Employment Agreement - Biopure Corp. and Paul A. Looney
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of June 9, 1999,
is made by and between Biopure Corporation, a Delaware corporation, having its
principal place of business at 11 Hurley Street, Cambridge, MA (the "Company"),
and Mr. Paul A. Looney residing at 9 Pheasant Lane, Lexington MA 02421 (the
"Executive").
Recitals
1. The Company desires to employ the Executive as the
President of the Company and to enter into an agreement with the Executive
embodying the terms of that relationship.
2. The Executive is willing to accept such employment by the
Company on the terms set forth herein.
Agreement
NOW, THEREFORE, in consideration of the mutual covenants and
premises herein contained, and other good and valuable consideration, the
Company and the Executive hereby agree as follows.
1. Certain Definitions.
1.1 "Effective Date" shall mean July 1, 1999.
1.2 "Employment Period" shall mean the period
commencing on the Effective Date and ending on the third anniversary of such
date, as further extended in accordance with the provisions of this Section 1.2.
The Employment Period (as it may have been extended pursuant to the provisions
of this sentence) shall be extended or further extended, as the case may be,
without any action by the Company or the Executive, on the first anniversary of
the Effective Date and on each subsequent anniversary thereof for an additional
period of one year, unless and until either party gives written notice to the
other party at least six months in advance of any such anniversary that the
Employment Period in effect when such notice is given is not to be extended or
further extended, as the case may be.
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1.3 "Board" shall mean the Board of Directors of
the Company.
2. Employment.
Subject to the terms and conditions provided
herein, the Company hereby agrees, during the Employment Period, to employ the
Executive as its President. The Executive hereby agrees to accept such
employment during the Employment Period. The Company agrees to nominate
Executive as a member of the Board and to use all reasonable efforts to cause
him to be elected to serve throughout the Employment Period. Promptly after the
Effective Date, the Company shall propose to the Board that there be elected an
Executive Committee that will include the Executive as a member.
3. Employment Duties. During the Employment Period, the
Executive shall have such duties and responsibilities as are assigned to the
Executive by the Board and are consistent with his status as President.
Executive shall be the chief operating officer of the Company and shall have
general supervision, direction and control of the operations of the business of
the Company, except that the legal function shall report to the Chief Executive
Officer of the Company and the Chief Executive Officer of the Company shall have
the right to direct the activities of the Chief Financial Officer from time to
time as needed to assist the Chief Executive Officer. The Executive shall report
on all activities of the Company to the Chief Executive Officer, who shall have
the general powers and duties of supervision and management usually vested in
the office of the Chief Executive Officer of the Corporation. During the
Employment Period, but excluding any periods of vacation and sick leave, the
Executive agrees to devote substantially all his business attention and time to
the business and affairs of the Company and its subsidiaries, and to use the
Executive's best efforts to perform faithfully and efficiently the duties and
responsibilities assigned to the Executive under this Section 3. It is expressly
understood that (a) the Executive may devote a reasonable amount of time to such
industry associations and charitable and civic endeavors as shall not interfere
with the obligation set forth in the preceding sentence, and (b) with the prior
approval of the Board (which shall not be unreasonably withheld), the Executive
may serve as a member of one or more boards of directors of companies that are
not affiliated with the Company.
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4. Compensation.
4.1 Base Salary. During the Employment Period,
the Company shall pay the Executive a base salary (the "Base Salary") of no less
than $295,000 per annum, payable in accordance with the Company's normal payroll
practices. The Base Salary shall be considered for increase at least once each
year, in accordance with the Company's regular review of senior executive
salaries.
4.2 Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall participate in and receive all
benefits under all bonus, short- or long-term incentive plans and programs
maintained by the Company from time to time on or after the Effective Date for
the benefit of senior executives of the Company. During the Employment Period,
the Executive shall participate in and receive all benefits under all savings
and retirement plans and programs maintained by the Company from time to time on
or after the Effective Date for the benefit of senior executives of the Company.
4.3 Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
participate in and receive all benefits under all welfare benefit plans and
programs maintained by the Company from time to time on or after the Effective
Date for the benefit of senior executives of the Company.
4.4 Vacation; Fringe Benefits. During the
Employment Period, the Executive shall be entitled to paid vacation in
accordance with the vacation policy maintained by the Company from time to time
on or after the Effective Date for senior executives of the Company. During the
Employment Period, the Executive shall receive such perquisites and fringe
benefits as are generally provided to senior executives of the Company.
4.5 Stock Option Grant. Within a reasonable
period of time, and in any case no later than the earlier of the closing of the
Company's initial public offering or six months after the Effective Date, the
Executive shall be granted stock options entitling the Executive to acquire
350,000 shares of the Company's common stock. Such options shall be for a term
of 10 years, and upon death or termination of employment, shall provide for
continued exercisability for a period of one year. Such options shall be or
become exercisable in respect of 100% of the aggregate number of shares
underlying such options upon the change in control (as defined in such option)
of the Company and upon the Executive's (a) death, (b) Disability (as defined in
Section 5.1 hereof), (c) retirement under the terms of any retirement plan of
the Company applicable to him, (d) termination of employment by the Company for
reasons other than Cause, or (e) voluntary termination of employment for Good
Reason. Prior to any such event, such options shall be or become exercisable in
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respect of the aggregate number of such shares underlying such
option as follows:
25% .............. on the first anniversary of
the Effective Date;
50% .............. on the second anniversary of
the Effective Date.
75% .............. on the third anniversary of
the Effective Date;
100% .............. on the fourth anniversary of
the Effective Date.
5. Termination.
5.1 Death or Disability. The Employment Period
shall terminate automatically upon the Executive's death. If, during the
Employment Period, the Disability (as defined below) of the Executive has
occurred, the Company may give to the Executive written notice of its intention
to terminate the Executive's employment due to such Disability. The Executive's
employment with the Company shall be terminated by the Company on the 30th day
after receipt by the Executive of such notice (the "Disability Effective Date"),
if, within such thirty (30) day period, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" means a physical or mental disability resulting in the complete,
total and permanent inability of the Executive to perform his duties under this
Agreement, as determined by a physician selected in good faith by the Company
and approved in good faith by the Executive.
5.2 Cause. During the Employment Period, the
Company, by action of the Board, may terminate the Executive's employment
hereunder for "Cause". For purposes of this Agreement, "Cause" means (a) an act
or acts of material personal dishonesty taken by, or committed at the request
of, the Executive, intended to result in the personal enrichment of the
Executive at the expense of the Company, or any of its subsidiaries, which
results in material damage to the Company, (b) repeated willful violations by
the Executive of the Executive's obligations under this Agreement which have not
been cured within thirty (30) days after a written Notice of Termination setting
forth such violations has been given by the Board to the Executive, or (c) the
conviction of the Executive of a felony.
5.3 Without Cause. During the Employment Period,
the Company, by action of the Board, may terminate, upon thirty
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(30) days' advance written notice given to the Executive, the Executive's
employment hereunder other than for Cause.
5.4 Termination by Executive for Good Reason.
During the Employment Period the Executive may terminate employment hereunder
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (a)
the reduction of the Executive's Base Salary, (b) the changing, without his
consent, of the Executive's title, authority, duties or responsibilities as
specified in Section 3, (c) the Company requiring the Executive, without his
consent, to be based in any office or location other than the Company's
headquarters office, or (d) the material breach by the Company of any provision
of this Agreement which has not been cured within thirty (30) days after a
Notice of Termination has been given by the Executive to the Company.
5.5 Date of Termination. "Date of Termination"
shall mean the date of receipt of a notice of termination or any later date
specified therein (which date shall be not more than fifteen (15) days after the
giving of such notice); provided, however, that (a) if the Executive's
employment is terminated by the Company, other than for Cause or Disability, the
Date of Termination shall be the thirtieth day after the date on which the
Company notifies the Executive in writing of such termination under Section 5.3,
(b) if the Executive's employment is terminated by the Company for Cause as
defined in clause (b) of the second sentence of Section 5.2, the Date of
Termination shall be the thirtieth day after the Notice of Termination is given
(provided that the Executive has not cured his violations of his obligations
under this Agreement prior to such thirtieth day), (c) if the Executive's
employment is terminated for Good Reason as defined in Section 5.4, the Date of
Termination shall be the thirtieth day after the Notice of Termination is given
(provided that the Company has not cured its breach of this Agreement prior to
such thirtieth day), (d) if the Executive's employment is terminated voluntarily
by the Executive other than for Good Reason, the Date of Termination shall be
the date on which the Executive notifies the Company of such termination (or the
date on which the Company otherwise first learns of such voluntary termination),
and (e) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
6.1 Death. If the Executive's employment is
terminated by reason of the Executive's death, the Employment Period shall
terminate on the date of death, and the Executive, or the Executive's legal
representatives, as the case may be, shall be entitled to receive (a) the
Executive's Base Salary through the Date of Termination, (b) any compensation
previously
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deferred by the Executive (together with any accrued interest thereon) and not
yet paid by the Company, and (c) any accrued vacation pay not yet paid by the
Company (such amounts specified in clauses (a), (b), and (c) are hereinafter
referred to as the "Accrued Obligations"). All such Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within thirty (30) days after the Date of Termination. In addition, the
Executive's family shall be entitled to receive any family death benefits
provided by the Company to surviving families of senior executives (or, if more
favorable, other employees) of the Company under the plans and programs, if any,
then maintained by the Company.
6.2 Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, the Employment Period shall
terminate on the Date of Termination and the Executive shall be entitled to
receive all Accrued Obligations. All such Accrued Obligations shall be paid to
the Executive in a lump sum in cash within thirty (30) days after the Date of
Termination. In addition, the Executive shall be entitled as of the Disability
Effective Date to receive the disability benefits provided by the Company to
disabled senior executives (or, if more favorable, other employees) of the
Company under the plans and programs, if any, then maintained or provided by the
Company, as if the Executive were disabled as of the Disability Effective Date
within the meaning of such plans and programs and regardless of whether the
Executive is actually disabled within the meaning of such plans and programs.
6.3 Cause; Voluntarily. If the Executive's
employment shall be terminated for Cause by the Company or by the Executive
voluntarily, the Employment Period shall terminate on the Date of Termination
and the Executive shall be entitled to receive all Accrued Obligations. All such
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
thirty (30) days after the Date of Termination.
6.4 Other Than for Cause or Disability or
Termination by the Executive for Good Reason. If, during the Employment Period,
the Company terminates the Executive's employment (other than for death, Cause
or Disability), or the Executive terminates his employment for Good Reason, the
Employment Period shall not terminate until it otherwise would in accordance
with the provisions of Section 1.2 and the Executive shall be entitled to
receive, within thirty (30) days after the Date of Termination, the following:
(a) The Company shall pay to the Executive
all Accrued Obligations.
(b) The Company shall pay to the Executive a
lump sum payment equal to (i) the amount of Base
Salary the Executive would have been paid pursuant
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to Section 4.1 had he remained in employment with the
Company in accordance with the terms of this
Agreement for the period from the Date of Termination
to the end of the Employment Period, plus (ii) the
amount (if any) determined by multiplying (A) the
average annual incentive award awarded to the
Executive for the three most recent fiscal years
ending in the Employment Period, or all fiscal years
ending in the Employment Period if less than three,
(for purposes of this clause (A), the incentive award
for 1999 shall be deemed to be 15% of Base Salary) by
(B) the greater of one or a fraction, the numerator
of which is the number of days remaining from the
Date of Termination to the end of the Employment
Period and the denominator of which is 365.
(c) The Company shall pay to or provide the
Executive with the benefits under the Company
Retirement Plan (including without limitation
additional benefit accruals), and all other
retirement, savings and welfare benefit plans and
programs maintained by the Company as of the Date of
Termination, that he would have received had he
remained in employment with the Company in accordance
with the terms of this Agreement for the period from
the Date of Termination to the end of his Employment
Period.
(d) The parties recognize and agree that, if
the Company terminates the Executive's employment
during the Employment Period other than for
Disability or Cause or if the Executive terminates
his employment during the Employment Period for Good
Reason, the actual damages to the Executive would be
difficult if not impossible to ascertain and agree
that the Executive's sole remedy shall be a right to
receive amounts determined and paid in accordance
with the provisions of this Section 6.4. The
Executive shall not be required to mitigate the
amount of any payment provided for in this Section
6.4 by seeking other employment or otherwise, nor
shall any compensation earned by the Executive in
other employment or otherwise reduce the amount of
any payment provided for in this Section 6.4.
6.5 Full Satisfaction. The payments received by
the Executive (or his legal representatives) under this Agreement that are
attributable to the termination of the Executive's employment shall be in full
and complete satisfaction of any and all claims the Executive (or his legal
representatives) may have
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against the Company which are, in any way, related to the employment
relationship between the Executive and the Company.
7. Other Payments. Notwithstanding anything to the contrary
contained herein (including without limitation Section 6.5), any compensation or
benefits, if any, which are vested in the Executive or which the Executive is
otherwise entitled to receive under any plan or program of the Company before,
at or subsequent to the Date of Termination shall be payable in accordance with
the terms and provisions of such plan or program.
8. Confidential Information. During the Employment Period, the
Executive shall hold in a fiduciary capacity for the benefit of the Company and
its subsidiaries all secret, proprietary or confidential information, knowledge
or data relating to the Company or its subsidiaries, and their respective
businesses, which shall have been obtained by the Executive. After termination
of the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, use, communicate or divulge any such
information, knowledge or data to anyone at any time.
9. Non-Competition. During the Executive's employment with the
Company, and for one year thereafter, the Executive agrees that, without the
prior written consent of the Company, (a) the Executive shall not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee, or in any other capacity,
carry on or engage in, or advise or have any financial interest in any company
that carries on or engages in, business which is in competition with any
business of the Company or its subsidiaries, (b) the Executive shall not, on his
own behalf or on behalf of any person, firm or company, directly or indirectly,
solicit for employment any person that has been employed by the Company or any
of its subsidiaries at any time during the one (1) year period immediately
preceding such solicitation, and (c) the Executive shall not, on his own behalf
or on behalf of any competitor of the Company or its subsidiaries, directly or
indirectly, solicit or divert the business of any person or entity which was a
customer (or a prospective customer) of the Company or any of its subsidiaries
at any time during the Executive's employment with the Company or as of the
Executive's Date of Termination. Anything in this Section 9 to the contrary
notwithstanding, the Executive may invest in stock, bonds, or other securities
of any business in competition with the Company (but without otherwise
participating in such competition with the Company) if (a) such stock, bonds, or
other securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of
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1934, as amended, and (b) his investment does not exceed, in the case of any
class of the capital stock of any one issuer, three percent (3%) of the issued
and outstanding shares, or, in the case of other securities, three percent (3%)
of the aggregate principal amount thereof issued and outstanding.
10. Survival; Injunctive Relief.
10.1 Survival. The Executive agrees that
Sections 8 and 9 of this Agreement shall survive the termination of (a) this
Agreement, (b) the Employment Period and/or (c) the Executive's employment with
the Company. The Executive acknowledges that the Company has no adequate remedy
at law and would be irreparably harmed if the Executive breaches or threatens to
breach any of the provisions of Sections 8 or 9 of this Agreement, and,
therefore, agrees that the Company shall be entitled to injunctive relief to
prevent any such breach or threatened breach thereof, and to specific
performance of the terms of such sections (in addition to any other legal or
equitable remedy the Company may have). The Executive further agrees that the
Executive shall not, in any equity proceeding relating to the enforcement of
Sections 8 or 9 of this Agreement, raise the defense that the Company has an
adequate remedy at law. Nothing in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
that it may have under and in respect of this Agreement or any other agreement
or understanding.
10.2 Reasonable Restrictions. All of the
provisions of this Agreement, including, without limitation, Sections 8 and 9,
are intended by the parties hereto as separate and divisible provisions and if,
for any reason, any one of them (or part thereof) is held to be invalid or
unenforceable neither the validity nor the enforceability of any other provision
(or part thereof) shall be affected thereby. The Executive agrees that the
restrictions imposed by Section 9 are reasonable in both geographic scope and
duration. The Executive understands that the provisions of Sections 8 and 9 of
this Agreement may affect or limit the Executive's ability to earn a livelihood
in a business similar to the businesses engaged in by the Company (or any of its
subsidiaries), but the Executive nevertheless believes and agrees that the
Executive shall receive (or shall have received) sufficient consideration,
remuneration and other benefits from the Company to make enforceable the
restrictions and limitations contained in Sections 8 and 9 of this Agreement.
10.3 Judicial Restatement. If for any reason any
court of competent jurisdiction shall find the provisions of Section 9 of this
Agreement unreasonable in geographic scope or duration, the Executive and the
Company agree that the restrictions and limitations contained in Section 9 shall
be restated so that they are effective and enforceable to the
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fullest extent allowed or allowable under the applicable law of any such
jurisdiction. It is further agreed by the Executive and the Company that any
judicial restraints ordered by any such court in respect of the restrictions and
limitations imposed by Section 9 of this Agreement shall be applicable and
effective only with respect to such particular jurisdiction in which such order
is made.
11. Successors. This Agreement is personal to the Executive.
Without the prior written consent of the Company it shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of, and be enforceable by, the
Executive's legal representatives. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
12. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without reference to principles of conflict of laws thereunder. The captions of
this Agreement are not part of the provisions hereof and shall not have any
force or effect. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives. All notices and other communications
hereunder shall be in writing and shall be given by facsimile transmission, hand
delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, to the addresses set forth above (in the case of the
Company, to the attention of the Chairman) or to such other address as either
party shall have furnished to the other in writing in accordance herewith. Any
such notice and communications shall be effective when actually received by the
addressee. The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation. This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
BIOPURE CORPORATION
By: /s/ Carl W. Rausch
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Name: Carl W. Rausch
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Title: Chairman, Chief Executive
Officer and President
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/s/ Paul A. Looney
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Paul A. Looney
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