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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 15,2001
Commission File Number 0-23252
IGEN INTERNATIONAL, INC.
(Exact name of registrant)
Delaware 94-2852543
(State of organization) (I.R.S. Employer Identification Number)
16020 Industrial Drive, Gaithersburg Maryland 20877
(Address of principal executive offices and zip code)
(301) 869-9800
(Registrant's telephone Number)
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ITEM 5. OTHER EVENTS
IGEN International, Inc. ("IGEN" or the "Company") has entered into
agreements with Meso Scale Technologies, LLC. ("MST") continuing Meso Scale
Diagnostics, LLC. ("MSD"), a joint venture formed solely by the Company and MST
in 1995. The amended agreements were negotiated by an independent committee of
IGEN's board of directors acting on IGEN's behalf. The independent committee was
comprised of three members of IGEN's board of directors -- Joop Sistermans,
Robert Salsmans and Anthony Rees -- who are not members of IGEN's management and
who are not related to any member of IGEN's management. The independent
committee was formed by unanimous action of the Board in August 2000. The
resolutions adopted by the Board delegated to the committee the exclusive power
and authority to review and investigate the matters identified in certain demand
letters relating to derivative actions subsequently filed by shareholders and to
determine what measures or actions, if any, should be undertaken on behalf of
the Company in response to the demand letters. The committee was also authorized
to address any other issues raised as a result of the committee's investigation
and to effect any such measures or actions on behalf of the Company with the
full power and authority of the Board, subject only to the requirements of
Delaware law and the Company's governing documents. The committee's mandate
specifically included the power and authority to negotiate, approve, execute and
deliver any documents that the committee deemed necessary to respond to the
demand letters and address the results of the committee's investigation.
Under the amended agreements, IGEN holds a 31% voting equity interest in
the joint venture. In addition, IGEN is entitled to a preferred return, payable
out of a portion of both future profits and certain third-party financings,
before any payments are made to other equity holders, on $21 million of the
funds it has previously invested in the venture and on additional funds it
invests. The preferred return is 5% on investments made prior to January 1, 2001
and the prime rate plus 0.5% on investments made after January 1, 2001.
IGEN and MST each hold one seat on MSD's two-member board of managers.
IGEN's representative on the board is Richard J. Massey, IGEN's President and
Chief Operating Officer, and MST's representative is Jacob Wohlstadter, who is
the sole owner of MST and serves as President and Chief Executive Officer of
MSD. Under most circumstances, significant governance matters require the
approval of both IGEN and MST (and/or their representatives on the Board of
Managers of MSD). Neither Dr. Hassey nor any other executive officer or director
of IGEN has any ownership interest in MST or MSD, other than through ownership
of interests in IGEN.
Under the terms of the revised joint venture agreement, IGEN agreed,
subject to certain conditions, to fund the joint venture through November 30,
2003. IGEN's funding commitment may be satisfied in part through in-kind
contributions of scientific and administrative personnel and shared facilities.
The Company's funding commitment for the next 12 months is $19.5 million and may
not be increased without the Company's consent. Thereafter, the Company's
funding commitment would be determined on the basis of an annual budget prepared
by MSD and submitted to a committee of IGEN's board of directors for approval.
If the committee fails to approve the annual budget submitted by MSD, IGEN would
still be required to provide MSD with transitional funding for an additional six
months. If the committee fails to approve a budget submitted by MSD, MSD and MST
have the right to terminate the joint venture unless the budget calls for
funding that exceeds 110% of the prior 12 months' funding and the committee
makes a reasonable good faith determination for the rejection.
The term of the joint venture is through November 30, 2003. MST and MSD
will have the right to terminate the joint venture under other circumstances
including (1) breach of IGEN's obligations, including its funding obligations to
MSD, (2) MSD's termination of Jacob Wohlstadter's employment (other than for
cause or disability), (3) if Mr. Wohlstadter is entitled to terminate his
employment agreement for good reason (as defined in the agreement), or (4) upon
a change in control of IGEN as defined in the joint venture agreement. Change in
control includes, among other things, the acquisition, by any person or group
(other than Samuel Wohlstadter and his affiliates), of 30% or more of the
beneficial ownership of any class of voting securities of IGEN, or 15% or more
of the beneficial ownership if combined with the right to nominate one or more
directors of IGEN. Upon termination, expiration or non-renewal of the joint
venture agreement, MSD and MST jointly have the right to repurchase IGEN's
interest in MSD at its fair market value, less a discount of 7.5% to 15%
depending on the cause of termination or non-renewal.
Under the terms of the revised agreements, MSD has a worldwide, perpetual,
exclusive license (with certain exceptions) to IGEN's technology for use in
MSD's research program. If IGEN ceases to be a member of the joint venture, IGEN
will receive royalty payments from MSD on all products developed and sold by MSD
using IGEN's technology. MST holds a worldwide, perpetual, non-exclusive license
for certain non-diagnostic applications of IGEN's technology. IGEN will receive
royalty payments from MST on any products developed and sold by MST that use
this technology.
Under the revised agreements, IGEN and Jacob Wohlstadter revised the terms
of his consulting agreement with IGEN to provide for a shorter term running only
through August 15, 2004. Pursuant to the consulting agreement, Mr. Wohlstadter
will be entitled to receive such fees as the Company and Mr. Wohlstadter agree
to when particular services are requested by the Company. In addition, MSD
entered into an employment contract with Mr. Wohlstadter that provides for a
term running concurrent with the joint venture agreement. Mr. Wohlstadter has
agreed to serve as President and CEO of MSD for an initial annual salary of
$250,000. Mr. Wohlstadter will be eligible to receive, at the discretion of an
independent committee of the IGEN Board, an annual cash bonus in an amount not
to exceed 20% of his annual salary. If MSD terminates the employment agreement
without cause, or Mr. Wohlstadter terminates the employment agreement for good
reason (which includes a change in control of IGEN as described above), Mr.
Wohlstadter shall be entitled to receive, in addition to salary and pro rata
bonus and adjustments earned through the 60th day following the notice of
termination, an amount equal to from 3 to 12 times (depending on the reason for
the termination) the monthly pro rata salary, bonus and adjustments in effect at
the time of the termination. In addition, upon such a termination, MSD and MST
shall have a joint right to repurchase IGEN's interest in MSD on terms described
above. IGEN is responsible for all amounts payable, costs incurred and other
obligations under the employment agreement, which is expected to be paid out of
IGEN's capital contribution to MSD. The Company has also agreed to indemnify Mr.
Wohlstadter against certain liabilities, including liability from the joint
venture.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IGEN INTERNATIONAL, INC.
By: /s/ Samuel J. Wohlstadter
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Name: Samuel J. Wohlstadter
Title: Chief Executive Officer
Dated: August 20, 2001