Firm calls lawsuit of fired chief extortion

Drug company claims former president only wants better severance

Board room

January 08, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

North American Vaccine Inc. says a lawsuit filed by its ousted president, Sharon Mates, is nothing more than "a shakedown" for more money, and the company has asked a federal judge to dismiss the suit, federal court records show.

"This case is -- and there is only one word for it -- a shakedown. Mates is using her suit to obtain leverage to secure a severance package that is more favorable than the one that NAV had offered following her removal," said North American Vaccine in its Dec. 22 response to Mates' suit.

The suit was filed in U.S. District Court in Greenbelt in November in response to her Sept. 23 firing by the company's board of directors.

Daniel Loeb, Mates' lawyer, could not be reached for comment yesterday.

Mates' annual compensation of $2 million made her among the top 10 highest-paid women executives in the country.

She sued the company and its two largest shareholders, Phillip Frost and Francesco Bellini, contending that they conspired to have her fired because they wanted to gain a greater stake in the company at a low price and then sell it.

She also claims that the company defamed her in announcing in September that she had been dismissed from the job.

Bellini is chief executive of BioChem Pharma Inc., which owns 34 percent of North American's stock. Frost, chairman and chief executive officer of Ivax Corp. of Miami, owns 17 percent of North American's stock and 39 percent of BioChem's stock.

In her suit, Mates argues that Frost and Bellini wanted her dismissed because she objected to their plan to lend the company $25 million in the form of a convertible debenture at a time when the company was strapped for cash.

The conversion terms of the debenture were not advantageous to the company or shareholders, Mates argues. In her suit, Mates seeks unspecified damages and to block the loan agreement, which finally went through late last year.

North American, which has its headquarters in Columbia, claims that Mates' suit is "designed to hold hostage NAV's critically needed $25 million financing to her demand for a richer severance package."

North American argues in its response that Mates voted in favor of the loan and its terms during a board meeting conducted by telephone Sept. 23.

It was after that vote that the company's chairman, Neil Flanzraich, called Mates and informed her of the board's decision to terminate her as president, court records show.

The company states in its response that Mates rejected a severance package offered her by Flanzraich, demanding one that was "far more lucrative."

Among the arguments North American makes for dismissing the suit: Mates had no guarantee of employment or a severance package and that the company's board could "terminate her with or without cause."

The company also argues that its announcement about Mates' dismissal did not defame her but only stated that she had been let go and that a replacement would be named later.

Pub Date: 1/08/99

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.