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Executive Compensation And Benefits Continuation

This is an actual contract by Kent International Holdings.

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Sectors: Biotechnology / Pharmaceuticals
Governing Law: Colorado , View Colorado State Laws
Effective Date: October 14, 1997
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EXECUTIVE COMPENSATION AND BENEFITS
CONTINUATION AGREEMENT


THIS EXECUTIVE COMPENSATION AND BENEFITS CONTINUATION AGREEMENT (the "AGREEMENT") is entered into this 14th day of October, 1997 (the "Effective Date") between KENNETH R. LYNN ("EXECUTIVE") and CORTECH, INC., a Delaware corporation (the "COMPANY"). This Agreement is intended to provide Executive with the compensation and benefits described herein upon the occurrence of specified events as a means of reducing the inevitable distraction of Executive created by a pending or threatened Change of Control and of encouraging Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control.


Certain capitalized terms used in this Agreement are defined in Article VII.


The Company and Executive hereby agree as follows:


ARTICLE I
EMPLOYMENT BY THE COMPANY


1.1 Executive is currently employed as the President and Chief Executive Officer of the Company.


1.2 This Agreement shall remain in full force and effect so long as Executive is employed by the Company; provided, however, that the rights and obligations of the parties hereto contained in Articles III through VIII shall survive any such termination.


1.3 The Company and Executive each agree and acknowledge that Executive is employed by the Company as an "at-will" employee and that either Executive or the Company has the right at any time to terminate Executive's employment with the Company, with or without cause or advance notice, for any reason or for no reason. The Company and Executive wish to set forth the compensation and benefits which Executive shall be entitled to receive in the event that Executive's employment with the Company terminates under the circumstances described in Article II of this Agreement.


1.4 The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive's past services to the Company, Executive's continued employment with the Company and Executive's execution of the waiver and release referred to in Section 4.2.


1. 2
ARTICLE II
TERMINATION EVENTS


2.1 TERMINATION PRIOR TO CHANGE OF CONTROL.


(a) Prior to the occurrence of a Change of Control, (i) if Executive's employment is involuntarily terminated at any time by the Company without Cause or (ii) if Executive terminates his employment on account of Good Reason, the termination of employment will be a Termination Event, and the Company shall pay Executive the compensation and benefits described in Article III; provided, however, that if such termination is also described in Section 2(a)(i) of the Severance Plan, compensation and benefits shall be paid to Executive pursuant to this Agreement and not pursuant to the Severance Plan, and this Agreement shall be considered to have amended the Severance Plan for this purpose.


(b) Prior to the occurrence of a Change of Control, if Executive's employment (i) is involuntarily terminated by the Company with Cause, (ii) is terminated on account of death or disability or (iii) is terminated by Executive for any other reason other than Good Reason, including, without limitation, retirement, then the termination of employment will not be a Termination Event, Executive will not be entitled to receive any payments or benefits under the provisions of this Agreement, except as otherwise specifically set forth herein, and the Company will cease paying compensation or providing benefits to Executive as of Executive's termination date, except as otherwise provided by a written agreement between Executive and the Company.


2.2 TERMINATION ON OR AFTER CHANGE OF CONTROL. Within thirty (30) months after the occurrence of a Change of Control, (i) if Executive's employment is involuntarily terminated at any time by the Company without Cause or (ii) if Executive terminates his employment on account of Good Reason, the termination of employment will be a Termination Event, and the Company shall pay Executive the compensation and benefits described in Article III; provided, however, that if such termination is also described in Section 2(a)(i) of the Severance Plan, compensation and benefits shall be paid to Executive pursuant to this Agreement and not pursuant to the Severance Plan, and this Agreement shall be considered to have amended the Severance Plan for this purpose.


ARTICLE III
COMPENSATION AND BENEFITS PAYABLE


3.1 RIGHT TO BENEFITS. If a Termination Event occurs, Executive shall be entitled to receive the benefits described in this Agreement subject to the restrictions and limitations set forth in Article IV. If a Termination Event does not occur, Executive shall not be entitled to receive any benefits described in this Agreement, except as otherwise specifically set forth herein.


3.2 SALARY CONTINUATION. Upon the occurrence of a Termination Event, Executive shall be entitled to receive a salary continuation benefit equal to twenty four (24) months of Executive's Base Salary, less any applicable withholding of federal, state or local tax. Such


2. 3 lump sum payment shall be made no later than the date the employee agreement and release described in Section 4.2 becomes effective. If Executive dies after a Termination Event but prior to the making of such lump sum payment, such payment shall be made to Executive's Salary Continuation Beneficiary.


3.3 HEALTH INSURANCE COVERAGE. Following the occurrence of a Termination Event, to the extent provided by the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and by the Company's group health insurance policies, Executive and his covered dependents will be eligible to continue their health insurance benefits at their own expense, and later, to convert to an individual policy if they wish. If Executive elects such COBRA continuation, the Company shall pay Executive's and his covered dependents' COBRA continuation premiums for eighteen (18) months following the date of the Termination Event, provided that the Company's obligation to make such payments shall cease immediately if Executive becomes eligible for other health insurance benefits at the expense of a new employer. Executive agrees to notify a duly authorized officer of the Company, in writing, immediately upon acceptance of any employment following the Termination Event which provides health insurance benefits.


This Section 3.3 provides only for the Company's payment of COBRA continuation premiums for the period specified above. This Section 3.3 is not intended to affect, nor does it affect, the rights of Executive, or Executive's covered dependents, under any applicable law with respect to health insurance continuation coverage.


If the Company does not maintain a group health insurance policy at the time of the Termination Event, then the Company shall provide Executive and his covered dependents with individual policies of health insurance for eighteen (18) months following the date of the Termination Event or, if such policies cannot be purchased, shall pay to Executive a cash lump sum equal to the cost for eighteen (18) months of group health insurance for Executive and his covered dependents at the rate last in effect under the Company's group health insurance policy.


3.4 STOCK OPTIONS. Executive's stock options which are outstanding as of the date of the Termination Event (the "Stock Options") shall become fully vested to the extent not already vested, and Executive shall be permitted to exercise such Stock Options until the earlier of (i) the date such Stock Options would otherwise expire in the absence of a Termination Event and (ii) eighteen (18) months following the Termination Event.


3.5 BONUS. If a Termination Event occurs, Executive shall receive a bonus for the fiscal year in which the Termination Event occurs if Executive received a bonus payment for the year immediately preceding the year in which the Termination Event occurs. The amount of the bonus shall be equal the amount of the bonus payment, if any, paid to Executive for the year immediately preceding the year in which the Termination Event occurs, multiplied by a fraction, the numerator of which shall be the number of months Executive works for the Company during the year in which the Termination Event occurs, including the month in which the Termination Event occurs, and the denominator of which shall be twelve (12).


3. 4
3.6 MITIGATION. Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by retirement benefits after the date of the Termination Event, or otherwise.


ARTICLE IV
LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT


4.1 REDUCTION IN PAYMENTS AND BENEFITS; WITHHOLDING TAXES. The benefits provided under this Agreement are in lieu of any other benefit provided under any group severance plan of the Company in effect at the time of a Termination Event. The Company shall withhold appropriate federal, state or local income and employment taxes from any payments hereunder.


4.2 EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the occurrence of a Termination Event, and prior to the receipt of any benefits under this Agreement on account of the occurrence of a Termination Event, Executive shall, as of the date of a Termination Event, execute an employee agreement and release in the form attached hereto as Exhibit A. It is understood that Executive has twenty-one (21) days to consider whether to execute such employee agreement and release, and Executive may revoke such employee agreement and release within seven (7) business days after execution of such employee agreement and release. If Executive does not execute such employee agreement and release within the twenty-one (21) day period, or if Executive revokes such employee agreement and release within the seven (7) business day period, no benefits shall be payable under this Agreement and this Agreement shall be null and void.


4.3 CERTAIN ADDITIONAL PAYMENTS. Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 4.3) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or any interest or penalties are incurred by Executive 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 Executive shall be entitled to receive from the Company an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.


4.4 AMENDMENT OR TERMINATION OF THIS AGREEMENT. This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive. The written consent of the Company to a change or termination of this Agreement must be


4. 5 signed by a duly authorized officer of the Company, after such change or termination has been approved by the Compensation Committee of the Comp
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