Exhibit
10.19
EXECUTIVE
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made
and entered into this 23 rd day of April ,
2004, by Angiotech Pharmaceuticals, Inc., a British Columbia
corporation (the Company"), and William L. Hunter, MD (the
"Employee").
BACKGROUND
The Company desires to retain the
services of the Employee in the capacity stated herein, and the
Employee is willing to be employed by the Company in such capacity,
on the terms and subject to the conditions set forth in this
Agreement. Accordingly, in consideration of the mutual covenants
contained herein, the parties agree as follows:
AGREEMENT
1.
Positions and Duties
1.1 Title. The Company
hereby agrees to employ the Employee, and the Employee agrees to
serve the Company as a member of the Board of Directors of the
Company (the "Board") and as President and Chief Executive Officer,
subject to the terms and conditions set forth in this
Agreement.
1.2 Duties. The Employee
shall report directly to the Board and perform those duties which
are customary with the position of President and Chief Executive
Officer, together with such additional duties as may be established
by the Company's Board of Directors. The Employee shall devote all
of his business time, energy, and skill to the affairs of the
Company and shall discharge his duties honestly, faithfully and to
the best of his ability. The Employee agrees that his hours of work
will vary and may be irregular and will be those hours reasonably
required to meet the objectives of his employment. The Employee
agrees that the compensation described in Section 3 of this
Agreement compensates him for all hours worked.
1.3 Avoidance of Conflicts of
Interest. The Employee will comply with all policies and
directives regarding conflicts of interest adopted from time to
time by the Board. The Employee will not serve as a director,
officer, employee or agent of or hold any position or office with
any corporation, firm, person or entity other than the Company (the
"Outside Interest") without obtaining prior written approval from
the Board, such approval not to be unreasonably withheld The Board
may in its sole discretion require the Employee to resign from any
Outside Interest if the Board is of the opinion that the Outside
Interest has resulted in or is reasonably likely to result in a
conflict of interest.
1.4 Additional Board
Membership. If and to the extent the Employee is requested
to serve as an officer on a board of directors of any affiliate of
the Company (other than the Company), the Employee agrees to serve
in such capacity(ies) without additional compensation. If the
Employee is so requested by the board of directors of such
companies, to resign from a board or officer position, whether due
to termination of employment or otherwise, the Employee agrees to
so resign, and such resignation will not constitute a constructive
dismissal or otherwise constitute a breach of this
Agreement.
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2.
Term of Agreement.
The team of this Agreement shall begin on
the date first noted above (the "Effective Date") and shall
continue until terminated by either party at such party's sole
discretion and in accordance with Section 4 herein.
3.
Compensation.
3.1
Base Salary.
As payment for the services rendered by
the Employee during the Term of this Agreement, the Company shall
pay to the Employee an annualized base salary (the "Base Salary")
of CDN $693,078 per year. The Base Salary, as earned, shall be
payable on the Company's normal payroll schedule and is subject to
lawfully required withholdings. Increases in the Base Salary shall
be subject to the Board's discretion, exercised from time to time
based on performance and other factors deemed relevant by the
Board. The Base Salary shall be reviewed annually within 90 days of
the end of the Company's fiscal year end.
3.2
Employee Benefits.
The Employee shall be entitled to be
enrolled in all employee benefits that the Company may make
generally available from time to time for its comparably situated
executive employees, including those available, if any, under any
group health, dental, life or disability insurance plans. The
benefits will be provided in accordance with the formal plan
documents or policies and any issues with respect to entitlement or
payment of benefits under the insurance benefits package will be
governed by the terms of such documents or policies. The Company
reserves the right to unilaterally modify, amend, and terminate any
benefits and benefit plans.
3.3
Stock Options.
The Employee shall be eligible to receive
options to purchase shares of the common stock of the Company, as
determined by the Board from time-to time. The terms and
conditions of such stock options shall be governed by the stock
option plan applicable to such stock options granted to the
Employee (collectively all such stock option plans, the "Stock
Option Plan") and the stock option agreements between the Company
and the Employee in respect of such stock options (collectively the
"Stock Option Agreements
3.4
Bonus. The Employee will be eligible for bonuses and/or
additional stock options in accordance with any Incentive Plans
established from time to time by the Board of Directors in its
discretion.
3.5
Vacation.
The Employee shall be entitled to paid
vacation which shall accrue pro rata The Employee shall be entitled
to paid vacation, accrued during the course of the year, of five
weeks' vacation per year. Unused accrued vacation may be carried
over to the following year in an amount equal to the annual
vacation accrual hereunder, or, if different, the maximum amount
allowable under the Company's standard policy for its employees in
effect from time to time. Unused vacation in excess of the allowed
carry over shall be forfeited. The Employee shall also be entitled
to such holidays with full pay as the Company generally affords its
employees.
3.6
Deductions from
Compensation. The Company
shall be entitled to deduct and withhold from all compensation
payable to the Employee all amounts it reasonably determines are
required to be deducted or withheld pursuant to any present or
future law, ordinance, regulation, order, writ, judgment, or decree
requiring such deduction and withholding.
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3.7
Travel and Other
Expenses. The Company
shall pay or promptly reimburse the Employee for those travel,
promotional and similar expenditures incurred by Employee which the
Company determines are reasonably necessary for the proper
discharge of the Employee's duties under this Agreement and for
which the Employee submits appropriate receipts and indicates the
amount, date, location and business character. Travel and other
expenses will be reviewed and approved by the Chair of the Board on
a regular basis.
3.8
Additional Benefits.
In addition to the benefits set forth
above, the Employee shall also be entitled to receive during the
term of employment those benefits set forth on Exhibit A
hereto. The Employee shall be solely responsible for personal
income tax liability, if any, arising from the Company's provision
of such benefits; however, the Company may be required to withhold
certain amounts as required by CCRA in the event that the benefits
are determined to be taxable benefits.
4.
Termination.
4.1
Termination For
Cause. The Company may
terminate this Agreement at any time without prior notice for
"cause" (as defined below) with no severance or other obligation to
the Employee, other than payment of the amount of unpaid earned
Base Salary accrued pursuant to Section 3.1 to the date of such
termination. For purposes of this Agreement "cause" shall
consist of (a) any act or acts which at common law in the Province
of British Columbia are just cause for dismissal; or (b) a material
breach of the Code of Ethics adopted by the Board and agreed to by
the Employee, as amended from time to time. A resignation by
the Employee at any time after the occurrence of an event which
would constitute cause for termination by the Company shall be
considered a termination by the Company for cause. In the event of
termination of the Employee's employment under this paragraph, the
Employee's rights with respect to any and all stock options will be
governed, in all respects, by the applicable stock option agreement
under which such options were granted.
4.2
Termination Without
Cause. Subject to the
conditions stated in Sections 4.4 and 4.5, the Company may
terminate this Agreement, without cause, at any time for any
reason, or no reason, and with or without notice.
4.3
Voluntary Termination By Employee
Upon Good Reason. Subject
to the conditions stated in Sections 4.4 and 4 5, this Agreement
may be terminated by the Employee for Good Reason. "Good Reason"
means
(a)
a change in title of the Employee as set
forth in Section 1.1;
(b)
a material reduction in the authority or
responsibility of the Employee;
(c)
one or more reductions, in the cumulative
amount of 5 percent or more, in the Base Salary of the
Employee;
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(d)
any notification to the Employee that his
principal place of work will be relocated by a distance of 80
kilometres or more; or
(e)
removal of the Employee from the Board of
the Company for any reason other than termination of this Agreement
for cause.
4.4
Severance.
In the event the Employee's employment is
terminated (a) by the Company without cause; or (b) by the Employee
for Good Reason, subject to the conditions stated herein and if the
Employee does not elect to enter into the Consulting Agreement
referred to in Section 4.5 below, upon the date the written notice
of termination is given to the Employee or the Company (the
"Termination Date"), the Company shall provide the Employee with
the following:
(a)
Severance. The Company shall pay the Employee a lump sum amount
equivalent to 12 months' salary plus an amount equal to the average
of annual bonus payments received by the Employee in the previous
three years of employment, within five business days of such
termination of employment. In addition, the Company shall pay the
Employee a regular monthly payment equivalent to one- half Base
Salary, for 24 months following the Termination Date (the
"Severance Period"). Payment will be subject to the usual
deductions and will be made from the Company payroll. If the
Employee is entitled to compensation and benefits arising from
termination of employment due to change of control under the
Executive Change of Control Agreement between the parties, such
compensation and benefits shall be in lieu of and not in addition
to compensation under this Section 4.4.
(b)
Bonus. During the Severance Period, the Employee will be
entitled to receive an amount equal to the average of annual bonus
payments received by the Employee in the previous three years of
employment. The bonus payment will be made in twenty-four equal
regular monthly payments during the Severance Period, at the same
time as the payment of monthly salary pursuant to paragraph 4.4(a)
herein is made.
(c)
Benefits. The Company shall provide, or pay to the Employee an
amount equal to the cost to the Company for 24 months for
providing, the benefits set out in Section 3.2 and Exhibit "A" to
this Agreement.
(d)
Stock Options. Any outstanding vested stock options held by the
Employee on the Termination Date shall be exercised by the Employee
within 30 days of the Termination Date, and if not so exercised,
shall be cancelled, and any unvested options held by the Employee
on the Termination Date shall be cancelled.
(e)
Notwithstanding the foregoing, the
Company's obligation to make severance payments, pay bonus payments
and provide benefits pursuant to this Section 4.4 is expressly
conditioned upon the Employee's ongoing compliance with the
provisions of the Confidentiality, Inventions and Non-Competition
Agreement. In the event the Employee materially breaches the tern's
of such agreement, the Company's obligations hereunder shall
automatically terminate, without any notice to the Employee. The
Employee agrees that severance as provided for in Sections 4.4 and
4.5 herein shall be the sole consideration to which he is entitled
in the event of the termination of his employment without cause or
for Good Reason, and that severance will not be paid in the event
of termination with cause or resignation without Good Reason,
except as set out in Sections 4.4 and 4.5 and the Employee
expressly waives and relinquishes any claim to other or further
consideration. Severance pay, bonus pay and provision of
benefits under this Section 4.4 are expressly conditioned upon the
Employee's execution and delivery of a release of all claims
against the Company in a form satisfactory to the Company, acting
reasonably.
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4.5 Consulting Agreement.
If the Employee wishes to retire or resign (provided that in
connection with such retirement or resignation the Employee does
not enter into any gainful employment for two years, other than the
Consulting Agreement (as defined below)), terminates his employment
for Good Reason or is terminated without cause (any of the
foregoing hereinafter the "Event"), the Company shall offer the
Employee a consulting agreement (the "Consulting Agreement"), to be
effective the day prior to the Event, substantially on the terms
set out on Exhibit B attached hereto, to allow the Employee to work
on a part-time basis as a management consultant, for a period of 24
months after the date of the Event (the "Transitional Term"). Any
outstanding and vested stock options held by the Employee on the
day of the Event (the "Existing Options") shall remain unaffected
by the Event and shall not be cancelled as a result of the Event,
subject to the teens of the Consulting Agreement. Any outstanding
but unvested stock options held by the Employee on the day prior to
the Event shall be deemed to be immediately vested on such prior
day, to the same extent such stock options would have vested on or
before 24 months after the Event (the "Accelerated Options"), if
the Event had not occurred, and the non-vested portion of any stock
options which would have vested after such 24 month period shall be
cancelled as of the Event. The Employee shall have the right to
exercise the Existing Options and the Accelerated Options within
the earlier of (i) 30 days of the end of the Transitional Term,
(ii) 30 days after the termination of the Consulting Agreement by
the Employee and (iii) the expiry dates of the respective Existing
Options and Accelerated Options. The Company covenants to take all
acts and execute all documents necessary to ensure that existing
and future stock option agreements between the Company and the
Employee contain vesting provisions consistent with the terms set
out in this paragraph.
Notwithstanding the foregoing, the
Company's obligation in this Article 4.5 is expressly conditioned
upon the Employee's ongoing compliance with the provisions of the
Confidentiality, Inventions and Non-Competition Agreement. In the
event the Employee materially breaches the terms of such agreement,
the Company's obligations hereunder and the Consulting Agreement
shall automatically terminate, without any notice to the Employee,
provided that in the event the Company terminates the Consulting
Agreement without cause, the Employee shall be automatically
released from any and all obligations pertaining to the non-
compete provisions under the Confidentiality, Inventions and
Non-Competition Agreement, and any and all amounts payable under
the Consulting Agreement shall become immediately payable. In the
event the Company terminates the Consulting Agreement for cause or
the Employee terminates the Consulting Agreement, the non-compete
provisions under the Confidentiality, Inventions and
Non-Competition Agreement shall continue to apply and be
enforceable, and only those amounts payable by the Company under
the Consulting Agreement until the date of termination of the
Consulting Agreement shall become immediately payable.
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4.6 Return of Company
Property. At the time of termination of this Agreement, or
as earlier requested, the Employee shall return to the Company all
products, books, records, forms, specifications, formulae, data,
data processes, designs, papers and writings relating to the
business of the Company, including without limitation Confidential
Information, proprietary or licensed computer programs, customer
lists and customer data and/or copies or duplicates thereof in the
Employee's possession or under the Employee's control. The Employee
shall not retain any copies or duplicates of such property and all
licenses granted to him by the Company to use computer programs or
software shall be revoked as of the date of such
termination.
5.
Change of Control.
Concurrently with the execution of this
Agreement and as a condition precedent to the Employee's
obligations hereunder, the Company shall execute and deliver to the
Employee, the Executive Change of Control Agreement attached hereto
as Exhibit C . The Employee is subject to a certain
Executive Change of Control Agreement with the Company dated June
6, 2000, which agreement shall be deemed superseded in its entirety
and of no further force and effect upon the Company's delivery to
the Employee the agreement attached as Exhibit C fully executed by
the Company.
6.
Confidentiality, Inventions,
Information and Non-Competition Agreement.
Concurrently with the execution of this
Agreement and as a condition precedent to the Company's obligations
hereunder, the Employee shall execute and deliver to the Company
the Confidentiality, Inventions and Non-Competition Agreement
attached hereto as Exhibit D . Subject to Section 4.5 and
the tends and conditions of the Consulting Agreement, the
provisions of such Confidentiality, Inventions, Information and
Non-Competition Agreement shall remain in full force and effect
after termination of employment, whether for cause or without
cause.
7.
Other Provisions.
7.1 Compliance With Other
Agreements. The Employee represents and warrants to the
Company that the execution, delivery and performance of this
Agreement and the Confidentiality, Inventions and Non-Competition
Agreement will not conflict with or result in the violation or
breach of any term or provision of any order, judgment, injunction,
contract, agreement, commitment or other arrangement to which the
Employee is a party or by which he is bound. The Employee
acknowledges that the Company is relying on his representation and
warranty in entering into this Agreement, and agrees to indemnify
the Company from and against all claims, demands, causes of action,
damages, costs or expenses (including attorneys' fees) arising from
any breach thereof.
7.2 Nondelegable Duties.
This is a contract for the Employee's personal services. The duties
of the Employee under this Agreement are personal and may not be
delegated or transferred by the Employee in any manner whatsoever,
and shall not be subject to involuntary alienation, assignment or
transfer by the Employee during his life.
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7.3 Entire Agreement. This
Agreement, the Confidentiality, Inventions and Non-competition
Agreement, the Stock Option Plan, the Stock Option Agreements and
the Executive Change of Control Agreement are the only agreements
and understandings between the parties pertaining to the subject
matter of said agreements, and supersede all prior agreements,
summaries of agreements, descriptions of compensation packages,
discussions, negotiations, understandings, representations or
warranties, whether verbal or written, between the parties
pertaining to such subject matter. This Agreement and any documents
and agreements to be delivered pursuant to this Agreement supersede
all previous invitations, proposals, letters, correspondence,
negotiations, promises, agreements, covenants, conditions,
representations and warranties with respect to the subject matter
of this Agreement. There is no representation, warranty, collateral
term or condition or collateral agreement affecting this Agreement,
other than as expressed in writing in this Agreement. Without
limiting the foregoing, the parties acknowledge and agree that the
Employee Confidentiality Inventions and Non-Competition Agreement
dated October 1992 between the parties (the "Proprietary Rights
Agreement") is superseded by the terms of this Agreement with
effect as of the date of this Agreement, except that all matters
governed by the Proprietary Rights Agreement prior to the effective
date of this Agreement and the parties' respective rights and
obligations with respect thereto will continue to be governed by
the Proprietary Rights Agreement as if that agreement remained in
full force and effect.
7.4 Administrative
Assistance. The Company hereby acknowledges that the
Company does not restrict the Employee from choosing to hire one or
more personal administrative assistants to assist him in performing
some of the administrative duties set out in the Employment
Agreement. However, while the Employee may hire one or more
personal administrative assistants, the Employee shall be solely
responsible for the payment of salary and benefits to such personal
administrative assistants and the Company shall have no legal
obligations owed to such personal administrative assistants or to
the Employee relating to the employment of such personal
administrative assistants. The Employee shall indemnify the Company
for any costs directly or indirectly incurred by the Company with
respect to the Employee's employment or personal administrative
assistants.
7.5 Further Assurances. The
Company shall take any and all steps necessary to implement the
terms and conditions set out in this Agreement.
7.6 Governing Law, Venue
. This Agreement shall be governed by and construed
according to the laws of the Province of British Columbia. The
prevailing party shall be entitled to reasonable lawyers' fees and
costs incurred in connection with any litigation arising under or
related to this Agreement.
7.7 Severability .
If any provision of this Agreement is held to be invalid or
unenforceable to any extent in any context, it shall nevertheless
be enforced to the fullest extent allowed by law in that and other
contexts, and the validity and force of the remainder of this
Agreement shall not be affected thereby.
7.8 Amendment and Waiver.
This Agreement may be amended, modified or supplemented only by a
writing executed by each of the parties. Either party may in
writing waive any provision of this Agreement to the extent such
provision is for the benefit of the waiving party. No waiver by
either party of a breach of any provision of this Agreement shall
he construed as a waiver of any subsequent or different breach, and
no forbearance by a party to seek a remedy for non-compliance or
breach by the other party shall be construed as a waiver of any
right or remedy with respect to such non-compliance or
breach.
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7.9 Binding Effect. The
provisions of this Agreement shall bind and inure to the benefit of
the parties and their respective successors and permitted
assigns.
7.10 Notice. All notices
and other communications under this Agreement shall be in writing
and shall be given by personal or courier delivery facsimile or
first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given upon receipt
if personally delivered or delivered by courier, on the date of
transmission if transmitted by facsimile, or three days after
mailing if mailed, to the addresses of the Company and the Employee
contained in the records of the Company at the time of such notice.
Any party may change such party's address for notices by notice
duly given pursuant to this Section 7.8.
7.11 Disputes. Subject to
Article 4 of Exhibit D, all disputes arising out of or in
connection with the employment relationship between the parties,
including disputes arising out of or in connection with this
Agreement, are to be referred to and finally resolved by
arbitration administered by the British Columbia International
Commercial Arbitration Centre, pursuant to its Rules. The place of
arbitration will be Vancouver, British Columbia.
7.12 Headings, Pronouns.
The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Any and all uses of masculine
or feminine pronouns herein are solely to aid in the ease of
reading this Agreement and any such pronoun usage shall have equal
application to the members of the opposite gender.
7.13 Independent Legal
Advice. The Employee agrees that the contents, terms and
effect of this Agreement have been explained to him by a lawyer
retained by him and are fully understood. The Employee further
agrees that the consideration described aforesaid is accepted
voluntarily for the purpose of employment with the Company under
the terms and conditions described above.
7.14 Counterparts. This
Agreement may be executed by the parties in counterpart, and may be
delivered by fax. Notwithstanding the date of the execution of and
delivery of any such counterparts, their date of execution shall be
deemed to be the effective date of this Agreement as set out
above.
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SO AGREED as of the date first entered
above.
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Angiotech Pharmaceuticals, Inc.
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Employee
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/s/ David T. Howard
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/s/ William Hunter, MD
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David T. Howard
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William Hunter, MD
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Chair of Compensation Committee
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President and Chief Executive Officer
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Board of Directors
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EXHIBIT A TO EXECUTIVE EMPLOYMENT
AGREEMENT
OF WILLIAM L. HUNTER, MD
Additional Benefits (if none are listed,
there are no additional benefits)
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Initialled by
Company
Representative:
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1.
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The
Company will pay for your monthly car lease to a maximum amount of
CDN $3,000 per month.
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/s/ DTH
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2.
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The
Company will pay for your annual tax planning and tax preparation
in an amount not to exceed CDN $20,000 per year.
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/s/ DTH
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3.
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The
Company will pay for expenses incurred for your spouse to accompany
you on business travel once a quarter and for your entire family,
including your nanny, to accompany you on business travel twice a
year, to an amount not to exceed CDN $75,000 per year.
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/s/ DTH
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4.
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The
Company will pay for a CDN $5,000,000 term life insurance policy,
with the beneficiary to be named by you, to cover any estate taxes
and other expenses incurred by your beneficiary due to your
death.
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/s/ DTH
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5.
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Should private health care become available in Canada, the Company
will pay the costs for insurance coverage for you and your
dependent.
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/s/ DTH
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6.
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The
Company will make available to you and your dependents enrolment
and coverage in the Angiotech Pharmaceuticals (US), Inc. employee
medical plan or pay for the costs for you and your dependents to
attain similar medical coverage in an individual plan in the
USA.
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/s/ DTH
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7.
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The
Company will pay for the cost for you to have an executive medical
once per year.
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/s/ DTH
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EXHIBIT B
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT
is made and entered into effective
_____, 2004 (the "Effective Date") by Angiotech Pharmaceuticals,
Inc., a British Columbia corporation (the "Company"), and Dr.
William L. Hunter ("Consultant").
BACKGROUND
WHEREAS:
A.
the Consultant has been employed by the
Company pursuant to a certain Executive Employment Agreement
("EEA") dated ________, 2004;
B.
the Consultant and the Company have
agreed to enter into this Agreement whereas the Consultant wishes:
to retire from the Company; to voluntarily terminate his employment
as an employee for Good Reason (as defined in the EEA); or is being
terminated without cause, and in any event such cessation as an
employee of the Company is to be effective the first calendar day
following the date of this Consulting Agreement; and
C.
the Company desires to retain the
services of the Consultant to provide transitional services as
described herein, and the Consultant desires to provide such
services and thereby obtain consideration to which he is not
otherwise entitled, on the terms and subject to the conditions set
forth in this Consulting Agreement;
THEREFORE, in consideration of the mutual
covenants contained herein, the parties agree as
follows:
AGREEMENT
1.
Termination of Existing
Agreement. The Executive
Employment Agreement shall be deemed terminated and of no further
force or effect as of 11:59 p.m., PDT, on the first calendar day
following the date of this Consulting Agreement (the "Termination
Date").The Consultant shall be deemed to have voluntarily retired
and thereby resigned from his employment. The Consultant agrees
that he shall not stand for re-election as a director of
