exv10w20



 





Exhibit 10.20









March 16, 2007




Michael A. Ashburn, MD MBA

Executive Vice President

ZARS, Inc.

1142 West 2320 South

Salt Lake City, UT 84119




Dear Michael:



ZARS, Inc. (the “Company”) is very pleased to offer you continued employment with the
Company as its Medical Director commencing on April 2, 2007. Except as expressly
provided herein, this offer letter (“Agreement”) supersedes and replaces all prior
agreements and understandings related to the terms of your employment with the Company,
whether oral or written, including, but not limited to, that certain Offer Letter dated
December 23, 2002 and that certain Employment Agreement dated May 8, 2003. For avoidance
of doubt, the Employment Agreement shall be effectively terminated as of the date of
this Agreement. If you agree to these terms and conditions, please initial the bottom of
each page and sign at the end of this letter in the spaces indicated.




     1. Duties. As Medical Director, you will report to the President and CEO, who
will be primarily responsible for evaluating your performance. You will work
primarily from our Salt Lake City, Utah facility and from time to time at such
other locations as is necessary to perform the duties of your position. Effective
March 25, 2007, you will no longer be an officer of the Company. Your job duties
will include, but not be limited to, the areas of responsibility set forth
in Exhibit A. Of course, the Company may change your position, title and duties
from time to time as it deems necessary. As we discussed, commencing on September
1, 2007, you will work as a part time employee of the Company and you will be
expected to provide services within a time commitment averaging approximately
twenty to thirty percent (20-30%) of that of a full-time professional employee. The
Company has agreed that while you are providing part time employment to the
Company, you may also commence employment with the University of Pennsylvania in
the position of Professor within the Department of Anesthesiology and
Critical Care. You agree, however, that during your employment with the Company,
you shall not engage in any other employment, consulting or other business activity
that will conflict with your responsibilities to the Company as a part
time-employee or that would create a conflict of interest with the Company and you
shall not assist any person or entity in competing with the Company or in preparing
to compete with the Company. Lastly, other than the medical malpractice case
you are already involved in and have disclosed to the Company, you will not
participate as a consultant or expert witness in any pending or contemplated legal
proceedings.



     2. Compensation. So long as you remain employed with the Company pursuant
to Section 1 and 6, your base salary through August 31, 2007 will be $18,750 per
month. Commencing on September 1, 2007, you will transition to a part time role
with the Company and









 









 







your base salary will commensurately be reduced to $9,375 per month. Salaries are paid on a
biweekly schedule. Your employment with ZARS is expected to end on January 23, 2008 (“End Date”).




     3. Stock Options. The Company previously granted you options (“Options) to purchase
shares of common stock of the Company pursuant to the Company’s 1997 Stock Option Plan
(“Plan”). For so long as you remain an employee of the Company pursuant to the terms
and conditions set forth in Paragraph 1 above, the options shall continue to vest and to be
subject to the terms and conditions set forth in the Plan, the stock option agreements and
stock option grant notices previously provided to you. In accordance with the Plan, and
subject to applicable tax withholdings, you may exercise all or any portion of your vested
option until ninety (90) days following the termination of your employment with the Company
which will take place on January 23, 2008.



     4. Policies and Procedures. You agree that you continue to be subject to and
will continue to comply with the policies and procedures of the Company, as such policies
and procedures may be modified, added to or eliminated from time to time at the sole
discretion of the Company, except to the extent any such policy or procedure specifically
conflicts with the express terms of this Agreement. You further agree and acknowledge that
any written or oral policies and procedures of the Company do not constitute contracts
between the Company and you



     5. Other Benefits. While employed by the Company as provided herein:



          (a) Employee Benefits. For so long as you remain a full time employee of the Company,
you shall be entitled to all benefits to which other employees of the Company are entitled,
on terms comparable thereto, including, without limitation, participation in pension
and profit sharing plans, 401(k) plan, group insurance policies and plans, medical, health,
vision, and disability insurance policies and plans, and the like, which may be maintained by
the Company for the benefit of its employees, provided however, you will not be eligible to
participate in any Company bonus opportunities. The Company reserves the right to alter and
amend the benefits received by you from time to time at the Company’s sole discretion.
Commencing with your transition to part time in September, you will not be eligible to accrue
any additional PTO and will not be eligible to participate in the Company’s benefits
programs, except as required by law.




          (b) Expense Reimbursement. You shall continue to receive, against presentation of
proper receipts and vouchers, reimbursement for direct and reasonable out-of- pocket expenses
incurred by you in connection with the performance of your duties hereunder, according to the
policies of the Company.




     6. At-Will Employment. Your employment with the Company continues to be “at- will.” This
means that either you or the Company may terminate your employment at any time, with or
without cause, with or without notice, and for any reason or no reason. Any
contrary representations or agreements, which may have been made to you, are superseded by
this offer. The “at will” nature of your employment described in this offer letter shall
constitute the entire agreement between you and the Company concerning the nature and
duration of your









 









 







employment.
In addition, the fact that the rate of your salary or other compensation is
stated in units of years or months and that your vacation and sick leave accrue annually or
monthly does not alter the at-will nature of the employment, and does not mean and should not be
interpreted to mean that you are guaranteed employment to the end of any period of time or for any
period time. The “at will” term of your employment with the Company can only be changed in a
writing signed by you and the CEO and the Chairman of the Board of Directors.




     7. Proprietary Information Obligations. You hereby acknowledge that your obligations
under your Confidentiality, Non-Disclosure and Non-Competition Agreement remains in full
force and effect. A copy of your Proprietary. Information Agreement is attached hereto as
Exhibit B.



     8. Confidentiality. The provisions of this Agreement shall be held in
strictest confidence by you and the Company and shall not be publicized or disclosed in any
manner whatsoever; provided, however, that: (a) you may disclose this Agreement to your
immediate family; (b) the parties may disclose this Agreement in confidence to their
respective attorneys, accountants, auditors, tax preparers, and financial advisors; (c) the
Company may disclose this Agreement as necessary to fulfill standard or legally required
corporate reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as otherwise
required by law.



     9. General Release. In exchange for the consideration provided to you that you are not
otherwise entitled to receive, you hereby generally and completely release the Company
and its past and present directors, officers, employees, shareholders, partners, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns from any and all claims, liabilities and obligations, both known and unknown,
that arise out of or are in any way related to events, acts, conduct, or omissions occurring
prior to you signing this general release. This general release includes, but is not limited
to: a) all claims arising out of or in any way related to your employment with the Company up
to the date of this Agreement; b) all claims related to your compensation or benefits from
the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership interests in the
Company up to the date of this Agreement; c) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing; d) all tort
claims, including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and e) all federal, state, and local statutory claims, including
claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising
under the federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, and the Utah Civil Rights Act (as amended). Excluded from
this general release are any claims that may arise under the terms of this Agreement,
including but not limited to any claims related to the terms of compensation, benefits,
Separation Benefits, stock options and indemnification obligations.



     10. Miscellaneous. This Agreement, including Exhibits A and B, constitutes
the complete, final and exclusive embodiment of the entire agreement between you and the









 









 







Company with regard to this subject matter. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained herein, and it
supersedes any other such promises, warranties or representations. This Agreement may not be
modified or amended except in a writing signed by both you and a duly authorized officer of the
Company. This Agreement shall bind the heirs, personal representatives, successors and assigns of
both you and the Company, and inure to the benefit of both you and the Company, their heirs,
successors and assigns. If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other provision of this
Agreement and the provision in question shall be modified by the court so as to be rendered
enforceable. This Agreement shall be deemed to have been entered into and shall be construed and
enforced in accordance with the laws of the State of Utah as applied to contracts made and to be
performed entirely within Utah.




     If you wish to accept this offer of continued employment under the terms and conditions
described above please sign and date this letter and return them to me by March 17, 2007. If you
have any questions about the terms of this offer, please do not hesitate to call me to discuss our
offer at your earliest convenience.



	 	 	 	 	 
	 

	 	Sincerely,	 	 
	 

	 	ZARS, Inc.	 	 
	 
	 	 	 	 
	 

	 	/s/ Robert Lippert
 

	 	 






Exhibit A
— Potential Job Duties




Exhibit B
— Proprietary Information Agreement




	 	 	 	 	 
	 

	 	Agreed:	 	 
	 
	 	 	 	 
	 

	 	/s/ Michael A. Ashburn
 

Michael A. Ashburn
	 	 











 









 





EXHIBIT A




POTENTIAL JOB DUTIES FOR MICHAEL A. ASHBURN




Clinical Trial Programs



ThermoProfen





	 	•	 	Medical Monitor/consultant on all ThermoProfen studies, which would
include:






	 	o	 	evaluate pertinent study decisions on protocols (design changes, waivers,
etc.)
	 
	 	o	 	respond to FDA comments if needed
	 
	 	o	 	respond to IRB concerns/safety issues
	 
	 	o	 	respond to PIs if needed
	 
	 	o	 	present scientific/product data at the web cast investigator meetings
	 
	 	o	 	review initial data (i.e., temperature study results prior to PK studies, PK
results prior to starting phase 3)
	 
	 	o	 	discuss protocols and clinical program with bankers, thought leaders, etc.
	 
	 	o	 	review CSRs on completed studies
	 
	 	o	 	review SAPs





Titragesia





	 	•	 	Medical monitor/consultant on all
fentanyl studies






	 	o	 	Review SAPS
	 
	 	o	 	Review clinical study report summaries
	 
	 	o	 	Review IND submission (which will include all
safety information, narratives, etc) prior to program close






	 	•	 	Assign AEs as SAEs





Pliaglis





	 	•	 	Medical Monitor for ongoing clinical studies
	 
	 	•	 	Review and revise draft Pliaglis MAA





Synera





	 	•	 	Medical monitor for ongoing clinical trials
	 
	 	•	 	Assist in the identification and recruitment of clinical PK trial sites










 









 






	 	•	 	Review and revise draft CSR for PK trial and immunization trials





Ropivacaine DuraPeel





	 	•	 	Review and revise draft IND
	 
	 	•	 	Review and revise phase 1 clinical trials
	 
	 	•	 	Assist in the development of the clinical trial program through POC





Alprazolam Patch





	 	•	 	Medical monitor for ongoing clinical trials
	 
	 	•	 	Provide DEA researcher registration for ZARS’ management of CTM
	 
	 	•	 	Review and revise draft CSR for 2 PK trials to be completed in 2007





Business Development





	 	•	 	Assist business development in the process of reviewing product opportunities
and
negotiating licensing agreements
	 
	 	•	 	Introduce the business development team to pain researchers and thought
leaders to
facilitate exploration of business opportunities





G & A





	 	•	 	Continue to review draft S-1 and support documents as necessary
	 
	 	•	 	Provide informational support for product and development program information
in
support of IPO process











 









 








EXHIBIT B