Document:

Unassociated Document

    EXHIBIT
      10.25

    
      

      

    

    
 

    

    SECURITY
      AGREEMENT AMENDMENT

    

    This
      SECURITY
      AGREEMENT AMENDMENT
      (the
“Amendment”)
      is
      made as of October 24, 2006 between the lenders listed on the signature page
      hereto (hereinafter, collectively, the “Secured
      Parties”)
      and
      Access Pharmaceuticals, Inc., a Delaware corporation with its chief executive
      office located at 2600 Stemmons Freeway, Suite 176, Dallas, Texas 75207,
      Attention: President (the “Debtor”).

    

    WHEREAS,
      on
      February 16, 2006, the Debtor issued in favor of each of the Secured Parties,
      promissory notes (collectively the “February
      Notes”),
      in
      the aggregate principal amount of Five Million Dollars ($5,000,000); such
      February Notes were issued pursuant to the terms of a Convertible Note and
      Warrant Purchase Agreement dated as of February 16, 2006 between the Debtor
      and
      the Secured Parties; 

    

    WHEREAS,
      in
      connection with the issuance of the February Notes, the Debtor entered into
      that
      certain Security Agreement dated as of February 16, 2006, between the Debtor
      and
      the Secured Parties (the “Security
      Agreement”);

    

    WHEREAS,
      on the
      date hereof, the Debtor has issued in favor of certain of the Secured Parties
      (the “October
      Secured Parties”),
      promissory notes (collectively the “October
      Notes”),
      in
      the aggregate principal amount of Five Hundred Thousand Dollars ($500,000);
      such
      Notes have been issued pursuant to the terms of a Convertible Note and Warrant
      Purchase Agreement (the “October
      Purchase Agreement”)
      of
      even date herewith between the Debtor and the October Secured Parties (such
      transaction, the “October
      Financing”);
      

    

    WHEREAS,
      it is a
      condition precedent to the October Secured Parties’ making any loans under
      October Purchase Agreement and the October Notes or
      otherwise extending credit to the Debtor that the Debtor execute and deliver
      this Security Agreement Amendment; and

    

    WHEREAS,
      the
      Debtor and each of the Secured Parties desires to amend the Security Agreement
      in order to secure the Debtor’s obligations pursuant to the October
      Notes;

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and to induce the October Secured Parties to
      extend the loans to the Debtor pursuant to the October Notes, the Debtor and
      the
      Secured Parties hereby agree as follows:

    

    1. Capitalized
      Terms.
      Capitalized terms used and not defined herein shall have the respective meanings
      ascribed to such terms in the Security Agreement.

     

    2. Amendment
      to the Security Agreement.
      

    

    (a)
      Section 1(c) of the Security Agreement is hereby amended by inserting the
      following defined terms in appropriate alphabetical order therein:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “February
      Notes”
means
      the Secured Convertible Promissory Notes of the Debtor in the aggregate
      principal amount of Five Million Dollars ($5,000,000), issued pursuant to the
      February Purchase Agreement.

    

    “February
      Purchase Agreement”
means
      the Convertible Note and Warrant Purchase Agreement dated as of February 16,
      2006, between the Debtor and the Secured Parties.

    

    “Note”
and
      “Notes”
means
      the February Notes and/or the October Notes. This definition shall supersede
      the
      definition of such terms set forth in the recitals to this
      Agreement.

    

    “October
      Notes”
means
      the Secured Convertible Promissory Notes of the Debtor in the aggregate
      principal amount of Five Hundred Thousand Dollars ($500,000) issued pursuant
      to
      the October Purchase Agreement.

    

    “October
      Purchase Agreement”
means
      the Convertible Note and Warrant Purchase Agreement dated as of October 24,
      2006, between the Debtor and certain of the Secured Parties.

    

    “Purchase
      Agreement”
means
      the February Purchase Agreement and/or the October Purchase Agreement. This
      definition shall supersede the definition of such term in the recitals to this
      Agreement.”

    

    3. Consent
      to October Financing.
      The
      Secured Parties hereby consent to the October Financing and, in connection
      therewith, the Debtor’s execution, delivery and performance of the October
      Purchase Agreement, the sale of the October Notes and the consummation of the
      other transactions and execution of the other agreements and documents
      contemplated by the October Purchase Agreement.

    

    4. Full
      Force and Effect of the Security Agreement.
      Except
      as specifically amended hereby, the Security Agreement shall remain of full
      force and effect and is hereby ratified and affirmed in all
      respects.

    

    5. Governing
      Law, etc.
      This
      Amendment shall be deemed to be a contract made under the laws of the State
      of
      New York and shall be construed in accordance with such laws.

    

    6. Counterparts;
      Facsimile Execution.
      This
      Amendment may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. Executed signature pages delivered by facsimile or other means
      of
      electronic image transmission shall have the same force and effect as an
      original thereof.

    

    [Signature
      pages follow.]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Security Agreement Amendment to be duly executed
      and delivered as of the date first above written.

    

    

    
      	 ACCESS PHARMACEUTICALS,
              INC.
	 	 
	 By:    	 /s/ Stephen
              B. Thompson 
	 Name:	 Stephen B. Thompson 
	 Title	 VP - CFO

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    OMNIBUS
      SIGNATURE PAGE TO

    ACCESS
      PHARMACEUTICALS, INC.

    SECURITY
      AGREEMENT AMENDMENT

    

    The
      undersigned, as a Secured Party, hereby executes and delivers the Security
      Agreement Amendment to which this signature page is attached, which, together
      with all counterparts of the Security Agreement Amendment and signature pages
      of
      the other parties named in said Security Agreement Amendment, shall constitute
      one and the same document in accordance with the terms of the Security Agreement
      Amendment.

     

     

     

    
      	Print Name:	 SCO Capital
              Partners LLC
	 	 
	 By: 	 /s/ Stephen
              H. Rouhandeh
	 Name:	 Stephen H.
              Rouhandeh
	 Title:	 Chairman

    

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    OMNIBUS
      SIGNATURE PAGE TO

    ACCESS
      PHARMACEUTICALS, INC.

    SECURITY
      AGREEMENT AMENDMENT

    

    The
      undersigned, as a Secured Party, hereby executes and delivers the Security
      Agreement Amendment to which this signature page is attached, which, together
      with all counterparts of the Security Agreement Amendment and signature pages
      of
      the other parties named in said Security Agreement Amendment, shall constitute
      one and the same document in accordance with the terms of the Security Agreement
      Amendment.

     

    
 

    
      	Print Name:	 Lake End
              Capital LLC
	 	 
	By:	 /s/ Jeffrey
              B. Davis 
	Name:	 Jeffrey B.
              Davis 
	Title: 	 Chairman

    

     

    
 

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

          

        

      

    

    
 

    
 

    OMNIBUS
      SIGNATURE PAGE TO

    ACCESS
      PHARMACEUTICALS, INC.

    SECURITY
      AGREEMENT AMENDMENT

    

    The
      undersigned, as a Secured Party, hereby executes and delivers the Security
      Agreement Amendment to which this signature page is attached, which, together
      with all counterparts of the Security Agreement Amendment and signature pages
      of
      the other parties named in said Security Agreement Amendment, shall constitute
      one and the same document in accordance with the terms of the Security Agreement
      Amendment.

     

    

    
      	Print Name:	 Beach Capital
              LLC
	 	 
	 By:    	 /s/ Steven H.
              Rouhandeh
	 Name:	 Steven H.
              Rouhandeh 
	 Title:	 ChairmanUnassociated Document

    EXHIBIT
      10.26

    
      

      

    

     

     

    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-_____
      October 24, 2006

    

    

    FOR
      VALUE RECEIVED,
      the
      undersigned, Access Pharmaceuticals, Inc., a Delaware corporation (the
“Company”),
      hereby promises to pay to the order of
      _____________________ 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 ________________ Dollars
      ($_________) (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) 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 

     

    
      
        
        

      

      
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    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 between the Company, the
      holders of the February 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.

     

    (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 

     

    
      
        
        

      

      
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    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
      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 

     

    
      
        
        

      

      
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    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 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.

     

    
      
        
        

      

      
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    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 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:

     

    
      
        
        

      

      
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    (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 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 

     

    
      
        
        

      

      
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    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 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, 

     

    
      
        
        

      

      
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    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 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 

     

    
      
        
        

      

      
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          9 -

        
          

        

      

      
        
        

      

       

    

    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 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 

     

    
      
        
        

      

      
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          10 -

        
          

        

      

      
        
        

      

       

    

    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 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 

     

    
      
        
        

      

      
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          11 -

        
          

        

      

      
        
        

      

       

    

    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. 

     

    (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 

     

    
      
        
        

      

      
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          12 -

        
          

        

      

      
        
        

      

       

    

    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 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

     

    
      
        
        

      

      
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    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 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.

     

    
      
        
        

      

      
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    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 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.

     

    
      
        
        

      

      
        -
          15 -

        
          

        

      

      
        
        

      

       

    

    (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]

    
      
         

         

        

        
        

      

      
        -
          16 -

        
          

        

      

      
        
        

      

    

    

    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:

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        -
          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

    ______________________________________________________________________________
      

    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:

    

    

    

    

    

     

    

    

    
      
        
        

      

      
        -
          19 -

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