Document:

Unassociated Document

     

    
EXHIBIT
      10.31

    
      

      

    

     

    
 

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

    

    

    ACCESS
      PHARMACEUTICALS, INC.

    

    

    7.5%
      SECURED CONVERTIBLE PROMISSORY NOTE

    

     

    
      	 U.S. $____________ 	
               Dallas,
                Texas

            
	 No.: PN-2006-__	
               December
                ___,
                2006

            

    

     

     

    

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

    

    This
      Note
      is one of a duly authorized issue of 7.5% Secured Convertible Promissory Notes
      of the Company, in aggregate principal amount of up to Five Hundred Thousand
      Dollars ($500,000) (the “Promissory
      Notes”)
      issued
      pursuant to the Convertible Note
      and
      Warrant Purchase Agreement of even date herewith (the “Purchase
      Agreement”).
      The
      Promissory Notes rank equally and ratably without priority over one another.
      No
      payment, including any prepayment, shall be made hereunder unless payment,
      including any prepayment, is offered with respect to the other Promissory Notes
      in an amount which bears the same ratio to the then unpaid principal amount
      of
      such Promissory Notes as the payment made hereon bears to the then unpaid
      principal amount under this Note.

     

    

    1.  Principal
      and Interest Payments.
      

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    defined
      below) unless the resulting successor or acquiring entity in such Sale
      Transaction (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 Sale Transaction,
      (A)
      assumes by written instrument all of the obligations of the Promissory Notes
      and
      the Transaction Documents (as defined in the Purchase Agreement) as more fully
      set forth in Section 1(d) below and (B) the entity whose securities into which
      this Note shall become convertible in such transaction is a publicly traded
      corporation whose common stock is listed for trading on the New York Stock
      Exchange, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
      Capital Market, the OTC Bulletin Board or Pink Sheets or (iii) the acceleration
      of the obligations as contemplated by this Note. 

     

    “Sale
      Transaction”
shall
      mean any transaction or series of related transactions, other than the
      conversion of convertible securities of the Company outstanding as of the date
      hereof or the exercise of options or warrants of the Company, in each case,
      outstanding as of the date hereof, which result in the (i) acquisition by an
      individual or legal entity or group (as set forth in Section 13(d) of the
      Exchange Act) of more than one-half of the voting rights or equity interests
      in
      the Company; or (ii) sale, conveyance, or other disposition of all or
      substantially all of the assets, property or business of the Company or the
      merger into or consolidation 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.

     

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

     

    (c)  The
      Company may not prepay the outstanding principal amount of this Note or the
      interest thereon prior to the Maturity Date (a “Prepayment”)
      without the written consent of the Payee, unless the Company shall provide
      at
      least sixty (60) days, but not more than ninety (90) days, prior written notice
      of the date on which the Company intends to make such Prepayment (a
“Prepayment
      Notice”).
      Nothing in this Section 1(c) shall limit the right of the Payee to convert
      this
      Note into Common Stock at any time after receipt of the Prepayment Notice and
      prior to the time at which such Prepayment is made. Notwithstanding the
      limitations in Section 8(g), the Payee may deliver a Conversion Notice with
      respect to all of the outstanding Principal Amount and interest accrued thereon,
      in which case, to the extent that Section 8(g) 

     

    
      
        
        

      

      
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    limits
      the conversion of this Note, this Note shall not be subject to Prepayment and
      shall be converted as set forth in Section 8(c)(v).

     

    (d)  If
      the
      Promissory Notes and Transaction Documents are to be assumed as described in
      Section 1(a)(ii)(A), the applicable assuming corporation shall expressly assume
      the due and punctual observance and performance of each and every covenant
      and
      condition contained in the Promissory Notes and the Transaction Documents to
      be
      performed and observed by the Company and all the obligations and liabilities
      thereunder, 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 the Promissory
      Notes are convertible which shall be as nearly equivalent as practicable to
      the
      adjustments provided for in Section 8. The provisions of Section 1(a) and this
      Section 1(d) shall similarly apply to successive Sale Transactions.

     

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

     

    3.  Security.This
      Note
      is secured pursuant to the terms of a Security Agreement dated as of February
      16, 2006, between the Company and the holders of the Secured Convertible
      Promissory Notes issued by the Company on February 16, 2006 (the “February
      Notes”),
      as
      amended pursuant to a Security Agreement Amendment dated as of October 24,
      2006,
      between the Company, the holders of the February Notes and the holders of the
      Secured Convertible Promissory Notes issued by the Company on October 24, 2006
      (the “October
      Notes”)
      and as
      further amended pursuant to a Second Amendment to Security Agreement between
      the
      Company, the holders of the February Notes, the holders of the October Notes
      and
      the holders of the Promissory Notes, of even date herewith (such Security
      Agreement, as so amended, the “Security
      Agreement”)
      by a
      security interest in the Collateral (as such term is defined in the Security
      Agreement). The Note is subject to the provisions of the Security
      Agreement.

     

    4.  Subordination
      of Future Debt; Payment of Common Stock Dividends.
      Any
      debt incurred after the date hereof to any creditor shall be subordinated to
      the
      indebtedness evidenced by this Note. The Company shall not declare or pay any
      dividend or distribution with respect to any common stock of the Company other
      than a pro rata dividend payable solely in shares of Common Stock.

     

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

     

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

     

    
      
        
        

      

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

     

    (c)  The
      execution, delivery and performance of this Note will not (i) conflict with
      or
      result in a breach of or a default under any of the terms or provisions of,
      (A)
      the Company’s articles of incorporation or by-laws, or (B) any material
      provision of any indenture, mortgage, deed of trust or other material agreement
      or instrument to which the Company is a party or by which it or any of its
      material properties or assets is bound, (ii) result in a violation of any
      material provision of any law, statute, rule, regulation, or any existing
      applicable decree, judgment or order by any court, Federal or state regulatory
      body, administrative agency, or other governmental body having jurisdiction
      over
      the Company, or any of its material properties or assets or (iii) result in
      the
      creation or imposition of any material lien, charge or encumbrance upon any
      material property or assets of the Company or any of its subsidiaries pursuant
      to the terms of any other agreement or instrument to which any of them is a
      party or by which any of them may be bound or to which any of their property
      or
      any of them is subject.

     

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

     

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

     

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

     

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

     

    (c)  if
      default shall be made in the performance or observance of any representation,
      warranty, covenant, or agreement contained in this Note, in the Security
      Agreement, in the Purchase Agreement or in the Investor Rights Agreement (as
      defined in the Purchase Agreement), or in any other agreement between the
      Company and the Payee relating to indebtedness of the Company to the Payee
      or
      any of its affiliates for borrowed money and such default shall have continued
      for a period of five (5) days after Company’s receipt of written notice of such
      default (unless such default is on account of failure to give a required notice,
      in which event such 5 day cure period shall commence with the date of such
      default); or

     

    (d)  the
      holder of any indebtedness of the Company or any of its subsidiaries shall
      accelerate any payment of any amount or amounts of principal or interest on
      

     

    
      
        
        

      

      
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    any
      indebtedness (“Indebtedness”)
      (other
      than the Indebtedness hereunder) prior to its stated maturity or payment date,
      the aggregate principal amount of which Indebtedness of all such persons is
      in
      excess of $100,000, whether such Indebtedness now exists or shall hereafter
      be
      created, and such accelerated payment entitles the holder thereof to immediate
      payment of such Indebtedness which is due and owing and such indebtedness has
      not been discharged in full or such acceleration has not been stayed, rescinded
      or annulled within five (5) business days of such acceleration; or 

     

    (e)  A
      judgment or order for the payment of money shall be rendered against the Company
      or any of its subsidiaries in excess of $100,000 in the aggregate (net of any
      applicable insurance coverage) for all such judgments or orders against all
      such
      persons (treating any deductibles, self insurance or retention as not so
      covered) that shall not be discharged, and all such judgments and orders remain
      outstanding, and there shall be any period of sixty (60) consecutive days
      following entry of the judgment or order in excess of $100,000 or the judgment
      or order which causes the aggregate amount described above to exceed $100,000
      during which a stay of enforcement of such judgment or order, by reason of
      a
      pending appeal or otherwise, shall not be in effect; or

     

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

     

    (g)  a
      proceeding or case shall be commenced in respect of the Company or any of its
      subsidiaries without its application or consent, in any court of competent
      jurisdiction, seeking (i) the liquidation, reorganization, moratorium,
      dissolution, winding up, or composition or readjustment of its debts, (ii)
      the
      appointment of a trustee, receiver, custodian, liquidator or the like of it
      or
      of all or any substantial part of its assets or (iii) similar relief in respect
      of it under any law providing for the relief of debtors, and such proceeding
      or
      case described in clause (i), (ii) or (iii) shall continue undismissed, or
      unstayed and in effect, for a period of thirty (30) consecutive days or any
      order for relief shall be entered in an involuntary case under the Bankruptcy
      Code or under the comparable laws of any jurisdiction (foreign or domestic)
      against the Company or any of its subsidiaries or action under the laws of
      any
      jurisdiction (foreign or domestic) analogous to any of the foregoing shall
      be
      taken with respect to the Company or any of its subsidiaries and shall continue
      undismissed, or unstayed and in effect for a period of thirty (30) consecutive
      days; 

     

    (h)  the
      suspension from listing or the failure of the Company’s common stock to be
      listed on any of the Pink Sheets, OTC Bulletin Board, American Stock

     

    
      
        
        

      

      
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    Exchange,
      New York Stock Exchange, Nasdaq National Market or Nasdaq Capital Market for
      a
      period of five (5) consecutive trading days;

     

    (i)  the
      declaration or payment by the Company of any dividend or distribution with
      respect to its common stock other than a pro rata dividend payable solely in
      shares of Common Stock; or

     

    (j)  the
      failure by the Company to comply with the requirements of Section 4.11 of the
      Purchase Agreement.

     

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

     

    8.  Conversion.
      

     

    (a) Optional
      Conversion.
       Subject
      to the limitations set forth in Sections 8(g) hereof, the holder of this Note
      shall have the right at any time, at such holder’s option, to convert all or any
      lesser portion of the Principal Amount plus accrued and unpaid interest thereon
      into such number of fully paid and non-assessable shares of Common Stock as
      is
      determined by dividing (i) the portion of the Principal Amount to be converted
      plus accrued and unpaid interest thereon by (ii) the Conversion Rate (as defined
      below) then in effect for this Note. The initial conversion rate shall be $1.10,
      such rate to be subject to adjustment in accordance with the provisions of
      this
      Section 8. Such conversion rate in effect from time to time, as adjusted
      pursuant to this Section 8, is referred to herein as a “Conversion
      Rate.”
All
      of
      the remaining provisions of this Section 8 shall apply separately to each
      Conversion Rate in effect from time to time with respect to this
      Note.

     

    (b) Mandatory
      Conversion.
      If a
      Conversion Triggering Event (as defined below) shall occur and within 5 business
      days following such occurrence, the Company shall deliver a written notice
      to
      the holders of the Promissory Notes (the “Notice”)
      that
      the Company intends to convert all of the outstanding Promissory Notes into
      Common Stock, then, subject to the limitations set forth in Section 8(g) hereof,
      as of the date that is sixty-five days following the date that such Notice
      is
      given (the “Mandatory
      Conversion Date”),
      this
      Note shall be converted into such number of fully paid and non-assessable shares
      of Common Stock as is determined by dividing (i) the Principal Amount plus
      accrued and unpaid interest thereon by (ii) the Conversion 

     

    
      
        
        

      

      
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    Rate
      then
      in effect (the “Mandatory
      Conversion”).
      Nothing in this Section 8(b) shall be construed so as to limit the right of
      a
      holder of this Note to convert pursuant to Section 8(a) at any time. If the
      Maturity Date occurs after the Notice is duly delivered to the Payee, but prior
      to the Mandatory Conversion Date or the earlier conversion in full of this
      Note,
      then the Company shall not be obligated to repay in cash the Principal Amount,
      together with all accrued and unpaid interest thereon, and this Note shall
      remain outstanding, as more fully described in Section 8(c)(v), until such
      time
      as it is fully converted.

     

    “Conversion
      Triggering Event”
shall
      mean, such time as:

     

    (i) The
      Registration Statement (as defined below) covering all of the shares of Common
      Stock into which this Note is convertible is effective and sales may be made
      pursuant thereto (or all of the shares of Common Stock into which this Note
      is
      convertible may be sold without restriction pursuant to Rule 144(k) promulgated
      by the Securities and Exchange Commission under the Securities Act of 1933,
      as
      amended (the “Securities
      Act”));
      

     

    (ii) The
      Daily
      Market Price of the Common Stock is at least $7.50 (subject to adjustment for
      stock splits, reverse splits, stock dividends and the like) for any period
      of 20
      consecutive trading days; and

     

    (iii) The
      Company has a sufficient number of authorized and unissued shares of Common
      Stock reserved for issuance upon the conversion of the Promissory Notes to
      convert all of the Promissory Notes in full.

     

    “Registration
      Statement”
shall
      have the meaning established in the Investor Rights Agreement dated on or about
      the date hereof, by and among the Company and the other parties signatory
      thereto.

     

    (c) Mechanics
      of Conversion.

     

    (i) Such
      right of conversion shall be exercised by the Payee by delivering to the Company
      a conversion notice in the form attached hereto as Exhibit
      A
      (the
“Conversion
      Notice”),
      appropriately completed and duly signed, and by surrender not later than two
      (2)
      business days thereafter of this Note. The Conversion Notice shall also contain
      a statement of the name or names (with addresses and tax identification or
      social security numbers) in which the certificate or certificates for Common
      Stock shall be issued, if other than the name in which this Note is registered.
      Promptly after the receipt of the Conversion Notice, the Company shall issue
      and
      deliver, or cause to be delivered, to the Payee or such Payee’s nominee, a
      certificate or certificates for the number of shares of Common Stock issuable
      upon such conversion. Such conversion shall be deemed to have been effected
      as
      of the close of business on the date of receipt by the Company of the Conversion
      Notice (the “Conversion
      Date”),
      and
      the person or persons entitled to receive the shares of Common Stock issuable
      upon conversion shall be treated for all purposes as the holder or holders
      of
      record of such shares of Common Stock as of the close of business on the
      Conversion Date. If the Payee has not converted the entire amount of the Note
      pursuant to the Conversion Notice, then the Company shall execute and deliver
      to
      the 

     

    
      
        
        

      

      
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    Payee
      a
      new Note instrument identical in terms to this Note, but with a principal amount
      reflecting the unconverted portion of this Note. The new Note instrument shall
      be delivered subject to the same timing terms as the certificates for the Common
      Stock.

     

    (ii) The
      Company shall effect such issuance of Common Stock within three (3) trading
      days
      following the Conversion Date and shall transmit the certificates by messenger
      or reputable overnight delivery service to reach the address designated by
      such
      holder within three (3) trading days after the receipt by the Company of such
      Conversion Notice. Provided that the holder complies with all of the provisions
      of this Note relating to the conversion hereof, if certificates evidencing
      the
      Common Stock are not received by the holder (through no fault or negligence
      of
      the holder) within five (5) Business Days following the Conversion Date, then
      the holder will be entitled to revoke and withdraw its Conversion Notice, in
      whole or in part, at any time prior to its receipt of those certificates. If
      the
      conversion has not been rescinded in accordance with this paragraph and the
      Company fails to deliver to the holder such certificate or certificates pursuant
      to this Section 8 in accordance herewith, prior to the seventh (7th)
      Business Day after the Conversion Date (assuming timely surrender of the Note
      and compliance with the other provisions of this Note that relate to the
      conversion hereof), the Company shall pay to such Payee, in cash, on a per
      diem
      basis, an amount equal to 0.2% of the principal amount and all interest accrued
      thereon of the Note until such delivery takes place and interest shall continue
      to accrue as provided in Section 2 as if no Conversion Notice had been
      delivered.

     

    (iii) The
      Company’s obligation to issue Common Stock upon conversion of this Note shall be
      absolute, is independent of any covenant of any Payee, and shall not be subject
      to: (i) any offset or defense; or (ii) any claims against the holders of the
      Promissory Notes whether pursuant to this Note, the Certificate of Incorporation
      of the Company, the Purchase Agreement, the Investor Rights Agreement (as
      defined in the Purchase Agreement), the Warrants (as defined in the Purchase
      Agreement) or otherwise.

     

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

     

    (v) Beneficial
      Ownership Cap.
      To the
      extent that (A) all of the outstanding principal and interest due on this Note
      is not automatically converted in full upon the occurrence of a Mandatory
      Conversion on account of the application of Section 8(g), (B) a Notice has
      been
      duly delivered to the Payee and the Maturity Date has occurred prior to the
      Mandatory Conversion Date specified in such Notice or (C) the Payee elects
      to
      convert all of the outstanding principal and interest due on this Note following
      a Prepayment Notice and prior to Prepayment, but all of such amounts are not
      converted in full on account of the application of Section 8(g) (each of the
      events referred to in clauses (A), (B) and (C), a “Limited
      Conversion”),
      this
      Note shall remain outstanding with respect to the amounts of unpaid principal
      and unpaid interest remaining and such amounts remaining shall be deemed
      converted automatically under this 

     

    
      
        
        

      

      
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    Section
      8
      at the first moment thereafter either when the Mandatory Conversion Date occurs
      in the case of a Limited Conversion pursuant to clause (B) above (except that
      such conversion shall remain subject to Section 8(g), and if Section 8(g)
      applies, such conversion shall become a clause (A) Limited Conversion following
      the Mandatory Conversion Date), or, in all other cases, when Section 8(g) would
      not prevent such conversion. Notwithstanding the preceding sentence, upon the
      occurrence of the Limited Conversion, the rights of the Payee pursuant to
      Sections 1, 2, 3, 4, 5, 6 and 7, including, without limitation, the right to
      be
      repaid principal and interest in cash, shall be terminated immediately and
      all
      other rights and obligations (including, without limitation, the rights
      hereunder to adjustments to the Conversion Rate) shall remain in full force
      and
      effect (the “Remaining
      Rights”);
      provided that, upon the occurrence of a Sale Transaction, the resulting
      successor or acquiring entity in such Sale Transaction (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 Sale Transaction, shall assume by written instrument all
      of
      the Remaining Rights (but not the rights that have been terminated as provided
      above) under the Promissory Notes and all of the rights and obligations of
      the
      Company under Transaction Documents.

     

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

     

    “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 fair market
      value
      per share of Common Stock as determined in good faith by the Board,
      or

     

    (2) if
      there
      shall then be a public market for the Common Stock, the average of the daily
      market prices for the 20 consecutive trading days 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 the
      National Association of Securities Dealers, Inc. (the “NASD”)
      selected mutually 

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

       

    

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

     

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

     

    (i) cause
      the
      holders of its Common Stock to be entitled to receive a dividend payable in,
      or
      other distribution of, additional 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
      in
      each such case the Conversion Rate shall be multiplied by a fraction of which
      the numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event. Any adjustment made pursuant to clause (i) of
      this
      Section 8(e) 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 Section 8(e) shall
      become effective immediately after the effective date of such subdivision or
      combination. If any event requiring an adjustment under this paragraph occurs
      during the period that a Conversion Rate is calculated hereunder, then the
      calculation of such Conversion Rate shall be adjusted appropriately to reflect
      such event.

     

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

     

    (i) cash,

     

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

     

    (iii) 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 (in each case set forth in
      subparagraphs 8(f)(i), 8(f)(ii) and 8(f)(iii) hereof, the “Distributed
      Property”),
      

     

    then
      upon
      any conversion of this Note that occurs after such record date, the holder
      of
      this Note shall be entitled to receive, in addition to the Conversion Shares,
      the Distributed Property that 

     

    
      
        
        

      

      
        -
          10 -

        
          

        

      

      
        
        

      

       

    

    such
      holder would have been entitled to receive in respect of such number of
      Conversion Shares had the holder been the record holder of such Conversion
      Shares as of such record date. Such distribution shall be made whenever any
      such
      conversion is made. In the event that the Distributed Property consists of
      property other than cash, then the fair value of such Distributed Property
      shall
      be as determined in good faith by the Board and set forth in reasonable detail
      in a written valuation report (the “Valuation
      Report”)
      prepared by the Board. The Company shall give written notice of such
      determination and a copy of the Valuation Report to the holder of this Note,
      and
      if the holder objects to such determination within twenty (20) business days
      following the date such notice is given, the Company shall submit such valuation
      to an investment banking firm of recognized national standing selected by the
      holder of this Note and acceptable to the Company in its reasonable discretion,
      whose opinion shall be binding upon the Company and the holder of this Note.
      A
      reclassification of the Common Stock (other than a change in par value, or
      from
      par value to no par value or from no par value to par value) into shares of
      Common Stock and shares of any other class of stock shall be deemed a
      distribution by the Company to the holders of its Common Stock of such shares
      of
      such other class of stock within the meaning of this Section 8(f) and, if the
      outstanding shares of Common Stock shall be changed into a larger or smaller
      number of shares of Common Stock as a part of such reclassification, such change
      shall be deemed a subdivision or combination, as the case may be, of the
      outstanding shares of Common Stock within the meaning of Section
      8(e).

     

    (g) Blocking
      Provision.

     

    (i) Except
      as
      provided otherwise in this Section 8(g)(i), the number of Conversion Shares
      that
      may be acquired by any holder shall be limited to the extent necessary to insure
      that, following such conversion, 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) does not exceed 4.99% of the total
      number of shares of Common Stock of the Company then issued and outstanding
      (the
“Beneficial
      Ownership Cap”).
      For
      purposes hereof, “group” has the meaning set forth in Section 13(d) of the
      Exchange Act and applicable regulations of the Securities and Exchange
      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.
      As
      used herein, the term “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 the holder of this Note, 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. Each delivery of a Conversion Notice by the holder of this Note will
      constitute a representation by such holder that it has evaluated the limitation
      set forth in this paragraph and determined, subject to the accuracy of
      information filed under the Securities Act and the Exchange Act of 1934, as
      amended (the “Exchange
      Act”)
      by the
      Company with respect 

     

    
      
        
        

      

      
        -
          11 -

        
          

        

      

      
        
        

      

       

    

    to
      the
      outstanding Common Stock of the Company, that the issuance of the full number
      of
      shares of Common Stock requested in such Conversion Notice is permitted under
      this paragraph. This paragraph shall be construed and administered in such
      manner as shall be consistent with the intent of the first sentence of this
      paragraph. Any provision hereof which would require a result that is not
      consistent with such intent shall be deemed severed herefrom and of no force
      or
      effect with respect to the conversion contemplated by a particular Conversion
      Notice.

     

    (ii) In
      the
      event the Company is prohibited from issuing shares of Common 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 the full
      conversion of the Promissory Notes.

     

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

     

    (h) Common
      Stock Reserved.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued Common Stock, solely for issuance upon the conversion of the Promissory
      Notes, such number of shares of Common Stock as shall from time to time be
      issuable upon the conversion of all the Promissory Notes at the time outstanding
      (without regard to any ownership limitations provided in Section
      8(g)).

     

    9.  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 Note is convertible and the
      current Conversion Rate provided for in Section 8: 

     

    (a) When
      Adjustments to Be Made.
      The
      adjustments required by Section 8 shall be made whenever and as often as any
      specified event requiring an adjustment shall occur, except that any adjustment
      to the Conversion Rate 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 8(e)) up to, but not beyond the Conversion Date 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 Note
      is
      convertible 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 Section 8 and not previously made,
      would result in a minimum adjustment or on the Conversion Date. 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. 

     

    
      
        
        

      

      
        -
          12 -

        
          

        

      

      
        
        

      

       

    

    (b) Fractional
      Interests.
      In
      computing adjustments under Section 8, 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 Section 8(f) 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 Section 8(f) 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 Section 8(f), 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 8 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 Note converts
      the
      Note during such period or such holder is unable to convert pursuant to Section
      8(g), the holder of this Note shall continue to be entitled to receive any
      shares of Common Stock issuable upon conversion under Section 8 by reason of
      such adjustment (as if this Note were not yet converted) and such shares or
      other property shall be held in escrow for the holder of this Note by the
      Company to be issued to holder of this Note 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.

     

    10.  Replacement.
      Upon
      receipt of a duly executed, notarized and unsecured written statement from
      the
      Payee with respect to the loss, theft or destruction of this Note (or any
      replacement hereof), and, if requested by the Company, an indemnity bond
      customary in the industry, or, in the case of a mutilation of this Note, upon
      surrender and cancellation of such Note, the Company shall issue a new Note,
      of
      like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated
      Note.

     

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

     

    12.  Amendments.
      This
      Note may not be modified or amended in any manner except in writing executed
      by
      the Company and the Payee.

     

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

     

    
      
        
        

      

      
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          13 -

        
          

        

      

      
        
        

      

       

    

    the
      date
      of mailing by express courier service, fully prepaid, addressed to such address,
      or upon actual receipt of such mailing, whichever shall first occur. The Company
      will give written notice to the Payee at least twenty (20) days prior to the
      date on which dissolution, liquidation or winding-up will take place and in
      no
      event shall such notice be provided to the Payee prior to such information
      being
      made known to the public. Notices to the Payee shall be made to the address
      set
      forth in the Purchase Agreement. Notices to the Company shall be made to the
      following:

     

    Address
      of the Company: 

    Access
      Pharmaceuticals, Inc.

    2600
      Stemmons Freeway, Suite 176

    Dallas,
      Texas 75207

    Attention:
      President 

    Facsimile
      No.: (214) 905-5101

    

    

    with
      a
      copy to:  

    Bingham
      McCutchen LLP

    150
      Federal Street

    Boston,
      Massachusetts 02110 

    Attention:
      John J. Concannon, III

    Facsimile
      No.: (617) 951-8736

    

    

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

     

    15.  Headings.
      Article
      and section headings in this Note are included herein for purposes of
      convenience of reference only and shall not constitute a part of this Note
      for
      any other purpose.

     

    16.  Remedies,
      Characterizations, Other Obligations, Breaches and Injunctive
      Relief.
      The
      remedies provided in this Note shall be cumulative and in addition to all other
      remedies available under this Note, at law or in equity (including, without
      limitation, a decree of specific performance and/or other injunctive relief),
      no
      remedy contained herein shall be deemed a waiver of compliance with the
      provisions giving rise to such remedy and nothing herein shall limit a Payee’s
      right to pursue actual damages for any failure by the Company to comply with
      the
      terms of this Note. Amounts set forth or provided for herein with respect to
      payments and the like (and the computation thereof) shall be the amounts to
      be
      received by the Payee and shall not, except as expressly provided herein, be
      subject to any other obligation of the Company (or the performance thereof).
      The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable and material harm to the Payee and that the remedy at law for any
      such breach may be inadequate. Therefore the Company agrees that, in the event
      of any such breach or threatened breach, the Payee shall be entitled, in
      addition to all other available rights and remedies, at law or in equity, to
      such equitable relief, including but not limited to an 

     

    
      
        
        

      

      
        -
          14 -

        
          

        

      

      
        
        

      

       

    

    injunction
      restraining any such breach or threatened breach, without the necessity of
      showing economic loss and without any bond or other security being
      required.

     

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

     

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

     

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

     

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

     

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

     

    21.  Consent
      to Jurisdiction.
      Each of
      the Company and the Payee (i) hereby irrevocably submits to the jurisdiction
      of
      the United States District Court sitting in the Southern District of New York
      and the courts of the State of New York located in New York county for the
      purposes of any suit, action or proceeding arising out of or relating to this
      Note and (ii) hereby waives, and agrees not to assert in any such suit, action
      or proceeding, any claim that it is not personally subject to the jurisdiction
      of such court, that the suit, action or proceeding is brought in an inconvenient
      forum or that the venue of the suit, action or proceeding is improper. Each
      of
      the Company and the Payee consents to process being served in any such suit,
      action or proceeding by mailing a copy thereof to such party at the address
      set
      forth in Section 13 hereof and agrees that such service shall constitute good
      and sufficient service of process and notice 

     

    
      
        
        

      

      
        -
          15 -

        
          

        

      

      
        
        

      

       

    

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

     

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

     

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

     

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

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

        17

        

        
        

      

      
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    IN
      WITNESS WHEREOF,
      the
      Company has executed and delivered this Promissory Note as of the date first
      written above.

    

    

    ACCESS
      PHARMACEUTICALS, INC.

    

    

    

    
      	 By:	 
	 	 Name: 
	 	 Title:

    

    

    

    

    

    

    
      
        
        

      

      
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          17 -

        
          

        

      

      
        
        

      

    

    

     

    

    EXHIBIT
      A

    

    FORM
      OF
      CONVERSION NOTICE

    

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

    

    The
      undersigned hereby irrevocably elects to convert the 7.5% Secured Convertible
      Promissory Note (the “Note”)
      of
      Access Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
      due
      March 31, 2007 held
      by
      the undersigned into shares of Common Stock, according to the terms and
      conditions of the Note and the conditions hereof, as of the date written below.
      The undersigned hereby requests that certificates for the shares of Common
      Stock
      to be issued to the undersigned pursuant to this Conversion Notice be issued
      in
      the name of, and delivered to, the undersigned or its designee as indicated
      below. If the shares of Common Stock are to be issued in the name of a person
      other than the undersigned, the undersigned will pay all transfer taxes payable
      with respect thereto. A copy of the Note being converted is attached hereto
      (and
      the original Note shall be transmitted to the Company pursuant to the terms
      thereof). All capitalized terms used in this Conversion Notice, but not
      otherwise defined herein shall have the meanings assigned in the
      Note.

    

    ______________________________________________________________________________
      

    Date
      of
      Conversion (Date of Notice)

    ______________________________________________________________________________
      

    Principal
      Amount of Note to be Converted

    

    ______________________________________________________________________________
      

    Principal
      Amount of Note not to be Converted (Principal Amount Remaining after Conversion)
      

    

    ______________________________________________________________________________
      

    Amount
      of
      accumulated and unpaid interest on principal amount of Note to be
      Converted

    ______________________________________________________________________________
      

    Number
      of
      shares of Common Stock to be Issued (including conversion of accrued but unpaid
      interest on Notes to be Converted) 

    

    ______________________________________________________________________________
      

    Applicable
      Conversion Value

    

    Conversion
      Information:[NAME OF HOLDER]

    

    

    ___________________________________

    

    Address
      of Holder:

    ___________________________________
      

    ___________________________________
      

    Issue
      Common Stock to (if different than above): 

    Name:_______________________________
      

    Address:____________________________
      

    ____________________________
      

     

     

    
      
        
        

      

      
        -
          18 -

        
          

        

      

      
        
        

      

    

     

     

    Tax
      ID
      #:_____________________

     

    ________________________________________________
      

    Name
      of
      Holder

     

    

    By:_____________________________________________
      

    Name:

    Title:

    

    

    \16289\15\123420.1

    

    
      
        
        

      

      
        -
          19 -Unassociated Document

     

    
EXHIBIT
      10.32

    
      

      

    

     

     

    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 _________ 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 $1.32 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: 

     

    “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) of more than one-half of the voting
      rights or equity interests in the Company, other than pursuant to the conversion
      of convertible securities of the Company outstanding as of the date hereof
      or
      the exercise of options or warrants of the Company, in each case, outstanding
      as
      of the date hereof; 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. 

     

    “Closing
      Date”
means
      December ___, 2006.

     

    “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 4.3. 

     

    “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 five (5) consecutive trading days 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, 

     

    
      
        
        

      

      
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    or
      (v) if
      there is no such firm, as furnished by any member of the NASD selected mutually
      by the holder of this Warrant and the Company or, if they cannot agree upon
      such
      selection, as selected by two such members of the NASD, one of which shall
      be
      selected by holder of this Warrant and one of which shall be selected by 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 $1.32 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
      December ___, 2012. 

     

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

     

    “NASD”
means
      the National Association of Securities Dealers, Inc., or any successor
      corporation thereto. 

     

    “Other
      Property”
has
      the
      meaning set forth in Section 4.3. 

     

    “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). 

     

    “Purchase
      Agreement”
means
      that certain Convertible Note and Warrant Purchase Agreement dated as of
      December ___, 2006 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. 

     

    
      
         

      

      
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    “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.
      

     

    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. 

     

    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, (ii) payment of the Warrant Price as provided
      herein, and (iii) this Warrant. 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. 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. 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 this Warrant shall have been
      exercised in part, the Company shall, at the time of delivery of the certificate
      or certificates representing Warrant Stock, deliver to the Holder a new Warrant
      evidencing the rights of the Holder to purchase the unpurchased shares of Common
      Stock called for by this Warrant, which new Warrant shall in all other respects
      be identical with this Warrant, or at the request of the Holder, appropriate
      notation may be made on this Warrant and the same returned to the
      Holder.

     

    
      
        
        

      

      
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    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.

     

    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. 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. 

     

    (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 

     

    
      
        
        

      

      
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    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.

     

    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, 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.” 

     

    
      
        
        

      

      
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    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: 

     

    (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 

     

    
      
        
        

      

      
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    (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. 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. 

     

    (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.

     

    
      
        
        

      

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

     

    (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).

     

    (b)
      In
      case of any such Change of Control described in Section 4.3(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.
      

     

    4.4. 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. 

     

    
      
        
        

      

      
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          9 -

        
          

        

      

      
        
        

      

       

    

    4.5. 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. 

     

    4.6. 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 

     

    
      
        
        

      

      
        -
          10 -

        
          

        

      

      
        
        

      

       

    

    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;

     

    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.

     

    
      
        
        

      

      
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          11 -

        
          

        

      

      
        
        

      

       

    

    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 

     

    
      
        
        

      

      
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          12 -

        
          

        

      

      
        
        

      

       

    

    condition
      to the availability of an exemption from the Securities Act for the sale of
      any
      Warrant or Restricted Common Stock. 

     

    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, 

     

    
      
        
        

      

      
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          13 -

        
          

        

      

      
        
        

      

       

    

    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.

     

    13.3. 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. 

     

    
      
        
        

      

      
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          14 -

        
          

        

      

      
        
        

      

       

    

    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. 

     

    [Signature
      Page Follows]

     

    
      
         

        

        
        

      

      
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          15 -

        
          

        

      

      
        
        

      

    

    

     

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

     

    Dated:
      December ___, 2006

    

    

    ACCESS
      PHARMACEUTICALS, INC.

     

     

    By:______________________________
      

    Name:

    Title:

    

    Attest:
      

    

    

    

    By:______________________________

    Name:

    Title:
      Secretary

    

    
      
         

        

        
        

      

      
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          16 -

        
          

        

      

      
        
        

      

    

    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. 

    
      
         

        

        
        

      

      
        -
          17 -

        
          

        

      

      
        
        

      

    

    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. 

    
      
         

        

        
        

      

      
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          18 -

        
          

        

      

      
        
        

      

    

    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.

    
      
         

        

        
        

      

      
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          19 -

        
          

        

      

      
        
        

      

    

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

     

     

    [Name]

    

    

    By:______________________________

    Name:

    Title:
      

     

    
 

    

    \16289\15\123421.1

     

    

    
      
        
          
            
            

          

          
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