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:
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
To Our Stockholders:
You are cordially invited to attend the Special
Meeting of Stockholders of Access Pharmaceuticals,
Inc. (the "Company" or "Access") to be held on April
___, 1998 at 10:00 a.m. local time, at the New York
Athletic Club, 180 Central Park South, New York, New
York 10019, (212) 247-5100 (the "Special
Meeting").
The Notice of Special Meeting and the Proxy
Statement that follow describe the business to be
considered and acted upon by the stockholders at the
Special Meeting. The Board of Directors
unanimously recommends that Access' stockholders
approve the proposals. Please carefully review the
information contained in the Proxy Statement.
Proposal 1, 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 recapitalization of the Company through a
one-for-twenty reverse stock split of Access common
stock, $.04 par value per share (the "Common
Stock"), decrease the number of authorized shares of
Common Stock from 60.0 million to 20.0 million and
decrease the authorized shares of preferred stock of
the Company from 10.0 million to 2.0 million (the
"Recapitalization"). This proposal will decrease the
number of outstanding shares of Common Stock from
approximately 31.9 million to 1.6 million. There are no
preferred shares outstanding.
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 Recapitalization of the Company is a component
of an overall plan to finance the Company to
advance research and development activities and to
apply for a listing on the NASDAQ SmallCap Market
or an alternative stock exchange. The Recapitalization
is designed to position the Company to attract
institutional investors who are precluded from
purchasing low-priced securities.
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 NASDAQ or an exchange
have had a negative effect on the marketability
of Access' Common Stock. Management of the Company
believes that a reverse stock 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. The Company
has been advised by the investment bank retained to
assist in raising additional funding that effecting a
one-for-twenty reverse stock split would assist the
investment bank in marketing the proposed offering to
institutional investors. 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 future financing transactions
could be
<PAGE>
concluded may also be more favorable with a higher
priced stock. Additionally, the reverse split and the
refinancing 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 and recapitalization. The enclosed
Proxy Statement sets forth more detailed information
regarding the amendment and the reverse stock split and
other proposals. 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
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
to be held on April ___, 1998
PLEASE TAKE NOTICE that the Special Meeting of
Stockholders (the "Special Meeting") of Access
Pharmaceuticals, Inc. (the "Company" or "Access") will
be held at the New York Athletic Club, 180 Central
Park South, New York, New York 10019, (212) 247-5100,
on April ___, 1998, at 10:00 a.m. local time.
The meeting will convene for the following purposes:
1.To consider and vote upon a proposal to amend the
Company's Certificate of Incorporation, as amended,
(the "Amendment") to effect a recapitalization (the
"Recapitalization") through a one-for-twenty reverse
stock split (the "Reverse Stock Split") pursuant to
which every twenty shares of Access common stock, $.04
par value per share (the "Common Stock") outstanding on
the effective date of the Amendment would be converted
into one share of common stock, $.01 par value per
share ("New Common Stock"). This proposal will decrease
the number of outstanding shares of Common Stock from
approximately 31.9 million to 1.6 million. The
Amendment would also reduce the number of authorized
shares of Common Stock from 60,000,000 shares to
20,000,000 shares. The reduction in authorized shares
of Common Stock would in fact proportionately increase
the number of authorized but unissued shares when
compared with the number of issued and outstanding
shares before the Amendment. 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. The Amendment would also decrease the
authorized shares of preferred stock, par value $.01
per share, of the Company from 10.0 million to 2.0
million. There are currently no preferred shares
outstanding.
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
March ___, 1998, 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 and
the other proposals is set forth in the accompanying
Proxy Statement dated March ___, 1998. Please carefully
review the information contained in the Proxy
Statement, which is incorporated into this Notice.
<PAGE>
By Order of the Board of
Directors,
/s/ Herbert H. McDade, Jr.
--------------------------
Herbert H. McDade, Jr.
Chairman of the Board of
Directors
Dallas, Texas
March __, 1998
_______________________________________________
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.
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
__________________
PROXY STATEMENT
__________________
SPECIAL MEETING OF STOCKHOLDERS
To Be Held On April __, 1998
This Proxy Statement is furnished by Access
Pharmaceuticals, Inc., a Delaware corporation (the
"Company" or "Access"), 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 the
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
_________, April ___, 1998 at 10:00 a.m., local time,
at the New York Athletic Club, 180 Central Park South,
New York, New York 10019, (212) 247-5100. This Proxy
Statement and the accompanying form of proxy is first
being sent to holders of Common Stock on or about
________, 1998. The Company's mailing address and the
location of its principal executive offices are 2600
Stemmons Freeway, Suite 176, Dallas, Texas 75207, (214)
905-5100.
A stockholder signing and returning the enclosed
proxy may revoke it at any time before it is exercised
by voting in person at the Special 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 Special
Meeting. All proxies returned prior to the meeting will
be voted in accordance with instructions contained
therein.
At the close of business on __________, 1998, the
record date for the Special Meeting, there were
outstanding and entitled to vote 31,991,324 shares of
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 business days prior to the Special
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. Because the proposal relating
to the Amendment (as defined below) requires the
affirmative vote of a majority of the outstanding
shares, broker non-votes and abstentions 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 and the accompanying form of proxy 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 Special Meeting other
than those matters specifically set forth in the Notice
of Special Meeting. 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.
<PAGE>
PROPOSAL 1
Proposed Amendment to the Certificate of Incorporation
to Effect the Recapitalization
General
The Company proposes to effect a recapitalization
through the adoption of 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. The Amendment will effect a
recapitalization (the "Recapitalization") of the
Company through a one-for-twenty reverse stock split
(the "Reverse Stock Split") and will also provide for
reducing the authorized number of shares of Common
Stock after the Reverse Stock Split to 20,000,000,
which would in fact proportionately increase the number
of authorized but unissued shares of Common Stock when
compared with the number of issued and outstanding
shares before the Amendment, and to decrease the
authorized shares of preferred stock, par value $.01
per share (the "Preferred Stock"), of the Company from
10,000,000 to 2,000,000. A form of the Amendment is
attached hereto as Exhibit A to this Proxy Statement.
If the Amendment is approved by the stockholders, each
TWENTY shares of Common Stock, par value $.04 per
share, ("Old Common Stock") outstanding on the
effective date of the Amendment (the "Effective Date")
will be converted automatically into ONE share of
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 20,000,000. 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. There are currently 31,991,324 shares of
Common Stock outstanding. There is currently no
Preferred Stock outstanding.
Background of and Reasons for the Reverse Stock Split
On February 13, 1998 the Board of Directors adopted
resolutions approving the Amendment and directing that
the Amendment be placed on the agenda for the
consideration of the stockholders.
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 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-
2
<PAGE>
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 in
April 1995, 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, increased the cost of raising capital and
limited 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 or an
alternative stock exchange, if this proposal is
approved and the Company otherwise meets such
requirements for relisting, which can nnot be assured.
Previously the Board of Directors requested and the
shareholders approved a one-for-four reverse stock
split which subsequently was abandoned by the Board of
Directors pursuant to Section 242 of the Delaware
General Corporation Law. This action was taken since
the Company did not believe that implementing the
one-for-four reverse stock split would have
accomplished the established objective of qualifying
for a NASDAQ SmallCap Market or an alternative stock
exchange relisting as the Company did not otherwise
meet the listing requirements.
The Company has signed a non-binding letter of
intent with an investment bank to assist the Company to
raise up to $8.0 million to fund the Company's research
and development activities. The investment bank has
advised the Company that effecting a one-for-twenty
reverse stock split would assist the investment bank in
marketing the proposed offering to institutional
investors and would enhance the Company's ablility to
meet the initial listing requirements for the NASDAQ
SmallCap or an alternative stock exchange.
Additionally, to conclude this financing it is
necessary for the Company to increase the authorized
capital stock as currently only approximately
20,000,000 shares are available for issuance. There can
be no assurance that the Company will be able to raise
funds through the proposed offering or that the Company
will be successful in gaining a listing on the NASDAQ
SmallCap Market or an alternative stock exchange.
The Company expects its cash requirements to
increase in future periods. The Company will require
substantial funds to conduct research and development
programs, preclinical studies and clinical trials of
its potential products. The Company's future capital
requirements will depend on many factors, including the
ability to establish and maintain collaborative
arrangements for research, development and
commercialization of products with corporate partners,
continued scientific progress in the Company's research
and development programs, the scope and results of
preclinical testing and clinical trials, the costs
involved in filing, prosecuting and enforcing patent
claims, competing technological developments, the cost
of manufacturing and scale-up and the ability to
establish and maintain effective commercialization
activities and arrangements. Based on its current
plans, the Company believes that its available cash,
including proceeds from projected interest income and
potential licensing activities, will be sufficient to
meet the Company's operating expenses and capital
requirements only into the second half of 1998 at a
reduced level which will not support the research and
development activities of the Company. There can be no
assurance, however, that changes in the Company's
operating expenses will not result in the expenditure
of such resources before such time.
The Board of Directors is optimistic that the
raising of substantial capital, the reduction 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 investing public.
3
<PAGE>
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 twenty 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, since February 1,
1996, trades on the NASD over-the-counter ("OTC")
Bulletin Board and trades under the trading symbol
AXCS. Prior to this date the common stock traded under
the trading symbol CHMX. The following tables set
forth, for the periods indicated, the high and low
closing prices for the Common Stock as reported by the
OTC Bulletin Board for the Company's past two fiscal
years.
<TABLE>
<CAPTION>
Common Stock
----------------------------------
High Low
------- -------
<S> <C> <C>
Fiscal Year Ending December 31, 1998
- - ------------------------------------
First quarter(thru February __, 1998) $______ $_______
Fiscal Year Ended December 31, 1997
- - -----------------------------------
First quarter $1-9/32 $ 23/32
Second quarter 55/64 3/8
Third quarter 1/2 3/16
Fourth quarter 45/64 13/64
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
</TABLE>
The Reverse Stock Split may be abandoned by the
Board of Directors pursuant to Section 242 of the
Delaware General Corporation Law at any time before,
during or after the Special Meeting and prior to the
effectiveness of 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.
The Board of Directors has determined that it would
be appropriate for the Company to increase the
proportionate number of authorized shares of Common
Stock in order to have additional shares available for
4
<PAGE>
possible future acquisition or financing transactions
and other issuances, or to satisfy requirements for
additional reservations of shares by reason of future
transactions 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 dividends and to enter into joint ventures and
corporate financing involving the issuance of shares of
Common Stock. Other than the proposed financing
discussed above, the Company has no present plans,
agreements, understandings or arrangements regarding
transactions expected to require the issuance of
additional shares of Common Stock that would be
authorized by the proposed amendment.
Effects of the Reverse Stock Split and Recapitalization
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 31,991,324 shares to
approximately 1,599,566 shares, based on share
information as of December 31, 1997, reduce the number
of authorized shares of Common Stock from 60,000,000 to
20,000,000, and decrease the authorized shares of
preferred stock of the Company from 10,000,000 to
2,000,000. There are currently no preferred shares
outstanding.
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."
Effect on Market for Common Stock. 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. On __________, 1998, the closing sale price of
the Common Stock on the OTC Bulletin Board 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
$1,279,653 to $15,996 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 from $.04 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 $1,263,657.
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
5
<PAGE>
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 in computing 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 aggregate of (i) total
number of shares of New Common Stock owned following
the Reverse Stock Split and (ii) the fractional share, if any,
in lieu of which cash is received. The holding period of the
shares of New Common Stock will 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 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 a fractional share of New
Common Stock will result in gain or loss (rather than
dividend income) to such a stockholder
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. The amount of gain or loss realized will be
equal to the cash received, less the basis allocated to the
fractional share as discussed in the preceding paragraph.
To the extent that a shareholder held shares of Common Stock
for more than one year as of the Effective Date, any capital
gain or loss realized will be long-term capital gain or loss.
Long-term capital gain or loss realized by a shareholder that
is an individual, estate or trust may be eligible to be taxed at
reduced rates if the the Common Stock was held for longer
than eighteen months as of the Effective Date.
Based on certain exceptions contained in regulations
issued by the Internal Revenue Service, the Company
does not believe that it or stockholders receiving cash in
lieu of fractional shares will be subject to backup withholding
or informational reporting with respect to such cash.
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.
6
<PAGE>
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.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT ALL STOCKHOLDERS VOTE "FOR" THE APPROVAL FOR THE
AMENDMENT.
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 January 31, 1998 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 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.
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
No. of % of
Name Shares(1) Class
- - ------------------------- ---------- -------
<S> <C> <C>
Herbert H. McDade. Jr.(2) 1,025,665 3.2%
Kerry P. Gray(3) 1,145,790 3.6%
J. Michael Flinn(4) 72,833 *
Stephen B. Howell(5) 91,667 *
Max Link(6) 76,667 *
W. Eric Bowditch 57,500 *
Stephen B. Thompson 55,451 *
Richard G. Van Inwegen 91,077 *
David F. Ranney 9,147,608 28.6%
Nicholas Madonia,
Individually and as
Trustee(7) 6,617,729 19.9%
All Directors and Executive
Officers as a group
(consisting of 8 persons) 2,536,498 7.7%
* Less than 1%
</TABLE>
(1)Includes Common Stock held plus all options and
warrants exercisable within 60 days after January 31,
1998. Unless otherwise indicated, the persons listed
have sole voting and investment powers with respect to
all such shares.
7
<PAGE>
(2)Including presently exercisable options for the
purchase of 30,883 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 75,000 shares of Common Stock pursuant to
the 1995 Stock Option Plan.
(4)Including presently exercisable options for the
purchase of 63,333 shares of Common Stock pursuant to
the Non-Employee Director Plans of 1987 and 1995.
(5)Including presently exercisable options for the
purchase of 36,667 shares of Common Stock pursuant to
the Non-Employee Director Plan of 1995 and 15,000
shares of Common Stock pursuant to the 1987 Stock
Option Plan.
(6)Including presently exercisable options for the
purchase of 36,667 shares of Common Stock pursuant to
the Non-Employee Director Plan of 1995.
(7)Mr. Nicholas Madonia owns 18,800 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 1,544,799 shares of
Common Stock held by Sentinel, Sentinel 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 930,239
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
2,923,891 shares of Common Stock, and as such may be
deemed to be a beneficial owner of the securities held
by it. Mr. Madonia disclaims beneficial ownership of
all shares held by the trusts. The information set
forth in this footnote is based on a Schedule 13D filed
by Mr. Madonia on April 9, 1997.
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
Special 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) any
proposals properly omitted from this Proxy Statement
and the form of proxy should come before the meeting;
or (iii) any matters should arise incident to the
conduct of the meeting, then the proxies will be voted
in accordance with the recommendations of the Board of
Directors of the Company.
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,
/s/ Herbert H. McDade, Jr.
---------------------------
Herbert H. McDade, Jr.
Chairman of the Board of
Directors
8
<PAGE>
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 TWENTY 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 TWENTY 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 and Section B 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 and Section B of the Corporation's Certificate of
Incorporation, as amended, be amended to read in its
entirety as follows:
The aggregate number of shares of common stock
which the Corporation shall have authority to
issue is Twenty Million (20,000,000) shares
with a par value of one cent ($0.01) per share.
The aggregate number of shares of preferred stock
which the Corporation shall authority to issue is Two
Million (2,000,000) shares with a par value of one cent
($0.01) per share in one or more series. Each series of
preferred stock shall be designated by the board of
directors so as to distinguish the shares thereof and
the shares of all other series and classes. The board
of directors may, by resolution, from time to time
divide shares of the preferred stock into series and
fix and determine the number of shares and the relative
rights and preferences of any series so established,
which relative rights and preferences may be greater or
lesser than those granted to the common stock as
provided herein. Notwithstanding the foregoing, all
shares of preferred stock shall be identical, except as
to the following relative rights and preferences, in
respect of any or all of which there may be variations
between different series, namely, the rate of dividends
(including the date from which dividends shall be
cumulative), the price at, and the terms and conditions
on which, shares may be redeemed, the amounts payable
on shares in the event of voluntary or involuntary
liquidation or dissolution, sinking fund provisions for
the redemption or purchase of shares in the event
shares of any series or issue with sinking fund
provisions, and the terms and conditions on which
shares of any series may be converted in the event
shares of any series are issued a privilege of
conversion. Each share of any series of
<PAGE>
2
preferred stock shall be identical with all the shares
of such series. The consideration for the issuance of
shares may be paid in whole or in part in money and
other property, tangible or intangible, or in labor or
in services actually performed for the Corporation.
When payment of the consideration for which shares are
to be issued has been received or, when payment of the
capital consideration has been received and the
Corporation has received a binding obligation from the
purchaser to pay the balance of the purchase price;
such shares shall be deemed to be fully paid and not
liable for any further call or assessment thereon.
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 effective date of this amendment
shall be ______, 1998.
<PAGE>
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
___________, 1998, 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, 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 April ___,
1998 at 10:00 a.m., at the New York Athletic Club, 180
Central Park South, New York, New York 10019, (212)
247-5100, 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 recapitalization whereby the Company
would effect a one-for-twenty reverse stock split,
the number of authorized shares of Common Stock
would be decreased from 60,000,000 shares, par value
$.04 per share, to 20,000,000 shares, par value $.01
per share, and the number of authorized shares of
Preferred Stock would be decreased from 10,000,000
shares, par value $.01 per share, to 2,000,000
shares, par value $.01 per share (the
Recapitalization).
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE MARK, SIGN AND DATE BELOW AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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.
Telegrams or cablegrams may be addressed to American
Stock Transfer & Trust Co. ("American Stock Transfer")
at the address appearing on the attached envelope.
American Stock Transfer's telecopy number is (718)
234-2287.
Shares Held: ___________
THIS PROXY IS SOLICITED ON BEHALF OF ACCESS PHARMACEUTICALS, INC.'S BOARD
OF DIRECTORS AND MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO EXERCISE.
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.
