EXHIBIT 10.17
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement (the "Second Amendment")
is executed and dated effective as of the 29th day of October, 2002 between
Zonagen, Inc. (the "Company") and Xxxxxx X. Xxxxxxxx (the "Employee").
WHEREAS, the Company and Employee entered into an Employment Agreement
dated as of January 1, 1993, as amended by the First Amendment to Employment
Agreement dated January 31, 2001 (as amended, the "Employment Agreement") which
has been renewed for successive terms pursuant to its terms;
WHEREAS, the Company and Employee now wish to amend certain provisions
of the Employment Agreement for clarification;
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 4(e) of the Employment Agreement is hereby amended by
replacing it in its entirety with the following:
"(e) In the event that Employee terminates his employment for
Good Reason (as defined in Section 6(c) below) or Employee's employment
is terminated by the Company without Cause within twelve months
following a Change of Control (as defined below) of the Company, the
Employee shall receive a cash lump sum bonus payment of the amount
necessary to provide him with the present value of the aggregate amount
of payments (plus interest as described below) set forth in the
schedule below. For this purpose, such present value shall be
determined as of the closing of the Change of Control (i) assuming that
a termination of Employee's employment for one of the reasons described
in the immediately preceding sentence will occur upon such closing date
and (ii) using an annual interest rate equal to the prime rate posted
by the bank that serves as the Employer's (or any successor's)
principal banking connection as of the closing date of the Change of
Control. Such bonus payment shall be in consideration for (i) past
services and services rendered in connection with Change of Control and
(ii) to the extent reasonable and to the extent necessary to avoid
application of an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended, the consulting services required to be
rendered by Employee during the first twelve (12) months after a Change
of Control pursuant to Section 6(c) below. Employee agrees to defer
payment of such lump sum bonus payment (and any earnings thereon) in
accordance with and upon the following schedule, subject only to such
payroll and withholding deductions as are required by applicable
federal and state laws. Such payments shall be in lieu of any other
severance payments payable to Employee under Section 6(a) of the
Employment Agreement, provided however that Employee shall be entitled
to continue to receive the benefits coverage for twelve (12) months
following termination of employment as provided in such Section 6(a).
All funds required
to be paid to Employee pursuant to the terms hereof shall be segregated
and contributed to the irrevocable Xxx Xxxxxxxx Rabbi Trust, a copy of
which is attached hereto, by the Company or the successor or acquiring
company for the benefit of the Employee upon closing of the Change of
Control, and maintained there (subject to the terms of such trust
regarding insolvency of the Company) until paid pursuant to the terms
hereof in accordance with the following schedule:
On the closing of the Change of Control: The Employee's then
current monthly rate of base salary in affect on the date of closing of
the Change of Control multiplied by twelve (12)
On first, second, third, and fourth anniversary dates of the Change of
Control: $150,000.00
On the fifth anniversary date of the Change of Control: $125,000.00
On the sixth anniversary date of the Change of Control: $75,000.00
Such payments shall be made to Employee, or to his heirs or
representative in the event of his death, and shall be credited with
interest, from such due date until paid, at an annual rate equal to the
prime rate posted by the bank that serves as the Employer's (or any
successor's) principal banking connection as of the due date of the
payment. Employee shall have the status of a general unsecured creditor
of the Company with respect to the bonus payments required to be paid
by the Company under this Section 4(e), and the Company's obligation to
pay such bonus constitutes a mere promise by the Company to make such
payments in the future. Employee's rights to receive such bonus
payments shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of Employee or any beneficiary
of Employee. It is the intention of the parties hereto that this
deferred bonus arrangement be unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of
1974, as amended, to the extent applicable.
3. Except as amended and modified by this Second Amendment, the
Employment Agreement shall continue in full force and effect. The Employment
Agreement and this Second Amendment shall be construed as one and the same
instrument.
4. This Second 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 Second Amendment to produce or account for more than one such
counterpart.
5. This Second 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.
6. This Second Amendment shall be construed and enforced in accordance
with the laws of the State of Texas.
7. This Second 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 Second Amendment to
the Employment Agreement effective (the "Effective Date") for all purposes as of
the date first above written.
EMPLOYEE: COMPANY:
ZONAGEN, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
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