EXECUTION VERSION

 

SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”) made
this 14th day of December 2012 by and between ACURA PHARMACEUTICALS, INC., a New
York corporation (the “Corporation”), with offices at 616 N. North Court, Suite
120, Palatine, Illinois 60067 and ROBERT B. JONES (the “Employee”).

 

RECITALS

 

A.   The Corporation and the Employee executed an Employee Employment Agreement
dated as of March 18, 2008, as amended (as amended, the “Employment Agreement”).

 

B.   The Corporation and the Employee now desire to further amend the Employment
Agreement as provided herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein
contained, the parties agree as follows:

 

1. Sections 7.6(a) and 7.6(b) of the Employment Agreement are hereby amended by
deleting such Sections and replacing them with the following:

 

7.6Payment, Benefits and Stock Options Upon Termination Without Cause Or For
Good Reason.

 

(a)        Cash Payments and Severance. In the event of a termination by the
Corporation of the Employee's employment with the Corporation without Cause or a
termination by the Employee of his employment with the Corporation for Good
Reason, during the Term, the Corporation shall pay to the Employee,

 

(i) each of the following amounts:

 

(x)the Employee’s accrued and unpaid Base Salary through and including the date
of termination;

 

(y)the Employee’s then accrued and unused vacation through and including the
date of termination; and

 

(z)the Employee’s then accrued and unpaid Bonus for such year, calculated by
pro-rating the annual Bonus, which would have been payable to the Employee but
for his termination and assuming full achievement of the Bonus Criteria for such
year, based on the number of days that the Employee remained in the employ of
the Corporation during the year for which the Bonus is due;

 

 

 

 

The payments provided in subsections (x) and (y) above, shall be paid in a
single lump sum in cash within thirty (30) days after the date of termination;
and

 

(ii)one (1) year of the Employee's Base Salary in effect immediately prior to
the date of termination (”Severance Pay”). The amount of such Severance Pay
together with the payment under 7.6(a)(i)(z) shall be paid (I) in equal monthly
installments over the Severance Period (as defined in Section 7.6(b)) if
Employee is not a “specified employee” (as defined in Section 7.8, below) at the
time of termination and (II) if Employee is a specified employee at termination
then (A) one half of the aggregate of such Severance Pay together with the
payment under 7.6(a)(i)(z) shall be paid six months and one day after the date
of termination, and (B) one-half of the aggregate of such Severance Pay together
with the payment under 7.6(a)(i)(z) shall be paid in six equal monthly
installments commencing six months and one day after the date of termination. If
Employee dies within six months after termination and was a specified employee
at termination, then he shall be paid the amounts that he would have been paid
through the date of death under clause (I) above within thirty days after death
and the remaining payments shall be made in accordance with clause (I).
Notwithstanding any other provision of the Agreement, payments which are
aggregated (as part of the same plan of Employee under Code Section 409A) with
those under Section 7.6(a)(ii) and/or the first paragraph of Section 7.7 under
Code Section 409A shall be paid on termination on the schedules provided under
Sections 7.6(a)(ii) (or Section 7.7 if the termination is less than two years
after a change control qualifying under Code Section 409A).

 

(b)        Benefits. In addition, the Employee shall be entitled to any benefits
under any employee benefit plans, and for twelve (12) months from the date of
termination (“Severance Period”), the Employee will continue to receive all
benefits to which he was entitled pursuant to Section 5(a) of this Agreement as
of the date of termination including continued medical, dental, disability, and
life insurance coverage for the Employee and the Employee's family, on terms
substantially as in effect on the date of termination, subject to the payment by
the Employee of all applicable employee contributions. If for any reason at any
time the Corporation is unable to treat the Employee as being or having been an
employee of the Corporation under any benefits plan in which he is entitled to
participate and as a result thereof the Employee receives reduced benefits under
such plan during the period that the Employee is continuing to receive payments
pursuant to this Section 7.6(b), then the Corporation shall provide the Employee
with such benefits by direct payment or, at the Corporation’s option, by making
available equivalent benefits from other sources. During the Severance Period,
the Employee shall not be entitled to receive salary and/or benefits except as
provided herein and shall not be entitled to participate in any employee benefit
plan of, or receive any other benefit from, the Corporation that is introduced
after the date of termination, except that an appropriate adjustment shall be
made if such new employee benefit or employee benefit plan is a replacement for
or amendment to an employee benefit or employee benefit plan in effect as of the
date of termination.

2

 

 

2. Section 7.7 of the Employment Agreement is hereby amended by deleting the
first paragraph thereof and replacing it with the following:

 

7.7        Change of Control. In the event that (i) a Change of Control (as
hereinafter defined) occurs during the Term and (ii) the Employee's employment
with the Corporation is terminated by the Corporation without Cause or the
Employee resigns or terminates his employment hereunder for Good Reason, the
Employee shall be entitled to the accrued salary, unused vacation, bonus,
Severance Pay, benefits, and stock option treatment as are provided in Sections
7.6(a), (b), and (c) above, on the same schedule as provided in Section 7.6,
except, that the amount provided in Section 7.6(a)(i)(z) and Severance Pay shall
be payable in a lump sum in cash (x) within thirty-one (31) days after the date
of such termination; provided such termination occurs within two years after the
Change of Control and such Change of Control meets the requirements for a
“change of control” (i.e. a change in ownership, change in effective control or
a change in ownership of a substantial portion of assets) under Code Section 26
USC 409A, and the regulations thereunder (“Code Section 409A”) if Employee is
not a “specified employee” under Code Section 409A at termination or (y) (A) the
earlier of thirty days after death and (B) six months and one day after such
termination if Employee is a “specified employee” at termination. The Employee
shall give the Corporation not less than sixty (60) days' prior written notice
of a termination of employment with the Corporation following a Change of
Control transaction if the Employee is terminating for Good Reason.
Notwithstanding any language to the contrary contained in any Option agreement
with the Employee, the Employee shall be entitled to exercise his vested Option
shares for twelve (12) months following the date of termination without Cause or
resignation for Good Reason. At the expiration of such twelve (12) month period,
all Options shall terminate.

 

2.Section 7.8 is added to the Employment Agreement as follows:

 

7.8Section 409A of the Code. The intent of the parties is that payments and
benefits under this Agreement comply with, or be exempt from, Code Section 409A
and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. If the Employee notifies the
Corporation (with specificity as to the reason therefor) that the Employee
believes that any provision of this Agreement (or of any award of compensation,
including equity compensation or benefits) would cause the Employee to incur any
additional tax or interest under Code Section 409A, the Corporation shall, after
consulting with the Employee, reform such provision to try to comply with Code
Section 409A through good faith modifications to the minimum extent reasonably
appropriate to conform with Code Section 409A. To the extent that any provision
hereof is modified in order to comply with, or be exempt from, Code Section
409A, such modification shall be made in good faith and shall, to the maximum
extent reasonably possible, maintain the original intent and economic benefit to
the Employee and the Corporation of the applicable provision without violating
the provisions of Code Section 409A.

 

3

 

 

3.        Except as expressly amended by this Amendment, the Employment
Agreement remains in full force and effect. Capitalized terms used herein shall
have the same meaning as in the Employment Agreement unless otherwise defined
herein. This Amendment shall be governed and construed and enforced in
accordance with the local laws of the State of New York applicable to agreements
made and to be performed entirely in New York.

 

4.        This Amendment may be executed in one or more facsimile or original
counterparts, each of which shall be deemed an original, but all of which taken
together will constitute one and the same instrument.

 

4

 

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.

 

  ACURA PHARMACEUTICALS, INC.         By: /s/ Peter Clemens       Name: Peter A.
Clemens     Title: Sr. Vice President and     Chief Financial Officer        
EMPLOYEE         By: /s/ Robert Jones       Robert B. Jones

 

5