Exhibit 10.2
IGEN INTERNATIONAL, INC.
TERMINATION PROTECTION PROGRAM
Section 1. Definitions. The following terms shall have the meaning ascribed
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to them:
(A) "Applicable Bonus" shall mean the highest maximum annual bonus that
was (or could have been under an established bonus plan) paid to a
Participant in respect of any of the three full calendar years
preceding or following a Change of Control.
(B) "Base Salary" shall mean a Participant's annual base salary in
effect on the date of the Change of Control or the date of termination,
whichever is higher.
(C) "Board" shall mean the board of directors of the Company.
(D) "Cause" shall mean (i) the Participant's conviction of a felony, or
(ii) either of the following that, in each case, results in
demonstrable harm to the Company's financial condition or business
reputation (I) the Participant's willful malfeasance or misconduct in
relation to the performance of his/her duties to the Company, or (II)
the Participant's repeated willful refusal to perform his/her duties.
(E) "Change of Control" shall mean (i) any Person or Group, other than
a Group of which an Excluded Person is a member, becoming the
beneficial owner of 20% or more of the Company's then outstanding
voting securities, (ii) any merger, consolidation, reorganization or
similar transaction involving the Company, other than, in the case of
any of the foregoing, a transaction in which the Company's shareholders
immediately prior to the transaction hold immediately thereafter, in
the same proportion as immediately prior to the transaction, not less
than a majority of the combined voting power of the then outstanding
voting securities with respect to the election of the board of
directors of the resulting entity, (iii) any change in a majority of
the Board within a 24 month period (unless the change was approved by
2/3 of the Incumbent Directors), (iv) any liquidation or sale of all or
substantially all of the Company's assets, provided that no grant to a
third party of a license to use intellectual property made on an arm's
length basis shall constitute a Change of Control, or (v) any other
transaction so defined by the Board.
(F) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and, as applicable, the regulations promulgated thereunder.
(G) "Company" shall mean IGEN International, Inc., and, after a Change
of Control, any successor or successors thereto.
(H) "Compensation" shall mean the sum of a Participant's Applicable
Bonus and Base Salary.
(I) "Employee Benefits" shall mean, except as otherwise specified by
the Chief Executive Officer of the Company with respect to a
Participant at the time such Participant is designated as a
Participant, the employee and fringe benefits and perquisites
(including without limitation all medical, dental, life insurance,
disability and pension (including maximum matching contributions)
benefits) made available to a Participant (and his or her eligible
dependents) immediately prior to a Change of Control (or the economic
equivalent thereof where pension laws prohibit or restrict such
benefits).
(J) "Excluded Person" shall mean Samuel J. Wohlstadter, Nadine
Wohlstadter, their respective "Affiliates" or "Associates" (each as
defined in Rule 12b-2 under the Exchange Act), their respective heirs
and any trust or foundation to which either of them have transferred or
may transfer the Company's voting securities.
(K) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(L) "Good Reason" shall mean, except as otherwise specified by the
Chief Executive Officer of the Company at the time a Participant is
designated as a Participant (provided that such exception does not
adversely affect such Participant), with respect to such a Participant,
(i) a decrease in (or failure to increase in accordance with the terms
of any employment contract) the Participant's base salary or bonus
opportunity, (ii) a diminution in the aggregate employee benefits and
perquisites provided to the Participant, (iii) a diminution in the
Participant's title, reporting relationship, duties or
responsibilities, (iv) relocation of the Participant's primary office
more than 35 miles from its current location, or (v) the failure by any
successor to the Company to explicitly assume this Program and the
Company's obligations hereunder.
(M) "Gross-Up Payment" shall have the meaning ascribed to such term in
Section 4.
(N) "Group" shall have the meaning ascribed to such term in the
Exchange Act.
(O) "Incumbent Director" shall mean a member of the Board on the date
this Program was adopted together with any director who is appointed as
a member of the Board, or who is nominated to become a member of the
Board by, or with the approval of, at least 2/3 of the directors who
qualified as Incumbent Directors at the time of such appointment or
nomination.
(P) "Participant" shall mean an employee of the Company designated by
the Chief Executive Officer of the Company to participate in this
Program. Once so designated, a Participant's rights hereunder may not
be diminished unless such Participant's employment with the Company is
terminated in a manner that will not permit him or her to become
eligible for any payments hereunder.
(Q) "Person" shall have the meaning ascribed to such term in the
Exchange Act.
(R) "Program" shall mean this Termination Protection Program, as it may
be amended from time to time.
(S) "Severance Payments" shall have the meaning ascribed to such term
in Section 4.
(T) "Total Payments" shall have the meaning ascribed to such term in
Section 4.
Section 2. Term. This Program shall be effective as of December 1, 2001, and
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shall continue in effect through December 1, 2004; provided, however, that,
commencing on December 1, 2004, and on each December 1 thereafter, this Program
shall be automatically extended for one additional year unless, not later than
October 1 of such year, the Company provides written notice to each Participant
that this Program shall not be so extended. In addition, if this Program is in
effect on the date of a Change of Control, then it shall continue in effect for
not less than three years following such Change of Control.
Section 3. Termination Protection. If during the term of this Program
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(a) a Participant's employment with the Company is terminated by the
Company without Cause, or a Participant resigns for Good Reason,
in each case within thirty months following a Change of Control,
or
(b) a Participant's employment with the Company is terminated prior to
a Change of Control (which subsequently occurs) at the request of
a party involved in such Change of Control, or otherwise in
connection with or in anticipation of a Change of Control,
then in the case of each of clauses (a) and (b) such Participant shall become
entitled to the following compensation, benefits and rights, except as otherwise
specified by the Chief Executive Officer of the Company with respect to a
Participant at the time such Participant is designated as a Participant:
(i) A cash lump sum, payable within ten days following the date of
termination, equal to the sum of: (A) such Participant's pro rata
target annual bonus in respect of the year of termination, (B) any
unpaid Base Salary through the date of termination, (C) any bonus
earned but unpaid as of the date of termination for any previously
completed year, (D) all compensation previously deferred but not yet
paid (except as otherwise agreed by such Participant), (E)
reimbursement for any unreimbursed expenses incurred by such
Participant prior to the date of termination, and (F) except as
otherwise specified by the Chief Executive Officer of the Company, an
amount equal to 150% of such Participant's Compensation.
(ii) Such employee and fringe benefits and perquisites, if any, to
which such Participant may be entitled as of the date of termination
under the relevant plans, policies and programs of the Company.
(iii) Any unvested Company stock options held by such Participant that
are outstanding on the date of termination shall become fully vested as
of such date, and all Company stock options held by such Participant
that are outstanding on such date shall remain exercisable for two
years following such date (or, if longer, until the date such options
would otherwise terminate).
(iv) Except as otherwise specified by the Chief Executive Officer of
the Company with respect to a Participant at the time such Participant
is designated as a Participant, continued eligibility for such
Participant and his/her eligible dependents to receive Employee
Benefits, for a period of 18 months following such Participant's date
of termination, except where the provision of such Employee Benefits
would result in a duplication of benefits provided by any subsequent
employer.
(v) Reimbursement of all reasonable expenses incurred by such
Participant within 18 months following such Participant's date of
termination for professional outplacement services (provided by
consultants selected by such Participant) and employment search
activities.
(vi) The amounts specified in Section 4.
(vii) All rights such Participant has to indemnification from the
Company immediately prior to the Change of Control shall be retained
for the maximum period permitted by applicable law, and any director's
and officer's liability insurance covering such Participant immediately
prior to the Change of Control shall be continued throughout the period
of any applicable statute of limitations.
(viii) The Company shall advance to such Participant all costs and
expenses, including all attorneys' fees and disbursements, incurred by
such Participant in connection with any legal proceedings (including
arbitration), which relate to the termination of employment or the
interpretation or enforcement of any provision of this Program, and the
Participant shall have no obligation to reimburse the Company for any
amounts advanced hereunder where such Participant prevails in such
proceeding with respect to at least one material issue, it being
acknowledged that settlement of any such proceeding shall relieve the
Participant from any reimbursement obligation.
Section 4. Excise Tax Gross-Up. In the event a Participant becomes entitled to
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any amounts or benefits payable in connection with a Change of Control (whether
or not such amounts are payable pursuant to this Program) (the "Severance
Payments"), if any of such Severance Payments are subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any similar federal, state
or local tax that may hereafter be imposed), the Company shall pay to such
Participant within ten days following the date of his/her termination of
employment an additional amount (the "Gross-Up Payment") such that the net
amount retained by such Participant, after deduction of any Excise Tax on the
Total Payments (as hereinafter defined) and any federal, state and local income
tax and Excise Tax upon the payment provided for by this Section, shall be equal
to the Total Payments. For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise Tax:
(a) any other payments or benefits received or to be received by such
Participant in connection with a Change of Control or such Participant's
termination of employment (whether pursuant to the terms of this Program or any
other plan, arrangement or agreement with the Company, any entity whose actions
result in a Change of Control or any entity affiliated with the Company, or such
entity) (which, together with the Severance Payments, constitute the "Total
Payments") shall be treated as "parachute payments" within the meaning of
Section 280G of the Code, and all "excess parachute payments" within the meaning
of Section 280G of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of a nationally-recognized tax counsel selected by such
Participant such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered within
the meaning of Section 280G of the Code, or are otherwise not subject to the
Excise Tax, (b) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (i) the total amount
of the Total Payments and (ii) the amount of excess parachute payments within
the meaning of Section 280G of the Code, and (c) the value of any non-cash
benefits or any deferred payments or benefits shall be determined by a
nationally-recognized accounting firm selected by such Participant in accordance
with the principles of Section 280G of the Code.
For purposes of determining the amount of the Gross-Up Payment, such
Participant shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of such Participant's residence on
his/her date of termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of such Participant's
employment (including by reason of any payment or benefit the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
within ten days after the time that the amount of such excess is finally
determined.
Section 5. No Mitigation or Offset. Except as provided in Section 3(iv), a
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Participant shall not be required to mitigate the amount of any payment or
benefit provided for under this Program by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for hereunder
be reduced by any compensation or benefits earned or received by such
Participant as the result of employment by a subsequent employer, by retirement
benefits, by offset against any amount claimed to be owed by such Participant to
the Company or otherwise.
Section 6. Validity. The invalidity or unenforceability of any provision of this
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Program shall not affect the validity or enforceability of any other provision
of this Program, which other provision shall remain in full force and effect.
Section 7. Withholding. All payments hereunder shall be reduced by any
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applicable taxes required by applicable law to be paid or withheld by the
Company.
Section 8. Modification or Waiver. No provision of this Program may be modified,
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waived or discharged, unless such waiver, modification, or discharge is agreed
to in writing and signed by any Participant whose rights hereunder would be
adversely affected thereby.
Section 9. Applicable Law. This Program shall be governed by and construed in
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accordance with the laws of the State of Maryland, without regard to conflicts
of laws principles thereof.
Section 10. No Liability. Neither the Board nor the Chief Executive Officer of
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the Company shall have any liability for any decision made in good faith in
interpreting, implementing or operating this Program, including without
limitation, any changes made to the definition Good Reason, in establishing the
list of Participants, or in selecting the Participants to be included in any of
the Appendices attached to this Program. The Company hereby agrees to indemnify
and hold harmless each member of the Board and each officer, including without
limitation the Chief Executive Officer of the Company, for (and in each case,
advance) any and all costs and expenses incurred in connection with the
administration, operation and implementation of the Program, including without
limitation any changes made to the definition Good Reason, in establishing the
list of Participants, or in selecting the Participants to be included in any of
the Appendices attached to this Program. No amounts paid under this Section 10
for or on account of any of the foregoing officers or directors shall be
included in Compensation under this Program.
ADDENDUM I TO THE
IGEN INTERNATIONAL, INC.
TERMINATION PROTECTION PROGRAM
1. The Chief Executive Officer of the Company may designate up to 39 employees
of the Company to participate in the Program at any particular time, on the
basis of name, title, function, or compensation level. The Chief Executive
Officer of the Company shall at all times be a Participant and shall have no
less favorable rights under the Program than any other Participant. As of
December 1, 2001, the employees specified on Appendix A shall constitute the
Participants.
2. The Chief Executive Officer of the Company may designate, with respect to up
to 3 Participants, that any reason for resigning within the thirty day period
following the first anniversary of a Change of Control shall also constitute
"Good Reason." As of December 1, 2001, the Participants identified on Appendix B
have been so designated.
3. The Chief Executive Officer of the Company may designate, with respect to up
to 39 Participants, that "Employee Benefits" shall also include an annual
comprehensive physical/check-up. As of December 1, 2001, the Participants
identified on Appendix C have been so designated.
4. The Chief Executive Officer of the Company may designate, with respect to up
to 3 Participants, that the percentage specified in Section 3(i)(F) shall be
300% rather than 150%. As of December 1, 2001, the Participants identified on
Appendix D have been so designated.
5. The Chief Executive Officer of the Company may designate, with respect to up
to 6 Participants, that the percentage specified in Section 3(i)(F) shall be
200% rather than 150%. As of December 1, 2001, the Participants identified on
Appendix E have been so designated.
6. The Chief Executive Officer of the Company may designate, with respect to up
to 3 Participants, that the period specified in Section 3(iv) shall be, instead
of 18 months, life (with respect to medical and dental benefits and the annual
comprehensive physical/check-up) and 36 months (with respect to all other
coverages). As of December 1, 2001, the Participants identified on Appendix F
have been so designated.
7. The Chief Executive Officer of the Company may designate, with respect to up
to 39 Participants, that the period specified in Section 3(iv) shall be 24
months instead of 18 months. As of December 1, 2001, the Participants identified
on Appendix G have been so designated.