Exhibit 10.8

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of January 7, 2015 (the “Amendment Date”), by and among OXFORD
FINANCE LLC, a Delaware limited liability company with an office located at 133
North Fairfax Street, Alexandria, Virginia 22314 (in its individual capacity,
“Oxford”; and in its capacity as Collateral Agent, “Collateral Agent”), the
Lenders listed on Schedule 1.1 thereof from time to time including Oxford in its
capacity as a Lender (each a “Lender” and collectively, the “Lenders”) and ACURA
PHARMACEUTICALS, INC., a New York corporation with offices located at 616 N.
North Court, Suite 120, Palatine, Illinois (“Parent”) and ACURA PHARMACEUTICAL
TECHNOLOGIES, INC., an Indiana corporation with offices locates at 16235 State
Road 17, Culver, IN 46511 (“APT”, and along with Parent, individually and
collectively, jointly and severally, “Borrower”).

 

WHEREAS, Collateral Agent, Borrower and Lenders party thereto from time to time
have entered into that certain Loan and Security Agreement, dated as of December
27, 2013 (as amended, supplemented or otherwise modified from time to time, the
“Loan Agreement”) pursuant to which Lenders have provided to Borrower certain
loans in accordance with the terms and conditions thereof; and

 

WHEREAS, Borrower, Lenders and Collateral Agent desire to amend certain
provisions of the Loan Agreement as provided herein and subject to the terms and
conditions set forth herein;

 

NOW, THEREFORE, in consideration of the promises, covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower, Lenders and Collateral
Agent hereby agree as follows:

 

1.Capitalized terms used herein but not otherwise defined shall have the
respective meanings given to them in the Loan Agreement.

 

2.In exchange for each Warrant issued to the Lenders or their Affiliates by
Parent on the Effective Date, on the date hereof, Parent will issue to the
holder thereof an Amended and Restated Warrant, exercisable for the same number
of shares in such form and substance as agreed to by the parties.

 

3.Section 6.10 of the Loan Agreement is hereby amended and restated in its
entirety as follows:

 

“6.10      Financial Covenant. For so long as the aggregate outstanding
principal amount of all Term Loans made hereunder is Five Million Dollars
($5,000,000.00) or more, Borrower shall maintain total cash reserves of at least
Two Million Five Hundred Thousand Dollars ($2,500,000.00) in Collateral Accounts
which are subject to a Control Agreement in favor of Collateral Agent and
maintained in accordance with the terms of Section 6.6.”

 

4.Section 8.2(a) of the Loan Agreement is hereby amended and restated in its
entirety as follows:

 

“(a)      Borrower or any of its Subsidiaries fails or neglects to perform any
obligation in Sections 6.2 (Financial Statements, Reports, Certificates), 6.4
(Taxes), 6.5 (Insurance), 6.6 (Operating Accounts), 6.7 (Protection of
Intellectual Property Rights), 6.9 (Notice of Litigation and Default), 6.10
(Financial Covenant), 6.11 (Landlord Waivers; Bailee Waivers), 6.12
(Creation/Acquisition of Subsidiaries) or 6.13 (Further Assurances) or Borrower
violates any covenant in Section 7; or”

 

 

 

 

5.Section 13.1 of the Loan Agreement is hereby amended by adding the following
definition thereto in alphabetical order:

 

““Egalet License” is that certain Collaboration and License Agreement, made and
entered into as of January 7, 2015, by and between the Parent and Egalet US
Inc., a corporation organized and existing under the laws of the State of
Delaware, having offices at 460 East Swedesford Road, Suite 19087, Wayne, PA,
Egalet Limited., a company organized under the laws of England and Wales with
its principal place of business at 33 St. James’ Square, London SW1Y 4JS, United
Kingdom and guaranteed by Egalet Corporation, a corporation organized and
existing under the laws of the State of Delaware, having offices located at 60
East Swedesford Road, Suite 1050, Wayne, PA, an executed, true and complete copy
of which has been provided by Borrower to Collateral Agent on or before the
Amendment Date; provided, however, that the Egalet License for the purposes of
this Agreement shall not include any amendment to the licenses granted by
Borrower thereunder unless any new or modified license granted by Borrower in
such amendment is a Permitted License and the consent, if any, of Collateral
Agent or the Lenders required under the definition of Permitted License is
obtained by Borrower in advance of such amendment; provided further that Egalet
License for the purposes of this Agreement shall not include any amendment which
would lower the milestone payments, co-promotion rates, or royalty rates thereof
or any amendment to Sections 4.3, 8.2, 11.1.3, 11.2.2 or 17.2 thereof unless
such amendment is consented to by the Collateral Agent.”

 

6.Section 13.1 of the Loan Agreement is hereby amended by amending and restating
the definition of “Permitted Licenses” therein as follows:

 

““Permitted Licenses” are (A) licenses of over-the-counter software that is
commercially available to the public, (B) the Egalet License and non-exclusive
and exclusive licenses for the use of the Intellectual Property of Borrower or
any of its Subsidiaries entered into in the ordinary course of business,
provided, that, with respect to each such license described in clause (B), (i)
no Event of Default has occurred and is continuing at the time of such license;
(ii) the license constitutes an arms length transaction, the terms of which, on
their face, do not provide for a sale or assignment of any Intellectual Property
and do not restrict the ability of Borrower or any of its Subsidiaries, as
applicable, to pledge, grant a security interest in or lien on, or assign or
otherwise Transfer any Intellectual Property; (iii) in the case of any exclusive
license, (x) Borrower delivers ten (10) days’ prior written notice and a brief
summary of the terms of the proposed license to Collateral Agent and the Lenders
and delivers to Collateral Agent and the Lenders copies of the final executed
licensing documents in connection with the exclusive license promptly upon
consummation thereof and (y) any such license could not result in a legal
transfer of title of the licensed property, but may be exclusive as to
geographic areas outside the United States, and may be exclusive in the United
States (and its territories and possessions) subject to the prior written
consent of Required Lenders, and the Required Lenders shall be obligated to
respond to Borrower within ten (10) calendar days regarding their decision to
grant or withhold such consent after receipt of a request for such consent from
Borrower in writing; and (iv) all upfront payments, royalties, milestone
payments or other proceeds arising from the licensing agreement that are payable
to Borrower or any of its Subsidiaries are paid to a Deposit Account that is
governed by a Control Agreement; provided that the parties acknowledge and agree
that notwithstanding clauses (ii) and (iii), the Egalet License includes an
assignment of the Product NDA (as defined in the Egalet License) and associated
IND (as defined in the Egalet License), the other documents and items specified
in Sections 4.3, 8.2, 11.1.3 and 11.2.2 of the Egalet License and the provisions
of Section 17.2 of the Egalet License, and the restrictions of clauses (ii) and
(iii) shall not apply to same; provided further that the parties acknowledge and
agree that the Egalet License has been consented to by the Collateral Agent and
the Required Lenders.”

 

7.Limitation of Amendment.

 

a.The amendments set forth in Sections 2 through 5 above are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice any
right, remedy or obligation which Lenders or Borrower may now have or may have
in the future under or in connection with any Loan Document, as amended hereby.

 

b.This Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

 

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8.To induce Collateral Agent and Lenders to enter into this Amendment, Borrower
hereby represents and warrants to Collateral Agent and Lenders as follows:

 

a.Immediately after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default has occurred and
is continuing;

 

b.Borrower has the power and due authority to execute and deliver this Amendment
and to perform its obligations under the Loan Agreement, as amended by this
Amendment;

 

c.The organizational documents of Borrower delivered to Collateral Agent on the
Effective Date, and updated pursuant to subsequent deliveries by the Borrower to
the Collateral Agent, remain true, accurate and complete and have not been
amended, supplemented or restated and are and continue to be in full force and
effect;

 

d.The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (i) any law or regulation binding on
or affecting Borrower, (ii) any contractual restriction with a Person binding on
Borrower, (iii) any order, judgment or decree of any court or other governmental
or public body or authority, or subdivision thereof, binding on Borrower, or
(iv) the organizational documents of Borrower;

 

e.The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
Borrower, except as already has been obtained or made; and

 

f.This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors’
rights.

 

9.Collateral Agent represents and warrants to Borrower that all Required Lenders
have executed this Amendment.

 

10.Except as expressly set forth herein, the Loan Agreement shall continue in
full force and effect without alteration or amendment. This Amendment and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements.

 

11.This Amendment shall be deemed effective as of the Amendment Date upon (a)
the due execution and delivery to Collateral Agent of this Amendment by each
party hereto and (b) Borrower’s payment of all Lenders’ Expenses incurred
through the date hereof, which may be debited from any of Borrower’s accounts
with Lenders provided however, that Lender’s Expenses in connection with this
Amendment shall not exceed $7,500.

 

12.This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which, taken together, shall constitute
one and the same instrument.

 

13.This Amendment and the rights and obligations of the parties hereto shall be
governed by and construed in accordance with the laws of the State of New York.

 

[Balance of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Loan
and Security Agreement to be executed as of the date first set forth above.

 

BORROWER:

 

ACURA PHARMACEUTICALS, INC.       By: /s/ Peter A. Clemens   Name: Peter A.
Clemens   Title: Sr. VP & CFO         BORROWER:       ACURA PHARMACEUTICAL
TECHNOLOGIES, INC.       By: /s/ Peter A. Clemens   Name: Peter A. Clemens  
Title: Sr. VP & CFO         COLLATERAL AGENT AND LENDER:       OXFORD FINANCE
LLC       By: /s/Mark Davis   Name: Mark Davis   Title: Vice President-Finance,
Secretary & Treasurer  

 

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EXHIBIT A

Form of Warrant

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED
UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER
TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

AMENDED AND RESTATED WARRANT TO PURCHASE STOCK (A3)

 

Company:     ACURA PHARMACEUTICALS, INC., a New York corporation       Number of
Shares:    

 [____]

      Type/Series of Stock:   Common Stock       Warrant Price:     $[___] per
share (which represents the average closing price of the Company’s common stock
for the previous ten days of trading, calculated on the day before the issuance
of this Warrant)       Issue Date:     [_____]       Expiration Date:    
[______]  See also Section 5.1(b).       Credit Facility:   This Amended and
Restated Warrant to Purchase Stock (“Warrant”) is issued in connection with that
certain Loan and Security Agreement of even date herewith among Oxford Finance
LLC, as Lender and Collateral Agent, the Lenders from time to time party
thereto, and the Company and (as modified, amended and/or restated from time to
time, the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE
LLC ( “Oxford” and, together with any successor or permitted assignee or
transferee of this Warrant or of any shares issued upon exercise hereof,
“Holder”) is entitled to purchase the number of fully paid and non-assessable
shares (the “Shares”) of the above-stated Type/Series of Stock (the “Class”) of
the above-named company (the “Company”) at the above-stated Warrant Price, all
as set forth above and as adjusted pursuant to Section 2 of this Warrant,
subject to the provisions and upon the terms and conditions set forth in this
Warrant. This Warrant amends and restates in its entirety that certain warrant
numbered [__], issued by the Company on December 27, 2013.

 

1.       EXERCISE.

 

1.1      Method of Exercise. Holder may at any time and from time to time
exercise this Warrant, in whole or in part, by delivering to the Company the
original of this Warrant together with a duly executed Notice of Exercise in
substantially the form attached hereto as Appendix 1 and, unless Holder is
exercising this Warrant pursuant to a cashless exercise set forth in Section
1.2, a check, wire transfer of same-day funds (to an account designated by the
Company), or other form of payment acceptable to the Company for the aggregate
Warrant Price for the Shares being purchased.

 

1.2      Cashless Exercise. On any exercise of this Warrant, in lieu of payment
of the aggregate Warrant Price in the manner as specified in Section 1.1 above,
but otherwise in accordance with the requirements of Section 1.1, Holder may
elect to receive Shares equal to the value of this Warrant, or portion hereof as
to which this Warrant is being exercised. Thereupon, the Company shall issue to
the Holder such number of fully paid and non-assessable Shares as are computed
using the following formula:

 

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X = Y(A-B)/A

 

where:

 

X =the number of Shares to be issued to the Holder;

 

Y =the number of Shares with respect to which this Warrant is being exercised
(inclusive of the Shares surrendered to the Company in payment of the aggregate
Warrant Price);

 

A =the Fair Market Value (as determined pursuant to Section 1.3 below) of one
Share; and

 

B =the Warrant Price.

 

1.3      Fair Market Value. If the Company’s common stock is then traded or
quoted on a nationally recognized securities exchange, inter-dealer quotation
system or over-the-counter market (a “Trading Market”) and the Class is common
stock, the fair market value of a Share shall be the closing price or last sale
price of a share of common stock reported for the Business Day immediately
before the date on which Holder delivers this Warrant together with its Notice
of Exercise to the Company. If the Company’s common stock is not traded in a
Trading Market, the Board of Directors of the Company shall determine the fair
market value of a Share in its reasonable good faith judgment.

 

1.4      Delivery of Certificate and New Warrant. Within a reasonable time after
Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2
above, the Company shall deliver to Holder a certificate representing the Shares
issued to Holder upon such exercise and, if this Warrant has not been fully
exercised and has not expired, a new warrant of like tenor representing the
Shares not so acquired.

 

1.5      Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form, substance and amount to the Company
or, in the case of mutilation, on surrender of this Warrant to the Company for
cancellation, the Company shall, within a reasonable time, execute and deliver
to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

1.6      Treatment of Warrant Upon Acquisition of Company.

 

(a)      Acquisition. For the purpose of this Warrant, “Acquisition” means any
transaction or series of related transactions involving: (i) the sale, lease,
exclusive license, or other disposition of all or substantially all of the
assets of the Company (ii) any merger of the Company into or consolidation of
the Company with another person or entity (other than a merger or consolidation
effected exclusively to change the Company’s domicile), or any other corporate
reorganization, in which the stockholders of the Company in their capacity as
such immediately prior to such merger, consolidation or reorganization, own less
than a majority of the Company’s (or the surviving or successor entity’s)
outstanding voting power immediately after such merger, consolidation or
reorganization (or, if such Company stockholders beneficially own a majority of
the outstanding voting power of the surviving or successor entity as of
immediately after such merger, consolidation or reorganization, such surviving
or successor entity is not the Company); or (iii) any sale or other transfer by
the stockholders of the Company of shares representing at least a majority of
the Company’s then-total outstanding combined voting power.

 

(b)      Treatment of Warrant at Acquisition. In the event of an Acquisition in
which the consideration to be received by the Company’s stockholders consists
solely of cash, solely of Marketable Securities or a combination of cash and
Marketable Securities (a “Cash/Public Acquisition”), either (i) Holder shall
exercise this Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will
be deemed effective immediately prior to and contingent upon the consummation of
such Acquisition or (ii) if Holder elects not to exercise the Warrant, this
Warrant will expire immediately prior to the consummation of such Acquisition.

 

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(c)      The Company shall provide Holder with written notice of its request
relating to the Cash/Public Acquisition (together with such reasonable
information as Holder may reasonably require regarding the treatment of this
Warrant in connection with such contemplated Cash/Public Acquisition giving rise
to such notice), which is to be delivered to Holder not less than seven (7)
Business Days prior to the closing of the proposed Cash/Public Acquisition. In
the event the Company does not provide such notice, then if, immediately prior
to the Cash/Public Acquisition, the fair market value of one Share (or other
security issuable upon the exercise hereof) as determined in accordance with
Section 1.3 above would be greater than the Warrant Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to
be exercised pursuant to Section 1.2 above as to all Shares (or such other
securities) for which it shall not previously have been exercised, and the
Company shall promptly notify the Holder of the number of Shares (or such other
securities) issued upon such exercise to the Holder and Holder shall be deemed
to have restated each of the representations and warranties in Section 4 of the
Warrant as the date thereof.

 

(d)      Upon the closing of any Acquisition other than a Cash/Public
Acquisition defined above, the acquiring, surviving or successor entity shall
assume the obligations of this Warrant, and this Warrant shall thereafter be
exercisable for the same securities and/or other property as would have been
paid for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares were outstanding on and as of the closing of such
Acquisition, subject to further adjustment from time to time in accordance with
the provisions of this Warrant.

 

(e)      As used in this Warrant, “Marketable Securities” means securities
meeting all of the following requirements: (i) the issuer thereof is then
subject to the reporting requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then
current in its filing of all required reports and other information under the
Act and the Exchange Act; (ii) the class and series of shares or other security
of the issuer that would be received by Holder in connection with the
Acquisition were Holder to exercise this Warrant on or prior to the closing
thereof is then traded in Trading Market, and (iii) following the closing of
such Acquisition, Holder would not be restricted from publicly re-selling all of
the issuer’s shares and/or other securities that would be received by Holder in
such Acquisition were Holder to exercise or convert this Warrant in full on or
prior to the closing of such Acquisition, except to the extent that any such
restriction (x) arises solely under federal or state securities laws, rules or
regulations, and (y) does not extend beyond six (6) months from the closing of
such Acquisition.

 

2.      ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1      Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend or distribution on the outstanding shares of the Class payable in
common stock or other securities or property (other than cash), then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
additional cost to Holder, the total number and kind of securities and property
which Holder would have received had Holder owned the Shares of record as of the
date the dividend or distribution occurred. If the Company subdivides the
outstanding shares of the Class by reclassification or otherwise into a greater
number of shares, the number of Shares purchasable hereunder shall be
proportionately increased and the Warrant Price shall be proportionately
decreased. If the outstanding shares of the Class are combined or consolidated,
by reclassification or otherwise, into a lesser number of shares, the Warrant
Price shall be proportionately increased and the number of Shares shall be
proportionately decreased.

 

2.2      Reclassification, Exchange, Combinations or Substitution. Upon any
event whereby all of the outstanding shares of the Class are reclassified,
exchanged, combined, substituted, or replaced for, into, with or by Company
securities of a different class and/or series, then from and after the
consummation of such event, this Warrant will be exercisable for the number,
class and series of Company securities that Holder would have received had the
Shares been outstanding on and as of the consummation of such event, and subject
to further adjustment thereafter from time to time in accordance with the
provisions of this Warrant. The provisions of this Section 2.2 shall similarly
apply to successive reclassifications, exchanges, combinations substitutions,
replacements or other similar events.

 

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2.3      Intentionally Left Blank.

 

2.4      Adjustments for Diluting Issuances. Without duplication of any
adjustment otherwise provided for in this Section 2, the number of shares of
common stock issuable upon conversion of the Shares shall be subject to
anti-dilution adjustment from time to time in the manner set forth in the
Company’s Articles or Certificate of Incorporation as if the Shares were issued
and outstanding on and as of the date of any such required adjustment.

 

2.5      No Fractional Share. No fractional Share shall be issuable upon
exercise of this Warrant and the number of Shares to be issued shall be rounded
down to the nearest whole Share. If a fractional Share interest arises upon any
exercise of the Warrant, the Company shall eliminate such fractional Share
interest by paying Holder in cash the amount computed by multiplying the
fractional interest by (i) the fair market value (as determined in accordance
with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant
Price.

 

2.6      Notice/Certificate as to Adjustments. Upon each adjustment of the
Warrant Price, Class and/or number of Shares, the Company, at the Company’s
expense, shall notify Holder in writing within a reasonable time setting forth
the adjustments to the Warrant Price, Class and/or number of Shares and facts
upon which such adjustment is based. The Company shall, upon written request
from Holder, furnish Holder with a certificate of its Chief Financial Officer,
including computations of such adjustment and the Warrant Price, Class and
number of Shares in effect upon the date of such adjustment.

 

3.      REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1      Representations and Warranties. The Company represents and warrants to,
and agrees with, the Holder as follows:

 

(a)      All Shares which may be issued upon the exercise of this Warrant, and
all securities, if any, issuable upon conversion of the Shares, shall, upon
issuance, be duly authorized, validly issued, fully paid and non-assessable, and
free of any liens and encumbrances except for restrictions on transfer provided
for herein or under applicable federal and state securities laws. The Company
covenants that it shall at all times cause to be reserved and kept available out
of its authorized and unissued capital stock such number of shares of the Class,
common stock and other securities as will be sufficient to permit the exercise
in full of this Warrant and the conversion of the Shares into common stock or
such other securities.

 

(b)      The Company’s capitalization table attached hereto as Schedule 1 is
true and complete, in all material respects, as of the Issue Date.

 

3.2      Notice of Certain Events. If the Company proposes at any time to:

 

(a)      declare any dividend or distribution upon the outstanding shares of the
Class or common stock, whether in cash, property, stock, or other securities and
whether or not a regular cash dividend;

 

(b)      offer for subscription or sale pro rata to the holders of the
outstanding shares of the Class any additional shares of any class or series of
the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

(c)      effect any reclassification, exchange, combination, substitution,
reorganization or recapitalization of the outstanding shares of the Class; or

 

(d)      effect an Acquisition or to liquidate, dissolve or wind up;

 

then, in connection with each such event, the Company shall give Holder:

 

(i)      at least seven (7) Business Days prior written notice of the date on
which a record will be taken for such dividend, distribution, or subscription
rights (and specifying the date on which the holders of outstanding shares of
the Class will be entitled thereto) or for determining rights to vote, if any,
in respect of the matters referred to in (a) and (b) above; and

 

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(ii)      in the case of the matters referred to in (c) and (d) above at least
seven (7) Business Days prior written notice of the date when the same will take
place (and specifying the date on which the holders of outstanding shares of the
Class will be entitled to exchange their shares for the securities or other
property deliverable upon the occurrence of such event).

 

Reference is made to Section 1.6(c) whereby this Warrant will be deemed to be
exercised pursuant to Section 1.2 hereof if the Company does not give written
notice to Holder of an Acquisition as required by the terms hereof. Company will
also provide information requested by Holder that is reasonably necessary to
enable Holder to comply with Holder’s accounting or reporting requirements.

 

4.      REPRESENTATIONS, WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1      Purchase for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by Holder are being acquired for
investment for Holder’s account, not as a nominee or agent, and not with a view
to the public resale or distribution within the meaning of the Act. Holder also
represents that it has not been formed for the specific purpose of acquiring
this Warrant or the Shares.

 

4.2      Disclosure of Information. Holder is aware of the Company’s business
affairs and financial condition and has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the acquisition of this Warrant and its
underlying securities. Holder further has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of this Warrant and its underlying securities and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Holder or to which Holder has access.

 

4.3      Investment Experience. Holder understands that the purchase of this
Warrant and its underlying securities involves substantial risk. Holder has
experience as an investor in securities of companies in the development stage
and acknowledges that Holder can bear the economic risk of such Holder’s
investment in this Warrant and its underlying securities and has such knowledge
and experience in financial or business matters that Holder is capable of
evaluating the merits and risks of its investment in this Warrant and its
underlying securities and/or has a preexisting personal or business relationship
with the Company and certain of its officers, directors or controlling persons
of a nature and duration that enables Holder to be aware of the character,
business acumen and financial circumstances of such persons.

 

4.4      Accredited Investor Status. Holder is an “accredited investor” within
the meaning of Regulation D promulgated under the Act.

 

4.5      The Act. Holder understands that this Warrant and the Shares issuable
upon exercise hereof have not been registered under the Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of the Holder’s investment intent as expressed herein.
Holder understands that this Warrant and the Shares issued upon any exercise
hereof must be held indefinitely unless subsequently registered under the Act
and qualified under applicable state securities laws, or unless exemption from
such registration and qualification are otherwise available. Holder is aware of
the provisions of Rule 144 promulgated under the Act.

 

4.6      No Voting Rights. Holder, as a Holder of this Warrant, will not have
any voting rights until the exercise of this Warrant.

9

 

 

5.      MISCELLANEOUS.

 

5.1      Term; Automatic Cashless Exercise Upon Expiration.

 

(a)      Term. Subject to the provisions of Section 1.6 above, this Warrant is
exercisable in whole or in part at any time and from time to time on or before
6:00 PM, Eastern time, on the Expiration Date and shall be void thereafter.

 

(b)      Automatic Cashless Exercise upon Expiration. In the event that, upon
the Expiration Date, the fair market value of one Share (or other security
issuable upon the exercise hereof) as determined in accordance with Section 1.3
above is greater than the Warrant Price in effect on such date, then this
Warrant shall automatically be deemed on and as of such date to be exercised
pursuant to Section 1.2 above as to all Shares (or such other securities) for
which it shall not previously have been exercised, and the Company shall, within
a reasonable time, deliver a certificate representing the Shares (or such other
securities) issued upon such exercise to Holder.

 

5.2      Legends. Each certificate evidencing Shares (and each certificate
evidencing the securities issued upon conversion of any Shares, if any) shall be
imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED
BY THE ISSUER TO OXFORD FINANCE LLC DATED [______], MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND
LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH
REGISTRATION.

 

5.3      Compliance with Securities Laws on Transfer. This Warrant and the
Shares issued upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part except in compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder, provided that
any such transferee is an “accredited investor” as defined in Regulation D
promulgated under the Act. Additionally, the Company shall also not require an
opinion of counsel if there is no material question as to the availability of
Rule 144 promulgated under the Act.

 

5.4      Intentionally Left Blank.

 

5.5      Transfer Procedure. After receipt by Oxford of the executed Warrant,
Oxford may transfer all or part of this Warrant to one or more of Oxford’s
affiliates (each, an “Oxford Affiliate”), by execution of an Assignment
substantially in the form of Appendix 2. Subject to the provisions of Article
5.3 and upon providing the Company with written notice, Oxford, any such Oxford
Affiliate and any subsequent Holder, may transfer all or part of this Warrant or
the Shares issuable upon exercise of this Warrant (or the Shares issuable
directly or indirectly, upon conversion of the Shares, if any) to any other
transferee, provided, however, in connection with any such transfer, the Oxford
Affiliate(s) or any subsequent Holder will give the Company notice of the
portion of the Warrant being transferred with the name, address and taxpayer
identification number of the transferee and Holder will surrender this Warrant
to the Company for reissuance to the transferee(s) (and Holder if applicable).

 

10

 

 

 

5.6      Notices. All notices and other communications hereunder from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
(i) when given personally, (ii) on the third (3rd) Business Day after being
mailed by first-class registered or certified mail, postage prepaid, (iii) upon
actual receipt if given by facsimile or electronic mail and such receipt is
confirmed in writing by the recipient, or (iv) on the first Business Day
following delivery to a reliable overnight courier service, courier fee prepaid,
in any case at such address as may have been furnished to the Company or Holder,
as the case may be, in writing by the Company or such Holder from time to time
in accordance with the provisions of this Section 5.5. All notices to Holder
shall be addressed as follows until the Company receives notice of a change of
address in connection with a transfer or otherwise:

 

Oxford Finance LLC

133 N. Fairfax Street

Alexandria, VA 22314

Attn: Legal Department

Telephone: (703) 519-4900

Facsimile: (703) 519-5225
Email: LegalDepartment@oxfordfinance.com

 

Notice to the Company shall be addressed as follows until Holder receives notice
of a change in address:

 

ACURA PHARMACEUTICALS, INC.

616 N. North Court, Suite 120

Palatine, Illinois

Attn: Peter A. Clemens

Fax: (847) 705-5399

Email: pclemens@acurapharm.com

 

With a copy (which shall not constitute notice) to:

 

LeClairRyan

One Riverfront Plaza
1037 Raymond Boulevard

Sixteenth Floor

Newark, New Jersey 07102

Attn: John P. Reilly

Fax: (973) 491-3511

Email: John.Reilly@leclairryan.com

 

5.7      Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated (either generally or in a particular instance and
either retroactively or prospectively) only by an instrument in writing signed
by the party against which enforcement of such change, waiver, discharge or
termination is sought.

 

5.8      Attorneys’ Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys’ fees.

 

5.9      Counterparts; Facsimile/Electronic Signatures. This Warrant may be
executed in counterparts, all of which together shall constitute one and the
same agreement. Any signature page delivered electronically or by facsimile
shall be binding to the same extent as an original signature page with regards
to any agreement subject to the terms hereof or any amendment thereto.

 

5.10      Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to its
principles regarding conflicts of law.

 

5.11      Headings. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.

 

11

 

 

 

5.12      Business Days. “Business Day” is any day that is not a Saturday,
Sunday or a day which banks in the State of New York or Commonwealth of Virginia
are closed.

 

[Remainder of page left blank intentionally]

 

[Signature page follows]

 

12

 

 

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be
executed by their duly authorized representatives effective as of the Issue Date
written above.

 

“COMPANY”               ACURA PHARMACEUTICALS, INC.                 By:        
          Name:           (Print)       Title:                   “HOLDER”      
        OXFORD FINANCE LLC                 By:                   Name:          
(Print)       Title:        

 

[Signature Page to Warrant to Purchase Stock-A3]

 

 

 

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.      The undersigned Holder hereby exercises its right purchase ___________
shares of the Common Stock of ACURA PHARMACEUTICALS, INC. (the “Company”) in
accordance with the attached Warrant To Purchase Stock, and tenders payment of
the aggregate Warrant Price for such shares as follows:

 

¨       check in the amount of $________ payable to order of the Company
enclosed herewith

 

¨       Wire transfer of immediately available funds to the Company’s account

 

¨       Cashless Exercise pursuant to Section 1.2 of the Warrant

 

¨       Other [Describe] __________________________________________

 

2.      Please issue a certificate or certificates representing the Shares in
the name specified below:

 

        Holder’s Name                 (Address)  

 

3.      By its execution below and for the benefit of the Company, Holder hereby
restates each of the representations and warranties in Section 4 of the Warrant
to Purchase Stock as of the date hereof.

 

    HOLDER:                 By:               Name:               Title:        
      Date:  

 

Appendix 1

 

 

 

 

APPENDIX 2

 

ASSIGNMENT

 

For value received, Oxford Finance LLC hereby sells, assigns and transfers unto

 

Name:[OXFORD TRANSFEREE]

 

Address:_______________________

 

Tax ID:    ______________________________]

 

that certain Warrant to Purchase Stock issued by ACURA PHARMACEUTICALS, INC.
(the “Company”), on [_____] (the “Warrant”) together with all rights, title and
interest therein.

 

    OXFORD FINANCE LLC             By:               Name:               Title:
        Date:                

By its execution below, and for the benefit of the Company, [OXFORD TRANSFEREE]
makes each of the representations and warranties set forth in Article 4 of the
Warrant and agrees to all other provisions of the Warrant as of the date hereof.

 

    [OXFORD TRANSFEREE]           By:               Name:               Title:
__________________________________________]

 

Appendix 2

 

 

 

 

SCHEDULE 1

 

Company Capitalization Table

 

See attached