Exhibit No. 10.66
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Amendment No. 1 to Employment Agreement (the "Amendment") dated as of
December 18, 1996 between Seragen, Inc. (the "Company") and Xxxx Prior
("Prior").
WHEREAS, the Company and Prior entered an Employment Agreement dated as of
November 6, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Prior desire to amend the Employment Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have the
same meaning herein as in the Employment Agreement.
2. Paragraph 3(c) of the Employment Agreement is hereby amended to read as
follows:
(c) Stock Options. On or before December 18, 1996, the Company
shall grant Prior stock options under the Seragen, Inc. 1992 Long Term
Incentive Plan, a true copy of which is attached as Exhibit D (the
"Plan"), to purchase sufficient shares of the Company's common stock, par
value $0.01 per share ("Common Stock"), to equal 8.5% of the then
outstanding Common Stock, measured on a Fully Diluted Basis (as the term
is defined in Paragraph 4), at the then fair market value per share of
Common Stock. To the extent permitted by federal income tax law, options
issued under the Plan to Prior shall be "incentive stock options". The
stock options shall be evidenced by an Incentive Stock Option Agreement
and, if required, a Non-Qualified Stock Option Agreement substantially in
the form of Exhibits A and B to this Agreement (the "Stock Option
Agreements") except as expressly provided otherwise herein. Both Stock
Option Agreements shall provide that: (i) the options issued thereunder
shall vest, i.e., become exercisable, 2.0833% on the date of execution of
this Agreement (the "Effective Date") and on the first day of each
calendar month thereafter so that Prior shall be fully (100%) vested on
the first day of the month immediately before the fourth anniversary of
the Effective Date; (ii) upon a Change in Ownership (as the term is
defined in Paragraph 4), in place of the vesting schedule provided in
clause "i" above the options shall vest retroactively as of the Effective
Date 25% on the Effective Date and an additional 2.0833% on the first day
of each calendar month thereafter so that Prior shall be fully (100%)
vested on the first day of the month immediately following the third
anniversary of the Effective Date; (iii) upon the termination by the
Company of Prior's employment without Just Cause or Prior's termination
for Good Reason (as the terms are defined in Paragraph 4), in place of the
-1-
vesting schedules provided in clauses "i" and "ii" above the options shall
vest retroactively as of the Effective Date 25% on the Effective Date and
at the accelerated rate of an additional 3.125% on the first day of each
calendar month thereafter so that Prior shall be fully (100%) vested on
the first day of the month immediately following the second anniversary of
the Effective Date; (iv) options issued shall, to the extent vested, be
fully exercisable until the tenth (10th) anniversary of the Effective
Date; (v) the options shall be exercisable in accordance with the terms of
the Plan, including the right to pay the option exercise price in whole or
in part by surrendering shares of the Company's common stock held by Prior
for at least six months prior to the exercise date with an aggregate fair
market value equal to the option exercise price or in accordance with a
cashless exercise program established with a securities brokerage firm and
approved by the Company, and shall provide that stock certificates shall
be issued outright and free of escrow no later than three (3) days after
the date of exercise; (vi) stock certificates issued pursuant to the
exercise of an option shall not include any legends or be subject to any
transfer restrictions, except for restrictions required by Section 16 of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder; (vii) the Company shall not terminate any option
issued to Prior upon a "Change in Control" as defined in the Plan without
Prior's written approval; (viii) in the event that before a Target Equity
Financing (as defined in Paragraph 4) the Company grants options or other
equity interests to management, employees, directors or consultants or the
Company sells shares of its Common Stock or any equity securities or
securities convertible or exchangeable into any equity securities of the
Company, as part of a plan or series of plans of financing, or the number
of shares of Common Stock outstanding on a Fully Diluted Basis increases
as a result of a change in the conversion ratio of any class of securities
convertible or exchangeable into any equity securities of the Company, the
Company shall grant Prior additional stock options under the Plan covering
that number of shares of Common Stock necessary to cause Prior's
proportionate holdings of the outstanding Common Stock, on a Fully Diluted
Basis, immediately after the grant or sale of such options, shares or
other equity interests to equal his proportionate holdings of the
outstanding Common Stock, on a Fully Diluted Basis, immediately prior to
the grant or sale of such options, shares or other equity interests, but
not to exceed 8-1/2% of the Common Stock on a Fully Diluted Basis; (ix)
all additional stock options shall have the same terms and conditions, and
shall vest as though they were granted on the same date as the initial
options that are required to be issued on or before December 18, 1996; (x)
each option shall include all other rights and benefits under the Plan,
including Section 11 of the Plan (regarding accelerated vesting on Change
in Control); and (xi) the Company has registered, or within 60 days of the
Effective Date shall at its own expense register, under the Securities Act
of 1933 all shares issued or to be issued pursuant to the exercise of the
stock options on Form S-8, the obligation to maintain such registration to
continue following Prior's termination of employment. Prior agrees that,
if requested by an underwriter of the Company's securities, Prior will
comply with any reasonable customary lock-up periods in connection with
the
-2-
Company's offering of securities provided that all other executive
officers and directors of the Company also must comply with such
restrictions and provided that no such lock-up periods shall exceed 180
days. The Plan shall be amended as necessary to provide or permit the
issuance of the options described in this Paragraph 3(c).
The Board shall in good faith take all necessary action to effect
the terms of this Agreement and to register the underlying shares of
Common Stock under applicable securities laws as provided herein.
3. Except as modified herein, the Employment Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of the day and year first above written.
/s/ Reed R. Prior
---------------------------------
Reed R. Prior
SERAGEN, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx
President and Chief
Technology Officer
rpemp.amd
