ACCESS PHARMACEUTICALS, INC.
EXHIBIT
10.35
ACCESS
PHARMACEUTICALS, INC.
This
2007
Special Stock Option Plan and Agreement (this "Plan"), dated as of January
4,
2007 (the "Grant Date"), is by and between Access Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and Xxxxxxx Xxxxxx (the
"Grantee").
RECITALS:
A. As
an
inducement to the Grantee to become Chief Executive Officer of the Company,
this
Plan was adopted by the Board of Directors of the Company (the "Board") and
awards to the Grantee, effective as of the Grant Date, an option to purchase
450,000 shares of the authorized but unissued shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock"); and
B. The
Grantee has been designated by the Board to participate in this
Plan.
In
consideration of the foregoing and the mutual covenants hereinafter set forth
and other good and valuable consideration, the receipt and adequacy of which
are
hereby acknowledged, the parties hereto agree as follows:
1. Option.
(a) Award.
The
Company hereby awards to the Grantee, pursuant to the terms and conditions
set
forth herein, an option (the "Option") to purchase 450,000 shares of Common
Stock. The Option is not to be treated as an "incentive stock option" within
the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
(b) Exercise
Price.
The
exercise price per share of Common Stock payable upon exercise of the Option
is
$2.90, which price is the closing price of the Common Stock as of January 3,
2007 (the last trading day preceding the Grant Date). Payment for shares of
Common Stock purchased upon exercise of the Option shall be made in full upon
exercise of the Option and may be made:
(i) in
cash;
(ii) by
check
payable to the order of the Company;
(iii) subject
to the approval of the committee of the Board responsible for the administration
of this Plan (or the Board if no such committee exists) (the "Committee"),
and
to such conditions as the Committee in its sole discretion may deem necessary
to
avoid adverse accounting effects to the Company, by delivery to the Company
of
shares of Common Stock having a market value equal to the exercise price
therefor (which market value shall be determined by reference to the closing
price of the Common Stock on the date of exercise of the Option on any national
securities exchange or other established market on which the Common Stock is
then traded (or, if the Common Stock is not then so listed, the market value
of
the Common Stock as determined by the Committee)); or
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(iv) if
the
Common Stock is then traded on
any
national securities exchange or other established market,
through
and under the terms and conditions of any formal cashless exercise program
authorized by the Company entailing the sale of the Common Stock subject to
the
Option in a brokered transaction (other than to the Company).
(c) Exercise
Date.
The
Option may be exercised at any time, in whole or in part, or from time to time,
after the Grant Date and to the extent that the Option shall have become
exercisable as provided in Section 2 hereof. This Plan shall not be construed
to
require the Option to be exercised in installments at fixed
intervals.
(d) Expiration.
The
Option may not be exercised after January 4, 2017 or, if earlier, after the
occurrence of any one of the following events:
(i) one
year
after the Grantee's termination of association with the Company, as an employee,
or consultant , of the Company or any subsidiary, irrespective of whether
the termination is voluntary or otherwise, except that the Option exercise
period shall not expire (A) in the case of the Grantee's total and permanent
disability, until the determination required in (ii) below shall have been
made
and in which case the Option exercise period shall expire in accordance with
paragraph (d) (ii) below; or (B) in the case of the Grantee's death, in which
case the Option exercise period shall expire in accordance with (iii) below.
Military or sick leave or other bona fide leave shall not be deemed a
termination of employment or other association, provided that it does not exceed
the longer of ninety (90) days or the period during which the absent Grantee's
reemployment rights, if any, are guaranteed by statute or by contract;
(ii) the
Grantee's disability determined in accordance with that certain Employment
Agreement (the "Employment Agreement"), dated as of the date hereof, by and
between the Company and the Grantee. The Grantee, or his legal representative,
shall have the right at any time within one year after the determination of
such
disability to exercise the Option to the extent the Grantee could have exercised
the Option immediately before such determination pursuant to the provisions
of
Section 2 hereof; and
(iii) the
Grantee's death during his association with the Company, if he shall not have
fully exercised the Option, in which case the Option may be exercised at any
time within one year after the Grantee's death by the Grantee's personal
representative, beneficiary or legal heirs to the extent the Grantee could
have
exercised the Option immediately before his death pursuant to the provisions
of
Section 2 hereof. The Option shall be exercised only by the Grantee's
transferee, who shall be the person or persons entitled to the Option under
the
Grantee's will, or, if he shall fail to make testamentary disposition of the
Option, his legal representative or legal heirs. Any transferee exercising
the
Option must furnish the Company (A) written notice of his status as transferee;
(B) evidence satisfactory to the Company to establish the validity of the
transfer of the Option, and compliance with any laws or regulations pertaining
to said transfer; and (C) written acceptance by the transferee of the terms
and
conditions of the Option as prescribed in this Plan.
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(e) Rights
of Holder of Option.
The
Grantee shall have no rights as a shareholder of the Company with respect to
any
shares of Common Stock subject to this Option until he shall have become the
holder of record of such shares, and he shall not be entitled to any dividends
or distributions or other rights in respect of such shares for which the record
date is prior to the date on which he shall have become the holder of record
thereof.
2. Vesting.
The
Option granted hereunder shall not be exercisable except to the extent it shall
have vested. The Option shall vest as follows:
(a) the
Option shall be exercisable on January 4, 2008 for 25% of the original number
of
shares of Common Stock subject to the Option;
(b) the
Option shall be exercisable on February 4, 2008 and the fourth day of each
month
thereafter for an additional 2.0833% of the original number of shares of Common
Stock subject to the Option until the Option shall have become exercisable
for
all shares of Common Stock subject to the Option; and
(c) the
Option shall be exercisable for all of the shares of Common Stock subject to
the
Option, to the extent the Option has not then become exercisable for such
shares, upon the occurrence of a Change of Control (as defined in the Employment
Agreement).
3. Exercise
of Option.
(a) Notice.
The
Option may be exercised by giving written notice to the Company specifying
the
number of shares of Common Stock to be purchased accompanied by payment in
full
of the applicable exercise price therefor in accordance with Section 1 (b)
or by
the surrender and cancellation of a portion of the shares issuable under this
Option, on a net exercise basis, which amount shall be credited toward the
exercise price based on the closing price of the Common Stock on the trading
date prior to such exercise. Any written notice to be given to the Company
hereunder shall be addressed to the Company, in care of its Chief Financial
Officer, at the Company's then current address. Any written notice to be given
to the Grantee hereunder shall be addressed to the Grantee at the address the
Grantee may hereafter designate to the Company in writing. Any such written
notice shall be deemed to have been duly given if and when enclosed in a
properly sealed envelope, addressed as aforesaid, registered and deposited,
postage prepaid, in a post office or branch post office
regularly maintained by the United States Government, or by if given by
reputable overnight courier, addressed as aforesaid, upon receipt.
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(b) Withholding.
Whenever shares of Common Stock are issued or to be issued pursuant to the
Option, the Company shall have the right to require the Grantee to remit to
the
Company an amount sufficient to satisfy federal, state, local or other
withholding tax requirements if, when, and to the extent required by law prior
to the delivery of any certificate or certificates for such shares. The
obligations of the Company hereunder shall be conditional on satisfaction of
all
such withholding obligations and the Company shall, to the extent permitted
by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Grantee. The Grantee may elect, subject to the approval
of
the Committee, acting in its sole discretion, to satisfy any withholding
requirement, in whole or in part, by having the Company withhold shares to
satisfy the minimum statutory total tax withholding obligation of the
Company.
4. Miscellaneous.
(a) Non-Transferability
of Option.
Unless
otherwise authorized by the Committee or the Board, (i) the Option shall not
be
transferable except by will or the laws of descent and distribution or pursuant
to a valid domestic relations order, and (ii) during the lifetime of the
Grantee, the Option shall be exercised only be him or his legal guardian or
legal representative.
(b) Governing
Law.
This
Plan shall be governed, interpreted and enforced in accordance with the laws
of
the State of Delaware, without regard to the conflict of laws principles
thereof.
(c) Binding
Agreement; Amendment.
Subject
to the limitations on the transferability of the Option contained herein, this
Plan shall be binding upon and insure to the benefit of the beneficiaries,
heirs, legal representatives, successors and assigns of the parties hereto.
This
Plan may be amended only by a writing signed by the Company and the
Grantee.
(d) Tax
Consequences.
The
Grantee agrees and acknowledges that (i) the Company makes no representation
or
warranty as to the tax treatment to the Grantee of the Grantee's receipt or
exercise of the Option or upon the Grantee's sale or other disposition of shares
of Common Stock subject to the Option, and (ii) the Grantee must rely on his
own
tax advisors for such advice.
(e) Adjustment
of Exercise Price and Common Stock Subject to Option.
The
exercise price and number of shares of Common Stock subject to the Option are
subject
to
proportionate adjustment in the event of any stock dividend, stock split,
combination of shares, reorganization, recapitalization, reclassification or
other similar event affecting the Common Stock occurring after the Grant Date.
Any adjustment pursuant to this Section 4(e) shall be determined and made,
if at all, by the Committee, whose determination, absent manifest error, shall
be final and binding. No fraction of a share shall be purchasable or deliverable
upon exercise of the Option, but in the event any adjustment hereunder of the
number of shares shall cause such number to include a fraction of a share,
such
number of shares shall be adjusted to the nearest smaller whole number of
shares. No adjustment of the exercise price per share shall result in an
exercise price which is less than the par value of the Common
Stock.
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(f) Acquisition
Events.
(1) Definitions. An
“Acquisition Event” shall mean: (a) any merger or consolidation of the Company
with or into another entity as a result of which all of the Common Stock of
the
Company is converted into or exchanged for the right to receive cash, securities
or other property or is cancelled, (b) any exchange of all of the Common Stock
of the Company for cash, securities or other property pursuant to a share
exchange transaction or (c) any liquidation or dissolution of the
Company.
(2) Effect
on Option. Upon
the occurrence of an Acquisition Event, or the execution by the Company of
any
agreement with respect to an Acquisition Event, the Board shall take any one
or
more of the following actions with respect to the option represented by this
Agreement and this Agreement shall be deemed amended to the extent required
by
such action: (i) provide that this option shall be assumed, or a substantially
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Employee,
provide that this option to the extent unexercised shall become exercisable
in
full and will terminate immediately prior to the consummation of such
Acquisition Event unless exercised by the Employee within a specified period
following the date of such notice, (iii) provide that this option shall become
realizable in whole or in part prior to or upon such Acquisition Event, (iv)
in
event of an Acquisition Event under the terms of which holders of Common Stock
will receive upon consummation thereof a cash payment for each share surrendered
in the Acquisition Event (the “Acquisition Price”), make or provide for a cash
payment to the Employee equal to (A) the Acquisition Price times the number
of
shares of Common Stock subject to this Option (to the extent the exercise price
does not exceed the Acquisition Price) minus (B) the aggregate exercise price
of
all outstanding Options under this Agreement, in exchange for the termination
of
this Option, (v) provide that in connection with a liquidation or dissolution
of
the Company, this option shall convert into the right to receive liquidation
proceeds (if applicable, net of the exercise price thereof) and (vi) any
combination of the foregoing.
(g) Violation
of Law.
Notwithstanding any other provision hereunder, if, at any time, in the
reasonable opinion of the Company, the issuance of shares of Common Stock
subject to the Option may constitute a violation of law, then the Company may
delay such issuance and the delivery of a certificate for such shares until
(i)
approval shall have been obtained from such governmental agencies, other than
the Securities and Exchange Commission (the "SEC"), as may be required under
any
applicable law, rule, or regulation and (ii) in the case where such issuance
would constitute a violation of a law administered by or a regulation of the
SEC, one of the following conditions shall have been satisfied:
(A) the
shares are at the time of the issue of such shares effectively registered under
the Securities Act of 1933, as amended (the "Act"); or
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(B) the
Company shall have determined, on such basis as it deems appropriate (including
an opinion of counsel in form and substance satisfactory to the Company) that
the sale, transfer, assignment, pledge, encumbrance or other disposition of
such
shares or such beneficial interest, as the case may be, does not require
registration under the Act or any applicable state securities laws.
(h) Investment
Representations.
The
Company shall be under no obligation to issue any shares subject to the Option
unless such shares have been effectively registered under the Act or the Grantee
shall have made such written representations to the Company (upon which the
Company believes it may reasonably rely) as the Company may deem necessary
or
appropriate for purposes of confirming that the issuance of such shares will
be
exempt from the registration requirements of the Act and any applicable state
securities laws and otherwise in compliance with all applicable laws, rules
and
regulations, including but not limited to that the Grantee is acquiring such
shares for his own account for the purpose of investment and not with a view
to,
or for sale in connection with, the distribution of any such
shares.
[signature
page follows]
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IN
WITNESS WHEREOF, the parties have executed this Plan, effective as of the date
first above written.
Company:
ACCESS
PHARMACEUTICALS, INC.
By:
/s/
Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx
Treasurer
and Chief Financial Officer
Grantee:
By:
/s
Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx
