EX-10.26 5 ex10-26.htm BOARD DESIGNATION AGREEMENT Unassociated Document
EXHIBIT 10.26

 
DIRECTOR DESIGNATION AGREEMENT

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]

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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/ Stephen B. Thompson
 
Name: Stephen B. Thompson
 
Title: Vice President, CFO
 
SCO Capital Partners LLC
 
By:
/s/ Steven H. Rouhandeh
 
Name: Steven H. Rouhandeh
 
Title: Chairman
 



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