**Exhibit10.28**

 

AMENDMENT TO 7.0%(SUBJECT TO ADJUSTMENT) CONVERTIBLEPROMISSORY NOTES DUE SEPTEMBER 13, 2005

 

This Amendment to 7.0% (Subject to Adjustment)Convertible Promissory Notes Due September 13, 2005, dated as of November 3,2005 (the “Amendment”), is by and among Access Pharmaceuticals, Inc., aDelaware corporation (the “Company”), and each of Oracle Partners LP,Oracle Institutional Partners LP, SAM Oracle Investments Inc. and OracleOffshore Ltd. (each, a “Holder”), amending certain provisions of thosecertain 7.0% (Subject to Adjustment) Convertible Promissory Notes Due September13, 2005 No. R-1 (each as amended and in effect from time to time, a “Note”)from the Company to each Holder in the original principal amount of $2,524,500,$698,500, $660,000 and $132,000, respectively. Terms not otherwise definedherein which are defined in any Note shall have the same respective meaningsherein as therein.

 

WHEREAS, the Company and each Holder have agreed tomodify certain terms and conditions of each Note as specifically set forth inthis Amendment.

 

NOW, THEREFORE, in consideration of the mutualagreements contained herein and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties hereto agreeas follows:

 

1.             Amendmentto Each Note. Each Note is hereby amended as follows:

 

(a)           Thetitle of each Note is hereby deleted in its entirety and replaced with thefollowing:

 

“7.0% (Subject to Adjustment) Convertible PromissoryNote Due April 28, 2007.”

 

(b)           Allreferences to “September 13, 2005” in the preamble (the “Preamble”) ofeach Note and the first sentence of Section 2(a) of each Note are herebydeleted and replaced with “April 28, 2007.”

 

(c)           Thefollowing text is hereby added following the word “annum” and before the word “provided”in the first sentence of the Preamble:

 

“(and shall pay interest from September 13, 2006, orfrom the most recent interest payment date to which interest has been paid orduly provided for, on April 28, 2007).”

 

(d)           Thefollowing text is hereby added following the words “September 1” and before theword “(whether” in the second sentence of the Preamble:

 

“(and April 1 in the case of the interest payment dueon April 28, 2007).”

 

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(e)           Allreferences to “$5,500” in each Note, including, without limitation, in thefirst sentence of Section 1 of each Note, the first sentence of Section 2(a) ofeach Note, the defined term “Conversion Price” in Section 2(j) of each Note andthe second sentence of Section 7(c) of each Note, are hereby deleted andreplaced with “$1,000.”

 

(f)            Thefollowing text is hereby added as a new paragraph following the first paragraphof Section 2(a) of each Note:

 

“Automatically and without further action, immediatelyupon the Closing Price of the Company Stock exceeding 1.5 times the ConversionPrice for any period of 20 consecutive Trading Days, this Security (or anyportion of the principal amount hereof then outstanding) shall convert intofully paid and nonassessable shares (calculated to the nearest 1/100 of ashare) of Common Stock of the Company at the rate of 1,000 shares of CommonStock for each $1,000 principal amount of Security. Upon such conversion ofthis Security (or any portion of the principal amount hereof then outstanding),the holder of this Security shall surrender this Security, duly endorsed orassigned to the Company or in blank to the Company at the Designated Office. Uponsurrender of this Security upon such conversion, the holder will be entitled toreceive the interest accruing on the principal amount of this Security thenbeing converted from the interest payment date next preceding the date of suchconversion to such date of conversion. No payment or adjustment is to be madeon conversion for dividends on the Common Stock issued on conversion hereof. Nofractions of shares or scrip representing fractions of shares will be issued onconversion, but instead of any fractional interest, the Company shall pay acash adjustment, computed on the basis of the Closing Price of the Common Stockon the date of conversion, or, at its option, the Company shall round up to thenext higher whole share.”

 

(g)           Sections3(a) through (i) of each Note are hereby deleted in their entirety and replacedwith the following:

 

“3.           ConversionUpon Change in Control. (a) In the event that a Change in Control (ashereinafter defined) shall occur, then automatically and without further actionimmediately prior to such Change in Control, this Security (or any portion ofthe principal amount hereof then outstanding) shall convert into fully paid andnonassessable shares (calculated to the nearest 1/100 of a share) of CommonStock at the rate of 1,000 shares of Common Stock for each $1,000 principalamount of Security. Upon such conversion of this Security (or any portion ofthe principal amount hereof then outstanding), the holder of this Securityshall surrender this Security, duly endorsed or assigned to the Company or inblank to the Company at the Designated Office. Upon surrender of this Securityupon such conversion, the holder will be entitled to receive the interestaccruing on the principal amount of this Security then being converted from theinterest payment date next preceding the date of such conversion to such dateof conversion. No payment or adjustment is to be made on conversion fordividends on the

 

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common stock issued onconversion hereof. No fractions of shares or scrip representing fractions ofshares will be issued on conversion, but instead of any fractional interest,the Company shall pay a cash adjustment, computed on the basis of the amountpayable per share of Common Stock upon such Change in Control, or, at itsoption, the Company shall round up to the next higher whole share. Notwithstandingthe foregoing, this Security (or any portion of the principal amount hereofthen outstanding) shall not convert automatically under this Section 3(a) inthe event of a Change in Control in which the amount payable per share ofCommon Stock is less than 1.5 times the Conversion Price unless,immediately prior to the consummation of such Change in Control, the Companypays to the holder of this Security, in cash or, subject to the fulfillment bythe Company of the conditions set forth in Section 3(b), by delivery of sharesof Common Stock, an amount such that the aggregate amount per share of CommonStock payable to the holder of this Security in connection with such Change inControl equals 1.5 times the Conversion Price. The Company agrees to give theholder of this Security notice of any Change in Control, by facsimiletransmission confirmed in writing by overnight courier service, promptly and inany event within two Trading Days of the occurrence thereof.

 

(b)           TheCompany may elect to deliver shares of Common Stock in payment under Section3(a), if and only if the following conditions have been satisfied:

 

(1)  Each shareof Common Stock deliverable as payment under Section 3(a) shall have a fairmarket value as of the date of the consummation of the Change in Control (the “ChangeinControlClosingDate”) of not less than the sumobtained by subtracting the amount payable per share of Common Stockupon such Change in Control from the Conversion Price. For purposes ofthis Section 3(b), the fair market value of a share of Common Stock shall beequal to 95% of the average of the Closing Prices for the five consecutiveTrading Days ending on and including the third Trading Day immediatelypreceding the Change in Control Closing Date;

 

(2)  In the eventany shares of Common Stock to be issued under Section 3(a) require registrationunder any Federal securities law before such shares may be freely transferablewithout being subject to any transfer restrictions under the Securities Act of1933, as amended, upon issuance, such registration shall have been completedand shall have become effective prior to the Change in Control Closing Date;

 

(3)  In theevent any shares of Common Stock to be issued under Section 3(a) requireregistration with or approval of any governmental authority under any State lawor any other Federal law before such shares may be validly issued or deliveredupon repurchase, such registration shall have been completed, have becomeeffective and such approval shall have been obtained, in each case, prior tothe Change in Control Closing Date;

 

(4)  Immediatelyprior to the Change in Control Closing Date the shares of Common Stockdeliverable as payment under Section 3(a) shall have been approved for tradingor listed on the American Stock Exchange or the principal national securities

 

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exchange or interdealerquotation system on which the Common Stock is then admitted to trading orlisted; and

 

(5)  All sharesof Common Stock deliverable as payment under Section 3(a) shall be issued outof the Company’s authorized but unissued Common Stock and will, upon issue, beduly and validly issued and fully paid and non-assessable and free of anypreemptive rights.

 

If all of the conditions set forth in this Section3(b) are not satisfied in accordance with the terms thereof, the Company shallpay the holder of this Security all amounts payable under Section 3(a) only incash.”

 

(h)           Section3(j) of each Note is hereby re-numbered as Section 3(c).

 

2.             Conditionto Effectiveness. This Amendment shall not become effective until eachHolder receives a counterpart of this Amendment executed by the Company.

 

3.             Ratification,Etc. Except as expressly amended hereby, all terms and conditions of eachNote are hereby ratified and confirmed in all respects and shall continue infull force and effect. Each Note and this Amendment shall be read and construedas a single agreement. All references to any Note shall hereafter refer to suchNote, as amended hereby.

 

4.             NoWaiver. Nothing contained herein shall constitute a waiver of, impair orotherwise affect, any obligation of the Company under any Note or any rights ofany Holder consequent thereon.

 

5.             Counterparts.This Amendment may be executed in one or more counterparts, each of which shallbe deemed an original but which together shall constitute one and the sameinstrument.

 

6.             GoverningLaw. This amendment shall be governed by, and construed in accordancewith, the laws of the State of Texas (without reference to conflict of laws).

 

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IN WITNESSWHEREOF, the parties hereto have executed this Amendment as a document underseal as of the date first above written.

 
|   | Company:                           |
|--------|------------------------------------|
|   |                               |
|   | ACCESS PHARMACEUTICALS, INC.       |
|   |                               |
|   |                               |
|   | By:                                | /s/ Rosemary Mazanet |   |
|   |                               | Name:  Rosemary Mazanet |
|   |                               | Title:  Acting CEO |
|   |                               |   |
|   |                               |   |
|   | Holders:                           |
|   |                               |
|   | ORACLE PARTNERS LP                 |
|   |                               |
|   |                               |
|   | By:                                | /s/ Larry Feinberg |   |
|   |                               | Name: Larry Feinberg |
|   |                               | Title: Managing Partner |
|   |                               |   |
|   |                               |   |
|   | ORACLE  INSTITUTIONAL PARTNERS  LP |
|   |                               |
|   |                               |
|   | By:                                | /s/ Larry Feinberg |   |
|   |                               | Name: Larry Feinberg |
|   | Title:                             | Managing Partner |
|   |                               |   |
|   |                               |   |
|   | SAM ORACLE  INVESTMENTS INC.       |
|   |                               |
|   |                               |
|   | By:                                | /s/ Larry Feinberg |   |
|   |                               | Name: Larry Feinberg |
|   | Title:                             | Managing Partner |
|   |                               |   |
|   |                               |   |
|   | ORACLE OFFSHORE  LTD.              |
|   |                               |
|   |                               |
|   | By:                                | /s/ Larry Feinberg |   |
|   |                               | Name: Larry Feinberg |
|   | Title:                             | Managing Partner |
|        |                                    |  |  |  |

 

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