First Amendment to Employment Offer Letter between Variagenics, Inc. and Joseph S. Mohr

Summary

This amendment updates the employment offer letter between Joseph S. Mohr and Variagenics, Inc., effective June 1, 2002. It changes how Mr. Mohr’s stock options vest if there is a change in control of the company, allowing for accelerated vesting of options and setting out specific conditions for further vesting or conversion of options. The amendment also addresses potential tax consequences and limits on severance payments to avoid excise taxes. All other terms of the original offer letter remain unchanged.

EX-10.2 4 j4285_ex10d2.htm EX-10.2
Exhibit 10.2
 

To:

Joseph S. Mohr

 

 

From:

David Housman

 

 

Date:

June 1, 2002

 

 

Subject:

First Amendment to Employment Offer Letter

 

                We hereby agree that your Employment Offer Letter, dated September 5, 2001 and comprised of the Offer Letter, the Inventions and Non-Disclosure Agreement and the Non Compete and Non Solicitation Agreement (collectively, the “Offer Letter”), be and hereby is amended effective June 1, 2002, as provided for herein.  Except as specifically modified herein, the terms of the Offer Letter, and all terms and conditions of your employment with Variagenics, Inc. (including any of its successors or assigns, the “Company”) shall remain in full force and effect.  This first amendment to your Offer Letter shall be referred to herein as the “Amendment.”

 

                Effective June 1, 2002, the Offer Letter is revised by adding the following to the conclusion of Paragraph “(a)”:

 

                “Vesting on a Change in Control.

 

1)              Upon the effective date of a Change in Control, 50% of the then outstanding unvested options to purchase shares of common stock of the Company held by you as of such date (whether granted to you prior to or after execution of this Amendment) shall be immediately vested and shall be otherwise exercisable in accordance with the terms of the stock option agreement pursuant to which they were granted.  The remaining 50% of the then outstanding unvested options shall vest monthly in six equal installments beginning with the first day of the month following the effective date of the Change in Control; provided that, all then remaining outstanding unvested options shall immediately vest in their entirety if the Company terminates your employment without Cause after the effective date of the Change in Control but prior to the end of the six month period following such Change in Control.  Notwithstanding the prior sentence, your employment with the Company remains an at-will relationship such that either you or the Company may terminate the relationship at any time with or without Cause or notice.  For purposes of the Offer Letter, as modified by this Amendment, Cause shall be defined as set forth in Section 11 of the Variagenics, Inc. Amended 1997 Employee, Director and Consultant Stock Option Plan.

2)              Change in Control Defined. A ‘Change in Control’ shall be deemed to have occurred if (i) there is a sale or transfer of all or substantially all of the assets of the Company in one or a series of transactions; (ii)  any ‘person,’ as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (or any successor provision) (the ‘Exchange Act’), together with all ‘affiliates’ and ‘associates’ (as such terms are defined in Rule 12b-2 under the Exchange Act or any successor provision) of such person, shall become the ‘beneficial owner’ or ‘beneficial owners’ (as defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor provision), directly or indirectly, of securities of the Company representing in the aggregate thirty percent (30%) or more of either (1) the then

 

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                        outstanding shares of common stock of the Company or (2) the combined voting power of all then outstanding securities of the Company having the right under ordinary circumstances to vote in an election of the Board of Directors of the Company (hereafter referred to as an ‘Acquisition’); provided, that, notwithstanding the foregoing, an Acquisition shall not be deemed to have occurred for purposes of this clause (ii) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of common stock or other voting securities outstanding, increases (x) the proportionate number of shares of common stock beneficially owned by any person to thirty percent (30%) or more of the common stock then outstanding or (y) the proportionate voting power represented by the voting securities beneficially owned by any person to thirty percent (30%) or more of the combined voting power of all then outstanding voting securities; or (iii) there is a merger or consolidation between the Company and an entity other than a subsidiary of the Company in which the Company is not the continuing or surviving corporation and pursuant to which the holders of the Company’s voting stock immediately prior to such merger or consolidation would not be the holders immediately after such merger or consolidation of at least 50% of the voting stock of the continuing or surviving corporation.

3)              All agreements between you and the Company governing the grant to you of stock options shall be and hereby are amended to the extent necessary to effectuate the provisions of this Agreement.  You acknowledge that the acceleration of Incentive Stock Options (“ISOs”) granted pursuant to section 422 of the Internal Revenue Code (the “Code”) may cause certain of those options to fail to satisfy section 422(d) of the Code, which may result in less favorable individual tax treatment on such option.  You understand and acknowledge such result and agree to the conversion, as necessary, of ISOs to non-qualified stock options as a precondition to the acceleration of the option grant described herein.  ISOs with the least difference between exercise price and fair market value on the date of the conversion shall be converted to non-qualified options first.  In all other respects all such agreements between you and the Company shall remain in full force and effect, and shall be administered in accordance with their terms.

4)              Notwithstanding anything provided herein, if you are considered to be a ‘disqualified individual’ (as defined in Section 280G of the Code), and the acceleration of vesting of options together with any other payments which you have a right to receive from the Company (or its affiliates and subsidiaries) in the event of a Change in Control (collectively the “Severance Compensation”), would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), the Severance Compensation shall be reduced.  The reduction shall be in an amount so that the present value of the total amount received by you from the Company will be one dollar ($1.00) less than three (3) times the Base Amount (as defined in Section 280G of the Code) so that no portion of the amounts received by you shall be subject to the excise tax imposed by Section 4999 of the Code (excise tax).

The determination as to whether any reduction in Severance Compensation is necessary and the amount of any such reduction shall be made by the Company’s independent public accountants (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and to you within fifteen (15) business days of the date payment is made.  Any such determination by the Accounting Firm shall be conclusive and binding upon you and the Company.  You shall determine which part of the Severance Compensation shall

 

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be eliminated or reduced consistent with the requirements of this section and you will notify the Company promptly in writing; provided, that if you do not make such a determination within ten (10) business days of the receipt of the calculations made by the Accounting Firm, the Company shall determine which part of the Severance Compensation shall be eliminated or reduced consistent with the requirements of this section and shall notify you promptly in writing of such election.

If through error or otherwise you should receive payments under this Agreement, together with other payments you have the right to receive from the Company, in excess of one dollar ($1.00) less than three times your Base Amount, you shall immediately repay the excess to the Company upon notification that an overpayment has been made.”

 

                It is understood and agreed that this Amendment shall constitute a binding agreement upon execution by both parties, and represents (along with the Offer Letter) the entire agreement and understanding between us with respect to the subject matter contained herein. If the terms of this Amendment are acceptable to you, please sign where indicated below.  This Amendment is executed as an instrument under seal as of the date indicated below.

 

 

 

 

 

 

 

VARIAGENICS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/David Housman

 

 

 

 

 

David Housman

Acknowledged and Agreed:

 

 

 

 

 

 

 

 

 

 

 

/s/Joseph S. Mohr

 

 

 

 

 

Joseph S. Mohr

 

 

 

 

 

 

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