# **Exhibit No. 10.29**

**SECURITY AGREEMENT**

This **SECURITY AGREEMENT** is made as of February 16,2006 between the lenders listed on the signature page hereto (hereinafter,collectively, the “**Secured Parties**”)and Access Pharmaceuticals, Inc., a Delaware corporation with its chiefexecutive office located at 2600 Stemmons Freeway, Suite 176, Dallas,Texas 75207, Attention:  President  (the “**Debtor**”).

**W I T N E S S E TH:**

**WHEREAS**, on the date hereof, the Debtor has issued in favorof each of the Secured Parties, promissory notes (each a “Note”and collectively the “Notes”), in the aggregate principal amount of FiveMillion Dollars ($5,000,000); such Notes have been issued pursuant to the termsof a Convertible Note and Warrant Purchase Agreement (the “PurchaseAgreement”) of even date herewith between theDebtor and the Secured Parties; and

**WHEREAS**,it is a condition precedent to the Secured Parties’ making any loans underPurchase Agreement and the Notes**orotherwise extending credit to the Debtor that the Debtor execute and deliver tothe Lenders this Security Agreement;

**NOW, THEREFORE**, in consideration of thepremises and to induce the Secured Parties to extend the loans to the Debtorpursuant to the Notes, the Debtor hereby agrees with the Secured Parties asfollows:

1.             **Defined Terms**.

(a)           Unless otherwisedefined herein, terms, which are defined in the Note  and used herein, shall have the meaningsascribed to such terms in the Note.

(b)           The following termswhich are defined in Article 9 are used herein as so defined:  Accessions, Accounts, Chattel Paper,Commercial Tort Claims, Deposit Accounts, Documents, Equipment, GeneralIntangibles, Goods, Instruments, Inventory, Investment Property, Letters ofCredit, Letter-of-Credit Rights, Payment Intangibles, Proceeds, PromissoryNotes, Software and Supporting Obligations.

(c)           The following termsshall have the following meanings:

“**Article 9**” means Article 9 ofthe Code as in effect from time to time.

“**Code**” means the Uniform Commercial Codeas from time to time in effect in the State of New York, including,specifically, Article 9.

“**Collateral**” shall have the meaningassigned to it in Section 2 of this Security Agreement.

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“**Contracts**” means the separate contractsbetween the Debtor and third parties (including without limitation itscustomers), as the same may from time to time be amended, supplemented orotherwise modified, including, without limitation, (a) all rights of theDebtor to receive moneys due and to become due to it thereunder or inconnection therewith, (b) all rights of the Debtor to damages arising outof, or for, breach or default in respect thereof and (c) all rights of theDebtor to perform and to exercise all remedies thereunder; but excluding anycontracts, the assignment or hypothecation of which, for collateral purposes,would result in a default or require, or cause, a forfeiture or permit arevocation of material rights under such contract.

“**Copyrights**” means (a) allcopyrights of the United States or any other country, (b) all copyrightregistrations filed in the United States or in any other country, and (c) allProceeds thereof.

“**Copyright License**” means any Contractproviding for the grant by Debtor of any right to use any Copyright.

“**Customer Contracts**” means Contractsbetween the Debtor and its customers.

“**Encumbrance**” or “**Encumbrances**” means any securityinterest, mortgage, pledge, lien, claim, charge, encumbrance, title retentionagreement, lessor’s interest under a financing lease or any analogousarrangements in any of properties or assets of Debtor, intended as, or havingthe effect of, security.

“**Event of Default**” as defined in eachNote.

“**Governmental Authority**” means anyFederal, state, local or foreign court, commission or tribunal, orgovernmental, administrative or regulatory agency, department, authority,instrumentality or other body.

“**Material Adverse Effect**” means amaterial adverse effect on the condition (financial or otherwise), assets,liabilities, business, results of operations or prospects of the Debtor, takenas a whole.

“**Obligations**” means all principal,interest, fees, charges, collateral protection expenses, enforcement costs andother sums (in each case whether pre-or-post petition) due or to become due andpayable by Debtor to any of the Secured Parties under the Notes, this Agreementor the Purchase Agreement.

“**Patents**” means (a) all patents ofthe United States and all reissues and extensions thereof, (b) allapplications for patents of the United States and all divisions, continuationsand continuations-in-part thereof or any other country, and (c) allProceeds thereof.

“**Patent License**” means any Contractproviding for the grant by Debtor of any right to manufacture, use or sell anyinvention covered by a Patent.

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“**Permitted Encumbrances**” means any ofthe following Encumbrances that exist or that the Debtor may create or incur orsuffer to be created or incurred or to exist : (i) liens to secure taxes,assessments and other government charges in respect of obligations not overdueor liens on properties to secure claims for labor, material or supplies inrespect of obligations not overdue; (ii)  deposits or pledges made inconnection with, or to secure payment of, workmen’s compensation, unemploymentinsurance, old age pensions or other social security obligations; (iii)  liensof carriers, warehousemen, mechanics and materialmen, and other like liens onproperties in existence less than 180 days from the date of creation thereof inrespect of obligations not overdue; (iv) encumbrances on real estateconsisting of easements, rights of way, zoning restrictions, restrictions onthe use of real property and defects and irregularities in the title thereto,landlord’s or lessor’s liens under leases to which the Debtor is a party, andother minor liens or encumbrances none of which in the opinion of the Debtorinterferes materially with the use of the property affected in the ordinaryconduct of business of the Debtor, which defects do not individually or in theaggregate have a Material Adverse Effect; (v)  purchase moneysecurity interests in or purchase money mortgages on real or personal propertyto secure purchase money indebtedness, incurred in connection with theacquisition of such property, which security interests or mortgages cover onlythe real or personal property so acquired or (vi) security interests inthe sale and lease back of real and personal property, the aggregate value ofwhich does not exceed $500,000 during the term of the Note (such aggregatevalue limitation to include any encumbrances on the assets of any subsidiary ofthe Company pursuant to Section 5(e)(vi) of the Note).

“**Person**” means an individual,partnership, corporation, limited liability company, business trust, jointstock company, trust, unincorporated association, joint venture or other entityof whatever nature, whether public or private.

“**Requirement of Law**” means anyrequirement of law, rule, regulation or guideline of any GovernmentalAuthority.

“**Security Agreement**” means this SecurityAgreement, as amended, supplemented, restated or otherwise modified from timeto time.

“**Software License**” means any agreement,written or oral, providing for the grant by Debtor of any right to use anySoftware.

**“Source****Code**”means all source code and all updates, releases and/or new versions of theSoftware.

“**Trademarks**” means (a) alltrademarks, trade names, corporate names, company names, business names,fictitious business names, trade styles, service marks, logos and other sourceor business identifiers and the goodwill associated therewith, now existing orhereafter adopted or acquired, all registrations and recordings thereof, andall applications in connection therewith, whether registered in the UnitedStates Patent and Trademark Office or in any similar office or agency of theUnited States, any State thereof or any 

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other country or anypolitical subdivision thereof or otherwise, (b) all renewals thereof, and (c) allProceeds thereof, including the goodwill of the business connected with the useof and symbolized by the Trademarks.

“**Trademark License**” means any Contractproviding for the grant by Debtor of any right to use any Trademark.

2.             **Grant of Security Interest.**

(a)           As collateralsecurity for the prompt and complete payment and performance when due of theObligations, the Debtor hereby grants to the Secured Parties a securityinterest in all properties, assets and rights of the Debtor now owned or at anytime hereafter acquired by the Debtor or in which the Debtor now has or at anytime in the future may acquire any right, title or interest, wherever locatedor situated and however defined or classified under Article 9, including,without limitation, all of the property described in clause (b) below  (collectively, the “**Collateral**”).

(b)           Without limitationof the foregoing, the Collateral includes all of Debtor’s right, title andinterest in the following at all times:

| (i)    |   | all Accounts;                |
|--------|--------|------------------------------|
| (ii)   |   | all Chattel Paper;           |
| (iii)  |   | all Commercial Tort  Claims; |
| (iv)   |   | all Contracts;               |
| (v)    |   | all Copyrights;              |
| (vi)   |   | all Copyright Licenses;      |
| (vii)  |   | all Deposit Accounts;        |
| (viii) |   | all Documents;               |
| (ix)   |   | all Equipment;               |
| (x)    |   | all General  Intangibles;    |
| (xi)   |   | all Goods;                   |
| (xii)  |   | all Instruments;             |
| (xiii) |   | all Inventory;               |

 

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| (xiv)   |   | all Investment  Property;                                                                                                                          |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
| (xv)    |   | all Letter-of-Credit  Rights                                                                                                                       |
| (xvi)   |   | all Letters of Credit;                                                                                                                             |
| (xvii)  |   | all Patents;                                                                                                                                       |
| (xviii) |   | all Patent Licenses;                                                                                                                               |
| (xix)   |   | all Payment  Intangibles;                                                                                                                          |
| (xx)    |   | all Promissory Notes;                                                                                                                              |
| (xxi)   |   | all Software  (including, without limitation, any Source Code thereto, all Software  Licenses and any Patents or Copyrights associated therewith); |
| (xxii)  |   | all Supporting  Obligations;                                                                                                                       |
| (xxiii) |   | all Trademarks;                                                                                                                                    |
| (xxiv)  |   | all Trademark Licenses;                                                                                                                            |
| (xxv)   |   | all Proceeds, all  Accessions and additions thereto and all substitutions and replacements  therefor and products of any and all of the foregoing. |

 

3.             **Rights of Secured Parties; Limitations on SecuredParties’ Obligations.**

(a)           Debtor RemainsLiable under Accounts and Contracts. Anything herein to the contrarynotwithstanding, the Debtor shall remain liable under each of the Accounts andContracts to observe and perform all the conditions and obligations to beobserved and performed by it thereunder, all in accordance with the terms ofany agreement giving rise to each such Account and in accordance with andpursuant to the terms and provisions of each such Contract. None of the SecuredParties shall have any obligation or liability under any Account (or anyagreement giving rise thereto) or under any Contract by reason of or arisingout of this Security Agreement or the receipt by any Secured Party of anypayment relating to such Account or Contract pursuant hereto, nor shall anySecured Party be obligated in any manner to perform any of the obligations ofthe Debtor under or pursuant to any Account (or any agreement giving risethereto) or under or pursuant to any Contract, to make any payment, to make anyinquiry as to the nature or the sufficiency of any payment received by it or asto the sufficiency of any performance by any party under any Account (or anyagreement giving rise thereto) or under any Contract, to present or file anyclaim, to take any action to enforce any performance or to 

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collect thepayment of any amounts which may have been assigned to it or to which it may beentitled at any time or times.

(b)           Notice to AccountDebtors and Contracting Parties. At any time after the occurrence of anEvent of Default, upon the request of any Secured Party, the Debtor shallnotify account debtors on the Accounts and parties to the Contracts that theAccounts and the Contracts have been assigned to the Secured Parties, and thatpayments in respect thereof shall be made directly to them. Upon the occurrenceof an Event of Default, the Secured Parties, may in its own name or in the nameof others communicate with account debtors on the Accounts and parties to theContracts to verify with them to the Secured Parties’ reasonable satisfactionthe existence, amount and terms of any Accounts or Contracts.

4.             **Representations and Warranties.**The Debtor herebyrepresents and warrants to the Secured Parties that (a) it is acorporation duly organized, validly existing and in good standing under thelaws of the State of Delaware, (b) it has the corporate power andauthority to own or hold under lease the Collateral, to transact the businessit transacts and proposes to transact, to execute and deliver this SecurityAgreement and to perform the provisions hereof, (c) this SecurityAgreement has been duly authorized by all necessary corporate action on thepart of the Debtor and constitutes a legal, valid and binding obligation of theDebtor enforceable against the Debtor in accordance with its terms, except assuch enforceability may be limited by (i) applicable bankruptcy,insolvency, reorganization, fraudulent conveyance, moratorium or other similarlaws affecting the enforcement of creditors’ rights generally and (ii) generalprinciples of equity (regardless of whether such enforceability is consideredin a proceeding in equity or at law), (d) the execution, delivery andperformance by the Debtor of this Security Agreement will not (i) to theknowledge of the Debtor, contravene, result in any breach of, or constitute adefault under, or result in the creation of any lien (other than those providedfor in this Security Agreement) in respect of any property of the Debtor under,any indenture, mortgage, deed of trust, loan, purchase or credit agreement,lease, the Debtor’s articles of incorporation or bylaws, or any other materialagreement or instrument to which the Debtor is a party or by which the Debtoror any of its properties may be bound or affected; (ii) conflict with orresult in a breach of any of the terms, conditions or provisions of any order,judgment, decree, or ruling of any court, arbitrator or Governmental Authorityapplicable to the Debtor, or (iii) to the knowledge of the Debtor, violateany provision of any statute or other rule or regulation of anyGovernmental Authority applicable to the Debtor, (e) except for theEncumbrances granted pursuant to this Security Agreement and  Permitted Encumbrances, the Debtor owns eachitem of the Collateral free and clear of any and all Encumbrances or claims ofothers,  and (f)  except inconnection with Permitted Encumbrances, no security agreement, financingstatement or other public notice with respect to all or any part of theCollateral is on file or of record in any public office, except such as mayhave been filed in favor of the Secured Parties.

5.             **Covenants.**The Debtor covenants and agrees with theSecured Parties that, from and after the date of this Security Agreement untilthe Obligations are paid in full:

(a)           FurtherDocumentation; Pledge of Instruments and Chattel Paper. Upon the occurrenceof an Event of Default, and upon the written request of the Secured Parties, 

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and at the soleexpense of the Debtor, the Debtor will promptly and duly execute and deliversuch further instruments and documents and take such further action as theSecured Parties may reasonably request for the purpose of obtaining orpreserving the full benefits of this Security Agreement and of the rights andpowers herein granted, including, without limitation, the filing of anyfinancing or continuation statements under the Uniform Commercial Code ineffect in any jurisdiction with respect to the Encumbrances created hereby. TheDebtor also hereby authorizes the Secured Parties to file any such financing orcontinuation statement. A carbon, photographic or other reproduction of thisSecurity Agreement shall be sufficient as a financing statement for filing inany jurisdiction. If any amount payable under or in connection with any of theCollateral shall be or become evidenced by any Instrument or Chattel Paper,such Instrument or Chattel Paper shall be delivered to the Secured Parties (ifrequested by the Secured Parties), duly endorsed in a manner satisfactory tothe Secured Parties  to be held asCollateral pursuant to this Security Agreement.

(b)           Indemnification.Following the occurrence of any Event of Default, in any suit, proceeding oraction brought by any Secured Party under any Account or Contract for any sumowing thereunder, or to enforce any provisions of any Account or Contract, theDebtor will save, indemnify and keep the Secured Parties harmless from and againstall expense, loss or damage suffered by reason of any defense, setoff,counterclaim, recoupment or reduction or liability whatsoever of the accountdebtor or obligor thereunder, arising out of a breach by the Debtor of anyobligation thereunder or arising out of any other agreement, indebtedness orliability at any time owing to or in favor of such account debtor or obligor orits successors from the Debtor.

(c)           Maintenance ofRecords. The Debtor will keep and maintain at its own cost and expense satisfactoryand complete records of the Collateral, including, without limitation, a recordof all payments received and all credits granted with respect to the Accounts. TheDebtor will mark its books and records pertaining to the Collateral to evidencethis Security Agreement and the security interests granted hereby. The SecuredParties shall have a security interest in all of the Debtor’s books and recordspertaining to the Collateral, and the Debtor shall make any such books andrecords available to the Secured Parties or to their representatives duringnormal business hours for their review at the request of the Secured Partiesupon reasonable prior notice.

(d)           Right ofInspection. The Secured Parties shall at all times but no more than onceevery six (6) months and upon reasonable prior notice have full and freeaccess during normal business hours to all the books, correspondence andrecords of the Debtor, and the Secured Parties or their respectiverepresentatives may examine the same, take extracts therefrom and makephotocopies thereof, and the Debtor agrees to render to the Secured Parties, atthe Debtor’s cost and expense, such clerical and other assistance as may bereasonably requested with regard thereto. The Secured Parties and theirrepresentatives shall at any reasonable time, but no more than once every six (6) months,and upon reasonable prior notice also have the right to enter into and upon anypremises where any of the Inventory or Equipment is located for the purpose ofinspecting the same, observing its use or otherwise protecting itsinterests-therein.

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(e)           Compliance withLaws, etc. The Debtor will comply in all material respects with allRequirements of Law applicable to the Collateral or any part thereof or to theoperation of the Debtor’s business; provided, however, that the Debtor maycontest any Requirement of Law in any reasonable manner which shall not, in theopinion of the Secured Parties, adversely affect the Secured Parties’ rights orthe priority of its Encumbrances on the Collateral.

(f)            Compliance withTerms of Contracts, etc. The Debtor will perform and comply in all materialrespects with all its obligations under the Contracts and all its othercontractual obligations relating to the Collateral except where such nonperformanceand noncompliance could not reasonably be expected to have a Material AdverseEffect.

(g)           Payment ofObligations. The Debtor will pay promptly when due all taxes, assessmentsand governmental charges or levies imposed upon the Collateral or in respect ofits income or profits therefrom, as well as all claims of any kind (including,without limitation, claims for labor, materials and supplies) against or withrespect to the Collateral, except that no such charge need be paid if (i) thevalidity thereof is being contested in good faith by appropriate proceedings, (ii) suchproceedings do not involve any material danger of the sale, forfeiture or lossof any of the Collateral or any interest therein and (iii) such charge isadequately reserved against on the Debtor’s books in accordance with generallyaccepted accounting principles.

(h)           Limitation onEncumbrances on Collateral. The Debtor will not create, incur or permit toexist, will defend the Collateral against, and will take such other action asis necessary to remove, any Encumbrance or claim on or to the Collateral, otherthan the Encumbrances created hereby or Permitted Encumbrances, and will defendthe right, title and interest of the Secured Parties in and to any of theCollateral against other claims and demands of all Persons whomsoever.

(i)            Limitations onDispositions of Collateral. The Debtor will not sell, transfer, lease orotherwise dispose of any of the Collateral, or attempt, offer or contract to doso except for (x) sales of Inventory in the ordinary course of itsbusiness and (y) so long as no Event of Default has occurred, thedisposition in the ordinary course of business of property not material to theconduct of its business.

(j)            Limitations onModifications, Waivers, Extensions of Contracts and Agreements Giving Rise toAccounts. The Debtor will not (i) amend, modify, terminate or waiveany provision of any Contract or any agreement giving rise to an Account in anymanner which could reasonably be expected to materially adversely affect thevalue of all Contracts and Accounts as Collateral when examined in theaggregate or (ii) fail to exercise promptly and diligently each and everymaterial right which it may have under each Contract and each agreement givingrise to an Account where such failure could reasonably be expected to have aMaterial Adverse Effect on the value of all Contracts and Accounts whenexamined in the aggregate.

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(k)           Maintenance ofEquipment. The Debtor will maintain each item of Equipment in goodoperating condition, ordinary wear and tear and immaterial impairments of valueand damage by the elements excepted, and will provide all maintenance, serviceand repairs necessary for such purpose except where the failure to maintainsuch Equipment could not reasonably be expected to have a Material AdverseEffect.

(l)            FurtherIdentification of Collateral. The Debtor will furnish to the SecuredParties from time to time, but no more than once per year, statements andschedules further identifying and describing the Collateral and such otherreports in connection with the Collateral as the Secured Parties may reasonablyrequest, all in reasonable detail.

(m)          Notices. TheDebtor will advise the Secured Parties promptly, in reasonable detail, (i) ofany Encumbrance (other than Encumbrances created hereby or PermittedEncumbrances) on, or claim asserted against, any of the Collateral, (ii) ofany notice sent by a Secured Party of the occurrence of an Event of Defaultunder such Secured Party’s Note and (iii) of the occurrence of any otherevent which could reasonably be expected to have a Material Adverse Effect onthe aggregate value of the Collateral or on the Encumbrances created hereunder.

(o)           Changes inLocations, Name, etc. The Debtor shall provide Secured Parties with atleast thirty (30) days prior written notice in the event of either (i) achange the location of its chief executive office/chief place of business orjurisdiction of incorporation or remove its books and records from suchlocation, or (ii) change its name, identity or corporate structure to suchan extent that any financing statement filed by the Secured Parties inconnection with this Security Agreement would become seriously misleading.

(p)           Patents,Copyrights, Software, Trademarks and General Intangibles.

(i)            Whenever Debtor shall file anapplication for the registration of any Patent, Software or Trademark with theUnited States Patent and Trademark Office or any Copyright or Software with theUnited States Copyright Office or any similar office or agency in any othercountry or any political subdivision thereof, Debtor shall report such filingto the Secured Parties within five (5) business days after the last day ofthe fiscal quarter in which such filing occurs.

(ii)           The Debtor shall execute and deliverany and all agreements, instruments, documents, and papers as the SecuredParties may reasonably request to evidence the Secured Parties’ security interestin any Patent, Copyright, Software, General Intangible or Trademark and thegoodwill of Debtor relating thereto or represented thereby, and Debtor herebyconstitutes the each of the Secured Parties as its attorney-in-fact to executeand file all such writings for the foregoing purposes, all acts of suchattorney being hereby ratified and confirmed; such power being coupled with aninterest is irrevocable until the Obligations are paid in full.

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(iii)          The Debtor will take all reasonableand necessary steps, including, without limitation, in any proceeding beforethe United States Patent and Trademark Office, or any similar office or agencyin any other country or any political subdivision thereof, to maintain andpursue each application (and to obtain the relevant registration) and tomaintain each registration of any registered Patents, Copyrights, Software,General Intangibles or Trademarks, including, without limitation, filing ofapplications for renewal, affidavits of use and affidavits of incontestability.

(iv)          In the event that any material Patent,Copyright, Software, General Intangible or Trademark included in the Collateralis infringed, misappropriated or diluted by a third party, Debtor shallpromptly notify the Secured Parties after it learns thereof and shall, unlessDebtor shall reasonably determine that such Patent, Copyright, Software,General Intangible or Trademark is of negligible economic value to Debtor,promptly sue for infringement, misappropriation or dilution, to seek injunctiverelief where appropriate and to recover any and all damages for suchinfringement, misappropriation or dilution, or take such other actions asDebtor shall reasonably deem appropriate under the circumstances to protectsuch Patent, Copyright, Software, General Intangible or Trademark.

(q)           Commercial TortClaims. The Debtor shall promptly notify the Secured Parties in writingupon incurring or otherwise obtaining a Commercial Tort Claim against any thirdparty, and upon request of the Secured Parties, promptly enter into anamendment to this Security Agreement and do such other acts or things deemedappropriate by the Secured Parties to give the Secured Parties a securityinterest in any such Commercial Tort Claim.

6.             **SecuredParties’ Appointment as Attorney-in-Fact*.***

(a)           Powers. Duringthe existence of an Event of Default, the Debtor hereby irrevocably constitutesand appoints each of the Secured Parties with full power of substitution, asits true and lawful attorney-in-fact with full irrevocable power and authorityin the place and stead of Debtor and in the name of Debtor or in its own name,from time to time in the Secured Parties’ discretion, for the purpose ofcarrying out the terms of this Security Agreement, to take any and allappropriate action and to execute any and all documents and instruments whichmay be necessary or desirable to accomplish the purposes of this SecurityAgreement, and, without limiting the generality of the foregoing, Debtor herebygives each of the Secured Parties the power and right, on behalf of Debtor,without notice to or assent by Debtor, to do the following:  to pay or discharge taxes and Encumbrances(other than Permitted Encumbrances) levied or placed on the Collateral, toeffect any repairs or any insurance called for by the terms of this SecurityAgreement  and to pay all or any part ofthe premiums therefor and the costs thereof; and during the existence of anEvent of Default and only upon written instruction of the Secured Parties, (A) todirect any party liable for any payment under any of the Collateral to makepayment of any and all moneys due or to become due thereunder directly to theSecured Parties or as the Secured Parties shall direct; (B) to ask ordemand for, collect, receive payment of and receipt for, any and all moneys,claims and other 

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amounts due or tobecome due at any time in respect of or arising out of any Collateral; (C) tosign and endorse any invoices, freight or express bills, bills of lading,storage or warehouse receipts, drafts against debtors, assignments,verifications, notices and other documents in connection with any of theCollateral; (D) to commence and prosecute any suits, actions orproceedings at law or in equity in any court of competent jurisdiction tocollect the Collateral or any thereof and to enforce any other right in respectof any Collateral; (E) to defend any suit, action or proceeding broughtagainst Debtor with respect to any Collateral; (F) to settle, compromiseor adjust any suit, action or proceeding described in clause (E) aboveand, in connection therewith, to give such discharges or releases as theSecured Parties may deem appropriate; (G) to assign any Patent, Copyright,Software, General Intangible or Trademark (along with the goodwill of thebusiness to which any such Trademark pertains), throughout the world for suchterm or terms, on such conditions, and in such manner, as the Secured Partiesshall determine; and (H) generally, to sell, transfer, pledge and make anyagreement with respect to or otherwise deal with any of the Collateral as fullyand completely as though the Secured Parties were the absolute owner thereoffor all purposes, and to do, at the Secured Parties’ option and Debtor’sexpense, at any time, or from time to time, all acts and things which the SecuredParties deem necessary to protect, preserve or realize upon the Collateral andthe Secured Parties’ Encumbrances thereon and to effect the intent of thisSecurity Agreement, all as fully and effectively as Debtor might do. The Debtorhereby ratifies all that said attorneys shall lawfully do or cause to be doneby virtue hereof. This power of attorney is a power coupled with an interestand shall be irrevocable.

(b)           Other Powers.The Debtor also authorizes the Secured Parties, at any time and from time totime, to execute, in connection with the sale provided for in Section 9hereof, any endorsements, assignments or other instruments of conveyance ortransfer with respect to the Collateral.

(c)           No Duty onSecured Parties’ Part. The powers conferred on the Secured Partieshereunder are solely to protect Secured Parties’ interests in the Collateraland shall not impose any duty upon the Secured Parties to exercise any suchpowers. The Secured Parties shall be accountable only for amounts that itactually receives as a result of the exercise of such powers, and none of themnor any of their officers, directors, or employees shall be responsible toDebtor for any act or failure to act hereunder, except for its own grossnegligence or willful misconduct.

7.             **Performance bySecured Party of Debtor’s Obligations.**If Debtor fails toperform or comply with any of its agreements contained herein and the SecuredParties shall itself perform or comply, or otherwise cause performance orcompliance, with such agreement, the reasonable expenses of the Secured Partiesincurred in connection with such performance or compliance, together withinterest thereon at a rate per annum equal to 12%, shall be payable by Debtorto the Secured Parties on demand and shall constitute Obligations securedhereby.

8.             **Proceeds.**In addition to the rights of the Secured Parties specified in Section 3with respect to payments of Accounts, it is agreed that during the existence ofan Event of 

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Default (a) allProceeds received by the Debtor consisting of cash, checks and other near-cashitems shall be held by the Debtor in trust for the Secured Parties, segregatedfrom other funds of the Debtor, and shall, forthwith upon receipt by theDebtor, be turned over to the Secured Parties in the exact form received by theDebtor (duly endorsed by the Debtor to the Secured Parties), and (b) anyand all such Proceeds received by the Secured Parties (whether from the Debtoror otherwise) may, in the sole discretion of the Secured Parties, be held bythe Secured Parties as collateral security for, and/or then or at any timethereafter may be applied by the Secured Parties, pro ratably against, theObligations or in such order as the Secured Parties may elect. Any balance ofsuch Proceeds remaining after the Obligations shall have been paid in full,shall be paid over to the Debtor or to whomsoever may be lawfully entitled toreceive the same.

9.             **Remedies.**Upon the occurrence of an Event of Default, the Required Secured Partiesmay exercise, in addition to all other rights and remedies granted to it inthis Security Agreement and in any other instrument or agreement securing,evidencing or relating to the Obligations, all rights and remedies of a securedparty under the Code. Without limiting the generality of the foregoing, theSecured Parties, during the existence of an Event of Default and withoutfurther demand of performance or other demand, presentment, protest,advertisement or notice of any kind (except any notice required by law referredto below) to or upon Debtor or any other Person (all and each of which demands,defenses, advertisements and notices are hereby waived), may in suchcircumstances forthwith collect, receive, appropriate and realize upon theCollateral, or any part thereof, and/or may forthwith sell, lease, assign, giveoption or options to purchase, or otherwise dispose of and deliver theCollateral or any part thereof (or contract to do any of the foregoing), in oneor more parcels at public or private sale or sales, at any exchange, broker’sboard or office of any of the Secured Parties or elsewhere upon such terms andconditions as it may deem advisable and at such prices as it may deem best, forcash or on credit or for future delivery without assumption of any credit risk.Each purchaser at any such sale shall hold the Collateral sold absolutely freefrom any claim or right on the part of the Debtor, and Debtor hereby waives (tothe extent permitted by law) all rights of redemption, stay, or appraisal thatit now has or may at any time in the future have under any rule of law orstatute now existing or hereafter enacted. Each of the Secured Parties shallhave the right upon any such public sale or sales, and, to the extent permittedby law, upon any such private sale or sales, to purchase the whole or any partof the Collateral so sold, free of any right or equity of redemption in Debtor,which right or equity is hereby waived or released, and in connection herewithto credit bid the Obligations with the proceeds that would otherwise be payableto such Secured Party. The  SecuredParties shall not be obligated to make any sale of Collateral regardless ofnotice of sale having been given. The Secured Parties may adjourn any public orprivate sale from time to time by announcement at the time and place fixedtherefor, and such sale may, without further notice, be made at the time andplace to which it was so adjourned. To the extent permitted by law, Debtorhereby waives any claims against the Secured Parties arising because the priceat which any Collateral may have been sold at a private sale was less than theprice that might have been obtained at a public sale. The Debtor furtheragrees, at the Secured Parties’ request to assemble the Collateral and make itavailable to the Secured Parties at places, which the Secured Parties shallreasonably select, whether at Debtor’s premises or elsewhere. The SecuredParties shall apply the net proceeds of any such collection, recovery, receipt,appropriation, realization or sale, after deducting all reasonable costs andexpenses of every kind incurred therein or incidental to the care orsafekeeping of any of the Collateral or in any way 

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relating to theCollateral or the rights of the Secured Parties hereunder, including, withoutlimitation, reasonable attorneys’ fees and disbursements, to the payment inwhole or in part of the Obligations, in such order as the Secured Parties mayelect, and only after such application and after the payment by Secured Partiesof any other amount required by any provision of law, including, withoutlimitation, any provision of the Code, need the Secured Parties account for thesurplus, if any, to Debtor. To the extent permitted by applicable law, Debtorwaives all claims, damages and demands it may acquire against any Secured Partyarising out of the exercise by any Secured Party of any of its rights hereunder.If any notice of a proposed sale or other disposition of Collateral shall berequired by law, such notice shall be deemed reasonable and proper if given atleast ten (10) days before such sale or other disposition. The Debtorshall remain liable for any deficiency if the proceeds of any sale or otherdisposition of the Collateral are insufficient to pay the obligations and thefees and disbursements of any attorneys employed by any Secured Party tocollect such deficiency. Debtor hereby agrees that any sale or otherdisposition of the Collateral conducted in conformity with reasonablecommercial practices of banks, insurance companies, or other financialinstitutions in the city and state where any Secured Party is located indisposing of property similar to the Collateral shall be deemed to becommercially reasonable.

10.           **Limitationon Duties Regarding Preservation of Collateral.**The SecuredParties’ sole duty with respect to the custody, safekeeping and physicalpreservation of the Collateral in its possession, under Article 9 orotherwise, shall be to deal with it in the same manner as any Secured Partydeals with similar property for its own account. None of the Secured Partiesnor any of  their respective directors,officers, agents or employees shall be liable for failure to demand, collect orrealize upon all or any part of the Collateral or for any delay in doing so orshall be under any obligation to sell or otherwise dispose of any Collateralupon the request of Debtor or otherwise.

11.           **Powerscoupled with an Interest.**All authorizations and agencies hereincontained with respect to the Collateral are irrevocable and powers coupledwith an interest.

12.           **Severability.**Any provision of this Security Agreement that is prohibited orunenforceable in any jurisdiction shall, as to such jurisdiction, beineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof, and any such prohibition orunenforceability in any jurisdiction shall not invalidate or renderunenforceable such provision in any other jurisdiction. All covenants and otheragreements contained in this Security Agreement by or on behalf of any of the partieshereto bind and inure to the benefit of their respective successors andassigns  whether so expressed or not.

13.           **ParagraphHeadings.**The paragraph headings used in this Security Agreementare for convenience of reference only and are not to affect the constructionhereof or be taken into consideration in the interpretation hereof. ThisSecurity Agreement may be executed in any number of counterparts, each of whichshall be an original but all of which together shall constitute one instrument.Each counterpart may consist of a number of copies hereof, each signed by lessthan all, but together signed by all, of the parties hereto.

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14.           **NoWaiver; Cumulative Remedies.**The Secured Parties shall not, byany act (except by a written instrument), delay, indulgence, omission orotherwise, be deemed to have waived any right or remedy hereunder or to haveacquiesced in any default or in any breach of any of the terms and conditionshereof. No failure to exercise, nor any delay in exercising, on the part of anyof the Secured Parties, any right, power or privilege hereunder shall operateas a waiver thereof. No single or partial exercise of any right, power orprivilege hereunder shall preclude any other or further exercise thereof or theexercise of any other right, power or privilege. A waiver by any Secured Partyof any right or remedy hereunder on any one occasion shall not be construed asa bar to any right or remedy that the Secured Parties would otherwise have onany future occasion. The rights and remedies herein provided are cumulative,may be exercised singly or concurrently and are not exclusive of any rights orremedies provided by law. **THIS SECURITY AGREEMENT SHALL BE CONSTRUED ANDENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNEDBY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THELAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF AJURISDICTION OTHER THAN SUCH STATE.**

15.**           Jurisdiction; Venue; Service ofProcess.**This Agreement shall be subject to the exclusivejurisdiction of the Federal District Court, Southern District of New York andif such court does not have proper jurisdiction, the State Courts of New YorkCounty, New York. The parties to this Agreement agree that any breach of anyterm or condition of this Agreement shall be deemed to be a breach occurring inthe State of New York by virtue of a failure to perform an act required to beperformed in the State of New York and irrevocably and expressly agree tosubmit to the jurisdiction of the Federal District Court, Southern District ofNew York and if such court does not have proper jurisdiction, the State Courtsof New York County, New York for the purpose of resolving any disputes amongthe parties relating to this Agreement or the transactions contemplated hereby.The parties irrevocably waive, to the fullest extent permitted by law, anyobjection which they may now or hereafter have to the laying of venue of anysuit, action or proceeding arising out of or relating to this Agreement, or anyjudgment entered by any court in respect hereof brought in New York County, NewYork, and further irrevocably waive any claim that any suit, action orproceeding brought in Federal District Court, Southern District of New York andif such court does not have proper jurisdiction, the State Courts of New YorkCounty, New York has been brought in an inconvenient forum. Each of the partieshereto consents to process being served in any such suit, action or proceeding,by mailing a copy thereof to such party at the address in effect for notices toit under this Agreement and agrees that such service shall constitute good andsufficient service of process and notice thereof. Nothing in this Section 15shall affect or limit any right to serve process in any other manner permittedby law.

16.           **Notices.**Notices hereunder shall be given to the Debtor and each Secured Party inthe manner set forth in the Purchase Agreement of even date herewith betweenthe Debtor and each of the Secured Parties and at the addresses set forththerein.

17.           **Termination.**Upon the repayment in full of all Obligations, this Security Agreementshall terminate, the Secured Parties shall deliver any release of theEncumbrances created under this Security Agreement that Debtor may reasonablyrequest (at the cost of the Debtor), and the Secured Parties shall return tothe Debtor all Collateral then in its possession, 

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custody, or control, andthis Security Agreement shall terminate without further action by the Party andbe of no further force and effect.

[intentionallyleft blank - signature page follows]

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**INWITNESS WHEREOF,** the parties hereto have caused this SecurityAgreement to be duly executed and delivered as of the date first above written.
| ** ** |   | **ACCESS PHARMACEUTICALS, INC.** |
|------------|--------|----------------------------------|
|       |   | By:                              | /s/ Rosemary  Mazanet |   |
|       |   | Name: Rosemary Mazanet           |   |
|       |   | Title: Acting CEO                |   |

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**OMNIBUSSIGNATURE PAGE TOACCESS PHARMACEUTICALS, INC.SECURITY AGREEMENT**

The undersigned,as a Secured Party, hereby executes and delivers the Security Agreement towhich this signature page is attached, which, together with allcounterparts of the Security Agreement and signature pages of the otherparties named in said Security Agreement, shall constitute one and the samedocument in accordance with the terms of the Security Agreement.
|        |        | ** ** |
|--------|-------------|------------|
|   | Print Name: |       | SCO Capital  Partners LLC |   |
|   |        |       |   |   |
|   | By:         |       | /s/ Steven H.  Rouhandeh |   |
|   | Name:       |       | Steven H.  Rouhandeh |   |
|   | Title:      |       | Chairman |   |

 

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