EXHIBIT
10.32
THIS
WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED
OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.
Warrant
No. W-__
COMMON
STOCK PURCHASE WARRANT
To
Purchase _________ Shares
of
Common Stock of
ACCESS
PHARMACEUTICALS, INC.
THIS
IS
TO CERTIFY THAT _______________, or registered assigns (the “Holder”),
is
entitled, during the Exercise Period (as hereinafter defined), to purchase
from
Access Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
the
Warrant Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, at a purchase price of $1.32 per
share
(as adjusted herein), all on and subject to the terms and conditions hereinafter
set forth.
1. Definitions.
As used
in this Warrant, the following terms have the respective meanings set forth
below:
“Affiliate”
means
any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
person or entity, as such terms are used in and construed under Rule 144 under
the Securities Act. With respect to a Holder of Warrants, any investment fund
or
managed account that is managed on a discretionary basis by the same investment
manager as such Holder will be deemed to be an Affiliate of such Holder.
“Appraised
Value”
means,
in respect of any share of Common Stock on any date herein specified, the fair
saleable value of such share of Common Stock (determined without giving effect
to the discount for (i) a minority interest or (ii) any lack of liquidity of
the
Common Stock or to the fact that the Company may have no class of equity
registered under the Exchange Act) as of the last day of the most recent fiscal
month ending prior to such date specified, based on the value of the Company
on
a fully-diluted basis, as determined by a nationally recognized investment
banking firm selected by the Company’s Board of Directors and having no prior
relationship with the Company.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the State of Texas generally are authorized
or required by law or other government actions to close.
“Change
of Control”
means
the (i) acquisition by an individual or legal entity or group
(as
set
forth in Section 13(d) of the Exchange Act) of more than one-half of the voting
rights or equity interests in the Company, other than pursuant to the conversion
of convertible securities of the Company outstanding as of the date hereof
or
the exercise of options or warrants of the Company, in each case, outstanding
as
of the date hereof; or (ii) sale, conveyance, or other disposition of all or
substantially all of the assets, property or business of the Company or the
merger into or consolidation with any other corporation (other than a wholly
owned subsidiary corporation) or effectuation of any transaction or series
of
related transactions where holders of the Company’s voting securities prior to
such transaction or series of transactions fail to continue to hold at least
50%
of the voting power of the Company (or, if other than the Company, the successor
or acquiring entity) immediately following such transaction.
“Closing
Date”
means
December ___, 2006.
“Commission”
means
the Securities and Exchange Commission or any other federal agency then
administering the Securities Act and other federal securities laws.
“Common
Stock”
means
(except where the context otherwise indicates) the Common Stock, $0.01 par
value
per share, of the Company as constituted on the Closing Date, and any capital
stock into which such Common Stock may thereafter be changed or converted,
and
shall also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares of Common Stock
upon any reclassification thereof which is also not preferred as to dividends
or
assets on liquidation over any other class of stock of the Company and which
is
not subject to redemption and (ii) shares of common stock of any successor
or
acquiring corporation received by or distributed to the holders of Common Stock
of the Company in the circumstances contemplated by Section 4.3.
“Current
Market Price”
means,
in respect of any share of Common Stock on any date herein specified,
(1) if
there
shall not then be a public market for the Common Stock, the higher of
(a)
the
book value per share of Common Stock at such date, and
(b)
the
Appraised Value per share of Common Stock at such date,
or
(2) if
there
shall then be a public market for the Common Stock, the average of the daily
market prices for the five (5) consecutive trading days immediately before
such
date. The daily market price for each such trading day shall be (i) the closing
bid price on such day on the principal stock exchange (including Nasdaq) on
which such Common Stock is then listed or admitted to trading, or quoted, as
applicable, (ii) if no sale takes place on such day on any such exchange, the
last reported closing bid price on such day as officially quoted on any such
exchange (including Nasdaq), (iii) if the Common Stock is not then listed or
admitted to trading on any stock exchange, the last reported closing bid price
on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the Pink Sheets
LLC, (iv) if neither such corporation at the time is engaged in the business
of
reporting such prices, as furnished by any similar firm then engaged in such
business,
or
(v) if
there is no such firm, as furnished by any member of the NASD selected mutually
by the holder of this Warrant and the Company or, if they cannot agree upon
such
selection, as selected by two such members of the NASD, one of which shall
be
selected by holder of this Warrant and one of which shall be selected by the
Company.
“Current
Warrant Price”
means,
in respect of a share of Common Stock at any date herein specified, the price
at
which a share of Common Stock may be purchased pursuant to this Warrant on
such
date. Unless and until the Current Warrant Price is adjusted pursuant to the
terms herein, the initial Current Warrant Price shall be $1.32 per share of
Common Stock.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, or any similar federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.
“Exercise
Period”
means
the period during which this Warrant is exercisable pursuant to Section 2.1.
“Expiration
Date”
means
December ___, 2012.
“GAAP”
means
generally accepted accounting principles in the United States of America as
from
time to time in effect.
“NASD”
means
the National Association of Securities Dealers, Inc., or any successor
corporation thereto.
“Other
Property”
has
the
meaning set forth in Section 4.3.
“Person”
means
any individual, sole proprietorship, partnership, joint venture, trust,
incorporated organization, association, corporation, limited liability company,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation,
any
instrumentality, division, agency, body or department thereof).
“Purchase
Agreement”
means
that certain Convertible Note and Warrant Purchase Agreement dated as of
December ___, 2006 among
the
Company and the other parties named therein, pursuant to which this Warrant
was
originally issued.
“Restricted
Common Stock”
means
shares of Common Stock which are, or which upon their issuance upon the exercise
of any Warrant would be required to be, evidenced by a certificate bearing
the
restrictive legend set forth in Section 3.2.
“Securities
Act”
means
the Securities Act of 1933, as amended, or any similar federal statute, and
the
rules and regulations of the Commission thereunder, all as the same shall be
in
effect at the time.
“Trading
Day”
means
any day on which the primary market on which shares of Common Stock are listed
or quoted is open for trading.
“Transfer”
means
any disposition of any Warrant or Warrant Stock or of any interest in either
thereof, which would constitute a sale thereof within the meaning of the
Securities Act.
“Warrants”
means
this Warrant and all warrants issued upon transfer, division or combination
of,
or in substitution for, any thereof. All Warrants shall at all times be
identical as to terms and conditions and date, except as to the number of shares
of Common Stock for which they may be exercised.
“Warrant
Price”
means
an amount equal to (i) the number of shares of Common Stock being purchased
upon
exercise of this Warrant pursuant to Section 2.1, multiplied by (ii) the Current
Warrant Price.
“Warrant
Stock”
means
the ____________ shares of Common Stock to be purchased upon the exercise
hereof, subject to adjustment as provided herein.
2. Exercise
of Warrant.
2.1. Manner
of Exercise.
From
and after the Closing Date, and until 5:00 P.M., New York time, on the
Expiration Date (the “Exercise
Period”),
the
Holder may exercise this Warrant, on any Business Day, for all or any part
of
the number of shares of Warrant Stock purchasable hereunder.
In
order
to exercise this Warrant, in whole or in part, the Holder shall deliver to
the
Company at its principal office or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder’s election to
exercise this Warrant, which notice shall specify the number of shares of
Warrant Stock to be purchased, (ii) payment of the Warrant Price as provided
herein, and (iii) this Warrant. Such notice shall be substantially in the form
of the subscription form appearing at the end of this Warrant as Exhibit
A,
duly
executed by the Holder or its agent or attorney. Upon receipt thereof, the
Company shall, as promptly as practicable, and in any event within three
Business Days thereafter, execute or cause to be executed and deliver or cause
to be delivered to the Holder a certificate or certificates representing the
aggregate number of full shares of Warrant Stock issuable upon such exercise,
together with cash in lieu of any fraction of a share, as hereinafter provided.
The stock certificate or certificates so delivered shall be, to the extent
possible, in such denomination or denominations as the Holder shall request
in
the notice and shall be registered in the name of the Holder or if permitted
pursuant to the terms of this Warrant such other name as shall be designated
in
the notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other Person so designated to be named therein shall be deemed to have
become a Holder of record of such shares for all purposes, as of the date when
the notice, together with the payment of the Warrant Price and this Warrant,
is
received by the Company as described above. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the
Holder.
Payment
of the Warrant Price may be made at the option of the Holder by: (i) certified
or official bank check payable to the order of the Company, (ii) wire transfer
of immediately available funds to the account of the Company or (iii) the
surrender and cancellation of a portion of shares of Common Stock then held
by
the Holder or issuable upon such exercise of this Warrant, which shall be valued
and credited toward the total Warrant Price due the Company for the exercise
of
the Warrant based upon the Current Market Price of the Common Stock. All shares
of Common Stock issuable upon the exercise of this Warrant pursuant to the
terms
hereof shall be validly issued and, upon payment of the Warrant Price, shall
be
fully paid and nonassessable and not subject to any preemptive
rights.
2.2. Fractional
Shares.
The
Company shall not be required to issue a fractional share of Common Stock upon
exercise of any Warrant. As to any fraction of a share which the Holder of
one
or more Warrants, the rights under which are exercised in the same transaction,
would otherwise be entitled to purchase upon such exercise, the Company shall
pay an amount in cash equal to the Current Market Price per share of Common
Stock on the date of exercise multiplied by such fraction.
2.3. Continued
Validity.
A
Holder of shares of Common Stock issued upon the exercise of this Warrant,
in
whole or in part (other than a Holder who acquires such shares after the same
have been publicly sold pursuant to a Registration Statement under the
Securities Act or sold pursuant to Rule 144 thereunder), shall continue to
be
entitled with respect to such shares to all rights to which it would have been
entitled as the Holder under Sections 10 and 13 of this Warrant.
2.4. Restrictions
on Exercise Amount.
(i) Unless
a
Holder delivers to the Company irrevocable written notice prior to the date
of
issuance hereof or sixty-one days prior to the effective date of such notice
that this Section 2.4(i) shall not apply to such Holder, the Holder may not
acquire a number of shares of Warrant Stock to the extent that, upon such
exercise, the number of shares of Common Stock then beneficially owned by such
holder and its Affiliates and any other persons or entities whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act (including shares held by any “group” of which
the holder is a member, but excluding shares beneficially owned by virtue of
the
ownership of securities or rights to acquire securities that have limitations
on
the right to convert, exercise or purchase similar to the limitation set forth
herein) exceeds 4.99% of the total number of shares of Common Stock of the
Company then issued and outstanding. For purposes hereof, “group” has the
meaning set forth in Section 13(d) of the Exchange Act and applicable
regulations of the Commission, and the percentage held by the holder shall
be
determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. Each delivery of a notice of exercise by a Holder will constitute
a representation by such Holder that it has evaluated the limitation set forth
in this paragraph and determined, based on the most recent public filings by
the
Company with the Commission, that the issuance of the full number of shares
of
Warrant Stock requested in such notice of exercise is permitted under this
paragraph.
(ii) In
the
event the Company is prohibited from issuing shares of Warrant Stock as a result
of any restrictions or prohibitions under applicable law or the rules or
regulations of any
stock
exchange, interdealer quotation system or other self-regulatory organization,
the Company shall as soon as possible seek the approval of its stockholders
and
take such other action to authorize the issuance of the full number of shares
of
Common Stock issuable upon exercise of this Warrant.
3. Transfer,
Division and Combination.
3.1. Transfer.
The
Warrants and the Warrant Stock shall be freely transferable, subject to
compliance with this Section 3.1 and all applicable laws, including, but not
limited to the Securities Act. If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant or the resale of the Warrant
Stock, this Warrant or the Warrant Stock, as applicable, shall not be registered
under the Securities Act, the Company may require, as a condition of allowing
such transfer (i) that the Holder or transferee of this Warrant or the Warrant
Stock as the case may be, furnish to the Company a written opinion of counsel
that is reasonably acceptable to the Company to the effect that such transfer
may be made without registration under the Securities Act, (ii) that the Holder
or transferee execute and deliver to the Company an investment representation
letter in form and substance acceptable to the Company and substantially in
the
form attached as Exhibit
C
hereto
and (iii) that the transferee be an “accredited investor” as defined in Rule
501(a) promulgated under the Securities Act. Transfer of this Warrant and all
rights hereunder, in whole or in part, in accordance with the foregoing
provisions, shall be registered on the books of the Company to be maintained
for
such purpose, upon surrender of this Warrant at the principal office of the
Company referred to in Section 2.1 or the office or agency designated by the
Company pursuant to Section 12, together with a written assignment of this
Warrant substantially in the form of Exhibit
B
hereto
duly executed by the Holder or its agent or attorney and funds sufficient to
pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to
the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Following a transfer that complies
with the requirements of this Section 3.1, the Warrant may be exercised by
a new
Holder for the purchase of shares of Common Stock regardless of whether the
Company issued or registered a new Warrant on the books of the Company.
3.2. Restrictive
Legends.
Each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, unless, in each case, such Warrant Stock
is
eligible for resale without registration pursuant to Rule 144(k) under the
Exchange Act, shall bear the following legend:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS NOT
REQUIRED.”
In
addition, the legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Warrant Stock
upon
which it is stamped, if, unless otherwise required by applicable state
securities laws, such Warrant Stock is registered for sale under an effective
registration statement filed under the Securities Act.
3.3. Division
and Combination; Expenses; Books.
This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3. The Company agrees
to
maintain, at its aforesaid office or agency, books for the registration and
the
registration of transfer of the Warrants.
4. Adjustments.
The
number of shares of Common Stock for which this Warrant is exercisable, and
the
price at which such shares may be purchased upon exercise of this Warrant,
shall
be subject to adjustment from time to time as set forth in this Section 4.
The
Company shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with Sections 5.1 and
5.2.
4.1. Stock
Dividends, Subdivisions and Combinations.
If at
any time while this Warrant is outstanding the Company shall:
(i) declare
a
dividend or make a distribution on its outstanding shares of Common Stock in
shares of Common Stock,
(ii) subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or
(iii) combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then:
(1) the
number of shares of Common Stock acquirable upon exercise of this Warrant
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number
of
shares of Common Stock that would have been acquirable under this Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination would own or be entitled
to
receive after such record date or the effective date of such subdivision or
combination, as applicable, and
(2) the
Current Warrant Price shall be adjusted to equal:
(A) the
Current Warrant Price in effect at the time of the record date for such dividend
or distribution or of the effective date of such subdivision or combination,
multiplied by the number of shares of Common Stock into which this Warrant
is
exercisable immediately prior to the adjustment, divided by
(B) the
number of shares of Common Stock into which this Warrant is exercisable
immediately after such adjustment.
Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clauses
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.
4.2. Other
Provisions Applicable to Adjustments.
The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock into which this Warrant is exercisable and
the
Current Warrant Price provided for in Section 4:
(a)
When
Adjustments to Be Made.
The
adjustments required by Section 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that any that would
otherwise be required may be postponed (except in the case of a subdivision
or
combination of shares of the Common Stock, as provided for in Section 4.1)
up
to, but not beyond the date of exercise if such adjustment either by itself
or
with other adjustments not previously made adds or subtracts less than 1% of
the
shares of Common Stock into which this Warrant is exercisable immediately prior
to the making of such adjustment. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result
in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close
of
business on the date of its occurrence.
(b)
Fractional
Interests.
In
computing adjustments under this Section 4, fractional interests in Common
Stock
shall be taken into account to the nearest 1/100th of a share.
(c)
When
Adjustment Not Required.
If the
Company undertakes a transaction contemplated under this Section 4 and as a
result takes a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or subscription or purchase
rights or other benefits contemplated under this Section 4 and shall, thereafter
and before the distribution to stockholders thereof, legally abandon its plan
to
pay or deliver such dividend, distribution, subscription or purchase rights
or
other benefits contemplated under this Section 4, then thereafter no adjustment
shall be required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(d)
Escrow
of Stock.
If
after any property becomes distributable pursuant to Section 4 by reason of
the
taking of any record of the holders of Common Stock, but prior to the occurrence
of the event for which such record is taken, a holder of this Warrant exercises
the Warrant during such time, then such holder shall continue to be entitled
to
receive any shares of Common Stock issuable upon exercise hereunder by reason
of
such adjustment and such shares or other property shall be held in escrow for
the holder of this Warrant by the Company to be issued to holder of this Warrant
upon and to the extent that the event actually takes place. Notwithstanding
any
other provision to the contrary herein, if the event for which such record
was
taken fails to occur or is rescinded, then such escrowed shares shall be
canceled by the Company and escrowed property returned to the Company.
4.3. Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets.
(a)
If
there shall occur a Change of Control and, pursuant to the terms of such Change
of Control, shares of common stock of the successor or acquiring corporation,
or
any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring corporation
(“Other
Property”),
are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder of this Warrant shall have the right thereafter to receive,
upon
the exercise of the Warrant, the number of shares of common stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and the Other Property receivable upon or as a result of such
Change of Control by a holder of the number of shares of Common Stock into
which
this Warrant is exercisable immediately prior to such event. The Company shall
not effect any Change of Control without the prior written consent of the
holders of a majority in interest of the Warrants (as defined in the Purchase
Agreement) (in addition to any other consent or voting rights with respect
to
such Change of Control that such holders may have pursuant to this Warrant
or
applicable law) unless the resulting successor or acquiring entity (if not
the
Company) and, if an entity different from the successor or acquiring entity,
the
entity whose capital stock or assets the holders of the Common Stock are
entitled to receive as a result of such Change of Control, assumes by written
instrument all of the obligations of this Warrant and the Transaction Documents
(as defined in the Purchase Agreement).
(b)
In
case of any such Change of Control described in Section 4.3(a) above, the
resulting, successor or acquiring entity (if not the Company) and, if an entity
different from the successor or acquiring entity, the entity whose capital
stock
or assets the holders of the Common Stock are entitled to receive as a result
of
such Change of Control, shall assume by written instrument all of the
obligations of this Warrant and the Transaction Documents (as defined in the
Purchase Agreement), subject to such modifications as may be deemed appropriate
(as determined by resolution of the Board of Directors of the Company) in order
to provide for adjustments of shares of the Common Stock into which this Warrant
is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in Section 4. For purposes of Section 4, common stock
of the successor or acquiring corporation shall include stock of such
corporation of any class which is not preferred as to dividends or assets on
liquidation over any other class of stock of such corporation and which is
not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4 shall similarly apply to successive Change of Control transactions.
4.4. Other
Action Affecting Common Stock.
In case
at any time or from time to time the Company shall take any action in respect
of
its Common Stock, other than the payment of dividends permitted by Section
4 or
any other action described in Section 4, then, unless such action will not
have
a materially adverse effect upon the rights of the holder of this Warrant,
the
number of shares of Common Stock or other stock into which this Warrant is
exercisable and/or the purchase price thereof shall be adjusted in such manner
as may be equitable in the circumstances.
4.5. Certain
Limitations.
Notwithstanding anything herein to the contrary, the Company agrees not to
enter
into any transaction which, by reason of any adjustment hereunder, would cause
the Current Warrant Price to be less than the par value per share of Common
Stock.
4.6. Stock
Transfer Taxes.
The
issue of stock certificates upon exercise of this Warrant shall be made without
charge to the holder for any tax in respect of such issue. The Company shall
not, however, be required to pay any tax which may be payable in respect of
any
transfer involved in the issue and delivery of shares in any name other than
that of the holder of this Warrant, and the Company shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
5. Notices
to Warrant Holders.
5.1. Certificate
as to Adjustments.
Upon
the occurrence of each adjustment or readjustment of the Current Warrant Price,
the Company, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
the
Holder of this Warrant a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of the Holder of this Warrant, furnish or cause to be furnished to such Holder
a
like certificate setting forth (i) such adjustments and readjustments, (ii)
the
Current Warrant Price at the time in effect and (iii) the number of shares
of
Common Stock and the amount, if any, or other property which at the time would
be received upon the exercise of Warrants owned by such Holder.
5.2. Notice
of Corporate Action.
If at
any time:
(a) the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend (other than a cash dividend payable
out
of earnings or earned surplus legally available for the payment of dividends
under the laws of the jurisdiction of incorporation of the Company) or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all
or
substantially all the property, assets or business of the Company to, another
corporation, or
(c) there
shall be a voluntary or involuntary dissolution, liquidation or winding up
of
the Company; or
(d) the
Company shall cause the holders of its Common Stock to be entitled to receive
(i) any dividend or other distribution of cash, (ii) any evidences of its
indebtedness, or (iii) any shares of stock of any class or any other securities
or property or assets of any nature whatsoever (other than cash or additional
shares of Common Stock as provided in Section 4.1 hereof and the rights under
the Company’s Rights Agreement, dated as of October 31, 2001, by
and
between the Company and American Stock Transfer & Trust Company as Rights
Agent (the “Rights
Agreement”));
or
(iv) any warrants or other rights to subscribe for or purchase any evidences
of
its indebtedness, any shares of stock of any class or any other securities
or
property or assets of any nature whatsoever;
then,
in
any one or more of such cases, the Company shall give to the Holder (i) at
least
15 days’ prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights
to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 15 days’ prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 15.2. Notwithstanding the forgoing
provisions of this Section 5.2, the Company shall give to the Holder at least
seven (7) Business Days prior written notice of the occurrence of any
Distribution Date (as defined in the Rights Agreement).
5.3. No
Rights as Stockholder.
This
Warrant does not entitle the Holder to any voting or other rights as a
stockholder of the Company prior to exercise and payment for the Warrant Price
in accordance with the terms hereof.
6. No
Impairment.
The
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be
necessary or appropriate to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company will (a) not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as
may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of
this Warrant, and (c) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant. Upon the request of the Holder, the Company will at any
time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to the Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. Reservation
and Authorization of Common Stock; Registration With Approval of Any
Governmental Authority.
From
and after the Closing Date, the Company shall at all times reserve and keep
available for issue upon the exercise of Warrants such number of its authorized
but unissued shares of Common Stock as will be sufficient to permit the exercise
in full of all outstanding Warrants (without regard to any ownership limitations
provided in Section 2.4(i)). All shares of Common Stock which shall be so
issuable, when issued upon exercise of any Warrant and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued
and
fully paid and nonassessable, and not subject to preemptive rights. Before
taking any action which would cause an adjustment reducing the Current Warrant
Price below the then par value, if any, of the shares of Common Stock issuable
upon exercise of the Warrants, the Company shall take any corporate action
which
may be necessary in order that the Company may validly and legally issue fully
paid and non-assessable shares of such Common Stock at such adjusted Current
Warrant Price. Before taking any action which would result in an adjustment
in
the number of shares of Common Stock for which this Warrant is exercisable
or in
the Current Warrant Price, the Company shall obtain all such authorizations
or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof. If any shares of Common
Stock required to be reserved for issuance upon exercise of Warrants require
registration or qualification with any governmental authority under any federal
or state law before such shares may be so issued (other than as a result of
a
prior or contemplated distribution by the Holder of this Warrant), the Company
will in good faith and as expeditiously as possible and at its expense endeavor
to cause such shares to be duly registered.
8. Taking
of Record; Stock and Warrant Transfer Books.
In the
case of all dividends or other distributions by the Company to the holders
of
its Common Stock with respect to which any provision of Section 4 refers to
the
taking of a record of such holders, the Company will in each such case take
such
a record and will take such record as of the close of business on a Business
Day. The Company will not at any time, except upon dissolution, liquidation
or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of
any
Warrant.
9. Registration
Rights.
The
resale of the Warrant Stock shall be registered in accordance with the terms
and
conditions contained in that certain Investor Rights Agreement dated of even
date hereof, among the Holder, the Company and the other parties named therein
(the “Investor
Rights Agreement”).
The
Holder acknowledges that pursuant to the Investor Rights Agreement, the Company
has the right to request that the Holder furnish information regarding such
Holder and the distribution of the Warrant Stock as is required by law or the
Commission to be disclosed in the Registration Statement (as such term is
defined in the Investor Rights Agreement), and the Company may exclude from
such
registration the shares of Warrant Stock acquirable hereunder if Holder fails
to
furnish such information within a reasonable time prior to the filing of each
Registration Statement, supplemented prospectus included therein and/or amended
Registration Statement.
10. Supplying
Information.
Upon
any default by the Company of its obligations hereunder or under the Investor
Rights Agreement, the Company shall cooperate with the Holder in supplying
such
information as may be reasonably necessary for such Holder to complete and
file
any information reporting forms presently or hereafter required by the
Commission as a
condition
to the availability of an exemption from the Securities Act for the sale of
any
Warrant or Restricted Common Stock.
11. Loss
or Mutilation.
Upon
receipt by the Company from the Holder of evidence reasonably satisfactory
to it
of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity or security reasonably satisfactory to it and
reimbursement to the Company of all reasonable expenses incidental thereto
and
in case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the Holder;
provided, however, that in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company
for
cancellation.
12. Office
of the Company.
As long
as any of the Warrants remain outstanding, the Company shall maintain an office
or agency (which may be the principal executive offices of the Company) where
the Warrants may be presented for exercise, registration of transfer, division
or combination as provided in this Warrant.
13. Financial
and Business Information.
13.1. Quarterly
Information.
The
Company will deliver to the Holder, as soon as available and in any event within
45 days after the end of each of the first three quarters of each fiscal year
of
the Company, one copy of an unaudited consolidated balance sheet of the Company
and its subsidiaries as at the end of such quarter, and the related unaudited
consolidated statements of income, retained earnings and cash flow of the
Company and its subsidiaries for such quarter and, in the case of the second
and
third quarters, for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year. Such financial statements shall be prepared
by the Company in accordance with GAAP (except as may be indicated thereon
or in
the notes thereto) and accompanied by the certification of the Company’s chief
executive officer or chief financial officer that such financial statements
present fairly the consolidated financial position, results of operations and
cash flow of the Company and its subsidiaries as at the end of such quarter
and
for such year-to-date period, as the case may be; provided, however, that the
Company shall have no obligation to deliver such quarterly information under
this Section 13.1 to the extent it is publicly available; and provided further,
that if such information contains material non-public information, the Company
shall so notify the Holder prior to delivery thereof and the Holder shall have
the right to refuse delivery of such information.
13.2. Annual
Information.
The
Company will deliver to the Holder as soon as available and in any event within
90 days after the end of each fiscal year of the Company, one copy of an audited
consolidated balance sheet of the Company and its subsidiaries as at the end
of
such year, and audited consolidated statements of income, retained earnings
and
cash flow of the Company and its subsidiaries for such year; setting forth
in
each case in comparative form the figures for the corresponding periods in
the
previous fiscal year; all prepared in accordance with GAAP, and which audited
financial statements shall be accompanied by an opinion thereon of the
independent certified public accountants regularly retained by the Company,
or
any other firm of independent certified public accountants of recognized
national standing selected by the Company; provided, however, that the Company
shall have no obligation to deliver such annual information under this Section
13.2 to the extent it is publicly available; and provided further,
that
if
such information contains material non-public information, the Company shall
so
notify the Holder prior to delivery thereof and the Holder shall have the right
to refuse delivery of such information.
13.3. Filings.
The
Company will file on or before the required date all regular or periodic reports
(pursuant to the Exchange Act) with the Commission and will deliver to Holder
promptly upon their becoming available one copy of each report, notice or proxy
statement sent by the Company to its stockholders generally.
14. Limitation
of Liability.
No
provision hereof, in the absence of affirmative action by the Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges
of
the Holder hereof, shall give rise to any liability of the Holder for the
purchase price of any Common Stock, whether such liability is asserted by the
Company or by creditors of the Company.
15. Miscellaneous.
15.1. Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of the Holder shall operate as a waiver of such right or otherwise
prejudice the Holder’s rights, powers or remedies. If the Company fails to make,
when due, any payments provided for hereunder, or fails to comply with any
other
material provision of this Warrant, the Company shall pay to the Holder such
amounts as shall be sufficient to cover any third party costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
15.2. Notice
Generally.
All
notices, requests, demands or other communications provided for herein shall
be
in writing and shall be given in the manner and to the addresses set forth
in
the Purchase Agreement.
15.3. Successors
and Assigns.
Subject
to compliance with the provisions of Section 3.1, this Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and assigns of the Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant, and shall be enforceable by any such Holder.
15.4. Amendment.
This
Warrant may be modified or amended or the provisions of this Warrant waived
with
the written consent of both the Company and the Holder.
15.5. Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be modified to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Warrant.
15.6. Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
15.7. Governing
Law.
This
Warrant and the transactions contemplated hereby shall be deemed to be
consummated in the State of New York and shall be governed by and interpreted
in
accordance with the local laws of the State of New York without regard to the
provisions thereof relating to conflicts of laws. The Company hereby irrevocably
consents to the exclusive jurisdiction of the State and Federal courts located
in New York City, New York in connection with any action or proceeding arising
out of or relating to this Warrant. In any such litigation the Company agrees
that the service thereof may be made by certified or registered mail directed
to
the Company pursuant to Section 15.2.
[Signature
Page Follows]
IN
WITNESS WHEREOF, Access Pharmaceuticals, Inc. has caused this Warrant to be
executed by its duly authorized officer and attested by its
Secretary.
Dated:
December ___, 2006
ACCESS
PHARMACEUTICALS, INC.
By:______________________________
Name:
Title:
Attest:
By:______________________________
Name:
Title:
Secretary
EXHIBIT
A
SUBSCRIPTION
FORM
[To
be
executed only upon exercise of Warrant]
1. The
undersigned hereby elects to purchase
shares
of the Common Stock of Access Pharmaceuticals, Inc. pursuant to the terms of
the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. The
undersigned hereby elects to convert the attached Warrant into Common Stock
of
Access Pharmaceuticals, Inc. through “cashless exercise” in the manner specified
in the Warrant. This conversion is exercised with respect to
_____________________ of the Shares covered by the Warrant.
3. Please
issue a certificate or certificates representing said shares in the name of
the
undersigned or in such other name as is specified below:
[and,
if
such shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and
date
for the balance of the shares of Common Stock issuable hereunder be delivered
to
the undersigned.]
_____________________________________
(Name
of
Registered Owner)
_____________________________________
(Signature
of Registered Owner)
_____________________________________
(Street
Address)
_____________________________________
(State)
(Zip Code)
NOTICE:
The signature on this subscription must correspond with the name as written
upon
the face of the Warrant in every particular, without alteration or enlargement
or any change whatsoever.
EXHIBIT
B
ASSIGNMENT
FORM
FOR
VALUE
RECEIVED the undersigned registered owner of this Warrant for the purchase
of
shares of common stock of Access Pharmaceuticals, Inc. hereby sells, assigns
and
transfers unto the Assignee named below all of the rights of the undersigned
under this Warrant, with respect to the number of shares of common stock set
forth below:
_______________________________________
_______________________________________
_______________________________________
(Name
and
Address of Assignee)
_______________________________________
(Number
of Shares of Common Stock)
and
does
hereby irrevocably constitute and appoint ____________ attorney-in-fact to
register such transfer on the books of the Company, maintained for the purpose,
with full power of substitution in the premises.
Dated:_________________________________
______________________________________
(Print
Name and Title)
______________________________________
(Signature)
______________________________________
(Witness)
NOTICE:
The signature on this assignment must correspond with the name as written upon
the face of the Warrant in every particular, without alteration or enlargement
or any change whatsoever.
EXHIBIT
C
FORM
OF
INVESTMENT REPRESENTATION LETTER
In
connection with the acquisition of [warrants (the “Warrants”) to purchase ____
shares of common stock of Access Pharmaceuticals, Inc. (the “Company”), par
value $0.01 per share (the “Common Stock”)][___shares of common stock of Access
Pharmaceuticals, Inc. (the “Company”), par value $0.01 per share (the “Common
Stock”) upon the exercise of warrants by ________], by _______________ (the
“Holder”) from _____________, the Holder hereby represents and warrants to the
Company as follows:
The
Holder (i) is an “Accredited Investor” as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
“Act”); and (ii) has the ability to bear the economic risks of such Holder’s
prospective investment, including a complete loss of Holder’s investment in the
Warrants and the shares of Common Stock issuable upon the exercise thereof
(collectively, the “Securities”).
The
Holder, by acceptance of the Warrants, represents and warrants to the Company
that the Warrants and all securities acquired upon any and all exercises of
the
Warrants are purchased for the Holder’s own account, and not with view to
distribution of either the Warrants or any securities purchasable upon exercise
thereof in violation of applicable securities laws.
[The
Holder acknowledges that (i) the Securities have not been registered under
the
Act, (ii) the Securities are “restricted securities” and the certificate(s)
representing the Securities shall bear the following legend, or a similar legend
to the same effect, until (i) in the case of the shares of Common Stock
underlying the Warrants, such shares shall have been registered for resale
by
the Holder under the Act and effectively been disposed of in accordance with
a
registration statement that has been declared effective; or (ii) in the opinion
of counsel for the Company such Securities may be sold without registration
under the Act:
“[NEITHER]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES INTO WHICH
THEY ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), AND ALL SUCH SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. [NEITHER]
THE
SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THEY ARE
EXERCISABLE] MAY [NOT] BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
OF
COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT
THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
REGISTRATION UNDER THE ACT.”]*
*
Bracketed language to be inserted if applicable.
IN
WITNESS WHEREOF, the Holder has caused this Investment Representation Letter
to
be executed this __ day of __________ 200_.
[Name]
By:______________________________
Name:
Title:
\16289\15\123421.1