EMPLOYMENT AGREEMENT
EXHIBIT
10.36
AGREEMENT
dated as of January 4, 2007 between ACCESS Pharmaceuticals, Inc., a Delaware
corporation located at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000-0000, (the "Company"), and Xxxxxxx Xxxxxx, an individual residing at
00
Xxxxx Xxxx, Xxxxxx, XX 00000 ("Executive").
WITNESSETH:
WHEREAS,
the Company desires that Executive serve as the Company's President and Chief
Executive Officer;
WHEREAS,
in order to induce Executive to agree to serve in such capacity, the Company
hereby offers Executive certain compensation and benefits of employment, as
described herein; and
WHEREAS,
Executive is willing to serve in this position on the terms and conditions
hereinafter set forth.
NOW,
THEREFORE, on condition of the premises and of the mutual covenants contained
herein, the Company and Executive hereby agree as follows:
1. Employment
(a) Duties.
The
Company agrees to employ Executive, and Executive hereby agrees to be employed,
upon the terms and conditions hereinafter set forth. During the Term (as defined
in Section 2 hereof), Executive shall serve as the President and Chief Executive
Officer of the Company. Executive shall report to the Board of Directors of
the
Company (the "Board"), rendering the services and performing the duties
prescribed by the Board and consistent with Executive's role as President and
Chief Executive Officer of the Company. As soon as reasonably practicable after
the date hereof, the Company shall appoint Executive to the Board and for so
long as Executive is employed as the Chief Executive Officer of the Company
hereunder the Company shall nominate Executive as a member of the Board in
the
Company's proxy materials relating to its annual stockholder meetings. Executive
agrees, while employed hereunder, to perform his duties faithfully and to the
best of his ability. Executive shall be based in Newton, MA. Notwithstanding
the
foregoing, upon request of the Company Executive will work at the Company's
offices in Dallas, Texas for approximately five (5) business days per
month.
(b) Other
Board Positions.
The
Company hereby agrees that Executive may serve as a member of the board of
directors of such other companies as the Board shall approve in advance, which
approval shall not be unreasonably withheld.
2. Term
The
employment of 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 (a) unless the
Company gives Executive written notice of termination within six (6) months
prior to the end of any such period or (b) until the occurrence of a Termination
Date, as defined in Section 5 hereof (the "Term").
3. Compensation
3.1. As
compensation for Executive's services during the Term, the Company shall pay
Executive an annual base salary at the rate of $350,000, payable in accordance
with the Company's customary payroll practices for executives in effect from
time to time. Prior to the end of each year during the Term, the Compensation
Committee of the Company shall undertake an evaluation of the services of
Executive during the year then ended in accordance with the Company's
compensation program then in effect. The Company shall consider the performance
of Executive, his contribution to the success of the Company and entities under
common control with the Company (collectively, "Affiliates") and other factors,
and shall fix an annual base salary to be paid to Executive during the ensuring
year (which shall in no event be less than Executive's annual base salary then
in effect, adjusted regularly to reflect increases in the cost of living and
comparable compensation for like positions).
3.2. Executive
shall participate in the Company's incentive compensation programs in accordance
with the following subparagraphs (a), (b) and (c):
(a) Incentive
Plan.
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 sixty (60) 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 one hundred twenty (120)
days of the end of such year.
(b) Equity.
Upon
commencement of employment, Executive shall be granted an option (the "Option")
to purchase 500,000 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, 2007 ($2.90), 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
36
months, and otherwise shall be subject to the terms of option agreements which
shall provide (i) that the Option shall be comprised of (A) an incentive stock
option for the number of shares of the Company's common stock available for
issuance under the Company's 2005 Equity Incentive Plan as of the date hereof
(after giving effect to the issuance by the Company on the date hereof of
options to purchase shares of the Company's common stock to Xx. Xxxxxxxx Xxxxxxx
and Xxxxx Xxxx) and
(B) a
non-statutory stock option for the balance of the shares issuable upon exercise
of the Option, (ii) for cashless exercise and (iii) for acceleration of the
Option upon or following the occurrence of a Change of Control (as defined
in
Section 5.3.1 hereof), in accordance with Section 5.3.2 hereof, and shall
contain such other terms as are customary for options granted by the
Company.
(c) Stock
Option Plan.
Executive shall be entitled to participate in the Company's stock option plan
in
effect from time to time. In accordance with this plan the Board may from time
to time, but without any obligation to do so, grant additional stock options
to
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 of Control, the Company's obligation under this Section
3.2 shall be satisfied through options granted by the issuer with public stock
then in control of the Company.
3.3. If
Executive is prevented by disability, for a period of six consecutive months,
from continuing fully to perform his obligations hereunder, Executive 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 salary, when added to payments received by Executive under
any
disability or qualified retirement or pension plan to which the Company or
an
Affiliate contributes or has contributed, be less than $210,000 If Executive
claims disability, Executive agrees to submit to a physical examination at
any
reasonable time or times by a qualified physician designated by the Board and
reasonably acceptable to Executive. . If there should be a dispute about
Executive's disability, disability shall be determined by such physician, who
shall have examined Executive. Notwithstanding any provision in this Section
3.3, the Company shall not be obligated to make any payment to Executive on
account of disability after the termination of this Agreement.
4. Executive
Benefits
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
Executive as the basis on which other executive employees of the Company are
eligible to participate. Notwithstanding the foregoing, Executive may elect
to
participate in any similar plans not maintained by the Company in which he
participates as of the date hereof, and, subject to the terms set forth herein,
the Company shall reimburse Executive for his expenses incurred in connection
therewith up to an amount not to exceed the amount the Company would have
reimbursed Executive hereunder if Executive had participated in any such plan
of
the Company. Executive shall, during the Term, 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,
Executive shall be entitled to the following employee benefits (collectively,
with the other benefits contemplated by this Section 4, the
"Benefits"):
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4.1. Medical
Insurance.
Executive and Executive's dependents shall be covered by medical insurance,
with
only such contribution by 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 $350,000,
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 determined in accordance with
Section 3.3 hereof) with compensation annually equal to at least
$210,000.
4.4. Vacation.
Executive shall be entitled to legal holidays and to annual paid vacation
aggregating four (4) weeks during any calendar year.
4.5. Expenses.
The
Company shall reimburse Executive from time to time for the reasonable expenses
incurred by Executive in connection with the performance of his obligations
hereunder, including, without limitation, expenses incurred in connection with
maintaining an office in Newton, MA and travel expenses incurred in connection
with Executive's travel between Newton, MA and the Company's offices in Dallas,
TX as set forth herein.
4.6. D&O
Insurance.
The
Company shall maintain directors and officers liability insurance applicable
to
Executive in amounts established by the Board.
Notwithstanding
the foregoing, the Company may from time to time change or substitute a plan
or
a program under which one or more of the Benefits are provided to Executive,
provided that the Company first obtains the written consent of Executive, which
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 Executive becomes entitled to receive long-term disability payment
from
the insurer by reason of disability under Section 3.3 hereof and is terminated
by the Company.
| 5.1.2. |
The
date of Executive's death.
|
| 5.1.3. |
The
date of Executive's voluntary resignation after one of the following
events shall have occurred,
|
which
event shall be specified to the Company by Executive at the time of
resignation ("Resignation for Reason"): (a) a change be
specified to the Company by Executive at the time of resignation ("Resignation
for Reason"): (a) a change in Executive's title, (b) a material reduction
(on a
cumulative basis) in the responsibility, authority, power or duty of Executive
or (c) a material breach by the Company of any provision of this Agreement,
which breach continues for 30 days following notice by Executive to the Company
setting forth the nature of the breach.
5.1.4. The
date
of Executive's voluntary resignation not accompanied by a notice of reason
described in Section 5.1.3 hereof.
5.1.5. The
date
of the Company's discharge of Executive after one of the following events shall
have occurred ("Discharge for Cause"):
(a) a
felonious
act (other than a motor vehicle violation) committed by Executive during his
employment hereunder;
(b) any
act
or omission on the part of Executive not requested or approved by the Company
constituting willful malfeasance in the performance of his duties hereunder
that
materially adversely affects the Company;
(c) conviction
of Executive or the entry of a plea of guilt or nolo contendere by Executive
to
any crime involving moral turpitude; or
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(d) any
material breach of any term of this Agreement by Executive which is not cured
within 30 days after written notice from the Chairman of the Board to Executive
setting forth the nature of the breach.
For
purposes of this Section 5.1.5, no act or failure to act on Executive's part
shall be considered "willful" unless done or omitted to be done by Executive
in
bad faith and without reasonable belief 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 Chairman of the Board identifying the conduct set forth
in clauses (a), (b), (c) or (d) above of this Section 5.1.5 for which
termination is made and specifying the particulars thereof in
detail.
5.1.6. The
date
of the Company's discharge of Executive not accompanied by a notice of Discharge
for Cause described in Section 5.1.5 hereof.
5.1.7. 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 sixty (60) days prior to the effective
date of termination.
5.2. Consequences
for Compensation and Benefits.
Upon
occurrence of the Termination Date, the Company shall pay to Executive (a)
compensation through the Termination Date and (b) 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.
5.3. Change
of Control.
Upon
the occurrence of a Change of Control, this Agreement may be terminated by
Executive upon the occurrence thereafter of any of the following
events;
(a) Within
(1) year after a Change of Control, the Executive resigns for
Reason. For
purposes of this Section “Reason” shall mean (i) significant adverse change in
the nature or scope of Executive's authorities, powers, functions,
responsibilities or duties as a result of the Change of Control, a reduction
in
the aggregate of Executive's then current annual base salary and incentive
compensation received from the Company, or termination of Executive's rights
to
any Benefit to which he was entitled immediately prior to the Change of Control
or a reduction in scope or value thereof without the prior written consent
of
Executive; or
(ii) The
Company shall require Executive to have as his principal location of work any
location which is in excess of 50 miles from
Newton, MA.
(b) Subsequent
to a Change of Control, 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
(c) Subsequent
to a Change of Control, 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
of Control shall occur 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 of the Company entitled to vote generally in the
election of the directors of the Company (other than in connection with (i)
the
conversion of convertible securities outstanding as of the date hereof or the
exercise of stock options or warrants outstanding as of the date hereof or
(ii)
a financing of the Company in which currently convertible securities outstanding
as of the date hereof are converted or repaid or redeemed or (iii) any
transaction whereby SCO Capital ot its affiliates controls or continues to
control the Company), (b) there occurs a merger, consolidation or reorganization
of the Company or a transfer of all or a significant portion of the Company's
business and/or assets (by liquidation, merger, consolidation, reorganization
or
otherwise) (other than any such transaction in which the holders of capital
stock of the Company entitled to vote generally in the election of the directors
of the Company immediately prior to such transaction hold more than fifty
percent (50%) of such capital stock or equity interests of the surviving
corporation or the surviving entity, as the case may be, or the acquiring entity
in the case of an asset transfer immediately after such transaction) or (c)
there occurs a change in the composition of the Board pursuant to which a
majority of the members of the Board serving as directors as of the date hereof
(or successors elected or nominated by such members) no longer serve as
directors of the Company.
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5.3.2. If
(a) a
Change of Control shall have occurred and (b) Executive terminates this
Agreement under this Section 5.3 within one (1) year after such Change of
Control, (i) Executive will be entitled to receive, within sixty (60) days
after
the Termination Date, an amount equal to Executive's annual base salary in
effect at the Termination Date, (ii) all
stock
options held by Executive shall become immediately exercisable and shall remain
exercisable for ninety (90) days after the Termination Date and (iii) the
Company shall continue the health coverage contemplated by Section 4.1 hereof
for a period of one (1) year thereafter. Notwithstanding the foregoing, the
Company shall have no obligation under this Section 5.3.2 if such termination
occurs after the occurrence of a Change of Control after giving effect to which
Executive is the chief executive officer of the surviving entity (whether or
not
such entity is the Company), provided
that
nothing herein shall obligate Executive to serve as such chief executive
officer.
5.4. Liquidated
Damages; No Duty to Mitigate Damages.
The
amounts payable pursuant to Sections 5.2 and 5.3 hereof shall be deemed
liquidated damages for the early termination of this Agreement and shall be
paid
to Executive regardless of any income Executive may receive from any other
employer, and Executive shall have no duty of any kind to seek employment from
any other employer during the balance of the severance period.
5.5. Section
409A Treatment.
If any
payment, compensation or other benefits provided to Executive in connection
with
employment termination is determined, in whole or in part, to constitute
"nonqualified deferred compensation" within the meaning of Section 409A of
the
Internal Revenue Code of 1986, as amended (the "Code"), and Executive is a
specified employee as defined in Section 409A(2)(B)(i) of the Code, no part
of
such payments shall be paid before the day that is six (6) months plus one
(1)
day after the date of termination (the "New Payment Date"). The aggregate of
any
payments that otherwise would have been paid to Executive during the period
between the date of termination and the New Payment Date shall be paid to
Executive in a lump sum on the New Payment Date. Thereafter, any payments that
remain outstanding as of the day immediately following the New Payment Date
shall be paid without delay over the time period originally scheduled, in
accordance with the terms herein.
6. Indemnification
The
Company shall indemnify Executive and hold him harmless from and against all
loss, cost, liability and expense (including reasonable attorney's fees) arising
from Executive's service to the Company or any Affiliates, whether as officer,
director, employee fiduciary of any employee benefit plan or otherwise, in
accordance with the Company's certificate of incorporation and bylaws, as in
effect from time to time.
7. Agreement
Not to Compete
In
consideration of Executive's employment by the Company in accordance with the
terms herein, Executive shall not, without the express written approval of
the
Company, engage in a "Competitive Business" (as defined below), directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any relationship or
capacity, in any geographic location in which the Company or any of its
Affiliates is engaged in business during Executive's employment and a period
of
one (1) year following the termination of Executive's employment with the
Company. As used herein, "Competitive Business" shall mean a commercial, for
profit entity that discovers, develops and commercializes (i) products based
on
polymers and/or nanoparticles for cancer treatment, mucositis and/or
receptor-mediated oral drug delivery or (ii) platinum pharmaceuticals in the
same geographic areas that the Company or any of its subsidiaries or Affiliates
does.
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8. Agreement
Not to Solicit
For
one
(1) year following any Termination Date, regardless of the reason, Executive
shall not solicit any employee of the Company or an Affiliate to leave such
employment and to provide service to Executive or any business entity by which
Executive is employed or in which Executive has a material financial interest,
provided
that
nothing herein shall prohibit the employment of any person by means of general
advertisements of employment not specifically directed towards such person.
Soliciting a former employee of the Company and/or its Affiliates to provide
such services shall not be a violation of this Agreement.
9. Confidential
Information
Executive
shall sign, and shall be subject to the terms and conditions set forth in,
the
Company's customary Confidential Disclosure and Limited Use
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 Boston, MA in accordance with the rules then in effect of the American
Arbitration Association, except as otherwise provided herein. The dispute or
difference shall be referred to a single arbitrator mutually selected by the
Company and Executive, which arbitrator shall have not less than five (5) year's
experience in dealing with the subject matter of the dispute or differences
to
be arbitrated, provided
that if
the Company and Executive cannot mutually select such arbitrator within thirty
(30) days of the dispute or difference, the Company and Executive shall each
select an arbitrator and the two arbitrators shall select the single arbitrator
to whom the dispute or difference shall be referred. If either party shall
refuse or neglect to select an arbitrator within 30 days after the other party
shall have selected an arbitrator and shall have served written notice upon
the
first mentioned party requiring such party to make such selection, then the
arbitrator selected by the first party shall, at the request of the party
selecting 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. 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
arbitrator.
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:
Access
Pharmaceuticals, Inc.
0000
Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attn: Chairman
of the Board
Copy
to:
Xxxx
X.
Xxxxxxxxx III, Esq.
Xxxxxxx
XxXxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
If
to
Executive:
Xxxxxxx
Xxxxxx
00
Xxxxx
Xxxx
Xxxxxx,
XX 00000
Copy
to:
Xxxxx
X.
Xxxxxxx Esq.
Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00
Xxxxx
Xxxxxx
Xxxxxx,
XX 00000
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.
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11.2. Governing
Law.
This
Agreement shall be deemed a contract made and performed in the Commonwealth
of
Massachusetts, and shall be governed by the internal and substantive laws of
the
Commonwealth of Massachusetts.
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 with respect to the
subject matter hereof 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. No waiver by
any
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
upon or following the Change of Control. As used in Section this 11.5.1,
the "Company" shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which executes and delivers this
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 Executive hereunder shall be
assigned, pledged, anticipated, or otherwise alienated by Executive, or subject
to attachment or other legal process by any creditor of Executive, and
notwithstanding any attempted assignment, pledge, anticipation, alienation,
attachment, or other legal process, any benefit payable to Executive hereunder
shall be paid only to Executive or his estate.
11.7. No
Conflict.
By
Executive's acceptance of this offer of employment, Executive hereby represents
that he is not bound by the terms of any agreement with any previous employer
or
other party to refrain from competing, directly or indirectly, with the business
of such previous employer or any other party. Executive further represents
that
his acceptance of this offer of employment and employment by the Company does
not and shall not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust prior
to his employment with the Company.
[signature
page follows]
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IN
WITNESSES WHEREOF, the Company, by its officer hereunto duly authorized, and
Executive have signed and sealed this Agreement as of the date first written
above.
| EXECUTIVE: | COMPANY: | |||
| By: | /s/ Xxxxxxx Xxxxxx | By: | /s/ Xxxxxxx X. Xxxxx | |
| Xxxxxxx Xxxxxx | Name: Xxxxxxx X. Xxxxx | |||
| Title: Chairman of the Board | ||||
