001. The remaining 80,000
options shall vest in 20,000 share increments upon the accomplishment by you
and the Company of each of the following performance related milestones:
1) Raise enough capital as determined by me and the Board of
Directors) to ensure Xxxxxx's financial viability through the
end of 1999.
2) Establish a new partnering relationship covering North America
and Western Europe for an A.G.E. inhibitor, an A.G.E. breaker
or a glucose lowering agent.
3) Elevate Xxxxxx's market capitalization to over $250,000,000.
4) Ensure Alteon's first NDA is accepted for filing by the FDA.
Notwithstanding the foregoing, all 80,000 milestone related options shall also
vest on the date ten (10) years after their grant date, provided you are then
employed by the Company as set forth in the New Grant Agreement.
In the event the Company elects to terminate your employment without cause
prior to the expiration of the Term of Employment, the exercise period for all
then vested Alteon stock options which you may then hold shall be extended from
the date your employment terminates for a period equal to that number of full
calendar months you have been employed by the Company, provided that such
extension shall not exceed 36 months, and provided further, that if the
expiration date of an option as set forth in the applicable stock option grant
agreement is earlier than the extension date calculated pursuant to this
sentence, such expiration date shall remain in effect. You acknowledge that
pursuant to current applicable law any stock options exercised more than three
months after you cease to be employed by the Company shall cease to be eligible
for treatment as federal income tax qualified incentive stock options.
In the event that prior to February 28, 1998, the Company participates in a
transaction described in either Section 11.2 or Section 11.3 of the Amended
1995 Stock Option Plan, the Company shall cause the New Grant Agreement for the
options described in this letter to be issued and delivered to you prior to the
closing of such transaction.
3
Xx. Xxxxxxx X. Xxxx
September 15, 1997 Page 3
Paragraph 20 of your Employment Agreement ("General") is amended to include the
New Grant Agreement and this letter as part of the "entire agreement," with
respect to the subject matter of your employment by the Company under these
agreements. Except as modified by this letter, the terms of all the foregoing
enumerated agreements shall remain in full force and effect.
If the foregoing is acceptable to you, please indicate your agreement by
signing and returning the enclosed copy of this letter.
Sincerely,
/s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
Chairman and
Chief Executive Officer
ACCEPTED AND AGREED THIS
17th day of September , 1997.
------ ------------ -
/s/ Xxxxxxx X. Xxxx
--------------------------------
Xxxxxxx X. Xxxx
