DIRECTOR DESIGNATION AGREEMENT
EXHIBIT
10.26
THIS
DIRECTOR DESIGNATION AGREEMENT,
dated
as of November 15, 2007 (this “Agreement”),
is
entered into by and between Access Pharmaceuticals, Inc., a Delaware corporation
(the “Company”)
and
SCO Capital Partners LLC (“SCO”).
WHEREAS,
pursuant to the terms of the Preferred Stock and Warrant Purchase Agreement
dated as of February 16, 2006, by and among the Company, SCO and the other
parties set forth therein as purchasers (the “Purchase
Agreement”),
SCO
was given the right to designate two individuals to serve as directors of the
Company (the “Designation
Right”);
WHEREAS,
the Designation Right will expire according to its terms if the Secured
Convertible Promissory Notes (the “Notes”)
issued
pursuant to the Purchase Agreement no longer remain outstanding;
WHEREAS,
the parties anticipate that all of the Notes will be exchanged (the
“Note
Exchange”)
into
the Series A Cumulative Convertible Preferred Stock, par value $0.01 per share,
of the Company (the “Series
A Stock”)
convertible in to shares of the Company’s common stock, par value $0.01 per
share (the “Conversion
Shares”)
in
connection with a proposed new equity financing of the Company and thereafter
none of the Notes shall remain outstanding; and
WHEREAS,
the parties desire to continue SCO’s right to designate two directors of the
Company as more fully set forth herein.
NOW,
THEREFORE, in consideration of the mutual agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto agree as follows:
1. Director
Designees.
Effective
immediately upon the Note Exchange and continuing for as long as SCO and its
Affiliates (as defined below) hold at least 20% of the aggregate number of
shares of the Series A Stock issued to SCO and its Affiliates in connection
with
the Note Exchange or at least 20% of the Conversion Shares issued upon
conversion of such Series A Stock, (a) SCO shall have the right, from time
to
time, to designate two individuals, in the sole discretion of SCO, to serve
as
directors of the Company (the “SCO
Director Designees”),
(b)
the Company shall use its best efforts at all times to cause the number of
directors to be fixed at a sufficient number such that at least two positions
shall be available for the SCO Director Designees (the “SCO
Board Seats”),
(c)
the Company shall use its best efforts to cause the SCO Director Designees
to be
nominated and elected for service as directors of the Company at each meeting
of
the Company’s shareholders held for the purpose of electing directors and (d) if
at any time, or from time to time, one or more of the SCO Board Seats is or
becomes vacant for any reason prior to the next annual meeting of shareholders,
the Company shall use its best efforts to cause such vacancy to be filled with
an SCO Director Designee.
2. Certain
Defined Terms.
For
purposes of this Agreement, an “Affiliate”
means
any Person (as such term is defined below) that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 144
under the Securities Act. With respect to any Person, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager of such Person will be deemed to be an Affiliate of such Person. A
“Person”
means
any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision of any thereof) or other
entity of any kind.
3. Counterparts;
Assignment; Amendment.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but which together shall constitute one and the same
instrument. The executed signature pages hereto may be delivered by facsimile
or
other means of electronic image transmission, such a copy of any signature
page
hereto shall have the same force an effect as an original thereof. This
Agreement may not be assigned without the written consent of each of the parties
hereto, provided that SCO may assign its rights under this Agreement to any
Affiliate of SCO without the consent of the Company. This Agreement may not
be
amended without the written approval of each of the parties hereto.
4. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York (without reference to principles of conflict of
laws).
[Signature
Page Follows]
2
IN
WITNESS WHEREOF, the parties hereto have executed this Director Designation
Agreement as a document under seal as of the date first above
written.
|
Access
Pharmaceuticals, Inc.
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxxxx
|
|
|
Title:
Vice President, CFO
|
|
|
SCO
Capital Partners LLC
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxxxxx
|
|
Name:
Xxxxxx
X. Xxxxxxxxx
|
|
|
Title:
Chairman
|
|
3
