EMPLOYMENT AGREEMENT
EXHIBIT
10.31
This
AGREEMENT (the “Agreement”), dated and effective as of February 1, 2010 (the
Effective Date”), is made between ACCESS Pharmaceuticals, Inc. a Delaware
corporation located at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000-0000, (“Access” or the "Company"), and Xxxxx X. Xxxxxxxx, Ph.D., an
individual (the "Executive").
W I T N E
S S E T H:
WHEREAS,
the Company desires that Executive continue to serve as the Company's Senior
Vice President, Research and Development; and
WHEREAS,
in order to induce Executive to agree to continue to serve in such capacity, the
Company hereby offers Executive certain compensation and benefits of employment,
as described herein.
WHEREAS,
Executive is willing to serve in this position on the terms and conditions
hereinafter set forth.
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, the Company and Executive hereby agree as
follows:
1. Employment
The
Company hereby agrees to employ Executive and Executive hereby agrees to be
employed upon the terms and conditions hereinafter set forth. During
the term of this Agreement, Executive shall serve as the Senior Vice President
of Research and Development of the Company. Executive shall be responsible to
the Chief Executive Officer (CEO) of the Company, rendering the services and
performing the duties prescribed by the CEO of the Company consistent with
Executive's position and title, and such other reasonable duties as the Board of
Directors of the Company (together with any applicable sub-committee or
sub-committees thereof, the "Board") may request.
The
Executive agrees, while employed hereunder, to perform his duties faithfully and
to the best of his ability. The Executive shall be employed at the
Company's offices in Dallas, Texas, and his principal duties shall be performed
primarily in Dallas, Texas, except for business trips reasonable in number and
duration.
2. Term
The
employment of the Executive hereunder shall begin on the date hereof and shall
continue in full force and effect for a period of one (1) year, and thereafter
shall be automatically renewed for successive one-year periods unless the
Company gives the Executive written notice of termination within six (6) months
prior to the end of any such period or until the occurrence of a Termination
Date, as defined in Section 5 (the "Term"). If the Company provides written
notice of termination as described above, then the last day of the Term will be
considered the Termination Date by General Discharge (as defined in Section
5.1.6), and the Executive will be entitled to all benefits attributable to
General Discharge as defined in Section 5.2.
3. Compensation
3.1. As
compensation for the Executive's services during the Term, the Company shall pay
the Executive an annual base salary at the rate of $290,000, payable monthly on
the last day of each month during the Term. Prior to the end of each
calendar year during the Term, the Compensation Committee of the Company shall
undertake an evaluation of the services of the Executive during the calendar
year then ended in accordance with the Company's compensation program then in
effect (the "Program"). The Company shall consider the performance of the
Executive, his contribution to the success of the Company and entities under
common control with the Company (collectively, "Affiliates"), and other factors
as the Compensation Committee considers relevant in their sole discretion and
shall fix an annual base salary to be paid to the Executive during the ensuing
calendar year.
3.2 Notwithstanding
the foregoing, the Company may change the Program from time to time or institute
a successor to the Program, but the Executive's annual base salary shall in no
event be less than his annual base salary in effect on the date of change,
adjusted regularly to reflect increases in the cost of living and comparable
compensation for like positions.
3.3. The
executive shall participate in the Company incentive compensation programs in
accordance with the following subparagraphs (i) and (ii):
(i) Incentive
Plan - The executive shall be covered by the cash bonus plan currently
maintained by the Company and shall be afforded the opportunity thereunder to
receive a target award of up to 30% of annual base salary payable in cash as
well as an allocation of options to purchase shares of Access’ Common Stock or
restricted shares of Common Stock, as applicable, at the sole discretion of the
Compensation Committee which shall make its evaluation prior to the end of each
calendar year during the Term of this Agreement. Such cash and equity
bonus awards shall be made by the Compensation Committee based upon among other
factors the achievement of reasonable performance goals; provided that the
Company may from time to time change the Program or institute a successor to the
Program, so long as the Executive continues to be eligible to receive bonus
awards of the percentage of annual base salary in amounts at least equal to
those specified as in effect on the date hereof.
(ii) Stock
Option Plan - Executive shall be entitled to participate in the Company's stock
option plan as noted above. In accordance with this plan the Board or
the Compensation Committee, as applicable, may from time to time, but without
any obligation to do so, grant additional stock options to the executive upon
such terms and conditions as the Board shall determine in its sole
discretion. If the Company no longer has a class of stock
publicly-traded by reason of a Change in Control of the Company, as defined in
Section 5.3, the Company's obligation under this Section 3.3 will be satisfied
through options granted by the issuer with public stock then in control of the
Company. On the Effective Date and subject to availability under the
Company’s existing stock option plan and approval by the Compensation Committee,
Executive shall receive options to purchase 200,000 shares of the Company’s
Common Stock at an exercise price equal to $___ per share (the closing price of
shares of Common Stock on the OTC BB on the Effective Date); one third (33.3%)
of which options shall vest on the one-year anniversary of the Effective Date
and the remaining two thirds (66.7%) of which shall vest ratably on the second,
and third anniversary of the Effective Date.
3.4 If
the Executive is prevented by disability, for a period of six consecutive
months, from continuing fully to perform his obligations hereunder, the Employee
shall perform his obligations hereunder to the
extent he
is able and after six months the Company may reduce his annual base salary to
reflect the extent of the disability; provided that in no event may such rate,
when added to payments received by him under any disability or qualified
retirement or pension plan to which the Company or an Affiliate contributes or
has contributed, be less than $100,000. If there should be a dispute
about the Executive's disability, disability shall be determined by the Board of
Directors of the Company based upon a report from a physician, reasonably
acceptable to the Executive and the Company, who shall have examined the
Executive. If the Executive claims disability, the Executive agrees
to submit to a physical examination at any reasonable time or times by a
qualified physician designated by the CEO of the Company and reasonably
acceptable to the Executive. Notwithstanding any provision in this
Section, the Company shall not be obligated to make any payments to Executive on
account of disability after the termination or expiration of this
Agreement.
4. Executive
Benefits
The
Executive shall be entitled to participate in all "employee pension benefit
plans," all "employee welfare benefit plans" (each as defined in the Employee
Retirement Income Security Act of 1974) and all pay practices and other
compensation arrangements maintained by the Company, on a basis at least as
advantageous to the Executive as the basis on which other executive employees of
the Company are eligible to participate. Executive shall, during the term of his
employment hereunder, continue to be provided with such benefits at a level at
least equivalent to the initial benefits provided or to be provided hereunder.
Without limiting the generality of the foregoing, the Executive shall be
entitled to the following employee benefits (collectively, with the benefits
contemplated by this Section 4, the "Benefits"):
4.1 The
Executive and the Executive's dependents shall be covered by medical insurance,
with only such contribution by the Executive toward the cost of such insurance
as may be required from time to time from other executive officers of the
Company.
4.2 Life
Insurance. Executive shall be entitled to group term life insurance coverage of
$25,000, all premiums being paid by the Company.
4.3
Long-Term Disability Insurance. The Company shall maintain in effect
long-term disability insurance providing Executive in the event of his
disability (as defined in Section 3 hereof) with compensation annually equal to
at least $60,000.
4.4 The
Executive shall be entitled to legal holidays and to annual paid vacation
aggregating at least four (4) weeks during any calendar year.
4.5 The
Company shall reimburse the Executive from time to time for the reasonable
expenses incurred by the Executive in connection with the performance of his
obligations hereunder.
4.6 During
such times as the Company is eligible and financially qualified to obtain the
same, the Company shall maintain directors’ and officers’ liability insurance
applicable to the Executive in amountsestablished by the Board of
Directors.
Notwithstanding
the foregoing, the Company may from time to time change or substitute a plan or
program under which one or more of the Benefits are provided to the Executive,
provided that the Company first obtains the written consent of the Executive,
which the Executive agrees not unreasonably to withhold, taking into account his
personal situation.
5. Termination
Date; Consequences for Compensation and Benefits
5.1. Definition
of Termination Date. The first to occur of the following events shall
be the Termination Date:
5.1.1 The
date on which the Executive becomes entitled to receive long-term disability
payments by reason of total and permanent disability;
5.1.2.
The Executive's death;
5.1.3.
Voluntary resignation after one of the following events shall have occurred,
which event shall be specified to the Company by the Executive at the time of
resignation: material reduction in the responsibility of the
Executive or a material breach by the Company of any material provision of this
Agreement, which material breach continues for 30 days following notice by the
Executive to the Company setting forth the nature of the material breach
("Resignation with Reason");
5.1.4. Voluntary
resignation not accompanied by a notice of reason described in Section 5.1.3
("General Resignation");
5.1.5 Discharge
of the Executive by the Company after one of the following events shall have
occurred, which event shall be specified in writing to the Executive by the
Company at the time of discharge:
(i) a
felonious act committed by Executive during his employment hereunder, (ii) any
act or omission on the part of Executive not requested or approved by the
Company constituting willful malfeasance or gross negligence in the performance
of his duties hereunder, (iii) conviction of the Executive or the
entry of a plea of guilty or nolo contendere by the Executive to any crime
involving moral turpitude, (iv) any material breach of any material term of this
Agreement by the Executive which is not cured within 30 days after written
notice from the CEO of the Company to the Employee setting forth the nature of
the breach ("Discharge for Cause");
For
purposes of this subparagraph (5.1.5), no act or failure to act on the
Executive's part shall be considered "willful" unless done or omitted to be done
by Executive not in good faith and without reasonable belief by Executive that
Executive's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Executive shall not be deemed to have been
discharged for Cause unless and until there shall have been delivered to
Executive a copy of a Notice of Termination (as defined below) from the CEO of
the Company stating that in his good faith opinion Executive was guilty of
conduct set forth in clauses (i), (ii), (iii) or (iv) above of this subparagraph
(5.1.5) and specifying the particulars thereof in detail.
5.1.6
Discharge of the Executive by the Company not accompanied by a notice of cause
described in Section 5.1.5 ("General Discharge").
For
purposes of this Agreement "Notice of Termination" shall mean a notice which
indicates the specific termination provision in this Agreement relied upon and
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated. Each Notice of Termination shall be delivered at least
thirty (30) days prior to the effective date of termination.
5.2 Consequences
for Compensation and Benefits
(a) If
the Termination Date occurs by reason of disability, death, General Resignation
or Discharge for Cause, the Company shall pay compensation to the Executive
through the Termination Date and shall pay to the Executive all Benefits accrued
through the Termination Date, payable in accordance with the respective terms of
the plans, practices and arrangements under which the Benefits were
accrued.
(b) If
the Termination Date occurs by reason of General Discharge or Resignation with
Reason, (i) all stock options held by the Executive shall become immediately
exercisable and shall remain exercisable for the greater of (i) thirty (30) days
after the Termination Date or (ii) the amount of time available under the
Company’, (ii) the Company shall continue the health coverage contemplated by
Section 4.1 for a period of 12 months thereafter, and (iii) the Executive shall
be entitled to receive, within 60 days after the Termination Date, the amount
set forth in Section 5.2.1.
5.2.1 The
Executive's annual base salary at the Termination Date, multiplied by one and a
half (1.5) (i.e., 1.5 times base salary).
5.3 Change
in Control. In the event of the occurrence of a Change in Control (as
defined below), this Agreement may be terminated by Executive upon the
occurrence thereafter of one or more of the following events:
1)
Termination by Executive of his employment with the Company may be made within
(1) year after a Change in Control and upon the occurrence of any of the
following events:
(a.) A
significant adverse change in the nature or scope of the Executive's
authorities, powers, functions, responsibilities or duties as a result of the
Change in Control, a reduction in the aggregate of Executive's existing Base
Salary and existing Incentive Compensation received from the Company, or
termination of Executive's rights to any existing Executive Benefit to which he
was entitled immediately prior to the Change in Control or a reduction in scope
or value thereof without the prior written consent of Executive; or
(b.) The
merger, consolidation or reorganization of the Company or transfer of all or a
significant portion of its business and/or assets (by liquidation, merger,
consolidation, reorganization or otherwise) unless the successor or successors
to which all or a significant portion of its business and/or assets have been
transferred (directly or by operation of law) shall have assumed all duties and
obligations of the Company under this Agreement pursuant to Section 11.5
hereof.
2) Subsequent
to a Change in Control of the Company, the failure by the Company to obtain the
assumption of the obligation to perform this Agreement by any successor as
contemplated in Section 11.5 hereof or otherwise; or
3) Subsequent
to a Change in Control of the Company, any purported termination of Executive's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirement of Section 5.1.5 hereof.
5.3.1 A
“Change in Control” of the Company as used in this Agreement shall be deemed to
have occurred upon the first to occur of the date when (a) a person
or group "beneficially owns" (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) in the aggregate 50% or more of the outstanding
shares of capital stock entitled to vote generally in the election of the
Directors of the Company or (b) there occurs a sale of all or substantially all
of the business and/or assets of the Company.
5.3.2 If
a Change in Control of the Company shall have occurred within six (6) months
prior to the Termination Date or the Executive terminates this Agreement under
Section 5.3 the Executive will be entitled to receive, within 60 days after the
Termination Date, the Executive's annual base salary at the
Termination
Date multiplied by one and one-half (1.5) (i.e., one and one-half times base
salary), all stock options held by the Executive shall become immediately
exercisable and shall remain exercisable for 30 days after the Termination
Date. The Company shall continue the health coverage contemplated by
Section 4.1 for a period of one (1) years thereafter.
5.4 Liquidated
Damages: No Duty to Mitigate Damages. The amounts payable pursuant to
Sections 5.2 and 5.3 shall be deemed liquidated damages for the early
termination of this Agreement and shall be paid to the Executive regardless of
any income the Executive may receive from any other employer, and the Executive
shall have no duty of any kind to seek employment from any other employer during
the balance of the Term.
6. Indemnification
To the
fullest extent permitted by law, the Company shall indemnify the Executive and
hold him harmless from and against all loss, cost, liability and expense
(including reasonable attorney's fees) arising from the Executive's service to
the Company or any Affiliate, whether as officer, director, employee, fiduciary
of any employee benefit plan or otherwise.
7. Agreement
Not to Compete
The
Executive shall devote all of his working time and his best efforts to the
performance of his duties herein for the Company, its Subsidiaries and
Affiliates. Notwithstanding the foregoing, nothing contained herein shall
preclude the Executive from (a) serving on the boards of directors of other
companies or organizations with the approval of the Board of Directors (not to
be unreasonably withheld) or serving on the boards of directors of
not-for-profit companies or organizations without the approval of the Board of
Directors, (b) investing in and managing passive investments, or (c) pursuing
his personal, financial and legal affairs provided that such activity does not
materially interfere with the performance of the Executive's obligations
hereunder.
8. Agreement
Not to Solicit
For one
year following any Termination Date, regardless of the reason, the Executive
shall not solicit any employee of the Company or an Affiliate to leave such
employment and to provide services to the Executive or any business entity by
which the Executive is employed or in which the Executive has a material
financial interest. Soliciting a former employee of the Company and
its Affiliates to provide such services shall not be a violation of this
Agreement.
9. Confidential
Information
Unless
the Executive shall first secure consent of the Company, the Executive shall not
disclose or use, either during or after the Term for a period of five (5) years,
any secret or confidential information of the Company or any Affiliate, whether
or not developed by the Executive, except as required by his duties to the
Company or the Affiliate.
Executive
will sign a Confidential Disclosure and Limited Use Agreement, which shall
control over this Agreement if any conflict exists between it and this
Agreement.
10. Arbitration
Any
dispute or differences concerning any provision of this Agreement which cannot
be settled by mutual accord between the parties shall be settled by arbitration
in Dallas, Texas in accordance with the rules then in effect of the American
Arbitration Association, except as otherwise provided herein. The
dispute or differences shall be referred to a single arbitrator, if the parties
agree upon one, or otherwise to three arbitrators, one to be appointed by each
party and a third arbitrator to be appointed by the first named arbitrators; and
if either party shall refuse or neglect to appoint an arbitrator within 30 days
after the other party shall have appointed an arbitrator and shall have served a
written notice upon the first mentioned party requiring such party to make such
appointment, then the arbitrator first appointed shall, at the request of the
party appointing him, proceed to hear and determine the matters in difference as
if he were a single arbitrator appointed by both parties for the purpose, and
the award or determination which shall be made by the arbitrator shall be final
and binding upon the parties hereto.
The
arbitrator or arbitrators shall each have not less than five-(5) year's
experience in dealing with the subject matter of the dispute or differences to
be arbitrated. Any award maybe enforced in any court of competent
jurisdiction. The expenses of any such arbitration shall be paid by
the non-prevailing party, as determined by the final order of the
arbitrators.
The
prevailing party in any dispute agrees to pay all reasonable legal fees and
expenses of the non-prevailing party in connection with any dispute under this
Agreement.
11. Miscellaneous
11.1 Notices
All
notices in connection with this Agreement shall be in writing and sent by
postage prepaid first class mail, courier, or telefax, and if relating to
default or termination, by certified mail, return receipt requested, addressed
to each party at the address indicated below:
If to the
Company:
0000
Xxxxxxxx Xxxx.
Xxxxx
000
Xxxxxx,
XX 00000
Attn:
Chief Financial Officer
Copy
To:
Xxxx X.
Xxxxxxxxx III, Esq.,
Xxxxxxx
Xxxx LLP
000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
If to the
Executive:
Xxxxx X.
Xxxxxxxx, Ph.D.
Or to
such other address as the addressee shall last have designated by notice to the
communicating party. The date of giving of any notice shall be the
date of actual receipt.
11.2 Governing
Law
This
Agreement shall be deemed a contract made and performed in the State of Texas,
and shall be governed by the internal and substantive laws of the State of New
York.
11.3 Severability
Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or in the interpretation
in any other jurisdiction; however, such provision shall be deemed amended to
conform to applicable laws and to accomplish the intentions of the
parties.
11.4 Entire
Agreement; Amendment
This
Agreement constitutes the entire agreement of the parties and may be altered or
amended or any provision hereof waived only by an agreement in writing signed by
the party against whom enforcement of any alteration, amendment, or waiver is
sought. This Agreement supersedes that certain offer letter, dated
October 23, 1998, made by the Company in favor of Executive, as amended, as well
as any and all prior agreements or understanding between the Company and
Executive. No waiver by a party of any breach of this Agreement shall be
considered as a waiver of any subsequent breach.
11.5 Successors
and Assigns
11.5.1 The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as Executive would be entitled hereunder if Executive
terminated his employment for Change of Control. As used in this
Section 11.5.1, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the Agreement provided for in this Section 11.5.1 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
11.5.2 This
Agreement is intended to bind and inure to the benefit of and be enforceable by
Executive and the Company, and their respective successors and assigns, except
that Executive may not assign any of his rights or delegate any of his duties
without the prior written consent of the Company.
11.6 Assignability
Neither
this Agreement nor any benefits payable to the Executive hereunder shall be
assigned, pledged, anticipated, or otherwise alienated by the Executive, or
subject to attachment or other legal process by any creditor of the Executive,
and notwithstanding any attempted assignment, pledge, anticipation, alienation,
attachment, or other legal process, any benefit payable to the Executive
hereunder shall be paid only to the Executive or his estate.
IN
WITNESSES WHEREOF, the Company and its officers hereunto duly authorized, and
the Employee have signed and sealed this Agreement as of the date first written
above.
ACCESS
PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X.
Xxxxx
Name: Xxxxxxx
X. Xxxxx
Title: President
& CEO
EXECUTIVE:
/s/ Xxxxx X.
Xxxxxxxx
Xxxxx
Xxxxxxxx
