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EXHIBIT 10.16(a)
March 11,1997
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
c/o Somerset Pharmaceuticals, Inc.
P.O. Box 30706
Tampa, Florida 33630
Re: Continued Employment
Dear ▇▇. ▇▇▇▇▇▇▇:
This letter confirms our discussions regarding your continued
employment pursuant to the Employment Agreement between ▇▇▇▇▇ Pharmaceutical
Co., Inc. (now Circa Pharmaceuticals, Inc.) dated on or about April 26, 1991, as
amended by: a) an Amendment dated as of January 19, 1993, and b) a letter dated
July 17, 1995 with Exhibit A as an attachment ("July 17 Assumption") by which
certain obligations relating to your employment were assumed by ▇▇▇▇▇▇
Pharmaceuticals, Inc. ("▇▇▇▇▇▇") (such agreement as amended is hereinafter
referred to as the "Agreement"). Except as specifically provided below, the
terms and conditions of the Agreement shall remain unchanged and in full force
and effect:
1. Term. Regarding Section 1 of the Agreement, the Term of your
employment under the Agreement shall be extended for a period of one year, up to
and including January 31, 1998, unless sooner terminated or further extended as
provided in the Agreement.
2. Somerset. The parties acknowledge that you presently are serving as
the President and a director of Somerset Pharmaceuticals, Inc. ("Somerset") and
that a substantial portion of your business time and attention is being devoted
to duties on behalf of ▇▇▇▇▇▇▇▇.
3. Base Compensation. Section 4(a) of the Agreement is amended to raise
your minimum annual base compensation to $375,000. It is contemplated but not
required that ▇▇▇▇▇▇▇▇ will agree to reimburse ▇▇▇▇▇▇ for $300,000 of your
annual base compensation in a manner acceptable to ▇▇▇▇▇▇.
4. Bonuses and Incentive Compensation. Section 4(b) of the Agreement is
amended by adding the following at the end of the Section:
The bonus or incentive compensation to be paid to Employee under the
Agreement for the 1997 fiscal year shall be the following:
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(A) You shall receive a bonus in the event that ▇▇▇▇▇▇'▇ earnings-per-share
equals or exceed $2.20 for the 1997 fiscal year in accordance with the
following chart:
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EARNINGS PER SHARE GROSS AMOUNT OF BONUS
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Less than $2.20 $0
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$2.20 - $2.24 $20,000
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$2.25 - $2.29 $40,000
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$2.30 - $2.34 $100,000
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$2.35 - $2.39 $110,000
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$2.40 - $2.44 $120,000
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$2.45 - $2.49 $130,000
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$2.50 and up $140,000
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All earnings per share figures will be based upon ▇▇▇▇▇▇'▇ year-end
audited financial statements as approved by ▇▇▇▇▇▇'▇ Board of Directors
calculated on a pooling-of-interest basis, but will exclude any one-time charges
resulting from past or future corporate mergers, reorganizations or other
transactions.
(B) In addition, Employee may receive an additional bonus based on the
performance of Somerset, such bonus to be determined in the sole discretion of
the board of directors of Somerset (or its compensation committee) and to be
paid solely by ▇▇▇▇▇▇▇▇. In lieu of such bonus or in combination with a cash
bonus, Somerset may award additional compensation to Employee in the form or
stock ownership or other equity based compensation (e.g., stock options).
▇▇▇▇▇▇'▇ board of directors and/or its compensation committee, in its sole
discretion, may pay Employee an additional bonus based on Somerset's performance
and its review of the amount of any bonus paid or the value of any equity
interest transferred to Employee by ▇▇▇▇▇▇▇▇.
(C) All bonus payments referred to above shall be reduced by all deductions
required by law and shall be paid as soon as reasonably practicable after the
Company has completed the closing of its books for the 1997 fiscal year.
5. Termination for Good Reason. Section 16 of the Agreement is
modified by adding the following language after the end of subsection 16(e):
Employee acknowledges that if he terminates his employment with
▇▇▇▇▇▇ and within one year thereafter accepts full time employment with
Somerset, such termination shall not constitute a termination for Good
Reason under the Agreement. Employee further acknowledges and agrees that
in the event that he receives and accepts equity based compensation from
Somerset (whether stock, stock options or similar form of compensation),
including the receipt of such compensation as a bonus, Employee will
resign from ▇▇▇▇▇▇ as an employee and officer and such resignation shall
not constitute
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a termination for Good Reason under the Agreement. In the event of either
of the occurrences as described in the foregoing two sentences, Employee
shall not be entitled to the Severance Benefits described in Section 17 of
the Agreement or any other benefits to which he may be entitled related to
a termination for Good Reason and Employee shall only be entitled to any
amounts as set forth in Section 12(b) relating to a termination by
Employee for other than Good Reason; provided however, that such
resignation shall not effect Employee's rights with regards to any then
unvested portion of the options for 300,000 shares of ▇▇▇▇▇▇ stock as
provided in the July 17 Assumption.
6. Severance Benefits. Section 17 (c) is replaced in its entirety by
the following:
(c) In lieu of any further salary payments to the Employee for
periods subsequent to the Date of Termination, ▇▇▇▇▇▇ shall pay as
severance to the Employee the lump sum amount of $1,350,000; provided
however that if such termination shall occur in connection with a Change
in Control of ▇▇▇▇▇▇ occurring after the date hereof and such other
requirements as necessary for payment of Severance Benefits are met, then
in lieu of any further salary payments to the Employee for periods
subsequent to the Date of Termination, ▇▇▇▇▇▇ shall pay as severance to
the Employee a lump sum equal to two and ninety-nine one-hundredths (2.99)
times the Employee's Base Salary either:
(i) As of the Date of Termination;
(ii) As of the date the Change in Control occurred; or
(iii) During the twelve (12) months preceding the date of
Notice of Termination, whichever is greatest, plus an amount equal
to two and ninety-nine one-hundredths (2.99) times the amount earned
by the Employee under any Incentive Plans in the calendar year
ending as of December 31st immediately preceding the Date of
Termination or the date the Change in Control of ▇▇▇▇▇▇ occurs,
whichever is greater.
For purposes of this Agreement, a "Change in Control of ▇▇▇▇▇▇" shall mean
the occurrence of any of the following events during the Term of this
extension of the Agreement:
i. The acquisition 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 [the "Exchange Act"])
(collectively, a "person") of Beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of twenty (20%) percent or more of the then
outstanding shares of common stock of Company (collectively, the
"Outstanding Common Stock"); provided, however, that the following
shall not constitute a Change of Control:
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(1) Any acquisition directly from Company (excluding an
acquisition by virtue of the exercise of a conversion
privilege);
(2) Any acquisition by an Underwriter (as such term is defined in
Section 2(11) of the Securities Act of 1933, as amended) for
the purpose of making a public offering;
(3) Any acquisition by Company; or
(4) Any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Company or any corporation
controlled by Company;
ii. The liquidation of all or substantially all
of the assets of Company; or
iii. If within two (2) years of:
(1) The completion of a tender offer or exchange offer for the
voting stock of Company (other than a tender offer or exchange
offer by Company) or a proxy contest in connection with the
election of members of the Board;
(2) A merger, consolidation, transfer or sale of twenty percent
(20%) of the book value of the gross assets of Company
measured at the time of such merger, consolidation, transfer
or sale in one (1) or more transactions;
(3) The acquisition by any person, directly or indirectly, of the
Beneficial Ownership of securities of Company representing
twenty percent (20%) of the Outstanding Common Stock; or
(4) Any combination of the foregoing;
▇▇. ▇▇▇▇▇ ▇▇▇▇ is not a member of the Board and a majority of
the Board shall not consist of:
(a) Persons who were directors of Company on the
effective date of the CIRCA Merger; or
(b) Persons who were elected or nominated for election as
directors with the approval of a majority of the
persons referred to in subsection (iii)(D)(I) of this
paragraph or persons theretofore elected in
accordance with this subsection (iii)(D)(II) of this
paragraph.
7. Andrx. The parties acknowledge that you currently serve as a
director of Andrx Corporation ("Andrx") as Watson's designee. ▇▇▇▇▇▇ agrees that
you may retain any fees or other compensation which you receive for serving as a
director of Andrx. You agree that you will resign such directorship as Watson's
designee at the written request of ▇▇▇▇▇▇'▇ Board of Directors.
8. Effective Date. The amendments to the Agreement contained in
this letter are effective February 1, 1997.
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9. Notice of Termination. The time period referred to in
Section 12(a)(ii) of the Agreement, which was modified to one (1) day by letter
agreement dated December 27, 1996, is hereby changed to fifteen (15) days.
If this letter is consistent with our agreement regarding your
continued employment, please execute four copies of this letter in the space
provided below, retain two copies for your files, and return two fully executed
copies to ▇▇▇▇▇▇ to the attention of the undersigned.
Very truly yours,
CIRCA PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: President and CEO
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▇▇▇▇▇▇ PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Title: CEO and Chairman
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ACCEPTED:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
