Employment Agreement - MedImmune Inc. and Edward Arcuri
This EMPLOYMENT AGREEMENT, dated as of February 25, 2002, (the "Effective Date"), is by and among EDWARD ARCURI (the "Employee"), MEDIMMUNE, INC., a Delaware corporation ("MedImmune") and AVIRON, a Delaware corporation, a wholly-owned subsidiary of MedImmune ("the Company").
The parties hereby agree as follows:
1. Employment. The Company hereby continues the employment of the Employee, and the Employee hereby accepts continued employment by the Company, upon the terms and conditions hereinafter set forth.
2. Term. The employment of the Employee hereunder will commence on the date hereof and will continue until Employee's employment is terminated in accordance with Section 6 hereof. The period of the Employee's employment under this Agreement is referred to hereafter as the "Employment Period."
3. Duties and Responsibilities. The Employee will be employed by the Company in the position set forth on Annex A, a copy of which is attached hereto and the terms of which are incorporated herein by reference. The Employee will faithfully perform the duties and responsibilities of such position, as they may be assigned from time to time by the Company and MedImmune.
4. Time to be Devoted to Employment. Except for vacation in accordance with the Company's policy in effect from time to time and absences due to temporary illness, the Employee shall devote full time, attention and energy during the Employment Period to the business of the Company and MedImmune. During the Employment Period, the Employee will not be engaged in any other business activity which, in the reasonable judgment of the Company and MedImmune, conflicts with the duties of the Employee hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage.
5. Compensation; Reimbursement.
(a) Settlement of Management Continuity Agreement. The Company shall (i) pay the Employee as soon as practicable following the date hereof the lump-sum amount specified as the Settlement Payment on Annex A and (ii) provide that all outstanding stock options granted to the Employee under the Company's stock option plans prior to the date hereof, to the extent they have not otherwise become vested and exercisable, will automatically become fully and immediately vested and exercisable effective as of the date hereof. Employee acknowledges that the provision of the payments and rights required by the previous sentence is in full satisfaction of the Company's and MedImmune's obligations under the Management Continuity Agreement between the Employee and the Company, dated May, 2000, (the "Management Continuity Agreement") and the Employee waives any other rights under such agreement with respect to past service with the Company or future service with the Company or MedImmune.
(b) Base Salary. The Company will pay to the Employee an annual base salary of not less than the amount specified as the Initial Base Salary on Annex A, payable in accordance with the Company's normal payroll practices. The Employee's base salary shall be reviewed annually by the Company and shall be subject to increase at the option and sole discretion of the Company.
(c) FluMist Bonus. In the event that the Employee is employed by the Company or MedImmune on the date that MedImmune receives final approval from the Food and Drug Administration for FluMist, MedImmune shall pay the Employee the amount specified as the FluMist Bonus on Annex A.
(d) Annual Bonus. During the Employment Period, the Employee will be eligible for consideration for an annual bonus under MedImmune's annual bonus program, based upon achievement of performance goals as determined by MedImmune in its sole discretion.
(e) Stock Option Grants. During the Employment Period, the Employee may be eligible for future stock option grants under MedImmune's annual merit grant program, as determined appropriate in the sole discretion of the Compensation and Stock Committee (the "Compensation Committee") of MedImmune's Board of Directors (the "Board"). MedImmune's annual merit grant program generally considers employees for merit option grants in February of each year and it is MedImmune's current expectation that the Employee be considered for a February, 2002 grant.
(f) Benefits. In addition to the salary and bonuses referred to above, the Employee shall be entitled during the Employment Period to participate in such employee benefit plans or programs of the Company, and shall be entitled to such other fringe benefits, as are from time to time made available generally to employees of the Company with Employee's position, tenure, salary, age, health and other qualifications. The Employee acknowledges and agrees that the Company and MedImmune do not guarantee the adoption or continuance of any particular employee benefit plan or program or other fringe benefit during the Employment Period, and participation by the Employee in any such plan or program shall be subject to the rules and regulations applicable thereto.
(g) Expenses. The Company will reimburse the Employee, in accordance with the practices in effect from time to time for other officers or staff personnel of the Company, for all reasonable and necessary traveling expenses and other disbursements incurred by the Employee for or on behalf of the Company or MedImmune in the performance of the Employee's duties hereunder, upon presentation by the Employee to the Company of appropriate vouchers.
6. Termination of Employment Period.
(a) At-Will Termination. The Company or the Employee may terminate the Employment Period and Employee's employment hereunder at any time and for any reason, subject to the provisions of Sections 6(b) and (c) below.
(b) Termination without Cause. In the event that the Employment Period and Employee's employment hereunder is terminated by the Company without Cause (as defined below) neither the Employee nor the Employee's beneficiaries or estate will have any further rights or claims against the Company or MedImmune under this Agreement except the right to receive:
(i) any unpaid compensation or rights due to the Employee under Section 5(a) hereof,
(ii) the unpaid portion of the base salary provided for in Section 5(b) hereof up to the date of termination (the "Termination Date"), computed on a pro rata basis to the Termination Date,
(iii) payment of Employee's accrued but unpaid rights in accordance with the terms of any stock option, retirement, employee welfare or other employee benefit plans or programs of MedImmune in which the Employee is then participating in,
(iv) reimbursement for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 5(g) hereof,
(v) severance payments equal to 6 months of the Employee's then-current base salary (payable in accordance with the Company's regular payroll practices), and
(vi) in the event the Termination Date is prior to the first anniversary of the date of Aviron's acquisition by MedImmune (the "Merger Date"), payment of the Termination Bonus specified on Annex A which is intended to reflect an amount equal to the Employee's 2001 bonus paid on a "meets expectation" basis, multiplied by a fraction, the numerator of which is the number of days between the Termination Date and the Merger Date, and the denominator of which is 365.
For purposes of this Agreement, "Cause" shall mean (i) the Employee's willful and substantial misconduct, (ii) the Employee's repeated, after written notice from the Company, neglect of duties or failure to act which can reasonably be expected to affect materially and adversely the business or affairs of MedImmune, the Company, or any subsidiary or affiliate thereof, (iii) the Employee's material breach of any of the agreements contained in Sections 7, 8, or 9 hereof, (iv) the commission by the Employee of any material fraudulent act with respect to the business and affairs of MedImmune, the Company, or any subsidiary or affiliate thereof or (v) the Employee's conviction of (or plea of nolo contendere to) a crime constituting a felony.
(c) Other Termination. In the event that the Employment Period and Employee's employment hereunder is terminated by the Company or MedImmune for Cause, by the Employee for any reason or on account of death or Disability (as defined below), neither the Employee nor the Employee's beneficiaries or estate will have any further rights or claims against the Company or MedImmune under this Agreement, including, without limitation, any severance or termination pay, except the right to receive (i) any unpaid compensation or rights due to the Employee under Section 5(a) hereof, (ii) the unpaid portion of the base salary provided for in Section 5(b) hereof up to the Termination Date, computed on a pro rata basis to the Termination Date, (iii) payment of the Employee's accrued but unpaid rights in accordance with the terms of any stock option, retirement, employee welfare or other employee benefit plans or programs of MedImmune in which the Employee is then participating in and (iv) reimbursement for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 5(g) hereof. For purposes of this Agreement, "Disability" shall mean disability by accident, sickness or otherwise, so as to render the Employee mentally or physically incapable of performing the services required to be performed by the Employee under this Agreement for a period that would entitle the Employee to qualify for long-term disability benefits under MedImmune's then-current long-term disability insurance program or, in the absence of such a program, for a period of 90 consecutive days or longer.
7. Disclosure of Information. The Employee will not, at any time during or after the Employment Period, disclose to any person, firm, corporation or other business entity, except as required by law, any non-public information concerning the business, products, clients or affairs of MedImmune, the Company, or any subsidiary or affiliate thereof for any reason or purpose whatsoever, nor will the Employee make use of any of such non-public information for personal purposes or for the benefit of any person, firm, corporation or other business entity except MedImmune, the Company, or any subsidiary or affiliate thereof.
8. Restrictive Covenants.
(a) NonCompetition. The Employee hereby acknowledges and recognizes that, during the Employment Period, the Employee will be privy to trade secrets and confidential proprietary information critical to the business of MedImmune and the Company, and the Employee further acknowledges and recognizes that MedImmune would find it extremely difficult or impossible to replace the Employee and, accordingly, the Employee agrees that, in consideration of the benefits to be received by the Employee hereunder, the Employee will not, from and after the date hereof until the first anniversary of the termination of the Employment Period, (i) directly or indirectly engage in the development, production, marketing or sale of products that compete (or, upon commercialization, would compete) with any influenza vaccines or other products of the Company or any subsidiary thereof being developed (so long as such development has not been abandoned), marketed or sold during Employee's period of service with MedImmune, the Company, or any subsidiary or affiliate thereof (such business or activity being hereinafter called a "Competing Business") whether such engagement shall be as an officer, director, owner, employee, partner, affiliate or other participant in any Competing Business or (ii) assist others in engaging in any Competing Business in the manner described in the foregoing clause (i).
(b) Nonsolicitation. The Employee agrees that, in consideration of the benefits to be received by the Employee hereunder, the Employee will not, until the expiration of a period of 12 months immediately following the expiration of the Employment Period, directly or indirectly solicit, hire or induce any employee, customer, client or other person doing business with MedImmune, the Company, or any subsidiary or affiliate thereof in any way alter their relationship or terminate their employment with MedImmune, the Company, or any subsidiary or affiliate thereof.
(c) Reasonableness. The Employee understands that the foregoing restrictions may limit the ability of the Employee to earn a livelihood in a business similar to the business of the Company, but nevertheless believes that the Employee has received and will receive sufficient consideration and other benefits, as an employee of the Company and as otherwise provided hereunder, to justify such restrictions which, in any event (given the education, skills and ability of the Employee), the Employee believes would not prevent the Employee from earning a living.
9. Right to Inventions. The Employee will promptly disclose, grant and assign to MedImmune, for its sole use and benefit, any and all inventions, improvements, technical information and suggestions relating in any way to the business of MedImmune, the Company, or any subsidiary or affiliate thereof which the Employee may develop or acquire during the Employment Period (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or upon any such invention, improvement or technical information. In connection therewith:
(i) the Employee shall, without charge, but at the expense of MedImmune, promptly at all times hereafter execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of MedImmune to vest title to any such inventions, improvements, technical information, patent applications, patents, copyrights or reissues thereof in MedImmune, the Company, or any subsidiary or affiliate thereof and to enable it to obtain and maintain the entire right and title thereto throughout the world; and
(ii) the Employee shall render to MedImmune, at its expense (including a reasonable payment for the time involved in case the Employee is not then in its employ), all such assistance as it may require in the prosecution of applications for said patents, copyrights or reissues thereof, in the prosecution or defense of interferences which may be declared involving any said applications, patents or copyrights and in any litigation in which MedImmune, the Company, or any subsidiary or affiliate thereof may be involved relating to any such patents, inventions, improvements or technical information.
10. Enforcement. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforceable to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, to the extent that a restriction contained in this Agreement is more restrictive than permitted by the laws of any jurisdiction where this Agreement may be subject to review and interpretation, the terms of such restriction, for the purpose only of the operation of such restriction in such jurisdiction, will be the maximum restriction allowed by the laws of such jurisdiction and such restriction will be deemed to have been revised accordingly herein.
11. Remedies; Survival. (a) The Employee acknowledges and understands that the provisions of the covenants contained in Sections 7, 8 and 9 hereof, the violation of which cannot be accurately compensated for in damages by an action at law, are of crucial importance to MedImmune, and that the breach or threatened breach of the provisions of this Agreement would cause MedImmune irreparable harm. In the event of a breach or threatened breach by the Employee of the provisions of Section 7, 8 or 9 hereof, MedImmune will be entitled to an injunction restraining the Employee from such breach. Nothing herein contained will be construed as prohibiting MedImmune from pursuing any other remedies available for any breach or threatened breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the contrary, the provisions of Sections 7, 8, 9, 10 and 11 hereof will survive the expiration or other termination of this Agreement until, by their terms, such provisions are no longer operative.
12. Tax Withholding. All compensation payable under this Agreement shall be subject to reduction by all applicable withholding, social security and other federal, state and local taxes and deductions for income, employment, excise and other taxes.
13. Release. As a condition of the Employee being eligible for any severance or other payments upon termination of employment under Section 6 hereof, the Employee shall execute and honor a standard release of claims against MedImmune, the Company, or any subsidiary or affiliate thereof in the form deemed appropriate by MedImmune. Such release shall specifically relate to all of the Employee's rights and claims in existence at the time of execution.
14. Notices. Notices and other communications hereunder will be in writing and will be delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows:
if to the Employee: at his address as listed on the Company's then current payroll and if to MedImmune: MedImmune, Inc. 35 West Watkins Mill Road Gaithersburg, Maryland 20878 Attention: Chief Executive Officer with a copy to: Frederick W. Kanner, Esq. Dewey Ballantine LLP 1301 Avenue of the Americas New York, NY 10019
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement will be deemed to have been given on the date of delivery, if personally delivered; on the business day after the date when sent, if sent by air courier; and on the third business day after the date when sent, if sent by mail, in each case addressed to such party as provided in this Section 14 or in accordance with the latest unrevoked direction from such party.
15. Binding Agreement; Benefit. The provisions of this Agreement will be binding upon, and will inure to the benefit of, the respective heirs, legal representatives and successors of the parties hereto.
16. Governing Law. This Agreement shall be governed by and enforceable in accordance with the laws of the State of Maryland applicable to contracts executed and performed within such state, without giving effect to the principles of conflict of laws thereof. The parties agree that any claims concerning the rights and obligations of the parties or any other issue arising under this Agreement shall be brought in the Circuit Court for Montgomery County or the United States District Court for the District of Maryland, and that such courts shall have exclusive jurisdiction over litigation involving any such claims. The parties agree to submit to the jurisdiction of such courts and that they will not raise lack of personal jurisdiction or inconvenient forum as defenses in any such litigation.
17. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and will not operate or be construed as a waiver of any subsequent breach by such other party.
18. Entire Agreement; Amendments. This Agreement (including Annex A) and the Management Continuity Agreement contain the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings among the parties with respect thereto. This Agreement may be amended only by an agreement in writing signed by the parties hereto.
19. Headings. The section headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.
20. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.
21. Assignment. This Agreement is personal in its nature and the parties hereto shall not, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, that the provisions hereof (including, without limitation, Sections 7, 8 and 9) will inure to the benefit of, and be binding upon, each successor of MedImmune, whether by merger, consolidation, transfer of all or substantially all of its assets or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
MEDIMMUNE, INC. By: /s/: Melvin D. Booth THE COMPANY By: Edward J. Arcuri, Ph.D. EMPLOYEE