Unassociated Document


    EXHIBIT
      10.26

    
      

      

    

    
 

    


    THIS
      WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED
      OR
      TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
      ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.
      

    


     

    Warrant
      No. W-__ 

     

    COMMON
      STOCK PURCHASE WARRANT

     

    To
      Purchase [50%
      X (Issue Amount)/(Conversion Price)] Shares
      of
      Common Stock of

    ACCESS
      PHARMACEUTICALS, INC.

     

    THIS
      IS
      TO CERTIFY THAT _______________, or registered assigns (the “Holder”),
      is
      entitled, during the Exercise Period (as hereinafter defined), to purchase
      from
      Access Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
      the
      Warrant Stock (as hereinafter defined and subject to adjustment as provided
      herein), in whole or in part, at a purchase price of $4.00 per
      share
      (as adjusted herein), all on and subject to the terms and conditions hereinafter
      set forth.

     

    1. Definitions.
      As used
      in this Warrant, the following terms have the respective meanings set forth
      below: 

     

    “Additional
      Shares of Common Stock”
means
      any shares of Common Stock issued by the Company after the Closing Date other
      than: (A) shares of Common Stock issued upon the conversion of the Preferred
      Stock, the exercise of the warrants issued pursuant to the Purchase Agreement
      or
      payment of dividends on the Preferred Stock, (B) shares of Common Stock issued
      upon the exercise of any warrants or options (collectively, the “Existing
      Warrants”)
      outstanding on the date hereof; provided that such securities have not been
      amended since the date of the Purchase Agreement to increase the number of
      such
      securities or to decrease the exercise, exchange or conversion price of such
      securities, (C) shares of Common Stock issued, stock awards or options under,
      or
      the exercise of any options granted pursuant to, any stock-based compensation
      plans of the Company duly adopted by a majority of the non-employee members
      of
      the Board of Directors of the Company or a majority of the members of a
      committee of non-employee directors established for such purpose (in each case,
      at issuance or exercise prices at or above fair market value), (D) shares of
      Common Stock pursuant to a stock split, combination or subdivision of the
      outstanding shares of Common Stock, (E) shares of Common Stock or Common Stock
      Equivalents issued in connection with a bona-fide strategic transaction approved
      by the Board of Directors of the Company, the primary purpose of which is not
      to
      provide financing to the Company or (F) shares of Preferred Stock and warrants
      to purchase Common Stock, in each case, issued pursuant to the Purchase
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Affiliate”
means
      any person or entity that, directly or indirectly through one or more
      intermediaries, controls or is controlled by or is under common control with
      a
      person or entity, as such terms are used in and construed under Rule 144 under
      the Securities Act. With respect to a Holder of Warrants, any investment fund
      or
      managed account that is managed on a discretionary basis by the same investment
      manager as such Holder will be deemed to be an Affiliate of such Holder.


     

    “Appraised
      Value”
means,
      in respect of any share of Common Stock on any date herein specified, the fair
      saleable value of such share of Common Stock (determined without giving effect
      to the discount for (i) a minority interest or (ii) any lack of liquidity of
      the
      Common Stock or to the fact that the Company may have no class of equity
      registered under the Exchange Act) as of the last day of the most recent fiscal
      month ending prior to such date specified, based on the value of the Company
      on
      a fully-diluted basis, as determined by a nationally recognized investment
      banking firm selected by the Company’s Board of Directors and having no prior
      relationship with the Company. 

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a legal holiday
      or a
      day on which banking institutions in the State of Texas generally are authorized
      or required by law or other government actions to close. 

     

    “Change
      of Control”
means
      the (i) acquisition by an individual or legal entity or group (as set forth
      in
      Section 13(d) of the Exchange Act), other than SCO Capital Partners LLC and
      its
      Affiliates, of more than one-half of the voting rights or equity interests
      in
      the Company other than in connection with the exercise or conversion of
      currently outstanding warrants or convertible securities; 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 with
      any
      other corporation (other than a wholly owned subsidiary corporation) or
      effectuation of any transaction or series of related transactions where holders
      of the Company’s voting securities prior to such transaction or series of
      transactions fail to continue to hold at least 50% of the voting power of the
      Company (or, if other than the Company, the successor or acquiring entity)
      immediately following such transaction; or (iii) any tender offer or exchange
      offer (whether by the Company or another Person) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (iv) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property.

     

    “Closing
      Date”
means
      November 10, 2007.

     

    “Commission”
means
      the Securities and Exchange Commission or any other federal agency then
      administering the Securities Act and other federal securities laws.


     

    “Common
      Stock”
means
      (except where the context otherwise indicates) the Common Stock, $0.01 par
      value
      per share, of the Company as constituted on the Closing Date, and any capital
      stock into which such Common Stock may thereafter be changed or converted,
      and
      shall also include (i) capital stock of the Company of any other class
      (regardless of how denominated) issued to the holders of shares of Common Stock
      upon any reclassification thereof which is also not preferred as to dividends
      or
      assets on liquidation over any other class of stock of the Company and which
      is
      not subject to redemption and (ii) shares of common stock of any successor
      or
      acquiring corporation received by or distributed to the holders of Common Stock
      of the Company in the circumstances contemplated by Section 4.6. 

     

    
      
        
        

      

      
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    “Common
      Stock Equivalents”
has
      the
      meaning set forth in Section 4.3.

     

    “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 public market for the Common Stock, the higher of


     

    (a)
      the
      book value per share of Common Stock at such date, and 

     

    (b)
      the
      Appraised Value per share of Common Stock at such date, 

     

    or

     

    (2) if
      there
      shall then be a public market for the Common Stock, the average of the daily
      market prices for the trading day immediately before such date. The daily market
      price for each such trading day shall be (i) the closing bid price on such
      day
      on the principal stock exchange (including Nasdaq) on which such Common Stock
      is
      then listed or admitted to trading, or quoted, as applicable, (ii) if no sale
      takes place on such day on any such exchange, the last reported closing bid
      price on such day as officially quoted on any such exchange (including Nasdaq),
      (iii) if the Common Stock is not then listed or admitted to trading on any
      stock
      exchange, the last reported closing bid price on such day in the
      over-the-counter market, as furnished by the National Association of Securities
      Dealers Automatic Quotation System or the Pink Sheets LLC, (iv) if neither
      such
      corporation at the time is engaged in the business of reporting such 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 FINRA selected in good faith by
      the
      Holder and reasonably acceptable to the Company.

     

    “Current
      Warrant Price”
means,
      in respect of a share of Common Stock at any date herein specified, the price
      at
      which a share of Common Stock may be purchased pursuant to this Warrant on
      such
      date. Unless and until the Current Warrant Price is adjusted pursuant to the
      terms herein, the initial Current Warrant Price shall be $4.00 per share of
      Common Stock. 

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any similar federal statute,
      and the rules and regulations of the Commission thereunder, all as the same
      shall be in effect from time to time. 

     

    “Exercise
      Period”
means
      the period during which this Warrant is exercisable pursuant to Section 2.1.
      

     

    “Expiration
      Date”
means
      November 10, 2013. 

     

    “GAAP”
means
      generally accepted accounting principles in the United States of America as
      from
      time to time in effect. 

     

    
      
        
        

      

      
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    “FINRA”
means
      the Financial Industry Regulatory Authority, or any successor entity thereto.
      

     

    “Other
      Property”
has
      the
      meaning set forth in Section 4.6. 

     

    “Person”
means
      any individual, sole proprietorship, partnership, joint venture, trust,
      incorporated organization, association, corporation, limited liability company,
      institution, public benefit corporation, entity or government (whether federal,
      state, county, city, municipal or otherwise, including, without limitation,
      any
      instrumentality, division, agency, body or department thereof). 

     

    “Preferred
      Stock”
shall
      mean the Company’s Series A Cumulative Convertible Preferred Stock, par value
      $0.01 per share, issued pursuant to the Purchase Agreement.

     

    “Purchase
      Agreement”
means
      that certain Preferred Stock and Warrant Purchase Agreement dated as of November
      7, 2007 among
      the
      Company and the other parties named therein, pursuant to which this Warrant
      was
      originally issued. 

     

    “Restricted
      Common Stock”
means
      shares of Common Stock which are, or which upon their issuance upon the exercise
      of any Warrant would be required to be, evidenced by a certificate bearing
      the
      restrictive legend set forth in Section 3.2. 

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any similar federal statute, and
      the
      rules and regulations of the Commission thereunder, all as the same shall be
      in
      effect at the time. 

     

    “Trading
      Day”
means
      any day on which the primary market on which shares of Common Stock are listed
      or quoted is open for trading, or, if the Common Stock is no then listed or
      quoted for trading on any public market, Trading Day shall mean a Business
      Day.


     

    “Transfer”
means
      any disposition of any Warrant or Warrant Stock or of any interest in either
      thereof, which would constitute a sale thereof within the meaning of the
      Securities Act. 

     

    “Warrants”
means
      this Warrant and all warrants issued upon transfer, division or combination
      of,
      or in substitution for, any thereof. All Warrants shall at all times be
      identical as to terms and conditions and date, except as to the number of shares
      of Common Stock for which they may be exercised. 

     

    “Warrant
      Price”
means
      an amount equal to (i) the number of shares of Common Stock being purchased
      upon
      exercise of this Warrant pursuant to Section 2.1, multiplied by (ii) the Current
      Warrant Price. 

     

    “Warrant
      Stock”
means
      the ____________ shares of Common Stock to be purchased upon the exercise
      hereof, subject to adjustment as provided herein. 

     

    2. Exercise
      of Warrant.
      

     

    
      
        
        

      

      
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    2.1. Manner
      of Exercise.
      From
      and after the Closing Date, and until 5:00 P.M., New York time, on the
      Expiration Date (the “Exercise
      Period”),
      the
      Holder may exercise this Warrant, on any Business Day, for all or any part
      of
      the number of shares of Warrant Stock purchasable hereunder. The exercise price
      per share of the Common Stock under this Warrant shall be the Current Warrant
      Price, subject to adjustment hereunder. 

     

    (i)  In
      order
      to exercise this Warrant, in whole or in part, the Holder shall deliver to
      the
      Company at its principal office or at the office or agency designated by the
      Company pursuant to Section 12, (i) a written notice of Holder’s election to
      exercise this Warrant, which notice shall specify the number of shares of
      Warrant Stock to be purchased, and (ii) payment of the Warrant Price as provided
      herein. Such notice shall be substantially in the form of the subscription
      form
      appearing at the end of this Warrant as Exhibit
      A,
      duly
      executed by the Holder or its agent or attorney. 

     

    (ii)  Upon
      receipt thereof, the Company shall, as promptly as practicable, and in any
      event
      within three Business Days thereafter, execute or cause to be executed and
      deliver or cause to be delivered to the Holder a certificate or certificates
      representing the aggregate number of full shares of Warrant Stock issuable
      upon
      such exercise, together with cash in lieu of any fraction of a share, as
      hereinafter provided. The stock certificate or certificates so delivered shall
      be, to the extent possible, in such denomination or denominations as the Holder
      shall request in the notice and shall be registered in the name of the Holder
      or
      if permitted pursuant to the terms of this Warrant such other name as shall
      be
      designated in the notice. Certificates for shares purchased hereunder shall
      be
      transmitted by the transfer agent of the Company to the Holder by crediting
      the
      account of the Holder’s prime broker with the Depository Trust Company through
      its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      if the Company is a participant in such system and there is an effective
      Registration Statement permitting the resale of the Warrant Stocks by the
      Holder, and otherwise by physical delivery to the address specified by the
      Holder in the exercise notice within 3 Trading Days from the delivery to the
      Company of the exercise notice, surrender of this Warrant (if required) and
      payment of the aggregate Exercise Price as set forth above (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised and such certificate or
      certificates shall be deemed to have been issued, and the Holder or any other
      Person so designated to be named therein shall be deemed to have become a Holder
      of record of such shares for all purposes, as of the date when the notice,
      together with the payment of the Warrant Price and this Warrant, is received
      by
      the Company as described above. If the Company fails for any reason to deliver
      to the Holder certificates evidencing the Warrant Stock subject to a Notice
      of
      Exercise by the Warrant Share Delivery Date, the Company shall pay to the
      Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
      of
      Warrant Stock subject to such exercise (based on the VWAP of the Common Stock
      on
      the date of the applicable Notice of Exercise), $10 per Trading Day (increasing
      to $20 per Trading Day on the fifth Trading Day after such liquidated damages
      begin to accrue) for each Trading Day after such Warrant Share Delivery Date
      until such certificates are delivered. 

     

    
      
        
        

      

      
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    (iii)  If
      the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Stock pursuant to an
      exercise on or before the Warrant Share Delivery Date, and if after such date
      the Holder is required by its broker to purchase (in an open market transaction
      or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of
      Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
      Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Stock that the Company was required to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Stock for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Company shall be required to pay the Holder
      $1,000. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In and, upon request of
      the
      Company, evidence of the amount of such loss. Nothing herein shall limit a
      Holder’s right to pursue any other remedies available to it hereunder, at law or
      in equity including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.

     

    (iv)  Notwithstanding
      anything herein to the contrary, the Holder shall not be required to physically
      surrender this Warrant to the Company until the Holder has purchased all of
      the
      Warrant Stock available hereunder and the Warrant has been exercised in full,
      in
      which case, the Holder shall surrender this Warrant to the Company for
      cancellation within 3 Trading Days of the date the final exercise notice is
      delivered to the Company. Partial exercises of this Warrant resulting in
      purchases of a portion of the total number of Warrant Stock available hereunder
      shall have the effect of lowering the outstanding number of Warrant Stock
      purchasable hereunder in an amount equal to the applicable number of Warrant
      Stock purchased. If this Warrant shall have been exercised in part, the Company
      shall, at the request of a Holder and upon surrender of this Warrant
      certificate, at the time of delivery of the certificate or certificates
      representing Warrant Stock, deliver to Holder a new Warrant evidencing the
      rights of Holder to purchase the unpurchased Warrant Stock called for by this
      Warrant, which new Warrant shall in all other respects be identical with this
      Warrant.

     

    (v)  Payment
      of the Warrant Price may be made at the option of the Holder by: (i) certified
      or official bank check payable to the order of the Company, (ii) wire transfer
      of immediately available funds to the account of the Company or (iii) the
      surrender and cancellation of a portion of shares of Common Stock then held
      by
      the Holder or issuable upon such exercise of this Warrant, which shall be valued
      and credited toward the total Warrant Price due the Company for the exercise
      of
      the Warrant based upon the Current Market Price of the Common Stock. All shares
      of Common Stock issuable upon the exercise of this Warrant pursuant to the
      terms
      hereof shall be validly issued and, upon payment of the Warrant Price, shall
      be
      fully paid and nonassessable and not subject to any preemptive
      rights.

     

    
      
        
        

      

      
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    (vi)  If
      the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Stock pursuant to Section
      2.1(ii) by the Warrant Share Delivery Date, then the Holder will have the right
      to rescind such exercise.

     

    (vii)  The
      Holder and the Company shall maintain records showing the number of Warrant
      Stock purchased and the date of such purchases. The Company shall deliver any
      objection to any exercise notice within 1 Business Day of receipt of such
      notice. In the event of any dispute or discrepancy, the records of the Holder
      shall be controlling and determinative in the absence of manifest error.
The
      Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
      that, by reason of the provisions of this paragraph, following the purchase
      of a
      portion of the Warrant Stock hereunder, the number of Warrant Stock available
      for purchase hereunder at any given time may be less than the amount stated
      on
      the face hereof.

     

    2.2. Fractional
      Shares.
      The
      Company shall not be required to issue a fractional share of Common Stock upon
      exercise of any Warrant. As to any fraction of a share which the Holder of
      one
      or more Warrants, the rights under which are exercised in the same transaction,
      would otherwise be entitled to purchase upon such exercise, the Company shall
      pay an amount in cash equal to the Current Market Price per share of Common
      Stock on the date of exercise multiplied by such fraction. 

     

    2.3. Continued
      Validity.
      A
      Holder of shares of Common Stock issued upon the exercise of this Warrant,
      in
      whole or in part (other than a Holder who acquires such shares after the same
      have been publicly sold pursuant to a Registration Statement under the
      Securities Act or sold pursuant to Rule 144 thereunder), shall continue to
      be
      entitled with respect to such shares to all rights to which it would have been
      entitled as the Holder under Sections 10 and 13 of this Warrant. 

     

    2.4. Restrictions
      on Exercise Amount.
      

     

    (i) Unless
      a
      Holder delivers to the Company irrevocable written notice prior to the date
      of
      issuance hereof or sixty-one days prior to the effective date of such notice
      that this Section 2.4(i) shall not apply to such Holder, the Holder may not
      acquire a number of shares of Warrant Stock to the extent that, upon such
      exercise, the number of shares of Common Stock then beneficially owned by such
      holder and its Affiliates and any other persons or entities whose beneficial
      ownership of Common Stock would be aggregated with the Holder’s for purposes of
      Section 13(d) of the Exchange Act (including shares held by any “group” of which
      the holder is a member, but excluding shares beneficially owned by virtue of
      the
      ownership of securities or rights to acquire securities that have limitations
      on
      the right to convert, exercise or purchase similar to the limitation set forth
      herein) exceeds 4.99% of the total number of shares of Common Stock of the
      Company then issued and outstanding. For purposes hereof, “group” has the
      meaning set forth in Section 13(d) of the Exchange Act and applicable
      regulations of the Commission, and the percentage held by the holder shall
      be
      determined in a manner consistent with the provisions of Section 13(d) of the
      Exchange Act. Except as set forth in the preceding sentence, for purposes of
      this Section, the number of shares of Common Stock beneficially owned by the
      Holder and its Affiliates shall include the number of shares of Common Stock
      issuable upon exercise of this Warrant with respect to which such determination
      is being made, but shall exclude the number of shares of Common Stock which
      would be issuable upon (A) exercise of the remaining, nonexercised portion
      of
      this Warrant beneficially owned by the Holder or any of its Affiliates and
      (B)
      exercise or conversion of the unexercised or nonconverted portion of any other
      securities of the Company (including, without limitation, any the Preferred
      Stock) subject to a limitation on conversion or exercise analogous to the
      limitation contained herein beneficially owned by the Holder or any of its
      affiliates.  For purposes of this Section, in determining the number of
      outstanding shares of Common Stock, a Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (x) the Company’s most recent
      Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other notice by the Company or the
      Company’s Transfer Agent setting forth the number of shares of Common Stock
      outstanding.  Each delivery of a notice of exercise by a Holder will
      constitute a representation by such Holder that it has evaluated the limitation
      set forth in this paragraph and determined, based on the most recent public
      filings by the Company with the Commission, that the issuance of the full number
      of shares of Warrant Stock requested in such notice of exercise is permitted
      under this paragraph. 

     

    
      
        
        

      

      
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    (ii) In
      the
      event the Company is prohibited from issuing shares of Warrant Stock as a result
      of any restrictions or prohibitions under applicable law or the rules or
      regulations of any stock exchange, interdealer quotation system or other
      self-regulatory organization, the Company shall as soon as possible seek the
      approval of its stockholders and take such other action to authorize the
      issuance of the full number of shares of Common Stock issuable upon exercise
      of
      this Warrant.

     

    3. Transfer,
      Division and Combination.
      

     

    3.1. Transfer.
      The
      Warrants and the Warrant Stock shall be freely transferable, subject to
      compliance with this Section 3.1 and all applicable laws, including, but not
      limited to the Securities Act. If, at the time of the surrender of this Warrant
      in connection with any transfer of this Warrant or the resale of the Warrant
      Stock, this Warrant or the Warrant Stock, as applicable, shall not be registered
      under the Securities Act, the Company may require, as a condition of allowing
      such transfer (i) that the Holder or transferee of this Warrant or the Warrant
      Stock as the case may be, furnish to the Company a written opinion of counsel
      that is reasonably acceptable to the Company to the effect that such transfer
      may be made without registration under the Securities Act, (ii) that the Holder
      or transferee execute and deliver to the Company an investment representation
      letter in form and substance acceptable to the Company and substantially in
      the
      form attached as Exhibit
      C
      hereto
      and (iii) that the transferee be an “accredited investor” as defined in Rule
      501(a) promulgated under the Securities Act. Transfer of this Warrant and all
      rights hereunder, in whole or in part, in accordance with the foregoing
      provisions, shall be registered on the books of the Company to be maintained
      for
      such purpose, upon surrender of this Warrant at the principal office of the
      Company referred to in Section 2.1 or the office or agency designated by the
      Company pursuant to Section 12, together with a written assignment of this
      Warrant substantially in the form of Exhibit
      B
      hereto
      duly executed by the Holder or its agent or attorney and funds sufficient to
      pay
      any transfer taxes payable upon the making of such transfer. Upon such surrender
      and, if required, such payment, the Company shall execute and deliver a new
      Warrant or Warrants in the name of the assignee or assignees and in the
      denomination specified in such instrument of assignment, and shall issue to
      the
      assignor a new Warrant evidencing the portion of this Warrant not so assigned,
      and this Warrant shall promptly be cancelled. Following a transfer that complies
      with the requirements of this Section 3.1, the Warrant may be exercised by
      a new
      Holder for the purchase of shares of Common Stock regardless of whether the
      Company issued or registered a new Warrant on the books of the Company.


     

    
      
        
        

      

      
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    3.2. Restrictive
      Legends.
      Each
      certificate for Warrant Stock initially issued upon the exercise of this
      Warrant, and each certificate for Warrant Stock issued to any subsequent
      transferee of any such certificate, unless, in each case, such Warrant Stock
      is
      eligible for resale without registration pursuant to Rule 144(k) under the
      Exchange Act or such Warrant Stock is registered for sale under an effective
      registration statement filed under the Securities Act, shall bear the following
      legend: 

     

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE
      OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION
      OF
      COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS NOT
      REQUIRED.” 

     

    In
      addition, the legend set forth above shall be removed and the Company shall
      issue a certificate without such legend to the holder of any Warrant Stock
      upon
      which it is stamped, if, unless otherwise required by applicable state
      securities laws, such Warrant Stock is registered for sale under an effective
      registration statement filed under the Securities Act.

    


    3.3. Division
      and Combination; Expenses; Books.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office or agency of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 3.1 as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice. The Company shall prepare, issue and deliver at its own
      expense the new Warrant or Warrants under this Section 3. The Company agrees
      to
      maintain, at its aforesaid office or agency, books for the registration and
      the
      registration of transfer of the Warrants. 

     

    4. Adjustments.
      The
      number of shares of Common Stock for which this Warrant is exercisable, and
      the
      price at which such shares may be purchased upon exercise of this Warrant,
      shall
      be subject to adjustment from time to time as set forth in this Section 4.
      The
      Company shall give the Holder notice of any event described below which requires
      an adjustment pursuant to this Section 4 in accordance with Sections 5.1 and
      5.2. 

     

    4.1. Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time while this Warrant is outstanding the Company shall: 

     

    (i) declare
      a
      dividend or make a distribution on its outstanding shares of Common Stock in
      shares of Common Stock, 

     

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

     

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

     

    
      
        
        

      

      
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    (1) the
      number of shares of Common Stock acquirable upon exercise of this Warrant
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock that would have been acquirable under this Warrant
      immediately prior to the record date for such dividend or distribution or the
      effective date of such subdivision or combination would own or be entitled
      to
      receive after such record date or the effective date of such subdivision or
      combination, as applicable, and 

     

    (2) the
      Current Warrant Price shall be adjusted to equal: 

     

    (A) the
      Current Warrant Price in effect at the time of the record date for such dividend
      or distribution or of the effective date of such subdivision or combination,
      multiplied by the number of shares of Common Stock into which this Warrant
      is
      exercisable immediately prior to the adjustment, divided by 

     

    (B) the
      number of shares of Common Stock into which this Warrant is exercisable
      immediately after such adjustment. 

     

    Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clauses
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination. 

     

    4.2. Issuance
      of Additional Shares of Common Stock.
      

     

    (i) If,
      at
      any time while this Warrant is outstanding, the Company shall issue or sell
      any
      Additional Shares of Common Stock in exchange for consideration in an amount
      per
      Additional Share of Common Stock less than the Current Warrant Price at the
      time
      the Additional Shares of Common Stock are issued or sold, then the Current
      Warrant Price immediately prior to such issue or sale shall be reduced to a
      price equal to the lowest price per share of the Additional Shares of Common
      Stock received by or to be received by the Company upon such issue or sale
      of
      such Additional Shares of Common Stock.

     

    (ii) The
      provisions of paragraph 4.2(i) shall not apply to any issuance of Additional
      Shares of Common Stock for which an adjustment is provided under Section 4.1.
      

     

    4.3. Issuance
      of Common Stock Equivalents.
      If, at
      any time while this Warrant is outstanding, the Company shall issue or sell
      any
      warrants or rights to subscribe for or purchase any Additional Shares of Common
      Stock or any securities exchangeable or convertible into Additional Shares
      of
      Common Stock (regardless of the number of shares of Common Stock that the
      Company is then authorized to issue) (collectively, “Common
      Stock Equivalents”),
      whether or not the rights to exchange or convert thereunder are immediately
      exercisable, and the effective price per share for which Common Stock is
      issuable upon the exercise, exchange or conversion of such Common Stock
      Equivalents shall be less than the Current Warrant Price in effect immediately
      prior to the time of such issue or sale, then the Current Warrant Price shall
      be
      adjusted as provided in Section 4.2 on the basis that the Additional Shares
      of
      Common Stock issuable pursuant to such Common Stock Equivalents shall be deemed
      to have been issued and the Company shall be deemed to have received all of
      the
      consideration payable therefor, if any, as of the date of the actual issuance
      of
      such Common Stock Equivalents. No further adjustments to the Current Warrant
      Price shall be made under this Section 4.3 upon the actual issue of such Common
      Stock upon the exercise, conversion or exchange of such Common Stock
      Equivalents. 

     

    
      
        
        

      

      
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    4.4. Superseding
      Adjustment.

     

    (i) If,
      at
      any time after any adjustment of the Current Warrant Price shall have been
      made
      pursuant to Section 4.3 as the result of any issuance of Common Stock
      Equivalents, (x) the right to exercise, convert or exchange all of such Common
      Stock Equivalents shall expire unexercised, or (y) the conversion rate or
      consideration per share for which shares of Common Stock are issuable pursuant
      to such Common Stock Equivalents shall be increased solely by virtue of
      provisions therein contained for an automatic increase in such conversion rate
      or consideration per share upon the occurrence of a specified date or event,
      then, unless any of such Common Stock Equivalents have previously been converted
      or exercised at the original price, any such previous adjustments to the Current
      Warrant Price shall be rescinded and annulled and the Additional Shares of
      Common Stock which were deemed to have been issued by virtue of the computation
      made in connection with the adjustment so rescinded and annulled shall no longer
      be deemed to have been issued by virtue of such computation, provided, however,
      such readjustment to the Current Warrant Price described in this Section shall
      not effect any exercises of this Warrant effected at any time prior to such
      readjustment. 

     

    (ii)
      Upon
      the occurrence of an event set forth in Section 4.4(i) above there shall be
      a
      recomputation made of the effect of such Common Stock Equivalents on the basis
      of treating any such Common Stock Equivalents which then remain outstanding
      as
      having been granted or issued immediately after the time of such increase of
      the
      conversion rate or consideration per share for which shares of Common Stock
      or
      other property are issuable under such Common Stock Equivalents; whereupon
      a new
      adjustment to the Current Warrant Price shall be made, which new adjustment
      shall supersede the previous adjustment so rescinded and annulled.

     

    4.5. Other
      Provisions Applicable to Adjustments.
      The
      following provisions shall be applicable to the making of adjustments of the
      number of shares of Common Stock into which this Warrant is exercisable and
      the
      Current Warrant Price provided for in Section 4: 

     

    (a)
      When
      Adjustments to Be Made.
      The
      adjustments required by Section 4 shall be made whenever and as often as any
      specified event requiring an adjustment shall occur, except that any that would
      otherwise be required may be postponed (except in the case of a subdivision
      or
      combination of shares of the Common Stock, as provided for in Section 4.1)
      up
      to, but not beyond the date of exercise if such adjustment either by itself
      or
      with other adjustments not previously made adds or subtracts less than 1% of
      the
      shares of Common Stock into which this Warrant is exercisable immediately prior
      to the making of such adjustment. Any adjustment representing a change of less
      than such minimum amount (except as aforesaid) which is postponed shall be
      carried forward and made as soon as such adjustment, together with other
      adjustments required by this Section 4 and not previously made, would result
      in
      a minimum adjustment or on the date of exercise. For the purpose of any
      adjustment, any specified event shall be deemed to have occurred at the close
      of
      business on the date of its occurrence. 

     

    
      
        
        

      

      
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    (b)
      Fractional
      Interests.
      In
      computing adjustments under this Section 4, fractional interests in Common
      Stock
      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 this Section 4 and as a
      result takes a record of the holders of its Common Stock for the purpose of
      entitling them to receive a dividend or distribution or subscription or purchase
      rights or other benefits contemplated under this Section 4 and shall, thereafter
      and before the distribution to stockholders thereof, legally abandon its plan
      to
      pay or deliver such dividend, distribution, subscription or purchase rights
      or
      other benefits contemplated under this Section 4, then thereafter no adjustment
      shall be required by reason of the taking of such record and any such adjustment
      previously made in respect thereof shall be rescinded and annulled.


     

    (d)
      Escrow
      of Stock.
      If
      after any property becomes distributable pursuant to Section 4 by reason of
      the
      taking of any record of the holders of Common Stock, but prior to the occurrence
      of the event for which such record is taken, a holder of this Warrant exercises
      the Warrant during such time, then such holder shall continue to be entitled
      to
      receive any shares of Common Stock issuable upon exercise hereunder by reason
      of
      such adjustment and such shares or other property shall be held in escrow for
      the holder of this Warrant by the Company to be issued to holder of this Warrant
      upon and to the extent that the event actually takes place. Notwithstanding
      any
      other provision to the contrary herein, if the event for which such record
      was
      taken fails to occur or is rescinded, then such escrowed shares shall be
      canceled by the Company and escrowed property returned to the Company.


     

    4.6. Reorganization,
      Reclassification, Merger, Consolidation or Disposition of Assets.
      

     

    (b)  (a)
      If
      there shall occur a Change of Control and, pursuant to the terms of such Change
      of Control, shares of common stock of the successor or acquiring corporation,
      or
      any cash, shares of stock or other securities or property of any nature
      whatsoever (including warrants or other subscription or purchase rights) in
      addition to or in lieu of common stock of the successor or acquiring corporation
      (“Other
      Property”),
      are
      to be received by or distributed to the holders of Common Stock of the Company,
      then the Holder of this Warrant shall have the right thereafter to receive,
      upon
      the exercise of the Warrant, the number of shares of common stock of the
      successor or acquiring corporation or of the Company, if it is the surviving
      corporation, and the Other Property receivable upon or as a result of such
      Change of Control by a holder of the number of shares of Common Stock into
      which
      this Warrant is exercisable immediately prior to such event. The Company shall
      not effect any Change of Control without the prior written consent of the
      holders of a majority in interest of the Warrants (as defined in the Purchase
      Agreement) (in addition to any other consent or voting rights with respect
      to
      such Change of Control that such holders may have pursuant to this Warrant
      or
      applicable law) unless the resulting successor or acquiring entity (if not
      the
      Company) and, if an entity different from the successor or acquiring entity,
      the
      entity whose capital stock or assets the holders of the Common Stock are
      entitled to receive as a result of such Change of Control, assumes by written
      instrument all of the obligations of this Warrant and the Transaction Documents
      (as defined in the Purchase Agreement). Notwithstanding anything to the
      contrary, in the event of a Change of Control that is (1) an all cash
      transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the
      Exchange Act, or (3) a Change of Control involving a person or entity not traded
      on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq
      Global Market, or the Nasdaq Capital Market, the Company or any successor entity
      shall pay at the Holder’s option, exercisable at any time concurrently with or
      within 30 days after the consummation of the Change of Control, an amount of
      cash equal to the value of this Warrant as determined in accordance with the
      Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
      L.P. using (i) a price per share of Common Stock equal to the VWAP of the Common
      Stock for the Trading Day immediately preceding the date of consummation of
      the
      applicable Change of Control, (ii) a risk-free interest rate corresponding
      to
      the U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as of the date of consummation of the applicable Change of Control and (iii)
      an
      expected volatility equal to the 100 day volatility obtained from the “HVT”
function on Bloomberg L.P. determined as of the Trading Day immediately
      following the public announcement of the applicable Change of
      Control.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    (b)
      In
      case of any such Change of Control described in Section 4.6(a) above, the
      resulting, successor or acquiring entity (if not the Company) and, if an entity
      different from the successor or acquiring entity, the entity whose capital
      stock
      or assets the holders of the Common Stock are entitled to receive as a result
      of
      such Change of Control, shall assume by written instrument all of the
      obligations of this Warrant and the Transaction Documents (as defined in the
      Purchase Agreement), subject to such modifications as may be deemed appropriate
      (as determined by resolution of the Board of Directors of the Company) in order
      to provide for adjustments of shares of the Common Stock into which this Warrant
      is exercisable which shall be as nearly equivalent as practicable to the
      adjustments provided for in Section 4. For purposes of Section 4, common stock
      of the successor or acquiring corporation shall include stock of such
      corporation of any class which is not preferred as to dividends or assets on
      liquidation over any other class of stock of such corporation and which is
      not
      subject to redemption and shall also include any evidences of indebtedness,
      shares of stock or other securities which are convertible into or exchangeable
      for any such stock, either immediately or upon the arrival of a specified date
      or the happening of a specified event and any warrants or other rights to
      subscribe for or purchase any such stock. The foregoing provisions of this
      Section 4 shall similarly apply to successive Change of Control transactions.
      

     

    4.7. Other
      Action Affecting Common Stock.
      In case
      at any time or from time to time the Company shall take any action in respect
      of
      its Common Stock, other than the payment of dividends permitted by Section
      4 or
      any other action described in Section 4, then, unless such action will not
      have
      a materially adverse effect upon the rights of the holder of this Warrant,
      the
      number of shares of Common Stock or other stock into which this Warrant is
      exercisable and/or the purchase price thereof shall be adjusted in such manner
      as may be equitable in the circumstances. 

     

    4.8. Certain
      Limitations.
      Notwithstanding anything herein to the contrary, the Company agrees not to
      enter
      into any transaction which, by reason of any adjustment hereunder, would cause
      the Current Warrant Price to be less than the par value per share of Common
      Stock. 

     

    
      
        
        

      

      
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    4.9. Stock
      Transfer Taxes.
      The
      issue of stock certificates upon exercise of this Warrant shall be made without
      charge to the holder for any tax in respect of such issue. The Company shall
      not, however, be required to pay any tax which may be payable in respect of
      any
      transfer involved in the issue and delivery of shares in any name other than
      that of the holder of this Warrant, and the Company shall not be required to
      issue or deliver any such stock certificate unless and until the person or
      persons requesting the issue thereof shall have paid to the Company the amount
      of such tax or shall have established to the satisfaction of the Company that
      such tax has been paid. 

     

    5. Notices
      to Warrant Holders.
      

     

    5.1. Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment of the Current Warrant Price,
      the Company, at its expense, shall promptly compute such adjustment or
      readjustment in accordance with the terms hereof and prepare and furnish to
      the
      Holder of this Warrant a certificate setting forth such adjustment or
      readjustment and showing in detail the facts upon which such adjustment or
      readjustment is based. The Company shall, upon the written request at any time
      of the Holder of this Warrant, furnish or cause to be furnished to such Holder
      a
      like certificate setting forth (i) such adjustments and readjustments, (ii)
      the
      Current Warrant Price at the time in effect and (iii) the number of shares
      of
      Common Stock and the amount, if any, or other property which at the time would
      be received upon the exercise of Warrants owned by such Holder. 

     

    5.2. Notice
      of Corporate Action.
      If at
      any time: 

     

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend (other than a cash dividend payable
      out
      of earnings or earned surplus legally available for the payment of dividends
      under the laws of the jurisdiction of incorporation of the Company) or other
      distribution, or any right to subscribe for or purchase any evidences of its
      indebtedness, any shares of stock of any class or any other securities or
      property, or to receive any other right, or 

     

    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation, or

     

    (c) there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company; or

     

    (d) the
      Company shall cause the holders of its Common Stock to be entitled to receive
      (i) any dividend or other distribution of cash, (ii) any evidences of its
      indebtedness, or (iii) any shares of stock of any class or any other securities
      or property or assets of any nature whatsoever (other than cash or additional
      shares of Common Stock as provided in Section 4.1 hereof and the rights under
      the Company’s Rights Agreement, dated as of October 31, 2001, by and between the
      Company and American Stock Transfer & Trust Company as Rights Agent (the
“Rights
      Agreement”));
      or
      (iv) any warrants or other rights to subscribe for or purchase any evidences
      of
      its indebtedness, any shares of stock of any class or any other securities
      or
      property or assets of any nature whatsoever;

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    then,
      in
      any one or more of such cases, the Company shall give to the Holder (i) at
      least
      15 days’ prior written notice of the date on which a record date shall be
      selected for such dividend, distribution or right or for determining rights
      to
      vote in respect of any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up, and (ii) in the case of any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up, at least 15 days’ prior written notice of the date when the same shall take
      place. Such notice in accordance with the foregoing clause also shall specify
      (i) the date on which any such record is to be taken for the purpose of such
      dividend, distribution or right, the date on which the holders of Common Stock
      shall be entitled to any such dividend, distribution or right, and the amount
      and character thereof, and (ii) the date on which any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      dissolution, liquidation or winding up is to take place and the time, if any
      such time is to be fixed, as of which the holders of Common Stock shall be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up. Each such written notice shall be sufficiently given if addressed to the
      Holder at the last address of the Holder appearing on the books of the Company
      and delivered in accordance with Section 15.2. Notwithstanding the forgoing
      provisions of this Section 5.2, the Company shall give to the Holder at least
      seven (7) Business Days prior written notice of the occurrence of any
      Distribution Date (as defined in the Rights Agreement).

     

    5.3. No
      Rights as Stockholder.
      This
      Warrant does not entitle the Holder to any voting or other rights as a
      stockholder of the Company prior to exercise and payment for the Warrant Price
      in accordance with the terms hereof.

     

    6. No
      Impairment.
      The
      Company shall not by any action, including, without limitation, amending its
      certificate of incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issue or sale of securities or any other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such actions as may
      be
      necessary or appropriate to protect the rights of the Holder against impairment.
      Without limiting the generality of the foregoing, the Company will (a) not
      increase the par value of any shares of Common Stock receivable upon the
      exercise of this Warrant above the amount payable therefor upon such exercise
      immediately prior to such increase in par value, (b) take all such action as
      may
      be necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock upon the exercise
      of
      this Warrant, and (c) use its best efforts to obtain all such authorizations,
      exemptions or consents from any public regulatory body having jurisdiction
      thereof as may be necessary to enable the Company to perform its obligations
      under this Warrant. Upon the request of the Holder, the Company will at any
      time
      during the period this Warrant is outstanding acknowledge in writing, in form
      satisfactory to the Holder, the continuing validity of this Warrant and the
      obligations of the Company hereunder.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    7. Reservation
      and Authorization of Common Stock; Registration With Approval of Any
      Governmental Authority.
      From
      and after the Closing Date, the Company shall at all times reserve and keep
      available for issue upon the exercise of Warrants such number of its authorized
      but unissued shares of Common Stock as will be sufficient to permit the exercise
      in full of all outstanding Warrants (without regard to any ownership limitations
      provided in Section 2.4(i)). All shares of Common Stock which shall be so
      issuable, when issued upon exercise of any Warrant and payment therefor in
      accordance with the terms of such Warrant, shall be duly and validly issued
      and
      fully paid and nonassessable, and not subject to preemptive rights. Before
      taking any action which would cause an adjustment reducing the Current Warrant
      Price below the then par value, if any, of the shares of Common Stock issuable
      upon exercise of the Warrants, the Company shall take any corporate action
      which
      may be necessary in order that the Company may validly and legally issue fully
      paid and non-assessable shares of such Common Stock at such adjusted Current
      Warrant Price. Before taking any action which would result in an adjustment
      in
      the number of shares of Common Stock for which this Warrant is exercisable
      or in
      the Current Warrant Price, the Company shall obtain all such authorizations
      or
      exemptions thereof, or consents thereto, as may be necessary from any public
      regulatory body or bodies having jurisdiction thereof. If any shares of Common
      Stock required to be reserved for issuance upon exercise of Warrants require
      registration or qualification with any governmental authority under any federal
      or state law before such shares may be so issued (other than as a result of
      a
      prior or contemplated distribution by the Holder of this Warrant), the Company
      will in good faith and as expeditiously as possible and at its expense endeavor
      to cause such shares to be duly registered.

     

    8. Taking
      of Record; Stock and Warrant Transfer Books.
      In the
      case of all dividends or other distributions by the Company to the holders
      of
      its Common Stock with respect to which any provision of Section 4 refers to
      the
      taking of a record of such holders, the Company will in each such case take
      such
      a record and will take such record as of the close of business on a Business
      Day. The Company will not at any time, except upon dissolution, liquidation
      or
      winding up of the Company, close its stock transfer books or Warrant transfer
      books so as to result in preventing or delaying the exercise or transfer of
      any
      Warrant. 

     

    9. Registration
      Rights.
      The
      resale of the Warrant Stock shall be registered in accordance with the terms
      and
      conditions contained in that certain Investor Rights Agreement dated of even
      date hereof, among the Holder, the Company and the other parties named therein
      (the “Investor
      Rights Agreement”).
      The
      Holder acknowledges that pursuant to the Investor Rights Agreement, the Company
      has the right to request that the Holder furnish information regarding such
      Holder and the distribution of the Warrant Stock as is required by law or the
      Commission to be disclosed in the Registration Statement (as such term is
      defined in the Investor Rights Agreement), and the Company may exclude from
      such
      registration the shares of Warrant Stock acquirable hereunder if Holder fails
      to
      furnish such information within a reasonable time prior to the filing of each
      Registration Statement, supplemented prospectus included therein and/or amended
      Registration Statement. 

     

    10. Supplying
      Information.
      Upon
      any default by the Company of its obligations hereunder or under the Investor
      Rights Agreement, the Company shall cooperate with the Holder in supplying
      such
      information as may be reasonably necessary for such Holder to complete and
      file
      any information reporting forms presently or hereafter required by the
      Commission as a condition to the availability of an exemption from the
      Securities Act for the sale of any Warrant or Restricted Common Stock.


     

    
      
        
        

      

      
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    11. Loss
      or Mutilation.
      Upon
      receipt by the Company from the Holder of evidence reasonably satisfactory
      to it
      of the ownership of and the loss, theft, destruction or mutilation of this
      Warrant and indemnity or security reasonably satisfactory to it and
      reimbursement to the Company of all reasonable expenses incidental thereto
      and
      in case of mutilation upon surrender and cancellation hereof, the Company will
      execute and deliver in lieu hereof a new Warrant of like tenor to the Holder;
      provided, however, that in the case of mutilation, no indemnity shall be
      required if this Warrant in identifiable form is surrendered to the Company
      for
      cancellation. 

     

    12. Office
      of the Company.
      As long
      as any of the Warrants remain outstanding, the Company shall maintain an office
      or agency (which may be the principal executive offices of the Company) where
      the Warrants may be presented for exercise, registration of transfer, division
      or combination as provided in this Warrant. 

     

    13. Financial
      and Business Information.
      

     

    13.1. Quarterly
      Information.
      The
      Company will deliver to the Holder, as soon as available and in any event within
      45 days after the end of each of the first three quarters of each fiscal year
      of
      the Company, one copy of an unaudited consolidated balance sheet of the Company
      and its subsidiaries as at the end of such quarter, and the related unaudited
      consolidated statements of income, retained earnings and cash flow of the
      Company and its subsidiaries for such quarter and, in the case of the second
      and
      third quarters, for the portion of the fiscal year ending with such quarter,
      setting forth in each case in comparative form the figures for the corresponding
      periods in the previous fiscal year. Such financial statements shall be prepared
      by the Company in accordance with GAAP (except as may be indicated thereon
      or in
      the notes thereto) and accompanied by the certification of the Company’s chief
      executive officer or chief financial officer that such financial statements
      present fairly the consolidated financial position, results of operations and
      cash flow of the Company and its subsidiaries as at the end of such quarter
      and
      for such year-to-date period, as the case may be; provided, however, that the
      Company shall have no obligation to deliver such quarterly information under
      this Section 13.1 to the extent it is publicly available; and provided further,
      that if such information contains material non-public information, the Company
      shall so notify the Holder prior to delivery thereof and the Holder shall have
      the right to refuse delivery of such information. 

     

    13.2. Annual
      Information.
      The
      Company will deliver to the Holder as soon as available and in any event within
      90 days after the end of each fiscal year of the Company, one copy of an audited
      consolidated balance sheet of the Company and its subsidiaries as at the end
      of
      such year, and audited consolidated statements of income, retained earnings
      and
      cash flow of the Company and its subsidiaries for such year; setting forth
      in
      each case in comparative form the figures for the corresponding periods in
      the
      previous fiscal year; all prepared in accordance with GAAP, and which audited
      financial statements shall be accompanied by an opinion thereon of the
      independent certified public accountants regularly retained by the Company,
      or
      any other firm of independent certified public accountants of recognized
      national standing selected by the Company; provided, however, that the Company
      shall have no obligation to deliver such annual information under this Section
      13.2 to the extent it is publicly available; and provided further, that if
      such
      information contains material non-public information, the Company shall so
      notify the Holder prior to delivery thereof and the Holder shall have the right
      to refuse delivery of such information.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    13.3. Filings.
      The
      Company will file on or before the required date all regular or periodic reports
      (pursuant to the Exchange Act) with the Commission and will deliver to Holder
      promptly upon their becoming available one copy of each report, notice or proxy
      statement sent by the Company to its stockholders generally.

     

    14. Limitation
      of Liability.
      No
      provision hereof, in the absence of affirmative action by the Holder to purchase
      shares of Common Stock, and no enumeration herein of the rights or privileges
      of
      the Holder hereof, shall give rise to any liability of the Holder for the
      purchase price of any Common Stock, whether such liability is asserted by the
      Company or by creditors of the Company. 

     

    15. Miscellaneous.
      

     

    15.1. Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of the Holder shall operate as a waiver of such right or otherwise
      prejudice the Holder’s rights, powers or remedies. If the Company fails to make,
      when due, any payments provided for hereunder, or fails to comply with any
      other
      material provision of this Warrant, the Company shall pay to the Holder such
      amounts as shall be sufficient to cover any third party costs and expenses
      including, but not limited to, reasonable attorneys’ fees, including those of
      appellate proceedings, incurred by the Holder in collecting any amounts due
      pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
      hereunder. 

     

    15.2. Notice
      Generally.
      All
      notices, requests, demands or other communications provided for herein shall
      be
      in writing and shall be given in the manner and to the addresses set forth
      in
      the Purchase Agreement.

     

    15.3. Successors
      and Assigns.
      Subject
      to compliance with the provisions of Section 3.1, this Warrant and the rights
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and assigns of the Holder. The
      provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant, and shall be enforceable by any such Holder.
      

     

    15.4. Amendment.
      This
      Warrant may be modified or amended or the provisions of this Warrant waived
      with
      the written consent of both the Company and the Holder. 

     

    15.5. Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be modified to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Warrant. 

     

    15.6. Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant. 

     

    15.7. Governing
      Law.
      This
      Warrant and the transactions contemplated hereby shall be deemed to be
      consummated in the State of New York and shall be governed by and interpreted
      in
      accordance with the local laws of the State of New York without regard to the
      provisions thereof relating to conflicts of laws. The Company hereby irrevocably
      consents to the exclusive jurisdiction of the State and Federal courts located
      in New York City, New York in connection with any action or proceeding arising
      out of or relating to this Warrant. In any such litigation the Company agrees
      that the service thereof may be made by certified or registered mail directed
      to
      the Company pursuant to Section 15.2. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    15.8. Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive and not to assert the
      defense in any action for specific performance that a remedy at law would be
      adequate.

     

    15.9. Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    


     

    [Signature
      Page Follows]

     


    
      
         

        


        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    


     

    IN
      WITNESS WHEREOF, Access Pharmaceuticals, Inc. has caused this Warrant to be
      executed by its duly authorized officer and attested by its
      Secretary.

     

    Dated:
      ___, 2007

    


    


    ACCESS
      PHARMACEUTICALS, INC.

     

     

    By:______________________________
      

    Name:

    Title:

    


    Attest:
      

    


    


    


    By:______________________________

    Name:

    Title:
      Secretary

    



    
      
         

        


        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

     

    SUBSCRIPTION
      FORM

     

    [To
      be
      executed only upon exercise of Warrant]

     

    1. The
      undersigned hereby elects to purchase  
      shares
      of the Common Stock of Access Pharmaceuticals, Inc. pursuant to the terms of
      the
      attached Warrant, and tenders herewith payment of the purchase price of such
      shares in full.

     

    2. The
      undersigned hereby elects to convert the attached Warrant into Common Stock
      of
      Access Pharmaceuticals, Inc. through “cashless exercise” in the manner specified
      in the Warrant. This conversion is exercised with respect to
      _____________________ of the Shares covered by the Warrant.

     

    3. Please
      issue a certificate or certificates representing said shares in the name of
      the
      undersigned or in such other name as is specified below:

     

     

    
      	 
	
               (Name)

            
	 
	 
	 
	
               (Address)

            


    

     

    [and,
      if
      such shares of Common Stock shall not include all of the shares of Common Stock
      issuable as provided in this Warrant, that a new Warrant of like tenor and
      date
      for the balance of the shares of Common Stock issuable hereunder be delivered
      to
      the undersigned.]

     

    


     

    _____________________________________

    (Name
      of
      Registered Owner) 

    


    


    _____________________________________

    (Signature
      of Registered Owner) 

    


    _____________________________________

    (Street
      Address) 

    


    _____________________________________

    (State)
      (Zip Code) 

    


    NOTICE:
      The signature on this subscription must correspond with the name as written
      upon
      the face of the Warrant in every particular, without alteration or enlargement
      or any change whatsoever. 


    
      
         

        


        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    EXHIBIT
      B

    


    ASSIGNMENT
      FORM

     

    FOR
      VALUE
      RECEIVED the undersigned registered owner of this Warrant for the purchase
      of
      shares of common stock of Access Pharmaceuticals, Inc. hereby sells, assigns
      and
      transfers unto the Assignee named below all of the rights of the undersigned
      under this Warrant, with respect to the number of shares of common stock set
      forth below:

    


    


    _______________________________________

    


    _______________________________________

    


    _______________________________________

    (Name
      and
      Address of Assignee)

    


    _______________________________________

    (Number
      of Shares of Common Stock)

    


    


    and
      does
      hereby irrevocably constitute and appoint ____________ attorney-in-fact to
      register such transfer on the books of the Company, maintained for the purpose,
      with full power of substitution in the premises. 

    


    


    Dated:_________________________________

    


    ______________________________________

    (Print
      Name and Title)

    


    ______________________________________

    (Signature)
      

    


    ______________________________________

    (Witness)

    


    


    NOTICE:
      The signature on this assignment must correspond with the name as written upon
      the face of the Warrant in every particular, without alteration or enlargement
      or any change whatsoever. 


    
      
         

        


        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    EXHIBIT
      C

     

    FORM
      OF
      INVESTMENT REPRESENTATION LETTER

     

    In
      connection with the acquisition of [warrants (the “Warrants”) to purchase ____
      shares of common stock of Access Pharmaceuticals, Inc. (the “Company”), par
      value $0.01 per share (the “Common Stock”)][___shares of common stock of Access
      Pharmaceuticals, Inc. (the “Company”), par value $0.01 per share (the “Common
      Stock”) upon the exercise of warrants by ________], by _______________ (the
“Holder”) from _____________, the Holder hereby represents and warrants to the
      Company as follows: 

     

    The
      Holder (i) is an “Accredited Investor” as that term is defined in Rule 501 of
      Regulation D promulgated under the Securities Act of 1933, as amended (the
      “Act”); and (ii) has the ability to bear the economic risks of such Holder’s
      prospective investment, including a complete loss of Holder’s investment in the
      Warrants and the shares of Common Stock issuable upon the exercise thereof
      (collectively, the “Securities”).

     

    The
      Holder, by acceptance of the Warrants, represents and warrants to the Company
      that the Warrants and all securities acquired upon any and all exercises of
      the
      Warrants are purchased for the Holder’s own account, and not with view to
      distribution of either the Warrants or any securities purchasable upon exercise
      thereof in violation of applicable securities laws. 

     

    [The
      Holder acknowledges that (i) the Securities have not been registered under
      the
      Act, (ii) the Securities are “restricted securities” and the certificate(s)
      representing the Securities shall bear the following legend, or a similar legend
      to the same effect, until (i) in the case of the shares of Common Stock
      underlying the Warrants, such shares shall have been registered for resale
      by
      the Holder under the Act and effectively been disposed of in accordance with
      a
      registration statement that has been declared effective; or (ii) in the opinion
      of counsel for the Company such Securities may be sold without registration
      under the Act:

     

    “[NEITHER]
      THE SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES INTO WHICH
      THEY ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE “ACT”), AND ALL SUCH SECURITIES ARE SUBJECT TO
      RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. [NEITHER]
      THE
      SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THEY ARE
      EXERCISABLE] MAY [NOT] BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
      OF
      COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT
      THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
      REGISTRATION UNDER THE ACT.”]*  

     

     

      
        

      

    
*
    Bracketed language to be inserted if applicable. 

    
      
         

        


        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Holder has caused this Investment Representation Letter
      to
      be executed this __ day of __________ 200_. 

     

    [Name]

    


    


    By:______________________________

    Name:

    Title:
      

    


    
      
        
        

      

      
        24