Vice President, Finance Employment Agreement

EXHIBIT 10.3


September 1, 1999


Mr. Stephen S. Galliker 14 Sheep Pasture Way East Sandwich, MA 02563


Dear Steve:


This letter sets forth our understanding of your employment by Dyax Corp. in the position of Executive Vice President, Finance and Administration, and Chief Financial Officer reporting directly to the Chief Executive Officer. You will be responsible for all finance and administration matters, including human resources and employee benefits. In addition, you will share responsibility for investor relations with me and participate in business development activities with senior management.


I understand that you will begin working with us full-time on or before October 1, 1999 (the "Effective Date").


Dyax will pay you a base salary of $185,000 per year ($15,416.67 per month), which is subject to review on an annual basis by the Compensation Committee of the Board of Directors (the "Committee"), but it shall in no event be reduced below the initial base salary. In addition, for the 1999 calendar year, you will be eligible for a pro-rated bonus for the portion of the current calendar year that you are employed by Dyax (using an annual target bonus amount of $50,000) based on specific individual and corporate objectives set by the Chief Executive Officer, with the Committee to determine achievement of the bonus at the end of the year. The eligible amount of the bonus for which you will be eligible in subsequent calendar years will be reasonably adjusted by the Committee to reflect Company performance, but such amount shall in no event be reduced below $50,000 per year. All payments shall be made to you in accordance with Dyax's standard payroll practices.


In the event of a Change of Control that adversely affects your position and responsibilities as an executive of Dyax and results in termination of your employment, whether by Dyax for Cause or by you for Good Reason, Dyax agrees that fifty percent of all shares that are subject to stock options granted to you at any time through the termination of your employment but that are not yet exercisable as of the date of your termination shall become exercisable immediately upon such termination. For purposes of the foregoing condition, "Change of Control" shall mean a change in ownership of more than 50% of the voting stock of Dyax in one transaction or a series of related transactions by one investor or affiliated group of investors, except as a result of any private or public debt or equity financing the net cash proceeds of which inure to Dyax, and


"Good Reason" shall mean, solely in connection with termination by you of your employment by Dyax subsequent to a Change in Control, a termination based on (i) the assignment to you of any duties inconsistent with your position, duties, responsibilities and status with Dyax immediately prior to the Change in Control, or a change in your reporting responsibilities, titles or offices as in effect immediately prior to the Change in Control, (ii) a reduction by Dyax in your base salary as in effect immediately before the Change in Control, or (iii) Dyax's requiring you to be based anywhere other than within thirty (30) miles of your office location prior to the Change in Control, except for required business travel to an extent substantially consistent with your business travel obligations before the Change of Control; provided, however, that notwithstanding the foregoing, if in the opinion of Dyax's independent auditors the terms of the foregoing acceleration of exercisability would render pooling-of-interest accounting treatment unavailable to an acquirer of Dyax in connection with a pending Change of Control transaction which the Board of Directors of Dyax wishes to be so treated, then such acceleration shall only be given effect to the maximum extent, if any, consistent with such treatment, but otherwise shall be inoperative and shall have no force or effect in connection with such transaction.


Subject to approval by the Committee, Dyax agrees to grant you two options to purchase shares of Dyax Common Stock. The first option will be an option to purchase 75,000 shares vesting in equal monthly installments over 48 months beginning on the Effective Date. The second option will be an option to purchase 52,500 shares vesting in equal monthly installments over 24 months beginning on the Effective Date. Such options shall be granted at an exercise price equal to the fair market value on the date of grant, as determined by the Committee, and shall be subject to Dyax's 1995 Equity Incentive Plan and the standard terms and conditions of its stock options, except that all options exercisable as of the date of termination shall continue to be exercisable from that date until twelve months thereafter. The maximum number of such options permitted under the Internal Revenue Code shall be treated as incentive stock options, except as may be required by law to be treated as nonstatutory stock options upon grant or upon exercise, including treatment as nonstatutory stock options if such options are exercised more than 90 days after termination of employment.


Subject to approval of the Committee, Dyax shall also grant you the opportunity to purchase from Dyax up to 47,500 shares of Dyax Common Stock at a purchase price ...