Document:

ttoo-ex1038_511.htm

EXHIBIT 10.38

 

 

January 29, 2018

 

 

John Sprague

62 Washington Street

Wellesley, MA 02481

 

 

 

Dear John: 

 

On behalf of T2 Biosystems, Inc., (the “Company”) I am delighted to make this offer of employment to you to join us in the role of Chief Financial Officer for the Company beginning January 30, 2018.

 

At T2 Biosystems, our mission is to fundamentally change the way that medicine is practiced by transforming diagnostics for the tangible benefit of patients, practitioners and healthcare institutions. We have developed a breakthrough and innovative technology, T2MR, that has received the most prestigious industry awards and is protected by almost 50 patents.  Our first products, T2Candida and the T2Dx, are already in use in over 100 hospitals in the United States and Europe. We are positively impacting the lives of patients and saving hospitals millions of dollars each year. Our next product, T2Bacteria, is expected to be FDA cleared this year and additional products are in development. There is a lot of growth ahead and you are joining us at a very exciting time!  

 

John, we are thrilled to extend this offer of employment to you.  We think you can help us fulfill our mission and we believe you’d be a great fit for our team.  To kick things off, you will find all of the pertinent information related to our offer of employment in the attached pages.  Please read the offer carefully and, if it is acceptable, sign and return one copy to my attention (PDF copy is fine).    

 

If you have any questions, please do not hesitate to contact me at (781) 457-1220 or email at jmcdonough@t2biosystems.com. We are looking forward to having you on our team!

 

 

Sincerely,

 

/s/ John McDonough

 

John McDonough

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

OFFER OF EMPLOYMENT

 

 

Date of employment:  Should you accept the terms of this offer, your employment with the Company will commence on January 30, 2018.

 

Background check:  Your employment is contingent upon your successful completion of a background check, which is required for all employees of the Company. The Company will forward you the appropriate documents, and such documents shall be required to be submitted to the Company by no later than one week prior to your start date. 

 

Position:  You have been offered the position of Chief Financial Officer. In this capacity, you will report to John McDonough, Chief Executive Officer, or his successor in such position. Your duties and responsibilities will include all those customarily attendant to such a position, and any other such duties or responsibilities that John McDonough or the Company may, from time to time, assign to you.  You agree that you shall not enter into any employment endeavors which may conflict with your ability to devote the necessary time and energies to the Company’s business interest while engaged by the Company.  You further agree to comply with all applicable laws and with all Company rules and policies established by the Company from time to time.

 

Compensation and Tax Matters:  Your salary shall be $14,583.34 (the equivalent of $350,000 when annualized), payable semi-monthly and subject to pro-ration for any partial initial or terminal week during which you are employed, in accordance with normal payroll practices and schedule of the Company. You will be eligible for a salary increase during the 2018 calendar year, and the timing of that adjustment will align with other members of the Company’s executive management team.

 

You will be eligible to receive an annual bonus (the "Annual Bonus") based upon the achievement of specific company and individual milestones as determined by the Board of Directors (the “Board”).  The target amount of your Annual Bonus will be 45% of your Base Salary, subject to adjustment by the Board. Payment of the Annual Bonus will be pro-rated for 2018 and will in all events be subject to your continued employment with the Company through the date of payment.  

 

All compensation amounts stated are before any deductions for FICA taxes, state and federal withholding taxes and other payroll deductions required to be made by the Company under applicable law.  

 

Stock Options:  Subject to the approval of the Board and your execution of a Stock Option Agreement, you will be offered options to purchase 225,000 shares of T2 Biosystems common stock under an Inducement Award Plan to be established by the Company as soon as practicable following the date hereof (the “Inducement Plan”).  Subject to the approval of the Inducement Plan by the Board, the exercise price of the options will be equal to the fair market value of the Company’s common stock on the grant date, which shall be first permissible date under the Inducement Plan (determined in accordance with the terms of the Inducement Plan). The options will have a 4-year vesting schedule with 25% of the options vesting one year from the vesting commencement date (your start date) and the remaining options vesting in equal monthly installments over the following 36 months.  The terms and conditions of the options shall be more fully described in the Inducement Plan and applicable Stock Option Agreement.  In the event that the 

Active: 2018

 

Inducement Plan is not approved by the Board within thirty (30) days following your start date, subject to Board approval, the Company shall make such grant under its existing 2014 Incentive Award Plan.

 

Severance Compensation:  Subject to the approval of the Board and your execution of the attached Change of Control Severance Agreement (the “Change in Control Agreement”), you will be offered certain benefits in the event of a change in control of the Company, as set forth in more detail and defined in the Change in Control Agreement, including severance compensation and the acceleration of certain stock options, each such benefit to be subject to the terms of the Change in Control Agreement. 

 

In the event your employment is terminated by the Company for reasons other than Cause and unrelated to a Change in Control, both as defined in the Change in Control Agreement (but for the avoidance doubt excluding a termination of your employment (x) due to death, (y) due to your inability to perform your duties for the Company on account of physical or mental illness for a period of three consecutive full months or for a period of six full months during any 12-month rolling period or (z) in circumstances that entitle you to severance payments or benefits under the Change in Control Agreement), subject to your executing and delivering to the Company, and not revoking, a release of claims in a form acceptable to the Company (the “Release”) within the 30-day period following your termination of employment, you will be entitled to receive severance benefits in the form of salary continuation and reimbursement for costs associated with COBRA, for a period of six (6) months following the end of your employment.  

 

Fringe Benefits: You will have the opportunity to participate in the Company’s fringe benefits program.  Currently, these fringe benefits are as follows:

 

	
 
	
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The Company currently provides contributions toward a medical and dental plan for yourself and immediate family members 

 

	
 
	
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Three (3) weeks paid vacation, Company designated holidays, personal holidays and sick days (see Benefits Summary for more information).

 

	
 
	
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The Company provides 100% contribution towards Term Life Insurance, Accidental Death and Dismemberment Insurance, and Short and Long-Term Disability Insurance;

 

	
 
	
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The opportunity to enroll in the Company’s 401(k) Investment and Section 125 Plans based on plan eligibility requirements; and

 

	
 
	
•
	
Pay or reimburse you in accordance with the Company’s reimbursement policies from time to time in connection with the performance of your duties for the Company subject to your submission of satisfactory documentation with respect thereto.

 

The Company reserves the right to amend, delete or change any of its employment policies and/or benefits at any time in its sole discretion.

 

Non Competition/Non-Disclosure/Invention Assignment Agreement:  No later than on the first day of your employment with the Company you will be required to sign the enclosed Non-Competition/Non-Disclosure/Inventions Assignment Agreement (“Obligations Agreement”) which includes nondisclosure, inventions ownership, and other provisions that are necessary to protect the Company’s confidential information, intellectual; property, trade secrets, and customer relationships.  As you may be given access to such protectable interests, your employment is contingent upon your signing the Obligations 

Active: 2018

 

Agreement.  The terms of the Obligations Agreement will survive termination, for whatever reason, of the employment relationship.

 

Prior Agreements: You acknowledge and confirm that you have provided/disclosed to the Company all restrictive covenants and agreements, including nondisclosure and confidentiality agreements, to which you are a party.  You agree that you shall not disclose to the Company or use while an employee of the Company any confidential or trade secret information obtained by you from other persons or employers and shall not bring any property upon the Company premises which has been misappropriated by others.  You also acknowledge that the Company expects you to honor any prior obligations to former employers to which you remain bound.

Employment At Will:  Although you are being hired as an employee commencing on January 30, 2018, your employment with the Company shall be at will.  This means that your employment is not guaranteed for any definite period of time, and you or the Company may terminate your employment relationship with or without notice at any time and for any or no reason or cause.  The Company is not bound to follow any policy, procedure, or process in connection with employee discipline, employment termination or otherwise.  

Entire Agreement:  This letter (together with the attached Obligations Agreement and Change in Control Agreement) sets forth the entire understanding between the Company and yourself with respect to your employment by the Company.  All prior discussions, negotiations, correspondence and other understandings between you and the Company are superseded, and there are no representations, warranties or undertakings by the Company or you with respect to your employment by the Company, which are not set forth in this letter.  

Section 409A: Notwithstanding anything in this letter to the contrary, any compensation or benefit payable under this letter that is designated as payable upon your termination of employment shall be payable only upon your “separation from service” with the Company (a “Separation from Service”) within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”), and except as provided below, any such compensation or benefits shall not be paid, or, in the case of installments, shall not commence payment, until the 30th day following your Separation from Service.  Any installment payments that would have been made to you during the 30 day period immediately following your Separation from Service but for the preceding sentence shall be paid to you on the 30th day following your Separation from Service and the remaining payments shall be made as provided in this letter.  Notwithstanding anything in this letter to the contrary, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which you are entitled under this letter is required in order to avoid a prohibited distribution under Section 409A, such portion of your benefits shall not be provided to you prior to the earlier of (i) the expiration of the six-month period measured from the date of your Separation from Service with the Company or (ii) the date of your death.  Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump-sum to you (or your estate or beneficiaries), and any remaining payments due to you under this letter shall be paid as otherwise provided herein.  Your right to receive any installment payments under this letter shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.  Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.

Active: 2018

 

If you agree with the terms of this offer, please acknowledge your understanding and acceptance of this offer by signing where indicated below and return to me along with a completed background check authorization form by 8:00 a.m. ET on January 30, 2018. We look forward to working with you.

 

Sincerely,

 

T2 Biosystems, Inc.

 

 

By: ___/s/ John McDonough____________1/30/2018____________________________

John McDonoughDate

Chief Executive Officer

 

 

 

I have read agree with and accept the items contained in this letter.

 

 

By: _/s/ John Sprague_____1/30/2018____________________________

John SpragueDate

 

 

The Immigration Control and Reform Act of 1986 requires that all new employees complete the I-9 form and submit proof of employment eligibility to work in the United States within the first three days of their start date.  If accepting employment the Company will provide you the I-9 form and requests that you present appropriate documents when you report to the Company and a representative of the Company will complete the I-9 form with you.  Accordingly, you will have three days from your start date to submit proof of your eligibility to work in the United States.

Active: 2018ttoo-ex1039_514.htm

EXHIBIT 10.39

T2 BIOSYSTEMS, INC.

 

Change of Control Severance Agreement

 

 

January 30, 2018

 

John M. Sprague

62 Washington Street

Wellesley, MA 02481

 

Dear John,

 

This letter sets forth the agreement between you and T2 Biosystems, Inc. (the “Company”) regarding certain terms and conditions of your employment.  

 

1.Severance Compensation.  If your employment is terminated either by you with Good Reason within 12 months following a Change of Control, or by the Company without Cause within 3 months preceding or within 12 months following a Change of Control, subject to your executing and delivering to the Company, and not revoking, a release of claims in a form acceptable to the Company (the “Release”) within the 30-day period following your termination of employment:

 

(a)the Company will pay you severance in an amount equal to 12 months of your then current annual base salary, payable in equal installments over a period of 12 months (the “Severance Period”) in accordance with the Company’s payroll practices, commencing on your termination of employment; 

 

(b)if you have been continuously employed by the Company for less than one year as of the date your employment terminates, the vesting schedule of any equity awards of the Company held by you shall automatically be amended to state that all of the options subject to such equity award(s) scheduled to vest within 12 months of the date of your termination shall immediately accelerate and become fully vested; 

 

(c)if you have been continuously employed by the Company for at least one year as of the date your employment terminates, all of the outstanding unvested equity awards of the Company held by you shall become fully vested and, if applicable, exercisable as of the date of your termination; and

 

(d)If you timely elect continued group medical and dental insurance coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will reimburse you for a portion of the applicable premiums, based on the then-current cost-sharing rates for active employees, for you and your eligible dependents during the period commencing on the date of your termination of employment and ending on the earliest to occur of (a) the final day of the Severance Period, (b) the date you and/or your eligible dependents are no longer eligible for COBRA, and (c) the date you become eligible to receive medical insurance coverage from a subsequent employer (and you agree to notify the Company of 

 

 

 

			
	
 
	
 
	
 

 

such eligibility).  Notwithstanding the foregoing, if the Company determines that it cannot provide such reimbursement of premiums to you without potentially violating applicable law, the Company shall in lieu thereof provide to you a taxable monthly payment in an amount equal to a portion of the applicable premiums, based on then-current cost-sharing rates for active employees, which payment will be made regardless of whether you elect COBRA continuation coverage and will commence in the month following the month in which your termination of employment occurs and end on the earliest to occur of (x) the final day of the Severance Period, (y) the date you and/or your eligible dependents are no longer eligible for COBRA, and (z) the date you become eligible to receive medical insurance coverage from a subsequent employer (and you agree to notify the Company of such eligibility).

 

Notwithstanding anything herein to the contrary, in the event that any compensation or benefit that constitutes “nonqualified deferred compensation” within the meaning of Section 409A (as defined below) becomes payable upon the occurrence of a Change of Control, such compensation or benefit shall not be paid unless such Change of Control constitutes a “change in control event” within the meaning of Section 409A.

 

2.Definitions.  For purposes of this letter, the terms “Change of Control,” “Cause,” and “Good Reason” shall have the following meanings.

 

(a)“Change of Control” means that any of the following events has occurred:

 

(i)Any person (as such term is used in Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Company, any employee benefit plan of the Company, or any entity organized, appointed, or established by the Company for or pursuant to the terms of any such plan, together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Exchange Act) becomes the beneficial owner or owners (as defined in Rule 13d-3 and 13d-5 promulgated under the Exchange Act), directly or indirectly (the “Control Group”), of more than 50% of the outstanding equity securities of the Company, or otherwise becomes entitled, directly or indirectly, to vote more than 50% of the voting power entitled to be cast at elections for directors (“Voting Power”) of the Company, provided that a Change of Control will not have occurred if such Control Group acquired securities or Voting Power solely by purchasing securities from the Company, including, without limitation, acquisition of securities by one or more third party investors;

 

(ii)A consolidation or merger (in one transaction or a series of related transactions) of the Company pursuant to which the holders of the Company’s equity securities immediately prior to such transaction or series of related transactions cease to be the holders, directly or indirectly, immediately after such transaction or series of related transactions of more than 50% of the Voting Power of the entity surviving such transaction or series of related transactions;

 

(iii)The sale, lease, exchange, or other transfer (in one transaction or series of related transactions) of all or substantially all of the assets of the Company; or

 

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(iv)The liquidation or dissolution of the Company or the Company ceasing to do business.

 

(b)“Cause” means:

 

(i)Your conviction of a felony, either in connection with the performance of your obligations to the Company or which otherwise materially and adversely affects your ability to perform such obligations;

 

(ii)Your willful disloyalty to the Company or deliberate material dishonesty to the Company;

 

(iii)The commission by you of an act of fraud or embezzlement against the Company;

 

(iv)Your willful, substantial failure to perform any of your duties hereunder or your deliberate failure to follow reasonable, lawful directions of the Company’s Board of Directors or your direct supervisor, which failure, if capable of being cured, is not cured within 30 days after delivery to you by the Company of written notice of such failure; or

 

(v)A material breach by you of any material provision of this letter which breach is not cured within 30 days after delivery to you by the Company of written notice of such breach.

 

(c)“Good Reason” means one or more of the following:

 

(i)A material change in the principal location at which you provide services to the Company, without your prior written consent;

 

(ii)A material and continuing diminution by the Company in the duties, authority or responsibilities of your position which causes such position to become of less responsibility or authority than immediately prior to such material and continuing diminution, provided that such change is not in connection with a termination of your employment hereunder by the Company (for purposes of clarity, if you are not the Chief Financial Officer of the combined public company following the Change of Control, you shall be deemed to have a material diminution of your duties);

 

(iii)A material reduction in your base salary or other benefits except if such a reduction is in connection with a general reduction in compensation or other benefits of all similarly situated employees of the Company;

 

(iv)Failure by the Company to obtain the assumption of this Agreement by any successor to the Company.

 

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Notwithstanding the foregoing, Good Reason shall only exist if you have given written notice to the Company within 90 days of the initial existence of the Good Reason condition(s), and the Company has failed to cure such event(s) within 30 days of its receipt of said notice.

 

3.Section 409A.

 

(a)Separation from Service.  Notwithstanding anything in this letter to the contrary, any compensation or benefit payable under this letter that is designated as payable upon your termination of employment shall be payable only upon your “separation from service” with the Company (a “Separation from Service”) within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”), and except as provided below, any such compensation or benefits shall not be paid, or, in the case of installments, shall not commence payment, until the 30th day following your Separation from Service.  Any installment payments that would have been made to you during the 30 day period immediately following your Separation from Service but for the preceding sentence shall be paid to you on the 30th day following your Separation from Service and the remaining payments shall be made as provided in this letter.

 

(b)Specified Employee.  Notwithstanding anything in this letter to the contrary, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which you are entitled under this letter is required in order to avoid a prohibited distribution under Section 409A, such portion of your benefits shall not be provided to you prior to the earlier of (i) the expiration of the six-month period measured from the date of your Separation from Service with the Company or (ii) the date of your death.  Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump-sum to you (or your estate or beneficiaries), and any remaining payments due to you under this letter shall be paid as otherwise provided herein.

 

(c)Installments.  Your right to receive any installment payments under this letter shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.  Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.

 

 

 

4.General

 

(a)No provision of this letter shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by you and by an authorized officer of the Company (other than you).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this letter by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at 

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another time.  The validity, interpretation, construction and performance of this letter shall be governed by the laws of the Commonwealth of Massachusetts without regard to conflicts of law.  The invalidity or unenforceability of any provision or provisions of this letter shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.  This letter may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

 

(b)This letter contains the entire and exclusive agreement between the parties with respect to the subject matter hereof and is intended to supersede and replace all previous agreements, negotiations, and representations between the parties, whether written or oral, including any provision of the employment offer letter agreement between you and the Company, dated as of January 30, 2018, to the extent such letter addresses the subject matter hereof.

 

 

 

Sincerely,

 

T2 BIOSYSTEMS, INC.

 

 

 

By:/s/ John McDonough___________

Name:John McDonough

Title:  President & CEO

 

Acknowledged and Agreed

 

 

/s/ John Sprague__________________________

John M. Sprague

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