CHANGE IN CONTROL EMPLOYMENT AGREEMENT
EXHIBIT 10.3
CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This AGREEMENT by and between Digene Corporation (the “Company”), and (the
“Employee”), is dated as of the day of , 2006, and is an amendment and restatement of
the Change In Control Employment Agreement, dated March 4, 2003, between the Employee and the
Company.
The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its stockholders to assure that the Company and its subsidiaries will
have the continued dedication of the Employee, notwithstanding the possibility, threat, or
occurrence of a Change in Control (as defined below) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a threatened or pending Change in Control, to encourage the
Employee’s full attention and dedication to the Company currently and in the event of any
threatened or pending Change in Control, and to provide the Employee with compensation arrangements
upon a Change in Control that provide the Employee with individual financial security and which are
competitive with those of other comparably situated companies and, in order to accomplish these
objectives, the Board has authorized the Company to enter into this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:
1. Effective Date.
(a) The “Effective Date” shall be the first date during the “Change in Control Period”
(as defined in Section 1(b)) on which a Change in Control occurs. Anything in this
Agreement to the contrary notwithstanding, if the Employee’s employment with the Company is
terminated prior to the date on which a Change in Control occurs, and it is reasonably
demonstrated that such termination (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of this
Agreement the “Effective Date” shall mean the date immediately prior to the date of such
termination.
(b) The “Change in Control Period” is the period commencing on the date hereof and
ending on the second anniversary of such date; provided, however, that
commencing on the date one year after the date hereof, and on each annual anniversary of
such date (such date and each annual anniversary thereof is hereinafter referred to as the
“Renewal Date”), the Change in Control Period shall be automatically extended so as to
terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice that the Change in Control Period shall not be so
extended.
2. Change in Control. For the purpose of this Agreement, a “Change in Control” shall
mean:
(a) The acquisition, directly or indirectly, other than from the Company, by any
person, entity or “group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), excluding, for this
purpose, the Company, its subsidiaries, and any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of the Company) (a
“Third Party”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of more than 50% of the combined voting power of the Company’s then
outstanding voting securities entitled to vote generally in the election of directors; or
(b) Individuals who, as of October 26, 2005, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board;
provided, that any person becoming a director subsequent to such date whose
election, or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the Incumbent Directors who are directors at the time of such vote
shall be, for purposes of this Agreement, an Incumbent Director; or
(c) Consummation of (i) a reorganization, merger or consolidation, or (ii) a
liquidation or dissolution of the Company or the sale of all or substantially all, but at
least 40%, of the assets of the Company (whether such assets are held directly or
indirectly) to a Third Party; or
(d) Any event or transaction that a majority of the Incumbent Directors who are
“independent directors” (as such term is defined under the Marketplace Rules of the National
Association of Securities Dealers, Inc.) determine to be a “Change in Control” for the
purposes of this Agreement;
except that any event or transaction which would be a “Change in Control” under (a) or (c)(i) of
this definition shall not be a “Change in Control” if persons who were the stockholders of the
Company immediately prior to such event or transaction (other than the acquiror in the case of a
reorganization, merger or consolidation), immediately thereafter, beneficially own more than 50% of
the combined voting power of the Company’s or the reorganized, merged or consolidated company’s
then outstanding voting securities entitled to vote generally in the election of directors.
3. Other Employment Agreement. The Employee and the Company have entered into an
agreement, dated
, 2006 (the “Employment Agreement”), which provides for certain
benefits to be paid to the Employee upon certain terminations of Employee’s employment with the
Company. Such Employment Agreement shall remain in full force and effect except that it shall be
superceded by this Agreement during the Employment Period; provided, however, that,
notwithstanding the foregoing, the authority of the Compensation Committee to end the period of
employment under the Employment Agreement shall remain in full force and effect during the
Employment Period, and the non-competition, non-solicitation and non-disparagement provisions of
the Employment Agreement shall remain
in full force and effect during the Employment Period and, if applicable, after the Date of
Termination, in accordance with the provisions of the Employment Agreement.
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4. Employment Period. The Company hereby agrees to continue the Employee in its
employ, and the Employee hereby agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the second anniversary of such date (the “Employment
Period”).
5. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period,
(A) the Employee’s position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 90-day period immediately preceding the
Effective Date, and
(B) the Employee’s services shall be performed at
the location where the Employee was employed immediately preceding the
Effective Date or any office or location less than forty (40) miles
from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee’s
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to
(A) serve on corporate, civic or charitable boards
or committees,
(B) deliver lectures, fulfill speaking engagements
or teach at educational institutions, and
(C) manage personal investments,
so long as such activities do not significantly interfere with the performance of the Employee’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been conducted by the
Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date shall
not thereafter be deemed to interfere with the performance of the Employee’s responsibilities to
the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Employee shall receive a base salary (“Base Salary”) at a monthly rate at least
equal to the
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highest monthly base salary paid or payable to the Employee by the
Company during the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Base Salary shall
be reviewed at least annually and shall be increased at any time and from time
to time as shall be substantially consistent with increases in base salary
awarded in the ordinary course of business to other key employees of the
Company and its subsidiaries with similar level of responsibilities. Any
increase in Base Salary shall not serve to limit or reduce any other obligation
to the Employee under this Agreement. Base Salary shall not be reduced after
any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Employee
shall be awarded, for each calendar year ending during the Employment Period,
an annual bonus (an “Annual Bonus”) in cash at least equal to the bonus paid or
payable to the Employee for the last calendar year preceding the calendar year
in which the Effective Date occurs. In the event the Employment Period
contains a partial year, the Employee shall be awarded a pro-rated bonus,
calculated in accordance with the prior sentence, for such partial year period.
Each Annual Bonus shall be determined and paid in full by March 15 of the year
following the calendar year for which the bonus is payable.
(iii) Incentive, Savings and Retirement Plans. In addition
to Base Salary and Annual Bonus payable as hereinabove provided, the Employee
shall be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key employees of the Company and its subsidiaries.
(iv) Welfare Benefit Plans. During the Employment Period,
the Employee and/or the Employee’s family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
subsidiaries (including, without limitation, medical, prescription, dental,
disability, employee life and accidental death and dismemberment insurance
plans and programs), at least as favorable as the most favorable of such plans,
practices, policies and programs of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee and/or the Employee’s family, as in
effect at any time thereafter with respect to other key employees of the
Company and its subsidiaries with similar level of responsibilities.
(v) Expenses. During the Employment Period, the Employee
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Employee in accordance with the most favorable
policies, practices and procedures of the Company and its subsidiaries in
effect at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect at any time thereafter
with respect to other key employees of the Company and its subsidiaries with
similar level of responsibilities.
(vi) Fringe Benefits. During the Employment Period, the
Employee shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
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Employee, as in
effect at any time thereafter with respect to other key employees of the
Company and its subsidiaries with similar level of responsibilities.
(vii) Vacation. During the Employment Period, the Employee
shall be entitled to paid holidays and vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
subsidiaries as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in
effect at any time thereafter with respect to other key employees of the
Company and its subsidiaries with similar level of responsibilities.
6. Termination.
(a) Death or Disability. This Agreement shall terminate automatically upon the
Employee’s death. If the Company determines in good faith that the Disability of the
Employee has occurred (pursuant to the definition of “Disability” set forth below), it may
give to the Employee written notice of its intention to terminate, or its intention to cause
its subsidiary to terminate, the Employee’s employment. In such event, the Employee’s
employment with the Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the “Disability Effective Date”); provided that, within 30
days after such receipt, the Employee shall not have returned to full-time performance of
the Employee’s duties. For purposes of this Agreement, “Disability” means disability as
defined in the Company’s Long Term Disability Plan (or, if the Company does not have such a
plan, a disability which, at least 26 weeks after its commencement, is determined to be
total and permanent by a physician selected by the Company or its insurers and acceptable to
the Employee or the Employee’s legal representative (with such agreement as to acceptability
not to be withheld unreasonably)).
(b) Cause. The Company may terminate the Employee’s employment for “Cause.”
For purposes of this Agreement, “Cause” means (i) an act or acts of personal dishonesty
taken by the Employee and intended to result in substantial personal enrichment of the
Employee at the expense of the Company, (ii) repeated violations by the Employee of the
Employee’s obligations under Section 5(a) of this Agreement which
are willful and deliberate on the Employee’s part and which are not remedied in a
reasonable period of time after receipt of written notice from the Company, (iii) breach by
the Employee of the Employee’s obligations under the Employee’s Non Competition, Non
Disclosure and Developments Agreement with the Company, (iv) violation by the Employee of
any of the Company’s policies, including, but not limited to, policies regarding sexual
harassment, xxxxxxx xxxxxxx, corporate disclosure, substance abuse and conflicts of
interest, which violation could result in termination of the Employee’s employment or (v)
the conviction of the Employee of a felony.
(c) Good Reason. The Employee’s employment may be terminated by the Employee
for Good Reason. For purposes of this Agreement, “Good Reason” means
(i) the assignment to the Employee of any duties inconsistent in
any respect with the Employee’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 5(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities;
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(ii) any failure by the Company to comply with any of the provisions
of Section 5(b) of this Agreement;
(iii) the Company’s requiring the Employee to be based at any office
or location other than that described in Section 5(a)(i)(B) hereof, except for
travel reasonably required in the performance of the Employee’s
responsibilities;
(iv) any purported termination by the Company of the Employee’s
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
12(c) of this Agreement;
provided, that within fifteen (15) days after the occurrence of any of the events listed in
clauses (i), (ii), (iii), (iv) or (v) above the Employee delivers written notice to the Company of
his intention to terminate for Good Reason specifying in reasonable detail the facts and
circumstances claimed to give rise to the Employee’s right to terminate his employment for Good
Reason and the Company shall not have cured such facts and circumstances within thirty (30) days
after delivery of such notice by the Employee to the Company (unless the Company shall have waived
its right to cure by written notice to the Employee); and provided further that
within fifteen (15) days after the expiration of such thirty (30) day period or the date of receipt
of such waiver notice, if earlier, the Employee delivers a Notice of Termination to the Company
under Section 6(d) based on the same Good Reason specified in the notice of intent to terminate
delivered to the Company under this Section 6(c).
Notwithstanding the foregoing, it is understood that a Change in Control may result in the
Company becoming a subsidiary or division of another public company and no longer existing as a
free-standing public company. In such event, a change in the Employee’s
position, title or reporting requirements will not constitute Good Reason as long as the
Employee retains a position of similar scope and responsibility and a title consistent with such
position in such subsidiary or division.
For purposes of this Section 6(c), any good faith determination of “Good Reason” made by the
Employee shall be conclusive.
(d) Notice of Termination. A Notice of Termination shall communicate any
termination by the Company for Cause or by the Employee for Good Reason to the other party
hereto given in accordance with Section 15(b) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the giving of such notice). The
failure by the Employee to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the Employee
hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his
rights hereunder.
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(e) Date of Termination. “Date of Termination” means the date of receipt of
the Notice of Termination or any later date specified therein as permitted by Section 6(d),
as the case may be; provided, however, that (i) if the Employee’s employment
is terminated by the Company or a subsidiary of the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company or such
subsidiary notifies the Employee of such termination and (ii) if the Employee’s employment
is terminated by reason of death or Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as the case may be.
7. Obligations of the Company upon Termination.
(a) Death. If the Employee’s employment is terminated during the Employment
Period by reason of the Employee’s death, this Agreement shall terminate without further
obligations to the Employee’s legal representatives under this Agreement, other than (i)
those obligations accrued or earned and vested (if applicable) by the Employee as of the
Date of Termination, including, for this purpose (A) the Employee’s full Base Salary through
the Date of Termination at the rate in effect on the Date of Termination, (B) subject to
Section 7(e), any compensation previously deferred by the Employee (together with any
accrued interest thereon) and not yet paid by the Company and (C) any accrued vacation pay
not yet paid by the Company (such amounts are hereinafter referred to as “Accrued
Obligations”) and (ii) a lump sum payment equal to the Employee’s annual Base Salary at the
rate in effect on the Date of Termination. All such Accrued Obligations and the payment
described in subparagraph (ii) above shall be paid to the Employee’s estate or beneficiary,
as applicable, in a lump sum in cash within 30 days after the Date of Termination, or
earlier if required by law.
(b) Disability. If the Employee’s employment is terminated during the
Employment Period by reason of the Employee’s Disability, this Agreement shall terminate
without further obligations to the Employee, other than (i) the Accrued Obligations and (ii)
continuation of health care benefits coverage to which the Employee is entitled under
Section 5(b)(iv) hereof for the twelve (12) month period following the effective Date of
Termination, with such coverage to be provided at the same level and subject to the same
terms and conditions (including, without limitation, any applicable co-pay obligations, but
excluding any applicable tax consequences for the Employee) as in effect for officers of the
Company generally during such period; provided, however, that if benefits
are being provided under the Company’s Long-Term Disability Plan then in effect, nothing in
this Section 7(b) shall provide any additional benefits or coverage than that in effect for
officers of the Company during such period under the Company’s Long-Term Disability Plan.
All of the Accrued Obligations shall be paid to the Employee in a lump sum in cash within 30
days after the Date of Termination, or earlier if required by law.
(c) Termination for Cause; Termination by Employee Other than for Good Reason.
If, during the Employment Period, the Employee’s employment is terminated for Cause or the
Employee terminates employment other than for Good Reason, this Agreement shall terminate
without further obligations to the Employee, other than Accrued Obligations. Subject to
Section 7(e), all such Accrued Obligations shall be paid to the Employee in a lump sum in
cash within 30 days after the Date of Termination, or earlier if required by law.
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(d) Termination for Good Reason; Termination by the Company Other than for Cause,
Death or Disability. If, during the Employment Period, the Company terminates the
Employee’s employment other than for Cause, Disability, or death or the Employee terminates
his employment for Good Reason:
(i) subject to Section 7(e), the Company shall pay to the Employee
the Accrued Obligations.
(ii) the Company shall pay as a severance benefit to the Employee in
a lump sum in cash (less applicable withholding), the aggregate of the
following amounts:
(A) an amount equal to the following formula: A x
(B ÷ 365); where A equals the Annual Bonus paid to the Employee for the
last calendar year before the Date of Termination; and B equals the
number of days in the current calendar year through the Date of
Termination; and
(B) an amount equal to two (2) times the sum of the
Employee’s annual Base Salary at the highest rate in effect at any time
during the period beginning 90 days before the Effective Date through
the Date of Termination plus the Annual Bonus paid to the
Employee for the last calendar year before the Date of Termination;
and
(iii) for a period of two years after the Date of Termination, or
such longer period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Employee and/or the Employee’s family at
levels substantially equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Section 5(b)(iv) of this Agreement if the Employee’s employment had not been
terminated, including health, disability and life insurance, in accordance with
the most favorable plans, practices, programs or policies of the Company and
its subsidiaries in effect during the 90-day period immediately preceding the
Date of Termination or, if more favorable to the Employee, as in effect at any
time thereafter with respect to other key employees with similar level of
responsibilities and their families; provided, however, that
the Company may, at its election, pay to the Employee an amount in cash equal
to the Company’s cost of providing any of such benefits for such period, in
lieu of continuing to provide the benefits. For purposes of eligibility for
retiree benefits pursuant to such plans, practices, programs and policies and
for purposes of health benefit continuation coverage pursuant to Section 601 et
seq. of ERISA (“COBRA”), the Employee shall be considered to have remained
employed until the end of the period for which Company-provided health plan
coverage is continued under this clause (iii), and to have retired on the last
day of such period.
Notwithstanding anything to the contrary herein, payments under this Section 7(d) shall comply with
the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and the regulatory guidance promulgated thereunder. Payment of the Accrued Obligations
(subject to Section 7(e)) and the lump amount described in
clause (ii) of this Section 7(d) shall
be made within thirty (30) days after the Date of Termination, or earlier if required by law;
provided, however, that if the Employee is a “specified employee” within the
meaning of Section 409A(a)(2)(B)(i) of the Code, payment of the lump sum amount described in
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clause
(ii) of this Section 7(d) shall be made within five (5) business days following the date which is
six (6) months following the Employee’s separation from service following a Notice of Termination
(or, if earlier, the Employee’s death) if the Company reasonably determines that the aggregate
amount of: (1) payments under clause (ii) of this Section 7(d); (2) the portion of the welfare
benefits described in clause (iii) of this Section 7(d) provided on an after-tax basis, including
the cash payment, if any, in lieu of providing certain welfare benefits described in clause (iii)
of this Section 7(d); (3) the Gross-up Payment, if any, under Section 10 of this Agreement; and (4)
payments, if any, made under any other Company-provided separation pay arrangement, represent the
payment of non-qualified deferred compensation subject to the requirements of Section 409A of the
Code, including the requirement of a six-month delay in the commencement of payments described in
Code Section 409A(a)(2)(B)(i). The lump sum shall be adjusted for simple interest that accrues
during the initial six-month period following the Employee’s separation from service at the
applicable Federal rate provided for in Code Section 7872(f)(2).
If the Employee is subject to the six-month delay period, the benefit described in clause (iii) of
this Section 7(d) shall be provided as follows:
(A) To the extent such welfare benefits can be
provided to the Employee on a before-tax basis, such benefit shall be
so provided.
(B) To the extent such welfare benefit must be
provided on an after-tax basis, the Employee shall pay the cost thereof
(based on applicable COBRA rates) for the first six months, and the
Company shall reimburse such amounts within five (5) business days
after the close of the six-month delay period.
(C) If a cash payment in lieu of providing such
welfare benefits is made, such payment shall take place within five (5)
business days after the close of the six-month delay period.
The Company shall have no obligation under this Section 7(d) unless the Employee executes and
delivers to the Company a valid general release agreement in a form reasonably acceptable to the
Company in which the Employee releases the Company from any and all possible liability, including,
without limitation, any and all liability based on the Employee’s employment or the termination of
his employment; provided, however, that nothing in such release shall include any
release of the Company’s indemnification obligations to or for the benefit of the Employee.
(e) Previously Deferred Compensation. If the Employee has previously deferred
compensation under a plan or arrangement not described above which has not yet been paid by
the Company, the Employee’s right to payment of such compensation shall be considered vested
and nonforfeitable as of the Date of Termination. Such deferred compensation shall be paid
to the Employee in accordance with the terms of the deferred compensation plan or
arrangement, subject to the applicable requirements of Code Section 409A.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Employee’s continuing or future participation in any benefit, bonus, incentive or other plans,
programs, policies or practices provided by the Company or its subsidiaries and for which the
Employee may qualify, nor shall anything herein limit or otherwise affect such rights as the
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Employee may have under any stock option or other agreements with the Company or any of its
subsidiaries. Amounts which are vested benefits or which the Employee is otherwise entitled to
receive under any plan, policy, practice or program of the Company or any of its subsidiaries at or
subsequent to the Date of Termination shall be payable in accordance with such plan, policy,
practice or program.
9. Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Employee
under any of the provisions of this Agreement. Upon termination of the
Employee’s employment during the Employment Period, the Employee shall not be entitled to any
benefits or payments other than as provided in this Agreement.
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution by the Company to or for the benefit of the
Employee (whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement) (a “Payment”) would be subject to the excise tax imposed by Code Section
4999, or any interest or penalties 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 Employee shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 10(c), all determinations required to be made
under this Section 10, including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by a firm of independent accountants selected by the
Audit Committee of the Company’s Board of Directors which firm may be, if consistent with
applicable securities laws, the firm of independent accountants engaged to audit the
Company’s financial statements (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and the Employee within 15 business days after
the Date of Termination or such earlier time as is requested by the Company. The Gross-Up
Payment, if any, as determined pursuant to this Section 10(b), shall be paid to the Employee
within five days of the receipt of the Accounting Firm’s determination (or if later, within
five (5) business days after the earliest date payment can be made consistent with Section
409A of the Code with respect to a “specified person” described in Code Section
409A(a)(2)(B)(i)). If the Accounting Firm determines that no Excise Tax is payable by the
Employee, it shall furnish the Employee with an opinion that he has substantial authority
not to report any Excise Tax on his federal income tax return. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. 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 a Gross-Up Payment which
will not have been made by the Company should have been made (“Underpayment”), consistent
with the calculations required to be made hereunder. In the event that the Company exhausts
its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine
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the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee.
(c) The Employee 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 business days after the Employee 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
Employee shall not pay such claim prior to the expiration of the thirty-day
period following the date on which it 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 Employee in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) 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 reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim,
(iv) 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 Employee 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 Section 10(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, if in compliance with applicable securities laws, either direct the Employee to
pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the
Employee 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 Employee to pay such
claim and xxx for a refund, the Company shall advance a portion of such payment equal to the
Gross-Up Payment to the Employee, on an interest-free basis, and shall indemnify and hold the
Employee harmless, on an after-tax basis, from any Excise Tax on the Payment or income tax,
including interest or penalties with respect thereto; and further provided that any
extension of the statute of limitations relating to payment of taxes for the taxable year of the
Employee with respect to which such contested amount is claimed to be due is limited solely to such
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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 Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant
to Section 10(c), the Employee becomes entitled to receive any refund with respect to such
claim, the Employee shall (subject to the Company’s complying with the requirements of
Section 10(c)) 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 Employee of an amount advanced by the Company pursuant to
Section 10(c), a determination is made that the Employee shall not be entitled to any refund
with respect to such claim and the Company does not notify the Employee in writing of its
intent to contest such denial of refund prior to the expiration of thirty 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.
11. Confidential Information and Company Policies. During the Employment Period, the
Employee shall abide by, conduct himself in accordance with, and be subject to, the
non-competition, non-solicitation, non-disparagement and confidentiality provisions of the
Employment Agreement and the Company’s policies on sexual harassment, xxxxxxx xxxxxxx, corporate
disclosure, substance abuse and conflicts of interest and any other written policy of the Company,
the violation of which could result in termination of employment.
12. Successors.
(a) This Agreement is personal to the Employee and without the prior written consent of
the Company shall not be assignable by the Employee otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be enforceable
by the Employee’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) acquiring all or substantially all of the business
and/or assets of the Company (whether such assets are held directly or indirectly) to assume
expressly and agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
13. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or any breach hereof, shall be settled in accordance with the terms of this Section 13.
All claims by the Employee for benefits under this Agreement shall first be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Employee in writing within thirty (30) days and
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shall set forth the specific reasons for the denial and the specific provisions of this Agreement
relied upon. The Board shall afford a reasonable opportunity to the Employee for a review of the
decision denying a claim and shall further allow the Employee to appeal to the Board a decision of
the Board within thirty (30) days after notification by the Board that the Employee’s claim has
been denied. Any further dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation or alleged breach hereof, shall be settled by arbitration in
accordance with Employment Dispute Resolution Rules of the American Arbitration Association
(or such other rules as may be agreed upon by the Employee and the Company). The place of the
arbitration shall be Washington, DC and any court having jurisdiction thereof may enter judgment
upon the award rendered by the arbitrator(s). Such an award shall be binding and conclusive upon
the parties hereto.
14. Legal Expenses. The Company agrees to reimburse the Employee, to the full extent
permitted by law, for all costs and expenses (including without limitation reasonable attorneys’
fees) which the Employee may reasonably incur as a result of any contest of the validity or
enforceability of, or the Company’s liability under, any provision of this Agreement, plus in each
case interest at the applicable Federal rate provided for in Code Section 7872(f)(2);
provided, however, that such payment shall be made only if the Employee prevails on
at least one material issue.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of
the State of Maryland without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
(b) Any notices required or permitted to be given hereunder shall be sufficient if in
writing, and if delivered by hand, or sent by registered or certified mail, return receipt
requested, or overnight delivery using a national courier service, or by facsimile or
electronic transmission, with confirmation as to receipt, to the Company at the address set
forth below and to the Employee at the address set forth in the personnel records of the
Company, or such other address as either party may from time to time designate in writing to
the other, and shall be deemed given as of the date of the delivery or mailing:
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with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Xx., Esquire
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Xx., Esquire
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such
Federal, state or local taxes as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Employee’s failure to insist upon strict compliance with any provision hereof
shall not be deemed to be a waiver of such provision or any other provision hereof.
(f) This Agreement contains the entire understanding of the Company and the Employee
with respect to the subject matter hereof. This Agreement supercedes all other agreements
and understandings between the Company and the Employee relating to the subject matter
hereof, but only during the Employment Period.
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IN WITNESS WHEREOF, the Employee has hereunto set his hand and, pursuant to the authorization
from its Board of Directors, the Company has caused these presents to be executed in its name and
on its behalf, all as of the day and year first above written.
| DIGENE CORPORATION | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
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