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EXHIBIT 10.7
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement (the "First Amendment") is
executed and dated effective as of the 31st day of January, 2001 between
Zonagen, Inc. (the "Company") and Xxxxx Xxxxx, Xx. (the "Executive").
WHEREAS, the Company and Executive entered into an Employment Agreement
dated as of October 16, 1993 (the "Employment Agreement") which Employment
Agreement has been renewed pursuant to the terms thereof;
WHEREAS, the Company and Executive now wish to amend certain provisions
of the Employment Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants herein, the parties hereto agree as follows:
1. Capitalized terms used but not defined herein have the respective
meanings set forth in the Employment Agreement.
2. Section 3 of the Employment Agreement is hereby amended to include
the following paragraph:
"(ii) Upon the earlier of (x) a Change of Control (as
defined below) of the Company or (y) the termination
of further action by the Board of Directors in
furtherance of a Change of Control, provided the
Executive is an employee of the Company on either
such date, the Executive shall receive a lump sum
bonus payment in the amount of $25,000, subject only
to such payroll and withholding deductions as are
required by applicable federal and state laws."
3. Section 6 of the Employment Agreement is hereby amended to include
the following subsection (g) at the end thereof:
"Notwithstanding anything in this Section 6 to the contrary,
upon a Change of Control (as defined below), provided the
Executive is an employee of the Company immediately prior
thereto, the Company shall:
(i) pay to the Executive, upon the closing of
the Change of Control, a lump sum cash
payment equal to .5 times the Executive's
then current annual salary; such payment
shall be in lieu of any other payments
payable to the Executive pursuant to Section
6(a) above, and the terms of Section 6(d)
and 6(f) shall not apply in such instance;
(ii) accelerate in full the vesting of all shares
subject to any of the Executive's
outstanding stock options, and Executive
shall have a period of two years following
the Change of Control to exercise such
options; and
(iii) continue, for the period of six (6) months
commencing on the date of such Change of
Control, to provide the benefits
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contemplated by Section 4(a) of this
Agreement (provided that the continuation of
such benefits shall be construed so as not
to extend the period during which the
Company shall be required to provide
benefits under COBRA following the date of
such Change of Control).
As used in this Agreement, a "Change of Control" shall mean:
(i) the acquisition after the Effective Date of
this First Amendment, by any individual,
entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended)
(a "Person") of beneficial ownership of 30%
or more of either (i) the then outstanding
shares of common stock of the Company (the
"Outstanding Common Stock") or (ii) the
combined voting power of the then
outstanding voting securities of the Company
entitled to vote generally in the election
of directors (the "Outstanding Voting
Securities"), provided that for purposes of
this subsection (i), the following
acquisitions shall not constitute a Change
of Control: (A) any acquisition directly
from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (D) any
acquisition by any corporation pursuant to a
transaction which complies with clauses (A),
(B) and (C) of subsection (ii) hereof; or
(ii) consummation after the Effective Date of
this First Amendment of a reorganization,
merger or consolidation or sale or other
disposition of all or substantially all of
the assets of the Company (a "Corporate
Transaction") in each case, unless,
following such Corporate Transaction, (A)
(1) all or substantially all of the persons
who were the beneficial owners of the
Outstanding Common Stock immediately prior
to such Corporate Transaction beneficially
own, directly or indirectly, more than 30%
of the then outstanding shares of common
stock of the corporation resulting from such
Corporate Transaction, and (2) all or
substantially all of the persons who were
the beneficial owners of the Outstanding
Voting Securities immediately prior to such
Corporate Transaction beneficially own,
directly or indirectly, more than 30% of the
combined voting power of the then
outstanding voting securities entitled to
vote generally in the election of directors
of the corporation resulting from such
Corporate Transaction (including, without
limitation, a corporation which as a result
of such transaction owns the Company or all
or substantially all of the Company's assets
either directly or through one or more
subsidiaries) in substantially the same
proportions as their ownership of the
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Outstanding Common Stock and the Outstanding
Voting Securities immediately prior to such
Corporate Transaction, as the case may be,
(B) no Person (excluding (l) any corporation
resulting from such Corporate Transaction or
any employee benefit plan (or related trust)
of the Company or such corporation resulting
from such Corporate Transaction and (2) any
Person approved by the members of the Board
in office immediately prior to such
Corporate Transaction) beneficially owns,
directly or indirectly, 30% or more of the
then outstanding shares of common stock of
the corporation resulting from such
Corporate Transaction or the combined voting
power of the then outstanding voting
securities of such corporation except to the
extent that such ownership existed prior to
such Corporate Transaction and (C) at least
a majority of the members of the board of
directors of the corporation resulting from
such Corporate Transaction were members of
the Board at the time of the execution of
the initial agreement or of the action of
the Board providing for such Corporate
Transaction."
4. In addition, and notwithstanding any other provision of his
Employment Agreement to the contrary, Executive shall be permitted to consult
with other companies during the term of this Employment Agreement, provided that
such consulting activities do not interfere with Employee's duties to the
Company or otherwise violate the terms of the Proprietary Information and
Inventions and Non-Competition Agreement entered into between the Company and
Executive, and are conducted on Executive's own time. Further, Executive shall
be permitted to have reasonable use of Company facilities (telephone, computers,
fax) during his employment term to pursue other employment opportunities,
provided that such use does not interfere with the discharge of his employment
duties to the Company.
5. Except as amended and modified by this First Amendment, the
Employment Agreement shall continue in full force and effect. The Employment
Agreement and this First Amendment shall be construed as one and the same
instrument.
6. This First Amendment may be signed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this First Amendment to produce or account for more than one such
counterpart.
7. This First Amendment (i) constitutes the entire contract between the
parties relative to the amendments to the Employment Agreement made hereby, (ii)
supersedes all prior agreements, consents and undertakings relating to such
amendments and (iii) may not be contradicted by evidence of prior
contemporaneous or subsequent oral agreements of the parties.
8. This First Amendment shall be construed and enforced in accordance
with the laws of the State of Texas.
9. This First Amendment shall be binding upon and shall inure to the
benefit of and enforceable by the parties hereto and their respective successors
and assigns.
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IN WITNESS WHEREOF, the parties have executed this First Amendment to
the Employment Agreement effective (the "Effective Date") for all purposes as of
the date first above written.
EMPLOYEE COMPANY
ZONAGEN, INC.
/s/ Xxxxx Xxxxx, Xx. By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxx Xxxxx, Xx. Xxxxxx X. Xxxxxxxx
President and
Chief Executive Officer
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