<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ACCESS PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ACCESS PHARMACEUTICALS, INC.
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
ACCESS Pharmaceuticals, Inc., to be held at 10:00 a.m. on June 21, 1996 at the
New York Athletic Club, 180 Central Park South, New York, New York (212) 247-
5100 (the "Meeting").
The Notice of Annual Meeting and the Proxy Statement that follow describe
the business to be considered and acted upon by the stockholders at the
Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS VERY IMPORTANT THAT YOU
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED
AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AT
THAT TIME BY REQUESTING THE RIGHT TO VOTE IN PERSON.
Sincerely,
Herbert H. McDade, Jr.
Chairman of the Board
<PAGE>
ACCESS PHARMACEUTICALS, INC.
NOTICE OF ANNUAL MEETING
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of ACCESS
Pharmaceuticals, Inc., a Delaware corporation (the "Company" or "ACCESS"),
will be held on June 21, 1996, at the New York Athletic Club, 180 Central Park
South, New York, New York (212) 247-5100. The meeting will convene at 10:00
a.m. for the following purposes:
1. To elect one Class 1 Director, to hold office for a term of three
years.
2. To consider and vote upon a proposal to amend Company's Certificate of
Incorporation to increase the authorized common stock of Company from
40,000,000 shares of common stock, $.04 par value per share, to 60,000,000
shares of common stock.
3. To amend the Company's 1995 Stock Option Plan.
4. To consider and act upon a proposal to ratify the appointment of KPMG
Peat Marwick LLP as independent accountants for the Company for the fiscal
year ending December 31, 1996.
5. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on May 17, 1996, the record
date for the Annual Meeting, are entitled to receive notice of, and to vote at
the Annual Meeting and any adjournment or postponement thereof. The Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995
accompanies the Proxy Statement.
By Order of the Board of Directors
Herbert H. McDade, Jr.
Chairman of the Board of Directors
Dallas, Texas
May 24, 1996
----------------
Stockholders are cordially invited to attend the Annual Meeting in person.
YOUR VOTE IS IMPORTANT. If you do not expect to attend the Annual Meeting, or
if you do plan to attend but wish to vote by proxy, please complete, date,
sign and mail the enclosed proxy card in the return envelope provided
addressed to ACCESS Pharmaceuticals, Inc., c/o American Stock Transfer & Trust
Co., 40 Wall Street, 46th Floor, New York, New York 10005 ("American Stock
Transfer"). Proxies will also be accepted by transmission of a telegram,
cablegram or telecopy provided that such telegram, cablegram or telecopy
contains sufficient information from which it can be determined that the
transmission was authorized by the stockholder. American Stock Transfer &
Trust Company's telecopy number is (718) 234-2287.
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 N. STEMMONS FREEWAY, SUITE 210
DALLAS, TEXAS 75207-2107
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 21, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of ACCESS Pharmaceuticals, Inc., a Delaware corporation
(the "Company" or "ACCESS"), of proxies to be voted at the Annual Meeting of
Stockholders to be held on June 21, 1996 at 10:00 a.m., and at any adjournment
thereof (the "Annual Meeting"). The Annual Meeting will be held at the New
York Athletic Club, 180 Central Park South, New York, New York (212) 247-5100.
This Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on or about May 24, 1996. The Company's principal executive
offices are located at 2600 North Stemmons Freeway, Suite 210, Dallas, Texas
75207.
A stockholder signing and returning the enclosed proxy may revoke it at any
time before it is exercised by voting in person at the Annual Meeting, by
submitting another proxy bearing a later date or by giving notice in writing
to the Secretary of the Company not later than the day prior to the Annual
Meeting. All proxies returned prior to the meeting will be voted in accordance
with the instructions contained therein.
At the close of business on May 17, 1996, the record date for the Annual
Meeting, there were outstanding and entitled to vote 31,290,182 shares of the
common stock, $.04 par value per share, of the Company (the "Common Stock").
The Company has no other outstanding voting securities. Each outstanding share
of Common Stock is entitled to one vote. A complete list of stockholders
entitled to vote at the meeting will be available for examination by any
stockholder for any purpose germane to the meeting at the Company's principal
executive offices, during normal business hours, at least ten days prior to
the Annual Meeting. The Bylaws of the Company require that a majority of the
shares entitled to vote, present in person or by proxy, shall constitute a
quorum for the conduct of business at the meeting. Abstentions and broker non-
votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. Abstentions are counted in tabulations
of the votes cast on proposals presented to the stockholders, whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved. Since the amendment of the Certificate of Incorporation
requires the affirmative vote of at least a majority of the shares of Common
Stock outstanding as of the record date, abstentions and broker non-voters
will have the effect of a vote against such proposal.
All expenses in connection with solicitation of proxies will be borne by the
Company. The Company will also request brokers, dealers, banks and voting
trustees, and their nominees, to forward this Proxy Statement, the
accompanying form of proxy and the Annual Report on Form 10-K for the fiscal
year of the Company ended December 31, 1995 to beneficial owners and will
reimburse such record holders for their expense in forwarding solicitation
material. The Company expects to solicit proxies primarily by mail, but
Directors, officers and regular employees of the Company may also solicit in
person, by telephone or by telecopy.
The Board of Directors does not know of any matters which will be brought
before the Annual Meeting other than those matters specifically set forth in
the notice of Annual Meeting. However, if any other matter
<PAGE>
properly comes before the Annual Meeting, it is intended that the persons
named in the enclosed form of proxy, or their substitutes acting thereunder,
will vote on such matter in accordance with their best judgment.
This proxy statement should be read in conjunction with the accompanying
Annual Report on Form 10-K of the Company, including financial statements and
management's discussion and analysis of financial condition and results of
operations for fiscal year ended December 31, 1995.
PROPOSAL 1
ELECTION OF A DIRECTOR
The Company's Certificate of Incorporation and Bylaws presently provide that
the Board of Directors of the Company (the "Board of Directors" or the
"Board") shall consist of three to fifteen members, shall be divided into
three classes as nearly equal in number as possible, and that each Director
shall serve for a term of three years and until his successor is elected and
qualified or until his earlier resignation, death or removal. By resolution,
the Board has set the number of its members at seven. The term in office of
one class of Director expires each year in rotation so that one class is
elected at each annual meeting for a three-year term. The Board presently
consists of six members. There is currently one vacancy in the Class 1
Directors.
NOMINEE FOR TERM EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN 1999 (CLASS
1 DIRECTORS)
Max Link is currently the only member of the Class 1 Directors. He was
appointed to serve as a Director at the meeting of the Board of Directors held
on March 28, 1996. His term expires at the Annual Meeting. If elected at the
Annual Meeting, Mr. Link will serve for a term of three years expiring on the
date of the Annual Meeting of Stockholders in 1999. The terms of the other
five Directors will continue as indicated below.
The following table sets forth the positions and offices presently held with
ACCESS by the nominee, his age, his tenure as a director of ACCESS and the
number of shares of ACCESS Common Stock beneficially owned by him as of April
30, 1996.
<TABLE>
<CAPTION>
NUMBER OF
POSITIONS AND OFFICES SHARES APPROXIMATE
PRESENTLY HELD DIRECTOR BENEFICIALLY PERCENTAGE
NAME AGE WITH ACCESS SINCE OWNED(1) OF CLASS (1)
---- --- --------------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Max Link, Ph.D. ......................... 55 Director (Class 1) 1996 0 --
</TABLE>
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(1) Includes shares issuable pursuant to currently exercisable options and
warrants which will become exercisable within sixty days of April 30,
1996. The person named herein has sole voting and dispositive power with
respect to the shares beneficially owned.
BUSINESS AND EXPERIENCE OF NOMINEE FOR DIRECTOR
Max Link, Ph.D. has been a director of the Company since March 28, 1996. He
has held a number of executive positions with pharmaceutical and health care
companies. Most recently, he served as Chief Executive Officer of Corange
Limited, from May 1993 until June 1994. Prior to joining Corange, Dr. Link
served in a number of positions within Sandoz Pharma Ltd., including Chief
Executive Officer, from 1990 until April 1992, and Chairman, from April 1992
until May 1993. Dr. Link currently serves on the board of directors of three
other publicly-traded life science companies: Alexion Pharmaceuticals, Inc.,
Protein Design labs, Inc. and Human Genome Sciences, Inc. Dr. Link received
his Ph.D. in Economics from the University of St. Gallen in 1970.
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<PAGE>
Dr. Link has consented to serve as a Director of the Company, and the Board
of Directors has no reason to believe that he will be unavailable. There is no
family relationship among any of the Directors or nominees.
The Board recommends a vote "FOR" the proposed nominee to the Board.
UNLESS OTHERWISE INDICATED THEREON, THE ACCOMPANYING PROXY WILL BE VOTED FOR
THE NOMINEE NAMED ABOVE. HOWEVER, THE PERSONS DESIGNATED AS PROXIES RESERVE
THE RIGHT TO CAST VOTES FOR ANOTHER PERSON DESIGNATED BY THE BOARD OF
DIRECTORS IN THE EVENT THE NOMINEE IS UNABLE OR UNWILLING TO SERVE.
INFORMATION WITH RESPECT TO DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE
OFFICERS
Directors Whose Terms Expire at the Annual Meeting in 1997 (Class 2
Directors)
David F. Ranney, M.D., has been Executive Vice President and a Director of
the Company since January 25, 1996. He was the founder and Chairman of the
Board of Directors of ACCESS Pharmaceuticals, Inc., a Texas corporation (which
was merged into the Company on January 25, 1996) ("API") since inception in
1988, and was Executive Vice President commencing August 1995 and Vice
President, Research and Development since June 1993. Previously, he was
President and Chief Executive Officer of API since founding API in March 1988.
Until November 1989, Dr. Ranney directed the laboratory of Targeted Diagnosis
and Therapy at the University of Texas Southwestern Medical Center, where he
held a joint faculty appointment in Radiology and Pathology, Dr. Ranney
received a B.A. degree in Chemistry from Oberlin College and an M.D. from Case
Western Reserve Medical School. He has postdoctoral training in Biochemistry
(Case Western Reserve), Cardiovascular and Microvascular Surgery (Stanford
University Medical Center), Immunology and Cancer Biology (NIH), and Pathology
(University of Texas Southwestern Medical Center).
Mrs. Elizabeth M. Greetham has served as a Director of the Company since
1992 and is President of Libracorn Financial Consultants. One of her present
clients is Weiss, Peck & Greer, a New York-based money management firm. With
over twenty years of worldwide experience as a health care analyst and
portfolio manager, she currently is responsible for Weiss, Peck & Greer's
health care investments for institutional, mutual, and selected individual
accounts. Prior to her associations with Weiss, Peck & Greer, Mrs. Greetham
consulted for a number of years for F. Eherstadt & Co., a New York
institutional brokerage house. She is a member of the Board of Directors of
Repligen Corporation, a pharmaceutical development company. She is a member of
the Company's Audit & Finance and Compensation Committees.
Directors Whose Terms Expire at the Annual Meeting in 1998 (Class 3
Directors)
Mr. Herbert H. McDade, Jr. was elected a Director of the Company in January
1988. In February 1989, he was elected Vice-Chairman of the Board of Directors
and Chief Executive Officer of the Company. In June 1989, he was elected
Chairman of the Board of Directors and Treasurer in addition to his
responsibilities as Chief Executive Officer, and in May 1990 he assumed the
position of President of the Company. Mr. McDade served in such capacities
until January 25, 1996. He is also a member of the Audit & Finance and
Compensation Committees of the Board of Directors. He is currently President
and Chief Executive Officer of the Thoma Corporation, a closely-held
healthcare consulting company. In addition, he also serves on the Boards of
CytRx Corporation, Shaman Pharmaceutical Co., Vaxcel Inc. and Clarion
Pharmaceuticals, Inc. From 1986 to 1987 he served as Chairman of the Board of
Directors and President of Armour Pharmaceutical Co., a wholly-owned
3
<PAGE>
subsidiary of Rorer Group, Inc. Prior to 1986 he served for approximately 13
years in various executive positions at Revlon, Inc. including President of
the International Division of the Revlon Health Care Group from 1979 to 1986.
He was also previously associated for twenty years in various executive
capacities with the Upjohn Company. From January 1989 to July 1995 he served
on the Board of API.
Mr. Kerry P. Gray, has been President and a Chief Executive Officer and a
Director of the Company since January 25, 1996. Prior to such time he served
as President and Chief Executive Officer of API since June 1993. Previously,
Mr. Gray served as Vice President and Chief Financial Officer of
PharmaSciences, Inc., a company he co-founded to acquire technologies in the
drug delivery area. From May 1990 to August 1991, Mr. Gray was Senior Vice
President, Americas, Australia and New Zealand of Rhone-Poulenc Rorer, Inc.
Prior to the Rorer/Rhone Poulenc merger, he had been Area Vice President
Americas of Rorer International Pharmaceuticals. Previously, from January 1986
to May 1988, he was Vice President, Finance of Rorer International
Pharmaceuticals, having served in the same capacity for the Revlon Health Care
Group of companies before their acquisition by Rorer Group. Between 1975 and
1985, he held various senior financial positions in Revlon Health Care Group.
Mr. Gray's experience in the pharmaceutical industry totals 21 years.
Mr. J. Michael Flinn has served as a Director of the Company since 1983. He
also is a member of the Audit & Finance and Compensation Committees of the
Board of Directors. He is an investment consultant. Previously from 1970 to
1996 he was an investment counselor with the investment counseling firm of
Sirach Capital Management, Inc. He assisted in the management of pension,
profit sharing, individual, corporate and foundation accounts totaling over
$4.5 billion.
Executive Officers
In addition to executive officers of the Company who are also directors, set
forth below is the business experience of the other executive officer of the
Company.
Mr. Stephen B. Thompson, has been Chief Financial Officer of the Company
since January 25, 1996. Previously from November 1990 he was Controller and
Administration Manager of API. From 1989 to 1990, he was Controller of Robert
E. Woolley, Inc. a hotel real estate company where he was responsible for
accounting, finances and investor relations. Previously from 1985 to 1989, he
was Controller of OKC Limited Partnership, an oil and gas company where he was
responsible for accounting, finances and SEC reporting. Between 1975 and 1985
he held various accounting and finance positions with Santa Fe International
Corporation.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held a total of 5 meetings in 1995.
The Company has no nominating committee, but does have an Audit & Finance
Committee comprised of J. Michael Flinn, Elizabeth M. Greetham and Herbert H.
McDade, Jr. The members of the Audit & Finance committee met 2 times during
1995 to review management activities and to consider and recommend to the
Board of Directors, for its consideration, financing alternatives and to
review and recommend compensation arrangements pertaining to members of
management, key employees and others. The Board of Directors in 1996 appointed
the Compensation Committee, presently composed of J. Michael Flinn, Elizabeth
M. Greetham and Herbert H. McDade, Jr. The Committee has met once in 1996.
There was no such committee in 1995.
In 1995 the Company also had an Executive Committee comprised of J. Michael
Flinn, Elizabeth M. Greetham, Herbert H. McDade, Jr. and Sanford D. Smith, a
former director. The Executive Committee met 2 times in 1995 to discuss
strategic issues of the Company.
4
<PAGE>
Currently each non-employee Director of the Company receives a quarterly fee
of $1,250, the sum of $1,000 for each board meeting which he attends and each
member of the Audit & Finance and Compensation Committee receives $500 for
each meeting which he attends. Each Committee Chairman also receives $250 for
each meeting. During 1995, each non-employee Director of the Company received
the sum of $500.00 for each board meeting which he attended and each member of
the Audit & Finance Committee and Executive Committee received $400.00 for
each meeting which he attended.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors, Executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities ("10%
holders"), to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of the Company. Directors, officers and 10% holders are
required by SEC regulation to furnish the Company with copies of all of the
Section 16(a) reports they file.
Based solely on a review of reports furnished to the Company or written
representatives from the Company's Directors and executive officers during the
fiscal year ended December 31, 1995, all Section 16(a) filing requirements
applicable to its Directors and officers for such year were complied with.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid by the
Company to the Chief Executive Officer and each of the most highly compensated
officers of the Company whose aggregate salary and bonus exceeded $100,000 for
services rendered in all capacities to the Company for the years ended
December 31, 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------- -------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS/SARS(#) COMPENS.
- --------------------------- ---- --------- ------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Herbert H. McDade, Jr. ..... 1995 $110,571 $ 0 0 $57,165(2)
Chairman & Former CEO(5) 1994 131,714 0 226,829 46,122(2)
1993 174,000 62,500 50,000 60,371(2)
Atul S. Khandwala .......... 1995 $103,751 $ 0 0 $57,173(6)
Former Executive Vice
President(5) 1994 153,960 0 107,715 19,620(4)
1993 160,626 30,519 25,000 28,662(3)
</TABLE>
- --------
(1) These amounts are prior to reduction for deferred employer contributions
under the Company's Employee Stock Ownership Plan Pursuant to Section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code").
(2) Pursuant to Mr. McDade's employment agreement, Mr. McDade was reimbursed
for certain expenses. In 1995, he was reimbursed for insurance payments
($49,682) and auto allowance ($6,000) and auto insurance reimbursements
($440). In addition, the Company made ESOP contributions in stock of
$1,043. In 1994, he was reimbursed for life insurance payments ($23,000)
and auto allowance ($6,000) and auto insurance reimbursement ($658). In
addition, the Company made ESOP contributions in stock of $16,464. In
1993,
5
<PAGE>
he was reimbursed for life insurance payments ($31,220) and automobile
allowance ($6,000) and automobile insurance reimbursements ($1,254). In
addition, the Company made ESOP contributions in stock of $21,897.
(3) Represents Company ESOP contributions in stock of $20,560 and relocation
expenses of $8,102.
(4) Represents Company ESOP contributions made in stock.
(5) Effective January 25, 1996 and August 31, 1995, Mr. McDade, Mr. Khandwala,
respectively, resigned as officers of the Company. Mr. McDade remains as
Chairman of the Board of Directors.
(6) Pursuant to Mr. Khandwala's severance agreement payments of $53,542 were
made to during 1995. Represents Company ESOP contributions made in stock
of $3,631.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/ SAR VALUES
The following table includes the number of shares covered by both
exercisable and non-exercisable stock options/SARs as of December 31, 1995.
Also reported are the values for "in-the-money" stock options/SARs and the
year-end price of the Company's common stock. There were no Options or SARs
granted to or exercised by the executive officers of the Company during the
year ended December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END
(#) ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
H. McDade, Jr. ................. -- -- 490,004/0 $184,756/$0
A. Khandwala.................... -- -- 268,965/0 $ 73,572/$0
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Herbert H. McDade, Jr. Effective February 1, 1989 the Company and Mr.
McDade entered into an employment agreement (the "McDade Agreement"), which
provided that he would serve as the Chief Executive Officer of the Company and
Vice Chairman or Chairman of the Board of Directors. The McDade Agreement was
amended, effective June 25, 1991, to provide for a term ending June 30, 1994,
and was extended toJanuary 31, 1996. Mr. McDade left the company as President
and Chief Executive Officer on January 25, 1996 after the merger with API was
completed. See "Certain Relationships and Related Transactions". Mr. McDade
was eligible to participate in all company employee benefit and welfare
programs available to executives. The Company also paid insurance premiums on
$1 million of life insurance payable to his estate, medical expenses coverage
for Mr. McDade and his spouse and long-term disability coverage for Mr.
McDade. The McDade Agreement provided that upon termination, a cash severance
payment equal to one year's salary would be paid if Mr. McDade was terminated
by the Company without cause and a cash severance equal to two years' salary
would be paid if he terminated his employment for good reason. Mr. McDade
waived the severance provision when leaving the Company.
Pursuant to the McDade Agreement and in accordance with the Company's 1987
Stock Awards Plan, the Company granted to Mr. McDade (i) on February 1, 1989
options (the "February Options") for the purchase of 50,000 shares of common
stock, and (ii) on December 31, 1989 options ("the December Options") for the
purchase of 37,500 shares of common stock, upon vesting and payment of the
exercise price. The February
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<PAGE>
Options and December Options are referred to collectively herein as the "New
Options." On July 31, 1991,Mr. McDade exchanged 87,500 previously granted
options for 80,625 New Options. The New Options are identical to the exchanged
options, except that the New Options have a lower exercise price. All of the
New Options have vested. On March 31, 1992, Mr. McDade was granted 65,000
options at market value, which have vested as of December 31, 1994. On July
29, 1993, Mr. McDade was granted 50,000 options at market value, which vest
based on certain performance criteria. On April 29, 1994, Mr. McDade
voluntarily accepted a salary reduction of approximately $64,000 on an
annualized basis. In exchange for this salary reduction, Mr. McDade was
granted 75,000 options at market value, to vest in one year from the date of
the grant. On July 29, 1994, Mr. McDade was granted 50,000 options, which vest
based on certain performance criteria, all of which have vested. On December
31, 1994, Mr. McDade was granted 101,829 SARs with zero base value or exercise
price, based on certain performance criteria. Upon Mr. McDade's termination of
employment (other than termination by the Company for cause or by Mr. McDade
without good reason), all options shall immediately vest and become
exercisable. All Options and SARs are vested. Mr. McDade also holds 17,550
vested options for the purchase of common stock granted pursuant to the Non-
Employee Directors Stock Option plan. Mr. McDade has the right to request
(subject to certain limitations by underwriters) that all shares of common
stock which he owns or may acquire in the future be included in registration
statements of company securities filed with the Securities and Exchange
Commission.
The McDade Agreement also contained a provision for stock appreciation
rights ("SARs") pertaining to 50,000 shares of common stock with a zero based
value or exercise price. All of the stock appreciation rights have vested.
Appreciation on SARs is to be paid in shares of common stock; as of December
31, 1991,Mr. McDade waived his right under the provision of the 1987 Stock
Awards Plan to request the Board to authorize a cash payment for any SARs he
elects to exercise.
KEY EMPLOYEE
In addition to its executive officers, the Company relies on the following
key employee for advancing its research efforts, pursuing licensing and
collaborative research arrangements with pharmaceutical companies and
obtaining FDA approval of identified drug products.
Dr. Richard Van Inwegen rejoined the Company in May 1996 as Vice President
Pre-Clinical and Clinical Development, after consulting for a period of eight
months with the Company and others. Previously he was with the Company in
September 1991 as Director of Clinical Research and in March 1993 was made
Vice President of Clinical Research. He is responsible for all of the
Company's clinical research and drug development. Prior to joining the
Company, Dr. Van Inwegen was with Roberts Pharmaceuticals for two years as
assistant director of clinical research The Rorer Company as department
manager specializing in hypersensitivity for three years, and The Revlon
Health Care Group where he was involved in various pharmaceutical development
for ten years. He holds a B.A. in biology and an M.A. in cell physiology from
State University of New York, Binghampton, and Ph.D. from the University of
Illinois in physiology. In addition, he is a member of the New York Academy of
Sciences and Sigma Xi.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. David Blech. Mr. Blech became a financial consultant to ACCESS on
October 1, 1990. His contract terminated in 1991 and under the terms of the
agreement, ACCESS paid Mr. Blech $75,000 in 1991 and $25,000 in 1990. In 1992,
Mr. Belch performed consulting services for ACCESS and ACCESS paid him
$50,000. In addition, ACCESS paid $25,000 to Mr. Blech in January 1995 for
consulting services rendered.
7
<PAGE>
As of December 14, 1995, ACCESS, D. Blech & Co., and Sentinel Remainder
Trust (each affiliates of Mr. Blech), entered into a Letter Agreement which
provided that Sentinel Remainder Trust would forfeit its rights to
representation on the Board of Directors of ACCESS in consideration of the
extension of the expiration date of (i) 500,000 Units exercisable in the
aggregate for 500,000 shares of Common Stock and warrants exercisable in the
aggregate for 700,000 shares of Common stock pursuant to the terms of the
Conversion Agreement from July 31, 1996 to January 1, 1999 and (i) the
warrants underlying the Units from July 31, 1997 to March 4, 2000.
As of January 29, 1996, ACCESS has retained Mr. Blech as a consultant to the
Company for one year to advise on structuring transactions including equity
placements, licensing agreements and research and development collaborations.
Under the terms of the agreement, based on completed transactions, Mr. Blech
was paid $480,000 and received warrants to purchase 600,000 shares of Common
Stock at an exercise price of $1.00 per share exercisable until the year 2000.
In March 1996, the Company concluded a $6 million Private Placement of 8.57
million shares of common stock. Mr. Blech may be deemed to be the beneficial
owner of up to 4.77 million shares of the Common Stock sold and issued in this
private placement. The investors have agreed not to sell any of the shares
purchased in the offering until 180 days after closing.
As of April 30, 1996, Mr. Blech may be deemed to be the beneficial owner of
5,398,027 Shares of Common Stock which represents 17.2% of the outstanding
Shares of Common Stock and warrants to purchase 600,000 shares of Common Stock
at the exercise price of $1.00 per share pursuant to his consulting
arrangement described above. Additionally Sentinel a related party of Mr.
Blech has an option to purchase until January 1, 1999, up to 500,000 units
which consist of 500,000 shares of Common Stock and 700,000 warrants with an
expiration date of January 1, 2000. See "Security Ownership of Certain
Beneficial Owners and Management."
Dr. David Ranney. Dr. David Ranney, the Executive Vice President and a
Director of ACCESS beneficially owns, approximately 9,147,608 shares of Common
Stock. See "Management and Security Ownership of Certain Beneficial Owners and
Management." Dr. David Ranney and ACCESS have entered into a Stockholder's
Agreement providing for, among other matters, (1) certain rights of Dr. David
Ranney to be nominated or to have his nominee nominated for election to the
Board of Directors of ACCESS at any election of ACCESS Directors, (2) a right
of first refusal of Dr. David Ranney to license or purchase certain technology
and intellectual property of ACCESS under certain conditions, and (3), a
certain Patent Purchase Agreement, dated as of April 5, 1994, as amended
January 25, 1996 between Dr. David Ranney and ACCESS, regarding certain
royalties payable to Dr. David Ranney relating to certain technology and
intellectual property of ACCESS and an agreement, subject to certain
conditions, by Dr. David Ranney not to sell, transfer or otherwise dispose of
his shares for the capital stock of ACCESS through July 25, 1996. ACCESS has
agreed to pay Dr. David Ranney a royalty of three quarters of one percent
(0.75%) of ACCESS' gross revenues derived from products covered by the patents
and pay certain minimum payments.
On April 5, 1994 a Patent Purchase Agreement, which terminated a previous
License Agreement, between ACCESS and Dr. David Ranney, was executed. This
provided for the assignment of the rights to the original patents to ACCESS.
Under the terms of the Patent Purchase Agreement Dr. David Ranney has
retained certain rights and interests in the intellectual property as provided
in the Stockholder's Agreement, including a non-exclusive right to use the
inventions and technology covered by or relating to the patents for his own
research, teaching or other academic related purposes, and after he is no
longer a full-time employee of ACCESS for research and
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development of uses or implementations of the inventions and technology
improvements. ACCESS maintains the first right to negotiate the acquisition of
any new inventions or technology improvements developed by Dr. David Ranney
relating to the technology. ACCESS has agreed to pay Dr. David Ranney a
royalty of three quarters of one percent (0.75%) of ACCESS gross revenues
derived from products covered by the patents and to pay certain minimum
payments which began in 1994, and which are subject to further modifications
at the Effective Time.
In addition the Patent Purchase Agreement as amended, establishes certain
additional rights of Dr. David Ranney. The patent assignment will terminate in
the event ACCESS fails to pay the amounts due to Dr. David Ranney pursuant to
the Agreement, files a petition in bankruptcy, fails to commercially develop
the patents or creates a security interest in the patents without Dr. David
Ranney's approval. Also, in the event that parts of the ACCESS technology are
not being developed after January 25, 2000, Dr. David Ranney has the right of
first refusal to license or acquire at fair market value development rights to
such parts of the ACCESS technology.
Dr. David Ranney has signed an Assignment of Intellectual Property whereby
all rights, title and interest in and to all subsequent inventions and
confidential information will become the sole and exclusive property of ACCESS
at the earlier of the date of conception or development, while he remains an
employee of ACCESS and for a period of two years after he ceases employment
for inventions related to the ACCESS technology.
Herbert McDade. In consideration for the termination of his employment with
ACCESS, Mr. McDade and ACCESS entered into an agreement dated as of October 4,
1995, pursuant to which, among other things, (i) Mr. McDade became a
consultant to ACCESS, providing consulting services to ACCESS at least four
days each month; (ii) Mr. McDade is paid a base of $1,500 per day of
consulting; (iii) ACCESS will use its best efforts to retain Mr. McDade's
enrollment under its healthcare plan and (iv) the period for exercise of all
options and SARs owned by Mr. McDade was extended from three months after the
termination of his employment with ACCESS to the expiration of the option or
SAR. See "Security Ownership of Certain Beneficial Owners and Management."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership of Common Stock as of
April 30, 1996 by all Directors and named Executive Officers of the Company
and all Directors and Executive Officers as a group, and all owners of 5% or
more of the Common Stock:
COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES (1) % OF CLASS
---- -------------------- ----------
<S> <C> <C>
Herbert H. McDade, Jr......................... 1,008,062(2) 3.2%
Kerry P. Gray................................. 1,070,790 3.4%
David F. Ranney............................... 9,147,608 29.2%
Stephen B. Thompson........................... 55,451 *
J. Michael Flinn.............................. 63,500(3) *
Elizabeth M. Greetham......................... 32,667(4) *
David Blech and Certain Related Parties....... 7,198,027(5) 21.7%
All Directors and Executive Officers as a
group (consisting of 7 persons).............. 11,378,078 35.7%
</TABLE>
- --------
(1) Includes common stock held plus all options and warrants exercisable
within 60 days after April 30, 1996. Unless otherwise indicated, the
persons listed have sole voting and investment powers with respect to all
such shares.
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(2) Including presently exercisable options for the purchase of 17,550 shares
of Common Stock pursuant to the Non-Employee Director Plan, and 320,625
shares of Common Stock and 151,829 SARs exercisable pursuant to the 1987
Stock Option Plan and 69,270 shares issued in connection with the ESOP.
(3) Including presently exercisable options for the purchase of 54,000 shares
of Common Stock pursuant to the Non-Employee Director Plan.
(4) Including presently exercisable options for the purchase of 26,667 shares
of Common Stock pursuant to the Non-Employee Director Plan.
(5) Sentinel Charitable Remainder Trust ("Sentinel"), 30 Outwater Lane,
Garfield, New Jersey, is known to ACCESS to be the beneficial owner of
more than five percent of the issued and outstanding Common Stock. Mr.
Blech is the sole income beneficiary of the trust, and as such may be
deemed to be the beneficial owner of the securities held by it.
In addition to the 1,020,000 shares of Common Stock held by Sentinel,
Sentinel additionally has an option to purchase until January 1, 1999, up to
500,000 units at $2.50 per unit. The units consist of 500,000 shares of Common
Stock, 500,000 warrants with an expiration date of January 1, 2000 and an
exercise price of $6.25 and 200,000 Warrants with an expiration date of
January 1, 2000 and an exercise price of $2.50. Information is based on Form 4
as filed by D. Blech in October 1994.
The Century Charitable Remainder Trust, the Ocean Charitable Remainder
Trust, the Lake Charitable Remainder Trust, the Beacon Charitable Remainder
Trust, the Freedom Charitable Remainder Trust, the Oak Charitable Remainder
Trust and the Celestrial Charitable Remainder Trust (together, the "Charitable
Remainder Trusts") are known by ACCESS to be the beneficial owners in the
aggregate of more than 5% (807,839 shares) of the issued and outstanding
Common Stock. Mr. Nicholas Madonia is the trustee of the Charitable Remainder
Trusts and as such may be deemed to be a beneficial owner of the securities
held by them. In addition, Mr. David Blech may be deemed to be a beneficial
owner of the securities held by the Charitable Remainder Trusts. Mr. Nicholas
Madonia is the trustee of the Blech Family Trust and as such may be deemed to
be a beneficial owner of the securities held by it. In addition, David Blech
may be deemed to be a beneficial owner of the securities held by the Blech
Family Trust. David Blech may be deemed to be a beneficial owner of the
securities held by the Edward Blech Trust.
In addition to the 5,000 shares of Common Stock held by Mr. Blech, Mr. Blech
additionally has 600,000 warrants to purchase up to 600,000 shares of Common
Stock with an expiration date of March 4, 2000, at an initial exercise price,
subject to adjustment in certain events, of $1.00 per share.
CHANGE IN CONTROL
On January 25, 1996, the Company, merged with API, in a statutory merger
(the "Merger") pursuant to the Delaware General Corporation law and the Texas
Business Corporation Act by filing a Certificate of Merger with the Secretary
of State of the State of Delaware and the Recorder of Deeds of New Castle
County, Delaware, and Articles of Merger with the Secretary of State of the
State of Texas. The Company is the surviving corporation of the Merger and
upon the consummation of the Merger changed its name to "ACCESS
Pharmaceuticals, Inc."
In the Merger, all of the issued and outstanding shares of common stock of
API were exchanged for 13,920,000 shares of the common stock, par value $.04
per share of the Company (the "Company's Common Stock"). As a stockholder of
API, Dr. David F. Ranney received 9,147,608 shares of the Company's Common
Stock in exchange for 2,392,000 shares of common stock, $.01 par value, of API
beneficially owned by him immediately before the effective time of the Merger.
The 9,147,608 shares of the Company's Common Stock
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owned by Dr. David F. Ranney constituted, upon the consummation of the Merger,
40.4% of the issued and outstanding stock of the Company. Subject to the terms
of the Stockholder's Agreement (as defined herein), Dr. David F. Ranney may be
deemed to control the Company. A change in control may thus be deemed to have
occurred from the stockholders of the Company immediately prior to the
consummation of the Merger to Dr. David F. Ranney immediately after
consummation of the Merger.
Pursuant to the terms of a Stockholder's Agreement (the "Stockholder's
Agreement"), dated as of October 3, 1995, between the Company and Dr. David F.
Ranney, Dr. David F. Ranney has agreed so long as he beneficially owns (as
determined by reference to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) ten percent or more of the issued and
outstanding capital stock of the Company, and to the extent he is able to do
so under applicable law, if any, and within the exercise of any fiduciary
duties imposed by law, if any, to vote all of the shares of such stock for
which he has voting power on any proposal presented to the stockholders of the
Company in the manner recommended by a majority of the Board of Directors of
the Company; provided, however, that he is not obligated to vote in such a
manner with regard to any proposal presented to the stockholders of the
Company without a recommendation of the Board of Directors of the Registrant
or which involves or relates to an attempted hostile takeover of the Company.
All material terms of the Merger are set forth in the Company's Proxy
Statement/Prospectus, relating to the Company's Registration Statement on Form
S-4 (Registration No. 33-64031), originally filed with the Securities and
Exchange Commission on November 7, 1995, as amended by Amendment No. 1
thereto, filed with the Commission on December 9, 1995, and Amendment No. 2
thereto, filed with the Commission on December 12, 1995.
Upon request, the Company will provide without charge to each person to whom
a copy of this Proxy Statement has been delivered a copy of any information
that was incorporated by reference in the Proxy Statement (other than exhibits
to documents, unless such exhibits are specifically incorporated by reference
into the information incorporated by reference in the Proxy Statement). The
Company will also provide upon specific request, without charge to each person
to whom a copy of this Proxy Statement has been delivered, a copy of all
documents filed from time to time by the Company with the Commission pursuant
to the Exchange Act. Requests for such copies should be directed to Stephen
Thompson; 2600 N. Stemmons Frwy., Suite 210, Dallas, Texas 75207. Telephone
requests may be directed to the Secretary at (214) 905-5100.
PROPOSAL 2
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The current authorized capital stock of the Company consists of 10,000,000
shares of preferred stock, $.01 par value ("Preferred Stock"), and 40,000,000
shares of Common Stock, $.04 par value, of which no shares of Preferred Stock
and 31,290,182 shares of Common Stock were issued and outstanding at May 17,
1996. The Board of Directors on May 13, 1996, adopted a proposed amendment to
Article V, Section A of the Company's Certificate of Incorporation increasing
the authorized number of shares of Common Stock from 40,000,000 to 60,000,000
for submission to the shareholders at the Annual Meeting.
Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of shareholders of the Company and to ratably receive
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor, subject to the payment of any
outstanding preferential dividends declared with respect to any Preferred
Stock that from time to time may be outstanding. Upon liquidation, dissolution
or winding up of the Company, holders of Common Stock are entitled to share
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<PAGE>
ratably in any assets available for distribution to shareholders after payment
of all obligations of the Company, subject to the rights to receive
preferential distributions of the holders of any Preferred Stock then
outstanding.
If the proposed amendment is approved, all or any part of the authorized but
unissued shares of Common Stock may thereafter be issued without further
approval from the shareholders, except as may be required by law or the
policies of any stock exchange or stock market on which the shares of stock of
the Company may be listed or quoted, for such purpose and on such terms as the
Board of Directors may determine. Holders of the capital stock of the Company
do not have any preemptive rights to subscribe for the purchase of any shares
of Common Stock which means that current shareholders do not have a prior
right to purchase any new issue of Common Stock in order to maintain their
proportionate ownership.
The proposed amendment will not affect the rights of existing holders of
Common Stock except to the extent that future issuances of Common Stock will
reduce each existing shareholders' proportionate ownership.
If the proposed amendment is adopted, Article V, Section A of the
Certificate of Incorporation would be amended to read as follows:
A: The aggregate number of shares of common stock which the Corporation
shall have authority to issue is Sixty million (60,000,000) shares of four
cents ($.04) per share.
The proposed amendment to Article V will not change any other aspect of
Article V.
The Board of Directors has determined that it would be appropriate for the
Company to increase the number of its authorized shares of Common Stock in
order to have additional shares available for possible future acquisition or
financing transactions and other issuances, or to satisfy requirements for
additional reservations of shares by reason of future transaction which might
require increased reservations. The Board of Directors believes that the
complexity of customary financing, employment and acquisition transactions
requires that the directors be able to respond promptly and effectively to
opportunities that involve the issuance of shares of Common Stock. For
example, if the proposal is approved, the Company will have the flexibility to
authorize stock splits and stock dividends and to enter into joint ventures
and corporate financing involving the issuance of shares of Common Stock. The
Company has no present plans, agreements, understandings or arrangements
regarding transactions expected to require issuance of the additional shares
of Common Stock that would be authorized by the proposed amendment.
The Board of Directors unanimously recommends that the stockholders vote
"FOR" the adoption of the proposed amendment. The affirmative vote of holder
of at least a majority of the outstanding Common Stock is required in order to
adopt the proposed amendment. Unless indicated to the contrary, the enclosed
proxy will be voted for the proposed amendment.
PROPOSAL 3
AMENDMENT OF THE 1995 STOCK OPTION PLAN
The 1995 Stock Option Plan of the Company (the "Plan") presently provides
for formula grants to each director of the Company who is not an employee of
the Company as follows: on the date the non-employee director is initially
elected or appointed to the Board of Directors he/she receives a non-statutory
option to purchase 30,000 shares of Common Stock, and on each date that the
non-employee director is re-elected to the Board of Directors, he/she receives
a non-statutory option to purchase 20,000 shares of Common Stock. The Board of
Directors has authorized on March 28, 1996, subject to stockholder
ratification, an amendment to the
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<PAGE>
Plan which would provide that for each year that a non-employee director
serves as a director of the Company, the director would receive a non-
statutory option to purchase 6,667 shares of Common Stock, but would no longer
receive a non-statutory option to purchase 20,000 shares of Common Stock upon
any re-election to the Board of Directors of the Company.
General. The Plan authorizes the granting of "incentive stock options" as
defined in Section 422A of the Code and non-qualified stock options. See
"Administration."
Securities Subject to the Plan and Market Value. Under the Plan, options may
be granted covering up to an aggregate of 2,000,000 shares of Common Stock.
The Plan provides for appropriate adjustments in the number and kind of shares
subject to the Plan in the event of a stock split, stock dividend, or certain
other similar changes in the Common Stock, and in the event of a
reorganization, merger, consolidation or certain other types of
recapitalization of the Company.
Eligibility to Participate. Any executive, other key employee or director
of, or advisor or consultant to, the Company or of any of the Company's
subsidiaries or parent corporation is eligible to be granted options under the
Plan. No election by any such person is required to participate in the Plan.
Administration. The Plan is administered by a committee (the "Committee")
consisting of two or more directors appointed by the Board, each of whom is a
"disinterested person" as defined by Rule 16b-3 under the Exchange Act. The
Committee is authorized to determine which employees of the Company are
executive or other key employees and select from among the executive or other
key employees and the advisors the individuals to whom options are to be
granted, to determine the number of shares to be subject to such options, to
determine the terms and conditions of the options, all consistent with the
terms of the Plan.
Stock Options. The Committee in its discretion may issue stock options which
qualify as incentive stock options under the Code or non-qualified stock
options. The Committee will determine the time or times when each stock option
becomes exercisable, the period within which it remains exercisable and the
price per share at which it is exercisable, provided that no incentive stock
option shall be exercised more than ten years after it is granted and no other
options shall be exercised more than ten years and one day after it is
granted, and further provided that the exercise price of incentive stock
options shall not be less than 100% of the fair market value of the Common
Stock on the date of the grant. The reported closing price of the Common Stock
on the OTC Bulletin Board on May 21, 1996 was $2.00 per share.
Notwithstanding the above description, option grants to non-employee
directors under the Plan will be made on a formula basis only, whereby each
director of the Company will receive, upon her or his initial election or
appointment to the Board, options exercisable for 30,000 shares of Common
Stock and, under the current version of the Plan, will receive, at each
subsequent election of directors of the Company at which she or he is re-
elected to the Board, options exercisable for 20,000 shares of Common Stock.
Payment for shares purchased upon exercise of an option must be made in full
in cash or check, by payment through a broker in accordance with Regulation T
of the Federal Reserve Board or by such other mode of payment as the Committee
may approve, including payment in whole or in part in shares of the Common
Stock, when the option is exercised. No option is transferable except by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined by the Code or in Title I of the Employee
Retirement Income Security Act of 1974, as amended.
All options granted under the Plan terminate on the earliest of (a) the
expiration of the term specified in the option document, which may not exceed
ten years from the date of grant; (b) the expiration of three months
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<PAGE>
from the date an option holder's employment or service with the Company or its
subsidiaries or parent terminates for any reason other than disability or
death; (c) the expiration of one year from the date an option holder's
employment or service with the Company, its subsidiaries or its parent
terminates by reason of such optionholder's disability or death. The
Committee, in its discretion, may provide for additional limitations on the
term of any option.
Tax Aspects of the Plan. The following discussion is intended to briefly
summarize the general principles of federal income tax law applicable to
options granted under the Plan. A recipient of an incentive stock option will
not recognize taxable income under either the grant or exercise of an
incentive stock option. The option holder will recognize long-term capital
gain or loss on a disposition of the shares acquired upon exercise of an
incentive stock option, provided the option holder does not dispose of those
shares within two years from the date the incentive stock option was granted
or within one year after the shares were transferred to such option holder.
Currently, for regular federal income tax purposes, long-term capital gain is
taxed at a maximum rate of 28%, while ordinary income may be subject to an
effective maximum rate of 39.6%. If the option holder satisfies both of the
foregoing holding periods, then the Company will not be allowed a deduction by
reason of the grant or exercise of an incentive stock option.
As a general rule, if the option holder disposes of the shares before
satisfying both holding period requirements (a "disqualifying disposition"),
the gain recognized by the option holder on the disqualifying disposition will
be taxed as ordinary income to the extent of the difference between (i) the
lesser of the fair market value of the shares on the date of exercise or the
amount received for the shares in the disqualifying disposition, and (ii) the
adjusted basis of the shares, and the Company will be entitled to a deduction
in that amount. The gain (if any) in excess of the amount recognized as
ordinary income on a disqualifying disposition will be long-term or short-term
capital gain, depending on the length of time the option holder held the
shares prior to the disposition.
The amount by which the fair market value of a share at the time of exercise
exceeds the option price will be included in the computation of such option
holder's "alternative minimum taxable income" in the year the option holder
exercises the incentive stock option. Currently, the maximum alternative
minimum tax rate for individuals is 28%. If an option holder pays alternative
minimum tax with respect to the exercise of an incentive stock option, then
the amount of such tax paid will be allowed as a credit against regular
liability in subsequent years. The option holder's basis in the shares for
purposes of the alternative minimum tax will be adjusted when income is
included in alternative minimum taxable income.
A recipient of a non-qualified stock option will not recognize taxable
income at the time of grant, and the Company will not be allowed a deduction
by reason of the grant. Such an option holder will recognize ordinary income
in the taxable year in which the option holder exercises the non-qualified
stock option, in an amount equal to the excess of the fair market value of the
shares received upon exercise, at the time of exercise of such options, over
the exercise price of the option, and the Company will be allowed a deduction
in that amount. Upon disposition of the shares subject to the option, an
option holder will recognize long-term or short-term capital gain or loss,
depending upon the length of time the shares were held prior to disposition,
equal to the difference between the amount realized on disposition and the
option holder's basis in a share subject to the option (which basis ordinarily
is the fair market value of the shares subject to the option on the date the
option was exercised).
The Board of Directors of the Company unanimously recommends a vote "FOR"
the approval of the amendment to the Plan. Unless otherwise indicated thereon,
the accompanying proxy will be voted "For" the approval of the amendment to
the Plan.
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PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to ratification by the
stockholders at the Annual Meeting, the accounting firm of KPMG Peat Marwick
LLP as principal independent accountants for the Company for the fiscal year
ending December 31, 1996. KPMG Peat Marwick LLP has served in this capacity
since 1979.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting and to be available to respond to appropriate questions
concerning the 1995 audit. Such representatives will have the opportunity to
make a statement if they desire to do so at the meeting and to respond to
appropriate questions.
UNLESS OTHERWISE INDICATED THEREON, THE ACCOMPANYING PROXY WILL BE VOTED FOR
THE APPROVAL OF KPMG PEAT MARWICK LLP. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK AS PRINCIPAL
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company has no knowledge of any matters to be presented for consideration at
the Annual Meeting other than those referred to above. If (i) any matters not
within the knowledge of the Board of Directors as of the date of this Proxy
Statement should properly come before the meeting (ii) a person not named
herein is nominated at the meeting for election as a Director because a
nominee named herein is unable to serve or for good cause will not serve;
(iii) any proposals properly omitted from this Proxy Statement and the form of
proxy should come before the meeting; or (iv) any matters should arise
incident to the conduct of the meeting, then the proxies will be votes in
accordance with the recommendations of the Board of Directors of the Company.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The Annual Meeting of stockholders in 1997 is expected to be held on or
about May 24, 1997. Stockholder proposals to be considered for presentation to
the Annual Meeting of Stockholders in 1997 must be received by the Board of
Directors of the Company for inclusion in the Company's Proxy Statement and
form of proxy relating to the 1997 Annual Meeting on or before January 24,
1997.
EACH STOCKHOLDER IS URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE AND ADDRESSED TO
ACCESS PHARMACEUTICALS, INC. C/O AMERICAN STOCK TRANSFER & TRUST CO., 40 WALL
STREET, 46TH FLOOR, NEW YORK, NEW YORK 10005, A PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
By Order of the Board of Directors
Justin P. Morreale, Secretary
May 24, 1996
15
