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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