Change in Control Agreement - Applied Biosystems Inc. and Andre Marion
November 1, 1990
Dear Andre Marion:
In view of your position as a Corporate Senior Manager at
Applied Biosystems Inc. (the "Company"), and in
consideration of your services in such capacity, the Board
of Directors (the "Board") has approved the commitment by
the Company to you ("Employee") to provide you with the
certain benefits in the event your employment is terminated
for specified reasons within two years after a Change of
Control. The purpose of this letter agreement (the
"Agreement") is to set forth the terms and conditions of the
Company's agreement with you concerning such benefits.
1. Termination of Benefits. If within two years after
the date of a Change of Control, Employee's employment is
terminated (a) by the Company for any reason other than for
Cause or Employee's death or Disability or (b) by Employee
for Good Reason, Employee will be entitled to receive the
following benefits:
1.1 Salary Continuation. The Company will continue to
pay Employee salary at the annual rate equal to Employee's
Annual Compensation for the number of weeks determined by
adding (a) the number of years Employee has been an employee
of the Company (rounding up to the next full year and
excluding any intervening periods during which Employee was
not an employee) or two, if greater, plus (b) two and one-
half times the number of $5,000 increments (rounded up to
the next $5,000 increment) contained in the Employee's
Annual Compensation. Continued salary will be paid to
Employee on the Company's regular paydays during the period
of salary continuation and will be subject to applicable
withholding taxes. If Employee should die before receiving
all amounts payable to Employee hereunder, any unpaid
amounts will be paid to Employee's spouse, if living,
otherwise to Employee's estate. Employee shall be entitled
to receive interest on any amount payable hereunder from the
date payment was due to the date actually paid at the rate
of the lesser of 12% or the highest rate legally
permissible. Employee will not be required to mitigate the
amount of the payments due to Employee hereunder by seeking
other employment or otherwise, and any amount earned by
Employee as the result of employment by another employer or
otherwise after the Date of Termination shall not reduce the
Company's obligation to Employee hereunder.
1.2 COBRA Benefits. The Company will pay for
Employee's health insurance continuation benefits provided
for under the Consolidated Omnibus Budget Reconciliation Act
of 1986 ("COBRA") and Section 4980B of the Internal Revenue
Code of 1986 until the earliest of (a) eighteen months after
the Date of Termination, (b) the last payday on which the
Company is obligated to make a payment to Employee pursuant
to paragraph 1.1 above or (c) the date on which Employee
first becomes eligible to participate in another health
insurance plan. The insurance continuation benefits paid
for hereunder shall be deemed to be part of Employee's COBRA
coverage.
1.3 Offset for Other Arrangements. The severance
benefits provided hereunder will be reduced by the amount of
any payment to which Employee may be entitled under any
severance plan or policy of the Company or under any
individual severance agreement, employment agreement or
offer letter.
2. Notice of Termination. Any termination by the
Company for Cause or by Employee for Good Reason shall be
communicated by written notice to the other party given by
hand delivery or by registered or certified mail, return
receipt requested, postage prepaid, if to Employee, then to
Employee at his or her address as set forth in the Company's
records, and, if to the Company, to Applied Biosystems,
Inc., 777 Lincoln Centre Drive, Foster City, California
94404, Attention: Andre F. Marion. Any notices given
pursuant to this paragraph 2 shall be effective the earlier
of when such notice is actually received by the addressee or
three days after such notice is delivered or sent.
3. Definitions.
3.1 "Annual Compensation" means all wages, salary,
bonus and other incentive compensation (including
commissions) paid by the Company as consideration for
Employee's service during the 12 months ended on either the
Termination Date or the date of the Change of Control,
whichever is greater, which are includable in the gross
income of Employee for federal income tax purposes.
3.2 "Cause" means (a) gross or habitual failure to
perform assigned duties of Employee's job, that is,
performance failure not corrected within thirty (30) days
after written notice to Employee thereof or (b) misconduct,
including but not limited to: (i) conviction of a crime, or
entry of a plea of nolo contendere with regard to a crime,
involving moral turpitude or dishonesty, or (ii) drug or
alcohol abuse on Company premises or at a Company sponsored
event or reporting to or remaining at work while under the
influence of drugs or alcohol, or (iii) conduct by Employee
which in the good faith and reasonable determination of the
Board demonstrates gross unfitness to serve.
3.3 "Change of Control" shall be deemed to have
occurred at any of the following times:
i. Upon the acquisition (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 (the "Exchange Act")
(excluding, for this purpose, the Company or its
affiliates, or any employee benefit plan of the
Company or its affiliates which acquires beneficial
ownership of voting securities of the Company) of
beneficial ownership (within the meaning of Rule 13d-
3 promulgated under the Exchange Act) of 50% or more
of either the then outstanding shares of common
stock or the Combined Voting Power; or
ii.At the time individuals who, as of October 31, 1990,
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of
the Board, provided that any person becoming a
director subsequent to October 31, 1990 whose
election, or nomination for election by the
Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising
the Incumbent Board (other than an election or
nomination of an individual whose initial assumption
of office is in connection with an actual or
threatened election contest relating to the election
of the Directors of the Company, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of
the Plan, considered as though such person were a
member of the Incumbent Board; or
iii. Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation
(in each case, with respect to which persons who
were the shareholders of the Company immediately
prior to such reorganization, merger or
consolidation do not, immediately thereafter, own
more than 50% of the Combined Voting Power of the
reorganized, merged or consolidated company's then
outstanding voting securities) or a liquidation or
dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
iv.The occurrence of any other event which the
Incumbent Board in its sole discretion determines
constitutes a Change of Control.
3.4 "Combined Voting Power" means the combined voting
power of the Company's then outstanding securities
ordinarily (and apart from rights accruing under special
circumstances ) having the right to vote at elections of
directors.
3.5 "Date of Termination" means the date of receipt of
the written notice of termination pursuant to paragraph 2 or
any later date specified therein, as the case may be;
provided, however, that (1.) if Employee's employment is
terminated by the Company other than for Cause or by reason
of death or Disability, the Date of Termination shall be the
date on which the Company notifies Employee of such
termination and (2.) if Employee's employment is terminated
by reason of death or Disability, the Date of Termination
shall be the date of death or determination of Disability
pursuant to paragraph 3.6 , as the case may be.
3.6 "Disability" means 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 Employee or Employee's legal
representative (such acceptance not to be unreasonably
withheld).
3.7 "Good Reason" means (i) reduction of Employee's
base salary or rate of compensation as in effect immediately
prior to the Change of Control, (ii) failure to continue in
effect any medical, dental, accident or disability plan in
which Employee is entitled to participate immediately prior
to the Change of Control and failure to provide plans with
substantially similar benefits (except that employee
contributions may be raised to the extent of any cost
increases imposed by third parties) or any action by the
Company which would adversely affect Employee's
participation or reduce Employee's benefits under any of
such plans, (iii) failure or refusal of the successor
company to assume the Company's obligations under this
Agreement, as required by paragraph 5 or (iv) breach by the
Company or any successor company any of the provisions of
this Agreement.
4. Nonexclusivity. Nothing in this Agreement shall
prevent or limit Employee's continuing or future
participation in any benefit, bonus, incentive or other
plans, programs, policies or practices provided by the
Company and for which Employee may otherwise qualify, nor
shall anything herein limit or otherwise affect such rights
as any Employee may have under any stock option or other
agreements with the Company. Except as otherwise expressly
provided herein, amounts which are vested benefits or which
Employee is otherwise entitled to receive under any plan,
policy, practice or program of the Company at or subsequent
to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program.
5. Successor to Company. The Company shall require any
successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform
the Company's obligations under this Agreement, in the same
manner and to the same extent that the Company would be
required to perform if no such succession or assignment had
taken place. In such event, the term "Company," as used in
this Agreement, shall mean the Company as hereinafter
defined and any successor or assignee to the business or
assets which by reason hereof becomes bound by the terms and
provisions of this Agreement.
6. Certain Reduction of Payments.
(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 Employee (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the
Company for Federal income tax purposes because of Section
280G of the Code, then the aggregate present value of
amounts payable or distributable as severance benefits
hereunder shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of such
severance benefits without causing any Payment to be
nondeductible by the Company because of Section 280G of the
Code. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any
Payment which is not part of the severance benefits payable
hereunder would nevertheless be nondeductible by the Company
for Federal income tax purposes because of Section 280G of
the Code, then the aggregate present value of Payments which
are not severance benefits under this Agreement shall also
be reduced (but not below zero) to an amount expressed in
present value which maximizes the aggregate present value of
Payments without causing any payment to be nondeductible by
the Company because of Section 280G of the Code. For
purposes of this paragraph 6, present value shall be
determined in accordance with Section 280G(d) (4) of the
Code.
(b) All determinations required to be made under this
paragraph 6 shall be made by the Company's independent
auditors which shall provide detailed supporting
calculations both to the Company and Employee within 15
business days of the Date of Termination or such earlier
time as is requested by the Company and an opinion to
Employee that he or she has substantial authority not to
report any excise tax on his Federal income tax return with
respect to any Payments. Any such determination by the
Company's independent auditors shall be binding upon the
Company and Employee. Employee shall determine which and
how much of the Payments, shall be eliminated or reduced
consistent with the requirements of this paragraph 6,
provided that, if Employee does not make such determination
within ten business days of the receipt of the calculations
made by the Company's independent auditors, the Company
shall elect which and how much of the Payments shall be
eliminated or reduced consistent with the requirements of
this paragraph 6 and shall notify Employee promptly of such
election. Within five business days thereafter, the Company
shall pay to or distribute to or for the benefit of Employee
such amounts as are then due to Employee under this
Agreement.
(c) As a result of the uncertainty in the application
of Section 280G of the Code at the time of the initial
determination by the Company's independent auditors
hereunder, it is possible that Payments will have been made
by the Company which should not have been made
("Overpayment") or that severance benefits payable hereunder
will not have been made by the Company which could have been
made ("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. In the event
that the Company's independent auditors, based upon the
assertion of a deficiency by the Internal Revenue Service
against Employee or the Company which the Company's
independent auditors believe has a high probability of
success, determine that an Overpayment has been made, any
such Overpayment paid or distributed by the Company to or
for the benefit of Employee shall be treated for all
purposes as a loan ab initio to Employee which Employee
shall repay to the Company together with interest at the
applicable federal rate provided for in Section 7872(f) (2)
of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable to
the Company if and to the extent such deemed loan and
payment would not either reduce the amount on which Employee
is subject to tax under Section 1 and Section 4999 of the
Code or generate a refund of such taxes. In the event that
the Company's independent auditors, based upon controlling
precedent or other substantial authority, determine that an
Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of
Employee together with interest at the applicable federal
rate provided for in Section 7872(f) (2) of the Code.
7. Amendments and Termination. The Incumbent Board may
from time to time supplement, amend or terminate this
Agreement or make any other provisions which the Company may
deem necessary or desirable, without the approval of
Employee; provided, however, that from and after such time
there has been a Change of Control, this Agreement shall not
be amended in any manner which would adversely affect the
interests of Employee without the written consent of
Employee. Subject to the foregoing, this Agreement
establishes and vests in Employee a contractual right to the
benefits to which Employee is entitled hereunder,
enforceable by Employee against the Company. The form of
any proper amendment or termination of this Agreement shall
be a written instrument signed by a duly authorized officer
or officers of the Company certifying that the amendment or
termination has been approved by the Incumbent Board.
8. Miscellaneous.
8.1 Employment Status. This Agreement does not
constitute a contract of employment or impose on Employee or
the Company any obligation to retain Employee as an
employee, to change the status of Employee's employment, or
to change the Company's policies regarding termination of
employment.
8.2 No Assignment. No benefit hereunder shall be
subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt
to do so shall be void.
8.3 Governing Law. This Agreement shall be governed
by the laws of the State of California.
8.4 Expenses of Suit. In the event of any dispute or
litigation between the Company and the Employee arising out
of this Agreement, the prevailing party shall be entitled to
recover its reasonable attorneys' fees and expenses incurred
in connection with the enforcement of its rights hereunder.
8.5 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
8.6 Descriptive Headings. Descriptive headings of the
several paragraphs of this Agreement are inserted for
convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
Please acknowledge your agreement to the foregoing
agreement by signing the enclosed counterpart of this letter
and returning it to the Company.
Very truly yours,
APPLIED BIOSYSTEMS, INC.
/s/ A. F. Marion
Andre F. Marion
Chairman of the Board
Chief Executive Officer
AGREED;
/S/ A. F. Marion