FORM OF RETENTION AGREEMENT ENTERED INTO
BETWEEN THE REGISTRANT AND CERTAIN
EXECUTIVE OFFICERS
RESTRICTED & CONFIDENTIAL INTERNAL USE ONLY
SOMATOGEN, INC.
RETENTION AGREEMENT
This RETENTION AGREEMENT is entered into as of (Date), between
Somatogen, Inc., a Delaware corporation (the "Corporation"), and (Officer).
RECITAL
Officer serves as the Corporation's (Officer's Title), and the
Corporation and the Officer desire to set forth herein the terms and conditions
of his/her compensation in the event of the termination of his/her employment,
following a Change in Control, or Change of Management (as defined herein). In
the event of a Change in Control, or Change of Management, the Officer and other
key employees may be more vulnerable to dismissal without regard to quality of
their service. Because such key employees are in a unique position to affect the
acquisition effort by another party and are vulnerable in the event of a Change
of Management, the Board of Directors of the Corporation (the "Board") believes
that it is in the best interests of the Corporation and its stockholders to
enter into Agreements such as this one in order to ensure fair treatment of such
key employees and to reduce the distractions and other adverse effects upon such
employees' performance which are inherent in such an acquisition, change in
control, or change of management.
AGREEMENT
The parties hereto agree as follows:
1. Term. If a Change in Control or Change of Management (as defined
below) has not occurred, this Agreement shall expire two years from the date
hereof. This Agreement may be renewed by written agreement of the parties for
successive one-year periods. If a Termination Following a Change in Control or
Change of Management occurs during the term of this Agreement, this Agreement
shall continue in full force and effect and shall not terminate until the
Officer shall have received the severance compensation provided hereunder.
2. Termination Following a Change in Control or Change of Management.
In the event of a Termination Following a Change in Control or Change of
Management (as defined below), the Officer shall immediately be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension
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plan or profit sharing plan benefits, which will be paid in accordance with the
applicable plan), any benefits then due under any plans of Corporation in which
Officer is a participant, accrued vacation pay and any appropriate business
expenses incurred by Officer in connection with his/her duties, all to the date
of termination ("Accrued Compensation"). The Officer shall also be entitled to
the severance compensation described in Section 3.
"Termination Following a Change in Control or Change of Management" shall mean a
termination by the Officer for Good Reason (as defined below) of Officer's
employment with Corporation within one year after the occurrence of a Change in
Control or Change of Management (as defined below) or a termination by
Corporation of Officer's employment by Corporation within one year after the
occurrence of a Change in Control or Change of Management other than a
termination by reason of death or disability (as defined below) or a Termination
for Cause (as defined below).
For purposes hereof, the following terms shall have the meanings set
forth below.
A "Change in Control" of the Corporation shall be deemed to have
occurred if (i) any person (as such term is used in Sections 13(d) and 14(d) (2)
of the Securities and Exchange Act of 1934 (the "Exchange Act"), other than the
Corporation, is or becomes the beneficial owner (as defined in Rule 13D-3 under
the Exchange Act), directly or indirectly, of 50% or more of the combined voting
power of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (calculated as provided in Rule
13d-3(d) under the Exchange Act in the case of rights to acquire capital stock),
whether by means of a tender offer or exchange offer, Transaction or otherwise;
or (ii) the Board or the stockholders of the Corporation approve a Transaction.
A "Transaction" is: a) any consolidation or merger of the Corporation other than
a merger solely to effect a reincorporation or a merger of the Corporation as to
which stockholder approval is not required pursuant to Sections 251(f) or 253 of
the Delaware General Corporation Law; or b) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of 50% or more
of the assets of the Corporation; or c) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation.
A "Change of Management" shall be deemed to have occurred if the
Company's current Chief Executive Officer ceases to serve as such, or a new
Chief Executive Officer or Chief Operating Officer is appointed by the Board of
Directors.
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"Disability" shall mean that the Officer, in the reasonable judgment of
the Board, is incapable of performing the duties of his office by reason of
illness or physical or mental disability, which condition has continued for a
period of more than three (3) consecutive months.
"Good Reason" shall include any of the following:
(i) the assignment to the Officer by the Corporation of duties
inconsistent with, or a substantial alteration in the nature or status
of, Officer's responsibilities; as in effect immediately prior to the
Change in Control or Change of Management;
(ii) a reduction by Corporation in the Officer's salary or
other benefits as in effect on the date of a Change in Control or
Change of Management;
(iii) a relocation of Corporation's principal executive
offices to a location outside Boulder County, Colorado, or Officer's
relocation to any place other than said offices of Corporation, except
for reasonably required travel by Officer on Corporation's business;
(iv) any material breach by the Corporation of any provision
of this Agreement, if such material breach has not been cured within
thirty (30) days following written notice by the Officer to the
Corporation of such breach setting forth with specificity the nature of
the breach; or
(v) any failure by Corporation to obtain the assumption of
this Agreement by any successor or assign of Corporation.
"Termination for Cause" shall mean termination of the Officer's
employment by the Corporation by reason of the following: (i) Officer's willful
dishonesty towards, fraud upon, crime against, deliberate or attempted injury or
bad faith action with respect to the Corporation; or (ii) Officer's conviction
for any felony crime (whether in connection with the Corporation's affairs or
otherwise).
3. Severance Compensation.
x. Xxxxxxxxx Payments. In the event of a Termination Upon a
Change in Control or Change of Management, the Corporation and Officer hereby
stipulate and agree that the Corporation shall pay to the Officer severance
compensation in an aggregate amount equal to Officer's compensation (as defined
below) for a period of twelve (12) months.
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Such Compensation shall be computed with reference to the Compensation paid to
the Officer for the last full calendar month coinciding with or immediately
preceding the month in which the Change in Control or Change of Management
occurred or the month in which the Officer's employment terminates, whichever
amount is higher. "Compensation" of Officer means and includes all wages,
salary, bonus and incentive compensation paid by the Corporation as
consideration for the Officer's service that are includible in the gross income
of the Officer for federal income tax purposes, (or are deferred by Officer's
elections or contributed to any employee benefit plan on a pre-tax basis), but
excluding any taxable income recognized upon the exercise of stock options or
disposition of shares acquired upon the exercise of stock options. Compensation
as to any month shall include: (i) one twelfth (1/12) of the amount of any bonus
or other lump sum compensation entitled to the Officer during the subsequent
twelve (12) months and all amounts accrued with respect to such month under any
deferred compensation plan. All severance compensation shall be without
prejudice to Officer's right to receive all Accrued Compensation (as defined in
Section 2) earned and unpaid up to the time of termination. Severance
compensation payments to the Officer shall, at the Company's option, be paid in
a lump sum, or in equal semi-monthly installments for twelve (12) months
following the termination. Severance compensation payments shall continue for
the stipulated twelve (12) months without respect to the Officers employment
status with any other organization or self employment.
b. Other Severance Provisions. In addition to the severance
payments described above, the Corporation will either (I) reimburse the
officer's COBRA premiums, or (ii) if permitted by the Corporation's health plan,
continue in such plans at the Corporation's expense. If Officer's health
insurance coverage included the Officer's dependents immediately prior to the
Officer's termination, such dependents will also be covered at the Corporation's
expense. Continuation coverage under this Section 3(b) shall continue for twelve
(12) months after the Officer's Termination Upon a Change in Control or Change
of Management, provided, however, that such continuation of coverage shall end
as of the date the Officer becomes covered under any other group health plan
that is not maintained by the Corporation.
4. Acceleration of Options. In the event of Termination, all stock
options held by the Officer, shall become exercisable in full, even if the
vesting conditions set forth therein have not been satisfied in full, and shall
remain exercisable for a period of 90 days if the Termination occurs following a
Change of Control in which the Company's stock exchanged for consideration
consisting of 75% or more cash, or a period of two (2) years following any other
Termination, or a period of twelve (12) months in the event of termination
because of the Officer's disability.
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5. Other Benefits. Neither the provisions of this Agreement nor the
severance compensation provided for hereunder shall reduce any amounts otherwise
payable, or in any way diminish the Officer's rights as an employee of the
Corporation, whether existing now or hereafter, under any benefit, incentive,
retirement, stock option, stock bonus, stock purchase plan, or any employment
agreement or other plan or arrangement.
6. Employment Status. This Agreement does not constitute a contract of
employment or impose on the Officer or the Corporation any obligation to retain
the Officer as an employee, or to change the status of the Officer's employment.
The Officer acknowledges that he or she is an "at-will" employee of the Company,
and that the Company may terminate his or her employment at any time, with or
without cause.
7. Miscellaneous.
a. Severability. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible.
b. Withholding. All compensation and benefits to the Officer
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
c. Arbitration. Except as provided in Section 3, the parties
hereby submit all controversies, claims and matters of difference in any way
related to this Agreement or the performance or breach of the whole or any part
hereof to arbitration in Denver, Colorado, according to the rules and practices
of the American Arbitration Association from time to time in force. If such
rules and practices shall conflict with the Colorado Rules of Civil Procedure or
any other provisions of the Colorado Rules of Civil Procedure or any other
provisions of Colorado law then in force, such Colorado rules and provisions
shall govern. Arbitration of any such controversy, claim or matter of difference
shall be a condition precedent to any legal action thereon. This submission and
agreement to arbitration shall be specifically enforceable. Awards shall be
final and binding on all parties to the extent and in the manner provided by
Colorado law. All awards may be filed by any party with the Clerk of the
District Court in the County of Boulder, Colorado, and an appropriate judgment
entered thereon and execution issued therefor. At the election of any party,
said award may also be filed, and judgment entered thereon and execution issued
therefor, with the clerk of one or more other courts, state or federal, having
jurisdiction over the party against whom such an award is rendered or its
property.
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The arbitrators shall allocate the costs of the arbitration in such manner as
they deem equitable, and may require the reimbursement of all or a portion of
the reasonable legal fees incurred by the prevailing party in such arbitration
proceeding, and any legal proceedings which are taken to enforce the arbitral
award.
d. Entire Agreement; Modifications. This Agreement represents
the entire agreement between the parties and may be amended modified, superseded
or canceled, and any of the terms hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall not affect the right at a
latter time to enforce the same. No waiver by any party of the breach of any
provision contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach or of any other term of this Agreement.
e. Applicable Law. This Agreement shall be construed
under and governed by the laws of the State of Colorado.
f. Successors and Assigns. This agreement shall be binding
upon, and shall issue to the benefit of, the Company's successors and assigns
and the Executive's heirs and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of (
Date ).
SOMATOGEN, INC.
By______________________________
OFFICER:
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