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<SEC-DOCUMENT>0001085146-08-000765.txt : 20080522
<SEC-HEADER>0001085146-08-000765.hdr.sgml : 20080522
<ACCEPTANCE-DATETIME>20080522170213
ACCESSION NUMBER:		0001085146-08-000765
CONFORMED SUBMISSION TYPE:	SC 13D/A
PUBLIC DOCUMENT COUNT:		6
FILED AS OF DATE:		20080522
DATE AS OF CHANGE:		20080522

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ACCESS PHARMACEUTICALS INC
		CENTRAL INDEX KEY:			0000318306
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				830221517
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SC 13D/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	005-33655
		FILM NUMBER:		08855353

	BUSINESS ADDRESS:	
		STREET 1:		2600 N STEMMONS FRWY
		STREET 2:		STE 176
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75207
		BUSINESS PHONE:		2149055100

	MAIL ADDRESS:	
		STREET 1:		2600 N STEMMONS FRWY
		STREET 2:		STE 176
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75207

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHEMEX PHARMACEUTICALS INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHEMEX CORP/WY
		DATE OF NAME CHANGE:	19831102

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FEINBERG LARRY N
		CENTRAL INDEX KEY:			0000926475
		STATE OF INCORPORATION:			NY

	FILING VALUES:
		FORM TYPE:		SC 13D/A

	BUSINESS ADDRESS:	
		STREET 1:		C/O ORACLE PARTNERS L P
		STREET 2:		712 FIFTH AVENUE 45TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019
		BUSINESS PHONE:		2038627900

	MAIL ADDRESS:	
		STREET 1:		C/O ORACLE PARTNERS L P
		STREET 2:		200 GREENWICH AVENUE
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D/A
<SEQUENCE>1
<FILENAME>oracaccesspharma1_0508.htm
<TEXT>
<HTML><HEAD>
</HEAD>
<body><div style='width:700px'>
<TABLE id=Table1 cellSpacing=0 cellPadding=1 width=160 align=right border=0>
</TABLE>
<table width='675' cellspacing='0' cellpadding='0'><tr>
    <td colspan='3' scope='row'><div align="center">
      <p><strong>UNITED STATES<BR>
        SECURITIES AND EXCHANGE
        COMMISSION<BR>
        Washington, D.C. 20549<br>
        <br>
        <br>
      </strong></p>
      </div></td>
</tr>
  <tr>   <td colspan='3' scope='row'><div align="center"> </div></td></tr>
  <tr>   <td colspan='3' scope='row'><div align="center">
    <p><strong>SCHEDULE 13D</strong><br>
      <br>
    </p>
    </div></td>
  </tr>
  <tr>   <td colspan='3' scope='row'><div align="center"> </div></td>  </tr>
  <tr>   <td colspan='3' scope='row'><div align="center"><strong>Under the Securities Exchange Act of 1934</strong></div></td>
  </tr>
  <tr>   <td colspan='3' scope='row'><div align="center"><strong>(Amendment No. 1 )</strong></div></td>
  </tr>
  <tr>   <td colspan='3' scope='row'>&nbsp;</td> </tr>
  <tr>   <td colspan='3' scope='row'> <div align='center' style='font-weight:normal'>Access Pharmaceuticals, Inc.*</div></td></tr>
  <tr>   <td height='20' colspan='3' scope='row'><HR noShade></td></tr>
  <tr>   <td colspan='3' scope='row'><div align='center'><strong>(Name of Issuer)</strong></div></td></tr>
  <tr>   <td colspan='3' scope='row'>&nbsp;</td></tr>
  <tr>   <td height='22' colspan='3' scope='row'><div align='center' >Common Stock, $0.01 par value</div></td></tr>
  <tr>   <td height='20' colspan='3' scope='row'><HR noShade></td></tr>
  <tr>   <td colspan='3' scope='row'><div align='center'><strong>(Title of Class of Securities)</strong></div></td>
  </tr>
  <tr>   <td colspan='3' scope='row'>&nbsp;</td></tr>
  <tr>   <td colspan='3' scope='row' style='font-weight:normal'><div align="center">00431M209</div></td></tr>
  <tr>   <td height='20' colspan='3' scope='row'><HR noShade></td></tr>
  <tr>   <td colspan='3' scope='row'><div align='center'><strong>(CUSIP Number)</strong></div></td>
  </tr>
  <tr>   <td colspan='3' scope='row'>&nbsp;</td></tr>
  <tr>   <td colspan='3' scope='row' style='font-weight:normal'><div align="center">Larry N. Feinberg<br>
    c/o Oracle Partners, L.P.<br>
    200 Greenwich Avenue, 3rd Floor<br>
    Greenwich, CT  06830<br>
    (203) 862-7900<br>
    <br>
    Copies to:<br>
    <br>
    Rita Molesworth, Esq.<br>
    Willkie Farr & Gallagher LLP<br>
    787 Seventh Avenue<br>
    New York, NY  10019-6099<br>
    (212) 728-8000</div></td></tr>
  <tr>   <td height='20' colspan='3' scope='row'><HR noShade></td></tr>
  <tr>   <td colspan='3' scope='row'><div align='center'><strong>(Name, Address and Telephone Number of Person Authorized to<br>
    Receive Notices and Communications)</strong></div></td>
  </tr>
  <tr>    <th colspan='3' scope='row'>&nbsp;</th></tr>
  <tr>    <th colspan='3' scope='row' style='font-weight:normal'>December 31, 2005</th></tr>
  <tr>    <th height='20' colspan='3' scope='row'><HR noShade></th></tr>
  <tr>    <td colspan='3' scope='row'><div align='center'><strong>(Date of Event which Requires Filing of this Statement)</strong></div></td>
  </tr>
  <tr>    <th colspan='3' scope='row'>&nbsp;</th></tr>
  <tr>    <th width='66' valign='top' scope='row'>&nbsp;</th>
    <td width='550' valign='top' scope='row'><div align='justify' ></div></td>
    <th width='57' scope='row'>&nbsp;</th></tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th>
    <td valign='top' scope='row'><div align='justify'>If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the
      subject of this Schedule 13D, and is filing this schedule because of &sect;&sect;240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.
        [ ]</div></td><th scope='row'>&nbsp;</th></tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th>    <td valign='top' scope='row'>&nbsp;</td>    <th scope='row'>&nbsp;</th>  </tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th>    <td valign='top' scope='row'><div align='justify' >
      <div align='justify'><strong>Note:</strong> Schedules filed in paper format shall include a signed original and five copies of the schedule,
        including all exhibits. See &sect;240.13d-7 for other parties to whom copies are to be sent.</div></div></td><th scope='row'>&nbsp;</th></tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th>    <td valign='top' scope='row'>&nbsp;</td>    <th scope='row'>&nbsp;</th></tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th>
    <td valign='top' scope='row'><div align='justify' >* The remainder of this cover page shall be filled out for
      a reporting person's initial filing on this form with respect to the
      subject class of securities, and for any subsequent amendment containing
      information which would alter the disclosures provided in a prior cover page.</div></td><th scope='row'>&nbsp;</th></tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th><td valign='top' scope='row'>&nbsp;</td><th scope='row'>&nbsp;</th></tr>
  <tr>    <th valign='top' scope='row'>&nbsp;</th>
    <td valign='top' scope='row'><div align='justify' >The information required in the remainder of this cover
      page shall not be deemed to be 'filed' for the purpose of Section 18 of
      the Securities Exchange Act of 1934 ('Act') or otherwise subject to the
      liabilities of that section of the Act but shall be subject to all other
    provisions of the Act (however, see the Notes).</div></td><th scope='row'>&nbsp;</th></tr>
  <tr>    <th colspan='3' scope='row'>&nbsp;</th></tr>
  <tr>    <th colspan='3' scope='row'>&nbsp;</th></tr></table>
<TABLE id=Table3 cellSpacing=0 cellPadding=4 width=675 border=0>
  <TR>   <TD colSpan=5>CUSIP No. 00431M209</TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>   <TD colSpan=5><B>Person 1</B></TD></tr>
  <TR>   <TD>&nbsp;</TD>
    <TD vAlign=top>1.</TD>
    <TD colSpan=3>(a) Names of Reporting Persons.</TD></TR>
  <TR>    <TD>&nbsp;</TD><TD vAlign=top>&nbsp;</TD><TD colSpan=3>Larry N. Feinberg</TD>
  </TR>
  <TR>    <TD>&nbsp;</TD>    <TD vAlign=top> </TD>
    <TD colSpan=3>(b) I.R.S. Identification Nos. of above persons (entities only).</TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>   <TD vAlign=top width=24></TD>    <TD colSpan=3></TD>  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD vAlign=top width=24>2.</TD>
    <TD colSpan=3>Check the Appropriate Box if a Member of a Group
      (See Instructions)</TD> </TR>
  <TR>  <TD>&nbsp;</TD><TD valign='top'>&nbsp;</TD>
  <TD valign='top' colspan=3>(a) &nbsp;
[ ]</TD>
  </TR>
  <TR> <TD width=7 height="36">&nbsp;</TD>
  <TD width=24 valign='top'>&nbsp;</TD>
    <TD width=50 valign='top' colspan='5'>(b)&nbsp;[X]</TD>
  </TR>
  <TR>  <TD colSpan=5>   <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>3.</TD>
    <TD colSpan=3>SEC Use Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . </TD></TR>
  <TR>   <TD>&nbsp;</TD>  <TD>&nbsp;</TD>  <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>4.</TD>
    <TD colSpan=3>Source of Funds (See Instructions) &nbsp;
 AF</TD></TR>
  <TR>    <TD>&nbsp;</TD> <TD>&nbsp;</TD> <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>5</TD>
    <TD colSpan=3>Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
      [ ]
    </TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>6.</TD>   <TD colSpan=3>Citizenship or Place of Organization &nbsp;United States</TD>
  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD colSpan=3 rowSpan=8>Number of<BR>Shares<BR>Beneficially<BR>Owned by<BR>Each Reporting<BR>Person With</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>7.&nbsp;Sole Voting Power &nbsp;3,660</TD>
  </TR>
  <TR>    <TD vAlign=top colSpan=2><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>8.&nbsp; Shared Voting Power &nbsp;2,479,380</TD>
  </TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>9.&nbsp;Sole Dispositive Power &nbsp;3,660</TD>
  </TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>10.&nbsp;Shared Dispositive Power &nbsp;2,479,380</TD>
  </TR>
  <TR>    <TD colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>11.</TD>
    <TD vAlign=top colSpan=3>Aggregate Amount Beneficially Owned by
      Each Reporting Person &nbsp; 2,483,040</TD>
  </TR>
  <TR><TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR><TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>12.</TD>
    <TD vAlign=top colSpan=3>Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) &nbsp;
      [ ] </TD></TR>
  <TR>    <TD vAlign=top colSpan=5>  <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>13.</TD>
    <TD vAlign=top colSpan=3>Percent of Class Represented by Amount in Row (11)&nbsp;
      31.8  %</TD>
  </TR>
  <TR> <TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>14.</TD>
    <TD vAlign=top colSpan=3>Type of Reporting Person (See Instructions)</TD></TR>
  <TR>    <TD height='17' colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD height='30' colSpan=5>IN</TD>
  </TR>
  <TR>    <TD colSpan=5></TD></TR>
  <TR>    <TD height='12' colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD colSpan=5><B>Person 2</B></TD></TR>
  <TR>   <TD>&nbsp;</TD>
    <TD vAlign=top>1.</TD>
    <TD colSpan=3>(a) Names of Reporting Persons.</TD></TR>
  <TR>    <TD>&nbsp;</TD><TD vAlign=top>&nbsp;</TD><TD colSpan=3>Oracle Associates, LLC</TD>  </TR>
  <TR>    <TD>&nbsp;</TD>    <TD vAlign=top> </TD>
    <TD colSpan=3>(b) I.R.S. Identification Nos. of above persons (entities only).</TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>   <TD vAlign=top width=24></TD>    <TD colSpan=3></TD>  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD vAlign=top width=24>2.</TD>
    <TD colSpan=3>Check the Appropriate Box if a Member of a Group
      (See Instructions)</TD> </TR>
  <TR>  <TD>&nbsp;</TD><TD valign='top'>&nbsp;</TD><TD valign='top' colspan=3>(a) &nbsp;
[ ]</TD></TR>
  <TR> <TD width=7>&nbsp;</TD>    <TD width=24 valign='top'>&nbsp;</TD>
    <TD width=50 valign='top'>(b) &nbsp;
[X]</TD></TR>
  <TR>  <TD colSpan=5>   <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>3.</TD>
    <TD colSpan=3>SEC Use Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . </TD></TR>
  <TR>   <TD>&nbsp;</TD>  <TD>&nbsp;</TD>  <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>4.</TD>
    <TD colSpan=3>Source of Funds (See Instructions) &nbsp;
 AF</TD></TR>
  <TR>    <TD>&nbsp;</TD> <TD>&nbsp;</TD> <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>5</TD>
    <TD colSpan=3>Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
      [ ]
    </TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>6.</TD>   <TD colSpan=3>Citizenship or Place of Organization &nbsp;
      Delaware    </TD></TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD colSpan=3 rowSpan=8>Number of<BR>Shares<BR>Beneficially<BR>Owned by<BR>Each Reporting<BR>Person With</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>7.&nbsp;Sole Voting Power &nbsp;
0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>8.&nbsp; Shared Voting Power &nbsp;      2,402,486</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>9.&nbsp;Sole Dispositive Power &nbsp;
      0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>10.&nbsp;Shared Dispositive Power &nbsp;
      2,402,486</TD></TR>
  <TR>    <TD colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>11.</TD>
    <TD vAlign=top colSpan=3>Aggregate Amount Beneficially Owned by
      Each Reporting Person &nbsp; 2,402,486</TD></TR>
  <TR><TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR><TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>12.</TD>
    <TD vAlign=top colSpan=3>Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) &nbsp;
      [ ] </TD></TR>
  <TR>    <TD vAlign=top colSpan=5>  <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>13.</TD>
    <TD vAlign=top colSpan=3>Percent of Class Represented by Amount in Row (11)&nbsp;
      31.0  %</TD></TR>
  <TR> <TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>14.</TD>
    <TD vAlign=top colSpan=3>Type of Reporting Person (See Instructions)</TD></TR>
  <TR>    <TD height='17' colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD height='30' colSpan=5>OO </TD></TR>
  <TR>    <TD colSpan=5></TD></TR>
  <TR>    <TD height='12' colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD colSpan=5><B>Person 3</B></TD></tr>
  <TR>   <TD>&nbsp;</TD>
    <TD vAlign=top>1.</TD>
    <TD colSpan=3>(a) Names of Reporting Persons.</TD></TR>
  <TR>    <TD>&nbsp;</TD><TD vAlign=top>&nbsp;</TD><TD colSpan=3>Oracle Partners, L.P.</TD>  </TR>
  <TR>    <TD>&nbsp;</TD>    <TD vAlign=top> </TD>
    <TD colSpan=3>(b) I.R.S. Identification Nos. of above persons (entities only).</TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>   <TD vAlign=top width=24></TD>    <TD colSpan=3></TD>  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD vAlign=top width=24>2.</TD>
    <TD colSpan=3>Check the Appropriate Box if a Member of a Group
      (See Instructions)</TD> </TR>
  <TR>  <TD>&nbsp;</TD><TD valign='top'>&nbsp;</TD><TD valign='top' colspan=3>(a) &nbsp;
[ ]</TD></TR>
  <TR> <TD width=7>&nbsp;</TD>    <TD width=24 valign='top'>&nbsp;</TD>
    <TD width=50 valign='top'>(b) &nbsp;
[X]</TD></TR>
  <TR>  <TD colSpan=5>   <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>3.</TD>
    <TD colSpan=3>SEC Use Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . </TD></TR>
  <TR>   <TD>&nbsp;</TD>  <TD>&nbsp;</TD>  <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>4.</TD>
    <TD colSpan=3>Source of Funds (See Instructions) &nbsp;
 WC</TD></TR>
  <TR>    <TD>&nbsp;</TD> <TD>&nbsp;</TD> <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>5</TD>
    <TD colSpan=3>Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
      [ ]
    </TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>6.</TD>   <TD colSpan=3>Citizenship or Place of Organization &nbsp;
      Delaware    </TD></TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD colSpan=3 rowSpan=8>Number of<BR>Shares<BR>Beneficially<BR>Owned by<BR>Each Reporting<BR>Person With</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>7.&nbsp;Sole Voting Power &nbsp;
0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>8.&nbsp; Shared Voting Power &nbsp;      1,622,488</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>9.&nbsp;Sole Dispositive Power &nbsp;
      0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>10.&nbsp;Shared Dispositive Power &nbsp;
      1,622,488</TD></TR>
  <TR>    <TD colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>11.</TD>
    <TD vAlign=top colSpan=3>Aggregate Amount Beneficially Owned by
      Each Reporting Person &nbsp; 1,622,488</TD></TR>
  <TR><TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR><TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>12.</TD>
    <TD vAlign=top colSpan=3>Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) &nbsp;
      [ ] </TD></TR>
  <TR>    <TD vAlign=top colSpan=5>  <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>13.</TD>
    <TD vAlign=top colSpan=3>Percent of Class Represented by Amount in Row (11)&nbsp;
      23.2  %</TD></TR>
  <TR> <TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>14.</TD>
    <TD vAlign=top colSpan=3>Type of Reporting Person (See Instructions)</TD></TR>
  <TR>    <TD height='17' colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD height='30' colSpan=5>PN </TD></TR>
  <TR>    <TD colSpan=5></TD></TR>
  <TR>    <TD height='12' colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD colSpan=5><B>Person 4</B></TD></tr>
  <TR>   <TD>&nbsp;</TD>
    <TD vAlign=top>1.</TD>
    <TD colSpan=3>(a) Names of Reporting Persons.</TD></TR>
  <TR>    <TD>&nbsp;</TD><TD vAlign=top>&nbsp;</TD><TD colSpan=3>Oracle Institutional Partners, L.P.</TD>  </TR>
  <TR>    <TD>&nbsp;</TD>    <TD vAlign=top> </TD>
    <TD colSpan=3>(b) I.R.S. Identification Nos. of above persons (entities only).</TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>   <TD vAlign=top width=24></TD>    <TD colSpan=3></TD>  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD vAlign=top width=24>2.</TD>
    <TD colSpan=3>Check the Appropriate Box if a Member of a Group
      (See Instructions)</TD> </TR>
  <TR>  <TD>&nbsp;</TD><TD valign='top'>&nbsp;</TD><TD valign='top' colspan=3>(a) &nbsp;
[ ]</TD></TR>
  <TR> <TD width=7>&nbsp;</TD>    <TD width=24 valign='top'>&nbsp;</TD>
    <TD width=50 valign='top'>(b) &nbsp;
[X]</TD></TR>
  <TR>  <TD colSpan=5>   <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>3.</TD>
    <TD colSpan=3>SEC Use Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . </TD></TR>
  <TR>   <TD>&nbsp;</TD>  <TD>&nbsp;</TD>  <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>4.</TD>
    <TD colSpan=3>Source of Funds (See Instructions) &nbsp;
 WC</TD></TR>
  <TR>    <TD>&nbsp;</TD> <TD>&nbsp;</TD> <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>5</TD>
    <TD colSpan=3>Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
      [ ]
    </TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>6.</TD>   <TD colSpan=3>Citizenship or Place of Organization &nbsp;
      Delaware    </TD></TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD colSpan=3 rowSpan=8>Number of<BR>Shares<BR>Beneficially<BR>Owned by<BR>Each Reporting<BR>Person With</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>7.&nbsp;Sole Voting Power &nbsp;
0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>8.&nbsp; Shared Voting Power &nbsp;      779,998</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>9.&nbsp;Sole Dispositive Power &nbsp;
      0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>10.&nbsp;Shared Dispositive Power &nbsp;
      779,998</TD></TR>
  <TR>    <TD colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>11.</TD>
    <TD vAlign=top colSpan=3>Aggregate Amount Beneficially Owned by
      Each Reporting Person &nbsp; 779,998</TD></TR>
  <TR><TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR><TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>12.</TD>
    <TD vAlign=top colSpan=3>Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) &nbsp;
      [ ] </TD></TR>
  <TR>    <TD vAlign=top colSpan=5>  <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>13.</TD>
    <TD vAlign=top colSpan=3>Percent of Class Represented by Amount in Row (11)&nbsp;
      12.3  %</TD></TR>
  <TR> <TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>14.</TD>
    <TD vAlign=top colSpan=3>Type of Reporting Person (See Instructions)</TD></TR>
  <TR>    <TD height='17' colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD height='30' colSpan=5>PN </TD></TR>
  <TR>    <TD colSpan=5></TD></TR>
  <TR>    <TD height='12' colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD colSpan=5><B>Person 5</B></TD></tr>
  <TR>   <TD>&nbsp;</TD>
    <TD vAlign=top>1.</TD>
    <TD colSpan=3>(a) Names of Reporting Persons.</TD></TR>
  <TR>    <TD>&nbsp;</TD><TD vAlign=top>&nbsp;</TD><TD colSpan=3>Oracle Investment Management, Inc.</TD>  </TR>
  <TR>    <TD>&nbsp;</TD>    <TD vAlign=top> </TD>
    <TD colSpan=3>(b) I.R.S. Identification Nos. of above persons (entities only).</TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>   <TD vAlign=top width=24></TD>    <TD colSpan=3></TD>  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD vAlign=top width=24>2.</TD>
    <TD colSpan=3>Check the Appropriate Box if a Member of a Group
      (See Instructions)</TD> </TR>
  <TR>  <TD>&nbsp;</TD><TD valign='top'>&nbsp;</TD><TD valign='top' colspan=3>(a) &nbsp;
[ ]</TD></TR>
  <TR> <TD width=7>&nbsp;</TD>    <TD width=24 valign='top'>&nbsp;</TD>
    <TD width=50 valign='top'>(b) &nbsp;
[X]</TD></TR>
  <TR>  <TD colSpan=5>   <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>3.</TD>
    <TD colSpan=3>SEC Use Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . </TD></TR>
  <TR>   <TD>&nbsp;</TD>  <TD>&nbsp;</TD>  <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>4.</TD>
    <TD colSpan=3>Source of Funds (See Instructions) &nbsp;
 AF</TD></TR>
  <TR>    <TD>&nbsp;</TD> <TD>&nbsp;</TD> <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>5</TD>
    <TD colSpan=3>Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
      [ ]
    </TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>6.</TD>   <TD colSpan=3>Citizenship or Place of Organization &nbsp;
      Delaware    </TD></TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD colSpan=3 rowSpan=8>Number of<BR>Shares<BR>Beneficially<BR>Owned by<BR>Each Reporting<BR>Person With</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>7.&nbsp;Sole Voting Power &nbsp;
0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>8.&nbsp; Shared Voting Power &nbsp;      76,893</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>9.&nbsp;Sole Dispositive Power &nbsp;
      0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>10.&nbsp;Shared Dispositive Power &nbsp;
      76,893</TD></TR>
  <TR>    <TD colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>11.</TD>
    <TD vAlign=top colSpan=3>Aggregate Amount Beneficially Owned by
      Each Reporting Person &nbsp; 76,893</TD></TR>
  <TR><TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR><TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>12.</TD>
    <TD vAlign=top colSpan=3>Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) &nbsp;
      [ ] </TD></TR>
  <TR>    <TD vAlign=top colSpan=5>  <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>13.</TD>
    <TD vAlign=top colSpan=3>Percent of Class Represented by Amount in Row (11)&nbsp;
      1.4  %</TD></TR>
  <TR> <TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>14.</TD>
    <TD vAlign=top colSpan=3>Type of Reporting Person (See Instructions)</TD></TR>
  <TR>    <TD height='17' colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD height='30' colSpan=5>CO </TD></TR>
  <TR>    <TD colSpan=5></TD></TR>
  <TR>    <TD height='12' colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD colSpan=5><B>Person 6</B></TD></tr>
  <TR>   <TD>&nbsp;</TD>
    <TD vAlign=top>1.</TD>
    <TD colSpan=3>(a) Names of Reporting Persons.</TD></TR>
  <TR>    <TD>&nbsp;</TD><TD vAlign=top>&nbsp;</TD><TD colSpan=3>SAM Oracle Investments Inc.</TD>  </TR>
  <TR>    <TD>&nbsp;</TD>    <TD vAlign=top> </TD>
    <TD colSpan=3>(b) I.R.S. Identification Nos. of above persons (entities only).</TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>   <TD vAlign=top width=24></TD>    <TD colSpan=3></TD>  </TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD vAlign=top width=24>2.</TD>
    <TD colSpan=3>Check the Appropriate Box if a Member of a Group
      (See Instructions)</TD> </TR>
  <TR>  <TD>&nbsp;</TD><TD valign='top'>&nbsp;</TD><TD valign='top' colspan=3>(a) &nbsp;
[ ]</TD></TR>
  <TR> <TD width=7>&nbsp;</TD>    <TD width=24 valign='top'>&nbsp;</TD>
    <TD width=50 valign='top' colspan="3">(b) &nbsp;
[X]</TD></TR>
  <TR>  <TD colSpan=5>   <HR noShade>    </TD>  </TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>3.</TD>
    <TD colSpan=3>SEC Use Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . </TD></TR>
  <TR>   <TD>&nbsp;</TD>  <TD>&nbsp;</TD>  <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>4.</TD>
    <TD colSpan=3>Source of Funds (See Instructions) &nbsp;
 WC</TD></TR>
  <TR>    <TD>&nbsp;</TD> <TD>&nbsp;</TD> <TD colSpan=3><HR noShade></TD></TR>
  <TR>    <TD>&nbsp;</TD>    <TD>5</TD>
    <TD colSpan=3>Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
      [ ]
    </TD></TR>
  <TR>   <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD width=7>&nbsp;</TD>    <TD width=24>6.</TD>   <TD colSpan=3>Citizenship or Place of Organization &nbsp;
      British Virgin Islands    </TD></TR>
  <TR>    <TD colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD colSpan=3 rowSpan=8>Number of<BR>Shares<BR>Beneficially<BR>Owned by<BR>Each Reporting<BR>Person With</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>7.&nbsp;Sole Voting Power &nbsp;
0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>8.&nbsp; Shared Voting Power &nbsp;      0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>9.&nbsp;Sole Dispositive Power &nbsp;
      0</TD></TR>
  <TR>    <TD vAlign=top colSpan=2>    <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top colSpan=2>10.&nbsp;Shared Dispositive Power &nbsp;
      0</TD></TR>
  <TR>    <TD colSpan=5><HR noShade>    </TD></TR>
  <TR>   <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>11.</TD>
    <TD vAlign=top colSpan=3>Aggregate Amount Beneficially Owned by
      Each Reporting Person &nbsp; 0</TD></TR>
  <TR><TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR><TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>12.</TD>
    <TD vAlign=top colSpan=3>Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) &nbsp;
      [ ] </TD></TR>
  <TR>    <TD vAlign=top colSpan=5>  <HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD>
    <TD vAlign=middle width=24>13.</TD>
    <TD vAlign=top colSpan=3>Percent of Class Represented by Amount in Row (11)&nbsp;
      0  %</TD></TR>
  <TR> <TD vAlign=top colSpan=5><HR noShade>    </TD></TR>
  <TR>    <TD vAlign=top width=7><BR></TD><TD vAlign=middle width=24>14.</TD>
    <TD vAlign=top colSpan=3>Type of Reporting Person (See Instructions)</TD></TR>
  <TR>    <TD height='17' colSpan=5>    <HR noShade>    </TD></TR>
  <TR>    <TD height='30' colSpan=5>CO </TD></TR>
  <TR>    <TD colSpan=5></TD></TR>
  <TR>    <TD height='12' colSpan=5><HR noShade>    </TD></TR>
  </TABLE><br>
<table width='675' cellpadding='0' cellspacing='0'>
  <tr> <td colspan='3' ><B>Item 1. Security and Issuer</B></td></tr>
  <tr>   <td width='7%' >&nbsp;</td><td colspan='2' >&nbsp;</td></tr>
  <tr>   <td colspan='3' ></td></tr>
  <tr>   <td >&nbsp;</td><td colspan='2' >&nbsp;</td></tr>
  <tr>   <td colspan='3' valign='top' ><strong>Item 2. Identity and Background</strong></td></tr>
  <tr>   <td valign='top' >&nbsp;</td><td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>   <td valign='top' >(a)</td>
          <td colspan='2' valign='top' >Item 2 of the Schedule 13D is hereby amended by the deletion of the text thereof in its entirety and its replacement with the following:<br><br>(a) This Schedule 13D is being filed by:<br><br>	(i) Oracle Partners, L.P., a Delaware limited partnership ("Oracle Partners"), with respect to shares of Common Stock directly owned by it;<br><br>
          (ii) Oracle Institutional Partners, L.P., a Delaware limited partnership ("Oracle Institutional" and together with Oracle Partners, the &quot;Partnerships&quot;), with respect to shares of Common Stock directly owned by it;	<br>
          <br>	(iii) Oracle Associates, LLC, a Delaware limited liability company("Oracle Associates"), which serves as the general partner of Oracle Partners and Oracle Institutional, with respect to shares of Common Stock directly owned by Oracle Partners and Oracle Institutional;<br><br>	(iv) SAM Oracle Investments Inc., a British Virgin Islands corporation ("SAM Oracle"), with respect to shares of Common Stock directly owned by it;<br><br>	(v) Oracle Investment Management, Inc., a Delaware corporation (the "Investment Manager"), which serves as investment manager to and has investment discretion over the securities held by (A) SAM Oracle,(B) Oracle Offshore Limited, a Cayman Islands corporation (together with SAM Oracle, the "Foreign Funds") and (C) Oracle Management, Inc. Employees Retirement Plan (together with the Foreign Funds, the "Managed Funds"), with respect to shares of Common Stock directly owned by the Managed Funds; and<br><br>	(vi) Mr. Larry N. Feinberg ("Mr. Feinberg"), who serves as the se
nior managing member of Oracle Associates, is the trustee of The Feinberg Family Foundation (the "Foundation") and is the sole shareholder and president of the Investment Manager, with respect to the shares of Common Stock directly owned by the Foundation and the shares of Common Stock directly owned by the Partnerships and the Managed Funds, which he may be deemed to beneficially own by virtue of the foregoing relationships.<br><br>Oracle Partners, Oracle Institutional, Oracle Associates, SAM Oracle, the Investment Manager and Mr. Feinberg are hereinafter sometimes collectively referred to as the "Reporting Persons." Any disclosures herein with respect to persons other than the Reporting Persons are made on information and belief after making inquiry to the appropriate party.<br></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>  <td valign='top' >(b)</td>
    <td colspan='2' valign='top' >(b) The business address of each of the Reporting Persons is 200 Greenwich Avenue, Greenwich, Connecticut, 06830.</td></tr>
  <tr>  <td valign='top' >&nbsp;</td><td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr> <td valign='top' >(c)</td>
    <td colspan='2' valign='top' ><div align='left'>
      (c) The principal business of Oracle Partners, Oracle Institutional and SAM Oracle is to invest in securities.  The principal business of Oracle Associates is to serve as general partner to and exercise investment discretion over securities held by the Partnerships.  The principal business of the Investment Manager is to serve as investment manager to and exercise investment discretion over securities held by the Managed Funds.  The principal business of Mr. Feinberg is to invest in securities through Oracle Associates, Oracle Investment Management and certain other entities. </div></td></tr>
  <tr>    <td valign='top' >&nbsp;</td> <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>    <td valign='top' >(d)</td>
    <td colspan='2' valign='top' ><div align='justify' SQL>
      <div align='left'>(d) None of the Reporting Persons, nor, to the best of their knowledge, any of their directors, executive officers, general partners or members, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).</div></div></td></tr>
  <tr> <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td>  </tr>
  <tr> <td valign='top' >(e)</td>
    <td colspan='2' valign='top' ><div align='justify' SQL>
      <div align='left'>
        (e) None of the Reporting Persons, nor, to the best of their knowledge, any of their directors, executive officers, general partners or members has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.</div></div></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>   <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>    <td valign='top' >(f)</td>
  <td colspan='2' valign='top' >(f) Oracle Partners is organized under the laws of the State of Delaware.  Oracle Institutional is organized under the laws of the State of Delaware.  Oracle Associates is organized under the laws of the State of Delaware.  SAM Oracle is organized under the laws of the a British Virgin Islands.  The Investment Manager is organized under the laws of the State of Delaware.  Mr. Feinberg is a citizen of the United States of America.</td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr><td colspan='3' valign='top' ><strong>Item 3. Source and Amount of Funds or Other Consideration</strong></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr> <td colspan='3' valign='top' >Item 3 of the Schedule 13D is hereby amended by the deletion of the text thereof in its entirety and its replacement with the following:<br><br>
  Between February 1, 2005 and March 11, 2008, Oracle Associates, the Partnerships and the Managed Funds acquired and disposed of shares of Common Stock in the ordinary course of business, which transactions are set forth on Exhibit 99.1 hereto.  In addition, on June 5, 2006, the Company effected a five-to-one reverse stock split of the Company's Common Stock.  <br>
  <br>
  A series of transactions involving the Company were described in the Company's Current Report on Form 8-K, filed on November 14, 2007 (the "Form 8-K").  In connection with these transactions, existing convertible notes (the &quot;Notes&quot;) held by the Partnerships and the Foreign Funds having an aggregate value of $4,373,104.54 (principal amount of $4,015,000 plus interest accrued thereon of $358,104.54), were exchanged into 437 shares of Series A Cumulative Convertible Preferred Stock, par value $0.01 per share (the &quot;Preferred Stock&quot;) of the Company and Common Stock Purchase Warrants (the &quot;Warrants&quot;) to purchase 728,850 shares of Common Stock.  Each share of Preferred Stock is convertible in whole or in part, at any time or from time to time, at the option of the holder into 3,333.33 shares of Common Stock.  The Warrants are exercisable in whole or in part, at any time or from time to time, at the option of the holder until November 10, 2013, at an exercise price of $3.50 per share,
 subject to adjustment.  Following the exchange and as of the date hereof, Mr. Feinberg may be deemed to beneficially own 2,483,040 shares of Common Stock, consisting of 296,483 shares of Common Stock (the &quot;Shares&quot;), 437 shares of Preferred Stock convertible into 1,457,707 shares of Common Stock and Warrants to purchase 728,850 shares of Common Stock directly owned by the Partnerships, the Foreign Funds and the Foundation.<br>
  <br>
  The Shares were purchased for an aggregate purchase price of $6,425,451 (not including the amount corresponding to the note conversion).  The funds for the purchase of those Shares held by the Partnerships came from capital contributions to the Partnerships by their general and limited partners. The funds for the purchase of those Shares held by the Foreign Funds came from capital contributions to the Foreign Funds by the investors in such funds. The funds for the purchase of those Shares held by the Foundation came from the Foundation's capital. <br>
  <br>The Partnerships and the Foreign Funds effect purchases of securities primarily through margin accounts maintained for them with Morgan Stanley & Co., which may extend margin credit to the Partnerships and Foreign Funds as and when required to open or carry positions in the margin accounts, subject to applicable Federal margin regulations, stock exchange rules and the firm's credit policies.  In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts.<br></td></tr>
  <tr> <td valign='top' >&nbsp;</td><td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>    <td colspan='3' valign='top' ><strong>Item 4. Purpose of Transaction</strong></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td width='13%' valign='top' >&nbsp;</td>
    <td width='80%' valign='top' >&nbsp;</td></tr>
  <tr>    <td colspan='3' valign='top' >Item 4 of the Schedule 13D is hereby amended by the deletion of the entirety of the text thereof and its replacement with the following:<br><br>The shares of Common Stock deemed to be beneficially owned by the Reporting Persons were acquired for, and are being held for, investment purposes.  Such shares were acquired in the ordinary course of business and not for the purpose of acquiring control of the Company.<br><br>The Reporting Persons may in the future directly acquire shares of Common Stock in open market or private transactions, block purchases or otherwise.  The Reporting Persons may continue to hold or dispose of all or some of the securities reported herein from time to time, in each case in open market or private transactions, block sales or purchases or otherwise, subject to compliance with applicable law.  	<br><br>Other than as set forth herein, none of the Reporting Persons has any plans or proposals which relate to, or could result in, any of the matter
s referred to in paragraphs (b) through (j), inclusive, of Item 4 of Schedule 13D.  Each of the Reporting Persons may, at any time and from time to time, review or reconsider his or its position and formulate plans or proposals with respect thereto, but has no present intention of doing so.<br></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td valign='top' >&nbsp;</td>
    <td valign='top' >&nbsp;</td></tr>
  <tr> <td colspan='3' valign='top' ><strong>Item 5. Interest in Securities of the Issuer</strong></td></tr>
  <tr>   <td valign='top' >&nbsp;</td>
         <td valign='top' >&nbsp;</td>
         <td valign='top' >&nbsp;</td></tr>
  <tr>    <td valign='top' >(a)</td>
    <td colspan='2' valign='top' ><div align='justify' >
      <div align='left'>Item 5 of the Schedule 13D is hereby amended by the deletion of the text thereof in its entirety and its replacement with the following:<br><br>(a) & (b) Ownership and power over disposition:<br><br><br>A. Mr. Larry N. Feinberg<br><br>
      1.	As of the date hereof, Mr. Feinberg's holdings are as follows:<br>
      <br>(a) Amount beneficially owned: 2,483,040, consisting of (i) 296,483 shares of Common Stock, (ii) 1,457,706 shares of Common Stock that would be received upon the conversion of 437 shares of Preferred Stock beneficially owned by Mr. Feinberg and (iii) 728,850 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Mr. Feinberg.<br><br>
      (b) Percent of class: 31.8%  This percentage is calculated based upon a total of 7,810,338 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as of March 31, 2008, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, (ii) 1,457,706 shares of Common Stock which would be received upon conversion of 437 shares of Preferred Stock beneficially owned by Mr. Feinberg and (iii) 728,850 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Mr. Feinberg.<br>
      <br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>            3,660<br>(ii)   Shared power to vote or direct the vote:<br>  2,479,380<br>      	(iii)  Sole power to dispose or direct the disposition:<br>	3,660<br>(iv)   Shared power to dispose or direct the disposition:<br>	2,479,380<br><br><br>
      2. 	As of November 9, 2007 when Mr. Feinberg experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Mr. Feinberg's holdings were as follows: <br>
      <br>(a) Amount beneficially owned: 2,483,040, consisting of (i) 296,483 shares of Common Stock, (ii) 1,457,706 shares of Common Stock that would be received upon the conversion of 437 shares of Preferred Stock beneficially owned by Mr. Feinberg and (iii) 728,850 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Mr. Feinberg.<br><br>
      (b) Percent of class: 43.2%  This percentage is calculated based upon a total of 5,752,950 outstanding shares of Common Stock, equal to the sum of (i) 3,566,394 shares of Common Stock outstanding as of August 14, 2007, as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007, (ii) 1,457,706 shares of Common Stock which would be received upon conversion of 437 shares of Preferred Stock beneficially owned by Mr. Feinberg and (iii) 728,850 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Mr. Feinberg.<br>
      <br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>          	  3,660<br>(ii)   Shared power to vote or direct the vote:<br>  2,479,380<br>      	(iii)  Sole power to dispose or direct the disposition:<br>	3,660<br>(iv)   Shared power to dispose or direct the disposition:<br>	2,479,380<br><br>
      3. 	As of February 28, 2007 when Mr. Feinberg experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Mr. Feinberg's holdings were as follows:<br>
      <br>(a) Amount beneficially owned: 448,523, consisting of (i) 302,523 shares of Common Stock, and (ii) 146,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Mr. Feinberg.<br><br>
      (b) Percent of class: 12.2%  This percentage is calculated based upon a total of 3,681,108 outstanding shares of Common Stock, equal to the sum of (i) 3,535,108 shares of Common Stock outstanding as of November 20, 2006, as reported on the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006 and (ii) 146,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Mr. Feinberg.<br>
      <br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>	       3,660<br>(ii)   Shared power to vote or direct the vote:<br>  444,863<br>      	(iii)  Sole power to dispose or direct the disposition:<br>	3,660<br>(iv)   Shared power to dispose or direct the disposition:<br>	444,863<br><br>
      4. 	As of December 31, 2005 when Mr. Feinberg experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Mr. Feinberg's holdings were as follows:<br>
      <br>(a) Amount beneficially owned: 2,448,121, consisting of (i) 1,718,121 shares of Common Stock, and (ii) 586,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Mr. Feinberg.<br><br>
      (b) Percent of class: 13.3%  This percentage is calculated based upon a total of 18,360,040 outstanding shares of Common Stock, equal to the sum of (i) 17,630,040 shares of Common Stock outstanding as of November 14, 2005, as reported on the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 and (ii) 730,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Mr. Feinberg.<br>
      <br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>	       18,300<br>(ii)   Shared power to vote or direct the vote:<br>  2,429,821<br>      	(iii)  Sole power to dispose or direct the disposition:<br>	18,300<br>(iv)   Shared power to dispose or direct the disposition:<br>	2,429,821<br><br>B. Oracle Associates, LLC.<br><br>
      1. 	As of the date hereof, Oracle Associate's holdings are as follows:<br>
      <br>(a) Amount beneficially owned: 2,402,486, consisting of (i) 287,816 shares of Common Stock, (ii) 1,409,782 shares of Common Stock which would be received upon conversion of 423 shares of Preferred Stock beneficially owned by Oracle Associates and (iii) 704,888 shares which would be received upon the exercise of the Warrants beneficially owned by Oracle Associates.<br><br>
      (b) Percent of class: 31.0%  This percentage is calculated based upon a total of 7,738,451 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as of March 31, 2008, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, (ii) 1,409,782 shares of Common Stock which would be received upon conversion of 423 shares of Preferred Stock beneficially owned by Oracle Associates and (iii) 704,888 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Associates.<br>
      <br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>	       -0-<br>(ii)   Shared power to vote or direct the vote:<br>  2,402,486<br>	     	(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	2,402,486<br><br>
      2. 	As of March 11, 2008 when Oracle Associates experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Associate's holdings were as follows:<br>
      <br>(a) Amount beneficially owned: 2,402,486, consisting of (i) 287,816 shares of Common Stock, (ii) 1,409,782 shares of Common Stock which would be received upon conversion of 423 shares of Preferred Stock beneficially owned by Oracle Associates and (iii) 704,888 shares which would be received upon the exercise of the Warrants beneficially owned by Oracle Associates.<br><br>(b) Percent of class: 31.0%  This percentage is calculated based upon a total of 7,738,451 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as per a private communication from the Company, (ii) 1,409,782 shares of Common Stock which would be received upon conversion of 423 shares of Preferred Stock beneficially owned by Oracle Associates and (iii) 704,888 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Associates.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote o
r direct the vote: <br>            -0-<br>(ii)   Shared power to vote or direct the vote:<br>  2,402,486<br>      	(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	2,402,486<br><br>3. 	As of November 9, 2007 when Oracle Associates experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Associate's holdings were as follows:<br><br>(a) Amount beneficially owned: 2,013,317, consisting of (i) 258,080 shares of Common Stock, (ii) 1,170,160 shares of Common Stock which would be received upon conversion of 351 shares of Preferred Stock beneficially owned by Oracle Associates and (iii) 585,077 shares which would be received upon the exercise of the Warrants beneficially owned by Oracle Associates.<br><br>(b) Percent of class: 37.8%  This percentage is calculated based upon a total of 5,330,351 outstanding shares of Common Stock, equal to the sum of, (i) 3,575,114 shares of 
Common Stock outstanding as of August 14, 2007, as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007, (ii) 1,170,160 shares of Common Stock which would be received upon conversion of 351 shares of Preferred Stock beneficially owned by Oracle Associates and (iii) 585,077 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Associates.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>	       -0-<br>(ii)   Shared power to vote or direct the vote:<br>  2,013,317<br>      	(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	2,013,317<br><br>4. 	As of December 31, 2005 when Oracle Associates experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Associate's holdings were as follows:<br><br>
(a) Amount beneficially owned: 1,868,201 consisting of (i) 1,282,201 shares of Common Stock and (ii) 586,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Oracle Associates.<br><br>(b) Percent of class: 10.3%  This percentage is calculated based upon a total of 18,216,040 outstanding shares of Common Stock, equal to the sum of, (i) 17,630,040 shares of Common Stock outstanding as of November 14, 2005, as reported on the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005, and (ii) 586,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Oracle Associates. <br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>            -0-<br>(ii)   Shared power to vote or direct the vote:<br>  1,868,201<br>      	(iii)  Sole power to dispose or direct 
the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	 1,868,201<br><br>C. Oracle Partners, L.P.<br><br>1.	As of the date hereof, Oracle Partners' holdings are as follows:<br><br>(a) Amount beneficially owned: 1,622,488, consisting of (i) 247,651 shares of Common Stock, (ii) 916,560 shares which would be received upon conversion of 275 shares of Preferred Stock beneficially owned by Oracle Partners and (iii) 458,277 shares which would be received upon exercise of the Warrants beneficially owned by Oracle Partners.<br><br>(b) Percent of class: 23.2%  This percentage is calculated based upon a total of 6,998,618 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as of March 31, 2008, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, (ii) 916,560 shares of Common Stock which would be received upon conversion of 275 shares of Preferred Stock beneficially owned by Oracle Pa
rtners and (iii) 458,277 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Partners.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  1,622,488<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	1,622,488<br><br>2.	As of November 9, 2007 when Oracle Partners experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Partners' holdings were as follows: <br><br>(a) Amount beneficially owned: 1,622,488, consisting of (i) 247,651 shares of Common Stock, (ii) 916,560 shares which would be received upon conversion of 275 shares of Preferred Stock beneficially owned by Oracle Partners and (iii) 458,277 shares which would be received upon exercise of the Warrants beneficially 
owned by Oracle Partners.<br><br>(b) Percent of class: 32.8%  This percentage is calculated based upon a total of 4,949,951 outstanding shares of Common Stock, equal to the sum of (i) 3,575,114 shares of Common Stock outstanding as of August 14, 2007, as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007, (ii) 916,560 shares of Common Stock which would be received upon conversion of 275 shares of Preferred Stock beneficially owned by Oracle Partners and (iii) 485,277 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Partners.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  1,622,488<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition:<br>	1,622,488<br><br>3.	As of June 19, 2007 whe
n Oracle Partners experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Associate's holdings were as follows:<br><br>(a) Amount beneficially owned: 339,451 consisting of (i) 247,651 shares of Common Stock and (ii) 91,800 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Oracle Partners.<br><br>(b) Percent of class: 9.4%  This percentage is calculated based upon a total of 3,627,158 outstanding shares of Common Stock, equal to the sum of, (i) 3,535,358 shares of Common Stock outstanding as of May 14, 2007 as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2007, and (ii) 91,800 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Oracle Associates. <br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power
 to vote or direct the vote: <br>            -0-<br>(ii)   Shared power to vote or direct the vote:<br>  339,451<br>      	(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	339,451<br><br>4. 	As of December 31, 2005 when Oracle Partners experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Associate's holdings were as follows:<br><br>(a) Amount beneficially owned: 1,463,556 consisting of (i) 1,004,556 shares of Common Stock and (ii) 459,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Oracle Partners.<br><br>(b) Percent of class: 8.1%  This percentage is calculated based upon a total of 18,089,040 outstanding shares of Common Stock, equal to the sum of, (i) 17,630,040 shares of Common Stock outstanding as of November 14, 2005, as reported on the Company's Quarterly Report on Form 1
0-Q for the quarterly period ended September 30, 2005, and (ii) 459,000 shares of Common Stock which would be received upon the conversion of the 7% Convertible Subordinated Notes beneficially owned by Oracle Associates. <br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>            -0-<br>(ii)   Shared power to vote or direct the vote:<br>  1,463,556<br>      	(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	1,463,556<br><br>D. Oracle Institutional Partners, L.P.<br><br>1. 	As of the date hereof, Oracle Institutional's holdings are as follows:<br><br>(a) Amount beneficially owned: 779,998, consisting of (i) 40,165 shares of Common Stock, (ii) 493,221 shares which would be received upon conversion of 148 shares of Preferred Stock beneficially owned by Oracle Institutional and (iii) 246,611 shares which would be received upon exercise of the Warrants bene
ficially owned by Oracle Institutional.<br><br>(b) Percent of class: 12.3%  This percentage is calculated based upon a total of 6,363,614 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as of March 31, 2008, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, (ii) 493,221 shares of Common Stock which would be received upon conversion of 148 shares of Preferred Stock beneficially owned by Oracle Institutional and (iii) 246,611 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Institutional.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  779,998<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	779,998<br><br>2. 	As of Marc
h 11, 2008 when Oracle Institutional experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Institutional's holdings were as follows:<br><br>(a) Amount beneficially owned: 779,998, consisting of (i) 40,165 shares of Common Stock, (ii) 493,221 shares which would be received upon conversion of 148 shares of Preferred Stock beneficially owned by Oracle Institutional and (iii) 246,611 shares which would be received upon exercise of the Warrants beneficially owned by Oracle Institutional.<br><br>(b) Percent of class: 12.3%  This percentage is calculated based upon a total of 6,363,614 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as per a private communication from the Company, (ii) 493,221 shares of Common Stock which would be received upon conversion of 148 shares of Preferred Stock beneficially owned by Oracle Institutional and (iii) 246,611 shares of Common Stock which would be received 
upon the exercise of the Warrants beneficially owned by Oracle Institutional.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  779,998<br>		(iii)  Sole power to dispose or direct the  disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition:<br>	779,998<br><br>3.	As of November 9, 2007 when Oracle Institutional experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Institutional's holdings were as follows: <br><br>(a) Amount beneficially owned: 3,946,794, consisting of (i) 10,429 shares of Common Stock, (ii) 253,600 shares which would be received upon conversion of 76 shares of Preferred Stock beneficially owned by Oracle Institutional and (iii) 126,800 shares which would be received upon exercise of the Warrants beneficially owned by Oracle Institutional.<br><br>(b) Percent of cl
ass: 9.9%  This percentage is calculated based upon a total of 3,946,794 outstanding shares of Common Stock, equal to the sum of (i) 3,575,114 shares of Common Stock outstanding as of August 14, 2007, as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007, (ii) 253,600 shares of Common Stock which would be received upon conversion of 76 shares of Preferred Stock beneficially owned by Oracle Institutional and (iii) 126,800 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Institutional.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  390,829<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition:<br>	390,829<br><br>E. Oracle Investment Management, Inc.<br><br>1.	As of the date hereof, t
he Investment Manager's holdings are as follows:<br><br>(a) Amount beneficially owned: 76,893, consisting of (i) 5,007 shares of Common Stock, (ii) 47,924 shares which would be received upon conversion of 14 shares of Preferred Stock beneficially owned by Oracle Investment Management and (iii) 23,962 shares which would be received upon exercise of the Warrants beneficially owned by Oracle Investment Management.<br><br>(b) Percent of class: 1.4%  This percentage is calculated based upon a total of 5,695,667 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as of March 31, 2008, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, (ii) 47,924 shares of Common Stock which would be received upon conversion of 14 shares of Preferred Stock beneficially owned by Oracle Investment Management and (iii) 23,962 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracl
e Investment Management.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  76,893<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>(iv)   Shared power to dispose or direct the disposition:<br>	76,893<br><br>2.	As of March 11, 2008 when the Investment Manager experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Investment Management's holdings were as follows: <br><br>(a) Amount beneficially owned: 76,893, consisting of (i) 5,007 shares of Common Stock, (ii) 47,924 shares which would be received upon conversion of 14 shares of Preferred Stock beneficially owned by Oracle Investment Management and (iii) 23,962 shares which would be received upon exercise of the Warrants beneficially owned by the Investment Manager.<br><br>(b) Percent of class: 1.4%  This percentage is calculated base
d upon a total of 5,695,667 outstanding shares of Common Stock, equal to the sum of (i) 5,623,781 shares of Common Stock outstanding as per a private communication from the Company, (ii) 47,924 shares of Common Stock which would be received upon conversion of 14 shares of Preferred Stock beneficially owned by Oracle Investment Management and (iii) 23,962 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Oracle Investment Management.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  76,893<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition:<br>	76,893<br><br>3.	As of November 9, 2007 when the Investment Manager experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, Oracle Investment M
anagement's holdings were as follows:<br><br>(a) Amount beneficially owned: 466,062, consisting of (i) 34,743 shares of Common Stock, (ii) 287,546 shares which would be received upon conversion of 86 shares of Preferred Stock beneficially owned by Oracle Investment Management and (iii) 143,773 shares which would be received upon exercise of the Warrants beneficially owned by Oracle Investment Management.<br><br>(b) Percent of class: 11.7%  This percentage is calculated based upon a total of 3,997,713 outstanding shares of Common Stock, equal to the sum of (i) 3,566,394 shares of Common Stock outstanding as of August 14, 2007, as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007, (ii) 287,546 shares of Common Stock which would be received upon conversion of 86 shares of Preferred Stock beneficially owned by Oracle Investment Management and (iii) 143,773 shares of Common Stock which would be received upon the exercise of the Warrants beneficially owned by Or
acle Investment Management.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  466,062<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition:<br>	466,062<br><br>F. SAM Oracle Investments Inc.<br><br>1.	As of the date hereof, SAM Oracle's holdings were as follows:<br><br>(a) Amount beneficially owned: -0-.<br><br>(b) Percent of class: 0%  This percentage is calculated based upon a total of 5,623,781 shares outstanding as of March 31, 2008, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  -0-<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-
<br>	(iv)   Shared power to dispose or direct the disposition: <br>	-0-<br><br>2.	As of March 11 2008 when SAM Oracle experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, SAM Oracle's holdings were as follows: <br><br>(a) Amount beneficially owned: -0-.<br><br>(b) Percent of class: 0%  This percentage is calculated based upon a total of 5,623,781 shares outstanding as per a private communication from the Company.<br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  -0-<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition: <br>	-0-<br><br>3.	As of November 9, 2007 when SAM Oracle experienced a change in beneficial ownership in excess of 1% based on the total shares outstanding at such time, SAM Oracle's holdings were as follows: <br><br>(a
) Amount beneficially owned: 389,169, consisting of (i) 29,736 shares of Common Stock, (ii) 239,622 shares which would be received upon conversion of 72 shares of Preferred Stock beneficially owned by SAM Oracle and (iii) 119,811 shares which would be received upon exercise of the Warrants beneficially owned by SAM Oracle.<br><br>(b) Percent of class: 9.9% This percentage is calculated based upon a total of 3,934,547 outstanding shares of Common Stock, equal to the sum of (i) 3,575,114 shares of Common Stock outstanding as of August 14, 2007, as reported on the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007, (ii) 239,622 shares of Common Stock which would be received upon conversion of 72 shares of Preferred Stock beneficially owned by SAM Oracle and (iii) 119,811 shares of Common Stock which would be received upon exercise of the Warrants beneficially owned by SAM Oracle. <br><br>(c) Number of shares of Common Stock as to which such person has:<br>	(i)	  Sole power to
 vote or direct the vote: <br>		  -0-<br>(ii)   Shared power to vote or direct the vote:<br>  389,169<br>		(iii)  Sole power to dispose or direct the disposition: <br>	-0-<br>	(iv)   Shared power to dispose or direct the disposition:<br>	389,169</div></div></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>   <td valign='top' >(b)</td>
    <td colspan='2' valign='top' ><div align='justify' >
      <div align='left'>  </div></div></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr> <td valign='top' >(c)</td>
    <td colspan='2' valign='top' ><div align='justify' >
      <div align='left'>       (c)	The transactions in the shares of the Common Stock that may be deemed to be beneficially owned by a Reporting Person, since 60 days prior to the date of the event which required the filing of this Schedule, are set forth on Exhibit 99.1 attached hereto.  All such transactions were effected in open market purchases, unless otherwise indicated.</div></div></td></tr>
  <tr><td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>  <td valign='top' >&nbsp;</td>
        <td valign='top' ><div align='left'></div></td>
    <td valign='top' >&nbsp;</td></tr>
  <tr>   <td valign='top' >(d)</td>
    <td colspan='2' valign='top' ><div align='justify' >
      <div align='left'>  (d)	If the Reporting Persons were to be deemed a group, each Reporting Person may be deemed to have beneficial ownership over the entire number of shares of Common Stock directly owned by the Partnerships, the Foreign Funds and the Foundation.  Each of the Reporting Persons expressly disclaims beneficial ownership of such shares of Common Stock except to the extent otherwise reported herein.  Other than as set forth herein, no other person is known to have the right to receive or the power to direct the receipt of dividends from, and proceeds from the sale of, the securities reported in this Amendment No. 1.</div></div></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>    <td valign='top' >(e)</td>  <td colspan='2' valign='top' ><div align='justify' >
      <div align='left'> (e)	SAM Oracle Investment ceased to be the beneficial owner of more than five percent of Common Stock on March 11, 2008.  Oracle Investment Management ceased to be the beneficial owner of more than five percent of Common Stock on March 11, 2008.</div></div></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
        <td valign='top' ><div align='left'></div></td>
    <td valign='top' >&nbsp;</td></tr>
  <tr>   <td colspan='3' valign='top' ><strong>Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer</strong></td></tr>
  <tr>   <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>    <td colspan='3' valign='top' >Item 6 of the Schedule 13D is hereby amended by the deletion of the text thereof in its entirety and its replacement with the following:<br><br>The Partnerships and the Foreign Funds hold Warrants to purchase 728,850 shares of Common Stock.  The Warrants are exercisable in whole or in part, at any time or from time to time, at the option of the holder until November 10, 2013, at an exercise price of $3.50 per share, subject to adjustment under certain circumstances.  The Warrants can also be exercised on a cashless basis.  The foregoing description of the Warrants does not purport to be complete and is qualified in its entirety by reference to the terms and conditions of such Warrants as set forth in the Form of Common Stock Purchase Warrant filed as Exhibit 99.3 hereto and incorporated herein by reference.  In addition, the Reporting Persons are not aware of any finder's fees related to their acquisition of securities described herein, except as may be set forth in th
e Preferred Stock and Warrant Purchase Agreement attached hereto as Exhibit 99.4.<br><br>For the terms and conditions of the Notes, see Exhibit 99.5.<br><br>Except as otherwise set forth herein, the Reporting Persons do not have any contract, arrangement, understanding or relationship with any person with respect to securities of the Company.</td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
        <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr>    <td colspan='3' valign='top' ><strong>Item 7. Material to Be Filed as Exhibits</strong></td></tr>
  <tr>    <td valign='top' >&nbsp;</td>
    <td colspan='2' valign='top' >&nbsp;</td></tr>
  <tr> <td colspan='3' valign='top' >99.1   Transactions in the Company's Common Stock<br><br>99.2   Joint Filing Agreement by and among the Reporting Persons, dated as of ________________, 2008<br><br>99.3   Form of Common Stock Purchase Warrant <br><br>99.4   Preferred Stock and Warrant Purchase Agreement<br><br>99.5   Convertible Promissory Notes<br></td></tr>
  <tr>    <td valign='top'>&nbsp;</td>  <td colspan='2' valign='top'>&nbsp;</td></tr></table><br>
<TABLE id=Table5 cellSpacing=0 cellPadding=0 width=675 border=0>
    <TR>      <TD colspan='2'>Signature</TD></TR>
    <TR>      <TD></TD><TD>&nbsp;</TD></TR>
    <TR> <TD width='757' colspan='2'><div align='left' >After reasonable inquiry and to the best of my knowledge and
      belief, I certify that the information set forth in this statement is
      true, complete and correct.</div></TD></TR></TABLE><br>
<TABLE id=Table6 height=164 width=623>
  <TR><TD vAlign=top height=1><div align='left'></div></TD>
    <TD style='BORDER-TOP-WIDTH: 1px; BORDER-LEFT-WIDTH: 1px; BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT-WIDTH: 1px'
    align=middle height=20><div align='center'>
        May 20, 2008</div></TD></TR>
  <TR>   <TD height=1 vAlign=top></TD>
    <TD height=20 vAlign=top align='center'>Date</TD></TR>
  <TR>    <TD vAlign=top width=21 height=1></TD>
    <TD width=590 height=20></TD></TR>
  <TR> <TD vAlign=top width=21 height=1><div align='center'></div></TD>
    <TD style='BORDER-TOP-WIDTH: 1px; BORDER-LEFT-WIDTH: 1px; BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT-WIDTH: 1px' align=middle width=590 height=20><div align='center'>
      /s/  Larry N. Feinberg<br>ORACLE ASSOCIATES, LLC<br>ORACLE PARTNERS, L.P.<br>ORACLE INSTITUTIONAL PARTNERS, L.P.<br>ORACLE INVESTMENT MANAGEMENT, INC.<br>SAM ORACLE INVESTMENTS INC.</div></TD></TR>
  <TR>  <TD height=1 vAlign=top></TD>
    <TD height=20 vAlign=top align='center'>Signature</TD></TR>
  <TR>    <TD vAlign=top width=21 height=1></TD><TD width=590 height=20></TD></TR>
  <TR>    <TD vAlign=top width=21 height=1><div align='left'></div></TD>
    <TD style='BORDER-TOP-WIDTH: 1px; BORDER-LEFT-WIDTH: 1px; BORDER-LEFT-COLOR: #000000; BORDER-TOP-COLOR: #000000; BORDER-BOTTOM: #000000 1px solid; BORDER-RIGHT-WIDTH: 1px; BORDER-RIGHT-COLOR: #000000'
    align=middle width=590 height=20><div align='center'>
      Larry N. Feinberg<br><br><br>ORACLE ASSOCIATES, LLC<br><br>By: 					<br>    Name:  Larry N. Feinberg<br>    Title: Managing Member<br><br><br>ORACLE PARTNERS, L.P.<br><br>By: Oracle Associates, LLC,<br>    its General Partner<br><br>By: 					<br>    Name:  Larry N. Feinberg<br>    Title: Managing Member<br><br><br>ORACLE INSTITUTIONAL PARTNERS, L.P.<br><br>By: Oracle Associates, LLC, its General Partner<br><br>By: 					<br>    Name:  Larry N. Feinberg<br>    Title: Managing Member<br><br><br>ORACLE INVESTMENT MANAGEMENT, INC.<br><br>By: 					<br>    Name:  Larry N. Feinberg<br>    Title: President<br><br><br>SAM ORACLE INVESTMENTS INC.<br><br>By:	Oracle Investment Management Inc., its investment manager<br><br>By: 						    Name:  Larry N. Feinberg<br>    Title: President<br><br></div></TD></TR>
  <TR>   <TD vAlign=top width=21 height=1><div align='center'></div></TD>
    <TD align=middle width=590 height=1><div align='center' >Name/Title</div></TD></TR>
  <TR>    <TD vAlign=top height=1></TD><TD align=middle height=1>&nbsp;</TD></TR></TABLE>
<TABLE id=Table7 width=669>
  <TR>    <TD vAlign=top width=76><B>Attention:</B></TD>
    <TD width=581><B>Intentional misstatements or omissions of fact constitute Federal criminal violations<BR>(See 18 U.S.C. 1001)</B></TD></TR>
  <TR>   <TD colspan='2' vAlign=top>&nbsp;</TD></TR></TABLE>
<TABLE width='665' border='0' cellPadding='4' cellSpacing='0' ID='Table6'>
<TR><TD><b>Exhibit A</b></TD></TR>
<TR>
  <TD>* This Amendment No. 1 (this "Amendment No. 1") amends the Schedule 13D filed on November 14, 2002 (the "Schedule 13D") by Oracle Partners, L.P. (&quot;Oracle Partners&quot;), Oracle Associates, LLC (&quot;Oracle Associates&quot;) and Mr. Larry Feinberg ("Mr. Feinberg").  This Amendment No. 1 relates to the Common Stock, par value $0.01 per share, of Access Pharmaceuticals, Inc., a Delaware corporation (the "Company").  Unless the context otherwise requires, references herein to the "Common Stock" are to such Common Stock of the Company.  This Amendment No. 1 is being filed to report changes in beneficial ownership in excess of 1% of the total amount of Common Stock outstanding and to update ownership information not previously reported through filings on Schedule 13D.  Capitalized terms used but not defined herein have the meaning ascribed thereto in the Schedule 13D. </TD>
</TR>
</TABLE>
<p>&nbsp;</p><P align='right'>&nbsp;</P>
<table width='675' cellspacing='0' cellpadding='0'><tr>
    <th width='410' scope='row'><div align='left'>SEC 1746 (3-06) </div></th>
    <th width='455' scope='row'><div align='right'><FONT size=1>Advisor Consultant Network, Inc. Copyright &copy;  2008-2009</FONT></div></th></tr>
    <tr><th scope='row'>&nbsp;</th><th scope='row'>&nbsp;</th></tr></table>
</div></body></html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit99_1.htm
<TEXT>
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<body>
<p align="right"><strong><u>Exhibit 99.1</u></strong><br />
    <strong><u>Transactions in the  Company&rsquo;s Common Stock</u></strong></p>
<table border="1" cellspacing="0" cellpadding="0" align="left">
  <tr>
    <td width="127"><p align="center">Trade Date</p></td>
    <td width="169"><p align="center">Transaction Type</p></td>
    <td width="87"><p align="center">Price</p></td>
    <td width="96"><p align="center">Quantity</p></td>
    <td width="89"><p align="center">Note</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/1/2005 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$2.69</p></td>
    <td width="96"><p align="center">30,200</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/1/2005 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$2.69</p></td>
    <td width="96"><p align="center">30,200</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">12/31/2005 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$0.65</p></td>
    <td width="96"><p align="center">15,636</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">12/31/2005 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$0.65</p></td>
    <td width="96"><p align="center">82,745</p></td>
    <td width="89"><p align="center">(3)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">12/31/2005 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$0.65</p></td>
    <td width="96"><p align="center">299,056</p></td>
    <td width="89"><p align="center">(1)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">12/31/2005 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$0.65</p></td>
    <td width="96"><p align="center">78,184</p></td>
    <td width="89"><p align="center">(4)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">9/1/2006 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">(5)</p></td>
    <td width="96"><p align="center">0.8</p></td>
    <td width="89"><p align="center">(4)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">9/1/2006 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">(5)</p></td>
    <td width="96"><p align="center">0.2</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">9/1/2006 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">(5)</p></td>
    <td width="96"><p align="center">0.2</p></td>
    <td width="89"><p align="center">(1)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">1/22/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$2.53</p></td>
    <td width="96"><p align="center">6,040</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">1/22/2007 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$2.53</p></td>
    <td width="96"><p align="center">6,040</p></td>
    <td width="89"><p align="center">(1)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/26/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.314</p></td>
    <td width="96"><p align="center">19,000</p></td>
    <td width="89"><p align="center">(1)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/26/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.314</p></td>
    <td width="96"><p align="center">5,000</p></td>
    <td width="89"><p align="center">(3)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/26/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.314</p></td>
    <td width="96"><p align="center">1,000</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/27/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.00</p></td>
    <td width="96"><p align="center">300</p></td>
    <td width="89"><p align="center">(1)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/27/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.00</p></td>
    <td width="96"><p align="center">100</p></td>
    <td width="89"><p align="center">(3)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/28/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.10</p></td>
    <td width="96"><p align="center">10,000</p></td>
    <td width="89"><p align="center">(2) </p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/28/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.10</p></td>
    <td width="96"><p align="center">4,500</p></td>
    <td width="89"><p align="center">(4) </p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">3/1/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$7.125</p></td>
    <td width="96"><p align="center">1,200</p></td>
    <td width="89"><p align="center">(4) </p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">6/19/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$5.17</p></td>
    <td width="96"><p align="center">40,000</p></td>
    <td width="89"><p align="center">(3)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">6/19/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$5.17</p></td>
    <td width="96"><p align="center">20,000</p></td>
    <td width="89"><p align="center">(2)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">6/19/2007 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$5.17</p></td>
    <td width="96"><p align="center">60,000</p></td>
    <td width="89"><p align="center">(1)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">7/23/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$4.3563</p></td>
    <td width="96"><p align="center">4,000</p></td>
    <td width="89"><p align="center">(2) </p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">7/24/2007 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$4.35</p></td>
    <td width="96"><p align="center">2,040</p></td>
    <td width="89"><p align="center">(2) </p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/12/2008 </p></td>
    <td width="169"><p align="center">BUY</p></td>
    <td width="87"><p align="center">$3.15</p></td>
    <td width="96"><p align="center">29,736</p></td>
    <td width="89"><p align="center">(3)</p></td>
  </tr>
  <tr>
    <td width="127"><p align="center">2/12/2008 </p></td>
    <td width="169"><p align="center">SELL</p></td>
    <td width="87"><p align="center">$3.15</p></td>
    <td width="96"><p align="center">29,736</p></td>
    <td width="89"><p align="center">(4)</p></td>
  </tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p><u>Notes</u><br />
1  - Trade by Oracle Partners<br />
2  - Trade by a Managed Fund other than SAM Oracle<br />
3  &ndash; Trade by Oracle Institutional<br />
4  &ndash; Trade by SAM Oracle<br />
5 &ndash; This transaction  involved an administrative adjustment for accounting purposes and not an actual  transfer of funds.<strong></strong></p>
<p>In  addition to the above transactions, the following transactions occurred:</p>
<p>a.  On June 5, 2006 the Company engaged in  a five-to-one reverse stock split.</p>
b. A series of  transactions involving the Company were described in the Company&rsquo;s Current  Report on Form 8-K, filed on November 14, 2007.&nbsp; In connection with these transactions,  existing convertible notes held by the Funds having an aggregate value of  $4,373,104.54 (principal amount of $4,015,000 plus interest accrued thereon of  $358,104.54), were exchanged into 437 shares of Preferred Stock and Warrants to  purchase 728,850 shares of Common Stock.&nbsp;  Oracle Associates received 351 shares of Preferred Stock and Warrants to  purchase 585,077 shares of Common Stock.&nbsp;  Oracle Partners received 275 shares of Preferred Stock and Warrants to  purchase 458,277 shares of Common Stock.&nbsp;  Oracle Institutional received 76 shares of Preferred Stock and Warrants  to purchase 126,800 shares of Common Stock.&nbsp;  SAM Oracle received 72 shares of Preferred Stock and Warrants to  purchase 119,811 shares of Common Stock.&nbsp;  In addition, in connection with the liquidation of the portfolio of
 SAM  Oracle, on March 11, 2008, Oracle  Institutional acquired from SAM Oracle 72 shares of Preferred Stock and Warrants  to purchase 119,811 shares of Common Stock.&nbsp;  Such Preferred Stock acquired by Oracle Institutional was at that time  valued by Oracle Institutional at $495,720 and no value was accorded to such  acquired Warrants.
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit99_2.htm
<TEXT>
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<p align="right"><strong><u>Exhibit 99.2</u></strong><br />
    <strong><u>Joint  Filing Agreement</u></strong></p>
<p>&nbsp;</p>
<p>&nbsp; &nbsp;&nbsp;&nbsp;The  undersigned hereby agree that this statement on Schedule 13D with respect to  the securities of Access Pharmaceuticals, Inc. is, and any amendment thereto  signed by each of the undersigned shall be, filed on behalf of each undersigned  pursuant to and in accordance with the provisions of 13d-1(k) under the  Securities Exchange Act of 1934, as amended and that all subsequent amendments  to this statement on Schedule 13D shall be filed on behalf of each of the  undersigned without the necessity of filing additional joint filing agreements.  The undersigned acknowledge that each shall be responsible for the timely  filing of such amendments, and for the completeness and accuracy of the  information concerning it contained therein, but shall not be responsible for  the completeness and accuracy of the information concerning the others, except  to the extent that it knows or has reason to believe that such information is  inaccurate.</p>
<table border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="295" valign="top"><p>Dated: _________, 2008</p></td>
    <td width="295" valign="top"><p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
      Larry N. Feinberg</p></td>
  </tr>
  <tr>
    <td width="295" valign="top"><p>ORACLE ASSOCIATES, LLC</p>
        <p>&nbsp;</p>
      <p>By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; </u><br />
        &nbsp;&nbsp;&nbsp;    Name:&nbsp; Larry N. Feinberg<br />
        &nbsp;&nbsp;&nbsp; Title: Managing Member </p></td>
    <td width="295" valign="top"><p>ORACLE PARTNERS, L.P.<br />
      By: Oracle Associates, LLC,<br />
      &nbsp;&nbsp;&nbsp; its General Partner</p>
        <p>By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;    Name:&nbsp; Larry N. Feinberg<br />
          &nbsp;&nbsp;&nbsp;    Title: Managing Member</p></td>
  </tr>
  <tr>
    <td width="295" valign="top"><p>ORACLE INSTITUTIONAL PARTNERS,    L.P.<br />
            <br />
      By: Oracle Associates, LLC, its    General Partner</p>
        <p>By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;    Name:&nbsp; Larry N. Feinberg<br />
          &nbsp;&nbsp;&nbsp;    Title: Managing Member</p></td>
    <td width="295" valign="top"><p>ORACLE INVESTMENT MANAGEMENT, INC.<br />
    </p>
        <p>&nbsp;</p>
      <p>By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
        &nbsp;&nbsp;&nbsp;    Name:&nbsp; Larry N. Feinberg<br />
        &nbsp;&nbsp;&nbsp;    Title: President</p></td>
  </tr>
  <tr>
    <td width="295" valign="top"><p>SAM    ORACLE INVESTMENTS INC.<br />
      By:&nbsp; Oracle Investment <br />
      &nbsp;&nbsp;&nbsp; &nbsp;Management Inc., <br />
      &nbsp;&nbsp;&nbsp;&nbsp; its investment manager</p>
        <p>By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp; Name:&nbsp;    Larry N. Feinberg<br />
          &nbsp;&nbsp;&nbsp; Title: President </p></td>
    <td width="295" valign="top"><p>&nbsp;</p></td>
  </tr>
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<TYPE>EX-99
<SEQUENCE>4
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<p align="right"><strong><u>Exhibit  99.3</u></strong><br />
    <strong><u>FORM OF COMMON STOCK PURCHASE WARRANT</u></strong></p>
<p>&nbsp;</p>
<p align="center">Form of Warrant<br />
    <strong>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.</strong><br />
  Warrant No. ________<br />
  COMMON  STOCK PURCHASE WARRANT<br />
  <br />
  To Purchase _______Shares of Common Stock of<br />
  ACCESS PHARMACEUTICALS, INC.<br />
  THIS IS TO CERTIFY THAT __________________, or registered  assigns (the &ldquo;<u>Holder</u>&rdquo;), is entitled, during the Exercise Period (as  hereinafter defined), to purchase from Access Pharmaceuticals, Inc., a Delaware  corporation (the &ldquo;<u>Company</u>&rdquo;), the Warrant Stock (as hereinafter defined  and subject to adjustment as provided herein), in whole or in part, at a  purchase price of $3.50 per share (as adjusted herein), all on and subject to  the terms and additions hereinafter set forth.</p>
<h1 ><u>Definitions</u>.&nbsp; As used in this Warrant, the following terms  have the respective meanings set forth below:</h1>
<p >&ldquo;<u>Additional Shares of Common Stock</u>&rdquo; means any shares  of Common Stock issued by the Company after the Closing Date other than:&nbsp; (A)&nbsp;shares of Common Stock issued upon  the Conversion of the Preferred Stock, the exercise of the warrants issued pursuant  to the Purchase Agreement or payment of dividends on the Preferred Stock,  (B)&nbsp;shares of Common Stock issued upon the exercise or any warrants or  options (collectively, the &ldquo;<u>Existing Warrants</u>&rdquo;) outstanding on the date  hereof; provided that such securities have not been amended since the date of  the Purchase Agreement to increase the number of such securities or to decrease  the exercise, exchange or conversion price of such securities, (C)&nbsp;shares  or Common Stock issued, stock awards or options under, or the exercise of any  options granted pursuant to, any stock-based compensation plans of the Company  duly adopted by a majority of the non-employee members of the Board of  Directors of the Compa
ny or a majority of the members of a committee of  non-employee directors established for such purpose (in each case, at issuance  or exercise prices at or above fair market value), (D)&nbsp;shares of Common  Stock pursuant to a stock split, combination or subdivision of the outstanding  shares of Common Stock, (E)&nbsp;shares of Common Stock or Common Stork  Equivalents issued in connection with a bona-fide strategic transaction  approved by the Board of Directors of the Company, the primary purpose of which  is not to provide financing to the Company or (F)&nbsp;shares of Preferred  Stock and warrants to purchase Common Stock, in each case, issued pursuant to  the Purchase Agreement.<br />
  &ldquo;<u>Affiliate</u>&rdquo; 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&nbsp;144 under the Securities Act.&nbsp; 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.<br />
  &ldquo;<u>Appraised Value</u>&rdquo; 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)&nbsp;a  minority interest or (ii)&nbsp;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&rsquo;s Board of Directors and having no prior relationship  with the Company.<br />
  &ldquo;<u>Business Day</u>&rdquo; 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.<br />
  &ldquo;<u>Change of Control</u>&rdquo; means the (i)&nbsp;acquisition by  an individual or legal entity or group (as set forth in Section&nbsp;13(d) of  the Exchange Act), other than SCO Capital Partners LLC and its Affiliates, of  more than one-half of the voting rights or equity interests in the Company  other than in connection with the exercise or conversion of currently  outstanding warrants or convertible securities; or (ii)&nbsp;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&rsquo;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 suc
h transaction; or (iii)&nbsp;any tender offer or exchange offer  (whether by the Company or another Person) is completed pursuant to which  holders of Common Stock are permitted to tender or exchange their shares for  other securities, cash or property; or (iv)&nbsp;the Company effects any  reclassification of the Common Stock or any compulsory share exchange pursuant  to which the Common Stock is effectively converted into or exchanged for other  securities, cash or property.<br />
  &ldquo;<u>Closing Date</u>&rdquo; means November&nbsp;10,   2007.<br />
  &ldquo;<u>Commission</u>&rdquo; means the Securities and Exchange  Commission or any other federal agency then administering the Securities Act  and other federal securities laws.<br />
  &ldquo;<u>Common Stock</u>&rdquo; 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)&nbsp;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)&nbsp;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&nbsp;4.6.<br />
  &ldquo;<u>Common Stock Equivalents</u>&rdquo; has the meaning set forth  in Section&nbsp;4.3.<br />
  &ldquo;<u>Current Market Price</u>&rdquo; means, in respect of any share  of Common Stock on any date herein specified.<br />
  (1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; if there  shall not then be a public market for the Common Stock, the higher of <br />
  (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the book  value per share of Common Stock at such date, and<br />
  (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the  Appraised Value per share of Common Stock at such date, <br />
  or<br />
  (2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; if there  shall then be a public market for the Common Stock, the average of the daily  market prices for the trading day immediately before such date. The daily  market price for each such trading day shall be (i)&nbsp;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)&nbsp;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)&nbsp;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)&nbsp;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)&nbsp;if there is no such firm, as furnished by  any member of FINRA selected in good faith by the Holder and reasonably  acceptable to the Company.<br />
  &ldquo;<u>Current Warrant Price</u>&rdquo; 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 in this Warrant on such date.&nbsp; Unless and until the Current Warrant Price is  adjusted pursuant to the terms herein, the initial Current Warrant Price shall  be $3.50 per share of Common Stock.<br />
  &ldquo;<u>Exchange Act</u>&rdquo; 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.<br />
  &ldquo;<u>Exercise Period</u>&rdquo; means the period during which this  Warrant is exercisable pursuant to Section&nbsp;2.1.<br />
  &ldquo;<u>Expiration Date</u>&rdquo; means November&nbsp;10,   2013.<br />
  &ldquo;<u>GAAP</u>&rdquo; means generally accepted accounting principles  in the United States of America as from time  to time in effect.<br />
  &ldquo;<u>FINRA</u>&rdquo; means the Financial Industry Regulatory  Authority, or any successor entity thereto.<br />
  &ldquo;<u>Other Property</u>&rdquo; has the meaning set forth in  Section&nbsp;4.6.<br />
  &ldquo;<u>Person</u>&rdquo; 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).<br />
  &ldquo;<u>Preferred Stock</u>&rdquo; shall mean the Company&rsquo;s  Series&nbsp;A Cumulative Convertible Preferred Stock, par value $0.01 per  share, issued pursuant to the Purchase Agreement.<br />
  &ldquo;<u>Purchase Agreement</u>&rdquo; means that certain Preferred  Stock and Warrant Purchase Agreement dated as of November&nbsp;7,   2007  among the Company and the other parties named therein, pursuant to which this  Warrant was originally issued.<br />
  &ldquo;<u>Restricted Common Stock</u>&rdquo; 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&nbsp;3.2.<br />
  &ldquo;<u>Securities Act</u>&rdquo; 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.<br />
  &ldquo;<u>Trading Day</u>&rdquo; means any day on which the primary  market on which shares of Comma Stock are listed or quoted is open for trading,  or, if the Common Stock is not then listed or quoted for trading on any public  market, Trading Day shall mean a Business Day.<br />
  &ldquo;<u>Transfer</u>&rdquo; 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.<br />
  &ldquo;<u>Warrants</u>&rdquo; means this Warrant and all warrants issued  upon transfer, division or combination of, or in substitution for, any  thereof.&nbsp; 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.<br />
  &ldquo;<u>Warrant Price</u>&rdquo; means an amount equal to (i)&nbsp;the  number of shares of Common Stock being purchased upon exercise of this Warrant  pursuant to Section&nbsp;2.1, multiplied by (ii)&nbsp;the Current Warrant  Price.<br />
  &ldquo;<u>Warrant Stock</u>&rdquo; means the __________ shares of Common  Stock to be purchased upon the exercise hereof, subject to adjustment as  provided herein.</p>
<h1 ><u>Exercise of Warrant</u>.</h1>
<h2 ><u>Manner of Exercise</u>.&nbsp; From and after the Closing Date, and until  5:00&nbsp;P.M., New York time, on the Expiration Date (the &ldquo;<u>Exercise Period</u>&rdquo;),  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.&nbsp; The exercise price per share of the Common  Stock under this Warrant shall be the Current Warrant Price, subject to  adjustment hereunder.</h2>
<h3 >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&nbsp;12,  (i)&nbsp;a written notice of holder&rsquo;s election to exercise this Warrant, which  notice shall specify the number of shares of Warrant Stock to be purchased, and  (ii)&nbsp;payment of the Warrant Pried as provided herein.&nbsp; Such notice shall be substantially in the  form of the subscription form appearing at the end of this Warrant as <u>Exhibit&nbsp;A</u>,  duly executed by the Holder or its agent or attorney.</h3>
<h3 >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 other 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.&nbsp; 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.&nbsp; Certificates for shares purchased hereunder  shall be transmitted by the transfer agent of the Company to the Holder by  crediting the account of the Holder&rsquo;s prime broker with the Depository Trust  Company through its Deposit Withdrawal Agent Commi
ssion (&ldquo;<u>DWAC</u>&rdquo;) system  if the Company is a participant in such system and there is an effective  Registration Statement permitting the resale of the Warrant Stocks by the  Holder, and otherwise by physical delivery to the address specified by the  Holder in the exercise notice within 3&nbsp;Trading Days from the delivery to  the Company of the exercise notice, surrender of this Warrant (if required) and  payment of the aggregate Exercise Price as set forth above (&ldquo;<u>Warrant Share  Delivery Date</u>&rdquo;).&nbsp; 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.&nbsp; If the Company fails  for any reason to deli
ver to the Holder certificates evidencing the Warrant  Stock subject to a Notice of Exercise by the Warrant Share Delivery Date, the  Company shall pay to the Holder, in cash, as liquidated damages and not as a  penalty, for each $1,000 of Warrant Stock subject to such exercise (based on  the VWAP of the Common Stock on the date of the applicable Notice of Exercise),  $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day  after such liquidated damages begin to accrue) for each Trading Day after such  Warrant Share Delivery Date until such certificates are delivered.</h3>
<h3 >If the Company fails to cause its transfer agent to  transmit to the Holder a certificate or certificates representing the Warrant  Stock pursuant to an exercise on or before the Warrant Share Delivery Date, and  if after such date the Holder is required by its broker to purchase (in an open  market transaction or otherwise) or the Holder&rsquo;s brokerage firm otherwise  purchases, shares of Common Stock to deliver in satisfaction of a sale by the  Holder of the Warrant Stock which the Holder anticipated receiving upon such  exercise (a &ldquo;<u>Buy-In</u>&rdquo;), then the Company shall (1)&nbsp;pay in cash to  the Holder the amount by which (x)&nbsp;the Holder&rsquo;s total purchase price  (including brokerage commissions, if any) for the shares of Common Stock so  purchased exceeds (y)&nbsp;the amount obtained by multiplying (A)&nbsp;the  number of Warrant Stock that the Company was required to deliver to the Holder  in connection with the exercise at issue times (B)&nbsp;the price at which the  se
ll order giving rise to such purchase obligation was executed, and  (2)&nbsp;at the option of the Holder, either reinstate the portion of the  Warrant and equivalent number of Warrant Stock for which such exercise was not  honored or deliver to the Holder the number of shares of Common Stock that  would have been issued had the Company timely complied with its exercise and  delivery obligations hereunder.&nbsp; For  example, if the Holder purchases Common Stock having a total purchase price of  $11,000 to cover a Buy-In with respect to an attempted exercise of shares of  Common Stock with an aggregate sale price giving rise to such purchase  obligation of $10,000, under clause&nbsp;(1) of the immediately preceding  sentence the Company shall be required to pay the Holder $1,000.&nbsp; The Holder shall provide the Company written  notice indicating the amounts payable to the Holder in respect of the Buy-In  and, upon request of the Company, evidence of the amount of such loss. Nothing  herein shall limit a Ho
lder&rsquo;s right to pursue any other remedies available to  it hereunder, at law or in equity including, without limitation, a decree of  specific performance and/or injunctive relief with respect to the Company&rsquo;s  failure to timely deliver certificates representing shares of Common Stock upon  exercise of the Warrant as required pursuant to the terms hereof.</h3>
<h3 >Notwithstanding anything herein to the contrary, the  holder shall not be requited to physically surrender this Warrant to the  Company until the Holder has purchased all of the Warrant Stock available  hereunder and the Warrant has been exercised in full, in which case, the Holder  shall surrender this Warrant to the Company for cancellation within  3&nbsp;Trading Days of the date the final exercise notice is delivered to the  Company.&nbsp; Partial exercises of this Warrant  resulting in purchases of a portion of the total number of Warrant Stock  available hereunder shall have the effect of lowering the outstanding number of  Warrant Stock purchased hereunder in an amount equal to the applicable number  of Warrant Stock purchased.&nbsp; If this  Warrant shall have been exercised in part, the Company shall, at request of a  Holder and upon surrender of this Warrant certificate, at the time of delivery  of the certificate or certificates representing Warrant Stock, deliver to  Holder a new Warrant evid
encing the rights of Holder to purchase the  unpurchased Warrant Stock called for by this Warrant, which new Warrant shall  in all other respects be identical with this Warrant.</h3>
<h3 >Payment of the Warrant Price may be made at the option  of the Holder by: (i)&nbsp;certified or official bank check payable to the  order of the Company, (ii)&nbsp;wire transfer of immediately available funds to  the account of the Company or (iii)&nbsp;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.&nbsp;  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.</h3>
<h3 >If the Company fails to cause its transfer agent to  transmit to the Holder a certificate or certificates representing the Warrant  Stock pursuant to Section&nbsp;2.1(ii) by the Warrant Share Delivery Date, then  the Holder will have the right to rescind such exercise.</h3>
<h3 >The Holder and the Company shall maintain records  showing the number of Warrant Stock purchased and the date of such  purchases.&nbsp; The Company shall deliver any  objection to any exercise notice within 1&nbsp;Business Day of receipt of such  notice.&nbsp; In the event of any dispute or  discrepancy, the records of the Holder shall be controlling and determinative  in the absence of manifest error.&nbsp; <strong>The Holder and any assignee, by acceptance  of this Warrant, acknowledge and agree that, by reason of the provisions of  this paragraph, following the purchase of a portion of the Warrant Stock  hereunder, the number of Warrant Stock available for purchase hereunder at any  given time may be less than the amount stated on the face hereof.</strong></h3>
<h2 ><u>Fractional Shares</u>. The Company shall not  be required to issue a fractional share of Common Stock upon exercise of any  Warrant.&nbsp; 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.</h2>
<h2 ><u>Continued Validity</u>.&nbsp; 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&nbsp;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&nbsp;10 and 13 of this Warrant.</h2>
<h2 ><u>Restrictions on Exercise Amount</u>.</h2>
<h3 >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&nbsp;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&rsquo;s for purposes of Section&nbsp;13(d) of the Exchange Act (including  shares held by any &ldquo;group&rdquo; 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  outst
anding.&nbsp; For purposes hereof,  &ldquo;group&rdquo; has the meaning set forth in Section&nbsp;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&nbsp;13(d) of the Exchange Act.&nbsp;  Except as set forth in the preceding sentence, for purposes of this  Section, the number of shares of Common Stock beneficially owned by the Holder  and its Affiliates shall include the number of shares of Common Stock issuable  upon exercise of this Warrant with respect to which such determination is being  made, but shall exclude the number of shares of Common Stock which would be  issuable upon (A)&nbsp;exercise of the remaining, nonexercised portion of this  Warrant beneficially owned by the Holder or any of its Affiliates and  (B)&nbsp;exercise or conversion of the unexercised or nonconverted portion of  any other securities of the Company (including, without limitation, any the  Prefe
rred Stock) subject to a limitation on conversion or exercise analogous to  the limitation contained herein beneficially owned by the Holder or any of its  affiliates.&nbsp; For purposes of this  Section, in determining the number of outstanding shares of Common Stock, a  Holder may rely on the number of outstanding shares of Common Stock as  reflected in (x)&nbsp;the Company&rsquo;s most recent Form 10-QSB or Form 10-KSB, as  the case may be, (y)&nbsp;a more recent public announcement by the Company or  (z)&nbsp;any other notice by the Company or the Company&rsquo;s Transfer Agent  setting forth the number of shares of Common Stock outstanding.&nbsp; 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.</h3>
<h3 >In the event the Company is prohibited from issuing  shares of Warrant Stock as a result of any restrictions or prohibitions under  applicable law or the rules or regulations of any stock exchange, interdealer  quotation system or other self-regulatory organization, the Company shall as  soon as possible seek the approval of its stockholders and take such other  action to authorize the issuance of the full number of shares of Common Stock  issuable upon exercise of this Warrant.</h3>
<h1 ><u>Transfer, Division and Combination</u>.</h1>
<h2 ><u>Transfer</u>.&nbsp;  The Warrants and the Warrant Stock shall be freely transferable, subject  to compliance with this Section&nbsp;3.1 and all applicable laws, including,  but not limited to the Securities Act.&nbsp;  If, at the time of the surrender of this Warrant in connection with any  transfer of this Warrant of 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)&nbsp;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)&nbsp;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 <
u>Exhibit&nbsp;C</u> hereto and (iii)&nbsp;that the  transferee be an &ldquo;accredited investor&rdquo; as defined in Rule&nbsp;501(a)  promulgated under the Securities Act.&nbsp;  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&nbsp;2.1  or the office or agency designated by the Company pursuant to Section&nbsp;12,  together with a written assignment of this Warrant substantially in the form of <u>Exhibit&nbsp;B</u> 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.&nbsp; 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.&nbsp;  Following a transfer that complies with the requirements of this  Section&nbsp;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.</h2>
<h2 ><u>Restrictive Legends</u>.&nbsp; Each certificate for Warrant Stock initially  issued upon the exercise of this Warrant, and each certificate for Warrant  Stock issued to any subsequent transfer of any such certificate, unless, in  each case, such Warrant Stock is eligible for resale without registration  pursuant to Rule&nbsp;144(k) under the Exchange Act or such Warrant Stock is  registered for sale under an effective registration statement filed under the  Securities Act, shall bear the following legend:</h2>
<p >&ldquo;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.&rdquo;<br />
  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.</p>
<h2 ><u>Division and Combination; Expenses; Books</u>.&nbsp; 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.&nbsp; Subject to  compliance with Section&nbsp;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.&nbsp;  The Company shall prepare, issue and deliver at its own expense the new  Warrant or Warrants under this Section&nbsp;3. The Company agrees to maintain,  at its aforesaid office or agency, books for the registration and the  registration of transfer of the Warrants.</h2>
<h1 ><u>Adjustments</u>.&nbsp; 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&nbsp;4.&nbsp; The Company shall give the Holder notice of  any event described below which requires an adjustment pursuant to this  Section&nbsp;4 in accordance with Sections 5.1 and 5.2.</h1>
<h2 ><u>Stock Dividends, Subdivisions and  Combinations</u>.&nbsp; If at any time while  this Warrant is outstanding the Company shall:</h2>
<h3 >declare a dividend or make a distribution on its  outstanding shares of Common Stock in shares of Common Stock,</h3>
<h3 >subdivide its outstanding shares of Common Stock into a  larger number of shares of Common Stock, or</h3>
<h3 >combine its outstanding shares of Common Stock into a  smaller number of shares of Common Stock, then:</h3>
<p >(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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<br />
  (2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the Current  Warrant Price shall be adjusted to equal:<br />
  (A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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<br />
  (B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the number of  shares of Common Stock into which this Warrant is exercisable immediately after  such adjustment.<br />
  Any adjustment made pursuant to clause&nbsp;(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.</p>
<h2 ><u>Issuance of Additional Shares of Common Stock</u>.</h2>
<h3 >If, at any time while this Warrant is outstanding, the  Company shall issue or sell any Additional Shares of Common Stock in exchange  for consideration in an amount per Additional Share of Common Stock less than  the Current Warrant Price at the time the Additional Shares of Common Stock are  issued or sold, then the Current Warrant Price immediately prior to such issue  or sale shall be reduced to a price equal to the lowest price per share of the  Additional Shares of Common Stock received by or to be received by the Company  upon such issue or sale of such Additional Shares of Common Stock.</h3>
<h3 >The provisions of paragraph&nbsp;4.2(i) shall not apply  to any issuance of Additional Shares of Common Stock for which an adjustment is  provided under Section&nbsp;4.1.</h3>
<h2 ><u>Issuance of Common Stock Equivalents</u>.&nbsp; If, at any time while this Warrant is  outstanding, the Company shall issue or sell any warrants or rights to  subscribe for or purchase any Additional Shares of Common Stock or any securities  exchangeable or convertible into Additional Shares of Common Stock (regardless  of the number of shares of Common Stock that the Company is then authorized to  issue) (collectively, &ldquo;<u>Common Stock Equivalents</u>&rdquo;), whether or not the  rights to exchange or convert thereunder are immediately exercisable, and the  effective price per share for which Common Stock is issuable upon the exercise,  exchange or conversion of such Common Stock Equivalents shall be less than the  Current Warrant Price in effect immediately prior to the time of such issue or  sale, then the Current Warrant Price shall be adjusted as provided in  Section&nbsp;4.2 on the basis that the Additional Shares of Common Stock  issuable pursuant to such Common Stock Equivalents shall b
e deemed to have been  issued and the Company shall be deemed to have received all of the  consideration payable therefor, if any, as of the date of the actual issuance  of such Common Stock Equivalents.&nbsp; No  further adjustments to the Current Warrant Price shall be made under this  Section&nbsp;4.3 upon the actual issue of such Common Stock upon the exercise,  conversion or exchange of such Common Stock Equivalents.</h2>
<h2 ><u>Superseding Adjustment</u>.</h2>
<h3 >If, at any time after any adjustment of the Current  Warrant Price shall have been made pursuant to Section&nbsp;4.3 as the result  of any issuance of Common Stock Equivalents, (x)&nbsp;the right to exercise,  convert or exchange all of such Common Stock Equivalents shall expire  unexercised, or (y)&nbsp;the conversion rate or consideration per share for  which shares of Common Stock are issuable pursuant to such Common Stock  Equivalents shall be increased solely by virtue of provisions therein contained  for an automatic increase in such conversion rate or consideration per share  upon the occurrence of a specified date or event, then, unless any of such  Common Stock Equivalents have previously been converted or exercised at the  original price, any such previous adjustments to the Current Warrant Price  shall be rescinded and annulled and the Additional Shares of Common Stock which  were deemed to have been issued by virtue of the computation made in connection  with the adjustment so rescinded and 
annulled shall no longer be deemed to have  been issued by virtue of such computation, provided, however, such readjustment  to the Current Warrant Price described in this Section shall not effect any  exercises of this Warrant effected at any time prior to such readjustment.</h3>
<h3 >Upon the occurrence of an event set forth in  Section&nbsp;4.4(i) above there shall be a recomputation made of the effect of  such Common Stock Equivalents on the basis of treating any such Common Stock  Equivalents which then remain outstanding as having been granted or issued  immediately after the time of such increase of the conversion rate or  consideration per share for which shares of Common Stock or other property are  issuable under such Common Stock Equivalents; whereupon a new adjustment to the  Current Warrant Price shall be made, which new adjustment shall supersede the  previous adjustment so rescinded and annulled.</h3>
<h2 ><u>Other Provisions Applicable to Adjustments</u>.&nbsp; 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&nbsp;4:</h2>
<h4 ><u>When Adjustments to Be Made</u>.&nbsp; The adjustments required by Section&nbsp;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&nbsp;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.&nbsp; 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&nbsp;4 and  not previously made, would result in a minimum adjustment or on the date of  exercise.&nbsp; 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.</h4>
<h4 ><u>Fractional Interest</u>.&nbsp; In computing adjustments under this  Section&nbsp;4, fractional interests in Common Stock shall be taken into  account to the nearest 1/100th of a share.</h4>
<h4 ><u>When Adjustment Not Required</u>.&nbsp; If the Company undertakes a transaction  contemplated under this Section&nbsp;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&nbsp;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&nbsp;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.</h4>
<h4 ><u>Escrow of Stock</u>.&nbsp;  If after any property becomes distributable pursuant to Section&nbsp;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.&nbsp; 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.</h4>
<h2 ><u>Reorganization, Reclassification, Merger,  Consolidation or Disposition of Assets</u>.</h2>
<h4 >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 (&ldquo;<u>Other Property</u>&rdquo;), 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.&nbsp;  The Company shall not effect any Ch
ange 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).&nbsp; Notwithstanding anything to  the contrary, in the event of a Change of Control that is (1)&nbsp;an all cash  transaction, (2)&nbsp;a &ldquo;Rule 13e-3 transaction&rdquo; as defined in Rule&nbsp;13e-3  under the Exchange Act, or (3)&nbsp;a Change of Control involving a person or  entit
y not traded on a national securities exchange, the Nasdaq Global Select  Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or  any successor entity shall pay at the Holder&rsquo;s option, exercisable at any time  concurrently with or within 30&nbsp;days after the consummation of the Change  of Control, an amount of cash equal to the value of this Warrant as determined  in accordance with the Black Scholes Option Pricing Model obtained from the  &ldquo;OV&rdquo; function on Bloomberg L.P. using (i)&nbsp;a price per share of Common  Stock equal to the VWAP of the Common Stock for the Trading Day immediately  preceding the date of consummation of the applicable Change of Control,  (ii)&nbsp;a risk-free interest rate corresponding to the U.S. Treasury rate for  a period equal to the remaining term of this Warrant as of the date of  consummation of the applicable Change of Control and (iii)&nbsp;an expected  volatility equal to the 100 day volatility obtained from the &ldquo;HVT&rdquo; 
function on  Bloomberg L.P. determined as of the Trading Day immediately following the  public announcement of the applicable Change of Control.</h4>
<h4 >In case of any such Change of Control described in Section&nbsp;4.6(a)  above, the resulting, successor or acquiring entity (if not the Company) and,  if an entity different from the successor of 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&nbsp;4.&nbsp; For purposes of Section&nbsp;4, common stock  of the successor or acquiring corporation shall include stock of such  corporation of any class which is not preferred as to di
vidend 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.&nbsp; The  foregoing provisions of this Section&nbsp;4 shall similarly apply to successive  Change of Control transactions.</h4>
<h2 ><u>Other Action Affecting Common Stock</u>.&nbsp; 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&nbsp;4 or any other action described  in Section&nbsp;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.</h2>
<h2 ><u>Certain Limitations</u>.&nbsp; 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.</h2>
<h2 ><u>Stock Transfer Taxes</u>.&nbsp; 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.&nbsp; 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.</h2>
<h1 ><u>Notices to Warrant Holders</u>.</h1>
<h2 ><u>Certificate as to Adjustments</u>.&nbsp; 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.&nbsp; 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)&nbsp;such adjustments and  readjustments, (ii)&nbsp;the Current Warrant Price at the time in effect and  (iii)&nbsp;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.</h2>
<h2 ><u>Notice of Corporate Action</u>.&nbsp; If at any time:</h2>
<h4 >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</h4>
<h4 >there shall be any capital reorganization of the  Company, any reclassification or recapitalization or 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</h4>
<h4 >there shall be a voluntary or involuntary dissolution,  liquidation or winding up of the Company, or</h4>
<h4 >the Company shall cause the holders of its Common Stock  to be entitled to receive (i)&nbsp;any dividend or other distribution of cash,  (ii)&nbsp;any evidences of its indebtedness, or (iii)&nbsp;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&nbsp;4.1 hereof and the rights under the Company&rsquo;s Rights Agreement,  dated as of October&nbsp;31, 2001, by and between the Company and American  Stock Transfer &amp; Trust Company as Rights Agent (the &ldquo;<u>Rights Agreement&rdquo;)</u>),  or (iv)&nbsp;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;</h4>
<p >then, in any one or more of such cases, the Company shall  give to the Holder (i)&nbsp;at least 15 days&rsquo; 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)&nbsp;in the case of any such  reorganization, reclassification, merger, consolidation, sale, transfer,  disposition, dissolution, liquidation or winding up, at least 15 days&rsquo; prior  written notice of the date when the same shall take place.&nbsp; Such notice in accordance with the foregoing  clause also shall specify (i)&nbsp;the date on which any such record is to be taken  for the purpose or 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
)&nbsp;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.&nbsp;  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&nbsp;15.2.&nbsp; Notwithstanding the foregoing provisions of  this Section&nbsp;5.2, the Company shall give to the Holder at least seven  (7)&nbsp;Business Days prior written notice of the occurrence of any  Distribution Date (as defined in the Rights Agreement).</p>
<h2 ><u>No Rights as Stockholder</u>.&nbsp; 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.</h2>
<h1 ><u>No Impairment</u>.&nbsp; 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 orally 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.&nbsp; Without limiting the generality of the  foregoing, the Company will (a)&nbsp;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)&nbsp;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)&nbsp;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.&nbsp; 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.</h1>
<h1 ><u>Reservation and Authorization of Common  Stock; Registration With Approval of Any Governmental Authority</u>.&nbsp; 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&nbsp;2.4(i)).&nbsp; 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.&nbsp; 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.&nbsp; Before taking any action which would result  in an adjustment in the number 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.&nbsp; 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.</h1>
<h1 ><u>Taking of Record; Stock and Warrant Transfer  Books</u>.&nbsp; 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&nbsp;4 refers to the taking of a  record or 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.&nbsp; 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.</h1>
<h1 ><u>Registration Rights</u>.&nbsp; 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 &ldquo;<u>Investor Rights  Agreement</u>&rdquo;).&nbsp; 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.</h1>
<h1 ><u>Supplying Information</u>.&nbsp; Upon any default by the Company of its  obligations hereunder or under the Investor Rights Agreement, the Company shall  cooperate with the Holder in supplying such information as may be reasonably  necessary for such Holder to complete and file any information reporting forms  presently or hereafter required by the Commission as a condition to the  availability of an exemption from the Securities Act for the sale of any  Warrant or Restricted Common Stock.</h1>
<h1 ><u>Loss or Mutilation</u>.&nbsp; 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.</h1>
<h1 ><u>Office of the Company</u>.&nbsp; 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.</h1>
<h1 ><u>Financial and Business Information</u>.</h1>
<h2 ><u>Quarterly Information</u>.&nbsp; The Company will deliver to the Holder, as  soon as available and in any event within 45&nbsp;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.&nbsp; 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&rsquo;s chief executive officer or chief financial officer that such  financial statement
s 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&nbsp;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.</h2>
<h2 ><u>Annual Information</u>.&nbsp; The Company will deliver to the Holder as  soon as available and in any event within 90&nbsp;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 an 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&nbsp;13.2 to the extent it
 is publicly available; and provided further,  that if such information contains material non-public information, the Company  shall so notify the Holder prior to delivery thereof and the Holder shall have  the right to refuse delivery of such information.</h2>
<h2 ><u>Filings.</u>&nbsp; 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.</h2>
<h1 ><u>Limitation of Liability</u>.&nbsp; 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 assorted by the Company or by creditors of the  Company.</h1>
<h1 ><u>Miscellaneous</u>.</h1>
<h2 ><u>Nonwaiver and Expenses</u>.&nbsp; 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&rsquo;s rights, powers or  remedies.&nbsp; 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&rsquo; 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.</h2>
<h2 ><u>Notice Generally</u>.&nbsp; 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.</h2>
<h2 ><u>Successor and Assigns</u>.&nbsp; Subject to compliance with the provisions of  Section&nbsp;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.&nbsp;  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.</h2>
<h2 ><u>Amendment</u>.&nbsp; 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.</h2>
<h2 ><u>Severability</u>.&nbsp; 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.</h2>
<h2 ><u>Headings</u>.&nbsp;  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.</h2>
<h2 ><u>Governing Law</u>.&nbsp; This Warrant and the transactions contemplated  hereby shall be deemed to be consummated in the State of Now    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.&nbsp; 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&nbsp;15.2.</h2>
<h2 ><u>Remedies</u>.&nbsp;  Holder, in addition to being entitled to exercise all rights granted by  law, including recovery of damages, will be entitled to specific performance of  its rights under this Warrant.&nbsp; The  Company agrees that monetary damages would not be adequate compensation for any  loss incurred by reason of a breach by it of the provisions of this Warrant and  hereby agrees to waive and not to assert the defense in any action for specific  performance that a remedy at law would be adequate.</h2>
<h2 ><u>Saturdays, Sundays, Holidays, etc</u>.&nbsp; If the last or appointed day for the taking  of any action or the expiration of any right required or granted herein shall  not be a Business Day, then such action may be taken or such right may be  exercised on the next succeeding Business Day.</h2>
<p align="center">[Signature  Page Follows]</p>
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<p align="right"><strong><u>Exhibit 99.4</u></strong></p>
<p align="center"><strong><u>Preferred Stock and Warrant Purchase Agreement </u></strong></p>
<p>&nbsp;</p>
<p align="center"><strong>PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT<br />
by and among<br />
Access Pharmaceuticals, Inc.<br />
and<br />
the parties named herein on Schedule 1, as Purchasers</strong></p>
<p align="center">&nbsp;</p>
<p align="center">November 7, 2007</p>
<p>&nbsp;</p>
<p align="center"><strong>ARTICLE I <br />
  <br />
DEFINITIONS AND TERMS OF PREFERRED STOCK AND WARRANTS</strong><br />
</p>
<p><strong>1.1 Certain Definitions; Terms of Preferred Stock  and Warrants.</strong><br />
  In addition to the terms defined elsewhere in this  Agreement, for all <strong>purposes</strong> of this Agreement, the following terms have  the meanings indicated in this Section 1.1:</p>
<p>&ldquo;<em>Action</em>&rdquo; shall  have the meaning ascribed to such term in Section 3.1(j).</p>
<p>&ldquo;<em>Affiliate</em>&rdquo;  means any Person that, directly or indirectly through one or more  intermediaries, controls or is controlled by or is under common control with a  Person, as such terms are used in and construed under Rule 144. With respect to  a Purchaser, any investment fund or managed account that is managed on a  discretionary basis by the same investment manager as such Purchaser will be  deemed to be an Affiliate of such Purchaser.</p>
<p>&ldquo;<em>Agreement</em>&rdquo;  shall have the meaning ascribed to such term in the Preamble.</p>
<p>&ldquo;<em>Business Day</em>&rdquo;  means any day except Saturday, Sunday and any day which shall be a federal  legal holiday or a day on which banking institutions in the State of Texas  are authorized or required by law or other governmental action to close.</p>
<p>&ldquo;<em>Certificate of  Designation</em>&rdquo; shall have the meaning ascribed to such term in Section 1.2.  &ldquo;Closing&rdquo; shall have the meaning ascribed to such term in Section 2.1(a).</p>
<p>&ldquo;<em>Closing Date</em>&rdquo;  shall have the meaning ascribed to such term in Section 2.1(a).</p>
<p>&ldquo;<em>Closing Escrow  Agreement</em>&rdquo; shall have the meaning ascribed to such term in Section 2.1(b).</p>
<p>&ldquo;<em>Commission</em>&rdquo;  means the Securities and Exchange Commission</p>
<p>&ldquo;<em>Common Stock</em>&rdquo;  means the common stock of the Company, $0.01 par value per share, and any  securities into which such common stock may hereafter be reclassified.</p>
<p>&ldquo;<em>Common Stock  Equivalents</em>&rdquo; means any securities of the Company or the Subsidiaries which  would entitle the holder thereof to acquire at any time Common Stock, including  without limitation, any debt, preferred stock, rights, options, warrants or  other instrument that is at any time convertible into or exchangeable for, or  otherwise entitles the holder thereof to receive, Common Stock.</p>
<p>&ldquo;<em>Company</em>&rdquo; shall  have the meaning ascribed to such term in the Preamble.</p>
<p>&ldquo;<em>Conversion Shares</em>&rdquo;  means the shares of Common Stock issuable or issued upon conversion of the  Preferred Stock. &ldquo;Disclosure Schedules&rdquo; means the Disclosure Schedules  concurrently delivered herewith.</p>
<p>&ldquo;<em>Effective Date</em>&rdquo;  means the date that the Registration Statement is first declared effective by  the Commission. &ldquo;Environmental Laws&rdquo; shall have the meaning ascribed to such  term in Section 3.1(y).</p>
<p>&ldquo;<em>Exchange Act</em>&rdquo;  means the Securities Exchange Act of 1934, as amended.</p>
<p>&ldquo;<em>FDC Act</em>&rdquo; shall  have the meaning ascribed to such tern in Section 3.1(m).</p>
<p>&ldquo;<em>GAAF</em>&rdquo; shall  have the meaning ascribed to such tern in Section 3.1(h).</p>
<p>&ldquo;<em>Governmental  Authorizations</em>&rdquo; shall have the meaning ascribed to such tern in Section  3.1(m).</p>
<p>&ldquo;<em>Hazardous  Substances</em>&rdquo; shall have the meaning ascribed to such term in Section 3.1(y).</p>
<p>&ldquo;<em>Indemnified Part</em>&rdquo;  shall have the meaning ascribed to such tern in Section 5.3.</p>
<p>&ldquo;<em>Indemnifying Part</em>&rdquo;  shall have the meaning ascribed to such tern in Section 5.3.</p>
<p>&ldquo;<em>Intellectual  Property</em>&rdquo; shall have the meaning ascribed to such tern in Section 3.1(o).</p>
<p>&ldquo;<em>Investor Rights  Agreement</em>&rdquo; means the Investor Rights Agreement, dated as of the date of  this Agreement, between the Company and each of the Purchasers, in the form of <u>Exhibit  A</u> hereto.</p>
<p>&ldquo;<em>Lien</em>&rdquo; means a  lien, charge, security interest, encumbrance, right of first refusal or other  restriction, except for a lien for current taxes not yet due and payable and a  minor imperfection of title, if any, not material in nature or amount and not materially  detracting from the value or impairing the use of the property subject thereto  or impairing the operations or proposed operations of the Company.</p>
<p>&ldquo;<em>Material Adverse  Effect</em>&rdquo; shall have the meaning ascribed to such term in Section 3.1(6). Per  Share Purchase Price&rdquo; equals $10,000.</p>
<p>&ldquo;<em>Person</em>&rdquo; means  an individual or corporation, partnership, trust, incorporated or  unincorporated association, joint venture, limited liability company, joint  stock company, government (or an agency or subdivision thereof) or other entity  of any kind.</p>
<p>&ldquo;<em>Placement Agents</em>&rdquo;  means Rodman &amp; Renshaw, LLC and Dawson James Securities, Inc.</p>
<p>&ldquo;<em>Placement Agent  Warrants</em>&rdquo; shall mean the common stock purchase warrants to be issued to the  Placement Agents and/or their designees as compensation for services rendered  in connection with the transaction set forth herein as provided on Schedule 1  attached hereto, which warrants shall be in the form of <u>Exhibit D</u> hereto.</p>
<p>&ldquo;<em>Preferred Shares</em>&rdquo;  means the shares of Preferred Stock issued to each Purchaser pursuant to this  Agreement.</p>
<p> &ldquo;Preferred Stock&rdquo; means the Company&rsquo;s Series A Cumulative  Convertible Preferred Stock, par value $0.01 per share. </p>
<p>&ldquo;Premises&rdquo; shall have  the meaning ascribed to such term in Section 3.1(y).</p>
<p>&ldquo;<em>Promissory Notes</em>&rdquo;  shall have shall have the meaning ascribed to such term in Section 2.1(c).</p>
<p>&ldquo;<em>Purchase Price</em>&rdquo;  means the aggregate purchase price paid by each Purchaser for the shares of  Preferred Stock and Warrants purchased by such Purchaser hereunder.</p>
<p>&ldquo;<em>Purchaser</em>&rdquo;  shall have the meaning ascribed to such term in the Preamble</p>
<p>&ldquo;<em>Registration  Statement</em>&rdquo; means a registration statement meeting the requirements set  forth in the Investor Rights Agreement and covering the resale by the  Purchasers of the Conversion Shares and the Warrant Shares.</p>
<p>&ldquo;<em>Required Minimum</em>&rdquo;  means, as of any date, the maximum aggregate number of shares of Common Stock  then issued or potentially issuable in the future pursuant to the Transaction  Documents, including any Underlying Shares issuable upon exercise or conversion  in full of all Warrants and shares of Preferred Stock, ignoring any conversion  or exercise limits set forth therein, and assuming that any previously  unconverted shares of Preferred Stock are held until the fifth anniversary of  the Closing Date and all dividends are paid in shares of Common Stock until  such fifth anniversary</p>
<p>&ldquo;<em>Rights</em>&rdquo; shall  have the meaning ascribed to such term in Section 3.1(o).</p>
<p>&ldquo;<em>Rule 144</em>&rdquo;  means Rule 144 promulgated by the Commission pursuant to the Securities Act, as  such Rule may be amended from time to time, or any similar rule or regulation  hereafter adopted by the Commission having substantially the same effect as  such Rule.</p>
<p>&ldquo;<em>SEC Reports</em>&rdquo;  shall have the meaning ascribed to such tertn in Section 3.1(h).</p>
<p>&ldquo;<em>Securities</em>&rdquo;  means the Preferred Shares, the Conversion Shares, the Warrants and the Warrant  Shares. &ldquo;SecuritiesAct&rdquo; means the Securities Act of 1933, as amended.</p>
<p>&ldquo;<em>Short Sales</em>&rdquo;  means all &ldquo;short sales&rdquo; as defined in Rule 200 of Regulation SHO under the  Exchange Act (but shall not be deemed to include the location and/or  reservation of borrowable shares of Common Stock).</p>
<p>&ldquo;<em>Subscription  Amount</em>&rdquo; means, as to each Purchaser, the amount set forth beside such  Purchaser&rsquo;s name on <u>Schedule 1</u> hereto, in United    States dollars and in immediately available  funds.</p>
<p>&ldquo;<em>Subsidiary</em>&rdquo;  means, with respect to any entity, any corporation or other organization of  which securities or other ownership interests having ordinary voting power to  elect a majority of the board of directors or other persons perfortning similar  functions, are directly or indirectly owned by such entity or of which such  entity is a partner or is, directly or indirectly, the beneficial owner of 50%  or more of any class of equity securities or equivalent profit participation  interests.</p>
<p>&ldquo;<em>Trading Day</em>&rdquo;  means (i) a day on which the Common Stock is traded on a Trading Market, or  (ii) if the Common Stock is not listed on a Trading Market, a day on which the  Common Stock is traded on the over-the-counter market, as reported by the OTC  Bulletin Board, or (iii) if the Common Stock is not listed on a Trading Market  or quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted  in the over-the-counter market as reported by Pink Sheets LLC (or any similar  organization or agency succeeding to its functions of reporting prices);  provided, that in the event that the Common Stock is not listed or quoted as  set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business  Day.</p>
<p>&ldquo;<em>Trading Market</em>&rdquo;  means the following markets or exchanges on which the Common Stock is listed or  quoted for trading on the date in question: the American Stock Exchange, the New    York Stock Exchange, the Nasdaq National Market, the  Nasdaq Capital Market or the OTC Bulletin Board.</p>
<p>&ldquo;<em>Transaction  Documents</em>&rdquo; means this Agreement, the Certificate of Designation, the  Investor Rights Agreement, the Warrants and any other documents or agreements  executed in connection with the transactions contemplated hereunder.</p>
<p>&ldquo;<em>Underlying Shares</em>&rdquo;  means the shares of Common Stock issued and issuable upon conversion of the  Preferred Stock, upon exercise of the Warrants and issued and issuable in lieu  of the cash payment of dividends on the Preferred Stock in accordance with the  terms of the Certificate of Designation.</p>
<p>&ldquo;<em>VWAP</em>&rdquo; means,  for any date, the price determined by the first of the following clauses that  applies: (a) if the Common Stock is then listed or quoted on a Trading Market,  the daily volume weighted average price of the Common Stock for such date (or  the nearest preceding date) on the Trading Market on which the Common Stock is  then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day  from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (v) if  the Common Stock is not then quoted for trading on any Trading Market and if  prices for the Common Stock are then reported in the &ldquo;Pink Sheets&rdquo; published by  Pink Sheets, LLC (or a similar organization or agency succeeding to its  functions of reporting prices), the most recent bid price per share of the  Common Stock so reported; or (d) in all other cases, the fair market value of a  share of Common Stock as detennined by an independent appraiser selected in  good faith by the Purchasers of 
a majority in interest of the Securities then  outstanding and reasonably acceptable to the Company.</p>
<p>&ldquo;<em>Warrants</em>&rdquo;  shall have the meaning ascribed to such tern in the recitals hereto. The  Placement Agent Warrants shall also constitute &ldquo;Warrants&rdquo; for all purposes  hereunder and the Placement Agents and/or their designees and such other  persons or entities shall constitute &ldquo;Purchasers&rdquo; for all purposes hereunder.</p>
<p>&ldquo;<em>Warrant Shares</em>&rdquo;  means the shares of Common Stock issuable upon exercise of the Warrants.</p>
<p><u><strong>1.2 Terms of the Preferred Stock and Warrants</strong></u>.&nbsp; <br />
The terms  and provisions of the Preferred Stock are set forth in the form of Certificate  of Designations of Rights and Preferences of Series A Convertible Preferred  Stock, attached hereto as Exhibit B (the &ldquo;<em>Certificate  of Designation</em>&rdquo;).&nbsp; The terms and  provisions of the Warrants are as set forth in the form of Common Stock  Purchase Warrant, attached hereto as <u>Exhibit C</u> (and <u>Exhibit D</u> in  the case of the Placement Agent Warrants).</p>
<p align="center">&nbsp;</p>
<p align="center"><strong>ARTICLE II</strong></p>
<p align="center"><strong>PURCHASE  AND SALE</strong></p>
<p><u><strong>2.1 Closing</strong></u><strong>.</strong></p>
<p>  (a) The closing of the transactions contemplated  under this Agreement (the &ldquo;<em>Closing</em>&rdquo;)  will take place upon the execution of this Agreement by the Company and the  Purchasers immediately following satisfaction or waiver of the conditions set  forth in Sections 2.2 and 2.3 (other than those conditions which by their terms  are not to be satisfied or waived until the Closing), at the offices of Wiggin  and Dana LLP, 400 Atlantic Street, Stamford, CT 06901 (or remotely via exchange  of documents and signatures) or at such other place or day as may be mutually  acceptable to the Purchasers and the Company. The date on which the Closing  occurs is the &ldquo;<em>Closing Date</em>&rdquo;.</p>
<p>(b) At  the Closing, the Purchasers shall purchase, severally and not jointly, and the  Company shall issue and sell, in the aggregate, 3,227.3617 shares of Preferred  Stock and Warrants to purchase 3,440,882 shares of Common Stock. Each Purchaser  shall purchase from the Company, and the Company shall issue and sell to each  Purchaser, a number of Preferred Shares equal to such Purchaser&rsquo;s Subscription  Amount divided by the Per Share Purchase Price and a Warrant to purchase 50% of  the number of Conversion Shares into which the Preferred Shares purchased by  such Purchaser are initially convertible. Except to the extent paid in the form  of surrender and cancellation of Promissory Notes (as defined below) pursuant  to Section 2.1(c), the Subscription Amount paid by each Purchaser shall be  placed in escrow pending the Closing pursuant to a Closing Escrow Agreement  among the Company, SCO Capital Partners
  LLC and Wiggin and Dana LLP (the &ldquo;<em>Escrow Agent</em>&rdquo;), which agreement shall be  in the form attached hereto as <u>Exhibit E</u> (the &ldquo;<em>Closing Escrow Agreement</em>&rdquo;).</p>
<p>(c) All or a portion of the Subscription Amount  payable by certain Purchasers for the Preferred Stock and Warrants purchased  pursuant to this Agreement shall be payable by the surrender and cancellation  of promissory notes of the Company held by such Purchasers, representing an  aggregate principal amount of $10,015,000 plus accrued and unpaid interest  thereon and described next to such Purchaser&rsquo;s name in <u>Schedule 1</u> hereto  (the &ldquo;<em>Promissory Notes</em>&rdquo;), with the  value of such Promissory Notes toward such Purchaser&rsquo;s Subscription Amount also  described in <u>Schedule 1</u>.&nbsp; The  value of each Promissory Note toward the Subscription Amount shall be  detennined according to whether the Promissory Note is an &ldquo;A&rdquo; Promissory Note  (a &ldquo;<em>Category A Note</em>&rdquo;) or a &ldquo;B&rdquo;  Promissory Note (a &ldquo;<em>Category B Note</em>&rdquo;),  in each case, as set forth on <u>Schedule 1</u> under the heading &ldquo;Promissory  Note Category&
rdquo;. Category A Notes shall be valued toward each applicable  Purchaser&rsquo;s Subscription Amount at a dollar amount equal to (i) the number of  shares of Common Stock into which such Category A Note is convertible  immediately prior to the Closing (without giving effect to any limitations on  beneficial ownership contained therein) multiplied by (ii) the Conversion Value  (as defined in the Certificate of Designation); provided that, notwithstanding  any other provision of this Agreement, the Warrants issuable to the Category A  Note holders in respect of Category A Notes exchanged by them shall be exercisable  for a number of shares of Common Stock detennined as if the principal and  interest on such Category A Notes were exchanged on a dollar-for-dollar basis  and as set forth next to the name of such Category A Note holder on <u>Schedule  1</u>.&nbsp; Category B Notes shall be valued  toward each applicable Purchaser&rsquo;s Subscription Amount at a dollar amount equal  to the outstanding principal 
amount of such Category B Note plus all accrued  and unpaid interest thereon.&nbsp; Each Purchaser  surrendering Promissory Notes for cancellation in payment of any portion of  such Purchaser&rsquo;s Subscription Amount hereby agrees that such Promissory Notes  shall be cancelled and that all liens held by such Purchaser in connection with  such Promissory Notes shall be terminated, in each case, as of the Closing.</p>
<p><strong>2.2
  <u>Conditions to Obligations of Purchasers to  Effect the Closing</u>.</strong></p>
<p>The obligations of each Purchaser to effect the Closing and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, by such Purchaser:</p>
<blockquote>
  <p>  (a)	At the Closing (unless otherwise specified below) the Company shall deliver or cause to be delivered to each Purchaser the following:</p>
  <blockquote>
    <p>  (i)	this Agreement, duly executed by the Company;<br />
      (ii)	a certificate evidencing a number of Preferred Shares equal to such Purchaser&rsquo;s Subscription Amount divided by the Per Share Purchase Price as set forth on Schedule 1 hereto, registered in the name of such Purchaser;<br />
      (iii)	a Warrant, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire up to the number of shares of Common Stock equal to 50% of the shares of Common Stock initially issuable upon conversion of the Preferred Shares to be issued to such Purchaser at such Closing (except with respect to Warrants issued upon exchange of Category A Notes, the number of which shall be detertnined in accordance with Section 2.1(c)), as set forth on Schedule 1 hereto;<br />
      (iv)	the Investor Rights Agreement, duly executed by the Company;<br />
      (v)	a legal opinion of Bingham McCutchen LLP, counsel to the Company, in the forn of Exhibit F hereto;<br />
      (vi)	a certificate of the Secretary of the Company (the &ldquo;Secretary&rsquo;s Certificate&rdquo;), attaching a tme copy of the Certificate of Incorporation and Bylaws of the Company, as amended to the Closing Date, and attaching tme and complete copies of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents; and<br />
      (vii)	evidence satisfactory to the Purchasers that the Certificate of Designation was duly filed with, and accepted by, the Secretary of State of the State of Delaware.</p>
  </blockquote>
  <p>  (b)	The Company shall have entered into the Closing Escrow Agreement.</p>
  <p>  (c)	All representations and warranties of the Company contained herein shall remain true and correct as of the Closing Date as though such representations and warranties were made on such date (except those representations and warranties that address matters only as of a particular date will remain true and correct as of such date).</p>
  <p>  (d)	All of the Promissory Notes shall have been surrendered for cancellation in partial payment of the Subscription Amount for the Purchasers holding such notes;</p>
  <p>  (e)	As of the Closing Date, there shall have been no Material Adverse Effect with respect to the Company since the date hereof.</p>
  <p>  (f)	From the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities.</p>
  <p>  (g)	All Purchasers surrendering Promissory Notes for cancellation in payment of any portion of their Subscription Amount shall have executed this Agreement.</p>
  <p>  (h)	The minimum aggregate cash Subscription Amount hereunder shall be $7,500,000.</p>
</blockquote>
<p><strong>2.3 <u>Conditions to Obligations of the Company to  Effect the Closing</u>.</strong></p>
<p>The obligations of the Company to effect the Closing and  the transactions contemplated by this Agreement shall be subject to the  satisfaction at or prior to the Closing of each of the following conditions,  any of which may be waived, in writing, by the Company.<br />
</p>
<blockquote>
  <p>(a) At the Closing, each Purchaser shall deliver or  cause to be delivered to the Company the following:</p>
  <blockquote>
    <p>  (i) this Agreement, duly executed by such Purchaser;</p>
    <p> (ii) such Purchaser&rsquo;s Subscription Amount, as  applicable, (A) by wire transfer of immediately available funds as provided in  the Closing Escrow Agreement and/or (B) in the case of Purchasers paying all or  a portion of their Subscription Amount by the cancellation of the Promissory  Notes held by them, by the cancellation of such Promissory Notes pursuant to  Section 2.1(c); and</p>
    <p>(iii) the Investor Rights Agreement, duly executed by  such Purchaser.<br />
    </p>
  </blockquote>
  <p>(b) All representations and warranties of each of  the Purchasers contained herein shall remain true and correct as of the Closing  Date as though such representations and warranties were made on such date.</p>
  <p>      (c) The Certificate of Designation shall have been  duly filed with, and accepted by, the Secretary of State of the State of Delaware.</p>
  <p>&nbsp;</p>
  <p align="center"><strong>ARTICLE III</strong></p>
  <p align="center"><strong>REPRESENTATIONS AND WARRANTIES </strong></p>
  <p align="left"><strong>3.1 <u>Representations and Warranties of the Company</u>.</strong></p>
  <p align="left">    Except as set forth under the corresponding section of  the Disclosure Schedules delivered concurrently herewith, the Company hereby  makes the following representations and warranties as of the date hereof and as  of the Closing Date to each Purchaser:</p>
  <p>(a)<strong> Subsidiaries.</strong>&nbsp; Except as listed in Schedule 3.1(a), the  Company has no direct or indirect Subsidiaries.</p>
  <p>(b) <strong>Organization  and Qualification.</strong>&nbsp; Each of the  Company and the Subsidiaries is an entity duly incorporated or otherwise  organized, validly existing and in good standing under the laws of the  jurisdiction of its incorporation or organization (as applicable), with the  requisite corporate power and authority to own and use its properties and  assets and to carry on its business as currently conducted. Neither the Company  nor any Subsidiary is in violation of any of the provisions of its respective  certificate or articles of incorporation, bylaws or other organizational or  charter documents. Each of the Company and the Subsidiaries is duly qualified  to conduct business and is in good standing as a foreign corporation or other  entity in each jurisdiction in which the nature of the business conducted or  property owned by it makes such qualification necessary, except where the  failure to be so qualified or in good standing, as the case may be, would not  have or result in (i
) a material adverse effect on the legality, validity or  enforceability of any Transaction Document, (ii) a material adverse effect on  the business or financial condition of the Company and the Subsidiaries, taken  as awhole, or (iii) a material adverse effect on the Company&rsquo;s ability to  perfonn in any material respect on a timely basis its obligations under any  Transaction Document (any of (i), (ii) or (iii), a &ldquo;<em>Material Adverse Effect</em>&rdquo;).</p>
  <p>(c)      <strong>Authorization;  Enforceability.</strong>&nbsp; The Company has the  requisite corporate power and authority to enter into and to consummate the  transactions contemplated by each of the Transaction Documents and otherwise to  carry out its obligations thereunder. The execution and delivery of each of the  Transaction Documents by the Company and the consummation by it of the  transactions contemplated thereby (including, but not limited to, the sale and  delivery of the Preferred Stock and Warrants) have been duly authorized by all  necessary corporate action on the part of the Company and no further corporate  action is required by the Company in connection therewith. The issuance and  delivery of the Conversion Shares upon conversion of the Preferred Stock and  the Warrant Shares upon exercise of the Warrants have been duly authorized by  all necessary action on the part of the Company and no further action is  required by the Company in connection therewith. Each Transaction Document
 has  been (or upon delivery will have been) duly executed by the Company and, when  delivered in accordance with the terms hereof, will constitute the valid and  binding obligation of the Company enforceable against the Company in accordance  with its terms, subject to laws of general application relating to bankruptcy,  insolvency, reorganization, moratorium or other similar laws affecting  creditors&rsquo; rights generally and rules of law governing specific performance,  injunctive relief, or other equitable remedies.</p>
  <p>(d) <strong>No  Conflicts.</strong>&nbsp; The execution, delivery  and performance of the Transaction Documents by the Company and the  consummation by the Company of the transactions contemplated thereby do not and  will not (i) conflict with or violate any provision of the Company&rsquo;s or any  Subsidiary&rsquo;s certificate or articles of incorporation, bylaws or other  organizational or charter documents, or (ii) conflict with, or constitute a  default (or an event that with notice or lapse of time or both would become a  default) under, or give to others any rights of termination, amendment, acceleration  or cancellation (with or without notice, lapse of time or both) of, any  agreement, credit facility, debt or other instrument (evidencing a Company or  Subsidiary debt or otherwise) or other understanding to which the Company or  any Subsidiary is a party or by which any property or asset of the Company or  any Subsidiary is bound or affected, or (iii) result in a violation of any law,  rule, re
gulation, order, judgment, injunction, decree or other restriction of  any court or governmental authority to which the Company or a Subsidiary is  subject (including federal and state securities laws and regulations), or by  which any property or asset of the Company or a Subsidiary is bound or  affected, except, in the cases of clause (ii), where such conflict, default or  violation would not have or result in a Material Adverse Effect.</p>
  <p>(e)    <strong>Filings,  Consents and Approvals.</strong>&nbsp; The Company  is not required to obtain any consent, waiver, authorization or order of, give  any notice to, or make any filing or registration with, any court or other  federal, state, local or other governmental authority or other Person in  connection with the execution, delivery and performance by the Company of the  Transaction Documents, other than (i) the filing with the Commission of the  Registration Statement, the application(s) to each Trading Market for the  listing of the Conversion Shares and Warrant Shares for trading thereon in the  time and manner required thereby, Form D and applicable Blue Sky filings, (ii)  such as have already been obtained or such exemptive filings as are required to  be made under applicable securities laws and (iii) the filing of the  Certificate of Designation with the Secretary of State of the State of  Delaware.</p>
  <p>(f)    <strong>Issuance  of the Securities.</strong>&nbsp; The Securities  are duly authorized and, when issued and paid for in accordance with the  Transaction Documents, will be duly and validly issued, fully paid and  nonassessable, free and clear of all Liens, other than any Liens created by or  imposed on the holders thereof through no action of the Company. The Company  has reserved from its duly authorized capital stock (i) the maximum number of  shares of Preferred Stock issuable pursuant to this Agreement and (ii) the  maximum number of shares of Common Stock issuable upon conversion of the Preferred  Stock and exercise of the Warrants.</p>
  <p>(g)    <strong>Capitalization.</strong></p>
  <blockquote>
    <p>(i)     The authorized and outstanding capitalization of  the Company is set forth on Schedule 3.1(g) hereto. All shares of the Company&rsquo;s  issued and outstanding capital stock have been duly authorized, are validly  issued and outstanding, and are fully paid and nonassessable. No securities  issued by the Company from March 1,   2002 to the date hereof were issued in violation of any statutory  or common law preemptive rights. There are no dividends which have accrued or  been declared but are unpaid on the capital stock of the Company. All taxes  required to be paid by the Company in connection with the issuance and any  transfers of the Company&rsquo;s capital stock have been paid. The holders of the  Company&rsquo;s Common Stock have certain rights under the company&rsquo;s Rights Agreement  dated as of October 31, 2001  by and between the Company and American Stock Transfer as Rights Agent. All  outstanding securities of the Company have been issued in all material respects  in accordance wi
th the provisions of all applicable securities and other laws.</p>
    <p><br />
      (ii) No Person has any right of first refusal,  preemptive right, right of participation, or any similar right to participate  in the transactions contemplated by the Transaction Documents. Except as a  result of the purchase and sale of the Securities and except for employee and  director stock options under the Company&rsquo;s equity compensation plans and as set  forth on Schedule 3.1(h)(ii) hereto, there are no outstanding options,  warrants, rights to subscribe to, calls or commitments of any character  whatsoever relating to, or securities, rights or obligations convertible into  or exchangeable for, or giving any Person any right to subscribe for or  acquire, any shares of Common Stock, or contracts, commitments, understandings  or arrangements by which the Company or any Subsidiary is or may become bound  to issue additional shares of Common Stock, or securities or rights convertible  or exchangeable into shares of Common Stock. The issue and sale of the Securities  will not obligate the Compan
y to issue shares of Common Stock or other  securities to any Person (other than the Purchasers) and will not result in a  right of any holder of Company securities other than the Purchasers to adjust  the exercise, conversion, exchange or reset price under such securities.</p>
  </blockquote>
  <p align="left">(h) <strong>SEC  Reports; Financial Statements; Liabilities.</strong></p>
  <blockquote>
    <p align="left">(i)
      The Company has filed all reports required to be  filed by it under the Securities Act and the Exchange Act, including pursuant  to Section 13(a) or 15(d) of the Exchange Act, for the 24 months preceding the  date hereof (or such shorter period as the Company was required by law to file  such material) (the foregoing materials, including the exhibits thereto, being  collectively referred to herein as the &ldquo;<em>SEC  Reports</em>&rdquo;) on a timely basis or has received a valid extension of such time  of filing and has filed any such SEC Reports prior to the expiration of any  such extension. As of their respective filing dates, the SEC Reports complied  in all material respects with the requirements of the Securities Act and the  Exchange Act, as the case may be, and the rules and regulations of the  Commission promulgated thereunder, as applicable, and none of the SEC Reports,  as of their respective filing dates, contained any untme statement of a  material fact or omitted to state a material fa
ct required to be stated therein  or necessary in order to make the statements therein, in light of the  circumstances under which they were made, not misleading.</p>
    <p align="left">(ii)
      The Company&rsquo;s (A) audited financial statements  for the fiscal years ended December 31, 2006 and 2005 included in the Company&rsquo;s  annual reports on Form 10-KSB and Form 10-K, respectively, filed with the  Commission and (B) the financial statements included in the Company&rsquo;s quarterly  reports on Form 10-QSB filed with the Commission for the first two fiscal  quarters of 2007 comply with applicable accounting requirements and the rules  and regulations of the Commission with respect thereto as in effect at the time  of filing of such reports. Such financial statements have been prepared in  accordance with generally accepted accounting principles in the United States,  applied on a consistent basis during the periods involved (&ldquo;<em>GAAP</em>&rdquo;), except as may be otherwise  specified in such financial statements or the notes thereto and except that  unaudited financial statements may not contain all footnotes required by GAAP,  subject to normal year-end audit adjustments. Suc
h financial statements fairly  present in all material respects the financial position of the Company and its  consolidated subsidiaries, if any, as of and for the dates thereof and the  results of operations and cash flows for the periods then ended, subject, in  the case of unaudited statements, to normal year-end audit adjustments.</p>
    <p align="left">(iii)
      Except for liabilities and obligations incurred  since June 30, 2007 in the ordinary course of business, consistent with past  practice, as of the date hereof (i) the Company and its Subsidiaries do not  have any material liabilities or obligations (absolute, accrued, contingent or  otherwise) and (ii) there has not been any aspect of the prior or current  conduct of the business of the Company or its Subsidiaries which may form the  basis for any material claim by any third party which if asserted could result  in a Material Adverse Effect.</p>
  </blockquote>
  <p align="left">(i)    <strong>Material  Changes.</strong>&nbsp; Except as set forth on  Schedule 3.1(i), since June 30, 2007,  the Company has conducted its business only in the ordinary course, consistent  with past practice, and since such date there has not occurred:</p>
  <blockquote>
    <p align="left">(i)
      any event, occurrence or development that has  had or that could reasonably be expected to result in a Material Adverse Effect  on the Company or any of its Subsidiaries;</p>
    <p>(ii) any amendments or changes in the charter  documents of the Company and its Subsidiaries;</p>
    <p>(iii)
      any:</p>
    <blockquote>
      <p>(A) incurrence, assumption or guarantee by the  Company or its Subsidiaries of any debt for borrowed money other than (i)  equipment leases made in the ordinary course of business, consistent with past  practice and (ii) any such incurrence, assumption or guarantee with respect to  an amount of $25,000 or less that has been disclosed in the SEC Reports;</p>
      <p>(B)
        other than as set forth on Schedule  31(i)(iii)(A) hereto, issuance or sale of any securities convertible into or  exchangeable for securities of the Company other than to directors, employees  and consultants pursuant to existing equity compensation or stock purchase  plans of the Company;</p>
      <p>(C)
        issuance or sale of options or other rights to  acquire from the Company or its Subsidiaries, directly or indirectly,  securities of the Company or any securities convertible into or exchangeable  for any such securities, other than options issued to directors, employees and  consultants in the ordinary course of business, consistent with past practice;</p>
      <p>(D)
        issuance or sale of any stock, bond or other  corporate security other than to directors, employees and consultants pursuant  to existing equity compensation or stock purchase plans of the Company;</p>
      <p>(E)
        discharge or satisfaction of any material Lien;</p>
      <p>(F)
        declaration or making any payment or  distribution to stockholders or purchase or redemption of any share of its  capital stock or other security other than to directors, officers and employees  of the Company or its Subsidiaries as compensation for services rendered to the  Company or its Subsidiary (as applicable) or for reimbursement of expenses  incurred on behalf of the Company or its Subsidiary (as applicable);</p>
      <p>(G)
        sale, assignment or transfer of any of its  intangible assets except in the ordinary course of business, consistent with  past practice, or cancellation of any debt or claim except in the ordinary  course of business, consistent with past practice;</p>
      <p>(H)
        waiver of any right of substantial value whether  or not in the ordinary course of business;</p>
      <p>(I)
        material change in officer compensation, except  in the ordinary course of business and consistent with past practice; or</p>
      <p>(J)
        other commitment (contingent or otherwise) to do  any of the foregoing.</p>
    </blockquote>
    <p>(iv) other than as set forth on Schedule 3(i)0v)  hereto, any creation, sufferance or assumption by the Company or any of its  Subsidiaries of any Lien on any asset or any making of any loan, advance or  capital contribution to or investment in any Person, in an aggregate amount  which exceeds $25,000 outstanding at any time;</p>
    <p>(v)
      any entry into, amendment of, relinquishment,  termination or non-renewal by the Company or its Subsidiaries of any material  contract, license, lease, transaction, commitment or other right or obligation,  other than in the ordinary course of business, consistent with past practice;  or</p>
    <p>(vi)
      other than as set forth on Schedule 3(i)(vi)  hereto, any transfer or grant of a right with respect to the patents,  trademarks, trade names, service marks, trade secrets, copyrights or other  intellectual property rights owned or licensed by the Company or its  Subsidiaries, except as among the Company and its Subsidiaries.</p>
  </blockquote>
  <p>(j) <strong>Litigation.</strong>&nbsp; There is no action, suit, inquiry, notice of  violation, proceeding or, to the knowledge of the Company, investigation  pending nor, to the knowledge of the Company, is any of the above threatened  against the Company, any Subsidiary or any of their respective properties  before or by any court, arbitrator, governmental or administrative agency or  regulatory authority (federal, state, county, local or foreign) (collectively,  an &ldquo;<em>Action</em>&rdquo;) which (i) adversely  affects or challenges the legality, validity or enforceability of any of the  Transaction Documents or the Securities or (ii) could, if there were an  unfavorable decision, have or result in a Material Adverse Effect. Neither the  Company nor any Subsidiary, nor, to the knowledge of the Company, any director  or officer thereof, is or has been the subject of any Action involving a claim  of violation of or liability under federal or state securities laws or a claim  of breach of fiduciary
 duty within the past five (5) years. To the knowledge of  the Company, there has not been and there is not pending or contemplated, any  investigation by the Commission involving the Company or any current or former  director or officer of the Company. The Commission has not issued any stop  order or other order suspending the effectiveness of any registration statement  filed by the Company or any Subsidiary under the Exchange Act or the Securities  Act within the past eight (8) years.</p>
  <p>(k)    <strong>Labor  Relations.</strong>&nbsp; No material labor dispute  exists or, to the knowledge of the Company, is imminent with respect to any of  the employees of the Company which could have or result in a Material Adverse  Effect.</p>
  <p>(l)    <strong>Compliance.</strong>&nbsp; Neither the Company nor any Subsidiary (i) is  in default under or in violation of (and no event has occurred that has not  been waived that, with notice or lapse of time or both, would result in a  default by the Company or any Subsidiary under), nor has the Company or any  Subsidiary received notice of a claim that it is currently in default under or  that it is in violation of, any indenture, loan or credit agreement or any  other agreement or instrument to which it is a party or by which it or any of  its properties is bound (whether or not such default or violation has been  waived), (ii) is in violation of any order of any court, arbitrator or  governmental body, or (iii) is or has been in violation of any statute, rule or  regulation of any governmental authority, including without limitation all  foreign, federal, state and local laws applicable to its business, except in  the case of clauses (i) and (iii) as would not have or reasonably be expected  to 
result in a Material Adverse Effect.</p>
  <p>(m) <strong>Licenses;  Compliance With FDA and Other Regulatory Requirements.</strong></p>
  <blockquote>
    <p>(i) The Company holds all material authorizations,  consents, approvals, franchises, licenses and permits required under applicable  law or regulation for the operation of the business of the Company and its  Subsidiaries as presently operated (the &ldquo;<em>Governmental  Authorizations</em>&rdquo;). All the Governmental Authorizations have been duly issued  or obtained and are in full force and effect, and the Company and its  Subsidiaries are in material compliance with the terms of all the Governmental  Authorizations. The Company and its Subsidiaries have not engaged in any  activity that, to their knowledge, would cause revocation or suspension of any  such Governmental Authorizations. Neither the execution, delivery nor  performance of this Agreement shall adversely affect the status of any of the  Governmental Authorizations.</p>
    <p>(ii)
      Without limiting the generality of the  representations and warranties made in sub-paragraph (i) above, the Company  represents and warrants that (i) the Company and each of its Subsidiaries is in  material compliance with all applicable provisions of the United States Federal  Food, Drug, and Cosmetic Act and the rules and regulations promulgated  thereunder (the &ldquo;<em>FDC Act</em>&rdquo;) and  equivalent laws, rules and regulations in jurisdictions outside the United  States in which the Company or its Subsidiaries do business, (ii) its products  and those of each of its Subsidiaries that are in the Company&rsquo;s control are not  adulterated or misbranded and are in lawful distribution, (iii) all of the  products marketed by and within the control of the Company comply in all  material respects with any conditions of approval and the terms of the  application by the Company to the appropriate Regulatory Authorities, (iv) no  Regulatory Authority has initiated legal action with respect to the  
manufacturing of the Company&rsquo;s products, such as seizures or required recalls,  and the Company is in compliance with applicable good manufacturing practice  regulations, (v) its products are labeled and promoted by the Company and its  representatives in substantial compliance with the applicable terms of the  marketing applications submitted by the Company to the Regulatory Authorities  and the provisions of the FDC Act and foreign equivalents, (vi) all adverse  events that were known to and required to be reported by Company to the  Regulatory Authorities have been reported to the Regulatory Authorities in a  timely manner, (vii) neither the Company nor any of its Subsidiaries is, to  their knowledge, employing or utilizing the services of any individual who has  been debarred under the FDC Act or foreign equivalents, (viii) all stability  studies required to be performed for products distributed by the Company or any  of its Subsidiaries have been completed or are ongoing in material compliance  wi
th the applicable Regulatory Authority requirements, (ix) any products  exported by the Company or any of its Subsidiaries have been exported in  compliance with the FDC Act and (x) the Company and its Subsidiaries are in  compliance in all material respects with all applicable provisions of the  Controlled Substances Act. For purposes of this Section 3.1(m), &ldquo;<em>Regulatory Authority</em>&rdquo; means any  governmental authority in a country or region that regulates the manufacture or  sale of Company&rsquo;s products, including, but not limited to, the United States  Food and Drug Administration.</p>
  </blockquote>
  <p>(n) <strong>Title to  Assets.</strong>&nbsp; The Company and the  Subsidiaries do not own any real property, and have good and marketable title  to all personal property owned by them that is material to the business of the  Company and the Subsidiaries, taken as a whole, in each case free and clear of  all Liens, except those, if any, reflected in the Company&rsquo;s financial  statements or incurred in the ordinary course of business consistent with past  practice or which would not cause a Material Adverse Effect. Any real property  and facilities held under lease by the Company and the Subsidiaries are held by  them under valid, subsisting and enforceable leases (subject to laws of general  application relating to bankruptcy, insolvency, reorganization, moratorium or  other similar laws affecting creditors&rsquo; rights generally and rules of law  governing specific performance, injunctive relief, or other equitable remedies)  with which the Company and the Subsidiaries are in material compliance.</
p>
  <p>(o)    <strong>Intellectual  Property.</strong></p>
  <blockquote>
    <p>(i) The Company or a Subsidiary thereof has the  right to use or is the sole and exclusive owner of all right, title and  interest in and to all material foreign and domestic patents, patent rights,  trademarks, service marks, trade names, brands and copyrights (whether or not  registered and, if applicable, including pending applications for registration)  owned, used or controlled by the Company and its Subsidiaries (collectively,  the &ldquo;<em>Rights</em>&rdquo;) and in and to each  material invention, software, trade secret, technology, product, composition,  formula and method of process used by the Company or its Subsidiaries (the  Rights and such other items, the &ldquo;<em>Intellectual  Property</em>&rdquo;), and, to the Company&rsquo;s knowledge, has the right to use the same,  free and clear of any claim or conflict with the rights of others (subject to  the provisions of any applicable license agreement) except as would not cause a  Material Adverse Effect;</p>
    <p>(ii)
      other than in the ordinary course of business,  no royalties or fees (license or otherwise) are payable by the Company or its  Subsidiaries to any Person by reason of the ownership or use of any of the  Intellectual Property;</p>
    <p>(iii)
      there have been no written claims made against  the Company or its Subsidiaries asserting the invalidity, abuse, misuse, or  unenforceability of any of the Intellectual Property, and, to the best of the Company&rsquo;s  knowledge, there are no reasonable grounds for any such claims which would  cause a Material Adverse Effect;</p>
    <p>(iv)
      neither the Company nor its Subsidiaries have  made any claim of any violation or infringement by others of its rights in the  Intellectual Property, and to the best of the Company&rsquo;s knowledge, no  reasonable grounds for such claims exist; and</p>
    <p>(v)
      neither the Company nor its Subsidiaries have  received written notice that it is in conflict with or infringing upon the  asserted rights of others in connection with the Intellectual Property which  would cause a Material Adverse Effect.</p>
  </blockquote>
  <p>(p) <strong>Insurance.</strong>&nbsp; The Company and the Subsidiaries are insured  by insurers of recognized financial responsibility against such losses and  risks and in such amounts as are prudent and customary in the businesses in  which the Company and the Subsidiaries are engaged, including, but not limited  to, directors and officers insurance coverage in the amount set forth on <u>Schedule  3.1(p)</u> attached hereto. All of the insurance policies of the Company and  its Subsidiaries are in full force and effect and are valid and enforceable in  accordance with their terms, and the Company and its Subsidiaries have complied  with all material terms and conditions thereof. Neither the Company nor any  Subsidiary has any reason to believe that it will not be able to renew its  existing insurance coverage as and when such coverage expires or to obtain  similar coverage from similar insurers as may be necessary to continue its  business without a significant increase in cost.</p>
  <p>(q) <strong>Transactions  With Affiliates and Employees.&nbsp; </strong>Except  as provided in the SEC Reports, none of the officers or directors of the  Company and, to the knowledge of the Company, none of the employees of the  Company is presently a party to any transaction with the Company or any  Subsidiary (other than for services as employees, officers and directors),  including any contract, agreement or other arrangement providing for the  furnishing of services to or by, providing for rental of real or personal property  to or from, or otherwise requiring payments to or from any officer, director or  such employee or, to the knowledge of the Company, any entity in which any  officer, director, or any such employee has a substantial interest or is an  officer, director, trustee or partner, other than (a) for payment of salary or  consulting fees for services rendered, (b) reimbursement for expenses incurred  on behalf of the Company and (c) for other employee benefits, including stock  option a
greements and other stock awards under any equity compensation plan of  the Company.</p>
  <p>(r)    <strong>Internal  Accounting Controls.</strong>&nbsp; The Company is  in material compliance with all provisions of the Sarbanes-Oxley Act of 2002  which are applicable to it as of the Closing Date. The Company and each of the  Subsidiaries maintains a system of internal accounting controls sufficient in  the judgment of the Company&rsquo;s management to provide reasonable assurance that  (i) transactions are executed in accordance with management&rsquo;s general or  specific authorizations, (ii) transactions are recorded as necessary to permit  preparation of financial statements in conformity with GAAP and to maintain  asset accountability, (iii) access to assets is permitted only in accordance  with management&rsquo;s general or specific authorization, and (iv) the recorded  accountability for assets is compared with the existing assets at reasonable  intervals and appropriate action is taken with respect to any differences. The  Company has established disclosure controls and procedures (as d
efined in Exchange  Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure  controls and procedures to ensure that the Company is able to collect the  information that it is required to disclose in the reports it files with the  Commission and to process, summarize and disclose this information in the time  periods specified in the Commission&rsquo;s rules. The Company&rsquo;s certifying officers  have evaluated the effectiveness of the Company&rsquo;s controls and procedures as of  June 30, 2007 (such date,  the &ldquo;<em>Evaluation Date</em>&rdquo;). The Company  presented in its Form 10-QSB for the quarter ended June 30, 2007, the  conclusions of the certifying officers about the effectiveness of the  disclosure controls and procedures based on their evaluations as of the  Evaluation Date. Since the Evaluation Date, there have been no significant  changes in the Company&rsquo;s internal control over financial reporting (as such  term is defined in Exchange Act Rule 13a-15) or, to
 the Company&rsquo;s knowledge, in  other factors that could significantly affect the Company&rsquo;s internal controls.</p>
  <p>(s)    <strong>Certain  Fees.</strong>&nbsp; Except for fees payable to the  Placement Agents, no brokerage or finder&rsquo;s fees or commissions are or will be  payable by the Company to any broker, financial advisor or consultant, finder,  placement agent, investment banker, bank or other Person with respect to the  transactions contemplated by this Agreement. The Purchasers shall have no  obligation with respect to any fees or with respect to any claims made by or on  behalf of other Persons for fees of a type contemplated in this Section that  may be due in connection with the transactions contemplated by this Agreement.</p>
  <p>(t)    <strong>Private  Placement; Integrated Offering.</strong>&nbsp;  Assuming the accuracy of the Purchasers representations and warranties  set forth in Section 3.2, no registration under the Securities Act is required  for the offer and sale of the Securities by the Company to the Purchasers as  contemplated hereby. The issuance and sale of the Securities hereunder does not  contravene the rules and regulations of the Trading Market. Neither the  Company, nor any of its Affiliates, nor any Person acting on its or their  behalf has, directly or indirectly, made any offers or sales of any security or  solicited any offers to buy any security, under circumstances that would cause  this offering of the Securities to be integrated with prior offerings by the  Company for purposes of the Securities Act and would as a result require  registration under the Securities Act or trigger any applicable shareholder  approval provisions, including, without limitation, under the rules and  regulations of any excha
nge or automated quotation system on which any of the  securities of the Company are listed or designated.</p>
  <p>(u)    <strong>Charter,  Bylaws and Corporate Records.&nbsp; </strong>The  minute books of the Company and its Subsidiaries contain in all material  respects complete and accurate records of all meetings and other corporate  actions of the board of directors, committees of the board of directors,  incorporators and stockholders of the Company and its Subsidiaries from the date  of incorporation of each such entity to the date hereof. All material corporate  decisions and actions have been validly made or taken. All corporate books,  including without limitation the share transfer register, comply in all  material respects with applicable laws and regulations and have been regularly  updated.</p>
  <p>(v)    <strong>Registration  Rights.</strong>&nbsp; Except as set forth in  Schedule 3.1(v), no Person has any right to cause the Company to effect the  registration under the Securities Act of any securities of the Company.</p>
  <p>(w)    <strong>Listing  and Maintenance Requirements.</strong>&nbsp; Except  as set forth on Schedule 3(w), the Company has not, in the 12 months preceding  the date hereof, received notice from any Trading Market on which the Common  Stock is or has been listed or quoted to the effect that the Company is not in  compliance with the listing or maintenance requirements of such Trading Market.  The Company is, and has no reason to believe that it will not in the  foreseeable future continue to be, in compliance with all such listing and  maintenance requirements.</p>
  <p>(x)    <strong>Taxes.</strong>&nbsp; All tax returns and tax reports required to  be filed with respect to the income, operations, business or assets of the  Company and its Subsidiaries have been timely filed (or appropriate extensions  have been obtained) with the appropriate governmental agencies in all  jurisdictions in which such returns and reports are required to be filed, and  all of the foregoing as filed are, in all material respects, correct and  complete and, in all material respects, reflect accurately all liability for  taxes of the Company and its Subsidiaries for the periods to which such returns  relate, and all amounts shown as owing thereon have been paid. All income,  profits, franchise, sales, use, value added, occupancy, property, excise,  payroll, withholding, FICA, FUTA and other taxes (including interest and  penalties), if any, collectible or payable by the Company and its Subsidiaries  or relating to or chargeable against any of its material assets, revenues or  income or rela
ting to any employee, independent contractor, creditor,  stockholder or other third party through the Closing Date, were fully collected  and paid by such date if due by such date or provided for by adequate reserves  in the financial statements contained in the SEC Reports as of and for the  periods ended September 30, 2005 (other than taxes accruing after such date)  and all similar items due through the Closing Date will have been fully paid by  that date or provided for by adequate reserves, whether or not any such taxes  were reported or reflected in any tax returns or filings. No taxation authority  has sought to audit the records of the Company or any of its Subsidiaries for  the purpose of verifying or disputing any tax returns, reports or related  information and disclosures provided to such taxation authority, or for the  Company&rsquo;s or any of its Subsidiaries&rsquo; alleged failure to provide any such tax  returns, reports or related information and disclosure. No material claims or  deficienc
ies have been asserted against or inquiries raised with the Company or  any of its Subsidiaries with respect to any taxes or other governmental charges  or levies which have not been paid or otherwise satisfied, including claims  that, or inquiries whether, the Company or any of its Subsidiaries has not  filed a tax return that it was required to file, and, to the best of the  Company&rsquo;s knowledge, there exists no reasonable basis for the making of any  such claims or inquiries. Neither the Company nor any of its Subsidiaries has  waived any restrictions on assessment or collection of taxes or consented to  the extension of any statute of limitations relating to taxation.</p>
  <p>(y)    <strong>Environmental  Matters.</strong>&nbsp; None of the premises or any  properties owned, occupied or leased by the Company or its Subsidiaries (the &ldquo;<em>Premises</em>&rdquo;) has been used by the Company  or the Subsidiaries or, to the Company&rsquo;s knowledge, by any other Person, to  manufacture, treat, store, or dispose of any substance that has been designated  to be a &ldquo;hazardous substance&rdquo; under applicable Environmental Laws (hereinafter  defined) (&ldquo;<em>Hazardous Substances</em>&rdquo;) in  violation of any applicable Environmental Laws. To its knowledge, the Company  has not disposed of, discharged, emitted or released any Hazardous Substances  which would require, under applicable Environmental Laws, remediation,  investigation or similar response activity. No Hazardous Substances are present  as a result of the actions of the Company or, to the Company&rsquo;s knowledge, any  other Person, in, on or under the Premises which would give rise to any  liability o
r clean-up obligations of the Company under applicable Environmental  Laws. The Company and, to the Company&rsquo;s knowledge, any other Person for whose  conduct it may be responsible pursuant to an agreement or by operation of law,  are in compliance with all laws, regulations and other federal, state or local  governmental requirements, and all applicable judgments, orders, writs,  notices, decrees, permits, licenses, approvals, consents or injunctions in  effect on the date of this Agreement relating to the generation, management,  handling, transportation, treatment, disposal, storage, delivery, discharge,  release or emission of any Hazardous Substance (the &ldquo;<em>Environmental Laws</em>&rdquo;). Neither the Company nor, to the Company&rsquo;s  knowledge, any other Person for whose conduct it may be responsible pursuant to  an agreement or by operation of law has received any written complaint, notice,  order, or citation of any actual, threatened or alleged noncompliance with any  of the Environme
ntal Laws, and there is no proceeding, suit or investigation  pending or, to the Company&rsquo;s knowledge, threatened against the Company or, to  the Company&rsquo;s knowledge, any such Person with respect to any violation or  alleged violation of the Environmental Laws, and, to the knowledge of the  Company, there is no basis for the institution of any such proceeding, suit or  investigation.</p>
  <p>(z)    <strong>Disclosure.</strong>&nbsp; The Company confirms that neither the Company  nor any other Person acting on its behalf and at the direction of the Company,  has provided any Purchaser or its agents or counsel with any information that  in the Company&rsquo;s reasonable judgment, at the time such information was  furnished, constitutes or might constitute material, non-public information,  other than information relating to the fact that the Company was considering and  engaged in the transactions contemplated by the Transaction Documents and  unless prior thereto such Purchaser shall have consented in writing to the  receipt of such information. The Company understands and confirms that the  Purchasers will rely on the foregoing representations and covenants in  effecting transactions in securities of the Company. All disclosure provided to  the Purchasers regarding the Company, its business and the transactions  contemplated hereby, including the Disclosure Schedules to this Agreement,  fur
nished by or on behalf of the Company are true and correct in all material  respects and do not contain any untrue statement of a material fact or omit to  state any material fact necessary in order to make the statements made therein,  in light of the circumstances under which they were made, not misleading.</p>
  <p>(aa) <strong>No  Additional Representations.</strong>&nbsp; Each  Purchaser acknowledges and agrees that the Company does not make and has not  made any representations or warranties with respect to the transactions contemplated  hereby other than those specifically set forth in this Section 3.1 or in any  Transaction Document.</p>
  <p>(bb)    <strong>Poison  Pill.</strong>&nbsp; The Company and its Board of  Directors have taken all necessary action, if any, in order to render  inapplicable any control share acquisition, business combination, poison pill  (including any distribution under a rights agreement) or other similar  anti-takeover provision under the Company&rsquo;s Certificate of Incorporation (or  similar charter documents) or the laws of its state of incorporation that is or  could become applicable to the Purchasers as a result of the Purchasers and the  Company fulfilling their obligations or exercising their rights under this  Agreement and the Transaction Documents, including without limitation the  Company&rsquo;s issuance of the Securities and the Purchasers&rsquo; ownership of the  Securities.</p>
  <p>(cc)    <strong>Solvency.</strong>&nbsp; Based on the consolidated financial condition  of the Company as of the Closing Date after giving effect to the receipt by the  Company of the proceeds from the sale of the Securities hereunder, (i) the fair  saleable value of the Company&rsquo;s assets exceeds the amount that will be required  to be paid on or in respect of the Company&rsquo;s existing debts and other  liabilities (including known contingent liabilities) as they mature, (ii) the  Company&rsquo;s assets do not constitute unreasonably small capital to carry on its  business as now conducted and as proposed to be conducted including its capital  needs taking into account the particular capital requirements of the business  conducted by the Company, and projected capital requirements and capital  availability thereof, and (iii) the current cash flow of the Company, together  with the proceeds the Company would receive, were it to liquidate all of its  assets, after taking into account all anticipate
d uses of the cash, would be  sufficient to pay all amounts on or in respect of its liabilities when such  amounts are required to be paid. The Company does not intend to incur debts  beyond its ability to pay such debts as they mature (taking into account the  timing and amounts of cash to be payable on or in respect of its debt). The  Company has no knowledge of any facts or circumstances which lead it to believe  that it will file for reorganization or liquidation under the bankruptcy or  reorganization laws of any jurisdiction within one year from the Closing Date. <u>Schedule  3.1(cc)</u> sets forth as of the date hereof all outstanding secured and  unsecured Indebtedness of the Company or any Subsidiary, or for which the  Company or any Subsidiary has commitments. For the purposes of this Agreement,  &ldquo;<u>Indebtedness</u>&rdquo; means (a) any liabilities for borrowed money or amounts  owed in excess of $50,000 (other than trade accounts payable incurred in the  ordinary course of business), (b) al
l guaranties, endorsements and other  contingent obligations in respect of indebtedness of others, whether or not the  same are or should be reflected in the Company&rsquo;s balance sheet (or the notes  thereto), except guaranties by endorsement of negotiable instruments for  deposit or collection or similar transactions in the ordinary course of  business; and (c) the present value of any lease payments in excess of $50,000  due under leases required to be capitalized in accordance with GAAP. Neither  the Company nor any Subsidiary is in default with respect to any Indebtedness.</p>
  <p>(dd)    <strong>Accountants.</strong>&nbsp; The Company&rsquo;s accounting firm is set forth on <u>Schedule 3.1(dd)</u> of the Disclosure Schedule. To the knowledge and belief  of the Company, such accounting firm (i) is a registered public accounting firm  as required by the Exchange Act and (ii) shall express its opinion with respect  to the financial statements to be included in the Company&rsquo;s Annual Report for  the year ending December 31, 2007.</p>
  <p>(ee)    <strong>Seniority.</strong>&nbsp; As of the Closing Date, no Indebtedness or  other claim against the Company is senior to the Preferred Stock in right of  payment, whether with respect to interest or upon liquidation or dissolution,  or otherwise, other than indebtedness secured by purchase money security  interests (which is senior only as to underlying assets covered thereby) and  capital lease obligations (which is senior only as to the property covered  thereby).</p>
  <p>(ff)    <strong>No  Disagreements with Accountants and Lawyers.</strong>&nbsp;  There are no disagreements of any kind presently existing, or reasonably  anticipated by the Company to arise, between the Company and the accountants  and lawyers formerly or presently employed by the Company and the Company is  current with respect to any fees owed to its accountants and lawyers which  could affect the Company&rsquo;s ability to perform any of its obligations under any  of the Transaction Documents.</p>
  <p>(gg)    <strong>Acknowledgment  Regarding Purchasers&rsquo; Purchase of Securities.</strong>&nbsp; The Company acknowledges and agrees that each  of the Purchasers is acting solely in the capacity of an arm&rsquo;s length purchaser  with respect to the Transaction Documents and the transactions contemplated  thereby. The Company further acknowledges that no Purchaser is acting as a  financial advisor or fiduciary of the Company (or in any similar capacity) with  respect to the Transaction Documents and the transactions contemplated thereby  and any advice given by any Purchaser or any of their respective  representatives or agents in connection with the Transaction Documents and the  transactions contemplated thereby is merely incidental to the Purchasers&rsquo;  purchase of the Securities. The Company further represents to each Purchaser  that the Company&rsquo;s decision to enter into this Agreement and the other  Transaction Documents has been based solely on the independent evaluation of  the transa
ctions contemplated hereby by the Company and its representatives.</p>
  <p>(hh)    <strong>Acknowledgement  Regarding Purchasers&rsquo; Trading Activity.</strong>&nbsp;  Notwithstanding anything in this Agreement or elsewhere herein to the  contrary, it is understood and acknowledged by the Company that (i) none of the  Purchasers has been asked to agree by the Company, nor has any Purchaser  agreed, to desist from purchasing or selling, long and/or short, securities of  the Company, or &ldquo;derivative&rdquo; securities based on securities issued by the  Company or to hold the Securities for any specified term, (ii) past or future  open market or other transactions by any Purchaser, specifically including,  without limitation, Short Sales or &ldquo;derivative&rdquo; transactions, before or after  the closing of this or future private placement transactions, may negatively  impact the market price of the Company&rsquo;s publicly-traded securities, (iii) any  Purchaser, and counter-parties in &ldquo;derivative&rdquo; transactions to which any such  Purchaser is a party, direct
ly or indirectly, may presently have a &ldquo;short&rdquo;  position in the Common Stock; and (iv) each Purchaser shall not be deemed to  have any affiliation with or control over any arm&rsquo;s length counter-party in any  &ldquo;derivative&rdquo; transaction. The Company further understands and acknowledges that  (a) one or more Purchasers may engage in hedging activities at various times  during the period that the Securities are outstanding, including, without  limitation, during the periods that the value of the Underlying Shares  deliverable with respect to Securities are being determined, and (b) such  hedging activities Of any) could reduce the value of the existing stockholders&rsquo;  equity interests in the Company at and after the time that the hedging  activities are being conducted. The Company acknowledges that such aforementioned  hedging activities do not constitute a breach of any of the Transaction  Documents.</p>
  <p>(ii)    <strong>Regulation  M Compliance.</strong>&nbsp; The Company has not,  and to its knowledge no one acting on its behalf has, (i) taken, directly or  indirectly, any action designed to cause or to result in the stabilization or  manipulation of the price of any security of the Company to facilitate the sale  or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any  compensation for soliciting purchases of, any of the securities of the Company,  or (iii) paid or agreed to pay to any Person any compensation for soliciting  another to purchase any other securities of the Company, other than, in the  case of clauses (ii) and (iii), compensation paid to the Company&rsquo;s placement  agent in connection with the placement of the Securities.</p>
  <p>(jj)    <strong>No  General Solicitation.</strong>&nbsp; Neither the  Company nor any person acting on behalf of the Company has offered or sold any  of the Securities by any form of general solicitation or general advertising.  The Company has offered the Securities for sale only to the Purchasers and  certain other &ldquo;accredited investors&rdquo; within the meaning of Rule 501 under the  Securities Act.</p>
  <p>(kk)    <strong>Investment  Company.</strong>&nbsp; The Company is not, and is  not an Affiliate of, and immediately after receipt of payment for the  Securities, will not be or be an Affiliate of, an &ldquo;investment company&rdquo; within  the meaning of the Investment Company Act of 1940, as amended. The Company  shall conduct its business in a manner so that it will not become subject to  the Investment Company Act of 1940, as amended.</p>
</blockquote>
<p><strong>3.2 <u>Representations and Warranties of the  Purchasers</u>.</strong> <br />
Each Purchaser hereby, for itself and for no other  Purchaser, represents and warrants as of the date hereof and as of the Closing  Date to the Company as follows:</p>
<blockquote>
  <p>(a) Organization; Authority; Enforceability. Such  Purchaser (other than individuals) is an entity duly organized, validly  existing and in good standing under the laws of the jurisdiction of its  organization with full power and authority to enter into and to consummate the  transactions contemplated by the Transaction Documents and otherwise to carry  out its obligations thereunder. The execution, delivery and performance by such  Purchaser of the transactions contemplated by this Agreement has been duly  authorized by all necessary corporate or similar action on the part of such  Purchaser. Each Transaction Document to which it is a party has been duly  executed by such Purchaser, and when delivered by such Purchaser in accordance  with the terms hereof, will constitute the valid and legally binding obligation  of such Purchaser, enforceable against it in accordance with its terms, subject  to laws of general application relating to bankruptcy, insolvency,  reorganization, moratorium or other similar
 laws affecting creditors&rsquo; rights  generally and rules of law governing specific performance, injunctive relief,  or other equitable remedies.</p>
  <p>(b)
    General Solicitation. Such Purchaser is not  purchasing the Securities as a result of any advertisement, article, notice or  other communication regarding the Securities published in any newspaper,  magazine or similar media or broadcast over television or radio or presented at  any seminar or any other general solicitation or general advertisement.</p>
  <p>(c)
    No Public Sale or Distribution. Such Purchaser  is (i) acquiring the Preferred Shares and Warrants and (ii) upon conversion of  the Preferred Stock will acquire the Conversion Shares and upon exercise of the  Warrants will acquire the Warrant Shares, as applicable, for its own account  and not with a view towards, or for resale in connection with, the public sale  or distribution thereof; provided, however, that by making the representations  herein, such Purchaser does not agree to hold any of the Securities for any  minimum or other specific term and reserves the right to dispose of the  Securities at any time in accordance with or pursuant to a registration  statement or an exemption under the Securities Act. Such Purchaser is acquiring  the Securities hereunder in the ordinary course of its business. Such Purchaser  does not have any agreement or understanding, directly or indirectly, with any  Person to distribute any of the Securities.</p>
  <p>(d)
    Accredited Investor Status. Such Purchaser is an  &ldquo;accredited investor&rdquo; as that term is defined in Rule 501(a) of Regulation D.<br />
  </p>
  <p>(e) Residency. Such Purchaser is a resident of the  jurisdiction set forth below such Purchaser&rsquo;s name on <u>Schedule 1</u> attached hereto.<br />
  </p>
  <p>(f) Reliance on Exemptions. Such Purchaser  understands that the Preferred Shares and Warrants are being offered and sold  to it in reliance on specific exemptions from the registration requirements of  United States federal and state securities laws and that the Company is relying  in part upon the truth and accuracy of, and such Purchaser&rsquo;s compliance with,  the representations, warranties, agreements, acknowledgments and understandings  of such Purchaser set forth herein in order to determine the availability of  such exemptions and the eligibility of such Purchaser to acquire the Preferred  Shares and Warrants.<br />
  </p>
  <p>(g) Information. Such Purchaser and its advisors, if  any, have been furnished with all publicly available materials (or such  materials have been made available to such Purchaser) relating to the business,  finances and operations of the Company and such other publicly available  materials relating to the offer and sale of the Preferred Shares and Warrants  as have been requested by such Purchaser, including without limitation the  Company&rsquo;s Form 10-KSB for the period ended December 31, 2006, Forms 10-QSB for  the periods ended March 31, 2007 and June 30, 2007 and Forms 8-K filed by the  Company since January 1, 2007. Each Purchaser acknowledges that it has read and  understands the risk factors set forth in such Form 10-KSB, Forms 10-QSB and  Forms 8-K. Neither such review nor any other due diligence investigations  conducted by such Purchaser or its advisors, if any, or its representatives  shall modify, amend or affect such Purchaser&rsquo;s right to rely on the Company&rsquo;s  representation
s and warranties contained herein. Such Purchaser understands  that its investment in the Preferred Shares and Warrants involves a high degree  of risk.</p>
  <p>(h) No Governmental Review. Such Purchaser  understands that no United States federal or state agency or any other  government or governmental agency has passed on or made any recommendation or  endorsement of the Preferred Shares and Warrants or the fairness or suitability  of the investment in the Preferred Shares and Warrants, nor have such  authorities passed upon or endorsed the merits of the offering of the Preferred  Shares and Warrants.</p>
  <p>(i) Experience of Such Purchaser. Such Purchaser,  either alone or together with its representatives, has such knowledge,  sophistication and experience in business and financial matters, including  investing in companies engaged in the business in which the Company is engaged,  so as to be capable of evaluating the merits and risks of the prospective  investment in the Preferred Shares and Warrants, and has so evaluated the  merits and risks of such investment. Such Purchaser is able to bear the  economic risk of an investment in the Preferred Shares and Warrants and, at the  present time, is able to afford a complete loss of such investment.</p>
  <p>The Company acknowledges and agrees that each Purchaser  does not make or has not made any representations or warranties with respect to  the transactions contemplated hereby other than those specifically set forth in  this Section 3.2.</p>
</blockquote>
<p align="center"><strong>ARTICLE IV </strong></p>
<p align="center"><strong>OTHER AGREEMENTS OF THE PARTIES </strong></p>
<p align="left"><strong>  4.1.	Transfer Restrictions.</strong></p>
<blockquote>
  <p align="left"> (a)	The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement, to the Company, to an Affiliate of a Purchaser (who is an accredited investor and executes a customary representation letter) or in connection with a pledge as contemplated in Section 4.1 (b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably satisfactory to the Company (it being understood that Wiggin and Dana LLP is reasonably satisfactory), the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act, provided, however, that in the case of a transfer pursuant to Rule 144, no opinion shall be required if the transferor provides the Company with a customary se
ller&rsquo;s representation letter, and if such sale is not pursuant to subsection (k) of Rule 144, a customary broker&rsquo;s representation letter and a Form 144. Any such transferee that agrees in writing to be bound by the terms of this Agreement and the Investor Rights Agreement shall have the rights of a Purchaser under this Agreement and the Investor Rights Agreement. Except as required by federal securities laws and the securities law of any state or other jurisdiction within the United States, the Securities may be transferred, in whole or in part, by any of the Purchasers at any time. The Company shall reissue certificates evidencing the Securities upon surrender of certificates evidencing the Securities being transferred in accordance with this Section 4.1(a).</p>
  <p align="left">  (b)	The Purchasers agree to the imprinting, so long as is required by this Section 4.1(6), of a legend on any of the Securities in substantially the following form:</p>
  <p align="left"> THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &ldquo;SECURITIES ACT&rdquo;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, SUCH COUNSEL AND THE SUBSTANCE OF SUCH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. UNLESS PROHIBITED BY APPLICABLE LAW, RULE OR REGULATION, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN &ldquo;ACCREDITED INVESTOR&rdquo; AS DEFIN
ED IN RULE 501(a) UNDER THE SECURITIES ACT.</p>
  <p align="left">    The Company acknowledges and agrees that, unless prohibited by applicable law, rule or regulation, a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an &ldquo;accredited investor&rdquo; as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith; provided, however, that such Purchaser shall provide the Company with such documentation as is reasonably requested by the Company to ensure that the pledge is pursuant to a bona fide margin agreement with a registered broker-dealer or a security interest in 
some or all of the Securities to a financial institution that is an &ldquo;accredited investor&rdquo; as defined in Rule 501(a) under the Securities Act. The Company will execute and deliver such documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(6)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.</p>
  <p align="left">(c)	Certificates evidencing the Conversion Shares and the Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(6) hereof): (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any shares of Preferred Stock or any portion of a Warrant is converted or exercised (as applicable) at a time when there is an effective registration
 statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k) or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Trading Day, the &ldquo;Legend Removal Date&rdquo;), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent t
hat enlarge the restrictions on transfer set forth in this Section. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser&rsquo;s prime broker with the Depository Trust Company System as directed by such Purchaser.</p>
  <p align="left">    (d)	In addition to such Purchaser&rsquo;s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day 5 Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend.  Nothing herein shall limit such Purchaser&rsquo;s right to pursue actual damages for the Company&rsquo;s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.</
p>
  <p align="left">    (e)	Each Purchaser, severally and not jointly, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company&rsquo;s reliance on, and the Purchaser&rsquo;s agreement that, and each Purchaser hereby agrees that, the Purchaser will not sell any Securities except pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.</p>
</blockquote>
<p align="left"><strong>4.2.	Furnishing of Information.</strong></p>
<p align="left">  As long as any Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  Upon the request of any such holder of Securities, the Company shall deliver to such holder a written certification of a duly authorized officer as to whether it has complied with the preceding sentence.  As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c), such information as is required for the Purchasers to sell the Securities under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell such Securities without
 registration under the Securities Act within the limitation of the exemptions provided by Rule 144.</p>
<p align="left">  <strong>4.3.	Integration.</strong></p>
<p align="left">The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market.</p>
<p align="left"><strong>4.4.	Publicity.</strong></p>
<p align="left">  The Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and within two Business Days following the Closing Date, file a Current Report on Form 8-K, disclosing the transactions contemplated hereby and make such other filings and notices in the manner and time required by the Commission.  The Company and the Placement Agents shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser nor any of the Placement Agents shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser or any of the Placement Agents, or without the prior consent of the Placement Agents, with respect to any press release of the Company, except if such disclosure is require
d by applicable law, rule or regulation, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.</p>
<p align="left"><strong>  4.5.	Non-Public Information.</strong></p>
<p align="left">  The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.</p>
<p align="left">  <strong>4.6.	Use of Proceeds.</strong></p>
<p align="left">The Company covenants and agrees that the proceeds from the sale of the Preferred Stock and Warrants shall be used by the Company for working capital and general corporate purposes; under no circumstances shall any portion of the proceeds be applied to:</p>
<blockquote>
  <p align="left">(i)	accelerated repayment of debt existing on the date hereof (other than payment of trade payables in the ordinary course of the Company&rsquo;s business and consistent with prior practices);</p>
  <p align="left">    (ii)	the payment of dividends or other distributions on any capital stock of the Company;</p>
  <p align="left">    (iii)	the purchase of debt or equity securities of any Person for cash, including the Company and its Subsidiaries, except in connection with investment of excess cash in high quality (Al/Pl or better) money market instruments having maturities of one year or less;</p>
  <p align="left">    (iv)	any expenditure not directly related to the business of the Company; or</p>
  <p align="left">    (v)	the redemption of any Company equity or equity-equivalent securities. </p>
</blockquote>
<p align="left"><strong>4.7.	Reservation of Preferred Stock and Common Stock.</strong></p>
<p align="left">  As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of (a) Preferred Stock for the purpose of enabling the Company to issue Preferred Shares pursuant to this Agreement and (b) Common Stock for the purpose of enabling the Company to issue Conversion Shares issuable upon conversion of the Preferred Stock and Warrant Shares issuable upon exercise of the Warrants.  If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock plus the number of shares of authorized but unissued Common Stock reserved for issuance upon conversion of the Preferred Stock and exercise of the Warrants is less than 130% of (i) the Required Minimum on such date, minus (ii) the number of shares of Common Stock previously issued pursuant to the Transaction Documents, then the Board of Directors shall use commercially reasonable efforts to amend the Comp
any&rsquo;s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time (minus the number of shares of Common Stock previously issued pursuant to the Transaction Documents), as soon as possible and in any event not later than the 75th day after such date; provided that the Company will not be required at any time to authorize a number of shares of Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued after such time pursuant to the Transaction Documents.</p>
<p align="left"><strong>  4.8.	Listing of Common Stock.</strong></p>
<p align="left">  The Company hereby agrees that, from time to time, if the Company applies to have the Common Stock traded on any Trading Market, it will include in such application the Conversion Shares and the Warrant Shares, and will take such other action as is necessary to cause the Conversion Shares and Warrant Shares to be listed on such Trading Market as promptly as possible.</p>
<p align="left"><strong>  4.9.	Business Operations.  </strong></p>
<p align="left">Until the earlier of (i) the third anniversary of the Closing Date and (ii) the date that the Purchasers own less than 10% of the Preferred Shares originally issued pursuant to this Agreement or Conversion Shares issuable upon conversion thereof, the Company shall comply with the following covenants:</p>
<blockquote>
  <p align="left">  (a)	<strong>Insurance</strong>.  The Company and its Subsidiaries shall maintain insurance policies such that the representations contained in the first sentence of Section 3.1(p) hereof continue to be true and correct and shall, from time to time upon the written request of the Purchasers, promptly furnish or cause to be furnished to the Purchasers evidence, in form and substance reasonably satisfactory to the Purchasers, of the maintenance of all insurance maintained by it.</p>
  <p align="left">    (b)	<strong>Corporate Existence; Licenses</strong>.  The Company shall preserve and maintain and cause its Subsidiaries to preserve and maintain their corporate existence and good standing in the jurisdiction of their incorporation and the rights, privileges and franchises of the Company and its Subsidiaries (except, in each case, in the event of a merger or consolidation in which the Company or its Subsidiaries, as applicable, is not the surviving entity) in each case where the failure to so preserve or maintain could have a Material Adverse Effect on the financial condition, business or operations of the Company and its Subsidiaries taken as a whole. The Company shall, and shall cause its Subsidiaries to, maintain at all times all material licenses or permits necessary to the conduct of its business and as required by any governmental agency or instrumentality thereof, including without limitation all Food and Drug Administration clearances and approvals.</p>
  <p align="left">    (c)	<strong>Taxes and Claims</strong>.  The Company and its Subsidiaries shall duly pay and discharge (a) all taxes, assessments and governmental charges upon or against the Company or its properties or assets prior to the date on which penalties attach thereto, unless and to the extent that such taxes are being diligently contested in good faith and by appropriate proceedings, and appropriate reserves therefor have been established, and (b) all lawful claims, whether for labor, materials, supplies, services or anything else which might or could, if unpaid, become a lien or charge upon the properties or assets of the Company or its Subsidiaries, unless and to the extent only that the same are being contested in good faith and by appropriate proceedings and appropriate reserves therefor have been established.</p>
  <p align="left">    (d)	<strong>Affiliate Transactions</strong>.  Except for transactions approved by the Company&rsquo;s Audit Committee or a majority of the disinterested members of the board of directors of the Company, neither the Company nor any of its Subsidiaries shall enter into any transaction with any (i) director, officer, employee or holder of more than 5% of the outstanding capital stock of any class or series of capital stock of the Company or any of its Subsidiaries, (ii) member of the immediate family of any such person, or (iii) corporation, partnership, trust or other entity in which any such person, or member of the immediate family of any such person, is a director, officer, trustee, partner or holder of more than 5% of the outstanding capital stock thereof.</p>
</blockquote>
<p align="left"><strong> 4.10.	Securities Law Compliance.</strong></p>
<blockquote>
  <p align="left">  (a)	<strong>Securities Act</strong>.  The Company shall timely prepare and file with the Securities and Exchange Commission the form of notice of the sale of securities pursuant to the requirements of Regulation D regarding the sale of the Preferred Stock and Warrants under this Agreement.</p>
  <p align="left">    (b)	<strong>State Securities Law Compliance</strong> &mdash; Sale.  The Company shall timely prepare and file such applications, consents to service of process (but not including a general consent to service of process) and similar documents and take such other steps and perform such further acts as shall be required by the state securities law requirements of each jurisdiction where a Purchaser resides, as indicated on Schedule 1, with respect to the sale of the Preferred Stock and Warrants under this Agreement.</p>
  <p align="left">    (c)	<strong>State Securities Law Compliance</strong> &mdash; Resale.  Beginning no later than 30 days following any date, from time to time, on which the Common Stock is no longer a&rdquo;covered security&rdquo; under Section 18(b)(1)(A) of the Securities Act and continuing until either (i) the Purchasers have sold all of their Conversion Shares and Warrant Shares under a registration statement pursuant to the Investor Rights Agreement or (ii) the Common Stock becomes a &ldquo;covered security&rdquo; under Section 18(b)(1)(A) of the Securities Act, the Company shall maintain within either Moody&rsquo;s Industrial Manual or Standard and Poor&rsquo;s Standard Corporation Descriptions (or any successors to these manuals which are similarly qualified as &ldquo;recognized securities manuals&rdquo; under state Blue Sky laws) an updated listing containing (i) the names of the officers and directors of the Company, (ii) a balance sheet of the Company as of a date that is at no time older than e
ighteen months and (iii) a profit and loss statement of the Company for either the preceding fiscal year or the most recent year of operations.</p>
</blockquote>
<p align="left"><strong>  4.11.	Poison Pill.  </strong></p>
<p align="left">From time to time, for as long as any Purchaser holds any Securities, the Company and its Board of Directors shall take all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company&rsquo;s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under this Agreement and the Transaction Documents, including without limitation the Company&rsquo;s issuance of the Securities and the Purchasers&rsquo; ownership of the Securities.</p>
<p align="left"><strong>  4.12.	Surrender of Promissory Notes.  </strong></p>
<p align="left">Each Purchaser surrendering Promissory Notes for cancellation in payment of any portion of such Purchaser&rsquo;s Subscription Amount that does not deliver such original Promissory Notes to the Company prior to the Closing, hereby covenants to deliver such original Promissory Notes to the Company as soon as practicable following the Closing Date.</p>
<p align="left"><strong>  4.13.	Subsequent ui Sales.</strong></p>
<blockquote>
  <p align="left">  (a)	From the date hereof until 45 days after the Effective Date, neither the Company nor any Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided, however, the 45 day period set forth in this Section 4.13 shall be extended for the number of Trading Days during such period in which (i) trading in the Common Stock is suspended by any Trading Market, or (ii) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Underlying Shares; provided, however that the Company may issue shares of Common Stock or Common Stock Equivalents, with an aggregate purchase price not to exceed $15,000,000 (including the purchase price of the Securities sold pursuant to this Agreement) and on terms that are no less favorable to the Company than the terms of the transactions contemplated by this Agreement, at any time from the date hereof until the date t
hat the Initial Registration Statement (as defined in the Investor Rights Agreement) is filed.</p>
  <p align="left">    (b)	From the date hereof until such time as no Purchaser holds any of the Securities, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a Variable Rate Transaction. &ldquo;Variable Rate Transaction&rdquo; means a transaction in which the Company issues or sells (i) any debtor equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debtor equity security or upon the occurrence of specified or contingent events directly or indirectly related to the bus
iness of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.</p>
</blockquote>
<p align="left"><strong>  4.14.	Equal Treatment of Purchasers.  </strong></p>
<p align="left">No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in anyway be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.</p>
<p align="center"><strong>ARTICLE V </strong></p>
<p align="center"><strong>INDEMNIFICATION, TERMINATION AND DAMAGES</strong></p>
<p align="left"><strong>5.1.	Survival of Representations.</strong></p>
<p align="left">  Except as otherwise provided herein, the representations and warranties of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing Date and shall continue in full force and effect for a period of three (3) years from the Closing Date. The Company&rsquo;s and the Purchasers&rsquo; warranties and representations shall in no way be affected or diminished in any way by any investigation of (or failure to investigate) the subject matter thereof made by or on behalf of the Company or the Purchasers.</p>
<p align="left"><strong>5.2.	Indemnification.</strong></p>
<p align="left">  The Company agrees to indemnify and hold harmless the Purchasers, their Affiliates, each of their officers, directors, employees and agents and their respective successors and assigns, from and against any losses, damages, or expenses which are caused by or arise out of (i) any breach or default in the performance by the Company of any covenant or agreement made by the Company in this Agreement or in any of the Transaction Documents; (ii) any breach of warranty or representation made by the Company in this Agreement or in any of the Transaction Documents; (iii) any and all third party actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to any of the foregoing; and/or(iv) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Tr
ansaction Documents (unless such action is based upon a breach of such Purchaser&rsquo;s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).</p>
<p align="left"><strong>  5.3.	Indemnity Procedure.</strong></p>
<p align="left">  A party or parties hereto agreeing to be responsible for or to indemnify against any matter pursuant to this Agreement is referred to herein as the &ldquo;Indemnifying Party&rdquo; and the other party or parties claiming indemnity is referred to as the &ldquo;Indemnified Party&rdquo;. An Indemnified Party under this Agreement shall, with respect to claims asserted against such party by any third party, give written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity under this Agreement within sixty (60) Business Days of the receipt of any written claim from any such third party, but not later than twenty (20) days prior to the date any answer or responsive pleading is due, and with respect to other matters for which the Indemnified Party may seek indemnification, give prompt written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity; provided, however, that any failure to give such notice will not wa
ive any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are materially prejudiced.<br />
The Indemnifying Party shall have the right, at its election, to take over the defense or settlement of such claim by giving written notice to the Indemnified Party at least fifteen (15) days prior to the time when an answer or other responsive pleading or notice with respect thereto is required. If the Indemnifying Party makes such election, it may conduct the defense of such claim through counsel of its choosing (subject to the Indemnified Party&rsquo;s approval of such counsel, which approval shall not be unreasonably withheld or delayed), shall be solely responsible for the expenses of such defense and shall be bound by the results of its defense or settlement of the claim. The Indemnifying Party shall not settle any such claim without prior notice to and consultation with the Indemnified Party, and no such settlement involving any equitable relief or which might have an adverse effect on the Indemnified Party may be agreed to without the written consent of the Indemnified Party (which consent shall not 
be unreasonably withheld or delayed). So long as the Indemnifying Party is diligently contesting any such claim in good faith, the Indemnified Party may pay or settle such claim only at its own expense and the Indemnifying Party will not be responsible for the fees of separate legal counsel to the Indemnified Party, unless the named parties to any proceeding include both parties or representation of both parties by the same counsel would be inappropriate in the reasonable opinion of counsel to the Indemnified Party, due to conflicts of interest or otherwise. If the Indemnifying Party does not make such election, or having made such election does not, in the reasonable opinion of the Indemnified Party proceed diligently to defend such claim, then the Indemnified Party may (after written notice to the Indemnifying Party), at the expense of the Indemnifying Party, elect to take over the defense of and proceed to handle such claim in its discretion and the Indemnifying Party shall be bound by any defense or sett
lement that the Indemnified Party may make in good faith with respect to such claim. In connection therewith, the Indemnifying Party will fully cooperate with the Indemnified Party should the Indemnified Party elect to take over the defense of any such claim. The parties agree to cooperate in defending such third party claims and the Indemnified Party shall provide such cooperation and such access to its books, records and properties (subject to the execution of appropriate non-disclosure agreements) as the Indemnifying Party shall reasonably request with respect to any matter for which indemnification is sought hereunder; and the parties hereto agree to cooperate with each other in order to ensure the proper and adequate defense thereof.</p>
<p align="left">  With regard to claims of third parties for which indemnification is payable hereunder, such indemnification shall be paid by the Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment against the Indemnified Party and the expiration of any applicable appeal period, or if earlier, five (5) days prior to the date that the judgment creditor has the right to execute the judgment; (ii) the entry of an unappealable judgment or final appellate decision against the Indemnified Party; or (iii) a settlement of the claim. Notwithstanding the foregoing, the reasonable expenses of counsel to the Indemnified Party shall be reimbursed on a current basis by the Indemnifying Party. With regard to other claims for which indemnification is payable hereunder, such indemnification shall be paid promptly by the Indemnifying Party upon demand by the Indemnified Party.</p>
<p align="left">&nbsp;</p>
<p align="center"><strong>ARTICLE VI</strong></p>
<p align="center"><strong>MISCELLANEOUS </strong></p>
<p align="left"><strong>6.1.	Fees and Expenses.</strong></p>
<p align="left">  The Company shall be responsible for the payment of the Purchasers&rsquo; reasonable and documented legal fees and other third-party expenses relating to the preparation, negotiation and execution of this Agreement and the Transaction Documents and the consummation of the transactions contemplated herein.</p>
<p align="left"><strong>  6.2.	Entire Agreement.</strong></p>
<p align="left">  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.</p>
<p align="left"><strong>  6.3.	Notices.</strong></p>
<p align="left">  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature pages attached hereto prior to 5:00 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number on the signature pages attached hereto on a day that is not a Trading Day or later than 5:00 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:</p>
<p align="left">  If to the Purchasers, at each Purchaser&rsquo;s address set forth under its name on Schedule 1 attached hereto, or with respect to the Company, addressed to:</p>
<blockquote>
  <p align="left">  Access Pharmaceuticals, Inc.<br />
    2600 Stemmons Freeway, Suite 176<br />
    Dallas, Texas 75207<br />
    Attention: President<br />
    Facsimile No.: (214) 905-5101</p>
</blockquote>
<p align="left">  or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice. Copies of notices to the Company shall be sent to:</p>
<blockquote>
  <p align="left">  Bingham McCutchen LLP<br />
    150 Federal Street<br />
    Boston, Massachusetts 02110 <br />
    Attention: John J. Concannon, III <br />
    Facsimile No.: (617) 951-8736</p>
</blockquote>
<p align="left">  Copies of notices to any Purchaser shall be sent to the addresses, if any, listed on Schedule 1 attached hereto.</p>
<p align="left"><strong>  6.4.	Amendments; Waivers.</strong></p>
<p align="left">  No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding 66% in interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought; provided, however that any such amendment or waiver that has a disproportionately adverse effect on any Purchaser shall require the consent of such Purchaser. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.</p>
<p align="left"><strong>  6.5.	Construction.</strong></p>
<p align="left">  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.</p>
<p align="left"><strong>  6.6.	Successors and Assigns.</strong></p>
<p align="left">  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser. Any Purchaser may assign any or all of its rights under this Agreement to any Person, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the Purchasers.</p>
<p align="left"><strong>  6.7.	No Third-Party Beneficiaries.</strong></p>
<p align="left">  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Article V.</p>
<p align="left"><strong>  6.8.	Governing Law.</strong></p>
<p align="left">  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof</p>
<p align="left"><strong>  6.9.	Jurisdiction; Venue; Service of Process.</strong></p>
<p align="left">  This Agreement shall be subject to the exclusive jurisdiction of the Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York. The parties to this Agreement agree that any breach of any term or condition of this Agreement shall be deemed to be a breach occurring in the State of New York by virtue of a failure to perform an act required to be performed in the State of New York and irrevocably and expressly agree to submit to the jurisdiction of the Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceedi
ng arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in New York County, New York, and further irrevocably waive any claim that any suit, action or proceeding brought in Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York has been brought in an inconvenient forum. Each of the parties hereto consents to process being served in any such suit, action or proceeding, by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 6.9 shall affect or limit any right to serve process in any other manner permitted by law.</p>
<p align="left"><strong>  6.10.	Execution.</strong></p>
<p align="left">  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.</p>
<p align="left"><strong>  6.11.	Severability.</strong></p>
<p align="left">  If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in anyway be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.</p>
<p align="left"><strong>  6.12.	Replacement of Securities.</strong></p>
<p align="left">  If any certificate or instrument evidencing any of the Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (but no bond shall be required), if requested by the Company.</p>
<p align="left"><strong>  6.13.	Remedies.</strong></p>
<p align="left">  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.</p>
<p align="left"><strong>  6.14.	Payment Set Aside.</strong></p>
<p align="left">  To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall, to the extent permissible under applicable law, be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.</p>
<p align="left"><strong> 6.15.	Independent Nature of Purchasers&rsquo; Obligations and Rights.</strong></p>
<p align="left">  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, ajoint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding f
or such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience only, Purchasers and their respective counsel have chosen to communicate with the Company through Wiggin and Dana LLP, but such counsel does not represent any of the Purchasers in this transaction other than SCO Capital Partners LLC. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers.</p>
<p align="left"><strong>  6.16.	Waiver of Trial by Jury.</strong></p>
<p align="left">  THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.</p>
<p align="left"><strong>  6.17.	Further Assurances.</strong></p>
<p align="left">  Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances as may be reasonably requested by any other party to better evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this Agreement, and further agrees to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable law to consummate and make effective the transactions contemplated hereby, to obtain all necessary waivers, consents and approvals, to effect all necessary registrations and filings, and to remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate and make effective the transactions contemplated by this Agreement for the purpose of securing to the parties hereto the benefits contemplated by this Agreement.</p>
<p align="left"><strong>  6.18.	Termination.  </strong></p>
<p align="left">This Agreement may be terminated by any Purchaser, as to such Purchaser&rsquo;s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before the fifth business day following the date hereof; provided, however, that such termination will not affect the right of any party to sue for any breach by the other party (or parties).</p>
<p align="left">&nbsp;</p>
<p>IN WITNESS WHEREOF, the parties hereto have executed this  Agreement as of the date first above written.<br />
  COMPANY:</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <p>ACCESS PHARMACEUTICALS, INC.</p>
            <p>&nbsp;</p>
            <p>By: <u>/S/ Stephen R. Seiler</u><br />
              Name: Stephen R. Seiler <br />
              Title: President and CEO</p>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Beach Capital LLC</p>
        <p>&nbsp;</p>
      <p>/s/ Steven H. Rouhandeh<br />
        Steven H. Rouhandeh<br />
        Managing Member</p>
      <p>1285 Avenue of the Americas<br />
        35th Floor<br />
        New York, NY     10019<br />
        212-554-4158<br />
        212-554-4058<br />
        souhandeh@scogroup.com</p>
      <p>&nbsp;</p>
      <p>7.5 % secured promissary note</p></td>
  </tr>
  <tr>
    <td width="423" colspan="2" valign="top"><p># PN-2006-2 for $500,000.00 + accrued interest</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Brio Capital L.P.</p>
        <p>&nbsp;</p>
      <p>/s/ Shaye Hirsch<br />
        Shaye Hirsch<br />
        Manager of the General Partner</p>
      <p>401 E 34th St.<br />
        Suite South 33C<br />
        New York, NY     10016<br />
        212-842-0733<br />
        646-390-2158<br />
        shaye@briocapital.com</p>
      <p>&nbsp;</p>
      <p>$ 150,000.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="center">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Catalytix Life Sciences Hedge AC</p>
        <p>&nbsp;</p>
      <p>/s/ Ken Sorensen<br />
        Ken Sorensen<br />
        PM, DIR</p>
      <p>c/o Array Capital Management<br />
        425 Fifth Ave Ste 28D<br />
        NY, NY 10016<br />
        212-481-1394<br />
        212-481-1396<br />
        ksorensen@arraycap.com</p>
      <p>&nbsp;</p>
      <p>50,000.00 US</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table width="432" border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="264" valign="top"><p>Cobblestone Asset Management LLC</p>
        <p>&nbsp;</p>
      <p>/s/ Michael J. Palazzi<br />
        Michael J. Palazzi<br />
        Managing Member</p>
      <p>11 Lakeview Ave<br />
        Sleepy Hollow, NY     10591</p>
      <p>914-631-8087<br />
        212-259-2093<br />
        mpalazzi@palicapital.com</p>
      <p>&nbsp;</p>
      <p>$ 250,000</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Cranshire Capita, L.P.</p>
        <p>&nbsp;</p>
      <p>/s/ Lawrence A. Prosser<br />
        Lawrence A.    Prosser<br />
        CFO-Downsview Capital, Inc.<br />
        The General Partner<br />
        3100 Dundee Road, Suite 703<br />
        Northbrook, IL     60062</p>
      <p>847-562-9030<br />
        847-562-9031<br />
        mkopm@aanshwecamtal.com</p>
      <p>&nbsp;</p>
      <p>$ 500,001.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Credit Suisse Securities (USA)    LLC</p>
        <p>&nbsp;</p>
      <p>/s/ Jeffrey B. Andreski<br />
        Jeffrey B. Andreski<br />
        Managing Director</p>
      <p>c/o Greg Grimaldi<br />
        11 Madison Ave    3rd Floor<br />
        New York, NY     10010<br />
        212-325-7408<br />
        646-935-7716<br />
        gregory.grimaldi@aedit-suisse.com</p>
      <p>&nbsp;</p>
      <p>$ 1,000,000.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:<br />
        Common Shares:<br />
        Warrants:</p></td>
    <td width="255" valign="top"><p>Enable Growth Partners LP</p>
        <p>&nbsp;</p>
      <p>/s/ Brendan O&rsquo;Neil<br />
        Brendan O&rsquo;Neil<br />
        Prinicipal and Portfolio Manager</p>
      <p>One Ferry Building,    Suite 255<br />
        San Francisco, CA     94111</p>
      <p>415-677-1578<br />
        415-677-1580</p>
      <p>boneil@enablecapital.com</p>
      <p>$ 500,000 Common<br />
        166,666<br />
        83,333</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Lake End    Capital LLC</p>
        <p>&nbsp;</p>
      <p>/s/ Jeffrey B. Davis<br />
        Jeffrey B. Davis<br />
        Managing Member</p>
      <p>33 Tall Oaks Dr.<br />
        Summitt, NJ     07901</p>
      <p>212-554-4158</p>
      <p>jdavis@scogroup.com</p>
      <p>&nbsp;</p>
      <p>$ 700,000.00 +</p></td>
  </tr>
  <tr>
    <td width="423" colspan="2" valign="top"><p>* Conversion of Outstanding notes into convertible preferred    stock _____________________</p>
        <p>+ To include Acumulated Interest ______________</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
  Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Dennis LaValle</p>
        <p>&nbsp;</p>
      <p>/s/ Dennis LaValle</p>
      <p>&nbsp;</p>
      <p>1201 Yale Place #1409<br />
        Minneapolis, MN     55403</p>
      <p>612-455-5776<br />
        612-455-5600<br />
        dlavalle@___________</p>
      <p>&nbsp;</p>
      <p>$ 90,000.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Midsummer Investment, Ltd.</p>
        <p>&nbsp;</p>
      <p>/s/ Michel Amsalem<br />
        Michel Amsalem<br />
        Director</p>
      <p>295 Madison Avenue,    38th Floor<br />
        New York, NY     10017</p>
      <p>212-624-5030<br />
        212-624-5040<br />
        MA@midsummercapital.com</p>
      <p>&nbsp;</p>
      <p>$ 1,500,000</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Oracle Institutional Partners L.P.</p>
        <p>&nbsp;</p>
      <p>/s/ Joel Liffmann<br />
        Joel Liffmann<br />
        Authorized Agent</p>
      <p>200 Greenwich Ave<br />
        Greenwich, CT     06830</p>
      <p>203-862-7900</p>
      <p>&nbsp;</p>
      <p>&nbsp;</p>
      <p>$ 698,500.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p align="left"><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Oracle Offshore LTD</p>
        <p>&nbsp;</p>
      <p>/s/ Joel Liffmann<br />
        Joel Liffmann<br />
        Authorized Agent</p>
      <p>200 Greenwich Ave<br />
        Greenwich, CT     06830</p>
      <p>203-862-7900</p>
      <p>&nbsp;</p>
      <p>&nbsp;</p>
      <p>$ 132,000 </p></td>
  </tr>
</table>
<p align="center">  [Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Oracle Partners, LP</p>
        <p>&nbsp;</p>
      <p>/s/ Joel Liffmann<br />
        Joel Liffmann<br />
        Authoriced Agent</p>
      <p>200 Greenwich Ave<br />
        Greenwich, CT     06830</p>
      <p>203-286-7900</p>
      <p>&nbsp;</p>
      <p>&nbsp;</p>
      <p>$2,524,500</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Perceptive Life Sciences Master Fund LTD</p>
        <p>/s/______________________</p>
      <p>&nbsp;</p>
      <p>499 Park Ave,    25th Fl<br />
        New York, NY     10022</p>
      <p>646-205-5342<br />
        646-205-5301<br />
        BERGER@perceptivelife.com</p>
      <p>&nbsp;</p>
      <p>2,000,000</p>
      <p>&nbsp;</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>Rockmore Investment Master Fund Ltd.</p>
        <p>/s/ Michael Clateman<br />
          Michael Clateman<br />
          Managing Director</p>
      <p>c/o Rockmore Capital LLC<br />
        150 E 58th St.<br />
        New York, NY     10155<br />
        212-258-2300<br />
        212-258-2315<br />
        as@rockmorecapital.com</p>
      <p>&nbsp;</p>
      <p>500,000.00</p>
      <p>&nbsp;</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>SCO Capital Partners LLC</p>
        <p>&nbsp;</p>
      <p>/s/ Steve H. Rouhandeh</p>
      <p>&nbsp;</p>
      <p>1285 Avenue of the Americas<br />
        35th Floor<br />
        New York, NY     10019<br />
        212-554-4158<br />
        212-554-4058<br />
        souhandeh@scogroup.com</p>
      <p>&nbsp;</p>
      <p>$ 1,000,000.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>SCO Capital Partners, L.P.</p>
        <p>&nbsp;</p>
      <p>Steven H. Rouhandeh</p>
      <p>&nbsp;</p>
      <p>1285 Avenue of the Americas<br />
        35th Floor<br />
        New York, NY     10019<br />
        212-554-4158<br />
        212-554-4058<br />
        souhandeh@scogroup.com</p>
      <p>&nbsp;</p>
      <p>$2,000,000.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p><strong>PURCHASERS:</strong></p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="168" valign="top"><p>Print Exact Name:</p>
        <p>&nbsp;</p>
      <p>By:<br />
        Name:<br />
        Title:</p>
      <p>Address:</p>
      <p>&nbsp;</p>
      <p>Telephone:<br />
        Facsimile:<br />
        Email:<br />
        SSN/EIN:</p>
      <p>Amount of Investment:</p></td>
    <td width="255" valign="top"><p>SAM Oracle Investments, Inc.</p>
        <p>&nbsp;</p>
      <p>/s/ Joel Liffmann<br />
        Joel Liffmann<br />
        Authorized Agent</p>
      <p>200 Greenwich Ave<br />
        Greenwich, CT     06830</p>
      <p>203-862-7900</p>
      <p>&nbsp;</p>
      <p>&nbsp;</p>
      <p>$ 660,000.00</p></td>
  </tr>
</table>
<p align="center">[Omnibus  Access Pharmaceuticals, Inc.<br />
Preferred  Stock and Warrant Purchase Agreement Signature Page]</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><strong><u>Schedule 1</u></strong></p>
<p align="center"><strong>to Preferred Stock and Warrant Purchase Agreement</strong></p>
<p align="center"><strong>Purchasers,  Shares of Preferred Stock and Warrants</strong></p>
<table border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="181"><div align="center"><br />
    <u>Name, Address and Fax Number of Purchaser</u> </div></td>
    <td width="79"><p align="center"><u>Shares of Preferred Stock Purchased</u></p></td>
    <td width="81"><p align="center"><u>Common Stock Underlying Warrants</u></p></td>
    <td width="234"><p align="center"><u>Description of Promissory Notes to be Cancelled     including Actual Principal Amount</u></p></td>
    <td width="138"><p align="center"><u>Promissory Note Category [Deemed Value of Notes for     Purposes of Exchange for Preferred Stock</u></p></td>
    <td width="105"><p align="center"><u>Purchase Price and Value of Promissory Notes     Cancelled as Applicable</u></p></td>
  </tr>
  <tr>
    <td width="181"><p>Beach Capital LLC<br />
      1285 Avenue of the Americas, 35th Fl.<br />
      New York, NY 10019 <br />
    Fax: 212-554-4058</p></td>
    <td width="79"><p align="center">154.2898</p></td>
    <td width="81"><p align="center">94,288</p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN-2006-2-1AR) (Original Principal Amt    $500.000.00) (Interest Amt $65,729.17)</p></td>
    <td width="138"><p align="center">A<br />
    [$1,542,897.73]</p></td>
    <td width="105"><p align="center">$565,729.17</p></td>
  </tr>
  <tr>
    <td width="181"><p>Brio Capital L.P.<br />
      401 E.      34th St.<br />
      Suite South 33C<br />
      New York, NY 10016 <br />
    Fax: 646-390-2158</p></td>
    <td width="79"><p align="center">15</p></td>
    <td width="81"><p align="center">25,000</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$150,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Catalytix LDC Life Science<br />
      Hedge AC<br />
      CIBC Bank and Trust<br />
      Company (Cayman) Ltd.<br />
      CIBC Financial Centre<br />
      11 Roy&rsquo;s Drive<br />
      P.O.      Box 694 GT<br />
      Grand Cayman <br />
      Cayman Islands <br />
      B.W.I. <br />
      Attn: Martin Laidlaw<br />
      With a copy to:<br />
      Theodore E. Kalem<br />
      Array Capital Management<br />
      LLC<br />
      425 5th      Ave, Ste. 28D <br />
    New York, NY 10016 </p></td>
    <td width="79"><p align="center">5</p></td>
    <td width="81"><p align="center">8,333</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$50,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Cobblestone Asset<br />
      Management LLC<br />
      11      Lakeview Ave. <br />
      Sleepy Hollow, NY 10591 <br />
    Fax: 212-259-2093</p></td>
    <td width="79"><p align="center">25</p></td>
    <td width="81"><p align="center">41,667</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$250,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Cranshire Capital, L.P.<br />
      3100      Dundee Rd., #703 <br />
      Northbrook, IL 60062 <br />
    Fax: 847-562-9031</p></td>
    <td width="79"><p align="center">50.0001</p></td>
    <td width="81"><p align="center">83,333</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$500,001.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Credit Suisse Securities<br />
      (USA) LLC<br />
      c/o Greg Grimaldi<br />
      11      Madison Ave.,    3d Fl.<br />
      New York, NY 100100<br />
    Fax: 212-935-7716</p></td>
    <td width="79"><p align="center">100</p></td>
    <td width="81"><p align="center">166,667</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$1,000,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Enable Growth Partners LP<br />
      One Ferry Building, Suite<br />
      255<br />
      San      Francisco, CA     94111 <br />
    Fax: 415-677-1580</p></td>
    <td width="79"><p align="center">50</p></td>
    <td width="81"><p align="center">83,333</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$500,000.00</p></td>
  </tr>
  <tr>
    <td width="181" rowspan="3"><p>Lake End Capital LLC<br />
      33 Tall Oaks Dr.<br />
      Summit, NJ 07901 <br />
    Fax:&nbsp; </p></td>
    <td width="79"><p align="center">154.2898</p></td>
    <td width="81"><p align="center">94,288</p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN 2006-3-1AR) (Original Principal Amt.: $500,000.00) (Interest Amt: $ 65,729.17)</p></td>
    <td width="138"><p align="center">A<br />
    [$1,542,897.73]</p></td>
    <td width="105"><p align="center">$565,729.17</p></td>
  </tr>
  <tr>
    <td width="79"><p align="center">29.4375 </p></td>
    <td width="81"><p align="center">17,990</p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN 2006-FO2-1AR) (Original Principal Amt:    $100,000.00) Interest Amt: $7937.50)</p></td>
    <td width="138"><p align="center">A<br />
    [$294,375.00]</p></td>
    <td width="105"><p align="center">107,937.50</p></td>
  </tr>
  <tr>
    <td width="79"><p align="center">29.1932 </p></td>
    <td width="81"><p align="center">17,840 </p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN 2006-DEC-2-1AR) (Original Principal Amt.:    $100,000.00) Interest Amt: $7,041.67)</p></td>
    <td width="138"><p align="center">A<br />
    [$291,931.83]</p></td>
    <td width="105"><p align="center">107,041.67</p></td>
  </tr>
  <tr>
    <td width="181"><p>Dennis Lavalle<br />
      1201      Yale Place #1409 <br />
      Minneapolis, MN 55403 <br />
    Fax: 612-455-5600</p></td>
    <td width="79"><p align="center">9 </p></td>
    <td width="81"><p align="center">15,000 </p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$90,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Midsummer Investment, Ltd.<br />
      295      Madison Ave.,    38th Fl.<br />
      New York, NY 10017 <br />
    Fax: 212-624-5040</p></td>
    <td width="79"><p align="center">150</p></td>
    <td width="81"><p align="center">250,000</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$1,500,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Oracle Institutional Partners LP<br />
      Oracle Partners, LP<br />
      200      Greenwich Ave. <br />
      Greenwich, CT 06830 <br />
    Fax:</p></td>
    <td width="79"><p align="center">76.0800</p></td>
    <td width="81"><p align="center">126,800</p></td>
    <td width="234"><p>7.0% (Subject to Adjustment)    Convertible Promissory Note Due November 16, 2007 (Original Principal Amt.: $698,500.00) Interest Amt:    $62,300.38)</p></td>
    <td width="138"><p align="center">B</p></td>
    <td width="105"><p align="center">$760,800.38</p></td>
  </tr>
  <tr>
    <td width="181"><p>Oracle Offshore Ltd.<br />
      Oracle Partners, LP<br />
      200      Greenwich Ave. <br />
      Greenwich, CT 06830 <br />
    Fax:</p></td>
    <td width="79"><p align="center">14.3773</p></td>
    <td width="81"><p align="center">23,962</p></td>
    <td width="234"><p>7.0% (Subject to Adjustment)    Convertible Promissory Note Due November 16, 2007 (Original Principal Amt: $132,000.00) Interest Amt.:    $11,773.50)</p></td>
    <td width="138"><p align="center">B</p></td>
    <td width="105"><p align="center">$143,773.30</p></td>
  </tr>
  <tr>
    <td width="181"><p>Oracle Partners, LP<br />
      200      Greenwich Ave. <br />
      Greenwich, CT 06830 <br />
    Fax:</p></td>
    <td width="79"><p align="center">274.9664</p></td>
    <td width="81"><p align="center">458,277</p></td>
    <td width="234"><p>7.0% (Subject to Adjustment)    Convertible Promissory Note Due November 16, 2007 (Original Principal Amt.: $2,524,500.00) Interest    Amt.: $225,164.36)</p></td>
    <td width="138"><p align="center">B</p></td>
    <td width="105"><p align="center">$2,749,664.36</p></td>
  </tr>
  <tr>
    <td width="181"><p>Perceptive Life Sciences<br />
      Master Fund Ltd.<br />
      499      Park Ave.,    25th Fl.<br />
      New York, NY 10022 <br />
    Fax: 646-205-5301</p></td>
    <td width="79"><p align="center">200</p></td>
    <td width="81"><p align="center">333,333</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$2,000,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>Rockmore Investment Master Fund    Ltd.<br />
      c/o Rockmore Capital LLC<br />
      150 E.      58th St.<br />
      New York, NY 10155 <br />
    Fax: 212-258-2315</p></td>
    <td width="79"><p align="center">50</p></td>
    <td width="81"><p align="center">83,333</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$500,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>SAM Oracle Investments, Inc.<br />
      Oracle Partners, LP<br />
      200      Greenwich Ave. <br />
      Greenwich, CT 06830 <br />
    Fax:</p></td>
    <td width="79"><p align="center">71.8867</p></td>
    <td width="81"><p align="center">119,811</p></td>
    <td width="234"><p>7.0% (Subject to Adjustment)    Covertible Promissory Note Due November 16, 2007 (Original Principal Amt.: $660,000.00) Interest    Amt.: $58,866.50)</p></td>
    <td width="138"><p align="center">B</p></td>
    <td width="105"><p align="center">$718,866.50</p></td>
  </tr>
  <tr>
    <td width="181" rowspan="4"><p>SCO Capital Partners LLC<br />
      1285 Avenue of the<br />
      Americas <br />
      35th Fl.<br />
      New York, NY 10019 <br />
      Fax: 212-554-4058<br />
      With a copy to:<br />
      Michael Grundei, Esq.<br />
      400      Atlantic St.<br />
      P.O.      Box 110325 <br />
    Stamford, CT 06911-0325 </p></td>
    <td width="79"><p align="center">1,234.3182</p></td>
    <td width="81"><p align="center">754,306</p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN-2006-1-1AR) (Original Principal Amt.: $4,000,000.00) (Interest Amt.:    $525,833.33)</p></td>
    <td width="138"><p align="center">A<br />
    [$12,343,181.81]</p></td>
    <td width="105"><p align="center">$4,525,833.33</p></td>
  </tr>
  <tr>
    <td width="79"><p align="center">117.7500 </p></td>
    <td width="81"><p align="center">71,958</p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN 2006-FO1-1AR) (Original Principal Amt.:    $400,000.00) jnterest Amt.: $31,750.00)</p></td>
    <td width="138"><p align="center">A<br />
    [$1,177,500.00]</p></td>
    <td width="105"><p align="center">$431,750.00</p></td>
  </tr>
  <tr>
    <td width="79"><p align="center">116.7727 </p></td>
    <td width="81"><p align="center">71,361</p></td>
    <td width="234"><p>Amended and Restated 7.5%    Secured Convertible Promissory Note Due November 15, 2007, Dated March 30, 2007 (No. PN 2006-DEC -1-1AR) (Original Principal Amt.:    $400,000.00) Interest Amt.: $28,166.67)</p></td>
    <td width="138"><p align="center">A<br />
    [$1,167,727.28]</p></td>
    <td width="105"><p align="center">428,166.67</p></td>
  </tr>
  <tr>
    <td width="79"><p align="center">100 </p></td>
    <td width="81"><p align="center">166,667</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$1,000,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p>SCO Capital Partners, L.P.<br />
      1285 Avenue of the<br />
      Americas <br />
      35th Fl.<br />
      New York, NY 10019 <br />
      Fax: 212-554-4058<br />
      With a copy to:<br />
      Michael Grundei, Esq.<br />
      400      Atlantic St.<br />
      P.O.      Box 110325 <br />
    Stamford, CT 06911-0325 </p></td>
    <td width="79"><p align="center">200 </p></td>
    <td width="81"><p align="center">333,333</p></td>
    <td width="234"><p align="center">n/a</p></td>
    <td width="138"><p align="center">n/a</p></td>
    <td width="105"><p align="center">$2,000,000.00</p></td>
  </tr>
  <tr>
    <td width="181"><p><strong>Totals:</strong></p></td>
    <td width="79"><p align="center"><strong>3,227.3617</strong></p></td>
    <td width="81"><p align="center"><strong>3,440,880</strong></p></td>
    <td width="234"><p align="center"><strong>&nbsp;</strong></p></td>
    <td width="138"><p align="center"><strong>&nbsp;</strong></p></td>
    <td width="105"><p align="center"><strong>$20,645,293.05</strong></p></td>
  </tr>
</table>
<table width="835" border="1" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="276" valign="top"><p><strong>Placement Agent Warrants</strong></p></td>
    <td width="205" valign="top"><p><strong>&nbsp;</strong></p></td>
    <td width="107" valign="top"><p><strong>&nbsp;</strong></p></td>
    <td width="178" valign="top"><p><strong>&nbsp;</strong></p></td>
    <td width="57" valign="top"><p><strong>&nbsp;</strong></p></td>
  </tr>
  <tr>
    <td width="276"><p align="center">Name, Address and Fax Number</p></td>
    <td width="205"><p align="center">Copies of Notice to</p></td>
    <td width="107"><p align="center">&nbsp;</p></td>
    <td width="178"><p align="center">Common Stock Underlying<br />
      Placement Agent<br />
    Warrants</p></td>
    <td width="57" valign="top"><p>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="276" valign="top"><p>&nbsp;</p></td>
    <td width="205" valign="top"><p>&nbsp;</p></td>
    <td width="107" valign="top"><p>&nbsp;</p></td>
    <td width="178" valign="top"><p>&nbsp;</p></td>
    <td width="57" valign="top"><p>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="276" valign="top"><p><strong>Totals:&nbsp;&nbsp;&nbsp; </strong></p></td>
    <td width="205" valign="top"><p><strong>&nbsp;</strong></p></td>
    <td width="107" valign="top"><p><strong>&nbsp;</strong></p></td>
    <td width="178" valign="top"><p><strong>&nbsp;</strong></p></td>
    <td width="57" valign="top"><p><strong>&nbsp;</strong></p></td>
  </tr>
</table>
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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>exhibit99_5.htm
<TEXT>
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<body>
<p align="right"><strong><u>Exhibit 99.5</u></strong></p>
<p align="center"><strong><u>Convertible  Promissory Notes</u></strong></p>
<p align="left">THIS SECURITY AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE &ldquo;SECURITIES ACT&rsquo;) OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.</p>
<p align="center">  ___________________</p>
<p align="center">  7.0% (SUBJECT TO ADJUSTMENT) CONVERTIBLE SUBORDINATED NOTE DUE<br />
SEPTEMBER 13, 2005</p>
<table width="728" cellspacing="0" cellpadding="0">
  <tr>
    <td width="180" scope="row">No. R-1 </td>
    <td width="180">&nbsp;</td>
    <td width="261">&nbsp;</td>
    <td width="105">$2,524,500.00</td>
  </tr>
</table>
<p>Access Pharmaceuticals, Inc., a corporation duly organized and existing under the laws of Delaware (the &ldquo;Company&rdquo;) for value received, hereby promises to pay to Oracle Partners LP, or registered assigns, the principal sum of Two Million Five Hundred Twenty Four Thousand Five Hundred Dollars ($2,524,500.00) on September 13, 2005, and to pay interest thereon, from September 13, 2000, or from the most recent interest payment date to which interest has been paid or duly provided for, annually on September 13 in each year, commencing September 13, 2001, at the rate of 7.0% per annum provided, that if the holder elects to extend the Redemption Commencement Date and the Conversion Commencement Date as provided in Sections 1 and 2 below, the rate shall adjust to 7.7% per annum commencing September 13, 2001 and continuing for the balance of the term of this Note, until the principal hereof is due, and at the rate of 10% per annum on any overdue principal and premium, if any, and, to the extent permitte
d by law, on any overdue interest.  The interest so payable, and punctually paid or duly provided for, on any interest payment date will be paid to the person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on the regular record date for such interest, which shall be September 1 (whether or not a business day), as the case may be, next preceding such interest payment date.  Payment of the principal of this Security shall be made upon the surrender of this Security to the Company, at its office at 2600 N. Stemmons Freeway, Suite 176, Dallas, Texas 75207-2107 (or such other office within the United States as shall be notified by the Company to the holder hereof) (the &ldquo;Designated Office&rdquo;), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, by transfer to a U.S. dollar account maintained by the payee with a bank in the United States of America. 
 Payment of interest on this Security shall be made, at the election of the holder, either (a) by transfer of cash to a U.S. dollar account (such a transfer to be made only if the holder shall have furnished wire instructions in writing to the Company no later than 15 days prior to the relevant payment date) maintained by the payee with a bank in the United States of America, provided that if the holder shall not have timely furnished wire instructions in writing to the Company, payment of interest on this Security shall be made by a check mailed to the address of the person entitled thereto as such address shall appear in the Company security register, or (b) by delivery of shares of Common Stock with a fair market value equal to 100% of the average Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the interest payment date.</p>
<p align="left">  1.	<u>Redemption</u>.  This Security is subject to redemption upon not less than 30 nor more than 60 days&rsquo; notice by mail, at any time on or after September 30, 2001 (the &ldquo;Redemption Commencement Date&rdquo;), as a whole or in part, (in any amount that is an integral multiple of $5,500) at the election of the Company, at a redemption price of 100% of the principal amount thereof, together with accrued interest to the redemption date, but interest installments whose stated maturity is on or prior to such redemption date will be payable to the holder of this Security, or one or more predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof; provided that this Security may not be redeemed on or after September 30, 2001 unless the Closing Price of the Company Stock exceeds 1.5 times the Conversion Price for any period of 10 consecutive Trading Days commencing on or after August 30, 2001 and ending not less than two Trading
 Days prior to the Company&rsquo;s giving notice of such redemption to the holder hereof; further provided, that the holder of this Security may extend the Redemption Commencement Date to December 31, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Redemption Commencement Date and the Conversion Commencement Date (as defined below).</p>
<p align="left">  2.	<u>Conversion</u>.  </p>
<blockquote>
  <p align="left">(a)  The holder of this Security is entitled at any time on or after September 13, 2001 (the &ldquo;Conversion Commencement Date&rdquo;) and before the close of business on September 13, 2005 (or, in case this Security or a portion hereof is called for redemption or the holder hereof has exercised his right to require the Company to repurchase this Security or a portion hereof, then in respect of this Security or such portion hereof, as the case may be, until and including, but (unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be) not after, the close of business on the redemption date or the Repurchase Date, as the case may be) to convert this Security (or any portion of the principal amount hereof that is an integral multiple of $5,500), into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock of the Company at the rate of 1,000 shares of Common Stock (the &ldquo;Conversi
on Rate&rdquo;) for each $5,500 principal amount of Security by surrender of this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office, accompanied by written notice to the Company that the holder hereof elects to convert this Security (or if less than the entire principal amount hereof is to be converted, specifying the portion hereof to be converted) provided, that the holder of this Security may extend the Conversion Commencement Date to December 13, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Conversion Commencement Date and Redemption Commencement Date. Upon surrender of this Security for conversion, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being converted from the interest payment date next preceding the date of such conversion to such date of conversion. No payment or adjustment is to be made on conversion for dividends on the C
ommon Stock issued on conversion hereof. No fractions of shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest, the Company shall pay a cash adjustment, computed on the basis of the Closing Price of the Common Stock on the date of conversion, or, at its option, the Company shall round up to the next higher whole share.</p>
  <p align="left">  (b)	The Conversion Rate shall be subject to adjustments from time to time as follows:</p>
  <blockquote>
    <p align="left">  (1)	In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company payable in shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the Determination Date for such dividend or other distribution shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in li
eu of fractions of shares of Common Stock.</p>
    <p align="left">    (2)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on the Determination Date for such distribution, the Conversion Rate in effect at the opening of business on the day following such Determination Date shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of
 Common Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.</p>
    <p align="left">    (3)	In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.</p>
    <p align="left">    (4)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, or other property (including securities, but excluding (i) any rights, options or warrants referred to in paragraph (2) of this Section 2(b), (ii) any dividend or distribution paid exclusively in cash, (iii) any dividend or distribution referred to in paragraph (1) of this Section 2(b) and (iv) any merger or consolidation to which Section 2(h) applies), the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determinati
on Date less the then fair market value (as determined in good faith by the Board of Directors of the Company) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the clay following such Determination Date.  If the Board of Directors determines the fair market value of any distribution for purposes of this paragraph (4) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the current market price per share pursuant to paragraph (8) of this Section 2(b).</p>
    <p align="left">    (5)	In case the Company shall, by dividend or otherwise, make a Cash Distribution, then, and in each such case, immediately after the close of business on the Determination Date for such Cash Distribution, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on such Determination Date by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date less an amount equal to the quotient of (1) the amount of such Cash Distribution divided by (2) the number of shares of Common Stock outstanding on such Determination Date and (b) the denominator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date.</p>
    <p align="left">    (6)	In case the Company or any Subsidiary shall make an Excess Purchase Payment, then, and in each such case, immediately prior to the opening of business on the day after the tender offer in respect of which such Excess Purchase Payment is to be made expires, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such tender offer by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock at such Determination Date less the amount of such Excess Purchase Payment and (b) the denominator of which shall be equal to the current market price per share of the Common Stock (determined as provided in paragraph (8) of this Section 2(b)) as of such Determination Date.</p>
    <p align="left"> (7)	The reclassification of Common Stock into securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 2(h) applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be the Determination Date), and (b) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be &ldquo;the day upon which such subdivision becomes effective&rdquo; or &ldquo;the day upon which such combination becomes effective&rdquo;, as the case may be, and &ldquo;the day upon which such subdivision or combination becomes effective&rdquo; within the meaning of paragraph (3) of this Section 2(b)). Rig
hts or warrants issued by the Company to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock, which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events (&ldquo;Trigger Event&rdquo;), shall for purposes of this Section 2(b) not be deemed issued until the occurrence of the earliest Trigger Event.</p>
    <p align="left"> (8)	For the purpose of any computation under paragraphs (2), (4), (5) or (6) of this Section 2(b) the current market price per share of Common Stock on any date shall be calculated by the Company and be deemed to be the average of the daily Closing Prices for the five consecutive Trading Days selected by the Company commencing not more than 10 Trading Days before, and ending not later than, the earlier of the day in question and the day before the &ldquo;ex&rdquo; date with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term &ldquo;ex date&rdquo;, when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way in the applicable securities market or on the applicable securities exchange without the right to receive such issuance or distribution.</p>
    <p align="left">    (9)	No adjustment in the Conversion Rate shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph (9)) would require an increase or decrease of at least one percent in such rate; provided, however, that any adjustments which by reason of this paragraph (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.</p>
    <p align="left">    (10)	The Company may make such increases in the Conversion Rate, for the remaining term of the Securities or any shorter term, in addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 2(b} as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes.</p>
  </blockquote>
  <p align="left">    (c)	Whenever the Conversion Rate is adjusted as provided in Section 2(b), the Company shall compute the adjusted Conversion Rate in accordance with Section 2(b) and shall prepare a certificate signed by the chief financial officer of the Company setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and shall promptly deliver such certificate to the holder of Security.</p>
  <p align="left">    (d)	In case:</p>
  <blockquote>
    <p align="left">    (1)	the Company shall declare a dividend or other distribution on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to Section 2(b); or</p>
    <p align="left">    (2)	the Company shall authorize the granting to the holders of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or</p>
    <p align="left">    (3)	of any reclassification of the Common Stock of the Company, or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance, sale, transfer or lease of all or substantially all of the assets of the Company; or</p>
    <p align="left">    (4)	of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or</p>
    <p align="left"> (5)	the Company or any Subsidiary shall commence a tender offer for all or a portion of the Company&rsquo;s outstanding shares of Common Stock (or shall amend any such tender offer);</p>
  </blockquote>
  <p align="left">    then the Company shall cause to be delivered to the holder of this Security, at least 10 days prior to the applicable record, expiration or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined, (y) the date on which the right to make tenders under such tender offer expires or (z) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, m
erger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (1) through (5) of this Section 2(d).</p>
  <p align="left">  (e)	The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of the Security, the full number of shares of Common Stock then issuable upon the conversion of this Security.</p>
  <p align="left">  (f)	Except as provided in the next sentence, the Company will pay any and all stamp or transfer taxes and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Security.  The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the holder of this Security, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.</p>
  <p align="left"> (g)	The Company agrees that all shares of Common Stock which may be delivered upon conversion of the Security, upon such delivery, will have been duly authorized and validly issued and will be fully paid and nonassessable (and shall be issued out of the Company&rsquo;s authorized but unissued Common Stock) and, except as provided in Section 2(1), the Company will pay all stamp or transfer taxes, liens and charges with respect to the issue thereof.</p>
  <p align="left"> (h)	In case of any consolidation of the Company with any other person, any merger of the Company into another person or of another person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company) or any conveyance, sale, transfer or lease of all or substantially all of the properties and assets of the Company, the person formed by such consolidation or resulting from such merger or which acquires such properties and assets, as the case may be, shall execute and deliver to the holder of this Security a supplemental agreement providing that such holder have the right there-after, during the period this Security shall be convertible as specified in Section 2(a), to convert this Security only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (including any Common Stock retainable) by a
 holder of the number of shares of Common Stock of the Company into which this Security might have been converted immediately prior to such consolidation, merger, conveyance, sale, transfer or lease, assuming such holder of Common Stock of the Company (i) is not a person with which the Company consolidated, into which the Company merged or which merged into the Company or to which such conveyance, sale, transfer or lease was made, as the case may be (a &ldquo;Constituent Person&rdquo;), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, or lease is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sa
le, transfer or lease by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised (&ldquo;Non-electing Share&rdquo;), then for the purpose of this Section 2(h) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease by the holders of each Non-electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-electing Shares). Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2.  The above provisions of this Section 2(h) shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases. In this paragraph, &ldquo;securities of the kind receivable&rdquo; upon such consolidation, merger, conve
yance, transfer, sale or lease by a holder of Common Stock means securities that, among other things, are registered and transferable under the Securities Act, and listed and approved for quotation in all securities markets, in each case to the same extent as such securities so receivable by a holder of Common Stock.</p>
  <p align="left"> (i)	The Company (a) will effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), the Securities Exchange Act of 1934, as amended, and state securities and Blue Sky laws) for the shares of Common Stock issuable upon conversion of this Security to be lawfully issued and delivered as provided herein, and thereafter publicly traded (if permissible under such Securities Act) and qualified or listed as contemplated by clause (b) below (it being understood that the Company shall not be required to register the Common Stock issuable on conversion hereof under the Securities Act, except pursuant to the Registration Rights Agreement between the Company and the initial holder of this Security); and (b) will list the shares of Common Stock required to be issued and delivered upon conversion of Securities, prior to such
 issuance or delivery, on each national securities exchange on which outstanding Common Stock is listed or quoted at the time of such delivery, or if the Common Stock is not then listed on any securities exchange, to qualify the Common Stock for quotation on the Nasdaq National Market or such other inter-dealer quotation system, if any, on which the Common Stock is then quoted.</p>
  <p align="left">  (j)	For purposes hereof:</p>
  <p align="left">&ldquo;Affiliate&rdquo; of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, &ldquo;control&rdquo;, when used with respect to any specified person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms &ldquo;controlling&rdquo; and &ldquo;controlled&rdquo; have meanings correlative to the foregoing.</p>
  <p align="left">&ldquo;Cash Distribution&rdquo; means the distribution by the Company to all holders of its Common Stock of cash, other than any cash that is distributed upon a merger or consolidation to which Section 2(h) applies or as part of a distribution referred to in paragraph (4) of Section 2(b).</p>
  <p align="left">&ldquo;Closing Price&rdquo; means, with respect to the Common Stock of the Company, for any day, the reported last sale price per share on the American Stock Exchange, or, if the Common Stock is not admitted to trading on the American Stock Exchange, on the principal national securities exchange or inter-dealer quotation system on which the Common Stock is listed or admitted to trading, or if not admitted to trading on the Nasdaq National Market, or listed or admitted to trading on any national securities exchange or inter-dealer quotation system, the average of the closing bid and asked prices per share in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose.</p>
  <p align="left">&ldquo;Common Stock&rdquo; means the Common Stock, par value $.01 per share, of the Company authorized at the date of this instrument as originally executed. Subject to the provisions of Section 2(h), shares issuable on conversion or repurchase of this Security shall include only shares of Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of this Security shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.</p>
  <p align="left">&ldquo;Conversion Price&rdquo; on any day means an amount equal to $5,500 divided by the Conversion Rate in effect on such day.</p>
  <p align="left">&ldquo;Determination Date&rdquo; means, in the case of a dividend or other distribution, including the issuance of rights, options or warrants, to shareholders, the date fixed for the determination of shareholders entitled to receive such dividend or other distribution and, in the case of a tender offer, the last time that tenders could have been made pursuant to such tender offer.</p>
  <p align="left">&ldquo;Excess Purchase Payment&rdquo; means the excess, if any, of (i) the amount of cash plus the fair market value (as determined in good faith by the Company&rsquo;s Board of Directors) of any non-cash consideration required to be paid with respect to one share of Common Stock acquired or to be acquired in a tender offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock over (ii) the current market price per share as of the last time that tenders could have been made pursuant to such tender offer.</p>
  <p align="left">&ldquo;Trading Day&rdquo; means (i) if the Common Stock is listed or admitted for trading on the New York or American Stock Exchange or any other national securities exchange, a day on which such exchange is open for business; (ii) if the Common Stock is admitted to trading on the Nasdaq National Market or any other system of automated dissemination of quotations of securities prices, a day on which trades may be effected through such system; or (iii) if the Common Stock is not admitted to trading on the Nasdaq National Market or listed or admitted for trading on any national securities exchange or any other system of automated dissemination of quotation of securities prices, a day on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available.</p>
</blockquote>
<p align="left"> 3.	<u>Right to Require Repurchase</u>.  </p>
<blockquote>
  <p align="left">(a)  In the event that a Change in Control (as hereinafter defined) shall occur, then the holder of this Security shall have the right, at such holder&rsquo;s option, subject to the rights of holders of Senior Indebtedness, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, this Security, or any portion of the principal amount hereof that is equal to $5,500 or any integral multiple thereof, on the date (the &ldquo;Repurchase Date&rdquo;) that is ten Trading Days after the date on which the Company gives notice thereof to the holder of this Security, at a purchase price equal to 105% of the principal amount of this Security to be repurchased, plus interest accrued to the Repurchase Date (the &ldquo;Repurchase Price&rdquo;); provided, however, that installments of interest on this Security whose stated maturity is on or prior to the Repurchase Date shall be payable to the holder of this Security, or one or more predecessor Securities, regis
tered as such on the relevant Record Date according to their terms. Upon surrender of this Security for repurchase, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being repurchased from the interest payment date next preceding the date of such repurchase to such date of repurchase. At the option of the Company, the Repurchase Price may be paid in cash or, subject to the fulfillment by the Company of the conditions set forth in Section 3(b), by delivery of shares of Common Stock having a fair market value equal to the Repurchase Price as described in Section 3(b). The Company agrees to give the holder of this Security notice of any Change in Control, by facsimile transmission confirmed in writing by overnight courier service, promptly and in any event within two Trading Days of the occurrence thereof.</p>
  <p align="left">    (b)	The Company may elect to pay the Repurchase Price by delivery of shares of Common Stock pursuant to Section 3(a), if and only if the following conditions have been satisfied:</p>
  <blockquote>
    <p align="left">    (1)	The shares of Common Stock deliverable in payment of the Repurchase Price shall have a fair market value as of the Repurchase Date of not less than the Repurchase Price. For purposes of this Section 3(b), the fair market value of shares of Common Stock shall be equal to 95% of the average of the Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Repurchase Date;</p>
    <p align="left">      (2)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act of 1933 upon issuance, such registration shall have been completed and shall have become effective prior to the Repurchase Date;</p>
    <p align="left">      (3)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration with or approval of any governmental authority under any State law or any other Federal law before such shares may be validly issued or delivered upon repurchase, such registration shall have been completed, have become effective and such approval shall have been obtained, in each case, prior to the Repurchase Date;</p>
    <p align="left">      (4)	Immediately prior to the Repurchase Date the shares of Common Stock deliverable in payment of the Repurchase Price shall have been approved for trading or listed on the American Stock Exchange or the principal national securities exchange or interdealer quotation system on which the Common Stock is then admitted to trading or listed; and</p>
    <p align="left">      (5)	All shares of Common Stock deliverable in payment of the Repurchase Price shall be issued out of the Company&rsquo;s authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights.</p>
    <p align="left">      If all of the conditions set forth in this Section 3(b) are not satisfied in accordance with the terms thereof, the Repurchase Price shall be paid by the Company only in cash.</p>
  </blockquote>
  <p align="left"> (c)	To exercise a repurchase right, the holder shall deliver to the Company on or before the 5th day prior to the Repurchase Date, together with this Security, written notice of the holder&rsquo;s exercise of such right, which notice shall set forth the name of the holder, the principal amount of this Security to be repurchased (and, if this Security is to be repurchased in part, the portion of the principal amount thereof to be repurchased and the name of the person in which the portion thereof to remain outstanding after such repurchase is to be registered) and a statement that an election to exercise the repurchase right is being made thereby, and, in the event that the Repurchase Price shall be paid in shares of Common Stock, the name or names (with addresses) in which the certificate or certificates for shares of Common Stock shall be issued. Such written notice shall be irrevocable, except that the right of the holder to convert this Security (or the portion hereof with respect to wh
ich the repurchase right is being exercised) shall continue until the close of business on the Repurchase Date.</p>
  <p align="left">    (d)	In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the holder the Repurchase Price in cash or shares of Common Stock, as provided above, or, if shares of Common Stock are to be paid, as promptly after the Repurchase Date as practicable, together with accrued and unpaid interest to the Repurchase Date; provided, however, that installments of interest that mature on or prior to the Repurchase Date shall be payable in cash, to the holders of this Security, or one or more predecessor Securities, registered as such at the close of business on the relevant regular record date.<br />
  (e)	If this Security (or portion thereof) is surrendered for repurchase and is not so paid on the Repurchase Date, the principal amount of this Security (or such portion hereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate per annum borne by this Security, and shall remain convertible into Common Stock until the principal of this Security (or portion thereof, as the case may be) shall have been paid or duly provided for.</p>
  <p align="left">    (f)	If this Security is to be repurchased only in part, it shall be surrendered to the Company at the Designated Office (with, if the Company so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing), and the Company shall execute and make available for delivery to the holder without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered.</p>
  <p align="left">    (g)	Any issuance of shares of Common Stock in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of business on the Repurchase Date and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open. No payment or adjustment shall be made for dividends or distributions on any Common Stock issued upon repurchase of this Security declared prior
 to the Repurchase Date.</p>
  <p align="left">    (h)	No fractions of shares shall be issued upon repurchase of this Security. Instead of any fractional share of Common Stock which would otherwise be issuable on the repurchase of this Security, the Company will deliver to the holder its check for the current market value of such fractional share. The current market value of a fraction of a share shall be determined by multiplying the current market price of a full share by the fraction, and rounding the result to the nearest cent. For purposes of this Section 3 the current market price of a share of Common Stock shall be the Closing Price of the Common Stock on the Trading Day immediately preceding the Repurchase Date.<br />
  (i)	Any issuance and delivery of certificates for shares of Common Stock on repurchase of this Security shall be made without charge to the holder of this Security for such certificates or for any stamp or transfer tax or duty in respect of the issuance or delivery of such certificates or the securities represented thereby; provided, however, that the Company shall not be required to pay any tax or duty which may be payable in respect of any transfer involved in the issuance or delivery of certificates for shares of Common Stock in a name other than that of the holder of this Security, and no such issuance or delivery shall be made unless and until the person requesting such issuance or delivery has paid to the Company the amount of any such tax or duty or has established, to the satisfaction of the Company, that such tax or duty has been paid.</p>
  <p align="left">    (j)	For purposes of this Section 3;</p>
  <blockquote>
    <p align="left"> (1)	the term &ldquo;beneficial owner&rdquo; shall be determined in accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934; and</p>
    <p align="left"> (2)	a &ldquo;Change in Control&rdquo; shall be deemed to have occurred at the time, after the original issuance of this Security, of:</p>
    <blockquote>
      <p align="left">    (i)	the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock of the Company entitling such person to exercise 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors (any shares of voting stock of which such person is the beneficial owner that are not then outstanding being deemed outstanding for purposes of calculating such percentage) other than any such acquisition by the Company or any employee benefit plan of the Company;</p>
      <p align="left">    (ii)	any consolidation or merger of the Company with or into, any other person, any merger of another person with or into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Company to another person (other than (a) any such transaction (x) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock and (y) pursuant to which holders of Common Stock immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving person immediately after such transaction and (b) any merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares 
of common stock);</p>
    </blockquote>
  </blockquote>
  <p align="left">        provided, however, that a Change in Control shall not be deemed to have occurred if the Closing Price for any five Trading Days within the period of 10 consecutive Trading Days (x) ending immediately after the later of the date of the Change in Control or the date of the public announcement of the Change in Control (in the case of a Change in Control under Clause (i) above) or (y) ending immediately prior to the date of the Change in Control (in the case of a Change in Control under Clause (ii) above) shall equal or exceed 105% of the Conversion Price in effect on each such Trading Day.</p>
</blockquote>
<p align="left"> 4.	<u>Events of Default</u>.  </p>
<blockquote>
  <p align="left">(a)  &ldquo;Event of Default&rdquo;, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Section 6 or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):</p>
  <blockquote>
    <p align="left">    (1)	default in the payment of any interest upon this Security when it becomes due and payable, and continuance of such default for a period of 30 days; or</p>
    <p align="left">    (2)	default by the Company in the performance of its obligations in respect of any conversion of this Security (or any portion hereof) in accordance with Section 2; or</p>
    <p align="left">    (3)	failure by the Company to give any notice of a Change of Control required to be delivered in accordance with Section 3(a); or</p>
    <p align="left"> (4)	default in the performance, or breach, of any material covenant or warranty of the Company herein (other than a covenant or warranty a default in the performance or breach of which is specifically dealt with elsewhere in this Section 4(a)) and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the holder of this Security a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p align="left"> (5)	a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company, or under any agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, with a principal amount then outstanding in excess of $1,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay the principal of such indebtedness (in whole or in any part greater than $1,000,000) when due and payable or shall have resulted in such indebtedness (in whole or in any part greater than $1,000,000) becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified mail
, to the Company by the holder of this Security a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p align="left">    (6)	the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or</p>
    <p align="left">    (7)	the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the ben
efit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action.</p>
  </blockquote>
  <p align="left">    (b)	If an Event of Default (other than an Event of Default specified in Section 4(a)(6) or 4(a)(7)) occurs and is continuing, then in every such case the holder of this Security may declare the principal hereof to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable. If an Event of Default specified in Section 4(a)(6) or 4(a)(7) occurs and is continuing, the principal of, and accrued interest on, this Security shall ipso facto become immediately due and payable without any declaration or other act of the holders.</p>
</blockquote>
<p align="left">    5.	<u>Consolidation, Merger, Etc</u>.  </p>
<blockquote>
  <p align="left">(a)  The Company shall not consolidate with or merge into any other person or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to any person, and the Company shall not permit any person to consolidate with or merge into the Company or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to the Company, unless:</p>
  <blockquote>
    <p align="left">    (1)	in case the Company shall consolidate with or merge into another person or convey, transfer, sell or lease all or substantially all of its properties and assets to any person, the person formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or sale, or which leases, all or substantially all the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the holder of this Security, the due and punctual payment of the principal of and interest on this Security and the performance or observance of every covenant of this Security on the part of the Company to be performed or observed, including the conversion rights provided herein;</p>
    <p align="left">      (2)	immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a subsidiary of the Company as a result of such transaction as having been incurred by the Company or such subsidiary of the Company at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and</p>
    <p align="left">      (3)	the Company has delivered to the holder of this Security an officers&rsquo; certificate stating that such consolidation, merger, conveyance, transfer, sale or lease and, if a supplemental agreement is required in connection with such transaction, such supplemental agreement, comply with this Section and that all conditions precedent herein provided for relating to such transaction have been complied with.</p>
  </blockquote>
  <p align="left">    (b)	Upon any consolidation of the Company with, or merger of the Company into, any other person or any conveyance, transfer, sale or lease of all or substantially all of the properties and assets of the Company in accordance with Section 5(a), the successor person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, sale or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Security with the same effect as if such successor person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor person shall be relieved of all obligations and covenants under this Security.</p>
</blockquote>
<p align="left">    6.	<u>Subordination</u>.  The Company agrees, and the holder of this Security by accepting a Security agrees, that the indebtedness evidenced by this Security is subordinated in right of payment to the prior payment in full of all Senior Indebtedness, and that the subordination is for the benefit of the holders of Senior Indebtedness.</p>
<blockquote>
  <p align="left">&ldquo;Senior Indebtedness&rdquo; means:</p>
  <p align="left">    (a)	the principal of, interest (including, to the extent permitted by applicable law, interest on or after the commencement of any bankruptcy or similar proceeding whether or not representing an allowed claim in such proceeding) on and any other amounts owing with respect to (i) any indebtedness of the Company, now or hereafter outstanding, in respect of borrowed money (other than the Securities), (ii) any indebtedness of the Company, now or hereafter outstanding, evidenced by a bond, note, debenture, capitalized lease, letter of credit or other similar instrument, (iii) any other written obligation of the Company, now or hereafter outstanding, to pay money issued or assumed as all or part of the consideration for the acquisition of property, assets or securities and (iv) any guaranty or endorsement (other than for collection or deposit in the ordinary course of business) or discount with recourse of, or other agreement (contingent or otherwise) to purchase, repurchase or otherwise acqu
ire, to supply or advance funds or to become liable with respect to (directly or indirectly), any indebtedness or obligation of any person of the type referred to in the preceding subclauses (i), (ii) and (iii) now or hereafter outstanding; and</p>
  <p align="left">    (b)	any refundings, renewals or extensions of any indebtedness or other obligation described in clause (a) above.</p>
  <p align="left">    Notwithstanding the foregoing, if, by the terms of the instrument creating or evidencing any indebtedness or obligation referred to in clauses (a) and (b) above, it is expressly provided that such indebtedness or obligation is not senior in right of payment to this Security, such indebtedness or obligation shall not be included as Senior Indebtedness.</p>
</blockquote>
<p align="left">  7.	<u>Other</u>.  </p>
<blockquote>
  <p align="left">(a)  No provision of this Security shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security as herein provided.</p>
  <p align="left">    (b)	The Company will give prompt written notice to the holder of this Security of any change in the location of the Designated Office.</p>
  <p align="left">    (c)	The transfer of this Security is registrable on the Security Register of the Company upon surrender of this Security for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such Securities are issuable only in registered form without coupons in denominations of $5,500 and any integral multiple thereof. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Security for registration of transfer, the Company and any agent of the Company may treat th
e person in whose name this Security is registered, as the owner thereof for all purposes, whether or not this Security be overdue, and neither the Company, nor any such agent shall be affected by notice to the contrary.</p>
  <p align="left">Notwithstanding any other provision of this Security, this Security and the shares of Common Stock issuable upon conversion hereof may only be transferred by the holder of this Security (a) in the case of the Common Stock only, in a public offering registered under the Securities Act of 1933, as amend; (b) to one or more investors, in one or more transactions, any one of whom, after such purchase, would hold not more than 5% of the shares of Common Stock then outstanding (assuming conversion of any portion of this Security so transferred); (c) to any person or entity that already controls more than 50% of the voting securities of the Company prior to such transfer; (d) in a transaction that complies with the manner of sale restrictions of Rule 144 under the Securities Act; or (e) in a transaction approved in advance by the Federal Reserve Board. The holder of this Security, by acceptance thereof, shall be deemed to have agreed to the foregoing restriction on transfers.</p>
  <p align="left">    (d)	The holder agrees that, at the written request of the Company or any managing underwriter of any underwritten public offering of securities of the Company, such holder shall not, without the prior written consent of the Company or such managing underwriter, sell, make any short sale of, loan, grant any option for the purchase of, pledge, encumber, or otherwise dispose of, or exercise any registration rights with respect to, any Securities or Common Stock of the Company during the 180-day period commencing on the effective date of the registration statement relating to such underwritten public offering of the Company&rsquo;s securities; provided, that each officer and director of the Company shall have entered into a similar agreement.</p>
  <p align="left">  (e)	This Security shall be governed by and construed in accordance with the laws of the State of Texas, United States of America.</p>
  <p align="left">&nbsp;</p>
  <p>IN WITNESS WHEREOF, the Company has caused this Security to be duly  executed under its corporate seal.</p>
  <p>    Dated:&nbsp; September   13, 2000</p>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <p>    By:<u>/s/Kerry P. Gray&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
                  Name:&nbsp; Kerry P. Gray<br />
                  Title:&nbsp;&nbsp;&nbsp; Chief Executive Officer</p>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
  <p>    Attest:</p>
  <p><u>/s/Stephen  B. Thompson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
    Name:&nbsp; Stephen B. Thompson<br />
    Title:&nbsp;&nbsp;&nbsp; Vice President and CFO</p>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p align="center">ELECTION OF HOLDER TO REQUIRE REPURCHASE</p>
  <p>1.&nbsp;&nbsp; Pursuant to  Section 3(a) of this Security, the undersigned hereby elects to have all or a  portion of this Security repurchased by the Company</p>
  <p>2.&nbsp;&nbsp; The undersigned hereby directs the Company to  pay [choose one] (a) it or (b) Name:_______________; address:&nbsp; _______________; Social Security or Other  Taxpayer Identification Number, if any:&nbsp;  ___________, an amount in cash or, at the Company&rsquo;s election, Common  Stock valued as set forth in the Security, equal to 100% of the principal  amount to be repurchased (as set forth below), plus interest accrued to the  Repurchase Date, as provided herein. </p>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <p>Dated:________________________<br />
                              <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature<br />
                          </p>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
  <p>Principal  amount to be repurchased<br />
  (an integral multiple of $5,500):&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  <p>    Remaining  principal amount following such repurchase<br />
    (not less than $5,500):&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  <p>    NOTICE: The  signature to the foregoing Election must correspond to the name as written upon  the face of this Security in every particular, without alteration or any change  whatsoever.<br />
  </p>
  <p align="center">CONVERSION NOTICE</p>
  <p><br />
  The undersigned holder of this Security hereby irrevocably exercises the  option to convert this Security, or any portion of the principal amount hereof  (which is an integral multiple of $5,500) below designated, into shares of  Common. Stock in accordance with the terms of this Security, and directs that  such shares, together with a check in payment for any fractional share and any  Security representing any unconverted principal amount hereof, be delivered to  and be registered in the name of the undersigned unless a different name has  been indicated below. If shares of Common Stock or Securities are to be  registered in the name of a person other than the undersigned, the undersigned  will pay all transfer taxes payable with respect thereto.</p>
  <p>    Dated:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature</p>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>&nbsp;</p>
<table border="0" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="312" valign="top"><br clear="all" />
        <br clear="all" />
        <p>If shares or    Securities are to be registered in the name of a person other than the    holder, please print such person&rsquo;s name and address:</p></td>
    <td width="327" valign="top"><p>If only a portion of    the Securities is to be converted, please indicate:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>&nbsp;</p></td>
    <td width="327" valign="top"><p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount to be converted:<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $__________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name</p></td>
    <td width="327" valign="top"><p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount and denomination of    Security representing unconverted principal amount to be issued:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Address</p></td>
    <td width="327" valign="top"><p>Amount:&nbsp; $_____________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      Social Security or other Taxpayer Identification Number, if any</p></td>
    <td width="327" valign="top"><p>Denominations:    $_________<br />
      (any integral multiple of $5,500)</p></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="left">THIS SECURITY AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE &ldquo;SECURITIES ACT&rsquo;) OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.</p>
<p align="center">___________________</p>
<p align="center">7.0% (SUBJECT TO  ADJUSTMENT) CONVERTIBLE SUBORDINATED NOTE DUE<br />
SEPTEMBER 13, 2005</p>
<table width="722" cellspacing="0" cellpadding="0">
  <tr>
    <td width="180" scope="row">No. R-1 </td>
    <td width="180">&nbsp;</td>
    <td width="267">&nbsp;</td>
    <td width="93">$660,000.00</td>
  </tr>
</table>
<p align="left">Access Pharmaceuticals, Inc., a corporation duly organized and existing under the laws of Delaware (the &ldquo;Company&rdquo;) for value received, hereby promises to pay to SAM Oracle Investments Inc., or registered assigns, the principal sum of Six Hundred Sixty Thousand Dollars ($660,000.00) on September 13, 2005, and to pay interest thereon, from September 13, 2000, or from the most recent interest payment date to which interest has been paid or duly provided for, annually on September 13 in each year, commencing September 13, 2001, at the rate of 7.0% per annum provided, that if the holder elects to extend the Redemption Commencement Date and the Conversion Commencement Date as provided in Sections 1 and 2 below, the rate shall adjust to 7.7% per annum commencing September 13, 2001 and continuing for the balance of the term of this Note, until the principal hereof is due, and at the rate of 10% per annum on any overdue principal and premium, if any, and, to the extent permitted by law, on
 any overdue interest.  The interest so payable, and punctually paid or duly provided for, on any interest payment date will be paid to the person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on the regular record date for such interest, which shall be September 1 (whether or not a business day), as the case may be, next preceding such interest payment date. Payment of the principal of this Security shall be made upon the surrender of this Security to the Company, at its office at 2600 N. Stemmons Freeway, Suite 176, Dallas, Texas 75207-2107 (or such other office within the United States as shall be notified by the Company to the holder hereof) (the &ldquo;Designated Office&rdquo;), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, by transfer to a U.S. dollar account maintained by the payee with a bank in the United States of America. Payment of in
terest on this Security shall be made, at the election of the holder, either (a) by transfer of cash to a U.S. dollar account (such a transfer to be made only if the holder shall have furnished wire instructions in writing to the Company no later than 15 days prior to the relevant payment date) maintained by the payee with a bank in the United States of America, provided that if the holder shall not have timely furnished wire instructions in writing to the Company, payment of interest on this Security shall be made by a check mailed to the address of the person entitled thereto as such address shall appear in the Company security register, or (b) by delivery of shares of Common Stock with a fair market value equal to 100% of the average Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the interest payment date.</p>
<p> 1.	<u>Redemption</u>.  This Security is subject to redemption upon not less than 30 nor more than 60 days&rsquo; notice by mail, at any time on or after September 30, 2001 (the &ldquo;Redemption Commencement Date&rdquo;), as a whole or in part, (in any amount that is an integral multiple of $5,500) at the election of the Company, at a redemption price of 100% of the principal amount thereof, together with accrued interest to the redemption date, but interest installments whose stated maturity is on or prior to such redemption date will be payable to the holder of this Security, or one or more predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof; provided that this Security may not be redeemed on or after September 30, 2001 unless the Closing Price of the Company Stock exceeds 1.5 times the Conversion Price for any period of 10 consecutive Trading Days commencing on or after August 30, 2001 and ending not less than two Trading Days prior to
 the Company&rsquo;s giving notice of such redemption to the holder hereof; further provided, that the holder of this Security may extend the Redemption Commencement Date to December 31, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Redemption Commencement Date and the Conversion Commencement Date (as defined below).</p>
<p>  2.	<u>Conversion</u>.  </p>
<blockquote>
  <p>(a)  The holder of this Security is entitled at any time on or after September 13, 2001 (the &ldquo;Conversion Commencement Date&rdquo;) and before the close of business on September 13, 2005 (or, in case this Security or a portion hereof is called for redemption or the holder hereof has exercised his right to require the Company to repurchase this Security or a portion hereof, then in respect of this Security or such portion hereof, as the case may be, until and including, but (unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be) not after, the close of business on the redemption date or the Repurchase Date, as the case may be) to convert this Security (or any portion of the principal amount hereof that is an integral multiple of $5,500), into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock of the Company at the rate of 1,000 shares of Common Stock (the &ldquo;Conversion Rate&rdquo
;) for each $5,500 principal amount of Security by surrender of this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office, accompanied by written notice to the Company that the holder hereof elects to convert this Security (or if less than the entire principal amount hereof is to be converted, specifying the portion hereof to be converted) provided, that the holder of this Security may extend the Conversion Commencement Date to December 13, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Conversion Commencement Date and Redemption Commencement Date. Upon surrender of this Security for conversion, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being converted from the interest payment date next preceding the date of such conversion to such date of conversion.  No payment or adjustment is to be made on conversion for dividends on the Common Stock 
issued on conversion hereof. No fractions of shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest, the Company shall pay a cash adjustment, computed on the basis of the Closing Price of the Common Stock on the date of conversion, or, at its option, the Company shall round up to the next higher whole share.</p>
  <p>  (b)	The Conversion Rate shall be subject to adjustments from time to time as follows:</p>
  <blockquote>
    <p>  (1)	In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company payable in shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the Determination Date for such dividend or other distribution shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (I), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractio
ns of shares of Common Stock.</p>
    <p>  (2)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on the Determination Date for such distribution, the Conversion Rate in effect at the opening of business on the day following such Determination Date shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of Common Stock o
utstanding at the close of business on such Determination Date plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.</p>
    <p>  (3)	In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.</p>
    <p>  (4)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, or other property (including securities, but excluding (i) any rights, options or warrants referred to in paragraph (2) of this Section 2(b), (ii) any dividend or distribution paid exclusively in cash, (iii) any dividend or distribution referred to in paragraph (1) of this Section 2(b) and (iv) any merger or consolidation to which Section 2(h) applies), the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date less th
e then fair market value (as determined in good faith by the Board of Directors of the Company) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following such Determination Date. If the Board of Directors determines the fair market value of any distribution for purposes of this paragraph (4) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the current market price per share pursuant to paragraph (8) of this Section 2(b).</p>
    <p>  (5)	In case the Company shall, by dividend or otherwise, make a Cash Distribution, then, and in each such case, immediately after the close of business on the Determination Date for such Cash Distribution, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on such Determination Date by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date less an amount equal to the quotient of (1) the amount of such Cash Distribution divided by (2) the number of shares of Common Stock outstanding on such Determination Date and (b) the denominator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date.</p>
    <p>  (6)	In case the Company or any Subsidiary shall make an Excess Purchase Payment, then, and in each such case, immediately prior to the opening of business on the day after the tender offer in respect of which such Excess Purchase Payment is to be made expires, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such tender offer by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock at such Determination Date less the amount of such Excess Purchase Payment and (b) the denominator of which shall be equal to the current market price per share of the Common Stock (determined as provided in paragraph (8) of this Section 2(b)) as of such Determination Date.</p>
    <p> (7)	The reclassification of Common Stock into securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 2(h) applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be the Determination Date), and (b) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be &ldquo;the day upon which such subdivision becomes effective&rdquo; or &ldquo;the day upon which such combination becomes effective&rdquo;, as the case may be, and &ldquo;the day upon which such subdivision or combination becomes effective&rdquo; within the meaning of paragraph (3) of this Section 2(b)). Rights or warran
ts issued by the Company to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock, which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events (&ldquo;Trigger Event&rdquo;), shall for purposes of this Section 2(b) not be deemed issued until the occurrence of the earliest Trigger Event.</p>
    <p> (8)	For the purpose of any computation under paragraphs (2), (4), (5) or (6) of this Section 2(b) the current market price per share of Common Stock on any date shall be calculated by the Company and be deemed to be the average of the daily Closing Prices for the five consecutive Trading Days selected by the Company commencing not more than 10 Trading Days before, and ending not later than, the earlier of the day in question and the day before the &ldquo;ex&rdquo; date with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term &ldquo;ex date&rdquo;, when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way in the applicable securities market or on the applicable securities exchange without the right to receive such issuance or distribution.</p>
    <p>  (9)	No adjustment in the Conversion Rate shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph (9)) would require an increase or decrease of at least one percent in such rate; provided, however, that any adjustments which by reason of this paragraph (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.</p>
    <p>  (10)	The Company may make such increases in the Conversion Rate, for the remaining term of the Securities or any shorter term, in addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 2(b) as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes.</p>
  </blockquote>
  <p>  (c)	Whenever the Conversion Rate is adjusted as provided in Section 2(b), the Company shall compute the adjusted Conversion Rate in accordance with Section 2(b) and shall prepare a certificate signed by the chief financial officer of the Company setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and shall promptly deliver such certificate to the holder of Security.</p>
  <p>  (d)	In case:</p>
  <blockquote>
    <p>  (1)	the Company shall declare a dividend or other distribution on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to Section 2(b); or</p>
    <p>  (2)	the Company shall authorize the granting to the holders of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or</p>
    <p>  (3)	of any reclassification of the Common Stock of the Company, or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance, sale, transfer or lease of all or substantially all of the assets of the Company; or</p>
    <p>  (4)	of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or</p>
    <p> (5)	the Company or any Subsidiary shall commence a tender offer for all or a portion of the Company&rsquo;s outstanding shares of Common Stock (or shall amend any such tender offer);</p>
  </blockquote>
  <p>  then the Company shall cause to be delivered to the holder of this Security, at least 10 days prior to the applicable record, expiration or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined, (y) the date on which the right to make tenders under such tender offer expires or (z) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, conveyan
ce, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (1) through (5) of this Section 2(d).</p>
  <p>  (e)	The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of the Security, the full number of shares of Common Stock then issuable upon the conversion of this Security.</p>
  <p>  (f)	Except as provided in the next sentence, the Company will pay any and all stamp or transfer taxes and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Security. The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the holder of this Security, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.</p>
  <p> (g)	The Company agrees that all shares of Common Stock which may be delivered upon conversion of the Security, upon such delivery, will have been duly authorized and validly issued and will be fully paid and nonassessable (and shall be issued out of the Company&rsquo;s authorized but unissued Common Stock) and, except as provided in Section 2(f), the Company will pay all stamp or transfer taxes, liens and charges with respect to the issue thereof.</p>
  <p> (h)	In case of any consolidation of the Company with any other person, any merger of the Company into another person or of another person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company) or any conveyance, sale, transfer or lease of all or substantially all of the properties and assets of the Company, the person formed by such consolidation or resulting from such merger or which acquires such properties and assets, as the case may be, shall execute and deliver to the holder of this Security a supplemental agreement providing that such holder have the right there-after, during the period this Security shall be convertible as specified in Section 2(a), to convert this Security only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (including any Common Stock retainable) by a holder of th
e number of shares of Common Stock of the Company into which this Security might have been converted immediately prior to such consolidation, merger, conveyance, sale, transfer or lease, assuming such holder of Common Stock of the Company (i) is not a person with which the Company consolidated, into which the Company merged or which merged into the Company or to which such conveyance, sale, transfer or lease was made, as the case may be (a &ldquo;Constituent Person&rdquo;), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, or lease is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sale, transfer 
or lease by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised (&ldquo;Non-electing Share&rdquo;), then for the purpose of this Section 2(h) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease by the holders of each Non-electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-electing Shares). Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2.  The above provisions of this Section 2(h) shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases. In this paragraph, &ldquo;securities of the kind receivable&rdquo; upon such consolidation, merger, conveyance, transf
er, sale or lease by a holder of Common Stock means securities that, among other things, are registered and transferable under the Securities Act, and listed and approved for quotation in all securities markets, in each case to the same extent as such securities so receivable by a holder of Common Stock.</p>
  <p> (i)	The Company (a) will effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), the Securities Exchange Act of 1934, as amended, and state securities and Blue Sky laws) for the shares of Common Stock issuable upon conversion of this Security to be lawfully issued and delivered as provided herein, and thereafter publicly traded (if permissible under such Securities Act) and qualified or listed as contemplated by clause (b) below (it being understood that the Company shall not be required to register the Common Stock issuable on conversion hereof under the Securities Act, except pursuant to the Registration Rights Agreement between the Company and the initial holder of this Security); and (b) will list the shares of Common Stock required to be issued and delivered upon conversion of Securities, prior to such issuance or 
delivery, on each national securities exchange on which outstanding Common Stock is listed or quoted at the time of such delivery, or if the Common Stock is not then listed on any securities exchange, to qualify the Common Stock for quotation on the Nasdaq National Market or such other inter-dealer quotation system, if any, on which the Common Stock is then quoted.</p>
  <p>  (j)	For purposes hereof:</p>
  <p>&ldquo;Affiliate&rdquo; of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, &ldquo;control&rdquo;, when used with respect to any specified person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms &ldquo;controlling&rdquo; and &ldquo;controlled&rdquo; have meanings correlative to the foregoing.</p>
  <p>&ldquo;Cash Distribution&rdquo; means the distribution by the Company to all holders of its Common Stock of cash, other than any cash that is distributed upon a merger or consolidation to which Section 2(h) applies or as part of a distribution referred to in paragraph (4) of Section 2(b).</p>
  <p>&ldquo;Closing Price&rdquo; means, with respect to the Common Stock of the Company, for any day, the reported last sale price per share on the American Stock Exchange, or, if the Common Stock is not admitted to trading on the American Stock Exchange, on the principal national securities exchange or inter-dealer quotation system on which the Common Stock is listed or admitted to trading, or if not admitted to trading on the Nasdaq National Market, or listed or admitted to trading on any national securities exchange or inter-dealer quotation system, the average of the closing bid and asked prices per share in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose.</p>
  <p>&ldquo;Common Stock&rdquo; means the Common Stock, par value $.01 per share, of the Company authorized at the date of this instrument as originally executed. Subject to the provisions of Section 2(h), shares issuable on conversion or repurchase of this Security shall include only shares of Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of this Security shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.</p>
  <p>&ldquo;Conversion Price&rdquo; on any day means an amount equal to $5,500 divided by the Conversion Rate in effect on such day.</p>
  <p>&ldquo;Determination Date&rdquo; means, in the case of a dividend or other distribution, including the issuance of rights, options or warrants, to shareholders, the date fixed for the determination of shareholders entitled to receive such dividend or other distribution and, in the ease of a tender offer, the last time that tenders could have been made pursuant to such tender offer.</p>
  <p>&ldquo;Excess Purchase Payment&rdquo; means the excess, if any, of (i} the amount of cash plus the fair market value (as determined in good faith by the Company&rsquo;s Board of Directors) of any non-cash consideration required to be paid with respect to one share of Common Stock acquired or to be acquired in a tender offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock over (ii) the current market price per share as of the last time that tenders could have been made pursuant to such tender offer.</p>
  <p>&ldquo;Trading Day&rdquo; means (i) if the Common Stock is listed or admitted for trading on the New York or American Stock Exchange or any other national securities exchange, a day on which such exchange is open for business; (ii) if the Common Stock is admitted to trading on the Nasdaq National Market or any other system of automated dissemination of quotations of securities prices, a day on which trades may be effected through such system; or (iii) if the Common Stock is not admitted to trading on the Nasdaq National Market or listed or admitted for trading on any national securities exchange or any other system of automated dissemination of quotation of securities prices, a day on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available.</p>
</blockquote>
<p> 3.	<u>Right to Require Repurchase</u>.  </p>
<blockquote>
  <p>(a)  In the event that a Change in Control (as hereinafter defined) shall occur, then the holder of this Security shall have the right, at such holder&rsquo;s option, subject to the rights of holders of Senior Indebtedness, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, this Security, or any portion of the principal amount hereof that is equal to $5,500 or any integral multiple thereof, on the date (the &ldquo;Repurchase Date&rdquo;) that is ten Trading Days after the date on which the Company gives notice thereof to the holder of this Security, at a purchase price equal to 105% of the principal amount of this Security to be repurchased, plus interest accrued to the Repurchase Date (the &ldquo;Repurchase Price&rdquo;); provided, however, that installments of interest on this Security whose stated maturity is on or prior to the Repurchase Date shall be payable to the holder of this Security, or one or more predecessor Securities, registered as such
 on the relevant Record Date according to their terms.  Upon surrender of this Security for repurchase, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being repurchased from the interest payment date next preceding the date of such repurchase to such date of repurchase. At the option of the Company, the Repurchase Price may be paid in cash or, subject to the fulfillment by the Company of the conditions set forth in Section 3(b), by delivery of shares of Common Stock having a fair market value equal to the Repurchase Price as described in Section 3(b). The Company agrees to give the holder of this Security notice of any Change in Control, by facsimile transmission confirmed in writing by overnight courier service, promptly and in any event within two Trading Days of the occurrence thereof.</p>
  <p>  (b)	The Company may elect to pay the Repurchase Price by delivery of shares of Common Stock pursuant to Section 3(a), if and only if the following conditions have been satisfied:</p>
  <blockquote>
    <p>  (1)	The shares of Common Stock deliverable in payment of the Repurchase Price shall have a fair market value as of the Repurchase Date of not less than the Repurchase Price. For purposes of this Section 3(b), the fair market value of shares of Common Stock shall be equal to 95% of the average of the Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Repurchase Date;</p>
    <p>  (2)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act of 1933 upon issuance, such registration shall have been completed and shall have become effective prior to the Repurchase Date;</p>
    <p>  (3)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration with or approval of any governmental authority under any State law or any other Federal law before such shares may be validly issued or delivered upon repurchase, such registration shall have been completed, have become effective and such approval shall have been obtained, in each case, prior to the Repurchase Date;</p>
    <p>  (4)	Immediately prior to the Repurchase Date the shares of Common Stock deliverable in payment of the Repurchase Price shall have been approved for trading or listed on the American Stock Exchange or the principal national securities exchange or interdealer quotation system on which the Common Stock is then admitted to trading or listed; and</p>
    <p> (5)	All shares of Common Stock deliverable in payment of the Repurchase Price shall be issued out of the Company&rsquo;s authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights.<br />
      If all of the conditions set forth in this Section 3(b) are not satisfied in accordance with the terms thereof, the Repurchase Price shall be paid by the Company only in cash.</p>
  </blockquote>
  <p> (c)	To exercise a repurchase right, the holder shall deliver to the Company on or before the 5th day prior to the Repurchase Date, together with this Security, written notice of the holder&rsquo;s exercise of such right, which notice shall set forth the name of the holder, the principal amount of this Security to be repurchased (and, if this Security is to be repurchased in part, the portion of the principal amount thereof to be repurchased and the name of the person in which the portion thereof to remain outstanding after such repurchase is to be registered) and a statement that an election to exercise the repurchase right is being made thereby, and, in the event that the Repurchase Price shall be paid in shares of Common Stock, the name or names (with addresses) in which the certificate or certificates for shares of Common Stock shall be issued. Such written notice shall be irrevocable, except that the right of the holder to convert this Security (or the portion hereof with respect to which the repur
chase right is being exercised) shall continue until the close of business on the Repurchase Date.</p>
  <p>  (d)	In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the holder the Repurchase Price in cash or shares of Common Stock, as provided above, or, if shares of Common Stock are to be paid, as promptly after the Repurchase Date as practicable, together with accrued and unpaid interest to the Repurchase Date; provided, however, that installments of interest that mature on or prior to the Repurchase Date shall be payable in cash, to the holders of this Security, or one or more predecessor Securities, registered as such at the close of business on the relevant regular record date.</p>
  <p>  (e)	If this Security (or portion thereof) is surrendered for repurchase and is not so paid on the Repurchase Date, the principal amount of this Security (or such portion hereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate per annum borne by this Security, and shall remain convertible into Common Stock until the principal of this Security (or portion thereof, as the case may be) shall have been paid or duly provided for.</p>
  <p>  (f)	If this Security is to be repurchased only in part, it shall be surrendered to the Company at the Designated Office (with, if the Company so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing), and the Company shall execute and make available for delivery to the holder without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered.</p>
  <p>  (g)	Any issuance of shares of Common Stock in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of business on the Repurchase Date and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open. No payment or adjustment shall be made for dividends or distributions on any Common Stock issued upon repurchase of this Security declared prior to the Repurch
ase Date.</p>
  <p>  (h)	No fractions of shares shall be issued upon repurchase of this Security. Instead of any fractional share of Common Stock which would otherwise be issuable on the repurchase of this Security, the Company will deliver to the holder its check for the current market value of such fractional share. The current market value of a fraction of a share shall be determined by multiplying the current market price of a full share by the fraction, and rounding the result to the nearest cent. For purposes of this Section 3 the current market price of a share of Common Stock shall be the Closing Price of the Common Stock on the Trading Day immediately preceding the Repurchase Date.</p>
  <p>  (i)	Any issuance and delivery of certificates for shares of Common Stock on repurchase of this Security shall be made without charge to the holder of this Security for such certificates or for any stamp or transfer tax or duty in respect of the issuance or delivery of such certificates or the securities represented thereby; provided, however, that the Company shall not be required to pay any tax or duty which may be payable in respect of any transfer involved in the issuance or delivery of certificates for shares of Common Stock in a name other than that of the holder of this Security, and no such issuance or delivery shall be made unless and until the person requesting such issuance or delivery has paid to the Company the amount of any such tax or duty or has established, to the satisfaction of the Company, that such tax or duty has been paid.</p>
  <p>  (j)	For purposes of this Section 3;</p>
  <blockquote>
    <p> (1)	the term &ldquo;beneficial owner&rdquo; shall be determined in accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934; and</p>
    <p> (2)	a &ldquo;Change in Control&rdquo; shall be deemed to have occurred at the time, after the original issuance of this Security, of:</p>
    <blockquote>
      <p>  (i)	the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock of the Company entitling such person to exercise 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors (any shares of voting stock of which such person is the beneficial owner that are not then outstanding being deemed outstanding for purposes of calculating such percentage) other than any such acquisition by the Company or any employee benefit plan of the Company;</p>
      <p>  (ii)	any consolidation or merger of the Company with or into, any other person, any merger of another person with or into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Company to another person (other than (a) any such transaction (x) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock and (y) pursuant to which holders of Common Stock immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving person immediately after such transaction and (b) any merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock
);</p>
    </blockquote>
  </blockquote>
  <p>  provided, however, that a Change in Control shall not be deemed to have occurred if the Closing Price for any five Trading Days within the period of 10 consecutive Trading Days (x) ending immediately after the later of the date of the Change in Control or the date of the public announcement of the Change in Control (in the case of a Change in Control under Clause (i) above) or (y) ending immediately prior to the date of the Change in Control (in the case of a Change in Control under Clause (ii) above) shall equal or exceed 105% of the Conversion Price in effect on each such Trading Day.</p>
</blockquote>
<p> 4.	<u>Events of Default</u>.  </p>
<blockquote>
  <p>(a)  &ldquo;Event of Default&rdquo;, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Section 6 or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):</p>
  <blockquote>
    <p>  (1)	default in the payment of any interest upon this Security when it becomes due and payable, and continuance of such default for a period of 30 days; or</p>
    <p>  (2)	default by the Company in the performance of its obligations in respect of any conversion of this Security (or any portion hereof) in accordance with Section 2; or</p>
    <p>  (3)	failure by the Company to give any notice of a Change of Control required to be delivered in accordance with Section 3(a); or</p>
    <p> (4)	default in the performance, or breach, of any material covenant or warranty of the Company herein (other than a covenant or warranty a default in the performance or breach of which is specifically dealt with elsewhere in this Section 4(a)) and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the holder of this Security a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p> (5)	a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company, or under any agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, with a principal amount then outstanding in excess of $1,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay the principal of such indebtedness (in whole or in any part greater than $1,000,000) when due and payable or shall have resulted in such indebtedness (in whole or in any part greater than $1,000,000) becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified mail, to the Comp
any by the holder of this Security a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p>  (6)	the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or</p>
    <p>  (7)	the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of credito
rs, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action.</p>
  </blockquote>
  <p>  (b)	If an Event of Default (other than an Event of Default specified in Section 4(a)(6) or 4(a)(7)) occurs and is continuing, then in every such case the holder of this Security may declare the principal hereof to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable. If an Event of Default specified in Section 4(a)(6) or 4(a)(7) occurs and is continuing, the principal of, and accrued interest on, this Security shall ipso facto become immediately due and payable without any declaration or other act of the holders.</p>
</blockquote>
<p>  5.	<u>Consolidation, Merger, Etc</u>.,  </p>
<blockquote>
  <p>(a)  The Company shall not consolidate with or merge into any other person or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to any person, and the Company shall not permit any person to consolidate with or merge into the Company or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to the Company, unless:</p>
  <blockquote>
    <p>  (1)	in case the Company shall consolidate with or merge into another person or convey, transfer, sell or lease all or substantially all of its properties and assets to any person, the person formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or sale, or which leases, all or substantially all the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the holder of this Security, the due and punctual payment of the principal of and interest on this Security and the performance or observance of every covenant of this Security on the part of the Company to be performed or observed, including the conversion rights provided herein;</p>
    <p>  (2)	immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a subsidiary of the Company as a result of such transaction as having been incurred by the Company or such subsidiary of the Company at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and</p>
    <p> (3)	the Company has delivered to the holder of this Security an officers&rsquo; certificate stating that such consolidation, merger, conveyance, transfer, sale or lease and, if a supplemental agreement is required in connection with such transaction, such supplemental agreement, comply with this Section and that all conditions precedent herein provided for relating to such transaction have been complied with.</p>
  </blockquote>
  <p>  (b)	Upon any consolidation of the Company with, or merger of the Company into, any other person or any conveyance, transfer, sale or lease of all or substantially all of the properties and assets of the Company in accordance with Section 5(a), the successor person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, sale or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Security with the same effect as if such successor person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor person shall be relieved of all obligations and covenants under this Security.</p>
</blockquote>
<p>  6.	Subordination.  The Company agrees, and the holder of this Security by accepting a Security agrees, that the indebtedness evidenced by this Security is subordinated in right of payment to the prior payment in full of all Senior Indebtedness, and that the subordination is for the benefit of the holders of Senior Indebtedness.</p>
<blockquote>
  <p>&ldquo;Senior Indebtedness&rdquo; means:</p>
  <p>  (a)	the principal of, interest (including, to the extent permitted by applicable law, interest on or after the commencement of any bankruptcy or similar proceeding whether or not representing an allowed claim in such proceeding) on and any other amounts owing with respect to (i) any indebtedness of the Company, now or hereafter outstanding, in respect of borrowed money (other than the Securities), (ii) any indebtedness of the Company, now or hereafter outstanding, evidenced by a bond, note, debenture, capitalized lease, letter of credit or other similar instrument, (iii) any other written obligation of the Company, now or hereafter outstanding, to pay money issued or assumed as all or part of the consideration for the acquisition of property, assets or securities and (iv) any guaranty or endorsement (other than for collection or deposit in the ordinary course of business) or discount with recourse of, or other agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire, to supply 
or advance funds or to become liable with respect to (directly or indirectly), any indebtedness or obligation of any person of the type referred to in the preceding subclauses (i), (ii) and (iii) now or hereafter outstanding; and</p>
  <p>  (b)	any refundings, renewals or extensions of any indebtedness or other obligation described in clause (a) above.</p>
</blockquote>
<p> Notwithstanding the foregoing, if, by the terms of the instrument creating or evidencing any indebtedness or obligation referred to in clauses (a) and (b) above, it is expressly provided that such indebtedness or obligation is not senior in right of payment to this Security, such indebtedness or obligation shall not be included as Senior Indebtedness.</p>
<p>  7.	<u>Other</u>.  </p>
<blockquote>
  <p>(a)  No provision of this Security shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security as herein provided.</p>
  <p>  (b)	The Company will give prompt written notice to the holder of this Security of any change in the location of the Designated Office.</p>
  <p>  (c)	The transfer of this Security is registrable on the Security Register of the Company upon surrender of this Security for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such Securities are issuable only in registered form without coupons in denominations of $5,500 and any integral multiple thereof. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Security for registration of transfer, the Company and any agent of the Company may treat the person in who
se name this Security is registered, as the owner thereof for all purposes, whether or not this Security be overdue, and neither the Company, nor any such agent shall be affected by notice to the contrary.</p>
  <p>    Notwithstanding any other provision of this Security, this Security and the shares of Common Stock issuable upon conversion hereof may only be transferred by the holder of this Security (a) in the case of the Common Stock only, in a public offering registered under the Securities Act of 1933, as amend; (b) to one or more investors, in one or more transactions, any one of whom, after such purchase, would hold not more than 5% of the shares of Common Stock then outstanding (assuming conversion of any portion of this Security so transferred); (c) to any person or entity that already controls more than 50% of the voting securities of the Company prior to such transfer; (d) in a transaction that complies with the manner of sale restrictions of Rule 144 under the Securities Act; or (e) in a transaction approved in advance by the Federal Reserve Board. The holder of this Security, by acceptance thereof, shall be deemed to have agreed to the foregoing restriction on transfers_</p>
  <p> (d)	The holder agrees that, at the written request of the Company or any managing underwriter of any underwritten public offering of securities of the Company, such holder shall not, without the prior written consent of the Company or such managing underwriter, sell, make any short sale of, loan, grant any option for the purchase of, pledge, encumber, or otherwise dispose of, or exercise any registration rights with respect to, any Securities or Common Stock of the Company during the 180-day period commencing on the effective date of the registration statement relating to such underwritten public offering of the Company&rsquo;s securities; provided, that each officer and director of the Company shall have entered into a similar agreement.</p>
  <p>  (e)	This Security shall he governed by and construed in accordance with the laws of the State of Texas, United States of America.</p>
</blockquote>
<p>&nbsp;</p>
<p>IN WITNESS WHEREOF, the Company has caused this Security to be duly  executed under its corporate seal.</p>
<p>Dated:&nbsp; September   13, 2000</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <p>  By:<u>/s/Kerry P. Gray&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
                  Name: &nbsp;Kerry P. Gray<br />
                  Title:&nbsp;&nbsp;&nbsp; Chief Executive Officer</p>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>&nbsp;</p>
<p>Attest:</p>
<p><u>/s/Stephen  B. Thompson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  Name:&nbsp; Stephen B. Thompson<br />
Title:&nbsp;&nbsp;&nbsp; Vice President and CFO</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center">ELECTION OF HOLDER TO REQUIRE REPURCHASE</p>
<p align="left">1.	Pursuant to Section 3(a) of this Security, the undersigned hereby elects to have all or a portion of this Security repurchased by the Company.</p>
<p align="left">  2.	The undersigned hereby directs the Company to pay [choose one] (a) it or (b) Name:_______________; address:  _______________; Social Security or Other Taxpayer Identification Number, if any:  ___________, an amount in cash or, at the Company&rsquo;s election, Common Stock valued as set forth in the Security, equal to 100% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Repurchase Date, as provided herein.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <p align="left">Dated:________________________<br />
              <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature</p>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left">&nbsp;</p>
<p>Principal amount to be  repurchased<br />
  (an integral multiple of $5,500): <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>  Remaining principal amount  following such repurchase<br />
  (not less than $5,500):&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>  NOTICE: The  signature to the foregoing Election must correspond to the name as written upon  the face of this Security in every particular, without alteration or any change  whatsoever.</p>
<p align="center">&nbsp;</p>
<p align="center">CONVERSION NOTICE</p>
<p>The undersigned holder of this Security hereby irrevocably exercises the  option to convert this Security, or any portion of the principal amount hereof  (which is an integral multiple of $5,500) below designated, into shares of  Common. Stock in accordance with the terms of this Security, and directs that  such shares, together with a check in payment for any fractional share and any  Security representing any unconverted principal amount hereof, be delivered to  and be registered in the name of the undersigned unless a different name has  been indicated below.&nbsp; If shares of  Common Stock or Securities are to be registered in the name of a person other  than the undersigned, the undersigned will pay all transfer taxes payable with  respect thereto.</p>
<p><br />
Dated:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p align="left"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left">&nbsp;</p>
<p align="center">&nbsp;</p>
<table border="0" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="312" valign="top"><br clear="all" />
        <br clear="all" />
        <p>If shares or    Securities are to be registered in the name of a person other than the    holder, please print such person&rsquo;s name and address:</p></td>
    <td width="327" valign="top"><p>If only a portion of    the Securities is to be converted, please indicate:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>&nbsp;</p></td>
    <td width="327" valign="top"><p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount to be converted:<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $__________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name</p></td>
    <td width="327" valign="top"><p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount and denomination of    Security representing unconverted principal amount to be issued:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Address</p></td>
    <td width="327" valign="top"><p>Amount:&nbsp; $_____________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      Social Security or other Taxpayer Identification Number, if any</p></td>
    <td width="327" valign="top"><p>Denominations:    $_________<br />
      (any integral multiple of $5,500)</p></td>
  </tr>
</table>
<p align="left"><br />
  <br />
THIS SECURITY AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE &ldquo;SECURITIES ACT&rsquo;) OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.</p>
<p align="center">___________________</p>
<p align="center">  7.0% (SUBJECT TO  ADJUSTMENT) CONVERTIBLE SUBORDINATED NOTE DUE<br />
SEPTEMBER 13, 2005</p>
<table width="721" cellspacing="0" cellpadding="0">
  <tr>
    <td width="179" scope="row">No. R-1 </td>
    <td width="179">&nbsp;</td>
    <td width="269">&nbsp;</td>
    <td width="92">$698,500.00</td>
  </tr>
</table>
<p align="left">Access Pharmaceuticals, Inc., a corporation duly  organized and existing under the laws of Delaware (the &ldquo;Company&rdquo;) for value  received, hereby promises to pay to Oracle Institutional Partners LP, or registered  assigns, the principal sum of Six Hundred Ninety Eight Thousand Five Hundred  Dollars ($698,500.00) on September 13, 2005, and to pay interest thereon, from  September 13, 2000, or from the most recent interest payment date to which  interest has been paid or duly provided for, annually on September 13 in each  year, commencing September 13, 2001, at the rate of 7.0% per annum <u>provided</u>,  that if the holder elects to extend the Redemption Commencement Date and the  Conversion Commencement Date as provided in Sections 1 and 2 below, the rate  shall adjust to 7.7% per annum commencing September 13, 2001 and continuing for  the balance of the term of this Note, until the principal hereof is due, and at  the rate of 10% per annum on any overdue principal and premium, if 
any, and, to  the extent permitted by law, on any overdue interest.&nbsp; The interest so payable, and punctually paid  or duly provided for, on any interest payment date will be paid to the person  in whose name this Security (or one or more predecessor Securities) is  registered at the close of business on the regular record date for such  interest, which shall be September 1 (whether or not a business day), as the  case may be, next preceding such interest payment date.&nbsp; Payment of the principal of this Security  shall be made upon the surrender of this Security to the Company, at its office  at 2600 N. Stemmons Freeway, Suite 176, Dallas, Texas 75207-2107 (or such other  office within the United States as shall be notified by the Company to the  holder hereof) (the &ldquo;Designated Office&rdquo;), in such coin or currency of the  United States of America as at the time of payment shall be legal tender for  the payment of public and private debts, by transfer to a U.S. dollar account  maintained by 
the payee with a bank in the United States of America. Payment of  interest on this Security shall be made, at the election of the holder, either  (a) by transfer of cash to a U.S. dollar account (such a transfer to be made  only if the holder shall have furnished wire instructions in writing to the  Company no later than 15 days prior to the relevant payment date) maintained by  the payee with a bank in the United States of America, <u>provided</u> that if  the holder shall not have timely furnished wire instructions in writing to the  Company, payment of interest on this Security shall be made by a check mailed  to the address of the person entitled thereto as such address shall appear in  the Company security register, or (b) by delivery of shares of Common Stock  with a fair market value equal to 100% of the average Closing Prices for the  five consecutive Trading Days ending on and including the third Trading Day  immediately preceding the interest payment date.</p>
<p align="left">  1.	<u>Redemption</u>.  This Security is subject to redemption upon not less than 30 nor more than 60 days&rsquo; notice by mail, at any time on or after September 30, 2001 (the `Redemption Commencement Date&rdquo;), as a whole or in part, (in any amount that is an integral multiple of $5,500) at the election of the Company, at a redemption price of 100% of the principal amount thereof, together with accrued interest to the redemption date, but interest installments whose stated maturity is on or prior to such redemption date will be payable to the holder of this Security, or one or more predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof; <u>provided</u> that this Security may not be redeemed on or after September 30, 2001 unless the Closing Price of the Company Stock exceeds 1.5 times the Conversion Price for any period of 10 consecutive Trading Days commencing on or after August 30, 2001 and ending not less than two Tradin
g Days prior to the Company&rsquo;s giving notice of such redemption to the holder hereof; further provided, that the holder of this Security may extend the Redemption Commencement Date to December 31, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Redemption Commencement Date and the Conversion Commencement Date (as defined below).</p>
<p align="left">  2.	<u>Conversion</u>.  </p>
<blockquote>
  <p align="left">(a)  The holder of this Security is entitled at any time on or after September 13, 2001 (the &ldquo;Conversion Commencement Date&rdquo;) and before the close of business on September 13, 2005 (or, in case this Security or a portion hereof is called for redemption or the holder hereof has exercised his right to require the Company to repurchase this Security or a portion hereof, then in respect of this Security or such portion hereof, as the ease may be, until and including, but (unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be) not after, the close of business on the redemption date or the Repurchase Date, as the case may be) to convert this Security (or any portion of the principal amount hereof that is an integral multiple of $5,500), into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock of the Company at the rate of 1,000 shares of Common Stock (the &ldquo;Conversi
on Rate&rdquo;) for each $5,500 principal amount of Security by surrender of this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office, accompanied by written notice to the Company that the holder hereof elects to convert this Security (or if less than the entire principal amount hereof is to be converted, specifying the portion hereof to be converted) provided, that the holder of this Security may extend the Conversion Commencement Date to December 13, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Conversion Commencement Date and Redemption Commencement Date. Upon surrender of this Security for conversion, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being converted from the interest payment date next preceding the date of such conversion to such date of conversion. No payment or adjustment is to be made on conversion for dividends on the C
ommon Stock issued on conversion hereof. No fractions of shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest, the Company shall pay a cash adjustment, computed on the basis of the Closing Price of the Common Stock on the date of conversion, or, at its option, the Company shall round up to the next higher whole share.</p>
  <p align="left">  (b)	The Conversion Rate shall be subject to adjustments from time to time as follows:</p>
  <blockquote>
    <p align="left">  (1)	In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company payable in shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the Determination Date for such dividend or other distribution shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in li
eu of fractions of shares of Common Stock.</p>
    <p align="left">  (2)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on the Determination Date for such distribution, the Conversion Rate in effect at the opening of business on the day following such Determination Date shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of C
ommon Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.</p>
    <p align="left">  (3)	In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.</p>
    <p align="left">  (4)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, or other property (including securities, but excluding (i) any rights, options or warrants referred to in paragraph (2) of this Section 2(b), (ii) any dividend or distribution paid exclusively in cash, (iii) any dividend or distribution referred to in paragraph (1) of this Section 2(b) and (iv) any merger or consolidation to which Section 2(h) applies), the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination
 Date less the then fair market value (as determined in good faith by the Board of Directors of the Company) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following such Determination Date. If the Board of Directors determines the fair market value of any distribution for purposes of this paragraph (4) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the current market price per share pursuant to paragraph (8) of this Section 2(b).</p>
    <p align="left">  (5)	In case the Company shall, by dividend or otherwise, make a Cash Distribution, then, and in each such case, immediately after the close of business on the Determination Date for such Cash Distribution, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on such Determination Date by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date less an amount equal to the quotient of (1) the amount of such Cash Distribution divided by (2) the number of shares of Common Stock outstanding on such Determination Date and (b) the denominator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date.</p>
    <p align="left">  (6)	In case the Company or any Subsidiary shall make an Excess Purchase Payment, then, and in each such case, immediately prior to the opening of business on the day after the tender offer in respect of which such Excess Purchase Payment is to be made expires, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such tender offer by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock at such Determination Date less the amount of such Excess Purchase Payment and (b) the denominator of which shall be equal to the current market price per share of the Common Stock (determined as provided in paragraph (8) of this Section 2(b)) as of such Determination Date.</p>
    <p align="left"> (7)	The reclassification of Common Stock into securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 2(h) applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall he deemed to be the Determination Date), and (b) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be &ldquo;the day upon which such subdivision becomes effective&rdquo; or &ldquo;the day upon which such combination becomes effective&rdquo;, as the case may be, and &ldquo;the day upon which such subdivision or combination becomes effective&rdquo; within the meaning of paragraph (3) of this Section 2(b)). Rig
hts or warrants issued by the Company to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock, which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events (&ldquo;Trigger Event&rdquo;), shall for purposes of this Section 2(b) not be deemed issued until the occurrence of the earliest Trigger Event.</p>
    <p align="left"> (8)	For the purpose of any computation under paragraphs (2), (4), (5) or (6) of this Section 2(b) the current market price per share of Common Stock on any date shall be calculated by the Company and be deemed to be the average of the daily Closing Prices for the five consecutive Trading Days selected by the Company commencing not more than 10 Trading Days before, and ending not later than, the earlier of the day in question and the day before the &ldquo;ex&rdquo; date with respect to the issuance or distribution requiring such computation.  For purposes of this paragraph, the term &ldquo;ex date&rdquo;, when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way in the applicable securities market or on the applicable securities exchange without the right to receive such issuance or distribution.</p>
    <p align="left">  (9)	No adjustment in the Conversion Rate shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph (9)) would require an increase or decrease of at least one percent in such rate; provided, however, that any adjustments which by reason of this paragraph (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.</p>
    <p align="left">  (10)	The Company may make such increases in the Conversion Rate, for the remaining term of the Securities or any shorter term, in addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 2(b) as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes.</p>
  </blockquote>
  <p align="left">  (c)	Whenever the Conversion Rate is adjusted as provided in Section 2(b), the Company shall compute the adjusted Conversion Rate in accordance with Section 2(b) and shall prepare a certificate signed by the chief financial officer of the Company setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and shall promptly deliver such certificate to the holder of Security.</p>
  <p align="left">  (d)	In case:</p>
  <blockquote>
    <p align="left">  (1)	the Company shall declare a dividend or other distribution on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to Section 2(b); or</p>
    <p align="left">  (2)	the Company shall authorize the granting to the holders of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or</p>
    <p align="left">  (3)	of any reclassification of the Common Stock of the Company, or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance, sale, transfer or lease of all or substantially all of the assets of the Company; or</p>
    <p align="left">  (4)	of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or</p>
    <p align="left"> (5)	the Company or any Subsidiary shall commence a tender offer for all or a portion of the Company&rsquo;s outstanding shares of Common Stock (or shall amend any such tender offer);</p>
  </blockquote>
  <p align="left">      then the Company shall cause to be delivered to the holder of this Security, at least 10 days prior to the applicable record, expiration or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined, (y) the date on which the right to make tenders under such tender offer expires or (z) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
 merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (1) through (5) of this Section 2(d).</p>
  <p align="left">  (e)	The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of the Security, the full number of shares of Common Stock then issuable upon the conversion of this Security.</p>
  <p align="left">  (f)	Except as provided in the next sentence, the Company will pay any and all stamp or transfer taxes and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Security. The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the holder of this Security, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.</p>
  <p align="left"> (g)	The Company agrees that all shares of Common Stock which may be delivered upon conversion of the Security, upon such delivery, will have been duly authorized and validly issued and will be fully paid and nonassessable (and shall be issued out of the Company&rsquo;s authorized but unissued Common Stock) and, except as provided in Section 2(f), the Company will pay all stamp or transfer taxes, liens and charges with respect to the issue thereof.</p>
  <p align="left"> (h)	In case of any consolidation of the Company with any other person, any merger of the Company into another person or of another person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company) or any conveyance, sale, transfer or lease of all or substantially all of the properties and assets of the Company, the person formed by such consolidation or resulting from such merger or which acquires such properties and assets, as the case may be, shall execute and deliver to the holder of this Security a supplemental agreement providing that such holder have the right there-after, during the period this Security shall be convertible as specified in Section 2(a), to convert this Security only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (including any Common Stock retainable) by a
 holder of the number of shares of Common Stock of the Company into which this Security might have been converted immediately prior to such consolidation, merger, conveyance, sale, transfer or lease, assuming such holder of Common Stock of the Company (i) is not a person with which the Company consolidated, into which the Company merged or which merged into the Company or to which such conveyance, sale, transfer or lease was made, as the case may be (a &ldquo;Constituent Person&rdquo;), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, or lease is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sa
le, transfer or lease by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised (&ldquo;Non-electing Share&rdquo;), then for the purpose of this Section 2(h) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease by the holders of each Non-electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-electing Shares).  Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2.  The above provisions of this Section 2(h) shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases. In this paragraph, &ldquo;securities of the kind receivable&rdquo; upon such consolidation, merger, conv
eyance, transfer, sale or lease by a holder of Common Stock means securities that, among other things, are registered and transferable under the Securities Act, and listed and approved for quotation in all securities markets, in each case to the same extent as such securities so receivable by a holder of Common Stock.</p>
  <p align="left"> (i)	The Company (a) will effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), the Securities Exchange Act of 1934, as amended, and state securities and Blue Sky laws) for the shares of Common Stock issuable upon conversion of this Security to be lawfully issued and delivered as provided herein, and thereafter publicly traded (if permissible under such Securities Act) and qualified or listed as contemplated by clause (b) below (it being understood that the Company shall not be required to register the Common Stock issuable on conversion hereof under the Securities Act, except pursuant to the Registration Rights Agreement between the Company and the initial holder of this Security); and (b) will list the shares of Common Stock required to be issued and delivered upon conversion of Securities, prior to such
 issuance or delivery, on each national securities exchange on which outstanding Common Stock is listed or quoted at the time of such delivery, or if the Common Stock is not then listed on any securities exchange, to qualify the Common Stock for quotation on the Nasdaq National Market or such other inter-dealer quotation system, if any, on which the Common. Stock is then quoted.</p>
  <p align="left">  (j)	For purposes hereof:</p>
  <p align="left">&ldquo;Affiliate&rdquo; of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, &ldquo;control&rdquo;, when used with respect to any specified person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms &ldquo;controlling&rdquo; and &ldquo;controlled&rdquo; have meanings correlative to the foregoing.</p>
  <p align="left">&ldquo;Cash Distribution&rdquo; means the distribution by the Company to all holders of its Common Stock of cash, other than any cash that is distributed upon a merger or consolidation to which Section 2(h) applies or as part of a distribution referred to in paragraph (4) of Section 2(b).</p>
  <p align="left">&ldquo;Closing Price&rdquo; means, with respect to the Common Stock of the Company, for any day, the reported last sale price per share on the American Stock Exchange, or, if the Common Stock is not admitted to trading on the American Stock Exchange, on the principal national securities exchange or inter-dealer quotation system on which the Common Stock is listed or admitted to trading, or if not admitted to trading on the Nasdaq National Market, or listed or admitted to trading on any national securities exchange or inter-dealer quotation system, the average of the closing bid and asked prices per share in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose.</p>
  <p align="left">&ldquo;Common Stock&rdquo; means the Common Stock, par value $.91 per share, of the Company authorized at the date of this instrument as originally executed. Subject to the provisions of Section 2(h), shares issuable on conversion or repurchase of this Security shall include only shares of Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of this Security shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.</p>
  <p align="left">&ldquo;Conversion Price&rdquo; on any day means an amount equal to $5,500 divided by the Conversion Rate in effect on such day.</p>
  <p align="left">&ldquo;Determination Date&rdquo; means, in the case of a dividend or other distribution, including the issuance of rights, options or warrants, to shareholders, the date fixed for the determination of shareholders entitled to receive such dividend or other distribution and, in the case of a tender offer, the last time that tenders could have been made pursuant to such tender offer.</p>
  <p align="left">&ldquo;Excess Purchase Payment&rdquo; means the excess, if any, of (i} the amount of cash plus the fair market value (as determined in good faith by the Company&rsquo;s Board of Directors) of any non-cash consideration required to be paid with respect to one share of Common Stock acquired or to be acquired in a tender offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock over (ii) the current market price per share as of the last time that tenders could have been made pursuant to such tender offer.</p>
  <p align="left">&ldquo;Trading Day&rdquo; means (i) if the Common Stock is listed or admitted for trading on the New York or American Stock Exchange or any other national securities exchange, a day on which such exchange is open for business; (ii) if the Common Stock is admitted to trading on the Nasdaq National Market or any other system of automated dissemination of quotations of securities prices, a day on which trades may be effected through such system; or (iii) if the Common Stock is not admitted to trading on the Nasdaq National Market or listed or admitted for trading on any national securities exchange or any other system of automated dissemination of quotation of securities prices, a day on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available.</p>
</blockquote>
<p align="left">  3.	<u>Right to Require Repurchase</u>.  </p>
<blockquote>
  <p align="left">(a)  In the event that a Change in Control (as hereinafter defined) shall occur, then the holder of this Security shall have the right, at such holder&rsquo;s option, subject to the rights of holders of Senior Indebtedness, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, this Security, or any portion of the principal amount hereof that is equal to $5,500 or any integral multiple thereof, on the date (the &ldquo;Repurchase Date&rdquo;) that is ten Trading Days after the date on which the Company gives notice thereof to the holder of this Security, at a purchase price equal to 105% of the principal amount of this Security to be repurchased, plus interest accrued to the Repurchase Date (the &ldquo;Repurchase Price&rdquo;); provided, however, that installments of interest on this Security whose stated maturity is on or prior to the Repurchase Date shall be payable to the holder of this Security, or one or more predecessor Securities, regis
tered as such on the relevant Record Date according to their terms.  Upon surrender of this Security for repurchase, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being repurchased from the interest payment date next preceding the date of such repurchase to such date of repurchase.  At the option of the Company, the Repurchase Price may be paid in cash or, subject to the fulfillment by the Company of the conditions set forth in Section 3(b), by delivery of shares of Common Stock having a fair market value equal to the Repurchase Price as described in Section 3(b).  The Company agrees to give the holder of this Security notice of any Change in Control, by facsimile transmission confirmed in writing by overnight courier service, promptly and in any event within two Trading Days of the occurrence thereof.</p>
  <p align="left">    (b)	The Company may elect to pay the Repurchase Price by delivery of shares of Common Stock pursuant to Section 3(a), if and only if the following conditions have been satisfied:</p>
  <blockquote>
    <p align="left">    (1)	The shares of Common Stock deliverable in payment of the Repurchase Price shall have a fair market value as of the Repurchase Date of not less than the Repurchase Price. For purposes of this Section 3(b), the fair market value of shares of Common Stock shall be equal to 95% of the average of the Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Repurchase Date;</p>
    <p align="left">      (2)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act of 1933 upon issuance, such registration shall have been completed and shall have become effective prior to the Repurchase Date;</p>
    <p align="left">      (3)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration with or approval of any governmental authority under any State law or any other Federal law before such shares may be validly issued or delivered upon repurchase, such registration shall have been completed, have become effective and such approval shall have been obtained, in each case, prior to the Repurchase Date;</p>
    <p align="left">      (4)	Immediately prior to the Repurchase Date the shares of Common Stock deliverable in payment of the Repurchase Price shall have been approved for trading or listed on the American Stock Exchange or the principal national securities exchange or interdealer quotation system on which the Common Stock is then admitted to trading or listed; and</p>
    <p align="left">      (5)	All shares of Common Stock deliverable in payment of the Repurchase Price shall be issued out of the Company&rsquo;s authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights.</p>
    <p align="left">If all of the conditions set forth in this Section 3(b) are not satisfied in accordance with the terms thereof, the Repurchase Price shall be paid by the Company only in cash.</p>
  </blockquote>
  <p align="left"> (c)	To exercise a repurchase right, the holder shall deliver to the Company on or before the 5th day prior to the Repurchase Date, together with this Security, written notice of the holder&rsquo;s exercise of such right, which notice shall set forth the name of the holder, the principal amount of this Security to be repurchased (and, if this Security is to be repurchased in part, the portion of the principal amount thereof to be repurchased and the name of the person in which the portion thereof to remain outstanding after such repurchase is to be registered) and a statement that an election to exercise the repurchase right is being made thereby, and, in the event that the Repurchase Price shall be paid in shares of Common Stock, the name or names (with addresses) in which the certificate or certificates for shares of Common Stock shall be issued. Such written notice shall be irrevocable, except that the right of the holder to convert this Security (or the portion hereof with respect to wh
ich the repurchase right is being exercised) shall continue until the close of business on the Repurchase Date.</p>
  <p align="left">    (d)	In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the holder the Repurchase Price in cash or shares of Common Stock, as provided above, or, if shares of Common Stock are to be paid, as promptly after the Repurchase Date as practicable, together with accrued and unpaid interest to the Repurchase Date; provided, however, that installments of interest that mature on or prior to the Repurchase Date shall be payable in cash, to the holders of this Security, or one or more predecessor Securities, registered as such at the close of business on the relevant regular record date.</p>
  <p align="left">    (e)	If this Security (or portion thereof) is surrendered for repurchase and is not so paid on the Repurchase Date, the principal amount of this Security (or such portion hereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate per annum borne by this Security, and shall remain convertible into Common Stock until the principal of this Security (or portion thereof, as the case may be) shall have been paid or duly provided for.</p>
  <p align="left">    (f)	If this Security is to be repurchased only in part, it shall be surrendered to the Company at the Designated Office (with, if the Company so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing), and the Company shall execute and make available for delivery to the holder without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered.</p>
  <p align="left">    (g)	Any issuance of shares of Common Stock in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of business on the Repurchase Date and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open. No payment or adjustment shall be made for dividends or distributions on any Common Stock issued upon repurchase of this Security declared prior
 to the Repurchase Date.</p>
  <p align="left">    (h)	No fractions of shares shall be issued upon repurchase of this Security. Instead of any fractional share of Common Stock which would otherwise be issuable on the repurchase of this Security, the Company will deliver to the holder its check for the current market value of such fractional share. The current market value of a fraction of a share shall be determined by multiplying the current market price of a full share by the fraction, and rounding the result to the nearest cent. For purposes of this Section 3 the current market price of a share of Common Stock shall be the Closing Price of the Common Stock on the Trading Day immediately preceding the Repurchase Date.</p>
  <p align="left">    (i)	Any issuance and delivery of certificates for shares of Common Stock on repurchase of this Security shall be made without charge to the holder of this Security for such certificates or for any stamp or transfer tax or duty in respect of the issuance or delivery of such certificates or the securities represented thereby; provided, however, that the Company shall not be required to pay any tax or duty which may be payable in respect of any transfer involved in the issuance or delivery of certificates for shares of Common Stock in a name other than that of the holder of this Security, and no such issuance or delivery shall be made unless and until the person requesting such issuance or delivery has paid to the Company the amount of any such tax or duty or has established, to the satisfaction of the Company, that such tax or duty has been paid.</p>
  <p align="left">    (j)	For purposes of this Section 3;</p>
  <blockquote>
    <p align="left"> (1)	the term &ldquo;beneficial owner&rdquo; shall be determined in accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934; and</p>
    <p align="left">      (2)	a &ldquo;Change in Control&rdquo; shall be deemed to have occurred at the time, after the original issuance of this Security, of:</p>
    <blockquote>
      <p align="left">      (i)	the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock of the Company entitling such person to exercise 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors (any shares of voting stock of which such person is the beneficial owner that are not then outstanding being deemed outstanding for purposes of calculating such percentage) other than any such acquisition by the Company or any employee benefit plan of the Company;</p>
      <p align="left">        (ii)	any consolidation or merger of the Company with or into, any other person, any merger of another person with or into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Company to another person (other than (a) any such transaction (x) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock and (y) pursuant to which holders of Common Stock immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving person immediately after such transaction and (b) any merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into sha
res of common stock);</p>
    </blockquote>
    <p align="left">        provided, however, that a Change in Control shall not be deemed to have occurred if the Closing Price for any five Trading Days within the period of 10 consecutive Trading Days (x) ending immediately after the later of the date of the Change in Control or the date of the public announcement of the Change in Control (in the case of a Change in Control under Clause (i) above) or (y) ending immediately prior to the date of the Change in Control (in the case of a Change in Control under Clause (ii) above) shall equal or exceed 105% of the Conversion Price in effect on each such Trading Day.</p>
  </blockquote>
</blockquote>
<p align="left"> 4.	<u>Events of Default</u>.  </p>
<blockquote>
  <p align="left">(a)  &ldquo;Event of Default&rdquo;, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Section 6 or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):</p>
  <blockquote>
    <p align="left">      (1)	default in the payment of any interest upon this Security when it becomes due and payable, and continuance of such default for a period of 30 days; or</p>
    <p align="left">      (2)	default by the Company in the performance of its obligations in respect of any conversion of this Security (or any portion hereof) in accordance with Section 2; or</p>
    <p align="left">      (3)	failure by the Company to give any notice of a Change of Control required to be delivered in accordance with Section 3(a); or</p>
    <p align="left">      (4)	default in the performance, or breach, of any material covenant or warranty of the Company herein (other than a covenant or warranty a default in the performance or breach of which is specifically dealt with elsewhere in this Section 4(a)) and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the holder of this Security a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p align="left">      (5)	a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company, or under any agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, with a principal amount then outstanding in excess of $1,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay the principal of such indebtedness (in whole or in any part greater than $1,000,000) when due and payable or shall have resulted in such indebtedness (in whole or in any part greater than $1,000,000) becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified
 mail, to the Company by the holder of this Security a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p align="left">      (6)	the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or</p>
    <p align="left">      (7)	the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the b
enefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action.</p>
  </blockquote>
  <p align="left">      (b)	If an Event of Default (other than an Event of Default specified in Section 4(a)(6) or 4(a)(7)) occurs and is continuing, then in every such case the holder of this Security may declare the principal hereof to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable.  If an Event of Default specified in Section 4(a)(6) or 4(a)(7) occurs and is continuing, the principal of, and accrued interest on, this Security shall ipso facto become immediately due and payable without any declaration or other act of the holders.</p>
</blockquote>
<p align="left">    5.	<u>Consolidation, Merger, Etc</u>.  </p>
<blockquote>
  <p align="left">(a)  The Company shall not consolidate with or merge into any other person or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to any person, and the Company shall not permit any person to consolidate with or merge into the Company or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to the Company, unless:</p>
  <blockquote>
    <p align="left">    (1)	in case the Company shall consolidate with or merge into another person or convey, transfer, sell or lease all or substantially all of its properties and assets to any person, the person formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or sale, or which leases, all or substantially all the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the holder of this Security, the due and punctual payment of the principal of and interest on this Security and the performance or observance of every covenant of this Security on the part of the Company to be performed or observed, including the conversion rights provided herein;</p>
    <p align="left">      (2)	immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a subsidiary of the Company as a result of such transaction as having been incurred by the Company or such subsidiary of the Company at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and</p>
    <p align="left">      (3)	the Company has delivered to the holder of this Security an officers&rsquo; certificate stating that such consolidation, merger, conveyance, transfer, sale or lease and, if a supplemental agreement is required in connection with such transaction, such supplemental agreement, comply with this Section and that all conditions precedent herein provided for relating to such transaction have been complied with.</p>
  </blockquote>
  <p align="left">      (b)	Upon any consolidation of the Company with, or merger of the Company into, any other person or any conveyance, transfer, sale or lease of all or substantially all of the properties and assets of the Company in accordance with Section 5(a), the successor person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, sale or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Security with the same effect as if such successor person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor person shall be relieved of all obligations and covenants under this Security.</p>
</blockquote>
<p align="left">    6.	<u>Subordination</u>.  The Company agrees, and the holder of this Security by accepting a Security agrees, that the indebtedness evidenced by this Security is subordinated in right of payment to the prior payment in full of all Senior Indebtedness, and that the subordination is for the benefit of the holders of Senior Indebtedness.</p>
<blockquote>
  <p align="left">&ldquo;Senior Indebtedness&rdquo; means:</p>
  <p align="left">  (a)	the principal of, interest (including, to the extent permitted by applicable law, interest on or after the commencement of any bankruptcy or similar proceeding whether or not representing an allowed claim in such proceeding) on and any other amounts owing with respect to (i) any indebtedness of the Company, now or hereafter outstanding, in respect of borrowed money (other than the Securities), (ii) any indebtedness of the Company, now or hereafter outstanding, evidenced by a bond, note, debenture, capitalized lease, letter of credit or other similar instrument, (iii) any other written obligation of the Company, now or hereafter outstanding, to pay money issued or assumed as all or part of the consideration for the acquisition of property, assets or securities and (iv) any guaranty or endorsement (other than for collection or deposit in the ordinary course of business) or discount with recourse of, or other agreement (contingent or otherwise) to purchase, repurchase or otherwise acquir
e, to supply or advance funds or to become liable with respect to (directly or indirectly), any indebtedness or obligation of any person of the type referred to in the preceding subclauses (i), (ii) and (iii) now or hereafter outstanding; and</p>
  <p align="left">    (b)	any refundings, renewals or extensions of any indebtedness or other obligation described in clause (a) above.</p>
  <p align="left">    Notwithstanding the foregoing, if, by the terms of the instrument creating or evidencing any indebtedness or obligation referred to in clauses (a) and (b) above, it is expressly provided that such indebtedness or obligation is not senior in right of payment to this Security, such indebtedness or obligation shall not be included as Senior Indebtedness.</p>
</blockquote>
<p align="left">    7.	<u>Other</u>.  </p>
<blockquote>
  <p align="left">(a)  No provision of this Security shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security as herein provided.</p>
  <p align="left">    (b)	The Company will give prompt written notice to the holder of this Security of any change in the location of the Designated Office.</p>
  <p align="left">    (c)	The transfer of this Security is registrable on the Security Register of the Company upon surrender of this Security for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such Securities are issuable only in registered form without coupons in denominations of $5,500 and any integral multiple thereof. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Security for registration of transfer, the Company and any agent of the Company may treat th
e person in whose name this Security is registered, as the owner thereof for all purposes, whether or not this Security be overdue, and neither the Company, nor any such agent shall be affected by notice to the contrary.</p>
  <p align="left">    Notwithstanding any other provision of this Security, this Security and the shares of Common Stock issuable upon conversion hereof may only be transferred by the holder of this Security (a) in the case of the Common Stock only, in a public offering registered under the Securities Act of 1933, as amend; (b) to one or more investors, in one or more transactions, any one of whom, after such purchase, would hold not more than 5% of the shares of Common Stock then outstanding (assuming conversion of any portion of this Security so transferred); (c) to any person or entity that already controls more than 50% of the voting securities of the Company prior to such transfer; (d) in a transaction that complies with the manner of sale restrictions of Rule 144 under the Securities Act; or (e) in a transaction approved in advance by the Federal Reserve Board.  The holder of this Security, by acceptance thereof, shall be deemed to have agreed to the foregoing restriction on transfers.</p>
  <p align="left">    (d)	The holder agrees that, at the written request of the Company or any managing underwriter of any underwritten public offering of securities of the Company, such holder shall not, without the prior written consent of the Company or such managing underwriter, sell, make any short sale of, loan, grant any option for the purchase of, pledge, encumber, or otherwise dispose of, or exercise any registration rights with respect to, any Securities or Common Stock of the Company during the 180-day period commencing on the effective date of the registration statement relating to such underwritten public offering of the Company&rsquo;s securities; provided, that each officer and director of the Company shall have entered into a similar agreement.</p>
  <p align="left">    (e)	This Security shall be governed by and construed in accordance with the laws of the State of Texas, United States of America.</p>
  <p align="left">&nbsp;</p>
  <p align="left">&nbsp;</p>
</blockquote>
<p>IN WITNESS WHEREOF, the Company has caused this Security to be duly  executed under its corporate seal.<br />
  Dated:&nbsp; September   13, 2000</p>
<blockquote>
  <p>&nbsp;</p>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p>By:<u>/s/Kerry P. Gray&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
            Name:&nbsp; Kerry P. Gray<br />
            Title:&nbsp;&nbsp;&nbsp; Chief Executive Officer</p>
          <p>&nbsp;</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>Attest:<br />
  <u>/s/Stephen  B. Thompson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
Name:&nbsp; Stephen B. Thompson<br />
Title:&nbsp;&nbsp;&nbsp; Vice President and CFO</p>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="center">ELECTION OF HOLDER TO REQUIRE REPURCHASE</p>
<p align="left">1.	Pursuant to Section 3(a) of this Security, the undersigned hereby elects to have all or a portion of this Security repurchased by the Company.</p>
<p align="left">  2.	The undersigned hereby directs the Company to pay [choose one] (a) it or (b) Name:_______________; address:  _______________; Social Security or Other Taxpayer Identification Number, if any:  ___________, an amount in cash or, at the Company&rsquo;s election, Common Stock valued as set forth in the Security, equal to 100% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Repurchase Date, as provided herein.</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p>Dated:________________________<br />
            <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
          <p>Signature          </p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>Principal amount to be  repurchased<br />
(an integral multiple of $5,500): <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>  Remaining principal amount  following such repurchase<br />
  (not less than $5,500):&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>  NOTICE: The  signature to the foregoing Election must correspond to the name as written upon  the face of this Security in every particular, without alteration or any change  whatsoever.</p>
<p>&nbsp;</p>
<p align="center">CONVERSION NOTICE</p>
<p>The undersigned holder of this Security hereby  irrevocably exercises the option to convert this Security, or any portion of  the principal amount hereof (which is an integral multiple of $5,500) below  designated, into shares of Common. Stock in accordance with the terms of this  Security, and directs that such shares, together with a check in payment for  any fractional share and any Security representing any unconverted principal  amount hereof, be delivered to and be registered in the name of the undersigned  unless a different name has been indicated below.&nbsp; If shares of Common Stock or Securities are  to be registered in the name of a person other than the undersigned, the  undersigned will pay all transfer taxes payable with respect thereto.</p>
<p><br />
  Dated:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature</p>
          <p>&nbsp;</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<table border="0" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="312" valign="top"><br clear="all" />
        <br clear="all" />
        <p>If shares or    Securities are to be registered in the name of a person other than the    holder, please print such person&rsquo;s name and address:</p></td>
    <td width="327" valign="top"><p>If only a portion of    the Securities is to be converted, please indicate:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>&nbsp;</p></td>
    <td width="327" valign="top"><p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount to be converted:<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $__________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name</p></td>
    <td width="327" valign="top"><p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount and denomination of    Security representing unconverted principal amount to be issued:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Address</p></td>
    <td width="327" valign="top"><p>Amount:&nbsp; $_____________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      Social Security or other Taxpayer Identification Number, if any</p></td>
    <td width="327" valign="top"><p>Denominations:    $_________<br />
      (any integral multiple of $5,500)</p></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="left">THIS SECURITY AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE &ldquo;SECURITIES ACT&rsquo;) OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.</p>
<p align="center">___________________</p>
<p align="center"><br />
  7.0% (SUBJECT TO  ADJUSTMENT) CONVERTIBLE SUBORDINATED NOTE DUE<br />
  SEPTEMBER 13, 2005</p>
<table width="746" cellspacing="0" cellpadding="0">
  <tr>
    <td width="200" scope="row">No. R-1</td>
    <td width="327">&nbsp;</td>
    <td width="128">&nbsp;</td>
    <td width="89">$132,000.00</td>
  </tr>
</table>
<p align="left">  Access Pharmaceuticals, Inc., a corporation duly organized and existing under the laws of Delaware (the &ldquo;Company&rdquo;) for value received, hereby promises to pay to Oracle Offshore Ltd., or registered assigns, the principal sum of One Hundred Thirty Two Thousand Dollars ($132,000.00) on September 13, 2005, and to pay interest thereon, from September 13, 2000, or from the most recent interest payment date to which interest has been paid or duly provided for, annually on September 13 in each year, commencing September 13, 2001, at the rate of 7.0% per annum provided, that if the holder elects to extend the Redemption Commencement Date and the Conversion Commencement Date as provided in Sections 1 and 2 below, the rate shall adjust to 7.7% per annum commencing September 13, 2001 and continuing for the balance of the term of this Note, until the principal hereof is due, and at the rate of 10% per annum on any overdue principal and premium, if any, and, to the extent permitted by law, on
 any overdue interest. The interest so payable, and punctually paid or duly provided for, on any interest payment date will be paid to the person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on the regular record date for such interest, which shall be September 1 (whether or not a business day), as the case may be, next preceding such interest payment date. Payment of the principal of this Security shall be made upon the surrender of this Security to the Company, at its office at 2600 N. Stemmons Freeway, Suite 176, Dallas, Texas 75207-2107 (or such other office within the United States as shall be notified by the Company to the holder hereof) (the &ldquo;Designated Office&rdquo;), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, by transfer to a U.S. dollar account maintained by the payee with a bank in the United States of America. Payment of int
erest on this Security shall be made, at the election of the holder, either (a) by transfer of cash to a U.S. dollar account (such a transfer to be made only if the holder shall have furnished wire instructions in writing to the Company no later than 15 days prior to the relevant payment date) maintained by the payee with a bank in the United States of America, provided that if the holder shall not have timely furnished wire instructions in writing to the Company, payment of interest on this Security shall be made by a check mailed to the address of the person entitled thereto as such address shall appear in the Company security register, or (b) by delivery of shares of Common Stock with a fair market value equal to 100% of the average Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the interest payment date.</p>
<p align="left">  1.	<u>Redemption</u>.  This Security is subject to redemption upon not less than 30 nor more than 60 days&rsquo; notice by mail, at any time on or after September 30, 2001 (the &lsquo;Redemption Commencement Date&rdquo;), as a whole or in part, (in any amount that is an integral multiple of $5,500) at the election of the Company, at a redemption price of 100% of the principal amount thereof, together with accrued interest to the redemption date, but interest installments whose stated maturity is on or prior to such redemption date will be payable to the holder of this Security, or one or more predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof; provided that this Security may not be redeemed on or after September 30, 2001 unless the Closing Price of the Company Stock exceeds 1.5 times the Conversion Price for any period of 10 consecutive Trading Days commencing on or after August 30, 2001 and ending not less than two Trading
 Days prior to the Company&rsquo;s giving notice of such redemption to the holder hereof; further provided, that the holder of this Security may extend the Redemption Commencement Date to December 31, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Redemption Commencement Date and the Conversion Commencement Date (as defined below).</p>
<p align="left">  2.	<u>Conversion</u>.  </p>
<blockquote>
  <p align="left">(a)  The holder of this Security is entitled at any time on or after September 13, 2001 (the &ldquo;Conversion Commencement Date&rdquo;) and before the close of business on September 13, 2005 (or, in case this Security or a portion hereof is called for redemption or the holder hereof has exercised his right to require the Company to repurchase this Security or a portion hereof, then in respect of this Security or such portion hereof, as the case may be, until and including, but (unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be) not after, the close of business on the redemption date or the Repurchase Date, as the case may be) to convert this Security (or any portion of the principal amount hereof that is an integral multiple of $5,500), into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock of the Company at the rate of 1,000 shares of Common Stock (the &ldquo;Conversi
on Rate&rdquo;) for each $5,500 principal amount of Security by surrender of this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office, accompanied by written notice to the Company that the holder hereof elects to convert this Security (or if less than the entire principal amount hereof is to be converted, specifying the portion hereof to be converted) provided, that the holder of this Security may extend the Conversion Commencement Date to December 13, 2002 by giving written notice to the Company on or before July 1, 2001 of its election to so extend the Conversion Commencement Date and Redemption Commencement Date. Upon surrender of this Security for conversion, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being converted from the interest payment date next preceding the date of such conversion to such date of conversion.  No payment or adjustment is to be made on conversion for dividends on the 
Common Stock issued on conversion hereof. No fractions of shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest, the Company shall pay a cash adjustment, computed on the basis of the Closing Price of the Common Stock on the date of conversion, or, at its option, the Company shall round up to the next higher whole share.</p>
  <p align="left">  (b)	The Conversion Rate shall be subject to adjustments from time to time as follows:</p>
  <blockquote>
    <p align="left">  (1)	In case the Company shall pay or make a dividend or other distribution on any class of capital stock of the Company payable in shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the Determination Date for such dividend or other distribution shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in li
eu of fractions of shares of Common Stock.</p>
    <p align="left">      (2)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on the Determination Date for such distribution, the Conversion Rate in effect at the opening of business on the day following such Determination Date shall be increased by dividing such Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares 
of Common Stock outstanding at the close of business on such Determination Date plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following such Determination Date. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.</p>
    <p align="left">      (3)	In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.</p>
    <p align="left">      (4)	Subject to the last sentence of paragraph (7) of this Section 2(b), in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, or other property (including securities, but excluding (i) any rights, options or warrants referred to in paragraph (2) of this Section 2(b), (ii) any dividend or distribution paid exclusively in cash, (iii) any dividend or distribution referred to in paragraph (1) of this Section 2(b) and (iv) any merger or consolidation to which Section 2(h) applies), the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determina
tion Date less the then fair market value (as determined in good faith by the Board of Directors of the Company) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following such Determination Date.  If the Board of Directors determines the fair market value of any distribution for purposes of this paragraph (4) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the current market price per share pursuant to paragraph (8) of this Section 2(b).</p>
    <p align="left">      (5)	In case the Company shall, by dividend or otherwise, make a Cash Distribution, then, and in each such case, immediately after the close of business on the Determination Date for such Cash Distribution, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on such Determination Date by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date less an amount equal to the quotient of (1) the amount of such Cash Distribution divided by (2) the number of shares of Common Stock outstanding on such Determination Date and (b) the denominator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock on such Determination Date.</p>
    <p align="left">      (6)	In case the Company or any Subsidiary shall make an Excess Purchase Payment, then, and in each such case, immediately prior to the opening of business on the day after the tender offer in respect of which such Excess Purchase Payment is to be made expires, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the Determination Date for such tender offer by a fraction (a) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (8) of this Section 2(b)) of the Common Stock at such Determination Date less the amount of such Excess Purchase Payment and (b) the denominator of which shall be equal to the current market price per share of the Common Stock (determined as provided in paragraph (8) of this Section 2(b)) as of such Determination Date.</p>
    <p align="left">      (7)	The reclassification of Common Stock into securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 2(h) applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be the Determination Date), and (b) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be &ldquo;the day upon which such subdivision becomes effective&rdquo; or &ldquo;the day upon which such combination becomes effective&rdquo;, as the case may be, and &ldquo;the day upon which such subdivision or combination becomes effective&rdquo; within the meaning of paragraph (3) of this Section 2(b))
. Rights or warrants issued by the Company to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock, which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events (&ldquo;Trigger Event&rdquo;), shall for purposes of this Section 2(b) not be deemed issued until the occurrence of the earliest Trigger Event.</p>
    <p align="left">      (8)	For the purpose of any computation under paragraphs (2), (4), (5) or (6) of this Section 2(b) the current market price per share of Common Stock on any date shall be calculated by the Company and be deemed to be the average of the daily Closing Prices for the five consecutive Trading Days selected by the Company commencing not more than 10 Trading Days before, and ending not later than, the earlier of the day in question and the day before the &ldquo;ex&rdquo; date with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term &ldquo;ex date&rdquo;, when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way in the applicable securities market or on the applicable securities exchange without the right to receive such issuance or distribution.</p>
    <p align="left">      (9)	No adjustment in the Conversion Rate shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph (9)) would require an increase or decrease of at least one percent in such rate; provided, however, that any adjustments which by reason of this paragraph (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.</p>
    <p align="left">      (10)	The Company may make such increases in the Conversion Rate, for the remaining term of the Securities or any shorter term, in addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 2(b) as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes.</p>
  </blockquote>
  <p align="left">  (c)	Whenever the Conversion Rate is adjusted as provided in Section 2(b), the Company shall compute the adjusted Conversion Rate in accordance with Section 2(b) and shall prepare a certificate signed by the chief financial officer of the Company setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and shall promptly deliver such certificate to the holder of Security,  </p>
  <p align="left">(d)	In case:  </p>
  <blockquote>
    <p align="left">(1)	the Company shall declare a dividend or other distribution on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to Section 2(b); or</p>
    <p align="left">      (2)	the Company shall authorize the granting to the holders of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or</p>
    <p align="left">      (3)	of any reclassification of the Common Stock of the Company, or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance, sale, transfer or lease of all or substantially all of the assets of the Company; or</p>
    <p align="left">      (4)	of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or</p>
    <p align="left">      (5)	the Company or any Subsidiary shall commence a tender offer for all or a portion of the Company&rsquo;s outstanding shares of Common Stock (or shall amend any such tender offer);</p>
  </blockquote>
  <p align="left"> then the Company shall cause to be delivered to the holder of this Security, at least 10 days prior to the applicable record, expiration or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined, (y) the date on which the right to make tenders under such tender offer expires or (z) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding &lsquo;up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidatio
n, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (1) through (5) of this Section 2(d).</p>
  <p align="left">  (e)	The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of the Security, the full number of shares of Common Stock then issuable upon the conversion of this Security.</p>
  <p align="left">  (f)	Except as provided in the next sentence, the Company will pay any and all stamp or transfer taxes and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Security. The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the holder of this Security, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.</p>
  <p align="left"> (g)	The Company agrees that all shares of Common Stock which may be delivered upon conversion of the Security, upon such delivery, will have been duly authorized and validly issued and will be fully paid and non assessable (and shall be issued out of the Company&rsquo;s authorized but unissued Common Stock) and, except as provided in Section 2(f), the Company will pay all stamp or transfer taxes, liens and charges with respect to the issue thereof.</p>
  <p align="left"> (h)	In case of any consolidation of the Company with any other person, any merger of the Company into another person or of another person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company) or any conveyance, sale, transfer or lease of all or substantially all of the properties and assets of the Company, the person formed by such consolidation or resulting from such merger or which acquires such properties and assets, as the case may be, shall execute and deliver to the holder of this Security a supplemental agreement providing that such holder have the right there-after, during the period this Security shall be convertible as specified in Section 2(a), to convert this Security only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (including any Common Stock retainable) by a
 holder of the number of shares of Common Stock of the Company into which this Security might have been converted immediately prior to such consolidation, merger, conveyance, sale, transfer or lease, assuming such holder of Common Stock of the Company (i) is not a person with which the Company consolidated, into which the Company merged or which merged into the Company or to which such conveyance, sale, transfer or lease was made, as the case may be (a &ldquo;Constituent Person&rdquo;), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, or lease is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sa
le, transfer or lease by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised (&ldquo;Non-electing Share&rdquo;), then for the purpose of this Section 2(h) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease by the holders of each Non-electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-electing Shares). Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2. The above provisions of this Section 2(h) shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases. In this paragraph, &ldquo;securities of the kind receivable&rdquo; upon such consolidation, merger, convey
ance, transfer, sale or lease by a holder of Common Stock means securities that, among other things, are registered and transferable under the Securities Act, and listed and approved for quotation in all securities markets, in each case to the same extent as such securities so receivable by a holder of Common Stock.</p>
  <p align="left"> (i)	The Company (a) will effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), the Securities Exchange Act of 1934, as amended, and state securities and Blue Sky laws) for the shares of Common Stock issuable upon conversion of this Security to be lawfully issued and delivered as provided herein, and thereafter publicly traded (if permissible under such Securities Act) and qualified or listed as contemplated by clause (b) below (it being understood that the Company shall not be required to register the Common Stock issuable on conversion hereof under the Securities Act, except pursuant to the Registration Rights Agreement between the Company and the initial holder of this Security); and (b) will list the shares of Common Stock required to be issued and delivered upon conversion of Securities, prior to such
 issuance or delivery, on each national securities exchange on which outstanding Common Stock is listed or quoted at the time of such delivery, or if the Common Stock is not then listed on any securities exchange, to qualify the Common Stock for quotation on the Nasdaq National Market or such other inter-dealer quotation system, if any, on which the Common Stock is then quoted.</p>
  <p align="left">  (j)	For purposes hereof:</p>
  <p align="left">&ldquo;Affiliate&rdquo; of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, control&rdquo;, when used with respect to any specified person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms &ldquo;controlling&rdquo; and &ldquo;controlled&rdquo; have meanings correlative to the foregoing.</p>
  <p align="left">&ldquo;Cash Distribution&rdquo; means the distribution by the Company to all holders of its Common Stock of cash, other than any cash that is distributed upon a merger or consolidation to which Section 2(h) applies or as part of a distribution referred to in paragraph (4) of Section 2(b).</p>
  <p align="left">&ldquo;Closing Price&rdquo; means, with respect to the Common Stock of the Company, for any day, the reported last sale price per share on the American Stock Exchange, or, if the Common Stock is not admitted to trading on the American Stock Exchange, on the principal national securities exchange or inter-dealer quotation system on which the Common Stock is listed or admitted to trading, or if not admitted to trading on the Nasdaq National Market, or listed or admitted to trading on any national securities exchange or inter-dealer quotation system, the average of the closing bid and asked prices per share in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose.</p>
  <p align="left">&ldquo;Common Stock&rdquo; means the Common Stock, par value $.01 per share, of the Company authorized at the date of this instrument as originally executed. Subject to the provisions of Section 2(h), shares issuable on conversion or repurchase of this Security shall include only shares of Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of this Security shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.</p>
  <p align="left">&ldquo;Conversion Price&rdquo; on any day means an amount equal to $5,500 divided by the Conversion Rate in effect on such day.</p>
  <p align="left">&ldquo;Determination Date&rdquo; means, in the case of a dividend or other distribution, including the issuance of rights, options or warrants, to shareholders, the date fixed for the determination of shareholders entitled to receive such dividend or other distribution and, in the case of a tender offer, the last time that tenders could have been made pursuant to such tender offer.</p>
  <p align="left">&ldquo;Excess Purchase Payment&rdquo; means the excess, if any, of (i) the amount of cash plus the fair market value (as determined in good faith by the Company&rsquo;s Board of Directors) of any non-cash consideration required to be paid with respect to one share of Common Stock acquired or to be acquired in a tender offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock over (ii) the current market price per share as of the last time that tenders could have been made pursuant to such tender offer.</p>
  <p align="left">&ldquo;Trading Day&rdquo; means (i) if the Common Stock is listed or admitted for trading on the New York or American Stock Exchange or any other national securities exchange, a day on which such exchange is open for business; (ii) if the Common Stock is admitted to trading on the Nasdaq National Market or any other system of automated dissemination of quotations of securities prices, a day on which trades may be effected through such system; or (iii) if the Common Stock is not admitted to trading on the Nasdaq National Market or listed or admitted for trading on any national securities exchange or any other system of automated dissemination of quotation of securities prices, a day on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available.</p>
</blockquote>
<p align="left"> 3.	<u>Right to Require Repurchase</u>.  </p>
<blockquote>
  <p align="left">(a)  In the event that a Change in Control (as hereinafter defined) shall occur, then the holder of this Security shall have the right, at such holder&rsquo;s option, subject to the rights of holders of Senior Indebtedness, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, this Security, or any portion of the principal amount hereof that is equal to $5,500 or any integral multiple thereof, on the date (the &ldquo;Repurchase Date&rdquo;) that is ten Trading Days after the date on which the Company gives notice thereof to the holder of this Security, at a purchase price equal to 105% of the principal amount of this Security to be repurchased, plus interest accrued to the Repurchase Date (the &ldquo;Repurchase Price&rdquo;); provided, however, that installments of interest on this Security whose stated maturity is on or prior to the Repurchase Date shall be payable to the holder of this Security, or one or more predecessor Securities, regis
tered as such on the relevant Record Date according to their terms. Upon surrender of this Security for repurchase, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being repurchased from the interest payment date next preceding the date of such repurchase to such date of repurchase. At the option of the Company, the Repurchase Price may be paid in cash or, subject to the fulfillment by the Company of the conditions set forth in Section 3(b), by delivery of shares of Common Stock having a fair market value equal to the Repurchase Price as described in Section 3(b). The Company agrees to give the holder of this Security notice of any Change in Control, by facsimile transmission confirmed in writing by overnight courier service, promptly and in any event within two Trading Days of the occurrence thereof.</p>
  <p align="left">    (b)	The Company may elect to pay the Repurchase Price by delivery of shares of Common Stock pursuant to Section 3(a), if and only if the following conditions have been satisfied:</p>
  <blockquote>
    <p align="left">    (1)	The shares of Common Stock deliverable in payment of the Repurchase Price shall have a fair market value as of the Repurchase Date of not less than the Repurchase Price. For purposes of this Section 3(b), the fair market value of shares of Common Stock shall be equal to 95% of the average of the Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Repurchase Date;</p>
    <p align="left">      (2)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act of 1933 upon issuance, such registration shall have been completed and shall have become effective prior to the Repurchase Date;</p>
    <p align="left">      (3)	In the event any shares of Common Stock to be issued upon repurchase of this Security require registration with or approval of any governmental authority under any State law or any other Federal law before such shares may be validly issued or delivered upon repurchase, such registration shall have been completed, have become effective and such approval shall have been obtained, in each case, prior to the Repurchase Date;</p>
    <p align="left">      (4)	Immediately prior to the Repurchase Date the shares of Common Stock deliverable in payment of the Repurchase Price shall have been approved for trading or listed on the American Stock Exchange or the principal national securities exchange or interdealer quotation system on which the Common Stock is then admitted to trading or listed; and</p>
    <p align="left">      (5)	All shares of Common Stock deliverable in payment of the Repurchase Price shall be issued out of the Company&rsquo;s authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights.</p>
  </blockquote>
  <p align="left">      If all of the conditions set forth in this Section 3(b) are not satisfied in accordance with the terms thereof, the Repurchase Price shall be paid by the Company only in cash.</p>
  <p align="left">    (c)	To exercise a repurchase right, the holder shall deliver to the Company on or before the 5th day prior to the Repurchase Date, together with this Security, written notice of the holder&rsquo;s exercise of such right, which notice shall set forth the name of the holder, the principal amount of this Security to be repurchased (and, if this Security is to be repurchased in part, the portion of the principal amount thereof to be repurchased and the name of the person in which the portion thereof to remain outstanding after such repurchase is to be registered) and a statement that an election to exercise the repurchase right is being made thereby, and, in the event that the Repurchase Price shall be paid in shares of Common Stock, the name or names (with addresses) in which the certificate or certificates for shares of Common Stock shall be issued. Such written notice shall be irrevocable, except that the right of the holder to convert this Security (or the portion hereof with respect to
 which the repurchase right is being exercised) shall continue until the close of business on the Repurchase Date.</p>
  <p align="left">      (d)	In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the holder the Repurchase Price in cash or shares of Common Stock, as provided above, or, if shares of Common Stock are to be paid, as promptly after the Repurchase Date as practicable, together with accrued and unpaid interest to the Repurchase Date; provided, however, that installments of interest that mature on or prior to the Repurchase Date shall be payable in cash, to the holders of this Security, or one or more predecessor Securities, registered as such at the close of business on the relevant regular record date.</p>
  <p align="left">    (e)	If this Security (or portion thereof) is surrendered for repurchase and is not so paid on the Repurchase Date, the principal amount of this Security (or such portion hereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate per annum borne by this Security, and shall remain convertible into Common Stock until the principal of this Security (or portion thereof, as the case may be) shall have been paid or duly provided for.</p>
  <p align="left">    (f)	If this Security is to be repurchased only in part, it shall be surrendered to the Company at the Designated Office (with, if the Company so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing), and the Company shall execute and make available for delivery to the holder without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered.</p>
  <p align="left">    (g)	Any issuance of shares of Common Stock in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of business on the Repurchase Date and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open.  No payment or adjustment shall be made for dividends or distributions on any Common Stock issued upon repurchase of this Security declared prio
r to the Repurchase Date.</p>
  <p align="left">    (h)	No fractions of shares shall be issued upon repurchase of this Security. Instead of any fractional share of Common Stock which would otherwise be issuable on the repurchase of this Security, the Company will deliver to the holder its check for the current market value of such fractional share.  The current market value of a fraction of a share shall be determined by multiplying the current market price of a full share by the fraction, and rounding the result to the nearest cent. For purposes of this Section 3 the current market price of a share of Common Stock shall be the Closing Price of the Common Stock on the Trading Day immediately preceding the Repurchase Date.</p>
  <p align="left">    (i)	Any issuance and delivery of certificates for shares of Common Stock on repurchase of this Security shall be made without charge to the holder of this Security for such certificates or for any stamp or transfer tax or duty in respect of the issuance or delivery of such certificates or the securities represented thereby; provided, however, that the Company shall not be required to pay any tax or duty which may be payable in respect of any transfer involved in the issuance or delivery of certificates for shares of Common Stock in a name other than that of the holder of this Security, and no such issuance or delivery shall be made unless and until the person requesting such issuance or delivery has paid to the Company the amount of any such tax or duty or has established, to the satisfaction of the Company, that such tax or duty has been paid.</p>
  <p align="left">    (j)	For purposes of this Section 3;</p>
  <blockquote>
    <p align="left"> (1)	the term &ldquo;beneficial owner&rdquo; shall be determined in accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934; and</p>
    <p align="left"> (2)	a &ldquo;Change in Control&rdquo; shall be deemed to have occurred at the time, after the original issuance of this Security, of:</p>
    <blockquote>
      <p align="left">    (i)	the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock of the Company entitling such person to exercise 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors (any shares of voting stock of which such person is the beneficial owner that are not then outstanding being deemed outstanding for purposes of calculating such percentage) other than any such acquisition by the Company or any employee benefit plan of the Company;</p>
      <p align="left">    (ii)	any consolidation or merger of the Company with or into, any other person, any merger of another person with or into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Company to another person (other than (a) any such transaction (x) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock and (y) pursuant to which holders of Common Stock immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving person immediately after such transaction and (b) any merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares 
of common stock);</p>
    </blockquote>
  </blockquote>
  <p align="left">        <u>provided, however</u>, that a Change in Control shall not be deemed to have occurred if the Closing Price for any five Trading Days within the period of 10 consecutive Trading Days (x) ending immediately after the later of the date of the Change in Control or the date of the public announcement of the Change in Control (in the case of a Change in Control under Clause (i) above) or (y) ending immediately prior to the date of the Change in Control (in the case of a Change in Control under Clause (ii) above) shall equal or exceed 105% of the Conversion Price in effect on each such Trading Day.</p>
</blockquote>
<p align="left"> 4.	<u>Events of Default</u>.  </p>
<blockquote>
  <p align="left">(a)  &ldquo;Event of Default&rdquo;, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Section 6 or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):</p>
  <blockquote>
    <p align="left">    (1)	default in the payment of any interest upon this Security when it becomes due and payable, and continuance of such default for a period of 30 days; or</p>
    <p align="left">      (2)	default by the Company in the performance of its obligations in respect of any conversion of this Security (or any portion hereof) in accordance with Section 2; or</p>
    <p align="left">      (3)	failure by the Company to give any notice of a Change of Control required to be delivered in accordance with Section 3(a); or</p>
    <p align="left">      (4)	default in the performance, or breach, of any material covenant or warranty of the Company herein (other than a covenant or warranty a default in the performance or breach of which is specifically dealt with elsewhere in this Section 4(a)) and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the holder of this Security a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p align="left">      (5)	a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company, or under any agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, with a principal amount then outstanding in excess of $1,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay the principal of such indebtedness (in whole or in any part greater than $1,000,000) when due and payable or shall have resulted in such indebtedness (in whole or in any part greater than $1,000,000) becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified
 mail, to the Company by the holder of this Security a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a &ldquo;Notice of Default&rdquo; hereunder; or</p>
    <p align="left">      (6)	the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or</p>
    <p align="left">      (7)	the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the b
enefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action.</p>
  </blockquote>
  <p align="left">      (b)	If an Event of Default (other than an Event of Default specified in Section 4(a)(6) or 4(a)(7)) occurs and is continuing, then in every such case the holder of this Security may declare the principal hereof to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable. If an Event of Default specified in Section 4(a)(6) or 4(a)(7) occurs and is continuing, the principal of, and accrued interest on, this Security shall ipso facto become immediately due and payable without any declaration or other act of the holders.</p>
</blockquote>
<p align="left">      5.	<u>Consolidation. Merger, Etc</u>.  </p>
<blockquote>
  <p align="left">(a)  The Company shall not consolidate with or merge into any other person or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to any person, and the Company shall not permit any person to consolidate with or merge into the Company or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to the Company, unless:</p>
  <blockquote>
    <p align="left">    (1)	in case the Company shall consolidate with or merge into another person or convey, transfer, sell or lease all or substantially all of its properties and assets to any person, the person formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or sale, or which leases, all or substantially all the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the holder of this Security, the due and punctual payment of the principal of and interest on this Security and the performance or observance of every covenant of this Security on the part of the Company to be performed or observed, including the conversion rights provided herein;</p>
    <p align="left">      (2)	immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a subsidiary of the Company as a result of such transaction as having been incurred by the Company or such subsidiary of the Company at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and</p>
    <p align="left">      (3)	the Company has delivered to the holder of this Security an officers&rsquo; certificate stating that such consolidation, merger, conveyance, transfer, sale or lease and, if a supplemental agreement is required in connection with such transaction, such supplemental agreement, comply with this Section and that all conditions precedent herein provided for relating to such transaction have been complied with.</p>
  </blockquote>
  <p align="left">      (b)	Upon any consolidation of the Company with, or merger of the Company into, any other person or any conveyance, transfer, sale or lease of all or substantially all of the properties and assets of the Company in accordance with Section 5(a), the successor person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, sale or lease is made shall succeed to, and he substituted for, and may exercise every right and power of, the Company under this Security with the same effect as if such successor person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor person shall be relieved of all obligations and covenants under this Security.</p>
</blockquote>
<p align="left">    6.	<u>Subordination</u>.  The Company agrees, and the holder of this Security by accepting a Security agrees, that the indebtedness evidenced by this Security is subordinated in right of payment to the prior payment in full of all Senior Indebtedness, and that the subordination is for the benefit of the holders of Senior Indebtedness.</p>
<blockquote>
  <p align="left">&ldquo;Senior Indebtedness&rdquo; means:</p>
  <p align="left">    (a)	the principal of, interest (including, to the extent permitted by applicable law, interest on or after the commencement of any bankruptcy or similar proceeding whether or not representing an allowed claim in such proceeding) on and any other amounts owing with respect to (i) any indebtedness of the Company, now or hereafter outstanding, in respect of borrowed money (other than the Securities), (ii) any indebtedness of the Company, now or hereafter outstanding, evidenced by a bond, note, debenture, capitalized lease, letter of credit or other similar instrument, (iii) any other written obligation of the Company, now or hereafter outstanding, to pay money issued or assumed as all or part of the consideration for the acquisition of property, assets or securities and (iv) any guaranty or endorsement (other than for collection or deposit in the ordinary course of business) or discount with recourse of, or other agreement (contingent or otherwise) to purchase, repurchase or otherwise acqu
ire, to supply or advance funds or to become liable with respect to (directly or indirectly), any indebtedness or obligation of any person of the type referred to in the preceding subelauses (i), (ii) and (iii) now or hereafter outstanding; and</p>
  <p align="left">    (b)	any refundings, renewals or extensions of any indebtedness or other obligation described in clause (a) above.</p>
  <p align="left">    Notwithstanding the foregoing, if, by the terms of the instrument creating or evidencing any indebtedness or obligation referred to in clauses (a) and (b) above, it is expressly provided that such indebtedness or obligation is not senior in right of payment to this Security, such indebtedness or obligation shall not be included as Senior Indebtedness.</p>
</blockquote>
<p align="left">    7.	<u>Other</u>.  </p>
<blockquote>
  <p align="left">(a)  No provision of this Security shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security as herein provided.</p>
  <p align="left">    (b)	The Company will give prompt written notice to the holder of this Security of any change in the location of the Designated Office.</p>
  <p align="left">    (c)	The transfer of this Security is registrable on the Security Register of the Company upon surrender of this Security for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such Securities are issuable only in registered form without coupons in denominations of $5,500 and any integral multiple thereof. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Security for registration of transfer, the Company and any agent of the Company may treat th
e person in whose name this Security is registered, as the owner thereof for all purposes, whether or not this Security be overdue, and neither the Company, nor any such agent shall be affected by notice to the contrary.</p>
  <p align="left">    Notwithstanding any other provision of this Security, this Security and the shares of Common Stock issuable upon conversion hereof may only be transferred by the holder of this Security (a) in the case of the Common Stock only, in a public offering registered under the Securities Act of 1933, as amend; (b) to one or more investors, in one or more transactions, any one of whom, after such purchase, would hold not more than 5% of the shares of Common Stock then outstanding (assuming conversion of any portion of this Security so transferred); (c) to any person or entity that already controls more than 50% of the voting securities of the Company prior to such transfer; (d) in a transaction that complies with the manner of sale restrictions of Rule 144 under the Securities Act; or (e) in a transaction approved in advance by the Federal Reserve Board. The holder of this Security, by acceptance thereof, shall be deemed to have agreed to the foregoing restriction on transfers.</p>
  <p align="left">    (d)	The holder agrees that, at the written request of the Company or any managing underwriter of any underwritten public offering of securities of the Company, such holder shall not, without the prior written consent of the Company or such managing underwriter, sell, make any short sale of, loan, grant any option for the purchase of, pledge, encumber, or otherwise dispose of, or exercise any registration rights with respect to, any Securities or Common Stock of the Company during the 180-day period commencing on the effective date of the registration statement relating to such underwritten public offering of the Company&rsquo;s securities; provided, that each officer and director of the Company shall have entered into a similar agreement.</p>
  <p align="left">    (e)	This Security shall be governed by and construed in accordance with the laws of the State of Texas, United States of America.<br />
                                                                                                      </p>
</blockquote>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p>IN WITNESS WHEREOF, the Company has caused this Security to be duly  executed under its corporate seal.<br />
  Dated:&nbsp; September   13, 2000</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p>By:<u>/s/Kerry P. Gray&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
            Name:&nbsp; Kerry P. Gray<br />
            Title:&nbsp;&nbsp;&nbsp; Chief Executive Officer</p>
          <p>&nbsp;</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>Attest:</p>
<p><u>/s/Stephen  B. Thompson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  Name:&nbsp; Stephen B. Thompson<br />
  Title:&nbsp;&nbsp;&nbsp; Vice President and CFO</p>
<p align="left">&nbsp;</p>
<p align="center">ELECTION OF HOLDER TO REQUIRE REPURCHASE</p>
<p align="left">1.	Pursuant to Section 3(a) of this Security, the undersigned hereby elects to have all or a portion of this Security repurchased by the Company.</p>
<p align="left">  2.	The undersigned hereby directs the Company to pay [choose one] (a) it or (b) Name:_______________; address:  _______________; Social Security or Other Taxpayer Identification Number, if any:  ___________, an amount in cash or, at the Company&rsquo;s election, Common Stock valued as set forth in the Security, equal to 100% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Repurchase Date, as provided herein.</p>
<p align="left">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p>Dated:________________________<br />
            <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>Principal amount to be  repurchased<br />
(an integral multiple of $5,500): <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>  Remaining principal amount  following such repurchase<br />
(not less than $5,500):&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p>  NOTICE: The  signature to the foregoing Election must correspond to the name as written upon  the face of this Security in every particular, without alteration or any change  whatsoever.</p>
<p>&nbsp;</p>
<p align="center">CONVERSION NOTICE</p>
<p>The undersigned holder of this Security hereby irrevocably exercises the  option to convert this Security, or any portion of the principal amount hereof  (which is an integral multiple of $5,500) below designated, into shares of  Common. Stock in accordance with the terms of this Security, and directs that  such shares, together with a check in payment for any fractional share and any  Security representing any unconverted principal amount hereof, be delivered to  and be registered in the name of the undersigned unless a different name has  been indicated below.&nbsp; If shares of  Common Stock or Securities are to be registered in the name of a person other  than the undersigned, the undersigned will pay all transfer taxes payable with  respect thereto.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p>  Dated:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
          <p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left"><br />
                    </p>
<table border="0" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="312" valign="top"><br clear="all" />
        <br clear="all" />
        <p>If shares or    Securities are to be registered in the name of a person other than the    holder, please print such person&rsquo;s name and address:</p></td>
    <td width="327" valign="top"><p>If only a portion of    the Securities is to be converted, please indicate:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>&nbsp;</p></td>
    <td width="327" valign="top"><p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount to be converted:<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $__________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name</p></td>
    <td width="327" valign="top"><p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal amount and denomination of    Security representing unconverted principal amount to be issued:</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Address</p></td>
    <td width="327" valign="top"><p>Amount:&nbsp; $_____________</p></td>
  </tr>
  <tr>
    <td width="312" valign="top"><p>_____________________<br />
      Social Security or other Taxpayer Identification Number, if any</p></td>
    <td width="327" valign="top"><p>Denominations:    $_________<br />
      (any integral multiple of $5,500)</p></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="center">  AMENDMENT TO 7.0% (SUBJECT TO ADJUSTMENT) CONVERTIBLE<br />
PROMISSORY NOTES DUE SEPTEMBER 13, 2005</p>
<p align="left">  This Amendment to 7.0% (Subject to Adjustment) Convertible Promissory Notes Due September 13, 2005, dated as of November 3, 2005 (the &quot;Amendment&quot;), is by and among Access Pharmaceuticals, inc., a Delaware corporation (the &quot;Company&quot;), and each of Oracle Partners LP, Oracle Institutional Partners LP, SAM Oracle Investments Inc. and Oracle Offshore Ltd. (each, a &quot;Holder&quot;), amending certain provisions of those certain 7.0% (Subject to Adjustment) Convertible Promissory Notes Due September 13, 2005 No. R-l (each as amended and in effect from time to time, a &quot;Note&quot;) from the Company to each Holder in the original principal amount of $2,524,500, $698,500, $660,000 and $132,000, respectively. Terms not otherwise defined herein which are defined in any Note shall have the same respective meanings herein as therein.</p>
<p align="left">  WHEREAS, the Company and each Holder have agreed to modify certain terms and conditions of each Note as specifically set forth in this Amendment.</p>
<p align="left">  NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:</p>
<p align="left">  1.	<u>Amendment to Each Note</u>. Each Note is hereby amended as follows:</p>
<blockquote>
  <p align="left">  (a)	The title of each Note is hereby deleted in its entirety and replaced with the following:</p>
  <blockquote>
    <p align="left">&quot;7.0% (Subject to Adjustment) Convertible Promissory Note Due April 28, 2007.&quot;</p>
  </blockquote>
  <p align="left"> (b)	All references to &quot;September 13, 2005&quot; in the preamble (the &quot;Preamble&quot;) of each Note and the first sentence of Section 2(a) of each Note arc hereby deleted and replaced with &quot;April 28, 2007.&quot;</p>
  <p align="left">    (c)	The following text is hereby added following the word &quot;annum&quot; and before the word &quot;provided&quot; in the first sentence of the Preamble:</p>
  <blockquote>
    <p align="left">&quot;(and shall pay interest from September 13, 2006, or from the most recent interest payment date to which interest has been paid or duly provided for, on April 28, 2007).&quot;</p>
  </blockquote>
  <p align="left">    (d)	The following text is hereby added following the words &quot;September 1&quot; and before the word &quot;(whether&quot; in the second sentence of the Preamble:</p>
  <blockquote>
    <p align="left">&quot;(and April 1 in the case of the interest payment due on April 28, 2007).&quot;</p>
  </blockquote>
  <p align="left">    (e)	All references to 15,500&quot; in each Note, including, without limitation, in the first sentence of Section 1 of each Note, the first sentence of Section 2(a) of each Note, the defined term &quot;Conversion Price&quot; in Section 2(j) of each Note and the second sentence of Section 7(c) of each Note, are hereby deleted and replaced with &quot;$1,000.&quot;</p>
  <p align="left">    (f)	The following text is hereby added as a new paragraph following the first paragraph of Section 2(a) of each Note:</p>
  <p align="left">&quot;Automatically and without further action, immediately upon the Closing Price of the Company Stock exceeding 1.5 times the Conversion Price for any period of 20 consecutive Trading Days, this Security (or any portion of the principal amount hereof then outstanding) shall convert into fully paid and nonassessable shares (calculated to the nearest 11100 of a share) of Common Stock of the Company at the rate of 1,000 shares of Common Stock for each $1,000 principal amount of Security. Upon such conversion of this Security (or any portion of the principal amount hereof then outstanding), the holder of this Security shall surrender this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office. Upon surrender of this Security upon such conversion, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being converted from the interest payment date next preceding the date of such conversion to su
ch date of conversion. No payment or adjustment is to be made on conversion for dividends on the Common Stock issued on conversion hereof. No fractions of shares or scrip representing fractions of shares will he issued on conversion, but instead of any fractional interest, the Company shall pay a cash adjustment, computed on the basis of the Closing Price of the Common Stock on the date of conversion, or, at its option, the Company shall round up to the next higher whole share.&quot;</p>
  <p align="left">    (g)	Sections 3(a) through (i) of each Note are hereby deleted in their entirety and replaced with the following:</p>
  <blockquote>
    <p align="left">&quot;3.	<u>Conversion Upon Change in Control</u>. </p>
    <p align="left">(a) In the event that a Change in Control (as hereinafter defined) shall occur, then automatically and without further action immediately prior to such Change in Control, this Security (or any portion of the principal amount hereof then outstanding) shall convert into fully paid and nonassessable shares (calculated to the nearest 1/100 of a share) of Common Stock at the rate of 1,000 shares of Common Stock for each $1,000 principal amount of Security. Upon such conversion of this Security (or any portion of the principal amount hereof then outstanding), the holder of this Security shall surrender this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office. Upon surrender of this Security upon such conversion, the holder will be entitled to receive the interest accruing on the principal amount of this Security then being converted from the interest payment date next preceding the date of such conversion to such date of conversion. No payment 
or adjustment is to be made on conversion for dividends on the common stock issued on conversion hereof. No fractions of shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest, the Company shall pay a cash adjustment, computed on the basis of the amount payable per share of Common Stock upon such Change in Control, or, at its option, the Company shall round up to the next higher whole share. Notwithstanding the foregoing, this Security (or any portion of the principal amount hereof then outstanding) shall not convert automatically under this Section 3(a) in the event of a Change in Control in which the amount payable per share of Common Stock is less than 1.5 times the Conversion Price pnless, immediately prior to the consummation of such Change in Control, the Company pays to the holder of this Security, in cash or, subject to the fulfillment by the Company of the conditions set forth in Section 3(b), by delivery of shares of Common Stock, an am
ount such that the aggregate amount per share of Common Stock payable to the holder of this Security in connection with such Change in Control equals 1.5 times the Conversion Price. The Company agrees to give the holder of this Security notice of any Change in Control, by facsimile transmission confirmed in writing by overnight courier service, promptly and in any event within two Trading Days of the occurrence thereof.</p>
    <p align="left">      (b)	The Company may elect to deliver shares of Common Stock in payment under Section 3(a), if and only if the following conditions have been satisfied:</p>
    <blockquote>
      <p align="left"> (1)	Each share of Common Stock deliverable as payment under Section 3(a) shall have a fair market value as of the date of the consummation of the Change in Control (the &quot;Change in Control Closing Date&quot;) of not less than the sum obtained by subtracting the amount payable per share of Common Stock upon such Change in Control from the Conversion Price. For purposes of this Section 3(b), the fair market value of a share of Common Stock shall be equal to 95% of the average of the Closing Prices for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Change in Control Closing Date;</p>
      <p align="left">      (2)	In the event any shares of Common Stock to be issued under Section 3(a) require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act of 1933, as amended, upon issuance, such registration shall have been completed and shall have become effective prior to the Change in Control Closing Date;</p>
      <p align="left">        (3)	In the event any shares of Common Stock to be issued under Section 3(a) require registration with or approval of any governmental authority under any State law or any other Federal law before such shares may be validly issued or delivered upon repurchase, such registration shall have been completed, have become effective and such approval shall have been obtained, in each case, prior to the Change in Control Closing Date;</p>
      <p align="left">        (4)	Immediately prior to the Change in Control Closing Date the shares of Common Stock deliverable as payment under Section 3(a) shall have been approved for trading or listed on the American Stock Exchange or the principal national securities exchange or interdealer quotation system on which the Common Stock is then admitted to trading or listed; and</p>
      <p align="left">        (5)	All shares of Common Stock deliverable as payment under Section 3(a) shall be issued out of the Company's authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights.</p>
    </blockquote>
    <p align="left"> if all of the conditions set forth in this Section 3(b) are not satisfied in accordance with the terms thereof, the Company shall pay the holder of this Security all amounts payable under Section 3(a) only in cash.&quot;</p>
  </blockquote>
  <p align="left">        (h)	Section 3(j) of each Note is hereby re-numbered as Section 3(c).</p>
</blockquote>
<p align="left">    2.	<u>Condition to Effectiveness</u>. This Amendment shall not become effective until each Holder receives a counterpart of this Amendment executed by the Company.</p>
<p align="left">  3.	<u>Ratification, Etc</u>. Except as expressly amended hereby, all terms and conditions of each Note are hereby ratified and confirmed in all respects and shall continue in full force and effect. Each Note and this Amendment shall be read and construed as a single agreement. All references to any Note shall hereafter refer to such Note, as amended hereby.</p>
<p align="left">  4.	<u>No Waiver</u>. Nothing contained herein shall constitute a waiver of, impair or otherwise affect, any obligation of the Company under any Note or any rights of any Holder consequent thereon.</p>
<p align="left">  5.	<u>Counterparts</u>. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.</p>
<p align="left">  6.	<u>Governing Law</u>. This amendment shall be governed by, and construed in accordance with, the laws of the State of Texas (without reference to conflict of laws).</p>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p>IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a  document under seal as of the date first above written.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p><u>Company</u>:</p>
          <p>            ACCESS PHARMACEUTICALS, INC.</p>
          <p>            By.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Rosemary Mazanet&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Rosemary Mazanet<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Acting CEO</p>
          <p><u>Holder</u>:</p>
          <p>            ORACLE PARTNERS LP</p>
          <p>            By.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:</p>
          <p>            ORACLE INSTITUTIONAL PARTNERS  LP</p>
          <p>            By.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:</p>
          <p>            SAM ORACLE INVESTMENTS INC.</p>
          <p>            By.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:</p>
          <p>            ORACLE OFFSHORE LTD.</p>
          <p>            By.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="center">AMENDMENT TO 7.0% (SUBJECT TO ADJUSTMENT) CONVERTIBLE<br />
  PROMISSORY NOTES DUE APRIL 28, 2007</p>
<p>This Amendment to 7.0% (Subject to Adjustment) Convertible Promissory  Notes previously Due September 13, 2005, dated as of April ___, 2007 and  currently due April 28, 2007 (the &ldquo;<u>Amendment</u>&rdquo;), is by and among Access  Pharmaceuticals, Inc., a Delaware corporation (the &ldquo;<u>Company</u>&rdquo;), and each  of Oracle Partners LP, Oracle Institutional Partners LP, SAM Oracle Investments  Inc. and Oracle Offshore Ltd. (each, a &ldquo;<u>Holder</u>&rdquo;), amending certain  provisions of those certain 7.0% (Subject to Adjustment) Convertible Promissory  Notes Due April 28, 2007 (each as amended and in effect from time to time, a &ldquo;<u>Note</u>&rdquo;)  from the Company to each Holder in the original principal amount of $2,524,500,  $698,500, $660,000 and $132,000, respectively. Terms not otherwise defined  herein which are defined in any Note shall have the same respective meanings  herein as therein.</p>
<p>  WHEREAS, the Company and each Holder have agreed to modify certain terms  and conditions of each Note as specifically set forth in this Amendment.</p>
<p>  NOW, THEREFORE, in consideration of the mutual agreements contained  herein and for other good and valuable consideration, the receipt and  sufficiency of which are hereby acknowledged, the parties hereto agree as  follows:</p>
<p align="left">1.	<u>Amendment to Each Note</u>. Each Note is hereby amended as follows:</p>
<blockquote>
  <p align="left">  (a)	The title of each Note is hereby deleted in its entirety and replaced with the following:</p>
  <blockquote>
    <p align="left">  &quot;7.0% (Subject to Adjustment) Convertible Promissory Note Due June 12, 2007.&quot;</p>
  </blockquote>
  <p align="left"> (b)	All references to &ldquo;April 28, 2007&rdquo; in each Note are hereby deleted and replaced with &ldquo;June 12, 2007,&rdquo;</p>
</blockquote>
<p align="left">  2.	<u>Condition to Effectiveness.</u> This Amendment shall not become effective until each Holder receives a counterpart of this Amendment executed by the Company.</p>
<p align="left">  3.	<u>Ratification, Etc</u>. Except as expressly amended hereby, all terms and conditions of each Note, as amended, are hereby ratified and confirmed in all respects and shall continue in full force and effect. Each Note and this Amendment shall be read and construed as a single agreement. All references to any Note shall hereafter refer to such Note, as amended hereby.</p>
<p align="left">  4.	<u>No Waiver</u>. Nothing contained herein shall constitute a waiver of, impair or otherwise affect, any obligation of the Company under any Note or any rights of any Holder consequent thereon.</p>
<p align="left">  5.	<u>Counterparts</u>. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.</p>
<p align="left">  6.	<u>Governing Law</u>. This amendment shall be governed by, and construed in accordance with, the laws of the State of Texas (without reference to conflict of laws).</p>
<p align="left">&nbsp;</p>
<p>IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a  document under seal as of the date first above written.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p><u>Company</u>:<br />
        ACCESS PHARMACEUTICALS, INC.</p>
        <p>          By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:<br />
        <u>Holders</u>:</p>
        <p>          ORACLE PARTNERS LP</p>
        <p>          By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
        <p>          ORACLE INSTITUTIONAL PARTNERS  LP</p>
        <p>          By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
        <p>          SAM ORACLE INVESTMENTS INC.</p>
        <p>          By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
        <p>          ORACLE OFFSHORE LTD.</p>
        <p>          By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="center">AMENDMENT TO 7.0% (SUBJECT TO ADJUSTMENT) CONVERTIBLE<br />
PROMISSORY NOTES DUE SEPTEMBER   7, 2007</p>
<p align="left">This Amendment to 7.0% (Subject to Adjustment) Convertible Promissory  Notes previously Due September 13, 2005, dated as of September 7, 2007 and  currently due September 7, 2007 (the &ldquo;<u>Amendment</u>&rdquo;), is by and among  Access Pharmaceuticals, Inc., a Delaware corporation (the &ldquo;<u>Company</u>&rdquo;),  and each of Oracle Partners LP, Oracle Institutional Partners LP, SAM Oracle  Investments Inc. and Oracle Offshore Ltd. (each, a &ldquo;<u>Holder</u>&rdquo;), amending  certain provisions of those certain 7.0% (Subject to Adjustment) Convertible  Promissory Notes Due September 7, 2007 (each as amended and in effect from time  to time, a &ldquo;Note&rdquo;) from the Company to each Holder in the original principal  amount of $2,524,500, $698,500, $660,000 and $132,000, respectively. Terms not  otherwise defined herein which are defined in any Note shall have the same  respective meanings herein as therein.</p>
<p>  WHEREAS, the Company and each Holder have agreed to modify certain terms  and conditions of each Note as specifically set forth in this Amendment.</p>
<p>  NOW, THEREFORE, in consideration of the mutual agreements contained  herein and for other good and valuable consideration, the receipt and  sufficiency of which are hereby acknowledged, the parties hereto agree as  follows:</p>
<p align="left">1.	Amendment to Each Note. Each Note is hereby amended as follows:</p>
<blockquote>
  <p align="left">  (a)	The title of each Note is hereby deleted in its entirety and replaced with the following:</p>
  <blockquote>
    <p align="left">&quot;7.0% (Subject to Adjustment) Convertible Promissory Note Due October 5, 2007.&quot;</p>
  </blockquote>
  <p align="left">    (b)	All references to &ldquo;September 7, 2007&rdquo; in each Note are hereby deleted and replaced with &ldquo;October 5, 2007.&rdquo;</p>
</blockquote>
<p align="left">  2.	<u>Condition to Effectiveness</u>. This Amendment shall not become effective until each Holder receives a counterpart of this Amendment executed by the Company.</p>
<p align="left">  3.<u> Ratification, Etc</u>. Except as expressly amended hereby, all terms and conditions of each Note, as amended, are hereby ratified and confirmed in all respects and shall continue in full force and effect. Each Note and this Amendment shall be read and construed as a single agreement. All references to any Note shall hereafter refer to such Note, as amended hereby.</p>
<p align="left">  4.<u> No Waiver</u>. Nothing contained herein shall constitute a waiver of, impair or otherwise affect, any obligation of the Company under any Note or any rights of any Holder consequent thereon.</p>
<p align="left">  5.	<u>Counterparts</u>. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.</p>
<p align="left">  6.	<u>Governing Law</u>. This amendment shall be governed by, and construed in accordance with, the laws of the State of Texas (without reference to conflict of laws).</p>
<p>&nbsp;</p>
<p>IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a  document tinder seal as of the date first above written.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p><u>Company</u>:</p>
        <p>  ACCESS PHARMACEUTICALS, INC.</p>
        <p> By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Stephen B. Thompson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Stephen B. Thompson<br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Vice President, Chief Financial Officer</p>
        <p><u>Holders</u>:</p>
        <p>  ORACLE PARTNERS LP</p>
        <p> By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
        <p>  ORACLE INSTITUTIONAL PARTNERS  LP</p>
        <p> By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
        <p>  SAM ORACLE INVESTMENTS INC.</p>
        <p> By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/  Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp; Joel Liffman<br />
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Authorized Agent</p>
        <p> ORACLE OFFSHORE LTD.</p>
        <p>By:&nbsp; <u>/s/ Joel Liffman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br />
          &nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp;&nbsp;&nbsp;&nbsp; Joel  Liffman<br />
          &nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp; Authorized Agent
        </p>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p align="left">&nbsp;</p>
<p align="center"><strong>Willkie  Farr &amp; Gallagher LLP</strong><br />
    <strong>787 </strong><strong>Seventh Avenue</strong><strong> </strong><br />
    <strong>New    York</strong><strong>, </strong><strong>NY</strong><strong>&nbsp; </strong><strong>10019-6099</strong> </p>
<blockquote>
  <p>_________,  2008</p>
  <p><u>VIA  EDGAR</u> </p>
  <p>Securities  and Exchange Commission<br />
    100 F Street, N.E. <br />
    Washington, D.C.&nbsp;  20549</p>
  <p>Re:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment  No. 1 to Schedule 13D with respect to <br />
    the Common Stock, par value $0.01 per share, of <br />
  <u>Access Pharmaceuticals, Inc.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  <p>Ladies and Gentlemen:</p>
  <p>    On behalf of Mr.  Larry N. Feinberg, Oracle Associates, LLC and Oracle Partners, L.P., Oracle  Institutional Partners, L.P., Oracle Investment Management, Inc., and SAM Oracle  Investments, Inc. transmitted herewith for filing with the Securities and  Exchange Commission is one complete copy of Amendment No. 1 to Schedule 13D  (&quot;Amendment No. 1&quot;) with respect to the common stock, par value $0.01  per share, of Access Pharmaceuticals, Inc. (the &quot;Company&quot;).</p>
  <p>    By copy of this  letter, one complete copy of Amendment No. 1 has been sent to the Company at  its principal executive office by certified mail.</p>
  <p>    Should you have  any questions regarding the enclosed, please call the undersigned at (212)  728-8000.</p>
  <p>    Very truly  yours,</p>
  <p>    [/s/ Jay B.  Straus] </p>
  <p>    Jay B. Straus</p>
  <p>Enclosure</p>
  <p>cc:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Access Pharmaceuticals, Inc.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Rita  Molesworth<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jay  B. Straus</p>
</blockquote>
<p align="left">&nbsp;</p>
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