Exhibit 10.3


 


CONVERTIBLE PROMISSORY NOTE 


AND NOTE PURCHASE AGREEMENT


MODIFICATION AGREEMENT


 


This Convertible Promissory
Note and Note Purchase Agreement Modification Agreement (“Agreement”) is made and entered into as of February __,
2011 by and between Cancer Prevention Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and _______________________________
(the “Holder”).


 


RECITALS


 


WHEREAS, the Holder
is the holder of the $__________________ principal face amount of Convertible Promissory Note (“Note”) dated June 11,
2010 issued by the Company which was issued pursuant to the Note Purchase Agreement between the Company and Holder of even date
with the Note (the “Purchase Agreement”). Capitalized terms used but otherwise defined herein shall have the meaning
assigned to such terms in the Note.


 


WHEREAS, Section 12
of the Note provides that the terms of the Note may be modified and amended by agreement between the Company and the Holder.


 


WHEREAS, the Company
and the Holder desire to modify and amend the Note in the manner hereinafter provided.


 


AGREEMENTS


 


NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged the Company and the Holder hereby
modify and amend the Note in the following, but no other way:


 


1.            Maturity
Date. The Note is hereby amended to provide that the Maturity Date shall be February 17, 2012.


 


2.            Automatic
Conversion. Section 2(a) of the Note is amended to read as follows:


 


(a)          Automatic
Conversion. If prior to the Maturity Date, the Company consummates a Qualified Financing (defined below), all principal of
and accrued and unpaid interest on this Note shall automatically convert into fully paid and nonassessable shares of the type
of security issued in such Qualified Financing (“Qualified Securities”) at a conversion
price per share (“Conversion Price”) equal to a discounted percentage of the per share price of the Qualified
Securities issued in a Qualified Financing, which discount escalates over time in accordance with the following schedule (expressed
as a percentage of the share price of the Qualified Securities):


 





ConvertPromNoteMod







 









     


     

    

 


	 	(i)	 	 	From date of issuance	 	 	85	%
	 	(ii)	 	 	August 17, 2010	 	 	82.5	%
	 	(iii)	 	 	November 17, 2010	 	 	80	%
	 	(iv)	 	 	February 17, 2011	 	 	77.5	%
	 	(v)	 	 	May 17, 2011	 	 	75	%
	 	(vi)	 	 	August 17, 2011	 	 	72.5	%
	 	(vii)	 	 	November 17, 2011	 	 	70	%
	 	(viii)	 	 	February 17, 2012	 	 	68.5	%



 


For example,
if a Qualified Financing takes place on May 18, 2011 and the price of the Qualified Security is $6.00, the Notes would automatically
convert into Qualified Securities at the rate of $4.50 per share (75%).


 


3.            Warrant
Coverage. Section 1(b) of the Purchase Agreement is amended to read as follows:


 


(a)          Issuance
of Warrants. In consideration for the purchase by the Lenders of the Notes, the Company will issue to each Lender a warrant
in the form attached hereto as Exhibit B (each, a “Warrant” and, collectively, the “Warrants”).
The number of shares for which the Warrant shall be exercisable shall initially be equal to 15% of the principal amount of the
Notes purchased by such Lender hereunder (“Coverage Percentage”) divided by the Exercise Price, which term is
defined in the Warrant. The Coverage Percentage shall increase over time in accordance with the following schedule:


 


	 	August 17, 2010	 	 	 	17.5	%
	 	November 17, 2010	 	 	 	20	%
	 	February 17, 2011	 	 	 	22.5	%
	 	May 17, 2011	 	 	 	25	%
	 	August 17, 2011	 	 	 	27.5	%
	 	November 17, 2011	 	 	 	30	%
	 	February 17, 2012	 	 	 	32.5	%



 


4.          Remaining
Terms Unchanged. Except as otherwise specifically provided herein, the Note and the Purchase Agreement shall remain in full
force and effect in accordance with their respective terms.


 


Dated: February ____,
2011


 


HOLDER


 


	 	 	Cancer Prevention Pharmaceuticals, Inc.
	Name	 	 
	 	 	 
	 	 	 
	 	 	 	 	 
	Name	Eugene Gerner, CSO 	 


 




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