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exv10w4

 

EXHIBIT 10.4

CHANGE IN CONTROL

EMPLOYMENT AGREEMENT

     This AGREEMENT by and between Digene Corporation (the “Company”), and
____________ (the “Employee”), is dated as of the ___ day of ______,
2003.

     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 24, 2002, 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 of the assets of the Company (whether such assets are held directly or
indirectly) to a Third Party;

except that any event or transaction which would be a “Change of Control” under
(a) or (c)(i) of this definition shall not be a “Change of 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 ______ __, 2003 (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.

          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,

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                                      (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
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

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 (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.

                            (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 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.

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          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 (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, insider trading, 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;

                            (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

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                            (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 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).

          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.

                  (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) any
compensation previously

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 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 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. 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.

                  (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)     the Company shall pay to the Employee in a lump sum in cash within 30
days after the Date of Termination, or earlier if required by law, the
aggregate of the following amounts:

                                      (A)     to the extent not theretofore paid, the Employee’s Base Salary through
the Date of Termination; and

                                      (B)     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

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                                      (C)     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

                                      (D)     in the case of compensation previously deferred by the Employee, all
amounts previously deferred (together with any accrued interest thereon) and
not yet paid by the Company and any accrued vacation pay not yet paid by the
Company; and

                            (ii)     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 Employment Period and to have retired on the last day of
such 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.

          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
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

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 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 Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), 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. 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 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

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 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 sue 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 sue 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 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

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 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, insider trading, 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 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.

11

 

          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 Section
7872(f)(2) of the Code; 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:

	 	Digene Corporation

1201 Clopper Road

Gaithersburg, Maryland 20878

Attention: Chief Executive Officer

	 	with a copy to:

	 	Ballard Spahr Andrews & Ingersoll, LLP

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103-7599

Attention: Morris Cheston, Jr., 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.

12

 

                    (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.

     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:

13exv10w5

 

EXHIBIT 10.5

CHANGE IN CONTROL

EMPLOYMENT AGREEMENT

     This AGREEMENT by and between Digene Corporation (the “Company”), and
____________ (the “Employee”), is dated as of the ___ day of ______,
2003.

     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 24, 2002, 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 of the assets of the Company (whether such assets are held directly or
indirectly) to a Third Party;

except that any event or transaction which would be a “Change of Control” under
(a) or (c)(i) of this definition shall not be a “Change of 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 ______ __, 2003 (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.

          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,

2

 

                                      (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
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

3

 

 (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.

                            (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 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.

4

 

          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 (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, insider trading, 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;

                            (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

5

 

                            (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 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).

          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.

                  (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) any
compensation previously

6

 

 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 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. 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.

                  (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)     the Company shall pay to the Employee in a lump sum in cash within 30
days after the Date of Termination, or earlier if required by law, the
aggregate of the following amounts:

                                      (A)     to the extent not theretofore paid, the Employee’s Base Salary through
the Date of Termination; and

                                      (B)     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

7

 

                                      (C)     an amount equal to one (1) 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

                                      (D)     in the case of compensation previously deferred by the Employee, all
amounts previously deferred (together with any accrued interest thereon) and
not yet paid by the Company and any accrued vacation pay not yet paid by the
Company; and

                            (ii)     for a period of one year 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 Employment Period and to have retired on the last day of
such 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.

          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
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

8

 

 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 Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), 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. 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 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

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 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 sue 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 sue 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 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

10

 

 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, insider trading, 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 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.

11

 

          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 Section
7872(f)(2) of the Code; 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:

	 	Digene Corporation

1201 Clopper Road

Gaithersburg, Maryland 20878

Attention: Chief Executive Officer

	 	with a copy to:

	 	Ballard Spahr Andrews & Ingersoll, LLP

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103-7599

Attention: Morris Cheston, Jr., 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.

12

 

                    (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.

     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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