S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N
Washington, D. C. 20549
FORM 10Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended June 30, 1995 Commission file number 0-14887
T H E L I P O S O M E C O M P A N Y, I N C.
(Exact name of registrant as specified in its charter)
Delaware 22-2370691
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Research Way, Princeton Forrestal Center, Princeton, N.J. 08540
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 452-7060
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of Common
Stock as of the latest practicable date:
Class August 8, 1995
Common Stock, $.01 par value 29,340,606
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE NO.
Part I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Balance Sheets as of
June 30, 1995 and December 31, 1994 3
Consolidated Statements of Operations
for the three and Six Month Periods Ending
June 30, 1995 and 1994.......................... 4
Consolidated Statements of Cash Flows
for the Six Month Periods Ending
June 30, 1995 and 1994.......................... 5
Notes to Consolidated Financial Statements 6,7
ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operation 8,9,10, 11, 12
Part II. OTHER INFORMATION 13
ITEM 4 - Submission of Matters to a Vote of
Security Holders 13
ITEM 6 - Exhibits and Reports on Form 8-K 13
Signatures 15
Exhibits 16
************************************************
Note concerning trademarks: Certain names
mentioned in this report are trademarks owned by
The Liposome Company, Inc. or its affiliates or
licensees. ABLC and AbelcetTM are trademarks of
The Liposome Company, Inc.
Page 2 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
(Unaudited)
June 30, December 31,
ASSETS 1995 1994
Current assets:
Cash and cash equivalents $ 3,302 $ 2,369
Short-term investments 68,255 55,487
Accounts receivable 2,698 1,618
Inventories 2,372 748
Other current assets 901 450
Total current assets 77,528 60,672
Long-term investments 2,798 9,421
Plant and equipment, net 18,139 17,686
Restricted cash 6,080 4,880
Other assets, net 509 537
Total assets $ 105,054 $ 93,196
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,130 $ 1,112
Accrued expenses and other current liabilities 6,157 4,698
Current portion of long term obligations 1,796 1,779
Preferred Stock dividends payable 1,337 1,337
Total current liabilities 10,420 8,926
Long-term obligations 5,015 5,917
Total liabilities 15,435 14,843
Stockholders' equity:
Capital stock:
Preferred Stock, par value $.0l;
2,400,000 authorized; 276,000 shares of
Series A Cumulative Convertible Exchangeable
Preferred Stock outstanding (liquidation
preference of $69,000,000) 3 3
Common Stock, par value $.0l;
60,000,000 shares authorized;
27,831,960 and 23,982,849 shares issued
and outstanding 278 240
Additional paid-in capital 219,327 192,003
Net unrealized investment loss (1,963) (5,033)
Foreign currency translation adjustment (7) (1)
Accumulated deficit (128,019) (108,859)
Total stockholders' equity 89,619 78,353
Total liabilities and stockholders' equity $ 105,054 $ 93,196
See accompanying notes
Page 3 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share figures)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Collaborative research,
development revenues and other $ 2,213 $ 1,653 $ 3,713 $ 3,233
Product sales 843 -- 843 --
Interest and investment income, net 661 1,288 1,014 2,744
Total revenues 3,717 2,941 5,570 5,977
Cost of goods sold 340 -- 340 --
Research and development expenses 9,038 8,956 18,254 16,533
Selling, general and administrative
expenses 3,093 2,047 5,979 4,269
Interest expense 73 81 157
156
Total expenses................. 12,544 11,084 24,730 20,958
Net loss... (8,827) (8,143) (19,160)(14,981)
Preferred Stock dividends (1,337) (1,337) (2,674) (2,674)
Net loss applicable to Common Stock $(10,164) $(9,480) $(21,834) $(17,655)
Net loss per share applicable to
Common Stock........................$ (.38)$ (.40) $ (.87) $ (.74)
Weighted average number of common
shares outstanding.................. 26,407 23,812 25,228 23,763
See accompanying notes
Page 4 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net loss $(19,160) $(14,981)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 1,636 1,544
Other 110 333
Changes in assets and liabilities
Accounts receivable (1,080) 588
Inventory (1,624) (305)
Prepaid expenses (319) 209
Other current assets (132) 148
Accounts payable (75) (1,989)
Accrued expenses and other current liabilities 1,262 428
Unearned contract income and other fees 197 356
Net cash used by operating activities (19,185) (13,669)
Cash flows from investing activities:
Purchases of short and long-term investments (34,069) (33,620)
Sales of short and long-term investments... 29,794 50,966
Purchases of property, plant and equipment (1,968) (1,742)
Net cash (used)/ provided by investing activities (6,243) 15,604
Cash flows from financing activities:
Net Proceeds from the issuance of Common Stock 28,839 --
Proceeds from the exercise of stock options 1,087 96
Principal payments under note payable (151) (152)
Principal payments under capital lease obligations (734)
(718)
Dividend payments (2,674) (2,674)
Net cash provided /(used) by financing activities 26,367 (3,448)
Effects of exchange rate changes on cash (6) (1)
Net increase/(decrease) in cash and cash equivalents 933 (1,514)
Cash and cash equivalents at beginning of the period 2,369 4,670
Cash and cash equivalents at end of the period $ 3,302 $ 3,156
Page 5 of 16
See accompanying notes.
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Basis of Presentation
The information presented at June 30, 1995, and for the six month
and three month periods then ended is unaudited, but includes all
adjustments (consisting only of normal recurring accruals) that the
Company's management believes to be necessary for the fair
presentation of results for the periods presented. The December
31, 1994 balance sheet was derived from audited financial
statements. These financial statements should be read in
conjunction with the Company's audited financial statements for the
year ended December 31, 1994, which were included as part of the
Company's Report on Form 10-K. Certain reclassifications have been
made to the prior year financial statement amounts to conform with
the presentation in the current year financial statements.
2.Common Stock Outstanding and Per Share Information
Per share data is based on the weighted average of shares of Common
Stock outstanding during each of the periods. In May, 1995 the
Company issued 3,450,000 shares of Common Stock in a public
offering, the impact of which increased the weighted average shares
outstanding by 2,150,000 and 1,075,000 shares for the respective
three and six month periods ended June 30, 1995. Stock options
(Common Stock equivalents) and the conversion of the Preferred
Stock to Common Stock are not included in the calculation since
their inclusion would be anti-dilutive. The net loss per common
share includes a charge for dividends paid on the outstanding
shares of Preferred Stock of $.11 per common share for the six
months ended June 30, 1995 and 1994.
3.Inventories
The Company values inventory on a lower of cost or market basis and
relieves it on the first-in first-out (FIFO) method. The components of
inventories are as follows:
June 30, December 31,
1995 1994
Finished Goods $ 1,273,000 $ -
Raw materials 882,000 611,000
Supplies 217,000 137,000
$2,372,000 $ 748,000
Page 6 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Unaudited)
4.Stockholders' Equity
Dividend Payable:
On May 11, 1995, the Board of Directors of the Company declared a
quarterly cash dividend on the Series A Cumulative Convertible
Exchangeable Preferred Stock at a prorated dividend rate of
$.484375 per Depositary Share. Each Depositary Share represents
one-tenth of a share of Preferred Stock. The dividend, totaling
approximately $1,337,000, was paid on July 17, 1995 to stockholders
of record on July 3, 1995.
Common Stock:
On April 27, 1995 the Company's Registration Statement on Form S-3 with
respect to an underwritten public offering of 3,450,000 shares of its
Common Stock was declared effective by the Securities and Exchange
Commission. Proceeds received pursuant to the offering were
$29,256,000 net of underwriters' fees. Additional stock issuance costs
including professional, registration, filing and printing fees of
approximately $417,500 are expected in connection with this offering.
5.Supplemental Disclosure of Cash Flow Information
Six Months Ended June 30,
1995 1994
Cash paid during the year for interest $152,000 $154,000
6.Subsequent Event
Common Stock:
On August 2, 1995 the Company sold 1,500,000 shares of its Common Stock
to an institutional investor Gross proceeds received were $15,000,000.
Stock issuance costs, including financial advisory, professional,
registration, and filing fees, of approximately $572,000 are expected
in connection with this offering.
Page 7 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The Company is a leading biotechnology company engaged in the discovery,
development and, recently, the commercialization of proprietary lipid and
liposome-based pharmaceuticals, for the treatment, prevention and diagnosis
of inadequately treated, life threatening illnesses. The Company recently
launched its first product, amphotericin B lipid complex (ABLC or, in Europe,
AbelcetTM), which has been approved for marketing for certain indications in
the United Kingdom and Luxembourg and is the subject of marketing application
filings in several other countries. The Company has filed an NDA (new drug
application) for ABLC in the United States on May 24, 1995. The Company's
other lead products are TLC D-99 and TLC C-53. TLC D-99 liposomal
doxorubicin, is being developed in conjunction with Pfizer Inc ("Pfizer")
primarily as a first line treatment of metastatic breast cancer, and is
undergoing Phase III clinical testing in the United States. The Company has
completed a Phase II clinical trial for TLC C-53, liposomal prostaglandin E1,
for Acute Respiratory Distress Syndrome ("ARDS") and is currently preparing a
protocol for a pivotal clinical trial in ARDS. In January 1995, the Company
commenced a Phase II clinical trial of TLC C-53 for the treatment of acute
myocardial infarction ("AMI"), or heart attack. The Company also has a
continuing discovery research program that concentrates primarily on the
treatment of cancer and inflammatory conditions.
Results of Operations
Revenues
Total revenues for the six months ended June 30, 1995 were $5,570,000, a
decrease of $407,000 or 7% compared to the six months ended June 30, 1994.
The introduction of product sales, increases in collaborative research and
development and other revenues were more than offset by lower interest and
investment income. These components can increase or decrease significantly
based on the level of product sales and the number and amount of research
collaborations, including the achievements of certain milestones, the
possible initiation of new licensing agreements and, in the case of interest
and investment income, the level of cash balances available for investment
and the rate of interest earned and gains and losses, if any, realized on the
sale of such investments.
In February, 1995, the Medicines Control Agency of the United Kingdom
approved the Company's marketing application for amphotericin B lipid complex
under the brand name AbelcetTM. This is the first product developed by the
Company to be approved for marketing in any country. The Company
subsequently launched the product and recorded sales of $843,000 during the
period ended June 30, 1995. Revenue was recognized from commercial sales of
AbelcetTM in the United Kingdom as well as from "named patient" sales in
certain other countries.
Collaborative research and development and other revenues for the six
months ended June 30, 1995 increased $480,000 or 15% compared to the six
month period ended June 30, 1994. The Company earned its collaborative
research and development revenues from two corporate sponsors, Pfizer and
Schering A.G., during the first six months of 1995 and 1994. The Company is
continuing development of its liposomal doxorubicin product TLC D-99 with
Pfizer as its corporate sponsor. The Schering A.G. agreement was terminated
on March 29, 1995.
Page 8 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (Continued)
Interest and investment income for the six months ended June 30, 1995
was $1,014,000 compared to $2,744,000 for the same period last year. This
63% decrease is due primarily to the reduction in the level of cash balances
available for investments, the timing of cash inflows and losses on certain
investments realized in the first quarter of 1995.
Total revenues of the Company for the quarter ended June 30, 1995 were
$3,717,000 compared to $2,941,000 for the same period during 1994. This
change in revenue represents an increase of $776,000 or 26%. This net
increase is due primarily to revenue of $843,000 from sales of the Company's
first product ABLC/AbelcetTM. The remaining components of revenue are
collaborative research and development activity, interest and investment
income, and licensing and other fees.
Collaborative research and development revenues were $2,213,000 for the
second quarter of 1995, $560,000 or 34% higher than the second quarter of
1994. This increase was primarily due to increased amounts earned from
Pfizer. The Company earned substantially all of its collaborative research
and development revenue in the second quarter of 1995 and 1994 from Pfizer
and Schering AG. Licensing and other revenues for the quarters ended June
30, 1995 and 1994 were $26,000 and $7,000 respectively.
Interest and investment income for the quarters ended June 30, 1995 and
1994 were $661,000 and $1,288,000 respectively. This change represents a
decrease of $627,000 or 49% from 1994. Interest income declined primarily
due to the reduction in the level of cash balances available for investments.
Expenses
Total expenses for the six months ended June 30, 1995 were $24,730,000,
an increase of $3,772,000 or 18% compared to the six months ended June 30,
1994. Research and development expenses accounted for 46% of the increase,
selling, general and administrative expenses, 45% and cost of goods sold
comprised the balance. The Company expects both its research and development
expenses and its selling, general and administrative expenses to continue to
increase due to increased clinical trial and development costs associated
with the progression of its lead proprietary products through late stage
development and the development of the infrastructure for sales and marketing
in Europe and the United States.
Research and development expenses for the six months ended June 30, 1995
were $18,254,000 as compared to $16,533,000 for the same period in 1994.
This increase of $1,721,000 or 10% is primarily due to costs associated with
the start up of product manufacturing. Other components of this increase are
expenditures related to TLC C-53 and TLC D-99 as these products progress to
late stages of development; increased staffing levels in connection with
increased activity in the manufacturing facility in Princeton; and the
expansion of the Company's Medical and Biostatistical departments to develop
and conduct increased clinical trial activity. As in prior years, costs
associated with the development of TLC D-99 are reimbursed by Pfizer.
Page 9 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (Continued)
Selling, general and administrative expenses were $5,979,000 for the six
months ended June 30, 1995 an increase of $1,710,000 or 40% compared to the
same period one year ago. Increased personnel and continued development of
the international sales and marketing operations were the primary
contributors of the increase.
Total expenses for the Company increased to $12,544,000 for the second
quarter of 1995 compared to $11,084,000 for the same period one year ago.
This increase of $1,460,000 or 13.2% is due to the Company's product costs
associated with the sale of AbelcetTM (amphotericin B lipid complex) and
increased selling, general and administrative costs. Cost of sales of
$340,000 related to the sales of AbelcetTM was recorded in the second quarter
of 1995.
Research and development expenditures were $9,038,000 and $8,956,000 for
the quarters ended June 30, 1995 and 1994 respectively. These expenditures
are related to ABLC/AbelcetTM, including costs associated with the shift from
product development to the commencement of product manufacturing and
commercialization. Spending for TLC C-53 and TLC D-99, as they move into
late stages of development, and the cost of the Company's other research and
development activities also contributed to the level of spending.
General and administrative expenses for the second quarter 1995 were
$3,093,000, an increase of $1,046,000 or 51% over the same period a year ago.
The primary components of the increase were costs associated with the
continued development of the international sales and marketing operations and
additions of certain key personnel.
The Company expects that expenditures in all areas will increase
throughout 1995 as the Company continues to receive marketing approvals in
Europe, progresses further in clinical development, and continues to develop
the infrastructure for sales and marketing in connection with the recent
filing of an NDA in the United States for ABLC (amphotericin B lipid
complex).
Preferred Stock Dividends
In January 1993, the Company completed the issuance of 2,760,000
Depositary Shares representing 276,000 shares of Series A Cumulative
Convertible Exchangeable Preferred Stock with an annual dividend of 7.75%.
The Company has declared and paid dividends quarterly on the Preferred Stock
since issuance of the Depositary Shares. These dividends are included as
part of the Company's net loss applicable to Common Stock and net loss per
share of Common Stock.
Net Loss, Net Loss Applicable to Common Stock and Net Loss per Share of
Common Stock
The net loss for the six months ended June 30, 1995 of $19,160,000 was
an increase of $4,179,000 above that of the same period a year ago due to the
factors discussed above. After Preferred Stock dividends of $2,674,000 the
net loss applicable to Common Stock was $21,834,000 or $0.87 per share and
$17,655 or $0.74 per share for the six months ended June 30, 1994.
Page 10 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (Continued)
The net loss of $8,827,000 for the quarter ended June 30, 1995 increased
$684,000 or 8% as compared to 1994. This increase in net loss was due to the
increase in total expense of $1,460,000 netted against an increase in total
revenue of $776,000. The net loss applicable to Common Stock was $10,164,000
in the second quarter of 1995 and $9,480,000 for the same quarter a year ago
as a result of the operational factors discussed above and the declaration of
Preferred Stock dividends in each year. The net loss per common share was
$.38 and $.40 for June 30, 1995 and June 30, 1994 respectively. The
reduction in the net loss per common share compared to the loss and net loss
applicable to Common Stock is primarily due to the increase in shares
outstanding as a result of the public offering of 3,450,000 shares of Common
Stock in the second quarter of 1995.
Liquidity and Capital Resources
The Company had $80,435,000 in cash and marketable securities as of June
30, 1995. Included in these reserves were cash and cash equivalents of
$3,302,000, short term investments of $68,255,000, long term investments of
$2,798,000 and restricted cash of $6,080,000. Cash and cash equivalents
increased by $8,278,000 since December 31, 1994 due to cash received of
approximately $28,839,000 (net of underwriters fees and expenses) from the
May, 1995 offering of Common Stock partially offset by $19,185,000 in funds
used for operations.
During the second quarter of 1995 cash used by operations increased by
$5,516,000 as compared to the second quarter of 1994. This is primarily due
to the net loss between periods, the build up of finished goods inventories
related to the commercialization of ABLC/AbelcetTM, combined with increases
in prepaids, accounts receivable, and other current assets. Funding required
for operating activities was derived from existing cash balances, revenue
from a corporate sponsor, interest income, and exercises of stock options.
The Company expects its working capital to increase as ABLC/AbelcetTM related
activities continue. Capital purchases have totaled $1,968,000 for the first
six months of 1995, 63% of which is attributable to the refurbishment of the
Indianapolis manufacturing facility. The Company expects to spend between
$11,000,000 and $13,000,000 for this project, with completion expected in mid
to late 1996.
The Company expects to finance its operations from, among other things,
the proceeds received from payments under research and development
agreements, interest earned on investments, the maturity, sale and/or use of
certain investments and product sales. Funds may also be provided to the
Company by leasing arrangements for capital expenditures and from the
licensing of its products. The Company believes that its available cash and
marketable securities, revenues from research and development contracts and
interest income will be sufficient to meet its expected operating and capital
cash flow requirements for the intermediate term.
Page 11 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
On August 2, 1995 the Company sold 1,500,000 shares of its Common Stock
to an institutional investor Gross proceeds received were $15,000,000.
Stock issuance costs, including financial advisory, professional,
registration, and filing fees, of approximately $572,000 are expected in
connection with this offering.
Page 12 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
(a) An annual meeting of stockholders of the Company was held on
May 11, 1995.
(c) All members of the Board of Directors were re-elected at the
annual meeting. The following votes were cast for and withheld
from each nominee; there were no abstentions or broker non-votes:
For Withheld
Charles A. Baker 20,142,913 724,231
James G. Andress 19,994,323 872,821
Morton Collins 20,275,582 591,562
Stuart F. Feiner 20,276,132 591,012
Robert F. Hendrickson 20,277,532 589,612
Bengt Samuelsson 20,276,273 590,871
Joseph T. Stewart 20,267,082 600,062
Gerald Weissmann 20,276,973 590,171
Horst Witzel 20,272,573 594,571
An amendment to extend the term of the 1986 Nonqualified Stock
Option Plan was approved by a vote of 15,338,574 affirmative votes
and 3,941,228 negative votes, with 170,668 shares abstaining.
Amendments to extend the term of the 1986 Employee Stock
Option Plan and to increase the number of shares of Common Stock
available for issuance under the Plan were approved by a vote of
15,217,143 affirmative votes and 4,481,368 negative votes, with
176,200 shares abstaining.
The appointment of Coopers & Lybrand as the Company's auditors
for the fiscal year ending December 31, 1995 was ratified by a vote
of 20,479,005 affirmative votes and 327,203 negative votes, with
60,936 shares abstaining.
Page 13 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION (Continued)
ITEM 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. During the quarter for which this report on
Form 10-Q is filed, two (2) reports on Form 8-K were filed.
On July 27, 1995 the Company filed a Form 8-K with respect to its
filing of a new drug application for its first product,
amphotericin B lipid complex (ABLC), with the U.S. Food and Drug
Administration.
On August 1, 1995 the Company filed a Form 8-K with respect to its
operating results for the three and six month periods ended June
30, 1995.
Page 14 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
Exhibits to Form 10Q
Exhibit
Number
10 Material Contracts
10-01 Agreement dated June 1, 1995 between Charles A. Baker and the
Company.
Page 15 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
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 thereunto duly authorized.
DATE: August 14, 1995
THE LIPOSOME COMPANY, INC.
By:
Charles A. Baker
Chairman of the Board and
Chief Executive Officer
By:
Brooks Boveroux
Vice President, Finance and
Chief Financial Officer
Page 16 of 16
THE LIPOSOME COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
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 thereunto duly authorized.
DATE: August 14, 1995
THE LIPOSOME COMPANY, INC.
By: /s/ Charles A. Baker
Charles A. Baker
Chairman of the Board and
Chief Executive Officer
By: /s/ Brooks Boveroux
Brooks Boveroux
Vice President, Finance and
Chief Financial Officer
Page 16 of 16
16 of 35
EXHIBIT 10-01
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of June 1, 1995, by and
between The Liposome Company, Inc., a Delaware corporation ("Employer"), and
Charles A. Baker ("Employee").
WHEREAS, Employer currently employs Employee as its Chairman, President and
Chief Executive Officer pursuant to the terms of an employment agreement dated
December 11, 1989, as extended through June 30, 1995 (the "1989 Agreement"); and
WHEREAS, Employer and Employee are desirous of continuing Employee's employment
with Employer for the period, and on the terms and conditions, set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions herein contained, the parties hereby agree as follows:
1. Employment. Employer hereby employs Employee, and Employee
accepts such employment, according to the terms and conditions set forth in this
Agreement.
2. Term. The term of Employee's employment hereunder shall be for a
period commencing on June 1, 1995 and continuing through May 31, 1998; provided,
however, that effective as of May 31, 1998 and as of each May 31 thereafter, the
term shall be extended for an additional 12-month period unless, not later than
six months prior to such May 31, either party hereto shall have given notice to
the other that the term shall not be so extended. Notwithstanding the
foregoing, Employee's employment by Employer hereunder may be earlier
terminated, subject to Section 9 hereof, upon the occurrence of any one of the
following events: (i) Employer's decision to terminate Employee for any reason,
(ii) Employee's decision to voluntarily resign or retire at any time or (iii)
the parties' mutual agreement in writing to terminate Employee's employment
hereunder at any time. The period of time between the commencement and
termination of Employee's employment hereunder shall be referred to herein as
the "Employment Period."
3. Position and Services. (i) Employee will hold the position of
Chairman, President and Chief Executive Officer of Employer. Employee will
report directly to the Board of Directors of Employer (the "Board") and shall
have such duties, responsibilities and authority with respect to such positions
as are set forth in the Bylaws of Employer, which duties and responsibilities
shall in all events include, but not be limited to, overall management
responsibility for the operations and administration of Employer and organizing
and chairing all meetings of the Board.
(ii) Employee will be expected to be in the full-time employment of
Employer, to devote substantially all of his business time, attention and
efforts to the performance of his duties hereunder. Notwithstanding the
foregoing, Employee may make and manage passive personal business investments of
his choice and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or obtaining approval by
the Board, provided such activities and service do not materially interfere or
conflict with the performance of his duties hereunder or violate the
noncompetition provisions of Section 12 hereof.
(iii) Employee expressly agrees that during the Employment Period he
will not be interested, directly or indirectly, in any form, fashion or manner,
as a partner, officer, director, stockholder, advisor, employee, consultant or
in any other form or capacity, in any other business, except (a) as would not be
prohibited by Section 12 hereof and (b) as a member of the Board of Directors of
Regeneron Pharmaceuticals, Inc., the Board of Directors of Progenics
Pharmaceuticals, Inc. and the Boards of Directors of such other companies as
may, upon advance notice from Employee, be approved by the Board, which approval
will not be unreasonably withheld nor unreasonably delayed, provided that the
continued service on any such board shall not, in the judgment of the Board
acting in good faith, interfere with the performance of Employee's obligations
to Employer hereunder, nor involve any actual or potential conflict of interest
with the interests of Employer. A determination by the Board that any such
conflict of interest exists shall be made only following notice by Employer to
Employee and Employee's opportunity to be heard on the issue by the Board and
shall, in the cases of Regeneron Pharmaceuticals, Inc. and Progenics
Pharmaceuticals, Inc., be based on the same standards as the Board adopts for
other Board members. Employee shall resign from any such board service within
30 days following the Board's final determination.
4. Base Salary. Employer shall pay to Employee an initial base
salary at an annual rate of $315,000, subject to applicable income and
employment tax withholdings and all other required and authorized payroll
deductions and withholdings. Employee's salary shall be payable at the same
time and basis as Employer pays its payroll in general. Increases in Employee's
annual base salary during the Employment Period may be effected from time to
time based upon the review and approval of the Compensation Committee of the
Board (the "Compensation Committee"). During the Employment Period, Employee's
base salary rate shall not be reduced below the initial base salary rate
provided hereunder, nor below any increased base salary rate that may be
effected as provided hereunder.
5. Annual Incentive Bonus. In addition to Employee's base salary as
provided above, Employee will be eligible for an annual cash incentive bonus for
each calendar year of the Employment Period. The bonus for which Employee is
eligible for each such year will be based on a target bonus as established by
the Compensation Committee in its discretion and upon consultation with Employee
at the beginning of each year. The annual bonus hereunder will be payable based
upon the satisfaction of performance criteria that will be established by the
Compensation Committee in its discretion and upon consultation with Employee at
the beginning of each year, subject to the approval of the Board. Such
performance criteria will include corporate performance goals consistent with
Employer's business plan for the year, as well as individual objectives for
Employee's performance that are separate from, but are consistent with,
Employer's business plan. The final determinations as to the actual corporate
and individual performance against the pre-established goals and objectives, and
the amount of the bonus payout in relationship to such performance, will be made
by the Compensation Committee in its sole discretion.
6. Employee Benefits. Employee shall be entitled to receive the same
standard employment benefits as other executive employees of Employer receive
from time to time, including, without limitation, 401(k) plan, medical
insurance, life insurance, accidental death and travel accident insurance, short
and long-term disability insurance and vacation benefits. Employee shall be
entitled to fully participate in all of Employer's future employee benefit
programs for executive employees generally, in accordance with their then-
existing terms. Nothing herein shall be interpreted as limiting Employer's
right to amend or terminate any employee benefit plan or program at any time in
any manner as applied to executives employees of Employer generally.
7. Car Allowance. Employer shall pay $500 per month during the
Employment Period in respect of the lease or use of an automobile by Employee,
it being understood that Employee and Employer may agree to have Employee lease
one of his automobiles to Employer where such total lease payments (together
with insurance and all other costs covering such automobile payable by Employer
in respect of the operation or use thereof) to Employee shall not exceed $500
per month. In addition, Employee shall be reimbursed by Employer for the
charges (excluding, however, basic lease or rental payments) associated with the
use, in respect of Employer's business, of Employee's car phone, facsimile and
telephone lines heretofore purchased or leased by Employee. The car-related
payments provided for above shall be included in Employee compensation
reportable to applicable tax authorities to the extent required under applicable
law, and Employee shall be responsible for the payment of all income and
employment taxes payable by him on such amounts, and subject to all tax
withholdings required thereon.
8. Indemnification. Employer shall indemnify Employee and hold him
harmless for any acts or decisions made by him while performing his duties
pursuant to this Agreement in accordance with Employer's By-laws and the terms
of the Indemnification Agreement between Employer and Employee dated December 8,
1989 (as such agreement may be amended or terminated in accordance with its
terms from time to time), which agreement is hereby ratified and continued in
full force and effect as of the date hereof. Employer agrees that it will make
all reasonable efforts to keep in full force and effect, for the duration of all
applicable statute of limitations periods, directors and officers liability
insurance policies on terms at least as favorable to Employee as those in effect
on the date hereof, as long as such insurance is reasonably available in the
marketplace and does not involve a material increase in the cost of such
coverage to Employer from the cost applicable for similar insurance coverage as
of the date hereof.
9. Termination. This Agreement does not grant the Employee any right
or entitlement to be retained by the Employer, and shall not affect or prejudice
the Employee's right to discharge Employee in accordance herewith. Employer may
terminate Employee's employment hereunder for any reason upon 15 days prior
written notice. In the event of termination of Employee's employment under the
circumstances described below in this Section 9, Employee shall be entitled to
the severance pay and benefits so specified.
(a) Certain Definitions. For purposes of this Section 9, the
following terms shall have the meanings given below:
(i) Termination For Cause. The employment of Employee hereunder
shall be deemed to have been terminated "For Cause" if Employer shall have
terminated Employee as a result of any of the following: (A) any act committed
by Employee which shall represent a breach in any material respect of any of the
terms of this Agreement and which breach is not cured within 30 days of receipt
by Employee of written notice from Employer of such breach; (B) improper
conduct, consisting of any willful act or omission with the intent of obtaining,
to the material detriment of Employer, any benefit to which Employee would not
otherwise be entitled; (C) gross negligence, consisting of wanton and reckless
acts or omissions in the performance of Employee's duties to the material
detriment of Employer; (D) bad faith in the performance of Employee's duties,
consisting of willful acts or omissions, to the material detriment of Employer;
(E) addiction to drugs or chronic alcoholism or (F) any conviction of, or plea
of nolo contendere to, a crime (other than a traffic violation) that constitutes
a felony under the laws of the United States or any political subdivision
thereof.
(ii) Termination Without Cause. The employment of Employee
hereunder shall be deemed to have been terminated "Without Cause" upon (A)
termination of employment by Employer for any reason other than the reasons
specified in Section 9(a)(i) hereof as termination "For Cause" or (B)
termination of employment by Employee within 45 days following a "constructive
termination" event. For purposes hereof, the following shall constitute
constructive termination events: (1) any removal of Employee from the position
of Chairman of the Board or Chief Executive Officer, (2) any substantive
reduction of Employee's duties, responsibilities or authority, including any
change in Employee positions as President or Chief Executive Officer that
results in such a reduction and (3) a material breach by Employer of any of its
obligations to provide Employee with the compensation and benefits provided in
Sections 4 through 8 hereof. The foregoing shall be treated as constructive
termination events hereunder following the expiration of 30 days from the date
Employee has notified Employer of the occurrence of such event and his intention
to treat such event as a constructive termination and terminate his employment
on the basis thereof, provided that Employer has not cured the constructive
termination event before the expiration of such 30-day period.
(iii) Disability. Employee shall be treated as having suffered a
"Disability" if Employee is prevented from performing his duties hereunder by
reason of illness or injury for a period of either (A) six or more consecutive
months from the First Date of Disability (as defined below) or (B) eight months
during any 12-month period. The date as of which Employee is first absent from
employment as a result of such illness or injury shall be referred to herein as
the "First Date of Disability".
(iv) Change in Control. A "Change in Control" shall be deemed to
have taken place if:
(A) there shall be consummated any consolidation or merger of
Employer in which Employer is not the continuing or surviving corporation
or pursuant to which shares of the Employer's capital stock are converted
into cash, securities or other property, other than a consolidation or
merger of Employer in which the holders of the Employer's voting stock
immediately prior to the consolidation or merger shall, upon consummation
of the consolidation or merger, own at least 50% of the voting stock, or
any sale, lease, exchange or other transfer (in one transaction or a series
of transactions contemplated or arranged by any party as a single plan) of
all or substantially all of the assets of Employer; or
(B) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) shall after the date hereof become the beneficial owner (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
of securities of Employer representing 35% or more of the voting power of
all then outstanding securities of Employer having the right under ordinary
circumstances to vote in an election of the Board (including, without
limitation, any securities of Employer that any such person has the right
to acquire pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise, shall be deemed beneficially
owned by such person); or
(C) individuals who at the date hereof constitute the entire
Board and any new directors whose election by the Board, or whose
nomination for election by the Employer's stockholders, shall have been
approved by a vote of at least a majority of the directors then in office
who either were directors at the date hereof or whose election or
nomination for election shall have been so approved (the "Continuing
Directors") shall cease for any reason to constitute a majority of the
members of the Board.
(b) Termination Without Cause or Following Change in Control. In the
event of termination of Employee's employment hereunder by Employer "Without
Cause" or by Employee for any reason within the first six months after the
effective date of a "Change in Control," Employee shall be entitled to the
following severance pay and benefits:
(i) Severance Pay - severance payments in the form of
continuation of Employee's base salary as in effect immediately prior to
such termination (A) for an initial period of 12 months following the
effective date of such termination and (B) for an additional period of up
to 12 months beginning at the expiration of such initial 12-month period;
provided, however, that Employer's obligation to provide severance pay for
the additional 12-month period shall be terminated if Employee has
commenced a full-time position as an employee or independent contractor
with any person, company, firm or other entity, other than any such
position which is of a temporary nature and does not continue for not more
than six months; Employee shall have an affirmative obligation to notify
Employer of any such position and the date of commencement thereof promptly
upon obtaining any such position;
(ii) Benefits Continuation - continued coverage under the group
medical care and life insurance benefit plans in which Employee is
participating at the time of termination, on the same terms as applicable
to other executive employees of Employer from time to time, over the same
period with respect to which Employee's base salary is continued as
provided in Section 9(b)(i) hereof; provided, however, that Employer's
obligation to provide such coverages shall be terminated if Employee
obtains substitute coverage from another employer of Employee at any time
during the continuation period; Employee shall have an affirmative
obligation to notify Employer of any such substitute coverage and the date
of commencement thereof promptly upon obtaining any such coverage; Employee
shall be entitled, at the expiration of the period of benefits continuation
under this Section 9(b)(ii), to elect continued medical coverage in
accordance with Section 4980B of the Internal Revenue Code of 1986, as
amended (or any successor provision thereto); and
(iii) Stock Options - with respect to all options to purchase
shares of Employer's common stock held by Employee immediately prior to
termination of employment (the "Options"), (A) all Options that would have
become exercisable in accordance with their terms before the expiration of
the then-current term of employment as provided in Section 2 hereof shall
become immediately vested and exercisable and (B) all Options that are
then-exercisable or that become exercisable in accordance with the
foregoing shall remain exercisable for a period of 24 months following the
effective date of termination of employment.
(c) Termination Upon Non-Renewal. In the event Employer exercises
its right under Section 2 hereof to give notice of non-renewal of this
Agreement, Employee shall be entitled to the following severance pay and
benefits, commencing on the earlier of (A) the effective date of Employee's
voluntary termination of employment for any reason not earlier than 30 days
following receipt of such notice or (B) Employee's termination of employment
upon the expiration date of the employment term in accordance with Section 2
hereof:
(i) Severance Pay - severance payments in the form of
continuation of Employee's base salary as in effect immediately prior to
such termination for a period of 12 months following the effective date of
such termination;
(ii) Benefits Continuation - the same benefits as provided in
Section 9(b)(ii) hereof over the 12-month salary continuation period
provided in Section 9(c)(i) hereof; and
(iii) Stock Options - the same rights as provided in Section
9(b)(iii) hereof.
(d) Termination Upon Disability. In the event of termination of
Employee's employment hereunder by Employer on account of Employee's
"Disability", Employee shall be entitled to the following severance pay and
benefits:
(i) Severance Pay - severance payments in the form of
continuation of Employee's base salary as in effect immediately prior to
such termination for a period of 12 months following the First Date of
Disability, reduced by the amounts of any payments received from any short-
term or long-term disability plan of Employer;
(ii) Benefits Continuation - the same benefits as provided in
Section 9(b)(ii) above, to be provided during the Employment Period while
Employee is suffering from Disability and for a period of 12 months
following the effective date of termination of employment by reason of
Disability ; and
(iii) Stock Options - (A) all Options that would have become
exercisable in accordance with their terms before the expiration of the
then-current term of employment as provided in Section 2 hereof shall
become immediately vested and exercisable and (B) all Options that are
then-exercisable or that become exercisable in accordance with the
foregoing shall remain exercisable for a period of 12 months following
the effective date of termination of employment.
(e) Termination Upon Death. In the event of termination of
Employee's employment hereunder on account of Employee's death, Employee's
heirs, estate or personal representatives under law, as applicable, shall be
entitled to the following:
(i) Base Salary - payment of Employee's base salary as in effect
immediately prior to death through the end of the calendar month in which
death occurs; and
(ii) Stock Options - all Options that were exercisable by
Employee on the date of his death shall remain exercisable for a period of
12 months following the date of death.
(f) Other Terminations. In the event of termination of Employee's
employment hereunder for any reason other than those specified in subsections
(b) through (e) of this Section 9, Employee shall not be entitled to any
severance pay, benefits continuation or stock option rights contemplated by the
foregoing provisions of this Section 9, except as otherwise provided in the
applicable benefit plans of Employer that cover Employee.
(g) Accrued Rights. Notwithstanding the foregoing provisions of this
Section 9, in the event of termination of Employee's employment hereunder for
any reason, Employee shall be entitled to payment of any unpaid portion of his
base salary, computed on a pro-rata basis through the effective date of
termination, and payment of any accrued but unpaid rights solely in accordance
with the terms of any incentive bonus, stock option or employee benefit plan or
program of Employer.
(h) Conditions to Severance Benefits. (i) As conditions of
Employee's entitlement and continued entitlement to the severance payments and
benefits provided by this Section 9, Employee is required to (i) honor in
accordance with their terms the provisions of Sections 10, 11 and 12 hereof and
(ii) execute and honor the terms of a waiver and release of claims against
Employer substantially in the form attached hereto as Exhibit A (and as may be
modified consistent with the purposes of such waiver and release to reflect
changes in law following the date hereof). In the event that Employee fails to
abide by the foregoing, all payments and benefits to which Employee may
otherwise have been entitled under this Section 9 shall immediately terminate
and be forfeited, and any portion of the base salary continuation payments as
may have been paid to Employee shall forthwith be returned to Employer. The
parties hereto agree that Employee is under no affirmative obligation to seek to
mitigate or offset the severance payments and benefits provided by this Section
9.
(ii) For purposes only of this Section, Employee shall be treated as
having failed to honor the provisions of Sections 10, 11 or 12 hereof only upon
the vote of a majority of the Board following notice of the alleged failure by
Employer to Employee, an opportunity for Employee to cure the alleged failure
for a period of 30 days from the date of such notice and Employee's opportunity
to be heard on the issue by the Board.
(i) Stock Options. Notwithstanding any other provisions of this
Agreement to the contrary, in the event that Employee continues to serve as a
member of the Board following his termination of employment from Employer, his
rights with respect to the vesting and exercisability of the options shall
continue in the same manner as though Employee remained an employee of Employer
during the period of his membership on the Board.
10. Confidentiality. Employee agrees that he will not at any time
during the term hereof or thereafter for any reason, in any fashion, form or
manner, either directly or indirectly, divulge, disclose or communicate to any
person, firm, corporation or other business entity, in any manner whatsoever,
any confidential information or trade secrets concerning the business of the
Employer (including the business of any unit thereof), including, without
limiting the generality of the foregoing, the names of any of its customers, the
prices at which it obtains or has obtained any products or services, the
techniques, methods or systems of its operation or management, any customer
proposals or other business opportunities, any information regarding its
financial matters, or any other material information concerning the business of
the Employer, its manner of operation, its plans or other material data. The
provisions of this paragraph shall not apply to (i) information disclosed in the
performance of Employee's duties to Employer based on his good faith belief that
such a disclosure is in the best interests of Employer; (ii) information that is
public knowledge; (iii) information disseminated by the Employer to others in
the ordinary course of Employer's business, in order to further such business,
provided the recipient of such information agrees to be subject to a
confidentiality obligation at least comparable to that herein; (iv) information
or knowledge lawfully received by Employee from a third party who, based upon
due inquiry by Employee, is not bound by a confidential relationship to
Employer; or (v) information disclosed under a requirement of law or as directed
by applicable legal authority having jurisdiction over Employee.
11. Inventions. (i) To the extent that any of the Employer's current
or future products or services relate to, embody or incorporate concepts,
technology or products of any kind relevant to Employer or its subsidiaries or
affiliates that Employee directly or indirectly conceived or developed prior to
the date hereof during the period of his employment by Employer ("Prior
Technology"), Employee assigns in perpetuity to Employer any and all of his
rights, title and interests, if any, to utilize, without any cost to the
Employer, such Prior Technology, and Employee agrees to assist Employer in
taking all action that may be reasonably required, at Employer's expense, to
secure for the Employer the benefits of Employee's ownership or rights, if any,
to use of all such Prior Technology.
(ii) Employee is hereby retained in a capacity such that Employee's
responsibilities include the making of technical, managerial and promotional
contributions of value to Employer. Employee hereby assigns to Employer all
rights, title and interest in such contributions and inventions made or
conceived by Employee alone or jointly with others which relate to the business
of Employer. This assignment shall include (a) the right to file and prosecute
patent applications on such inventions in any and all countries, (b) the patent
applications filed and patents issuing thereon, and (c) the right to obtain
copyright, trademark or trade name protection for any such work product.
Employee shall promptly and fully disclose all such contributions and inventions
to Employer and assist Employer in obtaining and protecting the rights therein
(including patents thereon), in any and all countries; provided, however, that
said contributions and inventions will be the property of Employer, whether or
not patented or registered for copyright, trademark or trade name protection, as
the case may be. Inventions conceived by Employee which are not related to the
business of the Employer (as determined in good faith by the Board), will remain
the property of Employee.
12. Non-Competition. (i) Employee agrees that he shall not during
the Employment Period and for a period of two years after the termination or end
thereof for any reason, without the approval of the Board (which, after the end
of the Employment Period, shall not unreasonably be withheld or delayed),
directly or indirectly, alone or as partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor or stockholder (other than
as provided below) of any company or business, engage in any "Competitive
Business" within the United States. For purposes of the foregoing, the term
"Competitive Business" shall mean any business (including, without limitation,
business units of any major pharmaceutical company) involved in the research,
development, manufacture or sale of lipids or liposomes or products or services
which utilize natural or artificial lipids or liposomes to encapsulate, enhance
or deliver any product, as determined at the time of Employee's termination;
provided that, this provision shall in no way prevent Employee, after the end of
the Employment Period, from being employed by, or consulting for or on behalf
of, any subsidiary, affiliate division or other business unit of a company
("Separate Unit") where the Separate Unit itself is not primarily involved in
the research, development, manufacture or sale of lipids or liposomes or
products or services which utilize natural or artificial lipids or liposomes to
encapsulate, enhance or deliver any product and where Employee has no material
business relationship with any other business units of such company that are
otherwise primarily involved in such activities.
(ii) Notwithstanding the provisions of clause (i) above or any other
provision of this Agreement to the contrary, Employee shall not be prohibited
during the period applicable under clause (i) above from acting as a passive
investor where (a) in the case of a Competitive Business, Employee owns not more
than one percent (1%) of the issued and outstanding capital stock (or such
higher percentage or amount as may be approved by the Board upon notice from
Employee prior to obtaining such interest); provided, however, that Employee
shall not be treated as having violated the provisions of this Section 12 if in
good faith he is unaware that an entity in which he has an investment interest
would be treated as a Competitive Business due to a de minimis level of
involvement in the lipids or liposome business (as described above) and, upon
becoming aware of such involvement, Employee makes reasonable efforts to divest
himself of his interest in such business; (b) in the case of any company or
entity (other than the Competitive Businesses) that is engaged in, or whose
affiliates are engaged in, the development or marketing of products or
technologies that are directly or indirectly competitive with any product or
technology that is developed or marketed or proposed to be developed or marketed
by Employer during the Employment Period, Employee owns not more than five
percent (5%) of the issued and outstanding capital stock; or (c) receiving
stock, options or warrants from any entity with which he can have a relationship
pursuant to clause (i) above as part of his compensation for services rendered
or to be rendered.
(iii) Notwithstanding the foregoing, the restrictions of this Section
12 shall not limit Employees' involvement with a business that utilizes liposome
technology where such technology is incidental to the primary character of the
business.
13. Breach of Restrictive Covenants. The parties agree that a breach
or violation of Sections 10, 11 or 12 hereof will result in immediate and
irreparable injury and harm to the innocent party, who shall have, in addition
to any and all remedies of law and other consequences under this Agreement, the
right to an injunction, specific performance or other equitable relief to
prevent the violation of the obligations hereunder.
14. Notices. Any notice required to be given pursuant to the
provisions of this Agreement shall be in writing and, if mailed, sent by
registered or certified mail, postage prepaid, to the party named at the address
set forth below, or at such other address as each party may hereafter designate
in writing to the other party, and with a copy to the representative designated
below or such other representative as may be designated by the party from time
to time:
Employer: One Research Way
Princeton Forrestal Center
Princeton, N.J. 08540
Attention: Corporate Secretary
with a copy to: Paul J. Wessel, Esq.
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Employee: RD2, Box 4830
Provinceline Road
Princeton, N.J. 08540
with a copy to: Michael S. Sirkin, Esq.
Proskauer Rose Goetz & Mendelsohn, LLP
1585 Broadway
New York, N.Y. 10036
Any such notices shall be deemed to have been delivered when served
personally, or 72 hours after being mailed in the manner specified above.
15. Dispute Resolutions; Legal Expenses. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in the State of
New Jersey, in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. Employer shall bear the expense of an arbitration
proceeding hereunder and shall reimburse Employee for all of his reasonable
costs and expenses relating to such arbitration proceeding, including, without
limitation, reasonable attorneys' fees and expenses, provided that Employee is
the prevailing party in such proceeding. For purposes hereof, the arbitrators
in the proceeding shall be requested to make a determination as to the
reimbursement of Employee's costs and expenses as a prevailing party hereunder.
In no event shall Employee be required to reimburse Employer for any of the
costs or expenses relating to such arbitration proceeding.
16. Entire Agreement.
(a) Change, Modification, Waiver. No change or modification of
this Agreement shall be valid unless it is in writing and signed by each of the
parties hereto. No waiver of any provision of this Agreement shall be valid
unless it is in writing and signed by the party against whom the waiver is
sought to be enforced. The failure of a party to insist upon strict performance
of any provision of this Agreement in any one or more instances shall not be
construed as a waiver or relinquishment of the right to insist upon strict
compliance with such provision in the future.
(b) Integration of All Agreements. This Agreement constitutes
the entire Agreement between the parties and is intended to be an integration of
all agreements between the parties with respect to Employee's service with
Employer. Except as provided in Section 8 hereof concerning the Indemnification
Agreement, any and all prior agreements between Employee and Employer with
respect to Employee's service with Employer, including but not limited to the
1989 Agreement, are hereby revoked.
(c) Severability of Provisions. If for any reason any provision
of this Agreement should be declared void or invalid, such declaration shall not
affect the validity of the rest of this Agreement, which shall remain in force
as if executed with the void or invalid provision eliminated.
17. Binding Effect. This Agreement shall be binding upon all parties
hereto and their heirs, successors and assigns. This Agreement shall be
assignable by Employer to any entity acquiring all or substantially all of the
assets of Employer.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
19. Miscellaneous.
(a) Form. As employed in this Agreement, the singular form
shall include, if appropriate, the plural.
(b) Headings. The headings employed in this Agreement are
solely for the convenience and reference of the parties and are not intended to
be descriptive of the entire contents of any paragraph and shall not limit or
otherwise affect any of terms, provisions, or construction thereof.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
EMPLOYER:
/s/ Robert F. Hendrickson
Member, Compensation Committee
EMPLOYEE:
/s/ Charles A. Baker
EXHIBIT A
RELEASE OF CLAIMS AND COVENANT NOT TO SUE
This RELEASE OF CLAIMS AND COVENANT NOT TO SUE is executed and
delivered by Charles A. Baker ("Employee") to The Liposome Company, Inc.
("Employer").
In consideration of the agreement by Employer to provide Employee with
the termination payments and benefits set forth in Section 9 of the Employment
Agreement between Employer and Employee dated June 1, 1995, (the "Employment
Agreement"), Employee hereby agrees as follows:
Section 1. Release and Covenant. Employee, of his own free will,
voluntarily releases and forever discharges Employer, its subsidiaries,
affiliates, their officers, employees, agents, stockholders, successors and
assigns (both individually and in their official capacities with Employer) from,
and covenants not to sue or proceed against any of the foregoing on the basis
of, any and all past or present causes of action, suits, agreements or other
claims which Employee, his dependents, relatives, heirs, executors,
administrators, successors and assigns has or have against Employer upon or by
reason of any matter arising out of his employment by Employer and the cessation
of said employment, and including, but not limited to, any alleged violation of
the Civil Rights Acts of 1964 and 1991, the Equal Pay Act of 1963, the Age
Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the
Older Workers Benefit Protection Act of 1990, the Americans with Disabilities
Act of 1990, the Family and Medical Leave Act of 1993, the New Jersey Law
Against Discrimination and any other federal or state law, regulation or
ordinance, or public policy, contract or tort law, having any bearing whatsoever
on the terms and conditions or cessation of his employment with Employer. This
release shall not, however, constitute a waiver of any of the Employee's rights
upon termination of employment under (i) the Employment Agreement, (ii) the
Indemnification Agreement and the By-laws provisions referred to in Section 8 of
the Employment Agreement, (iii) the terms of any employee benefit plan of
Employer in which Employee is participating or (iv) the policies of Employer
with regard to business expense reimbursement.
Section 2. Due Care. Employee acknowledges that he has received a
copy of this Agreement prior to its execution and has been advised hereby of his
opportunity to review and consider this Agreement for 21 days prior to its
execution. Employee further acknowledges that he has been advised hereby to
consult with an attorney prior to executing this Agreement. Employee enters
into this Agreement having freely and knowingly elected, after due
consideration, to execute this Agreement and to fulfill the promises set forth
herein. This Agreement shall be revocable by Employee during the 7-day period
following its execution, and shall not become effective or enforceable until the
expiration of such 7-day period. In the event of such a revocation, Employee
shall not be entitled to the consideration for this Agreement set forth above.
Section 3. Reliance by Employee. Employee acknowledges that, in his
decision to enter into this Agreement, he has not relied on any representations,
promises or agreements of any kind, including oral statements by representatives
of Employer, except as set forth in this Agreement.
This RELEASE OF CLAIMS AND COVENANT NOT TO SUE is executed by Employee
and delivered to Employer on
, 199 .
EMPLOYEE:
Charles A. Baker
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,302
<SECURITIES> 68,255
<RECEIVABLES> 2,698
<ALLOWANCES> 0
<INVENTORY> 2,372
<CURRENT-ASSETS> 77,528
<PP&E> 30,280
<DEPRECIATION> 12,141
<TOTAL-ASSETS> 105,054
<CURRENT-LIABILITIES> 10,420
<BONDS> 0
<COMMON> 278
0
3
<OTHER-SE> 89,338
<TOTAL-LIABILITY-AND-EQUITY> 105,054
<SALES> 843
<TOTAL-REVENUES> 3,717
<CGS> 340
<TOTAL-COSTS> 12,544
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73
<INCOME-PRETAX> (8,827)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,827)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,827)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> 0<F1>
<FN>
<F1>EPS- diluted not calculated because the effects would be anti-dilutive.
</FN>
</TABLE>
