EMPLOYMENT AGREEMENT
AGREEMENT dated as of November 16, 1998 between ACCESS
Pharmaceuticals, Inc. a Delaware corporation located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, (the "Company"), and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D., an individual residing at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, #▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires that Executive serve as the Company's
Vice President Research and Development; and
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.
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
Vice President of Research and Development of the Company. Executive
shall be responsible to the President of the Company, rendering the
services and performing the duties prescribed by the President of the
Company
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").
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
$165,000, payable monthly on the last day of each month during the
Term. Prior to the end of each year during the Term, the Compensation
Committee of the Company shall undertake an evaluation of the services
of the Executive during the year then ended in accordance with the
Company's compensation program at the date hereof (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
and shall fix an annual base salary to be paid to the Executive during the
ensuring 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 8.5% of annual base
salary payable in cash and 8.5% of annual base salary payable in Access
Common Stock, to be awarded upon 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
percentages 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. In accordance with this plan the Board
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.
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
$60,000. 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, 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 President 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 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 three (3) weeks during year one and four
(4) weeks after year one 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 amounts
established 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, authority, power or duty of the Executive or a material
breach by the Company of any provision of this Agreement, which
breach continues for 30 days following notice by the
Executive to the Company setting forth the nature of the 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 term of this Agreement by the Executive
which is not cured within 30 days after written notice from the President
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 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 President 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 sixty (60) 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 30 days
after the Termination Date, (ii) the Company shall continue the health
coverage contemplated by Section 4.1 for a period of 6 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 half (0.5) (i.e., .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;
(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; or
(c.) The Company shall relocate its principal executive offices or require
Executive to have as his principal location of work any location which
is in excess of 50 miles from the location thereof immediately prior to
the relocation date or to travel from his office in the course of
discharging his responsibilities or duties hereunder more than thirty (30)
consecutive calendar days or an aggregate of more than ninety (90)
calendar days in any consecutive 365-calendar day period without in
either case his prior consent.
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 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 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
(1) (i.e., one 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)
year 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 agrees that, while serving as an Executive of the
Company, he will not, without the written consent of the President of the
Company, serve as an employee or director of any business entity other
than the Company and its Affiliates, but may serve as a director of a
reasonable number of not-for-profit corporations and may devote a
reasonable amount of time to charitable and community service.
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.
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.
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Attn: Chief Financial Officer
Copy To:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III, Esq.,
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
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If to the Executive:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D.
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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 Texas.
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 and the offer letter dated October 23, 1998, 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. No waiver by an 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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D. BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.▇. ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Title: President & CEO
Date: 12/21/99 Date: 11/10/99
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