EMPLOYMENT AGREEMENT
EXHIBIT
10.29
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made
and effective as of this 4th
day of
January, 2007, between ACCESS Pharmaceuticals, Inc., a Delaware Corporation
with
a place of business at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000-0000 (“Company”), and
Xxxxxxx X. Xxxxx, an individual who resides at 00 Xxxx Xxxx Xxxxx, Xxxxxx,
Xxx
Xxxxxx 00000 (“Executive”).
WHEREAS
the Company desires to employ Executive and Executive desires to be employed
by
the Company, on terms set forth herein;
NOW,
THEREFORE, in consideration of the mutual agreements set forth herein, the
parties agree as follows:
1. Term
of Employment.
Executive’s employment under this Agreement shall commence on January 4, 2007
(“Effective
Date”) and shall end on the third anniversary of the Effective Date
(“ExpirationDate”)
or such
earlier date on which Executive’s employment terminates in accordance with
Section 4 of this Agreement. On the Expiration Date and each
anniversary thereof, the Expiration Date shall be extended by one year unless
(a) the Agreement has been earlier terminated under Section 4 or (b) either
party gives written notice not less than 90 days prior to the then Expiration
Date that the Agreement will not be extended. Notwithstanding any extension
of
the Expiration Date, Executive’s employment may terminate at any time in
accordance with Section 4, below.
2. Nature
of Duties. Executive
shall during his employment hereunder be the Company’s Chief Executive Officer
(“CEO”). As
such, Executive shall devote substantially all of his business time and effort
to the performance of his duties for the Company, which he shall perform
faithfully and to the best of his ability. Executive shall have all of the
customary powers and duties associated with his position. Executive
shall be subject to the Company’s policies, procedures, and approval practices,
as generally in effect from time to time for all employees of the Company.
Executive will report directly to the Company’s board of directors (the “Board”). 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 (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, (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.
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3.
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Compensation
and Related
Matters.
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(a) Base
Salary. The Company shall
pay Executive minimum base salary at an annual rate of
$335,000. Executive’s base salary shall be paid in conformity with
the Company’s salary payment practices generally applicable to similarly
situated Company employees.
(b) Discretionary
Bonuses.
Executive shall be covered by the cash bonus plan maintained from time to
time
by the Company and during each year of the term shall be afforded the
opportunity thereunder to receive a target award of up to 50% of Executive’s
annual base salary then in effect to be awarded upon the achievement of
reasonable performance goals established by the Board within thirty (30)
days of
the beginning of such year, which bonus, if any, shall be payable in accordance
with the cash bonus plan but in no event later than ninety (90) days of the
end
of such year. Upon the occurrence of a Change of Control during the
term, Executive shall receive a pro rata annual bonus for that portion of
the
year within which the Change of Control occurs in addition to other compensation
due to Executive upon a Change of Control (as hereinafter defined) as provided
in this Agreement.
(c) Stock
Options. Upon
commencement of employment, Executive shall be granted an option (the “Option”)
to purchase 600,000 shares of the Company’s common stock. The
exercise price of the Option shall be equal to the fair market value of the
Company’s common stock on the date of grant, which the Company has determined to
be the closing price of the Company’s common stock as of January 3, 2008
($3.15), which is the last trading day preceding the date of
grant. The Option shall vest 25% on the one year anniversary of the
date hereof and monthly thereafter over a period of 24 months, and otherwise
shall be subject to the terms of option agreements which shall provide, among
other standard provisions:
(i)
that
the Option shall be comprised of (A) an incentive stock option for the number
of
shares the Company’s common stock available for issuance under the Company’s
2005 Equity Incentive Plan as of the date hereof, and (B) a non-statutory
stock
option for the balance of the shares issuable upon exercise of the Option;
and
(ii) for
acceleration of the Option upon or following the occurrence of a Change of
Control (as defined below) or upon a discharge other than for Cause (as provided
in Section 4 below).
(d) Tax
Benefits. If a Change of Control occurs during the term
which prevents any Option which has Incentive Stock Option (“ISO”) designation,
or any other annual ISO option grant to Executive during the term, from
receiving favorable tax treatment under Section 422 of the Internal Revenue
Code
of 1986, as amended, Executive shall receive a complete tax make-whole from
the
Company or its successor and shall be held harmless from the loss of favorable
tax treatment. Further, upon a Change of Control, Executive
shall receive a complete tax make-whole for any and all excise taxes due
or
payable under Section 4999 of the Internal Revenue Code of 1986, as amended,
and
any state and/or local taxes payable under similar provisions of state and/or
local law, in each case, with any interest and/or penalties payable with
respect
thereto.
(e) Standard
Benefits. During his
employment, Executive shall be entitled to participate in all employee benefit
plans and programs to the same extent generally available to similarly situated
employees of the Company, in accordance with the terms of those plans and
programs.
(f) Vacation.
Executive shall be
entitled to four (4) weeks paid vacation per year, which shall be pro-rated
for
partial years. Unused vacation days will carry over pursuant to the terms
set
forth in the Company’s Employee Handbook. Notwithstanding anything herein to the
contrary, Executive may not take more than two (2) weeks vacation during
any
twelve (12) week period without the Company’s prior written
permission.
(g) Expenses.
Executive shall be
entitled to receive prompt reimbursement for all reasonable and customary
travel
and business expenses he incurs in connection with his employment, but he
must
incur and account for those expenses in accordance with the policies and
procedures established by the Company.
(g) Place
of Performance. In
connection with his employment by the Company, unless otherwise agreed by
the
Executive, the Executive shall be based at an office of the Company in New
York
City, except for travel reasonably required for Company business (the "Place
of
Performance").
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4.
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Termination.
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(h) Rights
and Duties. If
Executive’s employment is terminated he shall be entitled to the amounts or
benefits shown on the applicable row of the following table, subject to the
balance of this Section 4, beyond which the Company and Executive shall have
no
further obligations to each other, except Executive’s confidentiality and other
obligations under Section 6, the parties’ mutual arbitration obligations under
Section 7, as otherwise set forth in this Agreement or as set forth in any
written agreement the parties subsequently enter into.
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DISCHARGE
FOR CAUSE
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Payment
when due of any unpaid base salary, expense reimbursements, and
vacation
days accrued prior to termination of employment. Executive shall
forfeit
all vested and unvested stock options issued or issuable under
Section
3(c) of this Agreement, pursuant to the terms of the Option Award
Agreement.
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DISCHARGE
OTHER THAN FOR CAUSE
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Same
as for “Discharge For Cause” EXCEPT that, in exchange for Executive’s
execution of a release in accordance with this Section 4, Executive
shall
be entitled to the following special benefits: (A) a lump sum in
cash,
payable within ten (10) business days after the effective date
of such
event, equal to two times the sum of Executive’s then-current base salary,
plus his then average annual bonus for the preceding two years
(or, if
applicable, using the annual bonus target for such occurrences
prior to
receipt of the first annual bonus), pursuant to Section 3 of this
Agreement, and (B) all of Executive’s outstanding stock options issued or
issuable under Section 3(c) of this Agreement, shall immediately
vest and
become exercisable and Executive shall have the full term of the
option to
exercise any of his stock options, pursuant to the terms of the
Option
Award Agreement.
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RESIGNATION
WITHOUT GOOD REASON
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Same
as for “Discharge for Cause.”
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RESIGNATION
WITH GOOD REASON
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Same
as for “Discharge Other Than For Cause.”
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DISABILITY
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Same
as for “Discharge For Cause” EXCEPT that salary continuation will be
reduced by any amounts received by Executive under any Company-sponsored
disability benefits plan, and in exchange for Executive’s execution of a
release in accordance with this Section 4, all of Executive’s outstanding
vested stock options shall be exercisable pursuant to the terms
of the
Option Award Agreement.
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DEATH
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Same
as for “Discharge for Cause” EXCEPT that, in exchange for the execution of
a release by Executive’s estate in accordance with this Section 4,
continuation of Executive’s base salary for six (6) months after the date
of termination and Executive’s outstanding vested stock options shall be
exercisable pursuant to the terms of the Option Award
Agreement.
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(i) Discharge
for Cause. The
Company may terminate Executive’s employment at any time if it believes in good
faith that it has Cause to terminate his employment. “Cause” shall
mean:
(i) Fraud
and Dishonesty.
Executive’s commission of a willful act of fraud or dishonesty, the purpose or
effect of which materially and adversely affects the Company or its subsidiaries
and affiliates (“Group”).
(ii) Unlawful
Conduct. Executive’s
engaging in conduct that is unlawful.
(iii) Reckless
Conduct. Executive’s
engaging in intentional or reckless misconduct or gross negligence in connection
with any property or activity of the Group, the purpose or effect of which
materially and adversely affects the Group.
(iv) Breach
of Agreement.
Executive’s material breach of any of his obligations under this Agreement
(other than by reason of physical or mental illness, injury, or
condition).
(v) Failure
to Perform Duties.
Executive’s continued failure or refusal to attempt in good faith to perform his
job duties under this Agreement or to follow the reasonable directions of
the
Board (other than by reason of physical or mental illness, injury, or condition)
after having received thirty (30) days’ notice from the Board of his failure to
do so and an opportunity to cure.
(vi) Barred
from Office.
Executive’s becoming barred or prohibited by the U.S. Securities and Exchange
Commission from holding his position with the Company.
(j) Termination
for Disability.
Except as prohibited by applicable law, the Company may terminate Executive’s
employment on account of Disability, or may transfer him to inactive employment
status, which shall have the same effect under this Agreement as a discharge
“other than for Cause.” “Disability”
means a
physical or mental illness, injury, or condition that prevents Executive
from
performing substantially all of his duties under this Agreement for at least
90
consecutive calendar days or for at least 120 calendar days, whether or not
consecutive, in any 365 calendar day period.
(k) Discharge
Other Than for
Cause. The Company may terminate Executive’s employment at any time for
any reason, and without advance notice. If Executive is discharged by the
Company for a reason “other than for Cause”, for “death” or for “Disability”, he
will only receive the special benefits provided for such events under Section
4(a) if he (or his estate, as the case may be) signs a separation agreement
and
general release in a form supplied by the Company within 60 days after his
employment ends and he does not thereafter properly revoke the
release.
(l) Resignation.
Executive
promises not to resign his employment without providing the Company at least
sixty (60) days advance written notice. If Executive resigns “other
than for Good Reason”, the Company may accept his resignation effective on the
date set forth in his notice or any earlier date. If Executive
resigns for Good Reason, his employment will end on his last date of work
and he
will receive the benefits to which he is entitled under Section 4(a), but
he
only will receive special benefits conditioned on his signing a separation
agreement and general release in a form supplied by the Company within 60
days
after his employment ends and he does not thereafter properly revoke the
release. “Good
Reason” means that, without his express written consent, one or more of
the following events occurred after his execution of this
Agreement:
(i) Demotion.
Executive’s duties
or responsibilities are substantially and adversely diminished from those
in
effect immediately before such event other than merely as a result of the
Company ceasing to be a public company.
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(ii)
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Pay
Cut. Executive’s
annual base salary is reduced.
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(iii) Breach
of Promise. The Company
materially breaches this Agreement or fails to pay Executive any present
or
deferred compensation within 7 days after it is due.
(iv) Change
of Control. There
occurs a “Change of
Control,” which means the occurrence of any of the following: (i) the
acquisition, directly or indirectly, by any individual or entity or group
(as
such term is used in Section 13(d)(3) of the Exchange Act) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act, except that such
individual or entity shall be deemed to have beneficial ownership of all
shares
that any such individual or entity has the right to acquire without the
happening or failure to happen of a material condition or contingency, other
than the passage of time) of more than 50% of the aggregate outstanding voting
power of capital stock of the Corporation in respect of the general power
to
elect directors; or (ii) (A) the Corporation consolidates with or merges
into
another entity or sells all or substantially all of its assets to any individual
or entity, or (B) any corporation consolidates with or merges into the
Corporation, which in either event (A) or (B) is pursuant to a transaction
in
which the holders of the Corporation's voting capital stock in respect of
the
general power to elect directors immediately prior to such transaction do
not
own, immediately following such transaction, at least a majority of the voting
capital stock in respect of the general power to elect directors of the
surviving corporation or the person or entity which owns the assets so
sold.
(v) Notice
of Prospective Action.
Executive is officially notified (or it is officially announced) that the
Company will take any of the actions listed above during the term of this
Agreement.
However,
an event that is or would constitute Good Reason shall cease to be Good Reason
if: (1) Executive does not terminate employment within ten (10) days after
the
event occurs with knowledge of Executive (except for a Change of Control);
or
(2) the Company reverses the action or cures the default that constitutes
Good
Reason within 30 days after Executive notifies it
in
writing that Good Reason exists before Executive terminates employment If
Executive has Good Reason to terminate employment, he may do so even if he
is on
a leave of absence due to physical or mental illness or any other reason,
but he
must do so before his actual or constructive Disability termination as defined
herein.
(m) Disputes
Under This Section.
All disputes relating to this Agreement, including disputes relating to this
Section 4, shall be resolved by final and binding arbitration under Section
7.
4. No
Other Termination
Compensation. Except as specifically provided in this Agreement or the
Option Agreement to be entered into between the parties or any future amendment
or restatement of either agreement, upon termination of this Agreement for
any
reason Executive shall not be entitled to any severance pay or to any other
compensation or payments (by way of salary, damages or otherwise) of any
nature
relating to this Agreement or otherwise relating to or arising out of his
employment by the Company.
5. Confidentiality.
During the
term of Executive’s employment, in exchange for his promises to use such
information solely for the Company’s benefit, the Company will provide Executive
with Confidential Information concerning, among other things, its business,
operations, customers, vendors, owners, investors, and business partners.
“Confidential
Information” refers to information not generally known by others in the
form in which it is used by the Company, and which gives the Company a
competitive advantage over other companies which do not have access to this
information, including secret, confidential, or proprietary information or
trade
secrets of the Company and its subsidiaries and affiliates, conveyed orally
or
reduced to a tangible form in any medium, including information concerning
the
operations, future plans, customers, business models, strategies, and business
methods of the Company and its subsidiaries and affiliates, as well as
information about the Company’s customers, clients and business partners and
their respective operations and confidential information. “Confidential
Information” does not include information that (i) Executive knew prior to his
employment with the Company or any predecessor company, (ii) subsequently
came
into Executive’s possession other than through his work for the Company or any
predecessor company and not as a result of a breach of any duty owed to the
Company, (iii) is generally known within the relevant industry; or (d) any
prior
knowledge, information or know-how which Executive legally obtained from
a
source other than the Company
(a) Promise
Not to Disclose.
Executive promises never to use or disclose any Confidential Information
before
it has become generally known within the relevant industry through no fault
of
Executive. Notwithstanding this paragraph, Executive may disclose Confidential
Information (i) during his employment for the benefit of the Company, (ii)
as
required to do so by court order, subpoena, or otherwise as required by law,
provided that upon receiving such order, subpoena, or request and prior to
disclosure, to the extent permitted by law Executive shall provide written
notice to the Company of such order, subpoena, or request and of the content
of
any testimony or information to be disclosed and shall cooperate fully with
the
Company to lawfully resist disclosure of the information, and (iii) to an
attorney for the purpose of securing professional advice.
(b) Promise
Not to Solicit.
Executive agrees that, during his employment with the Company and for twelve
(12) months after his termination for any reason
(together,
the “Restricted
Period”): (1) as to any client or business partner of the Company with
whom Executive had dealings or about whom Executive acquired confidential
information during his employment, Executive will not solicit, attempt to
solicit, assist others to solicit, or accept any unsolicited request from
the
client or business partner to do business with any person or entity other
than
the Company or its affiliates; and (2) Executive will not solicit, attempt
to
solicit, assist others to solicit, hire, or assist others to hire for employment
any person who is, or within the preceding twelve (12) months was, an officer,
manager, employee, or consultant of the Company. Executive agrees that the
restrictions set forth in this paragraph do not and will not prohibit his
from
engaging in his livelihood and do not foreclose his working with clients
or
business partners not identified in this paragraph.
(c) Promise
Not to Engage in Certain
Employment. Executive agrees that, during the Restricted Period, he will
not, without the prior written consent of the Company, accept any employment;
provide any services, advice or information; or assist or engage in any activity
(whether as an employee, consultant, or in any other capacity, whether paid
or
unpaid) with any business or other entity in the business, directly or
indirectly, for profit or not, of developing, with a majority of its revenue
derived from distributing or marketing compounds or technologies for the
treatment of cancer in the United States.
(d) Return
of Information. When
Executive’s employment with the Company ends, he will promptly deliver to the
Company, or, at its written instruction, destroy, all documents, data, drawings,
manuals, letters, notes, reports, electronic mail, recordings, and copies
thereof, of or pertaining to it or any other Group member in his possession
or
control. Notwithstanding the foregoing, Executive may retain his personal
effects, files, benefit information, or other property to the extent such
materials do not contain any of the Company’s Confidential Information. In
addition, during his employment with the Company or the Group and thereafter,
Executive agrees to meet with Company personnel and, based on knowledge or
insights he gained during his employment with the Company and the Group,
answer
any question they may have related to the Company or the Group as reasonably
requested.
(e) Intellectual
Property.
Intellectual property (including such things as all ideas, concepts, inventions,
plans, developments, software, data, configurations, materials (whether written
or machine-readable), designs, drawings, illustrations, and photographs,
that
may be protectable, in whole or in part, under any patent, copyright, trademark,
trade secret, or other intellectual property law), developed, created,
conceived, made, or reduced to practice during Executive’s employment with the
Company (except intellectual property that has no relation to the Group or
any
Group customer that Executive developed, etc., purely on his own time and
at his
own expense), shall be the sole and exclusive property of the Company, and
Executive hereby assigns all rights, title, and interest in any such
intellectual property to the Company.
(f) Enforcement
of This Section.
This section shall survive the termination of this Agreement or Executive’s
employment for any reason. Executive acknowledges that (a) this section’s terms
are reasonable and necessary to protect the Company’s legitimate interests, (b)
this section’s restrictions will not prevent his from earning or seeking a
livelihood, (c) this section’s restrictions shall apply wherever permitted by
law, and (d) the violation of any of this section’s terms would irreparably harm
the Company. Accordingly,
Executive
agrees that, if she violates any of the provisions of this section, the Company
or any Group member shall be entitled to, in addition to other remedies
available to it, an injunction to be issued by any court of competent
jurisdiction restraining Executive from committing or continuing any such
violation, without the need to prove the inadequacy of money damages or post
any
bond or for any other undertaking.
6. Arbitration
of Disputes.
Except as expressly prohibited by law and except for the Company’s right to seek
injunctive relief as set forth in Section 6(f), all disputes between the
Company
and Executive (“Arbitrable Disputes”)
are to be resolved by final and binding arbitration in accordance with this
Section 7. This section shall remain in effect after the termination of this
Agreement or Executive’s employment.
(a) Scope
of Agreement. This
arbitration agreement applies to, among other things, disputes concerning
Executive’s employment with and/or termination from the Company; the validity,
interpretation, enforceability or effect of this Agreement or alleged violations
of it; claims of discrimination under federal or state law; or other statutory
or common law claims.
(b) The
Arbitration. The
arbitration shall take place under the auspices of the American Arbitration
Association (“AAA”) in its
office
nearest to the location where Executive last worked for the Company and
conducted in accordance with the AAA’s National Rules for the Resolution of
Employment Disputes then in effect before an experienced employment law
arbitrator licensed to practice law in that jurisdiction who has been selected
in accordance with such rules. The arbitrator may not modify or change this
Agreement in any way except as expressly set forth herein. The arbitration
shall
be governed by the substantive law of the State of New York (excluding where
it
mandates the use of another jurisdiction’s laws).
(c) Fees
and Expenses. Regardless
of which party initiates the arbitration, the non-prevailing party in any
dispute between the Company and Executive shall promptly pay the prevailing
party for any and all reasonable costs and expenses of such dispute upon
the
parties’ receipt of the final and binding resolution of such
dispute.
(d) Exclusive
Remedy. The
arbitration in this manner shall be the exclusive remedy for any Arbitrable
Dispute.
(e) Judicial
Enforcement. Nothing
in this Section 7 shall preclude any party to this agreement from seeking
judicial enforcement of an arbitrator’s award. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.
7. Amendment.
No provisions of
this Agreement may be modified, waived, or discharged except by a written
document signed by a duly authorized Company officer and
Executive.
A waiver of any conditions or provisions of this Agreement in a given instance
shall not be deemed a waiver of such conditions or provisions at any other
time
in the future.
8. Notices.
For all purposes of
this Agreement, all communications, including, without limitation, notices,
consents, request or approvals, required or permitted to be given hereunder
will
be in writing and will be deemed to have been duly given when hand delivered
or
dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
or
three business days after having been sent by a nationally recognized overnight
courier service such as Federal Express or UPS, addressed to the Company
(to the
attention of the Secretary of the Company) at its principal executive offices
and to Executive at his principal residence, or to such other address as
any
party may have furnished to the other in writing and in accordance herewith,
except that notices of changes of address shall be effective only upon
receipt.
9. Choice
of Law. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of New York (excluding any that mandate
the
use of another jurisdiction’s laws).
10. Successors.
This Agreement
shall be binding upon, and shall inure to the benefit of, Executive and his
estate, but Executive may not assign or pledge this Agreement or any rights
arising under it, except to the extent permitted under the terms of the benefit
plans in which she participates. Without Executive’s consent, the Company may
assign this Agreement to any affiliate or to a successor to substantially
all
the business and assets of the Company.
11. Taxes.
The Company shall
withhold taxes from payments it makes pursuant to this Agreement as it
reasonably determines to be required by applicable law.
12. Validity.
The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall
remain in full force and effect.
13. Counterparts.
This Agreement
may be executed in one or more counterparts, each of which shall be deemed
to be
an original but all of which together shall constitute the same
instrument.
14. Entire
Agreement. All oral or
written agreements or representations, express or implied, with respect to
the
subject matter of this Agreement are set forth in this Agreement. All prior
written employment agreements between Executive and the Company are hereby
declared null and void, and of no further effect.
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Date:
January 4, 2007
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ACCESS
PHARMACEUTICALS, INC.
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By:
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/s/
Xxxxx X.
Xxxx
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Name: Xxxxx
X. Xxxx
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Title:
Director, Chairman of Compensation
Committee
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Date:
January 4, 2007
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/s/
Xxxxxxx X.
Xxxxx
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Xxxxxxx
X. Xxxxx
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