EXHIBIT 10.35
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT between Access Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and Xxxxx Xxxx (hereinafter referred to as "Xxxx"),
dated as of May 10, 2005 (the "Effective Date");
WHEREAS, Xxxx is a member of the Board of Directors of the Company (the
"Board"), and President and Chief Executive Officer of the Company;
WHEREAS, Xxxx intends to resign and terminate his employment and all other
positions with the Company and its subsidiaries, including the offices of
President and Chief Executive Officer and Xxxx'x membership on the Board;
WHEREAS, the Company intends to accept Xxxx'x resignation and wishes to provide
to Xxxx certain payments and to provide Xxxx with certain other benefits upon
such termination and Xxxx agrees to give certain releases and provide certain
services to the Company;
NOW, THEREFORE, in consideration of the mutual promises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Resignation and Termination.
1.1. Xxxx hereby resigns from all positions he currently holds with the
Company and any subsidiary of the Company, including without
limitation the positions of President, Chief Executive Officer and
Director, and member of the Board and any committee thereof,
effective as of the Effective Date. Xxxx agrees to transfer any
shares of any subsidiary or interest of any trust of the Company
held by him as nominee or in any other capacity to the Company or
its designee.
1.2. The Employment Agreement, dated as of April 1, 1998, by and between
the Company and Xxxx is hereby terminated in its entirety as of the
Effective Date and neither party thereto shall have any further
rights or owe any further payment, duty or obligation to the other
thereunder; notwithstanding the foregoing, (a) the non-competition
obligation of Xxxx set forth in Section 7 of the Employment
Agreement as it relates to (i) mucoadhesive film technology and (ii)
products incorporating
platinum for use as a chemotherapeutic agent and (b) the
non-solicitation obligation of Xxxx set forth in Section 8 of the
Employment Agreement shall each survive for a period of one year
from the date of this Agreement.
2. Company Covenants.
2.1. Cash Payments. Commencing as of the Effective Date, Xxxx shall be
entitled to the following cash payments:
(a) On the Effective Date, the Company shall pay to Xxxx a cash
payment of $225,000; and
(b) For a period of eighteen (18) months following the Effective
Date, the Company shall pay to Xxxx a payment of $33,333.33 on
the penultimate business day of each calendar month, with the
first such payment due and payable on May 30, 2005 making an
aggregate payment of $600,000 under this Section 2.1(b).
2.2. Common Stock Issuances. For a period of eighteen (18) months
following the Effective Date, the Company shall issue to Xxxx 3,500
shares of the Company's common stock on the penultimate business day
of each calendar month, with the first such issuance due on May 30,
2005 making an aggregate issuance of 63,000 shares under this
Section 2.2. The Company agrees to register the resale of such
shares on the next registration statement that it files for which
registration of such resale is allowed by the rules of the
Securities and Exchange Commission.
2.3. Vesting and Exercise of Existing Options and Restricted Stock. On
the Effective Date, all outstanding Company stock options and shares
of restricted stock of the Company held by Xxxx shall immediately
and fully vest. All outstanding Company stock options held by Xxxx
shall remain exercisable by Xxxx until June 30, 2007,
notwithstanding anything to the contrary in documents related to
such option grants, and shall expire on such date.
2.4. Consulting. At the Company's sole discretion, Xxxx and the Company
hereby agree that, beginning on July 1, 2005 and thereafter, the
Company may request that Xxxx serve the Company in the capacity of a
consultant. The Company shall
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pay to Xxxx the sum of $2,000 for each day worked by Xxxx as a
consultant at the request of the Company pursuant to this Agreement.
From the Effective Date until July 1, 2005 Xxxx agrees to cooperate
with the Company, at no cost to the Company, in connection with the
transition of operations of the Company to a new Chief Executive
Officer of the Company.
2.5. Benefits. For a period of Twenty (20) months following the Effective
Date, the Company shall, at its sole expense, continue to maintain
and provide coverage under Xxxx'x existing health coverage plan. For
a period of Twelve (12) months following the Effective Date, the
Company shall, at its sole expense, provide outplacement services
appropriate to Xxxx'x position.
2.6. Withholding. All payments required to be made by the Company
hereunder to Xxxx shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as the
Company may reasonably determine it must withhold pursuant to any
applicable law or regulation.
2.7. No Duty to Mitigate Damages. Xxxx'x payments and benefits under
Sections 2.1, 2.2, 2.3 and 2.5 of this Agreement shall be considered
severance pay in consideration of his past service, and as an
inducement to him to enter into and become bound by this Agreement,
and his entitlement thereto shall not be dependent upon whether or
not Xxxx provides further services of any type to or for the Company
or any third party.
3. Xxxx Covenants. Xxxx hereby covenants with the Company as follows:
3.1. Non-disclosure. Xxxx recognizes and acknowledges that he has had and
will have access to certain highly sensitive, special, unique
information of the Company that is confidential or proprietary. Xxxx
hereby covenants and agrees not to use or disclose any Confidential
Information (as hereinafter defined) except for disclosures made
solely (i) to authorized representatives of the Company; or (ii) as
required by any governmental, statutory or judicial authority,
provided that prior to any such disclosure Xxxx shall provide the
Company with notice of such requirement as is practicable and shall
cooperate with the Company in responding to such requirement,
including assisting the Company in procuring a protective order or
other modification of such required disclosure.
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3.2. Confidential Information. For purposes of this Agreement,
"Confidential Information" means any data or information with
respect to the business conducted by the Company that is material to
the Company and not generally known by the public. To the extent
consistent with the foregoing definition, Confidential Information
includes without limitation; (i) reports, pricing, sales manuals and
training manuals, selling and pricing procedures, and financing
methods of the Company, together with any techniques utilized by the
Company in designing, developing, manufacturing, testing or
marketing its products or in performing services for clients,
customers and accounts of the Company and (ii) the business plans
and financial statements, reports and projections of the Company.
3.3. Return of Property. Xxxx covenants, agrees and acknowledges that all
Confidential Information is and shall remain the sole, exclusive and
valuable property of the Company and Xxxx has and shall acquire no
right, title or interests therein. Any and all printed, typed,
written or other material which Xxxx may have or obtain shall be and
remain the exclusive property of the Company, and any and all
material (including any copies) shall be promptly delivered by Xxxx
to the Company. The Company acknowledges that the personal property
listed on Exhibit B is and shall remain Xxxx'x personal property
unaffected by this Agreement
4. Indemnification. The Company shall indemnify Xxxx to the same extent provided
to its other directors and officers by its charter and by-laws against all
costs, charges and expenses, including, without limitation, attorneys' fees,
incurred or sustained by Xxxx in connection with any action, suit or proceeding
to which Xxxx may be made a party by reason of being an officer, director or
employee of the Company for acts undertaken from the time of his employment by
the Company through the Effective Date (the "Indemnification Period"), and Xxxx
will be included as an insured individual under any liability insurance policy
that insures other officers or directors of the Company for acts taken during
the Indemnification Period.
5. Public Statement, Non-disparagement.
5.1. Xxxx and the Company shall make a press release announcing Xxxx'x
resignation in the form attached hereto as Exhibit A (the "Approved
Public Statement") on the Effective Date. Neither Xxxx nor the
Company shall make any public statement other
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than the Approved Public Statement or that is consistent with the
Approved Public Statement.
5.2. Xxxx shall make no disparaging statements, whether public or
private, with regard to the Company, its officers, employees, Oracle
Partners or its affiliates or members of the Board unless and to the
extent specifically compelled by any governmental agency or tribunal
to make a statement.
5.3. The Company and the members of the Board shall make no disparaging
statements, whether public or private, about Xxxx unless and to the
extent specifically compelled by any government agency or tribunal
to make a statement. In response to an inquiry, or as necessary or
appropriate to make clear Xxxx'x status with the Company or the
circumstances of his departure, the Company and the members of the
Board shall inform third parties that Xxxx is a shareholder of the
Company and/or that he is not an employee, officer, director or
other agent of the Company by saying that Xxxx remains a shareholder
of the Company and that Xxxx resigned voluntarily, or other words of
similar effect. Neither the Company nor the members of the Board
shall make any statement that implies or suggests that the reason
for Xxxx'x separation from the Company was anything other than
Xxxx'x voluntary action.
6. Mutual Release and Covenant Not to Xxx.
6.1 Release and Covenant Not to Xxx from Xxxx.
(a) Release. Xxxx hereby releases each of the Company and its
officers, employees, directors, shareholders (in their
capacities as such), attorneys, agents, successors, and
assigns, from each and every right, claim, debt, demand,
liability, cost, expense, and/or cause of action, which he has
or may have had against any of such released parties as of the
Effective Date, whether known or unknown.
(b) Covenant Not to Xxx. Xxxx hereby covenants and agrees not to
bring suit against any of the Company or any of its officers,
employees, directors, attorneys, agents, successors, and
assigns based upon any claim herein released.
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(c) Rights Retained. Notwithstanding anything in this Agreement to
the contrary, Xxxx expressly reserves his right to take action
against the Company to preserve his rights under this
Agreement in the event of a breach thereof by the Company,
subject to Section 7 below.
6.2 Release and Covenant Not to Xxx from the Company.
(a) Release. The Company hereby releases each of Xxxx and his
attorneys, agents, successors, and assigns from each and every
right, claim, debt, demand, liability, cost, expense, and/or
cause of action arising out of Xxxx'x service or status as an
employee, officer, director, shareholder (in his capacity as
such) or representative of shareholders of the Company,
existing as of the Effective Date and whether known or
unknown.
(b) Covenant Not to Xxx. The Company hereby covenants and agrees
not to bring suit against each of Xxxx and his attorneys,
agents, successors, and assigns based upon any claim herein
released.
(c) Rights Retained. Notwithstanding anything in this Agreement to
the contrary, the Company expressly reserves its right to take
action against Xxxx to preserve its rights under this
Agreement in the event of a breach thereof by Xxxx, subject to
Section 7 below.
7. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled exclusively by
single-arbitrator arbitration, in Dallas, Texas, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then
in effect, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
8. Collateral. Payments owed to Xxxx by the Company pursuant to Section 2
hereof shall be secured by, and the Company hereby grants to Xxxx a
security interest in and to, all of the assets of the Company, ranking
junior only to the security interest granted to Cornell Capital Partners,
LP and Highgate House Funds, Ltd. Any failure to pay timely any amount due
under Section 2.1(b) shall result, automatically, in the full acceleration
of all such payments not yet paid in full if such amount due is not paid
within 10 days after written notice from Xxxx. With respect to the
Company, any commencement of
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a bankruptcy proceeding, assignment for the benefit of creditors or the
appointment of a receiver, trustee, liquidator or other similar official
shall also result, automatically, in the full acceleration of all such
payments not yet paid in full.
9. Legal Fees and Expenses. Each party hereto shall pay its own legal fees
and expenses of counsel reasonably incurred by such party in connection
with the negotiation, execution and delivery of this Agreement or in
seeking in good faith to obtain any right or benefit to which such party
believes it or he is entitled under this Agreement. In the event of a
default by the Company with respect to any payments owed to Xxxx under
this Agreement, the Company agrees to pay Xxxx any costs of collection,
including but not limited to any reasonable attorneys fees, which shall be
deemed additional payments that are secured pursuant to Section 8 hereto.
10. Notices. Any notices required to be given under this Agreement shall be in
writing and shall be deemed given three (3) days after mailing in the
continental United States by registered or certified mail, or upon
personal receipt after delivery, telex, telecopy, or telegram, to the
party entitled thereto at the address stated below or to such changed
address as the addressee may have given by a similar notice:
To the Company: Access Pharmaceuticals, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: Chief Executive Officer
With a copy to: Xxxx X. Xxxxxxxxx III, Esq.
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
To Xxxx: Xxxxx Xxxx
11. General Provisions.
11.1. Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of Xxxx and be enforceable by his personal or legal
representatives or successors. If Xxxx dies while any amounts would
still be payable to him hereunder, his rights herein shall still be
exercisable by such representatives or
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successors. Such amounts shall be paid to Xxxx'x estate in
accordance with the terms of this Agreement. This Agreement shall
not otherwise be assignable by Xxxx.
11.2. Successors. This Agreement shall inure to and be binding upon the
Company's successors. The Company shall require any successor to all
or substantially all of its business and/or assets by sale, merger
(where the Company is not the surviving corporation), consolidation,
lease or otherwise, by agreement in form and substance satisfactory
to Xxxx, to assume this Agreement expressly. This Agreement shall
not otherwise be assignable by the Company.
11.3. Amendment or Modification; Waiver. This Agreement may not be amended
or modified unless agreed to in writing by Xxxx and the Company. No
waiver by either party of any breach of this Agreement shall be
deemed a waiver of any subsequent breach.
11.4. Severability. In the event that any provision of this Agreement
shall be determined to be invalid or unenforceable, such provision
shall be enforceable in any jurisdiction in which valid and
enforceable, and in any event the remaining provisions shall remain
in full force and effect to the fullest extent permitted by law.
11.5. Rights Granted. This Agreement shall not give Xxxx any right to
compensation or benefits from the Company or any affiliate of the
Company, except for the rights specifically stated herein, including
those certain severance and other benefits that become payable on or
after the Effective Date.
11.6. Governing Law. The validity, interpretation, performance, and
enforcement of this Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without
giving effect to the principles of choice of law or conflicts of
law.
11.7. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same Agreement.
11.8. Section Headings. The descriptive section headings in this Agreement
have been inserted for convenience of reference only
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and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
12. Exclusive Agreement. It is agreed and understood that this Agreement
represents the entire agreement between the Company and Xxxx concerning
the subject matter hereof and supersedes all prior agreements and
understandings concerning Xxxx'x rights upon the termination of his
employment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
ACCESS PHARMACEUTICALS, INC. XXXXX XXXX
/s/ Xxxxxxx Xxxxx /s/ Xxxxx Xxxx
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Name: Xxxxxxx Xxxxx
Title: Chairman of the Board of Directors
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