Exhibit 10.1
 

 
TENGION, INC.
AMENDED AND RESTATED
MANAGEMENT SEVERANCE PAY PLAN
 

 
Effective as of March 15, 2012
 

 

 
1.    Purpose.  The purpose of the Tengion, Inc. Severance Pay Plan (the “Plan”)
is to grant severance benefits to certain Eligible Employees (as defined below)
of Tengion, Inc. (the “Company”) whose employment is terminated under the
circumstances specified in the Plan.  This document is intended to serve as both
the plan document and the summary plan description.
 
2.    Prior Plans.  This Plan replaces and supersedes all prior severance plans,
programs or arrangements of the Company which otherwise would be applicable to
an Eligible Employee hereunder.  If requested by the Company, an Eligible
Employee shall execute a written acknowledgement that this Plan replaces and
supersedes all prior severance arrangements, including any such arrangements in
such Eligible Employee’s offer letter of employment, prior to being eligible to
participate in this Plan.
 
3.    Effective Date.  The Plan’s effective date is the date this Plan is
approved by the Company Board of Directors (the “Board”), which date is set
forth above (the “Effective Date”).  It applies to all Eligible Employees who
are terminated from employment after the Effective Date of this Plan.  The Plan
shall terminate once all benefits hereunder have been paid.  The Company has
reserved the right to amend the Plan at any time.
 
4.    Eligibility.  To be eligible to participate in this Plan, an individual
must be an employee of the Company with a title of Vice President or above (an
“Eligible Employee”) and satisfy the following requirements:
 
(a)  
be classified by the Company as a regular full-time or part-time employee of the
Company;

 
(b)  
not be classified by the Company as a temporary employee;

 
(c)  
be on the active payroll of the Company or on a recognized and approved leave of
absence;

 
(d)  
either (1) be terminated from employment as a result of a job elimination,
workforce reduction or reorganization, or other reason (other than any
termination for “cause”); or (2) terminate employment for “Good Reason” (as
defined below);

 
 
 
 
 
 

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(e)  
not be offered the same or a similar position with the Company or another
company that succeeds to any part of the business of the Company within 50 miles
of the individual’s current work location;

 
(f)  
continue to work at the Company and to perform the job duties assigned by the
Company in a satisfactory manner through the termination date selected by the
Company;

 
(g)  
sign and deliver to the Company a general release in the form specified by the
Plan Administrator; and

 
(h)  
be designated by the Company as an Eligible Employee.

 
An individual's eligibility to participate in this Plan shall be determined by
the Company, in its sole discretion, and without regard to any administrative or
judicial determinations as to the individual's employment status.
 
For purposes of this Plan, “Good Reason” shall mean (1) a material adverse
change in the employees duties, authority or responsibilities without his/her
agreement; (2) a change without the employee’s consent in the principal location
of his/her office to an office that is more than fifty (50) miles from the
Company’s office in which such employee is then located; or (3) the Company’s
material failure to pay the employee his/her compensation or benefits when due,
a reduction of the employee’s salary (other than pursuant to an across-the-board
reduction in the compensation of all senior management provided that such
reduction is in all material respects proportionately equal amongst all such
members of senior management); or (4) any other material breach by the Company
of its obligations under this Plan or such employee’s offer letter; provided
that in any case such employee must provide the Company with written notice of
his/her intention to terminate his/her employment for Good Reason, give the
Company an opportunity for thirty (30) days following receipt of such notice to
cure, if the event is capable of being cured, or if not capable of being cured,
to have the Company’s representatives meet with the employee and his/her counsel
to be heard on whether Good Reason exists for the employee to terminate
employment.
 
5.    Benefits.  Subject to the provisions of Section 7 hereof, an Eligible
Employee shall be entitled to benefits under this Plan in such amount as
specified in this Section 5.  Benefits shall be subject to all applicable
federal and state tax withholding, including FICA, and any other requirements of
law.
 
(a)  
Benefits payable under this Plan shall be determined based upon (1) the Eligible
Employee’s position within the Company at the time of termination or, in the
case of any employee whose title is Vice President or above, at the onset of the
condition that serves as the basis of a Good Reason termination, and (2) in some
cases, the numbers of years of service, in each case as specified on Exhibit A
to this Plan.

 
 
 
 
 
 

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(b)  
Benefits payable under this Plan shall be in addition to any pay for accrued,
but unused, vacation days to which a terminated employee may be entitled.

 
(c)  
Benefits payable under this Plan shall not be considered "compensation" for
purposes of determining any benefits provided under any pension, savings, change
in control or other benefit plan maintained by the Company.

 
(d)  
Benefits payable under this Plan shall not otherwise entitle any individual to
the continuation of health or any other benefit offered by the Company except as
specified in Section 6(b) below.

 
6.    Payment of Benefits.
 
(a)  
Benefits payable under this Plan shall be paid at the discretion of the Company
in (i) one lump sum installment or, (ii) installments in which fifty percent
(50%) of the Benefits shall be paid in one lump sum installment and the
remaining fifty percent (50%) paid in monthly amounts according to the Company’s
regular payroll schedule beginning as soon as administratively practicable,
after the date of the employee’s termination of employment, and such payments
shall end no later than December 31 of the second calendar year following the
year of termination of employment; provided, however, failure to deliver the
general release required in Section 4(g) and described in Section 7 to the
Company within the timeframe established by the Company shall result in
forfeiture and non-payment of any benefits payable under this Plan.  All
benefits payable hereunder shall be subject to applicable tax withholding.

 
(b)  
Medical Benefits

 
(i)  
An Eligible Employee who is receiving Company medical coverage (medical and/or
dental benefits) at the time of his or her termination of employment may elect
to continue such coverage for himself and his family members who are "qualified
beneficiaries" as such term is defined in the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA").  The cost of COBRA continuation coverage
for such Eligible Employee for the duration of the Severance Period described in
Exhibit A shall be the employee contribution amount paid by similarly situated
active employees.  After the Severance Period described in Exhibit A ends, the
cost of COBRA continuation coverage for such Eligible Employee will be the full
cost of coverage plus a 2% administrative fee, as permitted under COBRA, for the
remainder of the COBRA continuation coverage period.

 
 
 
 
 
 

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(ii)  
The continuation of medical coverage under this Section 6(b) shall be consistent
with the terms of COBRA.

 
(iii)  
The Company's obligation to provide continuation of medical coverage under this
Section 6(b) is dependent on the Eligible Employee's eligibility for COBRA
continuation coverage and the Eligible Employee's payment of any required
contributions toward the cost of coverage.  Should the Eligible Employee cease
to be eligible for COBRA continuation coverage or fail to pay any required
contributions toward the cost of coverage, the Company's obligation to provide
continuation coverage shall cease.

 
(iv)  
To the extent Benefits payable hereunder are paid in a single lump sum amount as
set forth in Section 6(a)(i), an Eligible Employee's payment for COBRA
continuation coverage will be made on an after-tax basis in accordance with the
timing requirements of COBRA.  To the extent Severance Benefits payable
hereunder are paid in monthly amounts according to the Company's regular payroll
schedule as set forth in Section 6(a)(ii), an Eligible Employee's payment for
COBRA continuation coverage shall automatically be deducted from the Eligible
Employee's Severance Benefit on an pre-tax basis, as permitted by law.

 
(c)  
Benefits payable under this Plan shall be offset by the individual’s
indebtedness to the Company; (ii) any amount which may be due to the individual
under any and all agreements between the individual and the Company, whether
verbal or written, including but not limited to any employment agreements; and
(iii) any other severance or termination payment made to the individual pursuant
to a separate agreement or plan, excluding any post-termination benefits payable
under any Company-sponsored pension or savings plan.  Notwithstanding the
foregoing, no benefits payable under this Plan shall be offset by benefits
payable to the Eligible Employee under the Company’s Change In Control Payment
Plan.

 
(d)  
Severance Benefits.  Notwithstanding the foregoing, Severance Benefits as set
forth in Exhibit A do not include amounts that exceed two times the Eligible
Employee’s annual compensation (limited to the amount permitted to be taken into
account under Section 401(a)(17) of the Code) for the calendar year preceding
the year of termination of employment.

 
 
 
 
 
 
 

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7.           Requirement of Effective Release:  Integration with Other Benefits
or Notice Requirements.
 
(a)  
As indicated in Section 4(g) hereof, the Plan Administrator requires that as a
condition of eligibility for benefits provided hereunder, the employee must sign
a general release in the form specified by the Plan Administrator and such
release shall be effective in accordance with its terms.  The failure or refusal
of an Eligible Employee to sign such a release or the revocation of such a
release, to the extent permitted by its terms, shall disqualify the employee
from receiving benefits hereunder.  If an employee files a lawsuit, charge,
complaint or other claim asserting any claim or demand within the scope of any
such release, the Company, whether or not such claim is valid, shall retain all
rights and benefits of the release.

 
(b)  
Except as otherwise provided herein, benefits provided under this Plan are the
maximum benefits that the Company will pay on account of a severance from
service.  To the extent that any federal, state or local law, including, without
limitation, any plant closing law, requires the Company to give advance notice
or make a payment of any kind to an Eligible Employee because of that employee's
involuntary termination due to a layoff, reduction in force, plant or facility
closing, sale of business, change of control, or any other similar event or
reason, the benefits provided under this Plan shall be applied toward any such
payment and not paid in addition to such required payment, except where
expressly prohibited by such federal, state or local law.  To the extent legally
permitted, the benefits provided under this Plan are intended to satisfy any and
all statutory obligations that may arise out of an Eligible Employee's
involuntary termination for the foregoing reasons, and the Plan Administrator
shall so construe and implement the terms of the Plan.

 
8.    Plan Administrator.  The Plan Administrator shall have the powers
necessary to determine, in its discretion, all questions concerning the
administration of the Plan, including questions of eligibility and of the amount
of any benefits payable hereunder.  In addition, the Plan Administrator shall
have full authority to interpret and apply the provisions of the Plan, including
authority to correct any defects or omissions or to reconcile any
inconsistencies herein, in such a manner and to such an extent as it shall deem
necessary or desirable to effectuate the Plan.  The Plan Administrator may make
such rules and regulations for the administration of the Plan as it deems
necessary or desirable.  Any determination by the Plan Administrator within the
scope of its authority and any action taken thereon in good faith shall be
conclusive and binding on all persons.
 
 
 
 
 
 
 

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9.    Claims Procedure.  All claims for benefits under the Plan by an Eligible
Employee shall be made in writing to the Plan Administrator within sixty (60)
days of the date of the alleged occurrence giving rise to the claim.  If the
Plan Administrator, and/or any such group or individual that has been delegated
the authority to resolve claims, believes that the claim should be denied, the
claimant shall be notified in writing of the denial of the claim within ninety
(90) days after the Plan Administrator's receipt of the claim, but this period
may be extended by the Plan Administrator for up to an additional ninety (90)
days in special circumstances.  If additional information is needed from the
claimant for the Plan Administrator to decide the claim, the claimant will be
given 45 days from the notice date to provide the specified information.
 
If a claim is wholly or partially denied, the Plan Administrator’s notice shall
(a) set forth the specific reasons or reasons for the denial, making reference
to the pertinent provisions of the Plan on which the denial is based; (b)
describe any additional material or information that should be received before
the claim may be acted upon favorably and explain the reason why such material
or information, if any, is needed; and (c) inform the claimant of his or her
right pursuant to this Section 9 to request review of the decision by the Plan
Administrator.
 
A claimant who believes that he or she has submitted all available and relevant
information may appeal the denial of a claim to the Plan Administrator by
submitting a written request for review within sixty (60) days after the date on
which such denial is received.  Such period may be extended by the Plan
Administrator for good cause shown.  The person making the request for review
may examine the Plan documents and the request for review may discuss any issues
relevant to the claim appeal.  The Plan Administrator shall decide whether or
not to grant the appeal within sixty (60) days after receipt of the request for
review, but this period may be extended by the Plan Administrator for up to an
additional sixty (60) days in special circumstances.  The Plan Administrator's
decision shall be in writing, shall include specific reasons for the decision,
shall refer to pertinent provisions of the Plan on which the decision is based,
and shall be conclusive and binding on all persons for all purposes.  Claimants
must exhaust all claim and appeal opportunities available under this Plan before
any lawsuit is filed with respect to a claim.
 
10.    Funding.  Benefits payable under the Plan are unfunded and shall be paid
from the general assets of the Company.  No trust fund or other segregated fund
shall be established for the purpose of paying benefits hereunder.
 
11.    Amendment and Termination.  This Plan may be amended at any time and for
any reason by action of the duly authorized officers of the Company.
 
12.    Assignment or Alienation.  Assignment or alienation of any benefit
provided by the Plan will not be permitted or recognized except as otherwise
required by applicable law.  The Plan shall not confer upon any person any right
to be employed by, or to be continued in the employment of, the Company or any
affiliate thereof.
 
 
 
 
 
 

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13.    Severance Pay Plan Limitations under ERISA.  The Company intends that
this Plan constitutes a "severance pay plan" under Department of Labor
Regulations section 2510.3-2(b), and any ambiguities in this Plan shall be
construed to effect that intent.  As a severance pay plan, notwithstanding any
other provisions of this Plan:  payments hereunder shall not be contingent,
directly or indirectly, upon the retirement of any employee or offset by any
retirement benefit payable; the total amount of severance payments made and the
value of other benefits provided under this Plan to any employee shall not
exceed twice the employee's annual compensation during the year immediately
preceding the termination of such employee's employment; and all payments to an
employee under this Plan shall be paid within 24 months after the termination of
the employee's employment.
 
14.    Code Section 409A Status.  The Company intends that benefits provided
under this Plan are exempt from the limitations of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) because they satisfy the
requirements of the separation pay plan exemption set forth in Treas. Reg.
§1.409A-1(b)(9)(iii).  Benefits under this Plan (a) are provided only upon an
involuntary separation from service, (b) do not exceed two times annual
compensation (limited to the amount permitted to be taken into account under
Section 401(a)(17) of the Code) for the calendar year preceding the year of
termination of employment, and (c) are paid no later than December 31 of the
second calendar year following the year of termination of employment.
 
15.    Statement of ERISA Rights.  Each Eligible Employee covered by the Plan is
entitled to certain rights and protections under ERISA.  ERISA provides that all
Plan Participants shall be entitled to:
 
·  
Examine, without charge, at the Plan Administrator’s office and at other
specified locations, such as worksites, all documents governing the Plan,
including insurance contracts, and a copy of the latest annual report (Form 5500
series) filed by the Plan with the U.S. Department of Labor and available at the
Public Disclosure Room of the Employee Benefits Security Administration.

 
·  
Obtain upon written request to the Plan Administrator, copies of documents
governing the operation of the Plan, including insurance contracts, and copies
of the latest annual report (Form 5500 Series) and any updated summary plan
description.  The Plan Administrator may make a reasonable charge for the
copies.

 
·  
Receive a summary of the Plan’s annual financial report.

 
In addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan.  The people who
operate your Plan, called “fiduciaries” of the Plan, have a duty to do so
prudently and in the interest of you and other Plan participants and
beneficiaries.
 
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No one, including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit or
exercising your rights under ERISA.  If your claim for benefit is denied or
ignored, in whole or in part, you have a right to know why this was done, to
obtain copies of documents relating to the decision without charge, and to
appeal any denial, all within certain time schedules.
 
Under ERISA, there are steps you can take to enforce the above rights.  For
instance, if you request materials from the Plan and do not receive them within
thirty (30) days, you may file suit in a federal court.  In such a case, the
court may require the Plan Administrator to provide the materials and pay you up
to $110.00 a day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the Administrator.  If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a state or federal court.  If it should happen that Plan fiduciaries
misuse the Plan’s money, or if Plan fiduciaries discriminate against you for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court.  The court will decide who
should pay court costs and legal fees.  If you are successful, the court may
order the person you have sued to pay these costs and fees.  If you lose, the
court may order you to pay these costs and fees, for example, if it finds your
claim frivolous.
 
If you have any questions about your Plan, you should contact the Plan
Administrator.  If you have any questions about this statement or about your
rights under ERISA, or if you need assistance in obtaining documents from the
Plan Administrator, you should contact the nearest office of the Employee
Benefits Security Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquiries,
Employee Benefits Security Administration, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, DC 20210, http://www.dol.gov/ebsa/.  You
may also obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration at 1-800-997-7542.
 
16.    Additional Information.
 
Plan Sponsor/ Plan Administrator/Named
 Fiduciary
Tengion, Inc.
Address:
3929 Westpoint Blvd., Suite G, Winston-Salem, NC 27103
 
Telephone Number:
336-722-5855
 
Employer Identification Number:
 
 
Plan Number:
 
 
Plan Year:
January 1 - December 31
 
Type of Plan:
Severance pay plan -- the Plan is self-administered by the Company.
 
Agent for Service of Legal Process:
Legal Process must be served on the Plan Administrator
 
 

 
 
 
 
 
 

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Exhibit A

Severance Benefits

 
Title
 
Severance Benefits
 
Chief Executive Officer
12 months Salary plus Bonus Payment
 
Vice President and above (excluding CEO)
10 months Salary plus Bonus Payment
 

“Salary” means an amount equal to the Eligible Employee’s annualized base salary
for the year in which employment terminates.
 
“Bonus Payment” means the Eligible Employee’s Target Annual Bonus for the year
in which employment terminates plus the Eligible Employee’s Prorated Annual
Bonus for the year in which employment terminates; Bonus Payment shall also mean
the amount of any bonus earned but not yet paid in respect of any recently
completed calendar year.
 
“Target Annual Bonus” means an amount equal to the Eligible Employee’s target
annual bonus (assuming payment at 100% level) for the year in which employment
terminates.
 
“Prorated Annual Bonus” means an amount equal to the Eligible Employee’s
prorated target annual bonus (assuming payment at 100% level) for the year in
which employment terminates, calculated by dividing the number of days such
employee was employed by the Company for the year in which termination of
employment occurs divided by 365.
 
"Severance Period" is the number of months and/or weeks of Salary to which the
Eligible Employee is entitled as a Severance Benefit as set forth in Exhibit A.
 
 
 
 
 

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