SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
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:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
To Our Stockholders:
You are cordially invited to attend a Special Meeting of
Stockholders of Access Pharmaceuticals, Inc. ("Access") to be held on
__________, 1997 at ____:00 a.m. local time, at the New York Athletic
Club, 180 Central Park South, New York, New York (212) 247-5100 (the
"Special Meeting").
The only item of business to be addressed at the Special Meeting
is to consider and act upon a proposal to amend Access' Certificate of
Incorporation, as amended, to effect a one-for-four reverse stock split of
Access common stock (the "Common Stock"). This proposal will decrease
the number of outstanding shares of Common Stock from approximately
31.4 million to 7.9 million.
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL NOT CHANGE YOUR PROPORTIONATE
EQUITY INTERESTS IN ACCESS, EXCEPT AS MAY RESULT FROM THE ELIMINATION OF
FRACTIONAL SHARES.
The Board of Directors believes that the recent per share price
of the Company's Common Stock and the fact that it is not listed on an
exchange have had a negative effect on the marketability of Access'
Common
Stock. Management of the Company believes that a reverse split could
position
Access more attractively with institutional investors and retail stock
brokers who generally have restrictions on investing in low-priced stocks
and stocks not listed on NASDAQ or an exchange. A higher stock price
also could increase broker/dealer interest in maintaining markets in
Access' stock. Individual stockholders would then benefit as transaction
costs relative to the total value of stock trades may be reduced. The
reverse split also could improve Access's ability to finance the Company's
research activities by increasing the number of potential investors and
investment vehicles. The terms under which financing transactions could
be concluded may also be more favorable with a higher priced stock.
Additionally, the reverse split would improve Access' prospects for being
relisted on the NASDAQ SmallCap market or an alternate stock
exchange.
The Board of Directors unanimously recommends that Access'
stockholders approve the amendment to the Certificate of Incorporation
to effect the reverse stock split. The enclosed Proxy Statement sets forth
more detailed information regarding the amendment and the reverse
stock split. Please carefully review the information contained in the Proxy
Statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL 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,
/s/ Herbert H. McDade, Jr.
--------------------------
Herbert H.McDade,Jr.
Chairman of the Board of Directors
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
to be held on __________, 1997
PLEASE TAKE NOTICE that a Special Meeting of Stockholders
(the "Special Meeting") of Access Pharmaceuticals, Inc. (the "Company")
will be held at the New York Athletic Club, 180 Central Park South, New
York, New York (212) 247-5100, on __________, 1997, at -- :00 a.m.
local time. The purpose of the Special Meeting is:
1. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation, as amended, (the "Amendment") to
effect a recapitalization through a one-for-four reverse stock split
(the "Reverse Stock Split") pursuant to which every four shares of
Common Stock outstanding on the effective date of the
Amendment would be converted into one new share of Common
Stock ("New Common Stock"). The Amendment would also
reduce the number of authorized shares of Common Stock from
60,000,000 shares, par value $.04 per share, to 15,000,000 shares,
par value $.01 per share. To avoid the existence of fractional
shares of New Common Stock, stockholders who would otherwise
be entitled to receive fractional shares of New Common Stock
shall receive cash in lieu thereof.
2. To transact such other business as may properly come before the
Special Meeting or any postponements or adjournments thereof.
Stockholders of record at the close of business on _________, 1997,
the record date for the Special Meeting, are entitled to receive notice of,
and to vote at the Special Meeting and any adjournment or postponement
thereof.
Information relating to the Reverse Stock Split is set forth in the
accompanying Proxy Statement dated February ___, 1997. Please
carefully review the information contained in the Proxy Statement, which
is incorporated into this Notice.
By Order of the Board of Directors,
/s/ Herbert H. McDade, Jr.
-----------------------------
Herbert H. McDade, Jr.
Chairman of the Board of Directors
Dallas, Texas
February _____, 1997
Stockholders are cordially invited to attend the Special Meeting in
person. YOUR VOTE IS IMPORTANT. If you do not expect to attend
the Special 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.
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
__________________
PROXY STATEMENT
__________________
FOR A SPECIAL MEETING OF STOCKHOLDERS
To Be Held On March ___, 1997
This Proxy Statement is furnished by Access Pharmaceuticals, Inc.,
a Delaware corporation (the "Company"), to holders of Common Stock,
par value $.04 per share (the "Common Stock"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use
at a Special Meeting of Stockholders of the Company, and at any and all
adjournments or postponements thereof (the "Special Meeting"). The
Special Meeting will be held on ______, _____, 1997 at :00 a.m., local
time, at the New York Athletic Club, 180 Central Park South, New York,
New York, to consider and vote upon a proposed amendment (the
"Amendment") to the Company's Certificate of Incorporation, as
amended, (the "Certificate"), as specified in the accompanying Notice of
Special Meeting of Stockholders. A form of the Amendment is attached
hereto
as Exhibit A. The Amendment will effect a recapitalization of the
Company through a one-for-four reverse stock split (the "Reverse Stock
Split") pursuant to which every four shares of Common Stock outstanding
on the effective date of the Amendment (the "Effective Date") will
become and be converted into one new share of Common Stock ("New
Common Stock"). The Amendment also reduces the number of
authorized shares of Common Stock from 60,000,000 shares, par value
$.04 per share, to 15,000,000 shares, par value $.01 per share. The text
of the Amendment is set forth in Exhibit A to this Proxy Statement.
The Company's mailing address and the location of its principal
executive offices are 2600 Stemmons Freeway, Suite 176, Dallas, Texas
75207.
This Proxy Statement is first being sent to holders of Common
stock on or about February ___, 1997.
VOTING
General
The securities that may be voted at the Special Meeting consist of
the Common Stock, with each share entitling its owner to one vote on the
proposal to approve the Amendment. The record date for determining
the holders of Common Stock who are entitled to notice of and to vote
at the Special Meeting is _____, 1997 (the "Record Date"). On the
Record Date, ___________ shares of Common Stock were outstanding
and
eligible to be voted at the meeting. Notwithstanding the Record Date
specified above, the Company's stock transfer books will not
be closed and shares may be transferred subsequent to the Record Date.
However, all votes must be cast in the names of stockholders of record
on the Record Date.
Quorum and Vote Required
The presence, in person or by proxy, of a majority of the shares of
Common Stock outstanding on the Record Date is necessary to constitute
a quorum at the Special Meeting. The affirmative vote of the holders on
the Record Date of at least a majority of the outstanding shares of
Common Stock is required for the approval of the proposal described in
this Proxy Statement. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. Since the approval of the Amendment 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-votes will
have
the effect of a vote against approval of the Amendment.
At any subsequent reconvening of the Special Meeting, all proxies
will be voted on the matter(s) to be considered at the reconvened Special
Meeting in the same manner as such proxies would have been voted on
the matter(s) at the original convening of the Special Meeting (except
for any proxies which have theretofore effectively been revoked or
changed), notwithstanding that they may have been effectively voted on
the same or any other matter at a previous meeting. Any such
adjournment will require the affirmative vote of a majority of the shares
present at the session of the Special Meeting to be adjourned. A proxy
granting authority to vote upon such other business incidental to the
conduct of the Special Meeting as may properly come before the Special
Meeting will constitute authority to vote in favor of one or more
adjournments of the Special Meeting.
Proxies
In voting their Common Stock, stockholders may vote in favor of
or against the proposal to approve the Amendment or may abstain from
voting. Stockholders should specify their choice on the accompanying
proxy card. All properly executed proxy cards delivered pursuant to this
solicitation and not revoked will be voted at the Meeting in accordance
with the directions given.
IF NO SPECIFIC INSTRUCTIONS ARE GIVEN WITH REGARD TO THE MATTER TO
BE VOTE UPON, THEN THE SHARES REPRESENTED BY A SIGNED PROXY CARD
WILL BE VOTED "FOR" THE APPROVAL OF THE AMENDMENT AND IN THE DISCRETION OF
SUCH PROXIES ON ANY OTHER PROCEDURAL MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
All proxies delivered pursuant to this solicitation are revocable at
any time before they are voted at the option of the persons executing
them by (i) giving written notice to the Secretary
of the Company, (ii) by delivering a later dated proxy card or (iii) by
voting in person at the Meeting. All written notices of revocation and
other communications with respect to revocations of proxies should be
addressed to Kerry P. Gray, Access Pharmaceuticals, Inc., 2600 Stemmons
Freeway, Suite 176, Dallas, Texas 75207.
HOLDERS OF COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO THE COMPANY IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE.
All expenses incurred in connection with the solicitation of proxies
will be borne by the Company. In addition to the solicitation of proxies
by mail, the Company, through its directors, officers and employees, may
solicit proxies from stockholders personally or by telephone or other
forms of communication. The Company also will request brokerage
houses, nominees, fiduciaries and other custodians to forward soliciting
materials to beneficial owners, and the Company will reimburse such
persons for their reasonable expenses incurred in doing so.
The Board of Directors does not know of any matters which will
be brought before the Special Meeting other than the approval of the
Amendment. However, if any other matter properly comes before the
Special 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 judgement.
Stockholder Proposals
Any proposal which a Company Stockholder intends to present at
the next annual meeting of stockholders to be held in 1997 must have
been received by the Company on or before ________________. Only
those proper proposals which are received in a timely manner will
be included in the Proxy Statement and Proxy.
Security Ownership of Certain Beneficial Owners and Management
Based solely upon information made available to the Company, the
following table sets forth certain information with respect to the beneficial
ownership of Common Stock as of December 31, 1996 by (i) each person
who is known by the Company to beneficially own more than five percent
of Common Stock; (ii) each director of the Company; (iii) each of the
named executive officers; and (iv) all executive officers and directors as
a group. Except as otherwise indicated, the holders listed below have
sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them.
Common Stock Beneficially Owned
Name Number of Shares(1) % of Class
- ------------------------- ------------------- ----------
Herbert H. McDade. Jr.(2) 1,018,998 3.2%
Kerry P. Gray(3) 1,095,790 3.5%
J. Michael Flinn(4) 70,166 *
Elizabeth M. Greetham(5) 59,333 *
Stephen B. Howell 0 *
Max Link(6) 30,000 *
W. Eric Bowditch 4,000 *
Stephen B. Thompson(7) 47,951 *
Richard G. Van Inwegen, Ph.D.(8) 109,425 *
Glynn Wilson, Ph.D.(9) 25,000 *
David F. Ranney 9,147,608 29.1%
Nicholas Madonia, Individually
and as Trustee(10) 5,130,529 15.7%
All Directors and Executive
Officers as a group (consisting
of 10 persons) 2,460,663 7.7%
* Less than 1%.
(1) Includes Common Stock held plus all options and warrants
exercisable within 60 days after December 31, 1996. Unless
otherwise indicated, the persons listed have sole voting and
investment powers with respect to all such shares.
(2) Including presently exercisable options for the purchase of 24,216
shares of Common stock pursuant to the Non-Employee Director
Plans of 1987 and 1995, and 320,625 shares of Common Stock and
151,829 SARs exercisable pursuant to the 1987 Stock Option Plan.
(3) Including presently exercisable options for the purchase of 25,000
shares of Common Stock pursuant to the 1995 Stock Option Plan.
(4) Including presently exercisable options for the purchase of 60,666
shares of Common Stock pursuant to the Non-Employee Director
Plans of 1987 and 1995.
(5) Including presently exercisable options for the purchase of 53,333
shares of Common Stock pursuant to the Non-Employee Director
Plans of 1987 and 1995.
(6) Including presently exercisable options for the purchase of 30,000
shares of Common Stock pursuant to the Non-Employee Director
Plans of 1987 and 1995.
(7) Including presently exercisable options for the purchase of 7,500
shares of Common Stock pursuant to the 1995 Stock Option Plan.
(8) Including presently exercisable options for the purchase of 17,500
shares of Common Stock pursuant to the 1995 Stock Option Plan.
(9) Including presently exercisable options for the purchase of 25,000
shares of Common Stock pursuant to the 1995 Stock Option Plan.
(10) Mr. Nicholas Madonia holds 15,000 shares of Common Stock.
Mr. Madonia is the trustee of the Sentinel Charitable Remainder
Trust ("Sentinel"), 30 Outwater Lane, Garfield, New Jersey, which
is known to Access to be the beneficial owner of more than five
percent of the Common Stock. In addition to 1,569,999 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.
Mr. Madonia is also the trustee of 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 Celestial Charitable
Remainder Trust (together, the "Charitable Remainder Trusts").
The Charitable Remainder Trusts are known by Access to be the
beneficial owners of an aggregate of 807,839 shares of Common
Stock and as such Mr. Madonia, as trustee is deemed to be a
beneficial owner of the securities held by them. Mr. Madonia is
also the trustee of the Blech Family Trust, beneficial owner of
1,537,691 shares of Common Stock, and as such may be deemed to
be a beneficial owner of the securities held by it. The information
set forth in this footnote is from the Company's records and
information provided by Mr. Madonia.
PROPOSED AMENDMENT TO THE
CERTIFICATE OF EFFECT THE
REVERSE STOCK SPLIT
General
The Company proposes to effect a recapitalization through the
adoption of the Amendment which provides for the Reverse Stock Split.
If the Amendment is approved by the stockholders, each FOUR shares
of Common Stock, par value $.04 per share, ("Old Common Stock")
outstanding on the Effective Date will be converted automatically
into ONE share of new Common Stock, par value $.01 per share, ("New
Common Stock") and the number of authorized shares of Common Stock
will be reduced from 60,000,000 to 15,000,000. To avoid the existence of
fractional shares of New Common Stock, stockholders who would
otherwise be entitled to receive fractional shares of New Common Stock
shall receive a cash distribution in lieu thereof. The Effective Date of the
Reverse Stock Split will be the date on which the Amendment is filed
with the Secretary of State of Delaware, which is anticipated to be as
soon as practicable following the date of the Special Meeting.
Background of and Reasons for the Reverse Stock Split
On January 16, 1997 the Board of Directors adopted resolutions
approving the Amendment, calling the Special Meeting and directing that
the Amendment be placed on the agenda for the consideration of the
stockholders at the Special Meeting.
The Board of Directors believes that the recent per share price of
the Common Stock has had a negative effect on the marketability of the
existing shares, the amount and percentage of transaction costs paid by
individual stockholders and the potential ability of the Company to raise
capital by issuing new shares. The Company believes there are several
reasons for these effects, as summarized below.
There are significant restrictions imposed by most brokerage
houses on the ability of their brokers to solicit orders or recommend the
purchase of stocks that trade on the NASD Over-The-Counter ("OTC")
Bulletin Board. In the majority of cases the purchase of stock is limited
to unsolicited offers from private investors, who have to comply with
policies and practices involving the completion of time-consuming forms
that make the handling of lower-priced stocks economically unattractive.
Additionally, most brokerage houses do not permit lower-priced stocks to
be used as collateral for margin accounts or to be purchased on margin.
Further, the Board of Directors believes that the current per share price
of the Common Stock may limit the effective marketability of the
Common Stock because of the reluctance of many brokerage firms and
institutional investors to recommend lower-priced stocks to their clients
or to hold them in their own portfolios. The brokerage commission on
the purchase or sale of a lower-priced stock may also represent a higher
percentage of the price than the brokerage commission on a higher-
priced issue.
The opportunity to raise capital to support the Company's
development activities has been reduced as a result of the delisting of the
stock from NASDAQ, the recent price per share of the stock and the thin trading
of the stock. These facts have significantly reduced the number of potential
investors, increases the cost of raising capital limits and the types of
offerings that can be made. It is the Company's intention to seek re-listing
of the Common Stock on the NASDAQ SmallCap Market, if this proposal is
approved.
The Board of Directors is optimistic that the decrease in the
number of shares of Common Stock outstanding as a consequence of the
proposed Reverse Stock Split and the resulting anticipated increased price
level will result in greater interest in the Common Stock by the
financial community and the investment public.
There can be no assurances, however, that the foregoing will occur
or that the market price of the Common Stock immediately after
implementation of the proposed Reverse Stock Split will increase, and if it
increases, no assurance that such increase can be maintained for any period of
time, or that such market price will approximate four times the market
price before the proposed Reverse Stock Split.
Dissenting stockholders have no appraisal rights under Delaware
law or under the Company's Certificate and Bylaws in connection with
Reverse Stock Split.
The Company's Common Stock is currently traded on the NASD
Over-the-Counter ("OTC") Bulletin Board and as of February 1, 1996
trades under the trading symbol AXCS. The Common Stock was traded
on the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq") SmallCap market under the trading symbol
CHMX until April 27, 1995. Access' securities were delisted from the
Nasdaq SmallCap Market on April 27, 1995 for failure to meet certain
financial requirements. The following table sets forth the high and low
closing prices per share for the Common stock as reported by the OTC
for the Company's past two fiscal years.
Common Stock
-------------------------------
High Low
-------------- --------------
Fiscal Year Ended December 31, 1995
First quarter $ 3/4 $ 7/16
Second quarter(1) 1/2 7/16
Second quarter(2) 9/16 1/16
Third quarter 19/32 9/32
Fourth quarter 1- 1/8 1/4
Fiscal Year Ended December 31, 1996
First quarter 2-11/16 7/8
Second quarter 2- 9/16 1-5/8
Third quarter 1-11/16 7/8
Fourth quarter 1- 5/16 3/4
Fiscal Year Ended December 31, 1997
First quarter (thru February __,1997) ______ _____
(1) Through April 27, 1995 on NASDAQ SmallCap Market.
(2) After April 27, 1995 on OTC Bulletin Board.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT ALL STOCKHOLDERS VOTE "FOR" THE APPROVAL FOR THE AMENDMENT.
The Reverse Stock Split may be abandoned by the Board of
Directors pursuant to Section 242(a) of the Delaware General
Corporation Code at any time before, during or after the Special
Meeting and prior to the filing of the Certificate of Amendment to the
Company's Certificate of Incorporation with the Secretary of State of the
State of Delaware giving effect to the Reverse Stock Split if, for any
reason, the Board of Directors deems it advisable to do so.
Effects of the Reverse Stock Split
General Effects. If the Amendment is approved by the
stockholders, the principal effect of the Reverse Stock Split will be to
decrease the number of outstanding shares from _________
shares to approximately _____ shares, based on share information as of
February ____, 1997 and reduce the number of authorized shares of
Common Stock from 60,000,000 to 15,000,000.
In order that the Company may avoid the expense and
inconvenience of issuing and transferring fractional shares of New
Common stock, stockholders who would otherwise be entitled to receive
a fractional share of New Common Stock ("Fractional Stockholders") shall
receive payment in cash in lieu of receiving a fractional share of New
Common Stock. See "Exchange of Shares and Payment in Lieu of
Issuance of Fractional Shares."
The Reverse Stock Split may leave certain stockholders with one
or more "odd-lots" of new Common Stock, i.e. stock in amounts of less
than 100 shares. These odd-lots may be more difficult to sell or require
greater transaction cost per share to sell, than shares in even multiples
of 100.
Effect on Market for Common Stock. On February ___, 1997, the
closing sale price of the Common Stock on the OTC was $____ per share.
Upon the effectiveness of the Reverse Stock Split, the Compensation
Committee of the Board of Directors shall make a proportional
downward adjustment to the number of shares subject to outstanding
options and a corresponding upward adjustment in the per share exercise
prices to reflect the Reverse Stock Split.
Changes in Stockholders' Equity. As an additional result of the
Reverse Stock Split, the Company's stated capital, which consists of the
par value per share of Common Stock multiplied by the number of shares
of Common Stock issued, will be reduced by approximately $_____ to
$_____ on the Effective Date. Following the Reverse Stock Split the
stated capital will be decreased because the number of shares issued and
outstanding will be reduced and because the par value of the Common
Stock will change to $.01 per share. Correspondingly, the Company's
capital in excess of par value, which consists of the difference between the
Company's stated capital and the aggregate amount paid to the Company
upon the issuance by the Company of all currently outstanding Common
Stock, will be increased by approximately $________.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of
the Reverse Stock Split is based on current law, including the Internal
Revenue Code of 1986, as amended (the "Code"), and is for general
information only. The tax treatment of a stockholder may vary
depending upon the particular facts and circumstances of such
stockholder. Certain stockholders, including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers,
non-resident aliens, foreign corporations and persons who do not hold the
Common Stock as a capital asset, may be subject to special rules not
discussed below.
ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT HIS TAX ADVISOR TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO HIM OF THE REVERSE STOCK SPLIT,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR FOREIGN
INCOME TAX AND OTHER LAWS.
The receipt of shares of New Common Stock (excluding fractional
shares of New Common Stock) in the Reverse Stock Split should be a
nontaxable transaction under the Code for federal income tax purposes.
Consequently, a stockholder receiving shares of New Common Stock
should not recognize either gain or loss, or any other type of income, with
respect to whole shares of New Common Stock received as a result of the
Reverse Stock Split. In addition, the aggregate tax basis of such
stockholder's
shares of Common Stock prior to the Reverse Stock Split will carry over
as the tax basis of the stockholder's shares of New Common Stock. Each
Stockholder will be required to allocate his basis in his shares of Common
Stock ratably among the total number of shares of new Common Stock
owned following the Reverse Stock Split. The holding period of the
shares of New Common Stock will also include the holding period during
which the stockholder held the Common stock, provided that such
Common Stock was held by the stockholder as a capital asset on the
Effective Date.
The receipt by a Fractional Stockholder of cash in lieu of a
fractional share of New Common Stock pursuant to the Reverse Stock
Split will be a taxable transaction for federal income tax purposes. The
receipt of cash in lieu of fractional shares of New Common Stock
will result in gain or loss (rather than dividend income) to the Fractional
Stockholders assuming, as the Company believes, that such cash
distribution is undertaken solely for the purpose of saving the Company
the expense and inconvenience of issuing and transferring fractional
shares of New Common Stock. Capital gain or loss will be
long-term capital gain or loss if on the Effective Date the shares of
Common Stock have been held by the Fractional Stockholder for longer
than one year.
Based on certain exceptions contained in regulations issued by the
Internal Revenue Service, the Company does not believe that it or
Fractional Stockholders will be subject to backup withholding or
informational reporting with respect to the cash distributed to a
Fractional Stockholder.
EXCHANGE OF SHARES AND PAYMENT IN LIEU OF
ISSUANCE OF FRACTIONAL SHARES
On or after the Effective Date, the Company will mail to each
stockholder a letter of transmittal. A stockholder will be able to receive
his shares of New Common Stock and, if applicable, cash in lieu of a
fractional share of New Common Stock only by transmitting to the
Transfer Agent such stockholder's stock certificate(s) for shares of
Common Stock outstanding prior to the Reverse Stock Split, together
with the properly executed and completed letter of transmittal and such
evidence of ownership of such shares as the Company may require.
Stockholders will not receive certificates for shares of New Common stock
unless and until the certificates representing their shares of Common
Stock outstanding prior to the Reverse Stock Split are surrendered.
STOCKHOLDERS SHOULD NOT FORWARD THEIR CERTIFICATES TO THE TRANSFER
AGENT UNTIL THE LETTER OF TRANSMITTAL IS RECEIVED AND SHOULD SURRENDER
THEIR CERTIFICATES ONLY WITH SUCH LETTER OF TRANSMITTAL.
No scrip or fractional share certificates for New Common Stock
will be issued in connection with the Reverse Stock Split. A payment in
lieu of a fractional shares of New Common Stock will be made to a
Fractional Stockholder promptly after receipt of a properly
completed letter of transmittal and stock certificate(s) for all of his shares
of Common Stock outstanding prior to the Reverse Stock Split.
There will be no service charges payable by the stockholders of the
Company in connection with the exchange of their certificates.
By Order of the Board of Directors,
/s/ Herbert H. McDade, Jr.
---------------------------
Herbert H. McDade, Jr.
Chairman of the Board of Directors
Exhibit A
PROPOSED CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
ACCESS PHARMACEUTICALS, INC.
Access Pharmaceuticals, Inc. (the "Corporation"), a Delaware corporation,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the directors of the Corporation, a
resolution was duly adopted setting forth a proposed amendment
of the Certificate of Incorporation of the Corporation, as
previously amended, and declaring such amendment to be
advisable and calling a meeting of the stockholders of the
Corporation for consideration thereof. The resolution setting
forth the proposed amendment is as follows:
RESOLVED: Upon this Certificate of Amendment to the Certificate of
Incorporation becoming effective pursuant to the Delaware General
Corporate Law (the "Effective Time"), each FOUR outstanding shares
of common stock par value $.04 per share ("Common Stock"), shall
thereupon be reclassified and changed into ONE share of common
stock, par value $.01 per share ("New Common Stock"). Upon such
Effective Time, each holder of Common Stock shall thereupon
automatically be and become the holder of ONE share of New Common
Stock for every FOUR shares of Common Stock then held by such
holder. Upon such Effective Time, each certificate formerly
representing a stated number of shares of Common Stock shall
thereupon be deemed for all corporate purposes to evidence
ownership of New Common Stock in the appropriately reduced whole
number of shares. As soon as practicable after such Effective
Time, stockholders as of the date of the reclassification will be
notified thereof and, upon their delivery of their certificates of
Common Stock to the Company, will be sent stock certificates
representing their shares of New Common Stock, rounded down to the
nearest whole number, together with cash representing the fair
value of such holder's fractional shares of Common Stock. No
scrip or fractional share certificates for Common Stock will be
issued in connection with this reverse stock split.
RESOLVED: That it is advisable that Article V. Section
A of the Corporation's Certificate of Incorporation, as amended,
be amended to read in its entirety as follows; and that such
Article V, Section A of the Corporation's Certificate of
Incorporation, as amended, be amended to read in its
entirety as follows:
A. The aggregate number of shares of Common Stock
which the Corporation shall have authority to issue is Fifteen
Million (15,000,000) shares with a par value of one cent ($0.01)
per share.
SECOND: That thereafter, pursuant to resolution of the Board of
Directors, a meeting of the stockholders of the Corporation was
duly called and held, upon notice in accordance with Section 222
of the General Corporation Law of the State of Delaware at
which meeting the necessary number of shares as required by
the General Corporation Law of the State of Delaware voted in
favor of the amendment.
THIRD: That such amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
FOURTH: That the capital of the Corporation shall not be reduced
under or by reason of said amendment.
FIFTH: That the effective date of this amendment shall be ______,
1997.
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176, Dallas, Texas 75207
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned having received the Notice of Special Meeting of
Stockholders and Proxy Statement dated February ___, 1997, and
revoking any proxy heretofore given, hereby appoints each of Herbert H.
McDade, Jr. and Kerry P. Gray or either of them, proxies of the
undersigned with full power of substitution and to vote all shares of
common stock of Access Pharmaceuticals, Inc. which the undersigned is
entitled to vote at a Special Meeting of Stockholders to be held March
___, 1997 at __:00 a.m., at the New York Athletic Club, 180 Central
Park South, New York, New York, or any adjournment thereof.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this Proxy will be voted FOR the Proposal.
In their discretion, the Proxies are authorized to vote on any other
matters which may properly come before the Special Meeting or any
adjournment thereof as set forth in the Proxy Statement.
(continued, and to be signed on the reverse side)
SEE REVERSE SIDE
[ X ] PLEASE MARK YOUR VOTE THIS WAY
1. Proposal to amend the Certificate of Incorporation to effect a
one-for-four reverse stock split.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Shares Held: ___________-
________________________ ________
Signature Date
________________________ ________
Signature (if held jointly) Date
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF ACCESS
PHARMACEUTICALS, INC.'S BOARD OF
DIRECTORS AND MAY BE REVOKED BY THE STOCKHOLDER
PRIOR TO EXERCISE.
