EXHIBIT 10.3
__________, 19__
Xxxxxxx X. Xxxxx, Ph.D.
0000 Xx. Xxxxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Re: Side letter regarding employment agreement
Dear Sir:
Reference is hereby made to (a) that certain Employment Agreement (the
"Employment Agreement"), dated as of May 1, 1998, by and between TheraTech,
Inc., a Delaware corporation ("Employer"), and Xxxxxxx X. Xxxxx ("Employee"),
and (b) that certain Agreement and Plan of Merger (the "Merger Agreement"),
dated as of October 23, 1998, by and among Employer, Xxxxxx Pharmaceuticals,
Inc., a Nevada corporation ("Xxxxxx"), and Jazz Merger Corp., a Delaware
corporation ("Xxxxxx Sub"), pursuant to which Employer will merge with and into
Xxxxxx Sub (the "Merger"), with Employer surviving the Merger.
WHEREAS, as a condition to the willingness of Xxxxxx to enter into the
Merger Agreement, Xxxxxx has required that Employee agree, and in order to
induce Xxxxxx to enter into the Merger Agreement, Employee has agreed, to enter
into this side letter which shall clarify and amend certain provisions of the
Employment Agreement ("Amendment"); and
WHEREAS, all capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Employment Agreement; and
NOW THEREFORE, BE IT RESOLVED, THAT, in consideration of the foregoing, and
the consummation of the Merger by Xxxxxx, and for other good and valuable
consideration, the receipt and sufficiency of which Employee hereby
acknowledges, Employee, Employer and Xxxxxx agree as follows:
1. Status of Employment Agreement. Except as specifically set forth
herein, the Employment Agreement and each of the appendices attached thereto
shall remain in full force and effect and shall not be waived, modified,
superseded or otherwise affected by this Amendment. This Amendment is not to be
construed as a release, waiver or modification of any of the terms, conditions,
representations, warranties, covenants, rights or remedies set forth in the
Employment Agreement, except as specifically set forth herein.
2. Amendments to the Employment Agreement.
2.1 Section 1.1 of the Employment Agreement. The first sentence of Section
1.1 of the Employment Agreement is hereby deleted in its entirety and replaced
with the following:
"Employer hereby agrees to employ Employee as the Senior Vice President of
Research and Development of Employer. Employee shall report to the Chief
Executive Officer of Employer, or such other person as is designated by the
CEO of Xxxxxx Pharmaceuticals, Inc., the Employer's parent ("Xxxxxx"),
which person shall either be at a comparable level to the CEO of Employer
or an executive officer of Xxxxxx ("Designated Officer"). Employee shall
perform the responsibilities and duties that are commensurate with his
position with Employer and those other duties as are reasonably assigned to
him by the Designated Officer from time to time."
2.2 Designated Officer. Employee acknowledges that he reports solely to
the Designated Officer. The Employment Agreement is hereby amended so that
references to the terms "CEO" and "Board" contained in the Employment Agreement
are deemed to refer to the "Designated Officer."
2.3 Xxxxxx. Employee agrees to work to maximize the profitability and
business of Xxxxxx and its subsidiaries (including, without limitation, the
profitability and business of Employer) and agrees to perform such duties from
time to time as are requested by the Designated Officer, notwithstanding any
inconsistent terms contained in the Employment Agreement. In performing his
duties under the Employment Agreement, Employee agrees to comply with all
written policies and procedures of Xxxxxx.
2.4 Section 3.1 of the Employment Agreement. The first sentence of Section
3.1 of the Employment Agreement is hereby deleted in its entirety and replaced
with the following sentence:
"During the term of this Agreement, Employer shall pay to Employee for
services which Employee may render to Employer the annual salary set forth
on Appendix A attached hereto, which may be increased by the Board of
Directors of Employer in its sole discretion."
2.5 Section 3.3 of the Employment Agreement. Section 3.3 of the Employment
Agreement is hereby deleted in its entirety and replaced with the following:
"Employee's Base Salary, Bonus, and Benefits are set forth in Appendix "A"
to this Agreement."
2.6 Appendix A of the Employment Agreement. Appendix A of the Employment
Agreement is hereby amended by adding the following Section I to the end of such
Appendix:
"I. Options. Upon consummation of the Merger, Employee shall receive forty
thousand (40,000) options to purchase common stock, $0.0033 par value per
share, of Xxxxxx ("Xxxxxx Common"). On each of the first, second and third
year anniversaries of the Merger, Employee shall receive five thousand
(5,000) options to purchase Xxxxxx Common so long as Employee is an
employee of Xxxxxx or one of its majority-owned subsidiaries upon the date
of grant. Employee may receive additional option grants as determined in
the sole discretion of Xxxxxx'x Board of Directors. All options will be
granted pursuant to the terms of Xxxxxx'x then existing employee stock
option plan. Options will be granted at the fair market value of the
underlying shares upon the date of grant. Such options shall vest over a
five year period, with the first twenty percent (20%) vesting on the
anniversary date of the grant and 20% on each anniversary thereafter."
5. Severance Benefits. Pursuant to Section 6.4 of the
Employment Agreement, Employee hereby waives his right to the severance
benefits listed in Appendix B of the Employment Agreement as a result
of the Merger, but otherwise retains his rights to severance under this
Agreement, in connection with the occurrence of other events that
happen after the date hereof.
6. Merger. This Amendment shall be null and void ab initio in
the event the Merger is not consummated on or before March 31, 1999.
Please acknowledge your agreement by signing and returning the enclosed
duplicate of this letter.
Very truly yours,
THERATECH, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
XXXXXX PHARMACEUTICALS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Agreed and Acknowledged:
Xxxxxxx X. Xxxxx
__________________________
Date:_____________________
