FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report under Section 13 of the
Securities Exchange Act of 1934
Quarter ended September 30, 1998
Commission File Number 0-24320
NaPRO BIOTHERAPEUTICS, INC.
Incorporated in Delaware IRS ID No. 84-1187753
6304 Spine Road, Unit A
Boulder, CO 80301
(303) 530-3891
NaPro BioTherapeutics, Inc. ("NaPro" or "the Company") (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
The number of shares outstanding of each of the issuer's classes of common stock
as of November 2, 1998:
Common Stock, $.0075 par value 16,114,444
Non-voting Common Stock, $.0075 par value 395,000
Total number of pages in document--17
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NaPro BioTherapeutics, Inc.
Table of Contents
Page
Part I Financial Information
Consolidated Financial Statements
Balance Sheet 3
Statement of Operations 5
Cash Flow Statement 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Quantitative and Qualitative Disclosures about Market Risk 15
Part II Other Information
Legal Proceedings 15
Changes in Securities 16
Defaults upon Senior Securities 16
Submission of Matters to a Vote of Security Holders 16
Other Information 16
Exhibits and Reports on Form 8-K 17
Signatures 17
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Part I. Financial Information
Item 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
NaPro BioTherapeutics, Inc.
Balance Sheet
Assets
September 30, December 31,
1998 1997
(unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 9,135,000 $ 8,102,000
Accounts receivable 429,000 1,508,000
Inventory 4,171,000 3,122,000
Restricted cash 1,660,000 ---
Prepaid expense and other 415,000 481,000
--------------- --------------
Total current assets 15,810,000 13,213,000
Property and equipment, net 13,221,000 15,187,000
Restricted cash 195,000 246,000
Inventory 908,000 1,176,000
Other assets 493,000 536,000
--------------- --------------
Total assets $ 30,627,000 $ 30,358,000
============= =============
</TABLE>
See accompanying notes
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<TABLE>
<CAPTION>
NaPro BioTherapeutics, Inc.
Balance Sheet
Liabilities and Stockholders' Equity
September 30, December 31,
1998 1997
(unaudited)
Current liabilities:
<S> <C> <C>
Accounts payable $ 1,462,000 $ 4,361,000
Accrued payroll and payroll taxes 592,000 570,000
Notes payable--current portion 450,000 743,000
Senior Convertible debt --- 8,134,000
Deferred revenue 3,669,000 1,890,000
--------------- --------------
Total current liabilities 6,173,000 15,698,000
Notes payable--long term 223,000 480,000
Senior convertible debt 5,799,000 ---
--------------- --------------
Total liabilities 12,195,000 16,178,000
Minority interest 622,000 2,574,000
Senior convertible redeemable preferred stock, Series C 4,025,000 4,344,000
Stockholders' equity Preferred stock, $.001 par value:
Authorized shares--2,000,000
Issued--none (unaudited in 1998) --- ---
Non-voting common stock, convertible on disposition
into voting common stock, $.0075 par value:
Authorized shares--1,000,000 shares
Issued and outstanding shares--395,000 (unaudited
in 1998) 3,000 3,000
Common stock, $.0075 par value:
30,000,000 shares authorized at September 30, 1998 19,000,000 shares
authorized in 1997; 16,688,632 shares issued in 1998 (unaudited);
13,134,021 in 1997 125,000 98,000
Additional paid-in capital 57,502,000 50,833,000
Deficit (39,403,000) (40,998,000)
Treasury stock--1,345,236 shares in 1998 (unaudited);
218,838 shares in 1997 (4,442,000) (2,674,000)
--------------- --------------
Total stockholders' equity 13,785,000 7,262,000
-------------- -------------
Total liabilities and stockholders' equity $ 30,627,000 $30,358,000
============= ============
</TABLE>
See accompanying notes
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<TABLE>
<CAPTION>
NaPro BioTherapeutics, Inc.
Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------ ------ ------ -----
<S> <C> <C> <C> <C>
Product sales $ 732,000 $ 879,000 $ 3,721,000 $ 1,978,000
Expense:
Research, development and cost
of products sold 2,089,000 2,602,000 6,775,000 7,629,000
General and administrative 1,044,000 1,382,000 5,131,000 4,654,000
(Gain) Loss on retirement
of assets 581,000 --- 582,000 (218,000)
------------- ----------------- -------------- -------------
3,714,000 3,984,000 12,488,000 12,065,000
------------ ------------ ------------ -----------
Operating loss (2,982,000) (3,105,000) (8,767,000) (10,087,000)
Other income (expense):
License fee 2,950,000 --- 10,770,000 ---
Interest income 150,000 119,000 413,000 407,000
Interest and other expense (248,000) (935,000) (821,000) (1,309,000)
------------- ------------- ------------- -------------
Net income (loss) $ (130,000) $(3,921,000) $1,595,000 $(10,989,000)
============= ============ =========== =============
Earnings (loss) per share $ (0.01) $ (0.33) $ 0.10 $ (0.92)
=============== ============== ============== ===============
Earnings (loss) per common share,
assuming dilution $ (0.01) $ (0.33) $ 0.09 $ (0.92)
=============== ============== ============== ===============
Weighted average shares outstanding 14,949,422 12,055,344 14,196,179 11,994,855
============ ============ ============ ===========
Weighted average shares outstanding,
assuming dilution 14,949,422 12,055,344 16,807,660 11,994,855
============ ============ ============ ============
</TABLE>
See accompanying notes.
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<TABLE>
<CAPTION>
NaPro BioTherapeutics, Inc.
Cash Flow Statement
(Unaudited)
Nine Months Ended
September 30,
1998 1997
------ -----
<S> <C> <C>
Operating activities
Net income (loss) $1,595,000 $(10,989,000)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation 1,894,000 559,000
Accretion of debt issue cost, warrant allocation
and conversion rights allocation 331,000 845,000
Compensation paid with warrants 139,000 ---
Interest paid in stock 290,000 ---
(Gain) loss on sale or retirement of assets 582,000 (218,000)
Loss on early retirement of debt 127,000 ---
Changes in operating assets and liabilities:
Accounts receivable 1,079,000 207,000
Inventory (781,000) (2,744,000)
Prepaid expense and other assets 109,000 (10,000)
Accounts payable (2,897,000) 3,097,000
Accrued liabilities 61,000 240,000
Deferred revenue 1,779,000 525,000
----------- ---------------
Net cash provided (used) by operating activities 4,307,000 (8,488,000)
Investing activities
Transfers to restricted cash (2,000,000) (7,299,000)
Transfers from restricted cash 391,000 4,888,000
Additions to property and equipment (550,000) (9,431,000)
Proceeds from the sale of property and equipment 40,000 361,000
Purchase of securities held to maturity --- (3,827,000)
Proceeds from securities available for sale --- 2,650,000
Proceeds from securities held to maturity --- 6,476,000
-------------------- ------------
Net cash used by investing activities (2,119,000) (6,182,000)
Financing activities
Proceeds from notes payable 188,000 11,045,000
Debt issue cost --- (745,000)
Payments under notes payable (1,385,000) (1,786,000)
Proceeds from the sale of common stock,
and exercise of common stock warrants 42,000 1,172,000
-------------- -------------
Net cash provided (used) by financing activities (1,155,000) 9,686,000
------------ -------------
Net increase (decrease) in cash and cash equivalents 1,033,000 (4,984,000)
Cash and cash equivalents at beginning of period 8,102,000 9,531,000
------------- ------------
Cash and cash equivalents at end of period $ 9,135,000 $ 4,547,000
============ ============
</TABLE>
See accompanying notes.
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NaPro BioTherapeutics, Inc.
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
1. Basis of Presentation
The accompanying financial statements are unaudited. However, in the opinion of
management, the financial statements reflect all adjustments, consisting of only
normal recurring adjustments, necessary for fair presentation. Interim results
of operations are not indicative of results for the full year. These financial
statements should be read in conjunction with the NaPro Annual Report on Form
10-K for the year ended December 31, 1997.
2. Inventory September 30, December 31,
1998 1997
Raw materials $ 120,000 $ 412,000
Work-in-process 1,472,000 1,408,000
Finished goods 2,579,000 1,302,000
---------- -----------
$4,171,000 $3,122,000
========== ==========
Non-current inventory
Raw materials $ 468,000 $ 347,000
Work-in-process 440,000 288,000
Finished goods --- 541,000
----------- -----------
$908,000 $1,176,000
======== ==========
3. Cash Flow Supplemental Disclosures
Nine Months Ended
September 30,
1998 1997
----------- ------------
Interest paid $ 380,000 $ 469,000
Noncash transactions:
Receipt of common stock into treasury:
Note 4 1,768,000 ---
Repayment of notes receivable from stockholder
through transfer of stock into treasury --- 990,000
Issuance of common stock--compensation 40,000 40,000
Exchange of preferred shares of subsidiary
for common stock of parent 1,951,000 ---
Conversion of senior convertible debt to
common stock 2,141,000 ---
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Cash Flow Supplemental Disclosures
(Continued) Nine Months Ended
September 30,
1998 1997
-------------- --------------
Conversion of convertible preferred shares
to common stock 639,000 ---
Accretion of convertible preferred stock
conversion rights valuation, offering
cost and warrant valuation 323,000 ---
Issuance of common stock for dividends payable 182,000 ---
Note taken as partial proceeds on sale of asset --- 578,000
4. Common Stock
In the September 1998 quarter NaPro issued 596,073 shares of common stock in
conversion of NaPro's senior convertible debt, and 66,314 shares of common stock
in payment of interest on the senior convertible debt. In the quarter NaPro
issued 220,538 shares of common stock in conversion of NaPro's senior
convertible preferred stock and 48,322 shares of common stock in payment of
dividends on the senior convertible preferred stock.
5. Asset realization; loss on retirement of assets
NaPro focuses on the development, manufacture and commercialization of natural
product pharmaceuticals, particularly paclitaxel, a naturally occurring
cancer-fighting compound found in certain species of yew (Taxus) trees. The
nature of pharmaceutical development work includes the acquisition of assets,
the realization of which may be dependent on approval by various regulatory
agencies, such as the United States Food and Drug Administration, of developed
products for sale. NaPro currently sells commercial paclitaxel to F.H. Faulding
& Co., Ltd., an Australian corporation, which has approvals for paclitaxel in
Australia and 11 other countries. The full realization of NaPro's assets may be
dependent on approval of NaPro paclitaxel in either the U.S. or Europe.
Management believes that its assets bear no impairment at this time.
NaPro temporarily suspended construction of its commercial manufacturing
facility in Boulder, Colorado. As a result of this suspension NaPro has incurred
cost on certain elements of construction in progress. Accordingly NaPro has
disposed or will dispose of such assets and has expensed the cost, net of
estimated salvage. Development continues on the manufacturing process to be
installed in this facility. Improvements in the manufacturing process arising
from such development may result in disposal of additional assets at future
dates. No determination can presently be made of the amount of such future
disposals, if any.
6. Earnings (loss) per Share
The following table sets forth the computation of basic and diluted earnings
(loss) per share. In calculating diluted earnings (loss) per share for the three
periods in which a loss is reported, the impact of all additional shares is
antidilutive, and thus not included in the calculation:
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<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------ ------ ------ -----
Numerator:
<S> <C> <C> <C> <C>
Net income (loss) $ (130,000) $(3,921,000) $ 1,595,000 $(10,989,000)
Preferred stock dividends (56,000) --- (182,000) ---
---------- ---------------- ------------ --------------
Numerator for earnings (loss) per
share - income (loss) available to
common stockholders $ (186,000) $(3,921,000) 1,413,000 $(10,989,000)
Effect of dilutive securities:
Senior convertible debt --- --- 50,000 ---
Preferred stock dividends --- --- 27,000 ---
---------------- ---------------- ------------- -----------
Numerator for earnings (loss) per share, assuming dilution - income available
to common stockholders after assumed
conversions $ (186,000) $(3,921,000) $ 1,490,000 $(10,989,000)
=========== ============ ============ =============
Denominator:
Denominator for earnings (loss) per share -
weighted average shares outstanding 14,949,422 12,055,344 14,196,179 11,994,855
----------- ------------ ------------ ----------
Senior convertible debt --- --- 1,371,339 ---
Convertible preferred stock --- --- 796,996 ---
Non-voting common stock --- --- 395,000 ---
Stock options and warrants --- --- 48,146 ---
---------------- ---------------- ------------- -----------
Dilutive potential common shares --- --- 2,611,480 ---
---------------- ---------------- ----------- -----------
Denominator for earnings (loss) per share, assuming dilution - adjusted
weighted average shares outstanding and assumed
conversions 14,949,422 12,055,344 16,807,660 11,994,855
----------- ------------ =========== ==========
Earnings (loss) per common share $ (0.01) $ (0.33) $ 0.10 $ (0.92)
============== ============== ============== =============
Earnings (loss) per common share, assuming
dilution $ (0.01) $ (0.33) $ 0.09 $ (0.92)
============== ============== ============== =============
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis provide information that NaPro's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the consolidated financial statements and notes
thereto appearing elsewhere herein as well as with the consolidated financial
statements, notes thereto and the related management's discussion and analysis
of financial condition and results of operations included in NaPro's Annual
Report on Form 10-K for the year ended December 31, 1997.
General
NaPro is a natural product pharmaceutical company that is focusing primarily on
the development, manufacture and commercialization of paclitaxel, a
naturally-occurring anti-cancer agent found in certain species of yew (Taxus)
trees.
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NaPro has devoted its efforts primarily to the development and implementation of
its proprietary extraction, isolation and purification (EIPTM) technology and
the development of its proprietary semi- synthetic method for producing NaPro
paclitaxel. To advance the development and commercialization of NaPro
paclitaxel, NaPro entered into a 20-year, geographically exclusive agreement
with F.H. Faulding & Co., Ltd. ("Faulding") for the clinical development, sales,
marketing and distribution of NaPro paclitaxel. NaPro is in discussions with a
number of pharmaceutical companies, both domestically and internationally, to
assist NaPro in developing and marketing NaPro paclitaxel in various parts of
the world. NaPro is currently dependent for revenue exclusively on sales of
NaPro paclitaxel, and on fee income from licensed technology.
NaPro has initiated clinical studies exploring the use of its patented
formulation of paclitaxel using its patented method of administration. NaPro
anticipates that information gained in such studies will be useful in the filing
of a New Drug Application with the U. S. Food and Drug Administration for NaPro
paclitaxel. The cost of such studies is and will continue to be significant.
NaPro anticipates that should it enter into an agreement with one or more
pharmaceutical companies as discussed above, such agreement would include
funding for all or a significant portion of the related clinical studies cost.
Absent such an agreement or other financing of these studies, the cost of the
clinical studies may significantly reduce NaPro's working capital.
Through September 30, 1998, NaPro's production of NaPro paclitaxel was limited
primarily to research and pilot-scale production, and much of NaPro's product
sales were for use in clinical trials and for research and development purposes.
Accordingly, NaPro has generated only limited revenue from such activities and
has incurred significant losses, including losses of approximately $4.1 million,
$6.8 million and $15.5 million for the years ended December 31, 1995, 1996 and
1997, respectively. For the nine months ended September 30, 1998, largely as a
result of a nonrecurring license fee received from IVAX Corporation (IVAX) (see
below), NaPro recorded net income of approximately $1.6 million, resulting in an
accumulated deficit of $39.4 million as of September 30, 1998. NaPro expects
that it will continue to have a high level of operating expense and will be
required to make significant up-front expenditures in connection with its
biomass procurement, product development, and research and development
activities. NaPro anticipates that annual losses will continue until such time,
if ever, as NaPro is able to generate sufficient revenue to support its
operations. NaPro believes that its ability to generate such revenue depends
primarily on its ability to obtain regulatory approval in the U. S. or another
major market for the commercial sale of NaPro paclitaxel, on NaPro's ability to
obtain one or more partners to replace IVAX, on NaPro's ability to obtain
regulatory approval for its manufacturing facilities and on NaPro's ability to
construct manufacturing facilities that produce quantities of NaPro paclitaxel
sufficient to supply NaPro's strategic partners' requirements for commercial
sales. Moreover, NaPro's future growth and profitability will depend on the
success of its strategic partners in fostering acceptance in the oncological
market for NaPro paclitaxel as a preferred dosing regimen of taxane chemotherapy
to be used alone or in combination with other chemotherapeutic agents.
In February 1998, due to the delay in receiving marketing approval for NaPro
paclitaxel, NaPro underwent a restructuring to decrease overall cost, resulting
in a one-time charge of approximately $250,000. NaPro's total number of
employees was reduced by 53, a 43% reduction in full time positions, resulting
in an expected annual savings of $2.8 million in payroll expense. This payroll
expense is reflected in research and development, as well as general and
administrative expense. In addition, nonpayroll expense is also expected to
decrease as the result of the restructuring. As part of the restructuring NaPro
temporarily closed its British Columbia manufacturing facility and suspended
construction of its commercial scale manufacturing facility in Boulder,
Colorado. Completion of the
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Boulder facility will require additional financing, which NaPro intends to seek
at such time, if ever, as NaPro anticipates sufficient product demand to warrant
completion of the facility.
In March 1998, NaPro and IVAX entered into an agreement terminating the
development and marketing activity between the two companies (the "Termination
Agreement"). Under the terms of the Termination Agreement, IVAX received a
royalty-free, limited, nonexclusive license to one of NaPro's pending patents in
the U. S., Europe, and certain other world markets. In return, NaPro received a
cash payment of $6 million, $2 million of which was placed in escrow to be
released as remaining product is delivered through March 1999. Revenue related
to the escrow funds has been deferred and is to be recognized as funds are
released from the escrow. In addition, IVAX returned in April 1998 approximately
1.1 million shares of NaPro common stock and made additional payments of $3.8
million in April 1998 and $2.6 million in August 1998. Of the $2 million
escrowed funds, $340,000 was released in August 1998. NaPro will continue to
manufacture a fixed amount of NaPro paclitaxel for IVAX to be delivered and paid
for through March 1999.
The Termination Agreement leaves NaPro free to seek regulatory approvals and
market NaPro paclitaxel itself or to seek a new partner or partners with which
to pursue regulatory approvals and marketing of NaPro paclitaxel, in either case
outside the territory contractually allocated to Faulding. However, the
Termination Agreement currently leaves NaPro without such a partner. There can
be no assurance that NaPro will be able to secure such approvals or form new
long-term relationships for the approval, marketing, and distribution of NaPro
paclitaxel in these areas, or that NaPro or such a partner, if found, will be
able to effectively market NaPro paclitaxel.
Year 2000 issue
Until recently many computer programs used only the last two digits to refer to
a year. Such programs do not properly recognize a year that begins with "20"
instead of the familiar "19". If not corrected, many computer applications could
fail or create erroneous results. This matter is commonly referred to as the
Year 2000 issue or Y2K.
Two years ago NaPro implemented an assessment of its systems and other assets
which could be subject to Y2K. NaPro has completed the assessment of its primary
systems and has brought all but one of the systems into Y2K compliance. A
compliant upgrade currently exists for the noncompliant system, which will be
brought into compliance no later than April 1999. NaPro is assessing its
secondary systems and other assets and expects to complete that assessment no
later than April 1999.
NaPro is assessing its secondary systems, including microprocessor-controlled
equipment. The potential for significant interruption from secondary systems
exists, although NaPro believes that the likelihood of interruption caused by
Y2K failures in secondary systems is quite small.
In addition to its internal systems NaPro is evaluating potential impact on
NaPro of Y2K issues with its vendors and customers. NaPro cannot directly
control Y2K compliance by its vendors and customers. NaPro is communicating with
its key vendors and customers regarding this matter. NaPro knows of no vendor or
customer that has Y2K issues that have a potential of interrupting NaPro in a
manner that could significantly affect NaPro's operations. However, NaPro uses a
number of vendors that NaPro believes to be the best or the only qualified
source of a particular good or service. Sales to NaPro's customers potentially
could be interrupted by customers' Y2K issues. For example, NaPro's sales
process involves sample testing by customers prior to customers' release to
NaPro for product shipment. Should a
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significant customer incur Y2K problems with its testing, release or other
systems, NaPro's sales could be materially affected. NaPro will continue to
monitor the level of Y2K compliance with respect to its key vendors and
customers and will further develop contingency plans to cover the failure of a
key vendor, including identification and qualification of alternative suppliers.
Management believes that exposure to vendor or customer Y2K issues creates no
material risk to NaPro. However, no assurance can be given with certainty that
Y2K issues with vendors or customers will not significantly affect NaPro.
NaPro's Y2K effort has caused no significant deferral of other information
technology projects.
NaPro's Y2K contingency plan includes completion of the evaluation and
remediation process discussed above, including communication with its key
vendors and customers regarding potential for Y2K issues; identification of the
best alternative vendor for sensitive goods and services; coordination and
planning with such alternative vendors.
Management believes that Y2K issues related to both internal and external
systems will have no material effect on NaPro's business, results of operations
or financial condition, and that NaPro's Y2K risk is not material. However, no
such assurance can be given with certainty. The cost of addressing Y2K has not
been material; management believes that the cost of completing Y2K compliance
will not be material.
Results of Operations
Quarter ended September 30, 1998, compared to the quarter ended September 30,
1997 Sales for the 1998 quarter were $700,000, representing a decrease of
$200,000 from the 1997 quarter. The decrease related primarily to the timing of
product shipments. Shipments to the strategic partners may vary significantly on
a quarter to quarter basis depending on a number of factors including the timing
and size of any clinical trials conducted by the strategic partners, the level
of inventory carried by the strategic partners, NaPro's obtaining one or more
partners to replace IVAX, and changes in approved markets. This
quarter-to-quarter variability will continue until such time, if ever, that
stable commercial demand has been established for the product in a major market.
Research and development and cost of products sold expense for the 1998 quarter
was $2.1 million, representing a decrease of $500,000 from the 1997 quarter. The
decrease resulted from a decrease in the level of process development and
research expense as well as lower production cost. At this time NaPro's
production process is not distinct from its research and development processes.
Accordingly, the cost of products sold is included with NaPro's research and
development expense.
General and administrative expense for the 1998 quarter was $1 million, a
decrease of $400,000 from the 1997 quarter. The decrease is primarily
attributable to an overall decrease in the level of resources committed to
general and administrative activity as a result of NaPro's February 1998
restructuring.
Loss on retirement of assets for the 1998 quarter was $600,000, with no loss in
the 1997 quarter. NaPro temporarily suspended construction of its commercial
manufacturing facility in Boulder, Colorado. As a result of this suspension
NaPro has incurred cost on certain elements of construction in progress.
Accordingly NaPro has disposed or will dispose of such assets and has expensed
the cost, net of estimated salvage. Development continues on the manufacturing
process to be installed in this facility. Improvements in the manufacturing
process arising from such development may result in disposal of additional
assets at future dates. No determination can presently be made of the amount of
such future disposals, if any.
12
<PAGE>
License fee income for the 1998 quarter was $3 million. There was no analogous
income for the 1997 quarter. This revenue related to a license fee paid by IVAX
in conjunction with the Termination Agreement. Under the Termination Agreement,
NaPro expects to record up to an additional $1.7 million in license fee income
through March 1999 (all of which has been received but is escrowed pending
future product deliveries). NaPro is actively seeking one or more new
pharmaceutical partners to replace IVAX. There can be no assurance, however,
that NaPro will succeed in obtaining any new pharmaceutical partners or in
earning any license fees other than the license fee being paid under the
Termination Agreement.
Interest income for the 1998 quarter was $200,000, virtually unchanged from the
1997 quarter.
Interest and other expense for the 1998 quarter was $200,000, a decrease of
$700,000 from the 1997 quarter. This decrease is primarily due to the absence of
significant amortization of discount related to the conversion rights of NaPro's
senior convertible debt.
Nine months ended September 30, 1998, compared to the nine months ended
September 30, 1997 Sales for the 1998 period were $3.7 million , representing an
increase of $1.7 million from the 1997 period. The increase related primarily to
the timing of product shipments.
Research and development and cost of products sold expense for the 1998 period
was $6.8 million, representing a decrease of $800,000 from the 1997 period. The
decrease resulted from a decrease in the level of process development and
research expense as well as lower production cost.
General and administrative expense for the 1998 period was $5.1 million, an
increase of $400,000 from the 1997 period. The increase is primarily
attributable to the cost associated with the IVAX termination, the February 1998
restructuring, and depreciation.
Loss on retirement of assets for the 1998 period was $600,000, representing a
change of $800,000 from the $200,000 gain in the 1997 period. NaPro temporarily
suspended construction of its commercial manufacturing facility in Boulder,
Colorado. As a result of this suspension NaPro has incurred cost on certain
elements of construction in progress. Accordingly NaPro has disposed or will
dispose of such assets and has expensed the cost, net of estimated salvage.
Development continues on the manufacturing process to be installed in this
facility; such development may result in disposal of additional assets at future
dates. No determination can presently be made of the amount of such future
disposals, if any.
License fee income for the 1998 period was $10.8 million. NaPro earned no
analogous income for the 1997 period. This revenue related to a license fee paid
by IVAX in conjunction with the Termination Agreement.
Interest income for the 1998 period was $400,000, unchanged from the 1997
period.
Interest and other expense for the 1998 period was $800,000, representing a
decrease of $500,000 from the 1997 period. This decrease is primarily due to the
absence of significant amortization of discount related to the conversion rights
of NaPro's senior convertible debt.
Liquidity and Capital Resources
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<PAGE>
NaPro's capital requirements have been and will continue to be significant. At
September 30, 1998, NaPro had working capital of $9.6 million. This compared to
negative working capital of $2.5 million at December 31, 1997. To date, the
funding of NaPro's capital requirements has been dependent primarily on the net
proceeds of public offerings of its common stock of approximately $21.1 million,
on private placements of its equity securities of approximately $27.8 million,
on the exercise of warrants and options of $5.6 million, on net borrowings of
$11.8 million, and on loans and advances from its stockholders and strategic
partners.
In June and December 1997, NaPro issued its Senior Convertible Notes due in 2000
(the "Convertible Notes") and Series C Senior Convertible Preferred Stock (the"
Convertible Preferred Stock"), respectively. The Convertible Notes and the
Convertible Preferred Stock are referred to as the "Convertible Securities."
The Convertible Securities can be converted into NaPro common stock at discounts
(ranging from 5% to 10%) from the market price of the common stock during
specified periods prior to the conversion, subject to a maximum of $1.92385 per
share of common stock. Such conversions may be made at the rate of up to 450,000
shares of common stock per month through December 31, 1998, and up to the full
amount of the outstanding Convertible Securities thereafter. As of September 30,
1998, $3.8 million of the Convertible Securities have been converted into
2,965,666 shares of common stock. After September 30, 1998, over 5.6 million
shares of common stock could be issued by NaPro upon conversion of the
Convertible Securities subject to certain limitations under the terms of the
Convertible Securities. The issuance of shares of common stock upon conversion
of the Convertible Securities would result in substantial dilution of the
interest of the current stockholders of NaPro. NaPro is evaluating options to
refinance or redeem the Convertible Securities in circumstances where the number
of shares of common stock issued in connection therewith would be limited to the
extent practicable. NaPro is considering various sources of capital to fund such
a transaction, including possible funding from a potential strategic partner.
NaPro can give no assurance that any such transaction or transactions will
occur.
Cash and cash equivalents totaled $9.1 million at September 30, 1998. During the
first nine months of 1998, cash provided by operating activities totaled $4.3
million; and cash used by investing and financing activities totaled $2.1
million and $1.2 million, respectively.
The amount and timing of future capital expenditures will depend upon numerous
factors including the progress of NaPro's research and development program, the
magnitude and scope of these activities; competing technological and marketing
developments; changes in the existing strategic partnership; the establishment
of additional strategic relationships; the cost of further development and
maintenance of Yew tree plantations; and the cost of manufacturing scale-up.
NaPro may seek additional long-term financing to fund capital expenditures
should such financing become available on terms acceptable to NaPro.
14
<PAGE>
Special Note Regarding Forward-looking Statements.
Certain statements in this report constitute "forward-looking statements" within
the meaning of the federal securities laws. In addition, NaPro or persons acting
on its behalf sometimes make forward-looking statements in other written and
oral communications. Such forward-looking statements may include, among other
things, statements concerning NaPro's plans, objectives and future economic
prospects, such as matters relative to seeking and obtaining strategic partners
and the consequences thereof; the refinancing or redemption of the Convertible
Securities; the availability of patent and other protection for its intellectual
property; the completion of clinical trials and regulatory filings; the
prospects for and timing of regulatory approvals; the need for and availability
of additional capital; the amount and timing of capital expenditures; timing of
products introductions and revenue; the availability of raw materials; prospects
for future operations; and other statements of expectations, beliefs, future
plans and strategies, anticipated events or trends and similar expressions
concerning matters that are not historical facts. Such for ward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of NaPro, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such for ward-looking
statements. Included, among other things, are the following factors: adverse
economic and general business conditions, competition from Bristol-Myers Squibb
Company (Bristol) and other existing and new producers of paclitaxel and other
drugs, technological advances in cancer treatment and drug development, the
ability to obtain rights to technology, the ability to obtain and enforce
patents, the ability to obtain raw materials and commercialize manufacturing
processes, the effectiveness of NaPro paclitaxel and other pharmaceuticals
developed by NaPro in treating disease, the results of clinical studies, the
results of research and development activities, the business abilities and
judgment of NaPro's management and other personnel, the availability of
qualified personnel generally, changes in and compliance with governmental
regulations, the effect of capital market conditions and other factors on
capital availability for NaPro and other biopharmaceutical companies, the
ability of Faulding to perform its obligations under its existing agreement with
NaPro, the ability of NaPro to establish relationships with capable strategic
partners to develop and market NaPro paclitaxel in the territories not covered
by the Faulding Agreement, and other factors referenced in this Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Part II--Other Information
Item 1. Legal Proceedings
Australian Petty Patents
In September 1993 and August 1994, Bristol received two Australian petty patents
claiming certain methods of administering paclitaxel. Australian petty patents
have a maximum term of six years. Such patents are allowed to contain only three
claims (one independent and two dependent) and are granted on the basis of a
prior art search, which is significantly more limited in scope than the searches
done prior to issuance of standard patents. Following publication of these
patents, Faulding instituted legal action to revoke these patents on the grounds
that the patent claims are invalid and that the subject matter claimed in the
patents was already known prior to the claimed date of invention. In February
1995, Bristol brought legal action against Faulding based upon these patent
claims, seeking an injunction against Faulding to prevent Faulding from
marketing NaPro paclitaxel pursuant to Faulding's generic approval.
15
<PAGE>
In July 1998, Faulding received a favorable ruling from the Federal Court in
Australia that invalidated the patents. In addition, the court ruled against
Bristol in the countersuit which alleged infringement of those patents.
European Patent Litigation
On May 14, 1997, Bristol was issued a European patent relating to certain
methods of treatment with paclitaxel. On the same day, NaPro instituted
revocation proceedings in the United Kingdom against this European patent as
issued in the U. K. The revocation action was not in response to any lawsuit or
allegations of infringement against NaPro relating to the patents, but Bristol
has subsequently instituted a countersuit against NaPro alleging infringement.
The court heard each of the party's claims in July 1998. On August 25, 1998 the
court ruled in favor of NaPro that the patent was invalid in the United Kingdom.
Bristol has filed notice that it intends to appeal the decision.
Item 2. Changes in Securities
In the September 1998 quarter, NaPro issued 596,073 shares of common stock in
conversion of $644,000 of the Convertible Notes and 66,314 shares of common
stock in payment of $82,000 interest on the Convertible Notes. In the quarter,
NaPro issued 220,538 shares of common stock in conversion of 254 shares of the
Convertible Preferred Stock and 48,322 shares of common stock in payment of
$55,000 of dividends on the Convertible Preferred Stock. The issuance of shares
of common stock upon conversion of the Convertible Securities was exempt from
registration under section 3(a)(9) of the Securities Act of 1933, as amended
(the "Securities Act"). The issuance of shares of common stock in the payment of
interest and dividends was exempt as a private placement to sophisticated
investors under section 4(2) of the Securities Act and Regulation D thereunder.
Certain provisions of the Convertible Preferred Stock may limit the ability of
NaPro to pay dividends on its common stock and to repurchase shares of its
common stock.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Securities Holders. None.
Item 5. Other Information. None.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
NaPro filed no Current Reports on Form 8-K during the quarter.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
<S> <C>
10.1 Employment Agreement effective October 5, 1998 between NaPro and Leonard P. Shaykin
10.2 Employment Agreement effective October 5, 1998 between NaPro and Sterling K. Ainsworth
10.3 Employment Agreement effective October 5, 1998 between NaPro and Patricia A. Pilia
10.4 Employment Agreement effective October 5, 1998 between NaPro and Gordon Link
10.5 Employment Agreement effective October 5, 1998 between NaPro and David L. Denny
10.6 Employment Agreement effective October 5, 1998 between NaPro and William D. Fairbairn
10.7 Employment Agreement effective October 5, 1998 between NaPro and James D. McChesney
27.1 Financial Data Schedule
</TABLE>
- -------------------------------
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, NaPro has
duly caused this report to be signed on its behalf.
NaPro BioTherapeutics, Inc.
November 11, 1998 /s/ Sterling K. Ainsworth
Sterling K. Ainsworth
President and Chief Executive Officer
(Principal Executive Officer)
November 11, 1998 /s/ Gordon Link
Gordon Link
Vice President and Chief Financial Officer
(Principal Financial Officer)
November 11, 1998 /s/ Robert L. Poley
Robert L. Poley
Controller
(Principal Accounting Officer)
17
<PAGE>
AMENDED EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day
of October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and Leonard P. Shaykin
("Executive"). Certain capitalized terms used in this Agreement have the meaning
set forth in Paragraph 17 hereof.
RECITALS
A. WHEREAS, the Company and the Executive have previously entered into
an Amended and Restated Employment and Executive Stock Agreement, dated as of
June 7, 1993 and amended and restated effective as of May 31, 1994, (the "Prior
Agreement"); and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
parties contained in this Agreement, the parties agree to amend and restate in
its entirety the Prior Agreement as follows:
1. Employment Services. The Company hereby agrees to engage Executive,
and Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth in this Agreement. During the Employment Period (as
defined below), the Company and Executive agree that Executive will serve as
Chairman of the Board of Directors of the Company with the duties,
responsibilities and authority as set forth on Schedule A, or will have such
other executive title and such other executive duties, responsibilities and
authority as Executive and the Company may agree upon from time to time, and
will perform such services of an executive and administrative character to the
Company and its present or future Subsidiaries consistent with the duties of the
Company's other executive officers, as the Company's Board of Directors (the
"Board") may from time to time direct (the "Employment Services") or the Bylaws
of the Company may provide. The Employment Services shall commence upon the
Effective Date of this Agreement and terminate as provided in Paragraph 6 (the
"Employment Period").
2. Performance.
(a) Executive shall report to the Board, and Executive shall
devote such business time as he and the Company reasonably believe is necessary
to perform the Employment Services (except for permitted vacation periods);
provided, however, that (i) Executive shall be free to devote his business time
to perform and engage in other businesses not inconsistent with the terms of
this Agreement; and (ii) Executive shall not, without his consent, be required
to devote more than 20 hours in any week or 80 hours in any month to performing
the Employment Services.
(b) Executive shall perform the Employment Services at
locations of his choice consistent with performing the Employment Services to
the best of his abilities in a diligent,
<PAGE>
trustworthy, businesslike and professional manner, traveling on business as
Executive and the Company shall reasonably deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $ 159,000 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$20,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by him in the
course of performing his duties under this Agreement (including reimbursement of
$40,000 per year for Executive's expenses in maintaining an office), subject to
the Company's reasonable requirements with respect to reporting and
documentation of such expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation prorated, based on 80 hours worked per month during each year of the
Employment Period, and may carry over up to four weeks of vacation from one year
to the next succeeding year only.
2
<PAGE>
6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that commencing on the date one year after the Effective
Date, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Employment Period shall be automatically
extended so as to terminate three years from such Renewal Date, unless either
Executive or the Board shall have given written notice to the other party no
later than 180 days prior to the Renewal Date that the Employment Period shall
not be so extended;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Employment
Period, but not in excess of three years or (y) two years plus in either case
(I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $20,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of Executive's re-employment and subsequent
opportunity to participate in any health insurance program with comparable
coverage provided by such new employer, including without limitation, coverage
with respect to any pre-existing conditions or (ii) eighteen months after such
termination date.
3
<PAGE>
(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) he is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) his
employment with the Company is terminated by the Company without Cause or he
terminates his employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of his termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform his duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed his duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
(f) For purposes of this Agreement, termination of the
Employment Period by Executive for "Good Reason" shall mean termination by
Executive (i) within 90 days after Executive has been assigned, without his
consent, to any duties substantially inconsistent with his position, duties,
responsibilities or status with the Company as contemplated in Paragraph 1 of
this
4
<PAGE>
Agreement; (ii) upon 120 days' prior written notice if such notice is given
within 30 days after the date Executive ceases, without his consent, to be a
member of the Board; (iii) following a Change of Control, upon failure of the
Company to pay Executive an annual bonus equal to the average amount of such
annual bonus paid to Executive during the three fiscal years of the Company
immediately preceding the year in which the Change of Control occurs; (iv)
following a reduction of Executive's Base Salary after a Change of Control; or
(v) upon a material breach of this Agreement by the Company which is not cured
within 30 days after the Company's receipt of written notice thereof. Executive
shall provide written notice to the Company of any and all grounds that
Executive alleges constitute "Good Reason" and the Company shall have 30 days
after receipt of such written notice to cure any such alleged grounds for "Good
Reason". If, following the expiration of such 30 day period, Executive still
believes that "Good Reason" exists for his termination of Employment, the
provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any
termination of the Employment Period, and as of that date, the Company will
notify Executive of the itemized and aggregate cash value of the payments and
benefits, as determined under Section 280G of the Internal Revenue Code (the
"Code"), received or to be received by Executive in connection with the
termination of his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall advise Executive of
the portion of such payments or benefits which constitute parachute payments
within the meaning of the Code and which may subject Executive to the payment of
excise taxes pursuant to Section 4999 and the expected amount of such taxes
(such payments or benefits being hereinafter referred to as "Parachute
Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof,
if all or any portion of the payments or benefits provided under Paragraph 6(b)
either alone or together with other payments or benefits which Executive has
received or is then entitled to receive from the Company and any of its
Subsidiaries would constitute Parachute Payments, such payments or benefits
provided to Executive under Paragraph 6(b) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction,
Executive's net after tax benefit shall exceed the net after tax benefit if such
reduction were not made. "Net after tax benefit" for purposes of this Paragraph
6(h) shall mean the sum of (i) the total amount payable to Executive under
Paragraphs 6(b) and (c) hereof, plus (ii) all other payments and benefits which
Executive has received or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a Parachute Payment, less (iii) the
amount of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set forth in the Code
at the Termination Date), less (iv) the amount of excise taxes imposed with
respect to the payments and benefits described in (i) and (ii) above by Section
4999 of the Code.
For purposes of this Paragraph 6(h), Executive's base amount,
the present value of the Parachute Payments, the amount of the excise tax and
all other appropriate matters shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by the Company, which tax counsel shall
be reasonably satisfactory to Executive.
5
<PAGE>
7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall specify(x) the effective
date of termination of the Employment Period, which, except as otherwise
provided in Paragraph 6(f), shall not be more than 30 days after the date the
notice is delivered (the "Termination Effective Date"` and (y) in reasonable
detail the facts and circumstances underlying a determination that the
termination is for Cause or for Good Reason, as the case may be. If within 15
days after any notice of termination of Executive for Cause by the Company is
given, or if within 15 days after the Company's 30 day cure period under
Paragraph 6(f) has expired, the party receiving such notice notifies the other
party that a good faith dispute exists concerning the characterization of the
termination, the Termination Effective Date shall be the date on which such
dispute is finally resolved either by written agreement of the parties or by
binding arbitration conducted pursuant to the rules of the American Arbitration
Association. Notwithstanding the pendency of any such dispute, the Company shall
continue Executive and his dependents as participants in all medical, dental and
any other health insurance and similar benefit plans of the Company in which he
and they were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. Benefits provided under this
Paragraph 7 are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under, this
Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the
Company pursuant to procedures implemented by Company after the date hereof,
Executive shall not disclose or use at any time, either during the Employment
Period or thereafter, any Confidential Information (as defined in Paragraph 17)
except to the extent Executive reasonably believes is necessary to disclose or
use such Confidential Information in performing the Employment Services.
Executive further agrees that Executive will use Executive's commercial best
efforts to safeguard the Confidential Information and protect it against
disclosure, misuse, espionage, loss and theft, including, without limitation,
causing recipients of Confidential Information to enter into non-disclosure
agreements with the Company. Subject to the provisions of Paragraphs 10 and 13,
nothing herein shall be construed to prevent Executive from using Executive's
general knowledge and skill after termination of this Agreement, whether
Executive acquired such knowledge or skill before or during the Employment
Period.
(b) In the event the Company has entered into confidentiality
agreements with third parties (not including Company employees) which contain
provisions different from those set forth in this Agreement, Executive agrees,
in addition to the provisions of Paragraph 9(a), to comply with any such
different provisions of which Executive is notified by the Company.
10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the
6
<PAGE>
Employment Period during the period Executive was employed by or engaged in
research or development activities for or with the Company or its predecessors
and affiliates (whether alone or jointly with others) to the extent such
Intellectual Property is not owned by the Company as a matter of law. Executive
shall promptly and fully communicate to the Company all Intellectual Property
conceived, contributed to or made by Executive and shall cooperate with the
Company to protect the Company's interests in such Intellectual Property
including, without limitation, providing assistance in securing patent
protection and copyright registrations and signing all documents reasonably
requested by the Company, even if such request occurs after the Employment
Period. The Company shall pay Executive's reasonable expenses of cooperating
with the Company in protecting the Company's interests in such Intellectual
Property unless the subject matter of the requested cooperation is related to
actions taken or failed to be taken by Executive wrongfully or otherwise not in
good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such Intellectual Property
pursuant to this Agreement or otherwise), or (iii) relate to any subject matter
of the Company's actual or demonstrably anticipated material research and
development during the Employment Period, including without limitation, taxol,
taxanes and any other compounds, within any geographical area in which the
Company or any of its subsidiaries provide or plan to provide such products or
services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee
7
<PAGE>
of the Company to leave the employment of the Company to work for Executive or
for any other person, firm or corporation or (b) hire any employee of the
Company.
15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 5% owner
of the Company's Common Stock.
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"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential Information) and all related patents and
patent applications, any copyrightable work or mask work (whether or not
including Confidential Information) and all related registrations and
applications for registration, and all other proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants
to the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (b) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
19. Company Representations. The Company hereby represents and warrants
to Executive that (a) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement
shall be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement,
all notices, requests and other communications to be given or delivered under or
by reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the parties at the following
addresses (or such other address as shall be furnished in writing by like
notice; provided, however, that notice of change of address shall be effective
only upon receipt):
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Notices to Executive
Leonard P. Shaykin
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Patricia A. Pilia, Ph.D.
Executive Vice President
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter, including but not limited to the Prior Agreement.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of Executive's
creditors. This Agreement is for the sole benefit of the parties hereto and
shall not create any rights in third parties other than Executive's spouse or
beneficiary as expressly set forth herein.
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27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any such
arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees and expenses) relating to such arbitration paid by
the other party if the arbitrator(s) conducting such arbitration so determine.
Notwithstanding the foregoing, the parties agree and acknowledge that money
damages may not be an adequate remedy for breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The prevailing party in any suit shall be entitled
to recover reasonable attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the Company
may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ Leonard P. Shaykin
-----------------------------------
Leonard P. Shaykin
NAPRO BIOTHERAPEUTICS, INC.
By:______/s/ Gordon H. Link, Jr.______________
Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
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AMENDED EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day
of October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and Sterling K. Ainsworth
("Executive"). Certain capitalized terms used in this Agreement have the meaning
set forth in Paragraph 17 hereof.
RECITALS
A. WHEREAS, the Company and the Executive have previously entered into
an Amended and Restated Employment and Executive Stock Agreement, dated as of
June 7, 1993 and amended and restated effective as of May 31, 1994, (the "Prior
Agreement"); and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
parties contained in this Agreement, the parties agree to amend and restate in
its entirety the Prior Agreement as follows:
1. Employment Services. The Company hereby agrees to engage Executive,
and Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth in this Agreement. During the Employment Period (as
defined below), the Company and Executive agree that Executive will serve as an
executive officer of the Company in the position of President and Chief
Executive Officer with the duties, responsibilities and authority as set forth
on Schedule A, or will have such other executive title and such other executive
duties, responsibilities and authority as Executive and the Company may agree
upon from time to time, and will perform such services of an executive and
administrative character to the Company and its present or future Subsidiaries
consistent with the duties of the Company's other executive officers, as the
Company's Board of Directors (the "Board") may from time to time direct (the
"Employment Services") or the Bylaws of the Company may provide. The Employment
Services shall commence upon the Effective Date of this Agreement and terminate
as provided in Paragraph 6 (the "Employment Period").
2. Performance.
(a) Executive shall report to the Board, and Executive shall
devote his best efforts to the business and affairs of the Company and its
Subsidiaries; provided, however, that upon prior agreement by the Board, and
subject to the terms of this Agreement, Executive may engage in independent
activities in areas unrelated to the Company's business or the Company's actual
or demonstrably anticipated business; and provided, further, that no such
independent activities shall materially detract from the essentially full time
commitment of Executive to the business and affairs of the Company. Executive
shall perform his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and professional manner.
<PAGE>
(b) Unless the Company and Executive otherwise agree,
Executive shall perform the Employment Services at the Company's executive
offices and traveling on business as Executive and the Company shall reasonably
deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $175,000 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$20,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by him in the
course of performing his duties under this Agreement, subject to the Company's
reasonable requirements with respect to reporting and documentation of such
expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation during each year of the Employment Period and may carry over up to four
weeks of vacation from one year to the next succeeding year only.
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6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that commencing on the date one year after the Effective
Date, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Employment Period shall be automatically
extended so as to terminate three years from such Renewal Date, unless either
Executive or the Board shall have given written notice to the other party no
later than 180 days prior to the Renewal Date that the Employment Period shall
not be so extended;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Employment
Period, but not in excess of three years or (y) two years plus in either case
(I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $20,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of Executive's re-employment and subsequent
opportunity to participate in any health insurance program with comparable
coverage provided by such new employer, including without limitation, coverage
with respect to any pre-existing conditions or (ii) eighteen months after such
termination date.
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(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) he is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) his
employment with the Company is terminated by the Company without Cause or he
terminates his employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of his termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform his duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed his duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
(f) For purposes of this Agreement, termination of the
Employment Period by Executive for "Good Reason" shall mean termination by
Executive (i) within 90 days after Executive has been assigned, without his
consent, to any duties substantially inconsistent with his position, duties,
responsibilities or status with the Company as contemplated in Paragraph 1 of
this
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Agreement; (ii) upon 120 days' prior written notice if such notice is given
within 30 days after the date Executive ceases, without his consent, to be a
member of the Board; (iii) following a Change of Control, upon failure of the
Company to pay Executive an annual bonus equal to the average amount of such
annual bonus paid to Executive during the three fiscal years of the Company
immediately preceding the year in which the Change of Control occurs; (iv)
following a reduction of Executive's Base Salary after a Change of Control; (v)
if Executive is required to regularly perform the duties of his employment more
than 50 miles from Boulder, Colorado; or (vi) upon a material breach of this
Agreement by the Company which is not cured within 30 days after the Company's
receipt of written notice thereof. Executive shall provide written notice to the
Company of any and all grounds that Executive alleges constitute "Good Reason"
and the Company shall have 30 days after receipt of such written notice to cure
any such alleged grounds for "Good Reason". If, following the expiration of such
30 day period, Executive still believes that "Good Reason" exists for his
termination of Employment, the provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any
termination of the Employment Period, and as of that date, the Company will
notify Executive of the itemized and aggregate cash value of the payments and
benefits, as determined under Section 280G of the Internal Revenue Code (the
"Code"), received or to be received by Executive in connection with the
termination of his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall advise Executive of
the portion of such payments or benefits which constitute parachute payments
within the meaning of the Code and which may subject Executive to the payment of
excise taxes pursuant to Section 4999 and the expected amount of such taxes
(such payments or benefits being hereinafter referred to as "Parachute
Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof,
if all or any portion of the payments or benefits provided under Paragraph 6(b)
either alone or together with other payments or benefits which Executive has
received or is then entitled to receive from the Company and any of its
Subsidiaries would constitute Parachute Payments, such payments or benefits
provided to Executive under Paragraph 6(b) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction,
Executive's net after tax benefit shall exceed the net after tax benefit if such
reduction were not made. "Net after tax benefit" for purposes of this Paragraph
6(h) shall mean the sum of (i) the total amount payable to Executive under
Paragraphs 6(b) and (c) hereof, plus (ii) all other payments and benefits which
Executive has received or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a Parachute Payment, less (iii) the
amount of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set forth in the Code
at the Termination Date), less (iv) the amount of excise taxes imposed with
respect to the payments and benefits described in (i) and (ii) above by Section
4999 of the Code.
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For purposes of this Paragraph 6(h), Executive's base amount,
the present value of the Parachute Payments, the amount of the excise tax and
all other appropriate matters shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by the Company, which tax counsel shall
be reasonably satisfactory to Executive.
7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall specify(x) the effective
date of termination of the Employment Period, which, except as otherwise
provided in Paragraph 6(f), shall not be more than 30 days after the date the
notice is delivered (the "Termination Effective Date" and (y) in reasonable
detail the facts and circumstances underlying a determination that the
termination is for Cause or for Good Reason, as the case may be. If within 15
days after any notice of termination of Executive for Cause by the Company is
given, or if within 15 days after the Company's 30 day cure period under
Paragraph 6(f) has expired, the party receiving such notice notifies the other
party that a good faith dispute exists concerning the characterization of the
termination, the Termination Effective Date shall be the date on which such
dispute is finally resolved either by written agreement of the parties or by
binding arbitration conducted pursuant to the rules of the American Arbitration
Association. Notwithstanding the pendency of any such dispute, the Company shall
continue Executive and his dependents as participants in all medical, dental and
any other health insurance and similar benefit plans of the Company in which he
and they were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. Benefits provided under this
Paragraph 7 are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under, this
Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the
Company pursuant to procedures implemented by Company after the date hereof,
Executive shall not disclose or use at any time, either during the Employment
Period or thereafter, any Confidential Information (as defined in Paragraph 17)
except to the extent Executive reasonably believes is necessary to disclose or
use such Confidential Information in performing the Employment Services.
Executive further agrees that Executive will use Executive's commercial best
efforts to safeguard the Confidential Information and protect it against
disclosure, misuse, espionage, loss and theft, including, without limitation,
causing recipients of Confidential Information to enter into non-disclosure
agreements with the Company. Subject to the provisions of Paragraphs 10 and 13,
nothing herein shall be construed to prevent Executive from using Executive's
general knowledge and skill after termination of this Agreement, whether
Executive acquired such knowledge or skill before or during the Employment
Period.
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(b) In the event the Company has entered into confidentiality
agreements with third parties (not including Company employees) which contain
provisions different from those set forth in this Agreement, Executive agrees,
in addition to the provisions of Paragraph 9(a), to comply with any such
different provisions of which Executive is notified by the Company.
10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the Employment Period during
the period Executive was employed by or engaged in research or development
activities for or with the Company or its predecessors and affiliates (whether
alone or jointly with others) to the extent such Intellectual Property is not
owned by the Company as a matter of law. Executive shall promptly and fully
communicate to the Company all Intellectual Property conceived, contributed to
or made by Executive and shall cooperate with the Company to protect the
Company's interests in such Intellectual Property including, without limitation,
providing assistance in securing patent protection and copyright registrations
and signing all documents reasonably requested by the Company, even if such
request occurs after the Employment Period. The Company shall pay Executive's
reasonable expenses of cooperating with the Company in protecting the Company's
interests in such Intellectual Property unless the subject matter of the
requested cooperation is related to actions taken or failed to be taken by
Executive wrongfully or otherwise not in good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such
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Intellectual Property pursuant to this Agreement or otherwise), or (iii) relate
to any subject matter of the Company's actual or demonstrably anticipated
material research and development during the Employment Period, including
without limitation, taxol, taxanes and any other compounds, within any
geographical area in which the Company or any of its subsidiaries provide or
plan to provide such products or services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee of the Company to leave the employment of
the Company to work for Executive or for any other person, firm or corporation
or (b) hire any employee of the Company.
15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
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"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 5% owner
of the Company's Common Stock.
"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential Information) and all related patents and
patent applications, any copyrightable work or mask work (whether or not
including Confidential Information) and all related registrations and
applications for registration, and all other proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants to
the Company that (a) the execution, delivery and performance of this Agreement
by Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which he is bound, and (b) upon the execution
and delivery of this Agreement by the Company, this Agreement shall be the valid
and binding obligation of Executive, enforceable in accordance with its terms.
19. Company Representations. The Company hereby represents and warrants to
Executive that (a) the execution, delivery and performance of this Agreement by
the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement shall
be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement, all
notices, requests and other communications to be given or delivered under or by
reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the
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parties at the following addresses (or such other address as shall be furnished
in writing by like notice; provided, however, that notice of change of address
shall be effective only upon receipt):
Notices to Executive
Sterling K. Ainsworth, Ph.D.
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Patricia A. Pilia, Ph.D.
Executive Vice President
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter, including but not limited to the Prior Agreement.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of
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Executive's creditors. This Agreement is for the sole benefit of the parties
hereto and shall not create any rights in third parties other than Executive's
spouse or beneficiary as expressly set forth herein.
27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any such
arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees and expenses) relating to such arbitration paid by
the other party if the arbitrator(s) conducting such arbitration so determine.
Notwithstanding the foregoing, the parties agree and acknowledge that money
damages may not be an adequate remedy for breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The prevailing party in any suit shall be entitled
to recover reasonable attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the Company
may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ Sterling K. Ainsworth
-----------------------------------
Sterling K. Ainsworth
NAPRO BIOTHERAPEUTICS, INC.
By:______/s/ Gordon H. Link, Jr._____
Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
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AMENDED EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day of
October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and Patricia A. Pilia
("Executive"). Certain capitalized terms used in this Agreement have the meaning
set forth in Paragraph 17 hereof.
RECITALS
A. WHEREAS, the Company and the Executive have previously entered into an
Amended and Restated Employment and Executive Stock Agreement, dated as of June
7, 1993 and amended and restated effective as of May 31, 1994, (the "Prior
Agreement"); and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the parties
contained in this Agreement, the parties agree to amend and restate in its
entirety the Prior Agreement as follows:
1. Employment Services. The Company hereby agrees to engage Executive, and
Executive hereby agrees to perform services for the Company, on the terms and
conditions set forth in this Agreement. During the Employment Period (as defined
below), the Company and Executive agree that Executive will serve as an
executive officer of the Company in the position of Executive Vice President
with the duties, responsibilities and authority as set forth on Schedule A, or
will have such other executive title and such other executive duties,
responsibilities and authority as Executive and the Company may agree upon from
time to time, and will perform such services of an executive and administrative
character to the Company and its present or future Subsidiaries consistent with
the duties of the Company's other executive officers, as the Company's Board of
Directors (the "Board") may from time to time direct (the "Employment Services")
or the Bylaws of the Company may provide. The Employment Services shall commence
upon the Effective Date of this Agreement and terminate as provided in Paragraph
6 (the "Employment Period").
2. Performance.
(a) Executive shall report to the Chief Executive Officer (or person acting
in a similar capacity if the Company has no Chief Executive Officer), and
Executive shall devote her best efforts and her full business time and attention
(except for permitted vacation periods) to the business and affairs of the
Company and its Subsidiaries; provided, however, that upon prior agreement by
the Chief Executive Officer, and subject to the terms of this Agreement,
Executive may engage in independent activities in areas unrelated to the
Company's business or the Company's actual or demonstrably anticipated business;
and provided, further, that no such independent activities shall materially
detract from the essentially full time commitment of Executive to the business
and affairs of the Company. Executive shall perform her duties and
responsibilities to the best of her abilities
<PAGE>
in a diligent, trustworthy, businesslike and professional manner.
(b) Unless the Company and Executive otherwise agree,
Executive shall perform the Employment Services at the Company's executive
offices and traveling on business as Executive and the Company shall reasonably
deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $135,000 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$20,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by her in the
course of performing her duties under this Agreement, subject to the Company's
reasonable requirements with respect to reporting and documentation of such
expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation during
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each year of the Employment Period and may carry over up to four weeks of
vacation from one year to the next succeeding year only.
6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that commencing on the date one year after the Effective
Date, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Employment Period shall be automatically
extended so as to terminate three years from such Renewal Date, unless either
Executive or the Board shall have given written notice to the other party no
later than 180 days prior to the Renewal Date that the Employment Period shall
not be so extended;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Employment
Period, but not in excess of three years or (y) two years plus in either case
(I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $20,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of
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Executive's re-employment and subsequent opportunity to participate in any
health insurance program with comparable coverage provided by such new employer,
including without limitation, coverage with respect to any pre-existing
conditions or (ii) eighteen months after such termination date.
(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) she is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) her
employment with the Company is terminated by the Company without Cause or she
terminates her employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of her termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform her duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed her duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
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(f) For purposes of this Agreement, termination of the Employment Period by
Executive for "Good Reason" shall mean termination by Executive (i) within 90
days after Executive has been assigned, without her consent, to any duties
substantially inconsistent with her position, duties, responsibilities or status
with the Company as contemplated in Paragraph 1 of this Agreement; (ii) upon 120
days' prior written notice if such notice is given within 30 days after the date
Executive ceases, without her consent, to be a member of the Board; (iii)
following a Change of Control, upon failure of the Company to pay Executive an
annual bonus equal to the average amount of such annual bonus paid to Executive
during the three fiscal years of the Company immediately preceding the year in
which the Change of Control occurs; (iv) following a reduction of Executive's
Base Salary after a Change of Control; (v) if Executive is required to regularly
perform the duties of her employment more than 50 miles from Boulder, Colorado;
or (vi) upon a material breach of this Agreement by the Company which is not
cured within 30 days after the Company's receipt of written notice thereof.
Executive shall provide written notice to the Company of any and all grounds
that Executive alleges constitute "Good Reason" and the Company shall have 30
days after receipt of such written notice to cure any such alleged grounds for
"Good Reason". If, following the expiration of such 30 day period, Executive
still believes that "Good Reason" exists for her termination of Employment, the
provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any termination of
the Employment Period, and as of that date, the Company will notify Executive of
the itemized and aggregate cash value of the payments and benefits, as
determined under Section 280G of the Internal Revenue Code (the "Code"),
received or to be received by Executive in connection with the termination of
her employment (whether payable pursuant to the terms of this Agreement or
otherwise). At the same time, the Company shall advise Executive of the portion
of such payments or benefits which constitute parachute payments within the
meaning of the Code and which may subject Executive to the payment of excise
taxes pursuant to Section 4999 and the expected amount of such taxes (such
payments or benefits being hereinafter referred to as "Parachute Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof, if all or any
portion of the payments or benefits provided under Paragraph 6(b) either alone
or together with other payments or benefits which Executive has received or is
then entitled to receive from the Company and any of its Subsidiaries would
constitute Parachute Payments, such payments or benefits provided to Executive
under Paragraph 6(b) shall be reduced to the extent necessary so that no portion
thereof shall be subject to the excise tax imposed by Section 4999 of the Code;
but only if, by reason of such reduction, Executive's net after tax benefit
shall exceed the net after tax benefit if such reduction were not made. "Net
after tax benefit" for purposes of this Paragraph 6(h) shall mean the sum of (i)
the total amount payable to Executive under Paragraphs 6(b) and (c) hereof, plus
(ii) all other payments and benefits which Executive has received or is then
entitled to receive from the Company and any of its subsidiaries that would
constitute a Parachute Payment, less (iii) the amount of federal income taxes
payable with respect to the payment and benefits described in (i) and (ii) above
calculated at the maximum marginal income tax rate for each year in which such
payments and benefits shall be paid to Executive (based upon the rate in effect
for such year as set forth in the Code at the Termination Date), less (iv) the
amount of excise taxes imposed with respect to the payments and benefits
described in (i) and (ii) above by Section 4999 of the Code.
For purposes of this Paragraph 6(h), Executive's base amount, the present
value of the Parachute Payments, the amount of the excise tax and all other
appropriate matters shall be
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determined by the Company's independent auditors in accordance with the
principles of Section 280G of the Code and based upon the advice of tax counsel
selected by the Company, which tax counsel shall be reasonably satisfactory to
Executive.
7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall specify(x) the effective
date of termination of the Employment Period, which, except as otherwise
provided in Paragraph 6(f), shall not be more than 30 days after the date the
notice is delivered (the "Termination Effective Date"); (y) in reasonable detail
the facts and circumstances underlying a determination that the termination is
for Cause or for Good Reason, as the case may be. If within 15 days after any
notice of termination of Executive for Cause by the Company is given, or if
within 15 days after the Company's 30 day cure period under Paragraph 6(f) has
expired, the party receiving such notice notifies the other party that a good
faith dispute exists concerning the characterization of the termination, the
Termination Effective Date shall be the date on which such dispute is finally
resolved either by written agreement of the parties or by binding arbitration
conducted pursuant to the rules of the American Arbitration Association.
Notwithstanding the pendency of any such dispute, the Company shall continue
Executive and her dependents as participants in all medical, dental and any
other health insurance and similar benefit plans of the Company in which she and
they were participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved. Benefits provided under this Paragraph 7
are in addition to all other amounts due under this Agreement and shall not be
offset against, or reduce any other amounts due under, this Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the Company
pursuant to procedures implemented by Company after the date hereof, Executive
shall not disclose or use at any time, either during the Employment Period or
thereafter, any Confidential Information (as defined in Paragraph 17) except to
the extent Executive reasonably believes is necessary to disclose or use such
Confidential Information in performing the Employment Services. Executive
further agrees that Executive will use Executive's commercial best efforts to
safeguard the Confidential Information and protect it against disclosure,
misuse, espionage, loss and theft, including, without limitation, causing
recipients of Confidential Information to enter into non-disclosure agreements
with the Company. Subject to the provisions of Paragraphs 10 and 13, nothing
herein shall be construed to prevent Executive from using Executive's general
knowledge and skill after termination of this Agreement, whether Executive
acquired such knowledge or skill before or during the Employment Period.
(b) In the event the Company has entered into confidentiality agreements
with third parties (not including Company employees) which contain provisions
different from those set forth in this Agreement, Executive agrees, in addition
to the provisions of Paragraph 9(a), to comply with any such different
provisions of which Executive is notified by the Company.
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10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the Employment Period during
the period Executive was employed by or engaged in research or development
activities for or with the Company or its predecessors and affiliates (whether
alone or jointly with others) to the extent such Intellectual Property is not
owned by the Company as a matter of law. Executive shall promptly and fully
communicate to the Company all Intellectual Property conceived, contributed to
or made by Executive and shall cooperate with the Company to protect the
Company's interests in such Intellectual Property including, without limitation,
providing assistance in securing patent protection and copyright registrations
and signing all documents reasonably requested by the Company, even if such
request occurs after the Employment Period. The Company shall pay Executive's
reasonable expenses of cooperating with the Company in protecting the Company's
interests in such Intellectual Property unless the subject matter of the
requested cooperation is related to actions taken or failed to be taken by
Executive wrongfully or otherwise not in good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such Intellectual Property
pursuant to this Agreement or otherwise), or (iii) relate to any subject matter
of the Company's actual or demonstrably anticipated material research and
development during the Employment Period, including without limitation, taxol,
taxanes and any other compounds, within
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any geographical area in which the Company or any of its subsidiaries provide or
plan to provide such products or services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee of the Company to leave the employment of
the Company to work for Executive or for any other person, firm or corporation
or (b) hire any employee of the Company.
15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations
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thereunder, who, immediately prior to the contemplated transaction, does not own
in excess of 5% of the Company's Common Stock on a fully-diluted basis, who is
not controlling, controlled by or under common control with any such 5% owner of
the Company's Common Stock and who is not the spouse or descendent (by birth or
adoption) of any such 5% owner of the Company's Common Stock.
"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential Information) and all related patents and
patent applications, any copyrightable work or mask work (whether or not
including Confidential Information) and all related registrations and
applications for registration, and all other proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants
to the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which she is bound, and (b) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
19. Company Representations. The Company hereby represents and warrants
to Executive that (a) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement
shall be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement,
all notices, requests and other communications to be given or delivered under or
by reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the parties at the following
addresses (or such other address as shall be furnished in writing by like
notice; provided, however, that notice of change of address shall be effective
only upon receipt):
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Notices to Executive
Patricia A. Pilia, Ph.D.
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter, including but not limited to the Prior Agreement.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of Executive's
creditors. This Agreement is for the sole benefit of the parties hereto and
shall not create any rights in third parties other than Executive's spouse or
beneficiary as expressly set forth herein.
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27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any such
arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees and expenses) relating to such arbitration paid by
the other party if the arbitrator(s) conducting such arbitration so determine.
Notwithstanding the foregoing, the parties agree and acknowledge that money
damages may not be an adequate remedy for breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The prevailing party in any suit shall be entitled
to recover reasonable attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the Company
may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ Patricia A. Pilia
-----------------------------------
Patricia A. Pilia
NAPRO BIOTHERAPEUTICS, INC.
By: /s/ Gordon H. Link, Jr.
Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
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EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day of
October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and Gordon H. Link, Jr.
("Executive"). Certain capitalized terms used in this Agreement have the meaning
set forth in Paragraph 17 hereof.
RECITALS
A. WHEREAS, Executive is currently employed by the Company; and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
parties contained in this Agreement, the parties agree as follows:
1. Employment Services. The Company hereby agrees to engage Executive,
and Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth in this Agreement. During the Employment Period (as
defined below), the Company and Executive agree that Executive will serve as an
executive officer of the Company in the position of Vice President, Finance and
Chief Financial Officer with the duties, responsibilities and authority as set
forth on Schedule A, or will have such other executive title and such other
executive duties, responsibilities and authority as Executive and the Company
may agree upon from time to time, and will perform such services of an executive
and administrative character to the Company and its present or future
Subsidiaries consistent with the duties of the Company's other executive
officers, as the Company's Board of Directors (the "Board") may from time to
time direct (the "Employment Services") or the Bylaws of the Company may
provide. The Employment Services shall commence upon the Effective Date of this
Agreement and terminate as provided in Paragraph 6 (the "Employment Period").
2. Performance.
(a) Executive shall report to the Chief Executive Officer (or
person acting in a similar capacity if the Company has no Chief Executive
Officer), and Executive shall devote his best efforts and his full business time
and attention (except for permitted vacation periods) to the business of the
Company and its Subsidiaries; provided, however, that upon prior agreement by
the Chief Executive Officer, and subject to the terms of this Agreement,
Executive may engage in independent activities in areas unrelated to the
Company's business or the Company's actual or demonstrably anticipated business;
and provided, further, that no such independent activities shall materially
detract from the essentially full time commitment of Executive to the business
and affairs of the Company. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and professional manner.
<PAGE>
(b) Unless the Company and Executive otherwise agree,
Executive shall perform the Employment Services at the Company's executive
offices and traveling on business as Executive and the Company shall reasonably
deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $125,000 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$15,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by him in the
course of performing his duties under this Agreement, subject to the Company's
reasonable requirements with respect to reporting and documentation of such
expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation during each year of the Employment Period and may carry over up to four
weeks of vacation from one year
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to the next succeeding year only.
6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that the Employment Period shall be extended by one year
after the Initial Term and each year thereafter on the anniversary of the
Effective Date of this Agreement (each such extension, a "Renewal Term") unless
either Executive or the Board shall have given written notice to the other party
no later than 180 days prior to the commencement of any Renewal Term of his or
its desire to terminate the Employment Period on the date prior to the
commencement of such Renewal Term;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Employment
Period, but not in excess of three years or (y) two years plus in either case
(I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $20,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of Executive's re-employment and subsequent
opportunity to participate in any health insurance program with comparable
coverage provided by such new employer, including without limitation,
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<PAGE>
coverage with respect to any pre-existing conditions or (ii) eighteen months
after such termination date.
(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) he is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) his
employment with the Company is terminated by the Company without Cause or he
terminates his employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of his termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform his duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed his duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
(f) For purposes of this Agreement, termination of the
Employment Period by Executive for "Good Reason" shall mean termination by
Executive (i) within 90 days after Executive has been assigned, without his
consent, to any duties substantially inconsistent with his position,
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duties, responsibilities or status with the Company as contemplated in Paragraph
1 of this Agreement; (ii) following a Change of Control, upon failure of the
Company to pay Executive an annual bonus equal to the average amount of such
annual bonus paid to Executive during the three fiscal years of the Company
immediately preceding the year in which the Change of Control occurs; (iii)
following a reduction of Executive's Base Salary after a Change of Control; (iv)
if Executive is required to regularly perform the duties of his employment more
than 50 miles from Boulder, Colorado; or (v) upon a material breach of this
Agreement by the Company which is not cured within 30 days after the Company's
receipt of written notice thereof. Executive shall provide written notice to the
Company of any and all grounds that Executive alleges constitute "Good Reason"
and the Company shall have 30 days after receipt of such written notice to cure
any such alleged grounds for "Good Reason". If, following the expiration of such
30 day period, Executive still believes that "Good Reason" exists for his
termination of Employment, the provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any
termination of the Employment Period, and as of that date, the Company will
notify Executive of the itemized and aggregate cash value of the payments and
benefits, as determined under Section 280G of the Internal Revenue Code (the
"Code"), received or to be received by Executive in connection with the
termination of his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall advise Executive of
the portion of such payments or benefits which constitute parachute payments
within the meaning of the Code and which may subject Executive to the payment of
excise taxes pursuant to Section 4999 and the expected amount of such taxes
(such payments or benefits being hereinafter referred to as "Parachute
Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof,
if all or any portion of the payments or benefits provided under Paragraph 6(b)
either alone or together with other payments or benefits which Executive has
received or is then entitled to receive from the Company and any of its
Subsidiaries would constitute Parachute Payments, such payments or benefits
provided to Executive under Paragraph 6(b) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction,
Executive's net after tax benefit shall exceed the net after tax benefit if such
reduction were not made. "Net after tax benefit" for purposes of this Paragraph
6(h) shall mean the sum of (i) the total amount payable to Executive under
Paragraphs 6(b) and (c) hereof, plus (ii) all other payments and benefits which
Executive has received or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a Parachute Payment, less (iii) the
amount of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set forth in the Code
at the Termination Date), less (iv) the amount of excise taxes imposed with
respect to the payments and benefits described in (i) and (ii) above by Section
4999 of the Code.
For purposes of this Paragraph 6(h), Executive's base amount,
the present value of the Parachute Payments, the amount of the excise tax and
all other appropriate matters shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by the Company, which tax counsel shall
be reasonably satisfactory to Executive.
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7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall specify(x) the effective
date of termination of the Employment Period, which, except as otherwise
provided in Paragraph 6(f), shall not be more than 30 days after the date the
notice is delivered (the "Termination Effective Date" and (y) in reasonable
detail the facts and circumstances underlying a determination that the
termination is for Cause or for Good Reason, as the case may be. If within 15
days after any notice of termination of Executive for Cause by the Company is
given, or if within 15 days after the Company's 30 day cure period under
Paragraph 6(f) has expired, the party receiving such notice notifies the other
party that a good faith dispute exists concerning the characterization of the
termination, the Termination Effective Date shall be the date on which such
dispute is finally resolved either by written agreement of the parties or by
binding arbitration conducted pursuant to the rules of the American Arbitration
Association. Notwithstanding the pendency of any such dispute, the Company shall
continue Executive and his dependents as participants in all medical, dental and
any other health insurance and similar benefit plans of the Company in which he
and they were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. Benefits provided under this
Paragraph 7 are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under, this
Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the
Company pursuant to procedures implemented by Company after the date hereof,
Executive shall not disclose or use at any time, either during the Employment
Period or thereafter, any Confidential Information (as defined in Paragraph 17)
except to the extent Executive reasonably believes is necessary to disclose or
use such Confidential Information in performing the Employment Services.
Executive further agrees that Executive will use Executive's commercial best
efforts to safeguard the Confidential Information and protect it against
disclosure, misuse, espionage, loss and theft, including, without limitation,
causing recipients of Confidential Information to enter into non-disclosure
agreements with the Company. Subject to the provisions of Paragraphs 10 and 13,
nothing herein shall be construed to prevent Executive from using Executive's
general knowledge and skill after termination of this Agreement, whether
Executive acquired such knowledge or skill before or during the Employment
Period.
(b) In the event the Company has entered into confidentiality
agreements with third parties (not including Company employees) which contain
provisions different from those set forth in this Agreement, Executive agrees,
in addition to the provisions of Paragraph 9(a), to comply with any such
different provisions of which Executive is notified by the Company.
10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the
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Employment Period during the period Executive was employed by or engaged in
research or development activities for or with the Company or its predecessors
and affiliates (whether alone or jointly with others) to the extent such
Intellectual Property is not owned by the Company as a matter of law. Executive
shall promptly and fully communicate to the Company all Intellectual Property
conceived, contributed to or made by Executive and shall cooperate with the
Company to protect the Company's interests in such Intellectual Property
including, without limitation, providing assistance in securing patent
protection and copyright registrations and signing all documents reasonably
requested by the Company, even if such request occurs after the Employment
Period. The Company shall pay Executive's reasonable expenses of cooperating
with the Company in protecting the Company's interests in such Intellectual
Property unless the subject matter of the requested cooperation is related to
actions taken or failed to be taken by Executive wrongfully or otherwise not in
good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such Intellectual Property
pursuant to this Agreement or otherwise), or (iii) relate to any subject matter
of the Company's actual or demonstrably anticipated material research and
development during the Employment Period, including without limitation, taxol,
taxanes and any other compounds, within any geographical area in which the
Company or any of its subsidiaries provide or plan to provide such products or
services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee of the Company to leave the employment of
the Company to work for Executive or for any other
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person, firm or corporation or (b) hire any employee of the Company.
15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 5% owner
of the Company's Common Stock.
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"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential Information) and all related patents and
patent applications, any copyrightable work or mask work (whether or not
including Confidential Information) and all related registrations and
applications for registration, and all other proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants
to the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (b) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
19. Company Representations. The Company hereby represents and warrants
to Executive that (a) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement
shall be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement,
all notices, requests and other communications to be given or delivered under or
by reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the parties at the following
addresses (or such other address as shall be furnished in writing by like
notice; provided, however, that notice of change of address shall be effective
only upon receipt):
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Notices to Executive
Gordon H. Link, Jr.
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Patricia A. Pilia, Ph.D.
Executive Vice President
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of Executive's
creditors. This Agreement is for the sole benefit of the parties hereto and
shall not create any rights in third parties other than Executive's spouse or
beneficiary as expressly set forth herein.
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27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any such
arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees and expenses) relating to such arbitration paid by
the other party if the arbitrator(s) conducting such arbitration so determine.
Notwithstanding the foregoing, the parties agree and acknowledge that money
damages may not be an adequate remedy for breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The prevailing party in any suit shall be entitled
to recover reasonable attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the Company
may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ Gordon H. Link, Jr.
-----------------------------------
Gordon H. Link, Jr.
NAPRO BIOTHERAPEUTICS, INC.
By: /s/ Patricia A. Pilia, Ph.D.
Patricia A. Pilia, Ph.D.
Executive Vice President
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EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day
of October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and David L. Denny ("Executive").
Certain capitalized terms used in this Agreement have the meaning set forth in
Paragraph 17 hereof.
RECITALS
A. WHEREAS, Executive is currently employed by the Company; and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
parties contained in this Agreement, the parties agree as follows:
1. Employment Services. The Company hereby agrees to engage Executive,
and Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth in this Agreement. During the Employment Period (as
defined below), the Company and Executive agree that Executive will serve as an
executive officer of the Company in the position of Vice President, Operations
with the duties, responsibilities and authority as set forth on Schedule A, or
will have such other executive title and such other executive duties,
responsibilities and authority as Executive and the Company may agree upon from
time to time, and will perform such services of an executive and administrative
character to the Company and its present or future Subsidiaries consistent with
the duties of the Company's other executive officers, as the Company's Board of
Directors (the "Board") may from time to time direct (the "Employment Services")
or the Bylaws of the Company may provide. The Employment Services shall commence
upon the Effective Date of this Agreement and terminate as provided in Paragraph
6 (the "Employment Period").
2. Performance.
(a) Executive shall report to the Executive Vice President (or
person acting in a similar capacity if the Company has no Executive Vice
President), and Executive shall devote his best efforts and his full business
time and attention (except for permitted vacation periods) to the business of
the Company and its Subsidiaries; provided, however, that upon prior agreement
by the Executive Vice President, and subject to the terms of this Agreement,
Executive may engage in independent activities in areas unrelated to the
Company's business or the Company's actual or demonstrably anticipated business;
and provided, further, that no such independent activities shall materially
detract from the essentially full time commitment of Executive to the business
and affairs of the Company. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and professional manner.
<PAGE>
(b) Unless the Company and Executive otherwise agree,
Executive shall perform the Employment Services at the Company's executive
offices and traveling on business as Executive and the Company shall reasonably
deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $106,000 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$15,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by him in the
course of performing his duties under this Agreement, subject to the Company's
reasonable requirements with respect to reporting and documentation of such
expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation during each year of the Employment Period and may carry over up to four
weeks of vacation from one year to the next succeeding year only.
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6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that the Employment Period shall be extended by one year
after the Initial Term and each year thereafter on the anniversary of the
Effective Date of this Agreement (each such extension, a "Renewal Term") unless
either Executive or the Board shall have given written notice to the other party
no later than 180 days prior to the commencement of any Renewal Term of his or
its desire to terminate the Employment Period on the date prior to the
commencement of such Renewal Term;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Initial Term or
the then current Renewal Term, as applicable, or (y) one year plus in either
case (I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $15,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of Executive's re-employment and subsequent
opportunity to participate in any health insurance program with comparable
coverage provided by such new employer, including without limitation, coverage
with respect to any pre-existing conditions or (ii) eighteen months after such
termination date.
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(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) he is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) his
employment with the Company is terminated by the Company without Cause or he
terminates his employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of his termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform his duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed his duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
(f) For purposes of this Agreement, termination of the
Employment Period by Executive for "Good Reason" shall mean termination by
Executive (i) within 90 days after Executive has been assigned, without his
consent, to any duties substantially inconsistent with his position, duties,
responsibilities or status with the Company as contemplated in Paragraph 1 of
this Agreement; (ii) following a Change of Control, upon failure of the Company
to pay Executive an annual bonus equal to the average amount of such annual
bonus paid to Executive during the three
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fiscal years of the Company immediately preceding the year in which the Change
of Control occurs; (iii) following a reduction of Executive's Base Salary after
a Change of Control; (iv) if Executive is required to regularly perform the
duties of his employment more than 50 miles from Boulder, Colorado; or (v) upon
a material breach of this Agreement by the Company which is not cured within 30
days after the Company's receipt of written notice thereof. Executive shall
provide written notice to the Company of any and all grounds that Executive
alleges constitute "Good Reason" and the Company shall have 30 days after
receipt of such written notice to cure any such alleged grounds for "Good
Reason". If, following the expiration of such 30 day period, Executive still
believes that "Good Reason" exists for his termination of Employment, the
provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any
termination of the Employment Period, and as of that date, the Company will
notify Executive of the itemized and aggregate cash value of the payments and
benefits, as determined under Section 280G of the Internal Revenue Code (the
"Code"), received or to be received by Executive in connection with the
termination of his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall advise Executive of
the portion of such payments or benefits which constitute parachute payments
within the meaning of the Code and which may subject Executive to the payment of
excise taxes pursuant to Section 4999 and the expected amount of such taxes
(such payments or benefits being hereinafter referred to as "Parachute
Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof,
if all or any portion of the payments or benefits provided under Paragraph 6(b)
either alone or together with other payments or benefits which Executive has
received or is then entitled to receive from the Company and any of its
Subsidiaries would constitute Parachute Payments, such payments or benefits
provided to Executive under Paragraph 6(b) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction,
Executive's net after tax benefit shall exceed the net after tax benefit if such
reduction were not made. "Net after tax benefit" for purposes of this Paragraph
6(h) shall mean the sum of (i) the total amount payable to Executive under
Paragraphs 6(b) and (c) hereof, plus (ii) all other payments and benefits which
Executive has received or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a Parachute Payment, less (iii) the
amount of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set forth in the Code
at the Termination Date), less (iv) the amount of excise taxes imposed with
respect to the payments and benefits described in (i) and (ii) above by Section
4999 of the Code.
For purposes of this Paragraph 6(h), Executive's base amount,
the present value of the Parachute Payments, the amount of the excise tax and
all other appropriate matters shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by the Company, which tax counsel shall
be reasonably satisfactory to Executive.
7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall
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<PAGE>
specify(x) the effective date of termination of the Employment Period, which,
except as otherwise provided in Paragraph 6(f), shall not be more than 30 days
after the date the notice is delivered (the "Termination Effective Date" and (y)
in reasonable detail the facts and circumstances underlying a determination that
the termination is for Cause or for Good Reason, as the case may be. If within
15 days after any notice of termination of Executive for Cause by the Company is
given, or if within 15 days after the Company's 30 day cure period under
Paragraph 6(f) has expired, the party receiving such notice notifies the other
party that a good faith dispute exists concerning the characterization of the
termination, the Termination Effective Date shall be the date on which such
dispute is finally resolved either by written agreement of the parties or by
binding arbitration conducted pursuant to the rules of the American Arbitration
Association. Notwithstanding the pendency of any such dispute, the Company shall
continue Executive and his dependents as participants in all medical, dental and
any other health insurance and similar benefit plans of the Company in which he
and they were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. Benefits provided under this
Paragraph 7 are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under, this
Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the
Company pursuant to procedures implemented by Company after the date hereof,
Executive shall not disclose or use at any time, either during the Employment
Period or thereafter, any Confidential Information (as defined in Paragraph 17)
except to the extent Executive reasonably believes is necessary to disclose or
use such Confidential Information in performing the Employment Services.
Executive further agrees that Executive will use Executive's commercial best
efforts to safeguard the Confidential Information and protect it against
disclosure, misuse, espionage, loss and theft, including, without limitation,
causing recipients of Confidential Information to enter into non-disclosure
agreements with the Company. Subject to the provisions of Paragraphs 10 and 13,
nothing herein shall be construed to prevent Executive from using Executive's
general knowledge and skill after termination of this Agreement, whether
Executive acquired such knowledge or skill before or during the Employment
Period.
(b) In the event the Company has entered into confidentiality
agreements with third parties (not including Company employees) which contain
provisions different from those set forth in this Agreement, Executive agrees,
in addition to the provisions of Paragraph 9(a), to comply with any such
different provisions of which Executive is notified by the Company.
10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the Employment Period during
the period Executive was employed by or engaged in research or development
activities for or with the Company or its predecessors and affiliates (whether
alone or jointly with others) to the extent such Intellectual Property is not
owned by the Company as a matter
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of law. Executive shall promptly and fully communicate to the Company all
Intellectual Property conceived, contributed to or made by Executive and shall
cooperate with the Company to protect the Company's interests in such
Intellectual Property including, without limitation, providing assistance in
securing patent protection and copyright registrations and signing all documents
reasonably requested by the Company, even if such request occurs after the
Employment Period. The Company shall pay Executive's reasonable expenses of
cooperating with the Company in protecting the Company's interests in such
Intellectual Property unless the subject matter of the requested cooperation is
related to actions taken or failed to be taken by Executive wrongfully or
otherwise not in good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such Intellectual Property
pursuant to this Agreement or otherwise), or (iii) relate to any subject matter
of the Company's actual or demonstrably anticipated material research and
development during the Employment Period, including without limitation, taxol,
taxanes and any other compounds, within any geographical area in which the
Company or any of its subsidiaries provide or plan to provide such products or
services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee of the Company to leave the employment of
the Company to work for Executive or for any other person, firm or corporation
or (b) hire any employee of the Company.
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15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 5% owner
of the Company's Common Stock.
"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential
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Information) and all related patents and patent applications, any copyrightable
work or mask work (whether or not including Confidential Information) and all
related registrations and applications for registration, and all other
proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants
to the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (b) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
19. Company Representations. The Company hereby represents and warrants
to Executive that (a) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement
shall be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement,
all notices, requests and other communications to be given or delivered under or
by reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the parties at the following
addresses (or such other address as shall be furnished in writing by like
notice; provided, however, that notice of change of address shall be effective
only upon receipt):
Notices to Executive
David L. Denny
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
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Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Patricia A. Pilia, Ph.D.
Executive Vice President
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of Executive's
creditors. This Agreement is for the sole benefit of the parties hereto and
shall not create any rights in third parties other than Executive's spouse or
beneficiary as expressly set forth herein.
27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any such
arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees
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and expenses) relating to such arbitration paid by the other party if the
arbitrator(s) conducting such arbitration so determine. Notwithstanding the
foregoing, the parties agree and acknowledge that money damages may not be an
adequate remedy for breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
The prevailing party in any suit shall be entitled to recover reasonable
attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the
Company may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ David L. Denny
-----------------------------------
David L. Denny
NAPRO BIOTHERAPEUTICS, INC.
By: /s/ Gordon H. Link, Jr.
Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
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EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day
of October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and William D. Fairbairn
("Executive"). Certain capitalized terms used in this Agreement have the meaning
set forth in Paragraph 17 hereof.
RECITALS
A. WHEREAS, Executive is currently employed by the Company; and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
parties contained in this Agreement, the parties agree as follows:
1. Employment Services. The Company hereby agrees to engage Executive,
and Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth in this Agreement. During the Employment Period (as
defined below), the Company and Executive agree that Executive will serve as an
executive officer of the Company in the position of Vice President, Regulatory
Affairs with the duties, responsibilities and authority as set forth on Schedule
A, or will have such other executive title and such other executive duties,
responsibilities and authority as Executive and the Company may agree upon from
time to time, and will perform such services of an executive and administrative
character to the Company and its present or future Subsidiaries consistent with
the duties of the Company's other executive officers, as the Company's Board of
Directors (the "Board") may from time to time direct (the "Employment Services")
or the Bylaws of the Company may provide. The Employment Services shall commence
upon the Effective Date of this Agreement and terminate as provided in Paragraph
6 (the "Employment Period").
2. Performance.
(a) Executive shall report to the Executive Vice President (or
person acting in a similar capacity if the Company has no Executive Vice
President), and Executive shall devote his best efforts and his full business
time and attention (except for permitted vacation periods) to the business of
the Company and its Subsidiaries; provided, however, that upon prior agreement
by the Executive Vice President, and subject to the terms of this Agreement,
Executive may engage in independent activities in areas unrelated to the
Company's business or the Company's actual or demonstrably anticipated business;
and provided, further, that no such independent activities shall materially
detract from the essentially full time commitment of Executive to the business
and affairs of the Company. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and professional manner.
<PAGE>
(b) Unless the Company and Executive otherwise agree,
Executive shall perform the Employment Services at the Company's executive
offices and traveling on business as Executive and the Company shall reasonably
deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $110,000 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$15,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by him in the
course of performing his duties under this Agreement, subject to the Company's
reasonable requirements with respect to reporting and documentation of such
expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation during each year of the Employment Period and may carry over up to four
weeks of vacation from one year to the next succeeding year only.
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6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that the Employment Period shall be extended by one year
after the Initial Term and each year thereafter on the anniversary of the
Effective Date of this Agreement (each such extension, a "Renewal Term") unless
either Executive or the Board shall have given written notice to the other party
no later than 180 days prior to the commencement of any Renewal Term of his or
its desire to terminate the Employment Period on the date prior to the
commencement of such Renewal Term;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Initial Term or
the then current Renewal Term, as applicable, or (y) one year plus in either
case (I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $15,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of Executive's re-employment and subsequent
opportunity to participate in any health insurance program with comparable
coverage provided by such new employer, including without limitation, coverage
with respect to any pre-existing conditions or (ii) eighteen months after such
termination date.
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(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) he is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) his
employment with the Company is terminated by the Company without Cause or he
terminates his employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of his termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform his duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed his duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
(f) For purposes of this Agreement, termination of the
Employment Period by Executive for "Good Reason" shall mean termination by
Executive (i) within 90 days after Executive has been assigned, without his
consent, to any duties substantially inconsistent with his position, duties,
responsibilities or status with the Company as contemplated in Paragraph 1 of
this Agreement; (ii) following a Change of Control, upon failure of the Company
to pay Executive an annual bonus equal to the average amount of such annual
bonus paid to Executive during the three
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fiscal years of the Company immediately preceding the year in which the Change
of Control occurs; (iii) following a reduction of Executive's Base Salary after
a Change of Control; (iv) if Executive is required to regularly perform the
duties of his employment more than 50 miles from Boulder, Colorado; or (v) upon
a material breach of this Agreement by the Company which is not cured within 30
days after the Company's receipt of written notice thereof. Executive shall
provide written notice to the Company of any and all grounds that Executive
alleges constitute "Good Reason" and the Company shall have 30 days after
receipt of such written notice to cure any such alleged grounds for "Good
Reason". If, following the expiration of such 30 day period, Executive still
believes that "Good Reason" exists for his termination of Employment, the
provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any
termination of the Employment Period, and as of that date, the Company will
notify Executive of the itemized and aggregate cash value of the payments and
benefits, as determined under Section 280G of the Internal Revenue Code (the
"Code"), received or to be received by Executive in connection with the
termination of his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall advise Executive of
the portion of such payments or benefits which constitute parachute payments
within the meaning of the Code and which may subject Executive to the payment of
excise taxes pursuant to Section 4999 and the expected amount of such taxes
(such payments or benefits being hereinafter referred to as "Parachute
Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof,
if all or any portion of the payments or benefits provided under Paragraph 6(b)
either alone or together with other payments or benefits which Executive has
received or is then entitled to receive from the Company and any of its
Subsidiaries would constitute Parachute Payments, such payments or benefits
provided to Executive under Paragraph 6(b) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction,
Executive's net after tax benefit shall exceed the net after tax benefit if such
reduction were not made. "Net after tax benefit" for purposes of this Paragraph
6(h) shall mean the sum of (i) the total amount payable to Executive under
Paragraphs 6(b) and (c) hereof, plus (ii) all other payments and benefits which
Executive has received or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a Parachute Payment, less (iii) the
amount of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set forth in the Code
at the Termination Date), less (iv) the amount of excise taxes imposed with
respect to the payments and benefits described in (i) and (ii) above by Section
4999 of the Code.
For purposes of this Paragraph 6(h), Executive's base amount,
the present value of the Parachute Payments, the amount of the excise tax and
all other appropriate matters shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by the Company, which tax counsel shall
be reasonably satisfactory to Executive.
7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall
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<PAGE>
specify(x) the effective date of termination of the Employment Period, which,
except as otherwise provided in Paragraph 6(f), shall not be more than 30 days
after the date the notice is delivered (the "Termination Effective Date" and (y)
in reasonable detail the facts and circumstances underlying a determination that
the termination is for Cause or for Good Reason, as the case may be. If within
15 days after any notice of termination of Executive for Cause by the Company is
given, or if within 15 days after the Company's 30 day cure period under
Paragraph 6(f) has expired, the party receiving such notice notifies the other
party that a good faith dispute exists concerning the characterization of the
termination, the Termination Effective Date shall be the date on which such
dispute is finally resolved either by written agreement of the parties or by
binding arbitration conducted pursuant to the rules of the American Arbitration
Association. Notwithstanding the pendency of any such dispute, the Company shall
continue Executive and his dependents as participants in all medical, dental and
any other health insurance and similar benefit plans of the Company in which he
and they were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. Benefits provided under this
Paragraph 7 are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under, this
Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the
Company pursuant to procedures implemented by Company after the date hereof,
Executive shall not disclose or use at any time, either during the Employment
Period or thereafter, any Confidential Information (as defined in Paragraph 17)
except to the extent Executive reasonably believes is necessary to disclose or
use such Confidential Information in performing the Employment Services.
Executive further agrees that Executive will use Executive's commercial best
efforts to safeguard the Confidential Information and protect it against
disclosure, misuse, espionage, loss and theft, including, without limitation,
causing recipients of Confidential Information to enter into non-disclosure
agreements with the Company. Subject to the provisions of Paragraphs 10 and 13,
nothing herein shall be construed to prevent Executive from using Executive's
general knowledge and skill after termination of this Agreement, whether
Executive acquired such knowledge or skill before or during the Employment
Period.
(b) In the event the Company has entered into confidentiality
agreements with third parties (not including Company employees) which contain
provisions different from those set forth in this Agreement, Executive agrees,
in addition to the provisions of Paragraph 9(a), to comply with any such
different provisions of which Executive is notified by the Company.
10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the Employment Period during
the period Executive was employed by or engaged in research or development
activities for or with the Company or its predecessors and affiliates (whether
alone or jointly with others) to the extent such Intellectual Property is not
owned by the Company as a matter
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of law. Executive shall promptly and fully communicate to the Company all
Intellectual Property conceived, contributed to or made by Executive and shall
cooperate with the Company to protect the Company's interests in such
Intellectual Property including, without limitation, providing assistance in
securing patent protection and copyright registrations and signing all documents
reasonably requested by the Company, even if such request occurs after the
Employment Period. The Company shall pay Executive's reasonable expenses of
cooperating with the Company in protecting the Company's interests in such
Intellectual Property unless the subject matter of the requested cooperation is
related to actions taken or failed to be taken by Executive wrongfully or
otherwise not in good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such Intellectual Property
pursuant to this Agreement or otherwise), or (iii) relate to any subject matter
of the Company's actual or demonstrably anticipated material research and
development during the Employment Period, including without limitation, taxol,
taxanes and any other compounds, within any geographical area in which the
Company or any of its subsidiaries provide or plan to provide such products or
services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee of the Company to leave the employment of
the Company to work for Executive or for any other person, firm or corporation
or (b) hire any employee of the Company.
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15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 5% owner
of the Company's Common Stock.
"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential
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Information) and all related patents and patent applications, any copyrightable
work or mask work (whether or not including Confidential Information) and all
related registrations and applications for registration, and all other
proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants
to the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (b) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
19. Company Representations. The Company hereby represents and warrants
to Executive that (a) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement
shall be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement,
all notices, requests and other communications to be given or delivered under or
by reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the parties at the following
addresses (or such other address as shall be furnished in writing by like
notice; provided, however, that notice of change of address shall be effective
only upon receipt):
Notices to Executive
William D. Fairbairn
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
Notices to Company
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Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Patricia A. Pilia, Ph.D.
Executive Vice President
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of Executive's
creditors. This Agreement is for the sole benefit of the parties hereto and
shall not create any rights in third parties other than Executive's spouse or
beneficiary as expressly set forth herein.
27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any
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such arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees and expenses) relating to such arbitration paid by
the other party if the arbitrator(s) conducting such arbitration so determine.
Notwithstanding the foregoing, the parties agree and acknowledge that money
damages may not be an adequate remedy for breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The prevailing party in any suit shall be entitled
to recover reasonable attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the Company
may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ William D. Fairbairn
-----------------------------------
William D. Fairbairn
NAPRO BIOTHERAPEUTICS, INC.
By: /s/ Gordon H. Link, Jr.
Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
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EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into effective this 5th day
of October, 1998 (the "Effective Date"), by and between NaPro BioTherapeutics,
Inc., a Delaware corporation (the "Company"), and James D. McChesney
("Executive"). Certain capitalized terms used in this Agreement have the meaning
set forth in Paragraph 17 hereof.
RECITALS
A. WHEREAS, Executive is currently employed by the Company; and
B. WHEREAS, the Company desires to secure the continued services of
Executive as an employee of the Company, and to provide for certain compensation
and benefit arrangements for Executive in the event of Executive's termination
of employment under certain circumstances, and Executive is willing to enter
into this Agreement and perform such services.
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
parties contained in this Agreement, the parties agree as follows:
1. Employment Services. The Company hereby agrees to engage Executive,
and Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth in this Agreement. During the Employment Period (as
defined below), the Company and Executive agree that Executive will serve as an
executive officer of the Company in the position of Vice President, Natural
Products Chemistry with the duties, responsibilities and authority as set forth
on Schedule A, or will have such other executive title and such other executive
duties, responsibilities and authority as Executive and the Company may agree
upon from time to time, and will perform such services of an executive and
administrative character to the Company and its present or future Subsidiaries
consistent with the duties of the Company's other executive officers, as the
Company's Board of Directors (the "Board") may from time to time direct (the
"Employment Services") or the Bylaws of the Company may provide. The Employment
Services shall commence upon the Effective Date of this Agreement and terminate
as provided in Paragraph 6 (the "Employment Period").
2. Performance.
(a) Executive shall report to the Chief Executive Officer (or
person acting in a similar capacity if the Company has no Chief Executive
Officer), and Executive shall devote his best efforts and his full business time
and attention (except for permitted vacation periods) to the business of the
Company and its Subsidiaries; provided, however, that upon prior agreement by
the Chief Executive Officer, and subject to the terms of this Agreement,
Executive may engage in independent activities in areas unrelated to the
Company's business or the Company's actual or demonstrably anticipated business;
and provided, further, that no such independent activities shall materially
detract from the essentially full time commitment of Executive to the business
and affairs of the Company. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and professional manner.
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(b) Unless the Company and Executive otherwise agree,
Executive shall perform the Employment Services at the Company's executive
offices and traveling on business as Executive and the Company shall reasonably
deem necessary.
3. Compensation.
(a) During the Employment Period, the Company will pay
Executive for the Employment Services a base salary (the "Base Salary") at the
annual rate of $116,600 or such other increased rate as the compensation
committee of the Board or Board committee performing equivalent functions (the
"Compensation Committee") (or if the Board has no Compensation Committee at the
time, then the Board) may designate from time to time, such salary to be paid at
such periods as salary is paid to other executive officers of the Company. The
Compensation Committee (or the Board, if applicable) shall review the Base
Salary of the Executive at least annually on the anniversary of the Effective
Date and may, in its sole discretion, increase (but not decrease) such Base
Salary from time to time. Payment of the Base Salary shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) Executive may receive an annual bonus in such amount, if
any, as the Compensation Committee (or if the Board has no Compensation
Committee at the time, then the Board), in its discretion, may award to
Executive, based upon Executive's and the Company's performance during each year
of the Employment Period, provided, however that each annual bonus payable to
Executive during the Employment Period shall not be less than the greater of (i)
$15,000 or (ii) the amount of the highest annual bonus paid to Executive for the
three most recent fiscal years of the Company.
(c) The Executive shall be entitled to receive such stock
options during the Employment Period as determined from time to time by the
Compensation Committee (or if the Board has no Compensation Committee at the
time, then the Board).
4. Reimbursement for Expenses. The Company shall promptly reimburse
Executive for all reasonable out-of-pocket expenses incurred by him in the
course of performing his duties under this Agreement, subject to the Company's
reasonable requirements with respect to reporting and documentation of such
expenses.
5. Benefits. Executive shall be entitled to all fringe benefits offered
by the Company and to participate in all of the Company's employee benefit
programs both on the same basis as available to executives of the Company, and
shall be entitled to such other benefits as may from time to time be made
available to Executive. The Company shall use commercially reasonable best
efforts to obtain and keep directors' and officers' liability insurance coverage
in effect in an amount equivalent to that of a well-insured, similarly-situated
company; provided, however, that the failure to obtain and keep such insurance
in effect after the Company has exercised such commercially reasonable best
efforts shall not be a breach of the Company's obligations under this Agreement.
During the Employment Period, Executive shall be entitled to four weeks of paid
vacation during each year of the Employment Period and may carry over up to four
weeks of vacation from one year to the next succeeding year only.
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6. Term and Termination.
(a) Except as otherwise provided in this Agreement, the
Employment Period shall terminate upon the earlier of:
(i) three years from the Effective Date hereof (the "Initial Term");
provided, however, that the Employment Period shall be extended by one year
after the Initial Term and each year thereafter on the anniversary of the
Effective Date of this Agreement (each such extension, a "Renewal Term") unless
either Executive or the Board shall have given written notice to the other party
no later than 180 days prior to the commencement of any Renewal Term of his or
its desire to terminate the Employment Period on the date prior to the
commencement of such Renewal Term;
(ii) Executive's incapacity or permanent disability (which in either case
shall be deemed to occur only in the event Executive is unable to perform the
Employment Services for 180 days in any 12-month period) or death;
(iii) termination by Executive voluntarily or for Good Reason (as defined
below);
(iv) termination by the Company with or without Cause (as defined below).
(b) If the Employment Period is terminated (i) by the Company
without Cause or (ii) by Executive for Good Reason, then Executive shall be
entitled to receive, so long as Executive has not breached the provisions of
Paragraphs 9, 10, 12, 13, 14, or 16 hereof in a manner that could adversely
affect the Company, his Base Salary in cash at the periods set forth in
Paragraph 3, at a rate equal to the then applicable rate set forth in Paragraph
3 for a period equal to the greater of (x) the remainder of the Initial Term or
the then current Renewal Term, as applicable, or (y) one year plus in either
case (I) the greater of (A) the most recent annual bonus, if any, awarded to
Executive pursuant to Paragraph 3(b) during the Company's fiscal year of or
during the Company's fiscal year prior to termination, as the case may be, (B)
the average amount of the last three annual bonuses, if any, awarded to
Executive pursuant to Paragraph 3(b) prior to termination, or (C) $15,000,
multiplied by in any case not less than the number of years for which Executive
is entitled to receive his Base Salary pursuant to this Paragraph 6(b) (prorated
for any partial year) (such bonus amounts to be paid pro rata over the term for
which Executive is entitled to receive his Base Salary pursuant to this
Paragraph 6(b)); plus (II) at Executive's election, medical, dental and any
other health insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to Executive and his
dependents covered thereby (including that Executive shall remain obligated to
continue to pay any costs or expenses which Executive would otherwise be
obligated to pay pursuant to such insurance or other protections provided
pursuant to Paragraph 5 as in existence on the date of such termination) until
the first to occur of (i) the date of Executive's re-employment and subsequent
opportunity to participate in any health insurance program with comparable
coverage provided by such new employer, including without limitation, coverage
with respect to any pre-existing conditions or (ii) eighteen months after such
termination date.
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(c) If a Change of Control (as defined below) occurs and
Executive is thereafter offered and accepts continued employment with the
Company (or its successor), and either (i) he is still employed by the Company
on the first calendar anniversary of the Change of Control, or (ii) his
employment with the Company is terminated by the Company without Cause or he
terminates his employment for Good Reason during such one year period, the
Company shall pay Executive, in addition to any other amounts payable hereunder,
a "stay bonus" equal to one year's then current Base Salary. Such "stay bonus"
shall be paid in a cash lump sum to Executive within twenty (20) days following
the earlier of (i) the first anniversary of the date of the Change of Control or
(ii) the date of his termination of employment with the Company. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following: (i) the merger or consolidation of the Company into a new surviving
company in which the holders of the Company's voting securities (on a
fully-diluted basis) immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new
surviving company (on a fully diluted basis), or (ii) when any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "34 Act")
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the 34 Act but excluding the Company and any Subsidiary or
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including a trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
34 Act, as amended from time to time), of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities.
(d) Except as provided in Paragraphs 6(b) or (c), upon
termination of the Employment Period, Executive shall be entitled to receive
only (i) accrued but unpaid salary and bonus through the date of such
termination and (ii) unpaid salary with respect to any vacation days accrued but
not taken as of the date of such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the
conviction (or plea of nolo contendere) of a felony or a crime involving moral
turpitude or the commission of any other act which has an adverse effect on the
Company and which involves dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, including,
without limitation, such conduct resulting from repeated acts of alcohol or drug
abuse, (iii) continued failure by Executive to substantially perform his duties
as reasonably directed by the Board for a period of 15 days after the Board has
made a demand for substantial performance which specifically identifies the
manner in which the Board believes that Executive has not substantially
performed his duties, or (iv) gross negligence or misconduct not in good faith
with respect to the Company or any of its Subsidiaries, or (v) any other
material breach of this Agreement which is not cured within 15 days after
Executive's receipt of written notice thereof.
(f) For purposes of this Agreement, termination of the
Employment Period by Executive for "Good Reason" shall mean termination by
Executive (i) within 90 days after Executive has been assigned, without his
consent, to any duties substantially inconsistent with his position, duties,
responsibilities or status with the Company as contemplated in Paragraph 1 of
this Agreement; (ii) following a Change of Control, upon failure of the Company
to pay Executive an annual bonus equal to the average amount of such annual
bonus paid to Executive during the three
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fiscal years of the Company immediately preceding the year in which the Change
of Control occurs; (iii) following a reduction of Executive's Base Salary after
a Change of Control; (iv) if Executive is required to regularly perform the
duties of his employment more than 50 miles from Boulder, Colorado; or (v) upon
a material breach of this Agreement by the Company which is not cured within 30
days after the Company's receipt of written notice thereof. Executive shall
provide written notice to the Company of any and all grounds that Executive
alleges constitute "Good Reason" and the Company shall have 30 days after
receipt of such written notice to cure any such alleged grounds for "Good
Reason". If, following the expiration of such 30 day period, Executive still
believes that "Good Reason" exists for his termination of Employment, the
provisions of Paragraph 7 shall apply.
(g) Promptly (but in any event within 20 days) following any
termination of the Employment Period, and as of that date, the Company will
notify Executive of the itemized and aggregate cash value of the payments and
benefits, as determined under Section 280G of the Internal Revenue Code (the
"Code"), received or to be received by Executive in connection with the
termination of his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall advise Executive of
the portion of such payments or benefits which constitute parachute payments
within the meaning of the Code and which may subject Executive to the payment of
excise taxes pursuant to Section 4999 and the expected amount of such taxes
(such payments or benefits being hereinafter referred to as "Parachute
Payments").
(h) Notwithstanding the provisions of Paragraph 6(b) hereof,
if all or any portion of the payments or benefits provided under Paragraph 6(b)
either alone or together with other payments or benefits which Executive has
received or is then entitled to receive from the Company and any of its
Subsidiaries would constitute Parachute Payments, such payments or benefits
provided to Executive under Paragraph 6(b) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code; but only if, by reason of such reduction,
Executive's net after tax benefit shall exceed the net after tax benefit if such
reduction were not made. "Net after tax benefit" for purposes of this Paragraph
6(h) shall mean the sum of (i) the total amount payable to Executive under
Paragraphs 6(b) and (c) hereof, plus (ii) all other payments and benefits which
Executive has received or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a Parachute Payment, less (iii) the
amount of federal income taxes payable with respect to the payment and benefits
described in (i) and (ii) above calculated at the maximum marginal income tax
rate for each year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set forth in the Code
at the Termination Date), less (iv) the amount of excise taxes imposed with
respect to the payments and benefits described in (i) and (ii) above by Section
4999 of the Code.
For purposes of this Paragraph 6(h), Executive's base amount,
the present value of the Parachute Payments, the amount of the excise tax and
all other appropriate matters shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by the Company, which tax counsel shall
be reasonably satisfactory to Executive.
7. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for Cause or (ii) Executive shall terminate
for Good Reason, then any such termination shall be communicated by written
notice to the other party hereto. Any such notice shall
5
<PAGE>
specify(x) the effective date of termination of the Employment Period, which,
except as otherwise provided in Paragraph 6(f), shall not be more than 30 days
after the date the notice is delivered (the "Termination Effective Date" and (y)
in reasonable detail the facts and circumstances underlying a determination that
the termination is for Cause or for Good Reason, as the case may be. If within
15 days after any notice of termination of Executive for Cause by the Company is
given, or if within 15 days after the Company's 30 day cure period under
Paragraph 6(f) has expired, the party receiving such notice notifies the other
party that a good faith dispute exists concerning the characterization of the
termination, the Termination Effective Date shall be the date on which such
dispute is finally resolved either by written agreement of the parties or by
binding arbitration conducted pursuant to the rules of the American Arbitration
Association. Notwithstanding the pendency of any such dispute, the Company shall
continue Executive and his dependents as participants in all medical, dental and
any other health insurance and similar benefit plans of the Company in which he
and they were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. Benefits provided under this
Paragraph 7 are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under, this
Agreement.
8. Insurance. The Company may, at its election and for its benefit,
insure Executive against accidental death, and Executive shall submit to such
physical examination and supply such information as may be required in
connection therewith.
9. Non-disclosure of Confidential Information.
(a) Unless Executive first secures written consent from the
Company pursuant to procedures implemented by Company after the date hereof,
Executive shall not disclose or use at any time, either during the Employment
Period or thereafter, any Confidential Information (as defined in Paragraph 17)
except to the extent Executive reasonably believes is necessary to disclose or
use such Confidential Information in performing the Employment Services.
Executive further agrees that Executive will use Executive's commercial best
efforts to safeguard the Confidential Information and protect it against
disclosure, misuse, espionage, loss and theft, including, without limitation,
causing recipients of Confidential Information to enter into non-disclosure
agreements with the Company. Subject to the provisions of Paragraphs 10 and 13,
nothing herein shall be construed to prevent Executive from using Executive's
general knowledge and skill after termination of this Agreement, whether
Executive acquired such knowledge or skill before or during the Employment
Period.
(b) In the event the Company has entered into confidentiality
agreements with third parties (not including Company employees) which contain
provisions different from those set forth in this Agreement, Executive agrees,
in addition to the provisions of Paragraph 9(a), to comply with any such
different provisions of which Executive is notified by the Company.
10. Company Ownership of Intellectual Property. Executive hereby
assigns to the Company all right, title and interest in and to all Intellectual
Property (as defined in Paragraph 17) contributed to or conceived or made by
Executive during the Employment Period and prior to the Employment Period during
the period Executive was employed by or engaged in research or development
activities for or with the Company or its predecessors and affiliates (whether
alone or jointly with others) to the extent such Intellectual Property is not
owned by the Company as a matter
6
<PAGE>
of law. Executive shall promptly and fully communicate to the Company all
Intellectual Property conceived, contributed to or made by Executive and shall
cooperate with the Company to protect the Company's interests in such
Intellectual Property including, without limitation, providing assistance in
securing patent protection and copyright registrations and signing all documents
reasonably requested by the Company, even if such request occurs after the
Employment Period. The Company shall pay Executive's reasonable expenses of
cooperating with the Company in protecting the Company's interests in such
Intellectual Property unless the subject matter of the requested cooperation is
related to actions taken or failed to be taken by Executive wrongfully or
otherwise not in good faith.
11. Executive's Rights. Paragraph 10 of this Agreement does not apply
to an invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
material research or development, or (b) the invention results from any work
performed by Executive for the Company.
12. Return of Materials. Upon termination of the Employment Period, or
at any time reasonably requested by the Company, Executive shall promptly
deliver to the Company all copies of Confidential Information in Executive's
possession and control, including written records, manuals, lab notebooks,
customer and supplier lists and all other materials containing any Confidential
Information. If the Company requests, Executive shall provide written
confirmation that Executive has returned all such materials. Subject to the
provisions of this Agreement, including, without limitation, Paragraph 11,
notwithstanding anything in this Agreement to the contrary, upon termination of
the Employment Period, the Company, at Executive's request, shall promptly
return to Executive any equipment or other materials owned by Executive then
being used by or then in the possession of the Company.
13. Non-Competition. Executive acknowledges and agrees that during the
Employment Period and for a period of five years thereafter (the "Non-compete
Period"), Executive will not, without the prior written consent of the Company,
directly or indirectly, provide products or services substantially similar to
the Employment Services to any business or entity that provides or offers or
demonstrably plans to provide or offer, products or services that (i) are the
same as or substantially similar to the products or services provided by the
Company at any time during the Employment Period, (ii) relate to the Company's
Intellectual Property (whether the Company acquired such Intellectual Property
pursuant to this Agreement or otherwise), or (iii) relate to any subject matter
of the Company's actual or demonstrably anticipated material research and
development during the Employment Period, including without limitation, taxol,
taxanes and any other compounds, within any geographical area in which the
Company or any of its subsidiaries provide or plan to provide such products or
services.
14. Non-Solicitation. Executive acknowledges and agrees that during the
Non-compete Period Executive will not (a) solicit, induce or attempt to induce,
directly or indirectly, any employee of the Company to leave the employment of
the Company to work for Executive or for any other person, firm or corporation
or (b) hire any employee of the Company.
7
<PAGE>
15. Acknowledgment of Reasonableness. Executive acknowledges and agrees
that the limitations set forth in Paragraphs 13 and 14 are reasonable with
respect to scope, duration and geographic area and are properly required for the
protection of the legitimate business interest of the Company.
16. Further Assistance. During the Non-compete Period, Executive will
not make any disclosure or other communication to any person, issue any public
statements or otherwise cause to be disclosed any information which is designed,
intended or might reasonably be anticipated to discourage any persons from doing
business with the Company or otherwise have a negative impact or adverse effect
on the Company, except to the extent such disclosure is required by law. During
the Non-compete Period, Executive will provide assistance reasonably requested
by the Company in connection with actions taken by Executive during the
Employment Period, including but not limited to assistance in connection with
any lawsuits or other claims against the Company arising from events during the
Employment Period, provided that the Company shall reimburse all reasonable
expenses (including without limitation, reasonable loss of compensation from
other sources resulting from such assistance during normal business hours).
17. Certain Definitions.
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
"Confidential Information" means all information (whether or
not specifically labeled or identified as confidential), in any form or medium,
that is disclosed to, or developed or learned by Executive during the Employment
Period and prior to the Employment Period during the period Executive was
employed by or engaged in research or development activities for or with the
Company or its predecessors and affiliates or that relates to the business,
products, services, customers, research or development of the Company, its
Subsidiaries, its Affiliates, or third parties with whom the Company, its
Subsidiaries or its Affiliates does business or from whom the Company or its
Affiliates receives information. Confidential Information shall not include any
information that (i) has become publicly known through no wrongful act or breach
of any obligation of confidentiality, as evidenced by written records or
documents; or (ii) was rightfully received by Executive on a non-confidential
basis from a third party (provided that such third party is not known to
Executive to be bound by a confidentiality agreement with the Company or another
party), as evidenced by written records or documents.
"Independent Third Party" means any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 5% owner
of the Company's Common Stock.
"Intellectual Property" means any idea, invention, design,
development, device, method or process (whether or not patentable or reduced to
practice or including Confidential
8
<PAGE>
Information) and all related patents and patent applications, any copyrightable
work or mask work (whether or not including Confidential Information) and all
related registrations and applications for registration, and all other
proprietary rights.
"Subsidiaries" means any corporation of which the securities
having a majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
18. Executive Representations. Executive hereby represents and warrants
to the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (b) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
19. Company Representations. The Company hereby represents and warrants
to Executive that (a) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Company is a party or by which it is bound, and (b) upon the execution and
delivery of this Agreement by Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
20. Severability and Modification. If any provision of this Agreement
shall be held or declared to be illegal, invalid or unenforceable, such illegal,
invalid or unenforceable provision shall not affect any other provision of this
Agreement, and the remainder of this Agreement shall continue in full force and
effect as though such provision had not been contained in this Agreement. If the
scope of any provision in this Agreement is found to be too broad to permit
enforcement of such provision to its full extent, Executive consents to judicial
modification of such provision and enforcement to the maximum extent permitted
by law.
21. Notices. Except as otherwise expressly set forth in this Agreement,
all notices, requests and other communications to be given or delivered under or
by reason of the provisions of this Agreement shall be in writing and shall be
given (and, except as otherwise provided in this Agreement, shall be deemed to
have been duly given if so given) when delivered if given in person or by
telegram, three days after being mailed by first class registered or certified
mail, return receipt requested, postage prepaid, or one day after being sent
prepaid via reputable overnight courier to the parties at the following
addresses (or such other address as shall be furnished in writing by like
notice; provided, however, that notice of change of address shall be effective
only upon receipt):
Notices to Executive
James D. McChesney
c/o NaPro BioTherapeutics, Inc.
6304 Spine Road, Unit A
Boulder, Colorado 80301
9
<PAGE>
Notices to Company
NaPro BioTherapeutics,
6304 Spine Road, Unit A
Boulder, Colorado 80301
Attn.: Patricia A. Pilia, Ph.D.
Executive Vice President
with a copy to:
Holme Roberts & Owen
1700 Lincoln, Suite 4100
Denver, CO 80203
Attn.: Francis Wheeler
22. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter.
23. Governing Law. All questions concerning the construction, validity and
interpretations of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Colorado.
24. Survival. Paragraphs 6, 9, 10, 11, 12, 13, 14 and 16 and any other
provision of this Agreement which by its terms could survive termination of the
Employment Period shall survive and continue in full force in accordance with
their terms notwithstanding any termination of the Employment Period.
25. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
successors and assigns; provided that in no event shall Executive's obligations
under this Agreement be delegated or transferred by Executive, nor shall
Executive's rights be subject to encumbrance or to the claims of Executive's
creditors. This Agreement is for the sole benefit of the parties hereto and
shall not create any rights in third parties other than Executive's spouse or
beneficiary as expressly set forth herein.
27. Remedies. Except as otherwise provided in this Agreement, (i) each of
the parties to this Agreement will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights to which it may be
entitled and (ii) disputes under this Agreement not finally resolved in writing
by the parties within sixty days after one party gives notice in good faith to
the other party that a bona fide dispute exists shall be resolved pursuant to
binding arbitration conducted in Denver, Colorado in accordance with the rules
of the American Arbitration Association. The prevailing party in any
10
<PAGE>
such arbitration shall be entitled to have its costs and expenses (including
reasonable attorney's fees and expenses) relating to such arbitration paid by
the other party if the arbitrator(s) conducting such arbitration so determine.
Notwithstanding the foregoing, the parties agree and acknowledge that money
damages may not be an adequate remedy for breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The prevailing party in any suit shall be entitled
to recover reasonable attorneys fees and costs from the other party.
28. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any term or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar terms or
provisions at the time or at any prior or subsequent time.
29. Headings. The headings contained herein are solely for the purpose of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
30. Notification of Subsequent Employer. Executive agrees that the Company
may present a copy of this Agreement to any third party.
31. UNDERSTAND AGREEMENT. EXECUTIVE REPRESENTS AND WARRANTS THAT (a)
EXECUTIVE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION OF THIS AGREEMENT,
(b) EXECUTIVE HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FROM LEGAL COUNSEL OF
EXECUTIVE'S CHOICE, OTHER THAN COUNSEL TO THE COMPANY (WHO IS NOT REPRESENTING
THE EXECUTIVE), IN ORDER TO INTERPRET ANY AND ALL PROVISIONS OF THIS AGREEMENT,
(c) EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS
AGREEMENT AND ANY OF SUCH QUESTIONS EXECUTIVE HAS ASKED HAVE BEEN ANSWERED TO
EXECUTIVE'S SATISFACTION, AND (d) EXECUTIVE HAS BEEN GIVEN A COPY OF THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
EXECUTIVE
/s/ James D. McChesney
-----------------------------------
James D. McChesney
NAPRO BIOTHERAPEUTICS, INC.
By: /s/ Gordon H. Link, Jr.
Gordon H. Link, Jr.
Vice President, Finance and
Chief Financial Officer
11
<PAGE>
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