**Exhibit No. 10.30**

**THIS NOTE HAS NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATESECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OFUNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATESECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THATREGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THEPROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.**

**ACCESSPHARMACEUTICALS, INC.**

**7.5% SECURED CONVERTIBLEPROMISSORY NOTE**
| **U.S. $**        |       | **Dallas, Texas**          |
|-------------------|------------|----------------------------|
| **No.: PN-2006-** | ** ** | **February 16, 2006** |

 

**FOR VALUE RECEIVED**, the undersigned, Access Pharmaceuticals, Inc.,a Delaware corporation (the “Company”), hereby promises to pay to theorder of****          or any future holder of this promissory note (the “Payee”), at theprincipal office of the Payee set forth herein, or at such other place as theholder may designate in writing to the Company, the principal sum of           Dollars (U.S. $          )(the “Principal Amount”), or such other amount as may be outstandinghereunder, together with all accrued but unpaid interest, in such coin orcurrency of the United States of America as at the time shall be legal tenderfor the payment of public and private debts and in immediately available funds,as provided in this promissory note (the “Note”).

This Note is one of a duly authorized issue of 7.5%Secured Convertible Promissory Notes of the Company, in aggregate principalamount of up to Five Million Dollars ($5,000,000) (the “Promissory Notes”) issued pursuant to the Convertible Noteand Warrant Purchase Agreement of even date herewith (the “PurchaseAgreement”). The Promissory Notes rank equally and ratably without priorityover one another. No payment, including any prepayment, shall be made hereunderunless payment, including any prepayment, is offered with respect to the otherPromissory Notes in an amount which bears the same ratio to the then unpaidprincipal amount of such Promissory Notes as the payment made hereon bears tothe then unpaid principal amount under this Note.

1.             Principal and Interest Payments.

(a)           The Company shall repay in full theentire principal balance then outstanding under this Note plus all accrued andunpaid interest on the first to occur (the “Maturity Date”) of: (i) March 31,2007; (ii) such time as there occurs a Sale Transaction (as 

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defined below) unless the resulting successor oracquiring entity in such Sale Transaction (if not the Company) and, if an entity different from the successor oracquiring entity, the entity whose capital stock or assets the holders of theCommon Stock are entitled to receive as a result of such Sale Transaction, (A) assumesby written instrument all of the obligations of the Promissory Notes and theTransaction Documents (as defined in the Purchase Agreement) as more fully setforth in Section 1(d) below and (B) the entity whose securitiesinto which this Note shall become convertible in such transaction is a publiclytraded corporation whose common stock is listed for trading on the New YorkStock Exchange, the American Stock Exchange, the Nasdaq National Market, theNasdaq Capital Market, the OTC Bulletin Board or Pink Sheets or (iii) theacceleration of the obligations as contemplated by this Note.

“Sale Transaction”shall mean any transaction or series of related transactions which result inthe (i) acquisition by an individual or legal entity or group (as setforth in Section 13(d) of the Exchange Act) of more than one-half ofthe voting rights or equity interests in the Company; 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 withany other corporation (other than a wholly owned subsidiary corporation) oreffectuation of any transaction or series of related transactions where holdersof the Company’s voting securities prior to such transaction or series oftransactions fail to continue to hold at least 50% of the voting power of theCompany (or, if other than the Company, the successor or acquiring entity)immediately following such transaction.

(b)           Interest on the outstanding principalbalance of this Note shall accrue at a rate of seven and one-half percent(7.5%) per annum, compounded quarterly. Interest on the outstanding principalbalance of the Note shall be computed on the basis of the actual number of dayselapsed and a year of three hundred and sixty (360) days and shall be payableon the Maturity Date, upon earlier prepayment of this Note or in the form ofshares of common stock, par value $0.01 per share, of the Company (the “CommonStock”) upon conversion of this note as set forth in Section 8 below. Furthermore,upon the occurrence of an Event of Default, then to the extent permitted bylaw, the Company will pay interest to the Payee, payable on demand, on theoutstanding principal balance of the Note from the date of the Event of Defaultuntil payment in full at the rate of twelve percent (12%) per annum.

(c)           The Company may not prepay theoutstanding principal amount of this Note or the interest thereon prior to theMaturity Date (a “Prepayment”) without the written consent of the Payee,unless the Company shall provide at least sixty (60) days, but not more than ninety(90) days, prior written notice of the date on which the Company intends tomake such Prepayment (a “Prepayment Notice”). Nothing in this Section 1(c) shalllimit the right of the Payee to convert this Note into Common Stock at any timeafter receipt of the Prepayment Notice and prior to the time at which suchPrepayment is made. Notwithstanding the limitations in Section 8(g), thePayee may deliver a Conversion Notice with respect to all of the outstandingPrincipal Amount and interest accrued thereon, in which case, to the extentthat Section 8(g) limits the conversion of this Note, this Note shallnot be subject to Prepayment and shall be converted as set forth in Section 8(c)(v).

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(d)           If the Promissory Notes andTransaction Documents are to be assumed as described in Section 1(a)(ii)(A),the applicable assuming corporation shall expressly assume the due and punctualobservance and performance of each and every covenant and condition containedin the Promissory Notes and the Transaction Documents to be performed andobserved by the Company and all the obligations and liabilities thereunder,subject to such modifications as may be deemed appropriate (as determined byresolution of the Board of Directors of the Company) in order to provide foradjustments of shares of the Common Stock into which the Promissory Notes areconvertible which shall be as nearly equivalent as practicable to theadjustments provided for in Section 8. The provisions of Section 1(a) andthis Section 1(d) shall similarly apply to successive SaleTransactions.

2.             Non-Business Days. Whenever any payment to bemade shall be due on a Saturday, Sunday or a public holiday under the laws ofthe State of Texas, such payment may be due on the next succeeding business dayand such next succeeding day shall be included in the calculation of the amountof accrued interest payable on such date.

3.             Security.                This Note is securedpursuant to the terms of a Security Agreement (the “Security Agreement”)between the Company and the holders of the Promissory Notes of even dateherewith by a security interest in the Collateral (as such term is defined inthe Security Agreement). The Note is subject to the provisions of the SecurityAgreement.

4.             Subordination of Future Debt; Payment of Common StockDividends. Any debt incurred after the date hereof to any creditor shall besubordinated to the indebtedness evidenced by this Note. The Company shall notdeclare or pay any dividend or distribution with respect to any common stock ofthe Company other than a pro rata dividend payable solely in shares of CommonStock.

5.             Representations and Warranties of the Company. TheCompany represents and warrants to the Payee as follows:

(a)           The Company has been dulyincorporated and is validly existing and in good standing under the laws of thestate of Delaware, with full corporate power and authority to own, lease andoperate its properties and to conduct its business as currently conducted.

(b)           This Note has been duly authorized,validly executed and delivered on behalf of the Company and is a valid andbinding obligation of the Company enforceable against the Company in accordancewith its terms, subject to limitations on enforcement by general principles ofequity and by bankruptcy or other laws affecting the enforcement of creditors’rights generally, and the Company has full power and authority to execute anddeliver this Note and to perform its obligations hereunder.

(c)           The execution, delivery andperformance of this Note will not (i) conflict with or result in a breachof or a default under any of the terms or provisions of, (A) the Company’sarticles of incorporation or by-laws, or (B) any material provision of anyindenture, mortgage, deed of trust or other material agreement or instrument towhich the Company is a 

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party or by which it orany of its material properties or assets is bound, (ii) result in aviolation of any material provision of any law, statute, rule, regulation, orany existing applicable decree, judgment or order by any court, Federal orstate regulatory body, administrative agency, or other governmental body havingjurisdiction over the Company, or any of its material properties or assets or (iii) resultin the creation or imposition of any material lien, charge or encumbrance uponany material property or assets of the Company or any of its subsidiariespursuant to the terms of any other agreement or instrument to which any of themis a party or by which any of them may be bound or to which any of theirproperty or any of them is subject.

(d)           No consent, approval or authorizationof or designation, declaration or filing with any governmental authority on thepart of the Company is required in connection with the valid execution anddelivery of this Note.

6.             Events of Default. The occurrence of any of thefollowing events shall be an “Event of Default” under this Note:

(a)           the Company shall fail to make thepayment of any amount of any principal outstanding for a period of two (2) businessdays after the date such payment shall become due and payable hereunder; or

(b)           the Company shall fail to make anypayment of interest for a period of two (2) business days after the datesuch interest shall become due and payable hereunder; or

(c)           if default shall be made in theperformance or observance of any representation, warranty, covenant, oragreement contained in this Note, in the Security Agreement, in the PurchaseAgreement or in the Investor Rights Agreement (as defined in the PurchaseAgreement), or in any other agreement between the Company and the Payeerelating to indebtedness of the Company to the Payee or any of its affiliatesfor borrowed money and such default shall have continued for a period of five (5) daysafter Company’s receipt of written notice of such default (unless such defaultis on account of failure to give a required notice, in which event such 5 daycure period shall commence with the date of such default); or

(d)           the holder of any indebtedness of theCompany or any of its subsidiaries shall accelerate any payment of any amountor amounts of principal or interest on any indebtedness (“Indebtedness”)(other than the Indebtedness hereunder) prior to its stated maturity or paymentdate, the aggregate principal amount of which Indebtedness of all such personsis in excess of $100,000, whether such Indebtedness now exists or shallhereafter be created, and such accelerated payment entitles the holder thereofto immediate payment of such Indebtedness which is due and owing and suchindebtedness has not been discharged in full or such acceleration has not beenstayed, rescinded or annulled within five (5) business days of suchacceleration; or

(e)           A judgment or order for the paymentof money shall be rendered against the Company or any of its subsidiaries inexcess of $100,000 in the aggregate (net of any applicable insurance coverage)for all such judgments or orders against all such persons (treating 

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any deductibles, selfinsurance or retention as not so covered) that shall not be discharged, and allsuch judgments and orders remain outstanding, and there shall be any period ofsixty (60) consecutive days following entry of the judgment or order in excessof $100,000 or the judgment or order which causes the aggregate amountdescribed above to exceed $100,000 during which a stay of enforcement of suchjudgment or order, by reason of a pending appeal or otherwise, shall not be ineffect; or

(f)            the Company shall (i) apply foror consent to the appointment of, or the taking of possession by, a receiver,custodian, trustee or liquidator of itself or of all or a substantial part ofits property or assets, (ii) make a general assignment for the benefit ofits creditors, (iii) commence a voluntary case under the United StatesBankruptcy Code (the “Bankruptcy Code”) or under the comparable laws ofany jurisdiction (foreign or domestic), (iv) file a petition seeking totake advantage of any bankruptcy, insolvency, moratorium, reorganization orother similar law affecting the enforcement of creditors’ rights generally, (v) acquiescein writing to any petition filed against it in an involuntary case under theBankruptcy Code or under the comparable laws of any jurisdiction (foreign ordomestic), or (vi) take any action under the laws of any jurisdiction(foreign or domestic) analogous to any of the foregoing; or

(g)           a proceeding or case shall becommenced in respect of the Company or any of its subsidiaries without itsapplication or consent, in any court of competent jurisdiction, seeking (i) theliquidation, reorganization, moratorium, dissolution, winding up, orcomposition or readjustment of its debts, (ii) the appointment of atrustee, receiver, custodian, liquidator or the like of it or of all or anysubstantial part of its assets or (iii) similar relief in respect of itunder any law providing for the relief of debtors, and such proceeding or casedescribed in clause (i), (ii) or (iii) shall continue undismissed, orunstayed and in effect, for a period of thirty (30) consecutive days or anyorder for relief shall be entered in an involuntary case under the BankruptcyCode or under the comparable laws of any jurisdiction (foreign or domestic)against the Company or any of its subsidiaries or action under the laws of anyjurisdiction (foreign or domestic) analogous to any of the foregoing shall betaken with respect to the Company or any of its subsidiaries and shall continueundismissed, or unstayed and in effect for a period of thirty (30) consecutivedays;

(h)           the failure of the Company toimplement the 1 for 5 Split (as defined in the Purchase Agreement) on or priorto June 30, 2006;

(i)            the suspension from listing or thefailure of the Company’s common stock to be listed on any of the Pink Sheets,OTC Bulletin Board, American Stock Exchange, New York Stock Exchange, Nasdaq NationalMarket or Nasdaq Capital Market for a period of five (5) consecutivetrading days;

(j)            the declaration or payment by theCompany of any dividend or distribution with respect to its common stock otherthan a pro rata dividend payable solely in shares of Common Stock; or

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(k)           the failure by the Company to complywith the requirements of Section 4.14 of the Purchase Agreement.

7.             Remedies Upon An Event of Default. If an Event ofDefault shall have occurred and shall be continuing, the Payee of this Note mayat any time at its option, (a) declare the entire unpaid principal balanceof this Note, together with all interest accrued hereon, due and payable, andthereupon, the same shall be accelerated and so due and payable; provided,however, that upon the occurrence of an Event of Default described in (i) Sections6(f) and (g), without presentment, demand, protest, or notice, all ofwhich are hereby expressly unconditionally and irrevocably waived by theCompany, the outstanding principal balance and accrued interest hereunder shallbe automatically due and payable, and (ii) Sections 6(a) through (e) andSections 6(h) through (j), the Payee may exercise or otherwise enforce anyone or more of the Payee’s rights, powers, privileges, remedies and interestsunder this Note or applicable law. No course of delay on the part of the Payeeshall operate as a waiver thereof or otherwise prejudice the right of the Payee.No remedy conferred hereby shall be exclusive of any other remedy referred toherein or now or hereafter available at law, in equity, by statute orotherwise.

8.             Conversion.

(a)           Optional Conversion. Subjectto the limitations set forth in Sections 8(g) hereof, the holder of thisNote shall have the right at any time, at such holder’s option, to convert allor any lesser portion of the Principal Amount plus accrued and unpaid interestthereon into such number of fully paid and non-assessable shares of CommonStock as is determined by dividing (i) the portion of the Principal Amountto be converted plus accrued and unpaid interest thereon by (ii) theConversion Rate (as defined below) then in effect for this Note. The initialconversion rate shall be $0.          ,such rate to be subject to adjustment in accordance with the provisions of thisSection 8. Such conversion rate in effect from time to time, as adjustedpursuant to this Section 8, is referred to herein as a “Conversion Rate.”All of the remaining provisions of this Section 8 shall apply separatelyto each Conversion Rate in effect from time to time with respect to this Note.

(b)           Mandatory Conversion. If aConversion Triggering Event (as defined below) shall occur and within 5business days following such occurrence, the Company shall deliver a writtennotice to the holders of the Promissory Notes (the “Notice”) that theCompany intends to convert all of the outstanding Promissory Notes into CommonStock, then, subject to the limitations set forth in Section 8(g) hereof,as of the date that is sixty-five days following the date that such Notice is given(the “Mandatory Conversion Date”), this Note shall be converted intosuch number of fully paid and non-assessable shares of Common Stock as isdetermined by dividing (i) the Principal Amount plus accrued and unpaidinterest thereon by (ii) the Conversion Rate then in effect (the “MandatoryConversion”). Nothing in this Section 8(b) shall be construed soas to limit the right of a holder of this Note to convert pursuant to Section 8(a) atany time. If the Maturity Date occurs after the Notice is duly delivered to thePayee, but prior to the Mandatory Conversion Date or the earlier conversion infull of this Note, then the Company shall not be obligated to repay in cash thePrincipal Amount, together with all accrued and unpaid interest thereon, andthis Note shall remain outstanding, as more fully described in Section 8(c)(v),until such time as it is fully converted.

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“Conversion TriggeringEvent” shall mean, such time as:

(i)            The Registration Statement (asdefined below) covering all of the shares of Common Stock into which this Noteis convertible is effective and sales may be made pursuant thereto (or all ofthe shares of Common Stock into which this Note is convertible may be soldwithout restriction pursuant to Rule 144(k) promulgated by theSecurities and Exchange Commission under the Securities Act of 1933, as amended(the “Securities Act”));

(ii)           The Daily Market Price of the CommonStock is at least $1.50 (subject to adjustment for stock splits, reversesplits, stock dividends and the like, including, without limitation, the 1 for5 Split as such term is defined in the Purchase Agreement) for any period of 20consecutive trading days; and

(iii)          The Company has a sufficient number ofauthorized and unissued shares of Common Stock reserved for issuance upon theconversion of the Promissory Notes to convert all of the Promissory Notes infull.

“RegistrationStatement” shall have the meaning established in the Investor RightsAgreement dated on or about the date hereof, by and among the Company and the otherparties signatory thereto.

(c)           Mechanics of Conversion.

(i)            Such right of conversion shall beexercised by the Payee by delivering to the Company a conversion notice in theform attached hereto as Exhibit A (the “Conversion Notice”),appropriately completed and duly signed, and by surrender not later than two (2) businessdays thereafter of this Note. The Conversion Notice shall also contain astatement of the name or names (with addresses and tax identification or socialsecurity numbers) in which the certificate or certificates for Common Stockshall be issued, if other than the name in which this Note is registered.Promptly after the receipt of the Conversion Notice, the Company shall issueand deliver, or cause to be delivered, to the Payee or such Payee’s nominee, acertificate or certificates for the number of shares of Common Stock issuableupon such conversion. Such conversion shall be deemed to have been effected asof the close of business on the date of receipt by the Company of the ConversionNotice (the “Conversion Date”), and the person or persons entitled toreceive the shares of Common Stock issuable upon conversion shall be treatedfor all purposes as the holder or holders of record of such shares of CommonStock as of the close of business on the Conversion Date. If the Payee has notconverted the entire amount of the Note pursuant to the Conversion Notice, thenthe Company shall execute and deliver to the Payee a new Note instrumentidentical in terms to this Note, but with a principal amount reflecting theunconverted portion of this Note. The new Note instrument shall be deliveredsubject to the same timing terms as the certificates for the Common Stock.

(ii)           The Company shall effect suchissuance of Common Stock within three (3) trading days following theConversion Date and shall transmit the certificates by messenger or reputableovernight delivery service to reach the address designated by such holderwithin 

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three (3) tradingdays after the receipt by the Company of such Conversion Notice. Provided thatthe holder complies with all of the provisions of this Note relating to theconversion hereof, if certificates evidencing the Common Stock are not receivedby the holder (through no fault or negligence of the holder) within five (5) BusinessDays following the Conversion Date, then the holder will be entitled to revokeand withdraw its Conversion Notice, in whole or in part, at any time prior toits receipt of those certificates. If the conversion has not been rescinded inaccordance with this paragraph and the Company fails to deliver to the holdersuch certificate or certificates pursuant to this Section 8 in accordanceherewith, prior to the seventh (7th) Business Day after the Conversion Date(assuming timely surrender of the Note and compliance with the other provisionsof this Note that relate to the conversion hereof), the Company shall pay tosuch Payee, in cash, on a per diem basis, an amount equal to 0.2% of theprincipal amount and all interest accrued thereon of the Note until suchdelivery takes place and interest shall continue to accrue as provided in Section 2as if no Conversion Notice had been delivered.

(iii)          The parties acknowledge that as of thedate of this Note, the Company does not have sufficient number of authorizedand unissued shares of Common Stock to fully convert all of the PromissoryNotes. Subject to approval by the Company’s shareholders, the Company will havesufficient number of authorized and unissued shares of Common Stock followingthe effectiveness of the 1 for 5 Split. The Company’s obligation to issueCommon Stock upon conversion of this Note shall be absolute, is independent ofany covenant of any Payee, and shall not be subject to:  (i) any offset or defense; or (ii) anyclaims against the holders of the Promissory Notes whether pursuant to thisNote, the Certificate of Incorporation of the Company, the Purchase Agreement,the Investor Rights Agreement (as defined in the Purchase Agreement), theWarrants (as defined in the Purchase Agreement) or otherwise.

(iv)          Subject to the provisions of Section 8(g),in the event that a Conversion Triggering Event has occurred and the Companyhas given the Notice as required by Section 8(b), this Note shall beconverted in full on the Mandatory Conversion Date as if the holder hereof haddelivered a Conversion Notice with respect to this Note on such date. Promptlythereafter, the holder of this Note shall deliver this Note to the Company orits duly authorized transfer agent, and upon receipt thereof, the Company shallissue or cause its transfer agent to issue certificates evidencing the CommonStock into which this Note has been converted.

(v)           Beneficial Ownership Cap. Tothe extent that (A) all of the outstanding principal and interest due onthis Note is not automatically converted in full upon the occurrence of aMandatory Conversion on account of the application of Section 8(g), (B) aNotice has been duly delivered to the Payee and the Maturity Date has occurredprior to the Mandatory Conversion Date specified in such Notice or (C) thePayee elects to convert all of the outstanding principal and interest due onthis Note following a Prepayment Notice and prior to Prepayment, but all ofsuch amounts are not converted in full on account of the application of Section 8(g) (eachof the events referred to in clauses (A), (B) and (C), a “LimitedConversion”), this Note shall remain outstanding with respect to theamounts of unpaid principal and unpaid interest remaining and such amountsremaining shall be deemed converted automatically under this Section 8 atthe first moment thereafter either when the Mandatory Conversion Date occurs inthe case of a Limited Conversion pursuant to clause (B) above (except thatsuch conversion shall remain subject to Section 8(g), and if Section 8(g) applies,such conversion shall become a

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clause (A) LimitedConversion following the Mandatory Conversion Date), or, in all other cases, whenSection 8(g) would not prevent such conversion. Notwithstanding thepreceding sentence, upon the occurrence of the Limited Conversion, the rightsof the Payee pursuant to Sections 1, 2, 3, 4, 5, 6 and 7, including, withoutlimitation, the right to be repaid principal and interest in cash, shall beterminated immediately and all other rights and obligations (including, withoutlimitation, the rights hereunder to adjustments to the Conversion Rate) shallremain in full force and effect (the “Remaining Rights”); provided that,upon the occurrence of a Sale Transaction, the resulting successor or acquiringentity in such Sale Transaction (if not the Company) and, if an entitydifferent from the successor or acquiring entity, the entity whose capitalstock or assets the holders of the Common Stock are entitled to receive as aresult of such Sale Transaction, shall assume by written instrument all of theRemaining Rights (but not the rights that have been terminated as providedabove) under the Promissory Notes and all of the rights and obligations of theCompany under Transaction Documents.

(d)           Fractional Shares. The Companyshall not be required to issue a fractional share of Common Stock uponconversion of this Note. As to any fraction of a share which the holder of thisNote would otherwise be entitled to acquire upon such conversion, the Companyshall pay an amount in cash equal to the Current Market Price (as definedbelow) per share of Common Stock on the date of conversion, multiplied by suchfraction.

“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 publicmarket for the Common Stock, the higher of (a) the book value per share ofCommon Stock at such date, and (b) the fair market value per share ofCommon Stock as determined in good faith by the Board, or

(2)           if there shall then be a publicmarket for the Common Stock, the average of the daily market prices for the 20consecutive trading days immediately before such date. The daily market pricefor each such trading day shall be (i) the closing bid price on such dayon the principal stock exchange (including Nasdaq) on which such Common Stockis then listed or admitted to trading, or quoted, as applicable, (ii) ifno sale takes place on such day on any such exchange, the last reported closingbid price on such day as officially quoted on any such exchange (includingNasdaq), (iii) if the Common Stock is not then listed or admitted totrading on any stock exchange, the last reported closing bid price on such dayin the over-the-counter market, as furnished by the National Association ofSecurities Dealers Automatic Quotation System or the Pink Sheets LLC, (iv) ifneither such corporation at the time is engaged in the business of reportingsuch 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 NationalAssociation of Securities Dealers, Inc. (the “NASD”) selectedmutually by holders of a majority in interest of the 

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PromissoryNotes and the Company or, if they cannot agree upon such selection, as selectedby two such members of the NASD, one of which shall be selected by holders of amajority in interest of the Promissory Notes and one of which shall be selectedby the Company (as applicable, the “Daily Market Price”).

(e)           Stock Dividends, Subdivisions andCombinations. If at any time while the this Note is outstanding, theCompany shall:

(i)            cause the holders of its CommonStock to be entitled to receive a dividend payable in, or other distributionof, additional shares of Common Stock,

(ii)           subdivide its outstanding shares ofCommon Stock into a larger number of shares of Common Stock, or

(iii)          combine its outstanding shares ofCommon Stock into a smaller number of shares of Common Stock,

then in each such casethe Conversion Rate shall be multiplied by a fraction of which the numeratorshall be the number of shares of Common Stock (excluding treasury shares, ifany) outstanding immediately before such event and of which the denominatorshall be the number of shares of Common Stock outstanding immediately aftersuch event. Any adjustment made pursuant to clause (i) of this Section 8(e) shallbecome effective immediately after the record date for the determination ofstockholders entitled to receive such dividend or distribution, and any adjustmentpursuant to clauses (ii) or (iii) of this Section 8(e) shallbecome effective immediately after the effective date of such subdivision orcombination. If any event requiring an adjustment under this paragraph occursduring the period that a Conversion Rate is calculated hereunder, then thecalculation of such Conversion Rate shall be adjusted appropriately to reflectsuch event.

(f)            Certain Other Distributions.If at any time while this Note is outstanding the Company shall take a recordof the holders of its Common Stock for the purpose of entitling them to receiveany dividend or other distribution of:

(i)            cash,

(ii)           any evidences of its indebtedness,any shares of stock of any class or any other securities or property or assetsof any nature whatsoever (other than cash or additional shares of Common Stockas provided in Section 8(e) hereof), or

(iii)          any warrants or other rights tosubscribe for or purchase any evidences of its indebtedness, any shares ofstock of any class or any other securities or property or assets of any naturewhatsoever (in each case set forth in subparagraphs 8(f)(i), 8(f)(ii) and8(f)(iii) hereof, the “Distributed Property”),

then upon any conversionof this Note that occurs after such record date, the holder of this Note shallbe entitled to receive, in addition to the Conversion Shares, the DistributedProperty that such holder would have been entitled to receive in respect ofsuch number of Conversion Shares had the holder been the record holder of suchConversion Shares as of such record date. Such distribution shall be madewhenever any such conversion is made. In the event that the 

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Distributed Propertyconsists of property other than cash, then the fair value of such DistributedProperty shall be as determined in good faith by the Board and set forth inreasonable detail in a written valuation report (the “Valuation Report”)prepared by the Board. The Company shall give written notice of suchdetermination and a copy of the Valuation Report to the holder of this Note, andif the holder objects to such determination within twenty (20) business daysfollowing the date such notice is given, the Company shall submit suchvaluation to an investment banking firm of recognized national standingselected by the holder of this Note and acceptable to the Company in itsreasonable discretion, whose opinion shall be binding upon the Company and theholder of this Note. A reclassification of the Common Stock (other than achange in par value, or from par value to no par value or from no par value topar value) into shares of Common Stock and shares of any other class of stockshall be deemed a distribution by the Company to the holders of its CommonStock of such shares of such other class of stock within the meaning of this Section 8(f) and,if the outstanding shares of Common Stock shall be changed into a larger orsmaller number of shares of Common Stock as a part of such reclassification,such change shall be deemed a subdivision or combination, as the case may be,of the outstanding shares of Common Stock within the meaning of Section 8(e).

(g)           Blocking Provision.

(i)            Except as provided otherwise in thisSection 8(g)(i), the number of Conversion Shares that may be acquired byany holder shall be limited to the extent necessary to insure that, followingsuch conversion, the number of shares of Common Stock then beneficially ownedby such holder and its Affiliates and any other persons or entities whosebeneficial ownership of Common Stock would be aggregated with the holder’s forpurposes of Section 13(d) of the Exchange Act (including shares heldby any “group” of which the holder is a member, but excluding sharesbeneficially owned by virtue of the ownership of securities or rights toacquire securities that have limitations on the right to convert, exercise orpurchase similar to the limitation set forth herein) does not exceed 4.99% ofthe total number of shares of Common Stock of the Company then issued andoutstanding (the “Beneficial Ownership Cap”). For purposes hereof, “group”has the meaning set forth in Section 13(d) of the Exchange Act andapplicable regulations of the Securities and Exchange Commission, and thepercentage held by the holder shall be determined in a manner consistent withthe provisions of Section 13(d) of the Exchange Act. As used herein,the term “Affiliate” means any person or entity that, directly orindirectly through one or more intermediaries, controls or is controlled by oris under common control with a person or entity, as such terms are used in andconstrued under Rule 144 under the Securities Act. With respect to theholder of this Note, any investment fund or managed account that is managed ona discretionary basis by the same investment manager as such holder will bedeemed to be an Affiliate of such holder. Each delivery of a Conversion Noticeby the holder of this Note will constitute a representation by such holder thatit has evaluated the limitation set forth in this paragraph and determined,subject to the accuracy of information filed under the Securities Act and theExchange Act of 1934, as amended (the “Exchange Act”) by the Companywith respect to the outstanding Common Stock of the Company, that the issuanceof the full number of shares of Common Stock requested in such ConversionNotice is permitted under this paragraph. This paragraph shall be construed andadministered in such manner as shall be 

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consistentwith the intent of the first sentence of this paragraph. Any provision hereofwhich would require a result that is not consistent with such intent shall bedeemed severed herefrom and of no force or effect with respect to theconversion contemplated by a particular Conversion Notice.

(ii)           In the event the Company isprohibited from issuing shares of Common Stock as a result of any restrictionsor prohibitions under applicable law or the rules or regulations of anystock exchange, interdealer quotation system or other self-regulatoryorganization, the Company shall as soon as possible seek the approval of itsstockholders and take such other action to authorize the issuance of the fullnumber of shares of Common Stock issuable upon the full conversion of thePromissory Notes.

(iii)          Notwithstanding the foregoingprovisions of Section 8(g), any holder of Promissory Notes shall have theright prior to the time of the Closing (as defined in the Purchase Agreement)upon written notice to the Company, or after the time of the Closing upon (x) 61days prior written notice to the Company or (y) upon a Sale Transaction,to choose not to be governed by the Beneficial Ownership Cap provided herein.

(h)           Common Stock Reserved. TheCompany shall at all times reserve and keep available out of its authorized butunissued Common Stock, solely for issuance upon the conversion of thePromissory Notes, such number of shares of Common Stock as shall from time totime be issuable upon the conversion of all the Promissory Notes at the timeoutstanding (without regard to any ownership limitations provided in Section 8(g));provided, that on the date of original issue of the Promissory Notes and priorto the effective date of the 1 for 5 Split, the parties acknowledge that theCompany does not and will not have sufficient authorized Common Stock to allowfor the conversion in full of the Promissory Notes and the exercise in full ofthe warrants issued pursuant to the Purchase Agreement.

9.             Other Provisions Applicable to Adjustments. Thefollowing provisions shall be applicable to the making of adjustments of thenumber of shares of Common Stock into which this Note is convertible and thecurrent Conversion Rate provided for in Section 8:

(a)           When Adjustments to Be Made.The adjustments required by Section 8 shall be made whenever and as oftenas any specified event requiring an adjustment shall occur, except that anyadjustment to the Conversion Rate that would otherwise be required may bepostponed (except in the case of a subdivision or combination of shares of theCommon Stock, as provided for in Section 8(e)) up to, but not beyond theConversion Date if such adjustment either by itself or with other adjustmentsnot previously made adds or subtracts less than 1% of the shares of CommonStock into which this Note is convertible immediately prior to the making ofsuch adjustment. Any adjustment representing a change of less than such minimumamount (except as aforesaid) which is postponed shall be carried forward andmade as soon as such adjustment, together with other adjustments required by Section 8and not previously made, would result in a minimum adjustment or on theConversion Date. For the purpose of any adjustment, any specified event shallbe deemed to have occurred at the close of business on the date of itsoccurrence.

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(b)           Fractional Interests. Incomputing adjustments under Section 8, fractional interests in CommonStock 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 Section 8(f) andas a result takes a record of the holders of its Common Stock for the purposeof entitling them to receive a dividend or distribution or subscription orpurchase rights or other benefits contemplated under Section 8(f) andshall, thereafter and before the distribution to stockholders thereof, legallyabandon its plan to pay or deliver such dividend, distribution, subscription orpurchase rights or other benefits contemplated under Section 8(f), thenthereafter no adjustment shall be required by reason of the taking of suchrecord and any such adjustment previously made in respect thereof shall berescinded and annulled.

(d)           Escrow of Stock. If after anyproperty becomes distributable pursuant to Section 8 by reason of thetaking of any record of the holders of Common Stock, but prior to theoccurrence of the event for which such record is taken, a holder of this Noteconverts the Note during such period or such holder is unable to convertpursuant to Section 8(g), the holder of this Note shall continue to beentitled to receive any shares of Common Stock issuable upon conversion under Section 8by reason of such adjustment (as if this Note were not yet converted) and suchshares or other property shall be held in escrow for the holder of this Note bythe Company to be issued to holder of this Note upon and to the extent that theevent actually takes place. Notwithstanding any other provision to the contraryherein, if the event for which such record was taken fails to occur or isrescinded, then such escrowed shares shall be canceled by the Company andescrowed property returned to the Company.

10.           Replacement. Upon receipt of aduly executed, notarized and unsecured written statement from the Payee withrespect to the loss, theft or destruction of this Note (or any replacementhereof), and, if requested by the Company, an indemnity bond customary in theindustry, or, in the case of a mutilation of this Note, upon surrender andcancellation of such Note, the Company shall issue a new Note, of like tenorand amount, in lieu of such lost, stolen, destroyed or mutilated Note.

11.           Parties in Interest,Transferability. This Note shall be binding upon the Company and itssuccessors and permitted assigns and the terms hereof shall inure to the benefitof the Payee and its successors and assigns. This Note may be transferred orsold, subject to the provisions of Section 19 of this Note, or pledged,hypothecated or otherwise granted as security by the Payee.

12.           Amendments. This Note may notbe modified or amended in any manner except in writing executed by the Companyand the Payee.

13.           Notices. Any notice, demand,request, waiver or other communication required or permitted to be givenhereunder shall be in writing and shall be effective (a) upon handdelivery by telecopy or facsimile at the address or number designated below (ifdelivered on a business day during normal business hours where such notice isto be received), or the first business day following such delivery (ifdelivered other than on a business day during normal business hours where suchnotice is to be received) or (b) on the second business day following 

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thedate of mailing by express courier service, fully prepaid, addressed to suchaddress, or upon actual receipt of such mailing, whichever shall first occur. TheCompany will give written notice to the Payee at least twenty (20) days priorto the date on which dissolution, liquidation or winding-up will take place andin no event shall such notice be provided to the Payee prior to suchinformation being made known to the public. Notices to the Payee shall be madeto the address set forth in the Purchase Agreement. Notices to the Companyshall be made to the following:
| Address of the Company: |   | Access Pharmaceuticals, Inc.       |
|-------------------------|--------|-----------------------------------------|
|                    |   | 2600 Stemmons  Freeway, Suite 176  |
|                    |   | Dallas, Texas  75207                    |
|                    |   | Attention:  President                   |
|                    |   | Facsimile No.:  (214) 905-5101          |
| with a copy to:         |   | Bingham McCutchen LLP                   |
|                    |   | 150 Federal  Street                     |
|                    |   | Boston,  Massachusetts 02110            |
|                    |   | Attention: John  J. Concannon, III |
|                    |   | Facsimile No.:  (617) 951-8736          |

 

14.           Governing Law. This Note shallbe governed by and construed in accordance with the internal laws of the Stateof New York, without giving effect to the choice of law provisions. This Noteshall not be interpreted or construed with any presumption against the partycausing this Note to be drafted.

15.           Headings. Article andsection headings in this Note are included herein for purposes of convenienceof reference only and shall not constitute a part of this Note for any otherpurpose.

16.           Remedies, Characterizations, OtherObligations, Breaches and Injunctive Relief. The remedies provided in thisNote shall be cumulative and in addition to all other remedies available underthis Note, at law or in equity (including, without limitation, a decree ofspecific performance and/or other injunctive relief), no remedy containedherein shall be deemed a waiver of compliance with the provisions giving riseto such remedy and nothing herein shall limit a Payee’s right to pursue actualdamages for any failure by the Company to comply with the terms of this Note. Amountsset forth or provided for herein with respect to payments and the like (and thecomputation thereof) shall be the amounts to be received by the Payee and shallnot, except as expressly provided herein, be subject to any other obligation ofthe Company (or the performance thereof). The Company acknowledges that abreach by it of its obligations hereunder will cause irreparable and materialharm to the Payee and that the remedy at law for any such breach may beinadequate. Therefore the Company agrees that, in the event of any such breachor threatened breach, the Payee shall be entitled, in addition to all otheravailable rights and remedies, at law or in equity, to such equitable relief,including but not limited to an 

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injunction restrainingany such breach or threatened breach, without the necessity of showing economicloss and without any bond or other security being required.

17.           Failure or Indulgence Not Waiver.No failure or delay on the part of the Payee in the exercise of any power,right or privilege hereunder shall operate as a waiver thereof, nor shall anysingle or partial exercise of any such power, right or privilege preclude otheror further exercise thereof or of any other right, power or privilege.

18.           Enforcement Expenses. TheCompany agrees to pay all costs and expenses of enforcement of this Note,including, without limitation, reasonable attorneys’ fees and expenses.

19.           Compliance with Securities Laws.The Payee of this Note acknowledges that this Note is being acquired solely forthe Payee’s own account and not as a nominee for any other party, and forinvestment, and that the Payee shall not offer, sell or otherwise dispose ofthis Note other than in compliance with the laws of the United States ofAmerica and as guided by the rules of the Securities and ExchangeCommission. This Note and any Note issued in substitution or replacementtherefore shall be stamped or imprinted with a legend in substantially thefollowing form:

“THIS NOTE HAS NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISEDISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLESTATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSELTHAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THEPROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

20.           Severability. The provisionsof this Note are severable, and if any provision shall be held invalid orunenforceable in whole or in part in any jurisdiction, then such invalidity orunenforceability shall not in any manner affect such provision in any otherjurisdiction or any other provision of this Note in any jurisdiction.

21.           Consent to Jurisdiction. Eachof the Company and the Payee (i) hereby irrevocably submits to thejurisdiction of the United States District Court sitting in the SouthernDistrict of New York and the courts of the State of New York located in NewYork county for the purposes of any suit, action or proceeding arising out ofor relating to this Note and (ii) hereby waives, and agrees not to assertin any such suit, action or proceeding, any claim that it is not personallysubject to the jurisdiction of such court, that the suit, action or proceedingis brought in an inconvenient forum or that the venue of the suit, action orproceeding is improper. Each of the Company and the Payee consents to processbeing served in any such suit, action or proceeding by mailing a copy thereofto such party at the address set forth in Section 13 hereof and agreesthat such service shall constitute good and sufficient service of process andnotice 

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# thereof. Nothing in this Section 21shall affect or limit any right to serve process in any other manner permittedby law.

22.           Company Waivers. Except asotherwise specifically provided herein, the Company and all others that maybecome liable for all or any part of the obligations evidenced by this Note,hereby waive presentment, demand, notice of nonpayment, protest and all otherdemands and notices in connection with the delivery, acceptance, performanceand enforcement of this Note, and do hereby consent to any number of renewalsof extensions of the time or payment hereof and agree that any such renewals orextensions may be made without notice to any such persons and without affectingtheir liability herein and do further consent to the release of any person liablehereon, all without affecting the liability of the other persons, firms orCompany liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(a)           No delay or omission on the part ofthe Payee in exercising its rights under this Note, or course of conductrelating hereto, shall operate as a waiver of such rights or any other right ofthe Payee, nor shall any waiver by the Payee of any such right or rights on anyone occasion be deemed a waiver of the same right or rights on any futureoccasion.

(b)           THE COMPANY ACKNOWLEDGES THAT THETRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, ANDTO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE ANDHEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE PAYEE OR ITSSUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

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**IN WITNESS WHEREOF,** the Company has executed and delivered thisPromissory Note as of the date first written above.
|        |   | **ACCESS PHARMACEUTICALS, INC.** |
|--------|--------|----------------------------------|
|   |   | By:                              |   |   |
|   |   | Name:                            |   |
|   |   | Title:                           |   |

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EXHIBIT A

FORM OFCONVERSION NOTICE

(To be executed bythe registered holder in order to convert the Note)

The undersigned herebyirrevocably elects to convert the 7.5% Secured Convertible Promissory Note (the“Note”) of Access Pharmaceuticals, Inc., a Delaware corporation(the “Company”), due March 31, 2007****heldby the undersigned into shares of Common Stock, according to the terms andconditions of the Note and the conditions hereof, as of the date written below.The undersigned hereby requests that certificates for the shares of CommonStock to be issued to the undersigned pursuant to this Conversion Notice beissued in the name of, and delivered to, the undersigned or its designee as indicatedbelow. If the shares of Common Stock are to be issued in the name of a personother than the undersigned, the undersigned will pay all transfer taxes payablewith respect thereto. A copy of the Note being converted is attached hereto(and the original Note shall be transmitted to the Company pursuant to theterms thereof). All capitalized terms used in this Conversion Notice, but nototherwise defined herein shall have the meanings assigned in the Note.
|  |
|--|

Date of Conversion (Dateof Notice)
|  |
|--|

Principal Amount of Noteto be Converted
|  |
|--|

Principal Amount of Notenot to be Converted (Principal Amount Remaining after Conversion)
|  |
|--|

Amount of accumulated andunpaid interest on principal amount of Note to be Converted
|  |
|--|

Number of shares ofCommon Stock to be Issued (including conversion of accrued but unpaid intereston Notes to be Converted)
|  |   |
|--|--------|

Applicable ConversionValue

ConversionInformation:[NAME OF HOLDER]
|  |   |
|--|--------|

Address of Holder:
|        |   |
|--------|--------|
|   |   |

Issue Common Stock to (ifdifferent than above):
| Name:    |   |   |
|----------|--------|--------|
| Address: |   |   |
|     |   |

 

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| Tax ID #: |   |   |
|-----------|--------|--------|

 
|  |   |
|--|--------|

Name of Holder
| By: |   |   |
|-----|--------|--------|

Name:Title:

 

 

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