Document:

Exhibit 10.4

 

SECOND AMENDMENT TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

 

THIS SECOND
AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Amendment”) by and
between AVANT Immunotherapeutics, Inc., a Delaware corporation (f/k/a “T Cell
Sciences, Inc.,” the “Company”) and Una S. Ryan, Ph.D. (the “Executive”), is
dated as of September 18, 2003.

 

WHEREAS, the
Company and the Executive entered into an Employment Agreement as of May 28,
1996 (the “Original Agreement”);

 

WHEREAS, the
Company and the Executive entered into an Amended and Restated Employment
Agreement as of August 20, 1998 (the “Employment Agreement”), which Employment
Agreement amended, restated and superseded the Original Agreement;

 

WHEREAS, the
Employment Agreement was amended by the First Amendment to the Amended and
Restated Employment Agreement dated December 23, 2002; and

 

WHEREAS, the
parties agree to further amend certain provisions of the Employment Agreement
in accordance with Section 19 thereof.

 

NOW,
THEREFORE, the Company and the Executive, each intending to be legally bound
hereby, do mutually covenant and agree as follows:

 

1.                                       Section
6(f) of the Employment Agreement is hereby amended by deleting said Section in
its entirety and substituting therefor the following:

 

“f.                                   Termination Benefits On or After Change in Control.

 

(i)                                     In the event of
termination of the Executive’s employment with the Company pursuant to Section
6(c) or 6(d) above on or after a Change in Control, the Company shall pay to
the Executive an aggregate amount equal to (a) three (3) times the “base
amount” (as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the “Code”)) applicable to the Executive, less (b) One Dollar
($1.00), payable in one lump sum in cash on the date of such termination.

 

(ii)                                  Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any compensation,
payment or distribution by the Company to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise (the “Severance Payments”), would be subject to
the excise tax imposed by Section 4999 of the Code, or any interest or
penalties are incurred

 

 

by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Severance Payments,
any Federal, state, and local income tax, employment tax and Excise Tax upon
the payment provided by this subsection, and any interest and/or penalties
assessed with respect to such Excise Tax, shall be equal to the Severance
Payments.

 

(iii)                               Subject to the provisions of Subparagraph
6(f)(iv), all determinations required to be made under this Subparagraph
6(f)(iii), including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by a nationally recognized accounting firm
selected by the Company (the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen
(15) business days of the date of termination of the Executive’s employment, if
applicable, or at such earlier time as is reasonably requested by the Company
or the Executive.  For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income taxes at the highest marginal rate of federal income
taxation applicable to individuals for the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rates of individual taxation in the state and locality of the Executive’s
residence on the date of termination of the Executive’s employment, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. 
The initial Gross-Up Payment, if any, as determined pursuant to this
Subparagraph 6(f)(iii), shall be paid to the Executive within five (5) days of
the receipt of the Accounting Firm’s determination.  If the Accounting Firm determines that no Excise Tax is payable
by the Executive, the Company shall furnish the Executive with an opinion of
counsel that failure to report the Excise Tax on the Executive’s applicable
federal income tax return would not result in the imposition of a negligence or
similar penalty.  Any determination by
the Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
“Underpayment”).  In the event that the
Company exhausts its remedies pursuant to Subparagraph 6(f)(iv) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred, consistent
with the calculations required to be made hereunder, and any such Underpayment,
and any interest and penalties imposed on the Underpayment and required to be
paid by the Executive in connection with the proceedings described in
Subparagraph 6(f)(iv), shall be promptly paid by the Company to or for the
benefit of the Executive.

 

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(iv)                              The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-up Payment.  Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive knows
of such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid.  The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due).  If
the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, provided that the Company has set
aside adequate reserves to cover the Underpayment and any interest and
penalties thereon that may accrue, the Executive shall:

 

(A)                              give the Company any information reasonably
requested by the Company relating to such claim,

 

(B)                                take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the Company,

 

(C)                                cooperate with the Company in good faith in
order to effectively contest such claim, and

 

(D)                               permit the Company to participate in any
proceedings relating to such claim; provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income
tax, including interest and penalties with respect thereto, imposed as a result
of such representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Subparagraph 6(f)(iv), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any

 

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Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. 
Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issues raised by the Internal Revenue Service or any other taxing
authority.

 

(v)                                 If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Subparagraph 6(f)(iv), the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Subparagraph 6(f)(iv)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto).  If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Subparagraph
6(f)(iv), a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

 

(vi)                              If any dispute between
the Company and the Executive as to any of the amounts to be determined under
this subsection (f), or the method of calculating such amounts, cannot be
resolved by the Company and the Executive, either the Company or the Executive
after giving three days’ written notice to the other, may refer the dispute to
a partner in the Boston office of a firm of independent certified public
accountants selected jointly by the Company and the Executive.  The determination of such partner as to the
amount to be determined under this subsection (f) and the method of calculating
such amounts shall be final and binding on both the Company and the
Executive.  The Company shall bear the
costs of any such determination.”

 

2.                                       Except
as so amended, the Employment Agreement in all other respects is hereby
confirmed.

 

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IN WITNESS
WHEREOF, this Amendment has been executed as a sealed instrument by the
Company, by its duly authorized officer, and by the Executive, as of the date
first written herein above.

 

	
   

  	
  AVANT IMMUNOTHERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Barrie Ward

  
	
   

  	
   

  	
  J. Barrie Ward, Director

  
	
   

  	
   

  
	
   

  	
  /s/ Una S. Ryan

  
	
   

  	
  Executive

  

 

5Exhibit
10.5

 

RESTRICTED STOCK UNIT
AGREEMENT

UNDER THE AVANT IMMUNOTHERAPEUTICS, INC.

1999 STOCK OPTION AND INCENTIVE PLAN

 

Name of Grantee:  Una S. Ryan, Ph.D.

No. of Restricted Stock
Units Granted:  400,000

Grant Date:  September 18, 2003

 

Pursuant to the AVANT Immunotherapeutics, Inc. 1999
Stock Option and Incentive Plan (the “Plan”) as amended through the date
hereof, AVANT Immunotherapeutics, Inc. (the “Company”) hereby grants a deferred
stock award consisting of the number of Restricted Stock Units listed above (an
“Award”) to the Grantee named above. 
Each “Restricted Stock Unit” shall relate to one share of Common Stock,
par value $.001 per share (the “Stock”) of the Company specified above, subject
to the restrictions and conditions set forth herein and in the Plan.

 

1.                                       Acceptance
of Award.  The Grantee shall have no
rights with respect to this Award unless she shall have accepted this Award
within 90 days of receipt hereof by signing and delivering to the Company a
copy of this Award Agreement.  Any
consideration due to the Company on the issuance of the Award has been deemed
to be satisfied by past services rendered by the Grantee to the Company.

 

2.                                       Restrictions
on Transfer of Award.  The Award
shall not be sold, transferred, pledged, assigned or otherwise encumbered or
disposed of by the Grantee, until (i) the Restricted Stock Units have vested as
provided in Section 3 of this Agreement, (ii) the Deferral Period has expired,
and (iii) a certificate has been issued pursuant to Section 6 of this Agreement.

 

3.                                       Vesting
of Restricted Stock Units.  The
Restricted Stock Units shall vest in accordance with the schedule set forth
below, provided in each case that the Grantee is then, and since the Grant Date
has continuously been, employed by the Company or its Subsidiaries.

 

	
  Incremental (Aggregate)

  Number of

  Restricted Stock Units Vested

  	
   

  	
  Vesting
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  100,000 (100,000)

  	
   

  	
  July 17, 2004

  	
   

  
	
  100,000 (200,000)

  	
   

  	
  July 17, 2005

  	
   

  
	
  100,000 (300,000)

  	
   

  	
  July 17, 2006

  	
   

  
	
  100,000 (400,000)

  	
   

  	
  July 17, 2007

  	
   

  

 

The Administrator may at any time accelerate the
vesting schedule specified in this Paragraph 3.  Notwithstanding the foregoing, the Grantee shall become vested in
the Restricted Stock Units prior to the Vesting Date set forth above in the
following circumstances:

 

 

(a)          Immediately prior to the
consummation of a Change of Control, all Restricted Stock Units that have not
previously been forfeited shall immediately vest; provided that the Grantee is
then employed by the Company or its Subsidiaries.

 

(b)         In the event of the
Grantee’s employment terminates on account of death or disability, all
Restricted Stock Units that have not previously been forfeited shall
immediately vest.

 

(c)          In the event the
Grantee’s employment is terminated by the Company without Cause, all Restricted
Stock Units that have not previously been forfeited shall immediately
vest.  For purposes hereof, “Cause”
shall have the same meaning as set forth in the Amended and Restated Employment
Agreement between the Company and the Grantee dated August 20, 1998, as amended
from time to time.

 

4.                                       Forfeiture.  In the event the Company terminates the
Grantee’s employment for Cause or the Grantee terminates her employment on her
own initiative (it being understood that in this context, a termination of
employment on the Grantee’s own initiative does not include a termination due
to her death or disability), all Restricted Stock Units that have not
previously been forfeited on such date shall be immediately forfeited to the
Company.

 

5.                                       Dividend
Equivalents.

 

(a)          If on any date the
Company shall pay any dividend on shares of Stock of the Company, the number of
Restricted Stock Units credited to the Grantee shall, as of such date, be
increased by an amount determined by the following formula:

 

W = (X multiplied by Y) divided by Z, where:

 

W = the number of additional Restricted Stock Units to
be credited to the Grantee on such dividend payment date;

 

X = the aggregate number of Restricted Stock Units
(whether vested or unvested) credited to the Grantee as of the record date of
the dividend;

 

Y = the cash dividend per share amount; and

 

Z = the Fair Market Value per share of Stock (as
determined under the Plan) on the dividend payment date.

 

(b)          In the case of a
dividend paid on Stock in the form of Stock, including without limitation a
distribution of Stock by reason of a stock dividend, stock split or otherwise,
the number of Restricted Stock Units credited to the Grantee shall be increased
by a number equal to the product of (i) the aggregate number of Restricted
Stock Units that have been awarded to the Grantee through the related dividend
record date, and (ii) the number of shares of Stock (including any fraction
thereof) payable as dividend on one share of Stock.  In the case of a dividend payable in property other than shares
of Stock or cash, the per share of Stock value of such dividend shall be
determined in good faith by the Board of Directors of the Company and shall be
converted to additional Restricted Stock Units based on the formula in (a) above.  Any 

 

2

 

additional
Restricted Stock Units shall be subject to the vesting and restrictions of this
Agreement in the same manner and for so long as the Restricted Stock Units
granted pursuant to this Agreement to which they relate remain subject to such
vesting and restrictions, and shall be promptly forfeited to the Company if and
when such Restricted Stock Units are so forfeited.

 

6.                                       Receipt
of Shares of Stock.

 

(a)          As soon as practicable
following the date the Grantee terminates employment with the Company or its
Subsidiaries (the “Deferral Period”), the Company shall issue to the Grantee a
certificate representing the number of shares of Stock equal to the aggregate
number of Restricted Stock Units credited to the Grantee that have vested
pursuant to Section 3 of this Agreement on such date in full satisfaction of
such Restricted Stock Units.

 

(b)         Upon a Change of Control,
the Company shall issue to the Grantee a certificate representing the number of
shares of Stock equal to the aggregate number of Restricted Stock Units
credited to the Grantee on such date (determined after giving effect to Section
3(a) above) in full satisfaction of such Restricted Stock Units; provided,
however, that in the event the Company is involved in a transaction in which
shares of Stock will be exchanged for cash or other consideration, the Company
shall issue to the Grantee immediately prior to the consummation of such
transaction a certificate representing the number of shares of Stock equal to
the aggregate number of Restricted Stock Units credited to the Grantee on such
date (determined after giving effect to Section 3(a) above).

 

(c)          In each instance above,
the certificate or certificates issued to the Grantee covering the shares of
Stock shall be subject to the payment by the Grantee by cash or other means
acceptable to the Company of any federal, state, local and other applicable
taxes required to be withheld in connection with such issuance in accordance
with Section 9 of this Agreement.  The
Grantee understands that once a certificate has been delivered to the Grantee
in respect of the Restricted Stock Units, the Grantee will be free to sell the
shares of Stock evidenced by such certificate, subject to applicable requirements
of federal and state securities laws. 
Immediately after the issuance of shares of Stock, this Agreement shall
terminate and be of no further force or effect.

 

7.                                       Incorporation
of Plan.  Notwithstanding anything
herein to the contrary, this Agreement shall be subject to and governed by all
the terms and conditions of the Plan, including the powers of the Administrator
set forth in Section 2(b) of the Plan. 
Capitalized terms in this Agreement shall have the meaning specified in
the Plan, unless a different meaning is specified herein.

 

8.                                       Transferability
of this Agreement.  This Agreement
is personal to the Grantee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of
descent and distribution.

 

9.                                       Tax
Withholding.  The Grantee shall, not
later than the date as of which the receipt of this Award becomes a taxable
event for Federal income tax purposes, pay to the Company or make arrangements
satisfactory to the Administrator for payment of any Federal, state, and local
taxes required by law to be withheld on account of such taxable event.  The

 

3

 

Grantee
may elect to have the required minimum tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued, or (ii) transferring to the Company, a number of shares of
Stock with an aggregate Fair Market Value that would satisfy the withholding
amount due.

 

10.                                 Miscellaneous.

 

(a)          Notice hereunder shall
be given to the Company at its principal place of business, and shall be given
to the Grantee at the address set forth below, or in either case at such other
address as one party may subsequently furnish to the other party in writing.

 

(b)         This Agreement does not
confer upon the Grantee any rights with respect to continuation of employment
by the Company or any Subsidiary.

 

	
   

  	
  AVANT
  IMMUNOTHERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Barrie Ward

  
	
   

  	
   

  	
  J. Barrie Ward,
  Director

  

 

The foregoing Agreement is hereby accepted and the terms and conditions
thereof hereby agreed to by the undersigned.

 

 

	
  Dated:

  	
  September 18, 2003

  	
   

  	
  /s/ Una S. Ryan

  
	
   

  	
   

  	
  Grantee’s Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s name and
  address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Una S. Ryan

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  329 Hammond St.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chestnut Hill,
  MA 02467

  

 

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