Unassociated Document


     

    STOCK
      PLEDGE AGREEMENT

     

    This
      Stock Pledge Agreement (this “Agreement”)
      is
      dated as of January 31, 2006 by and between Acura Pharmaceuticals, Inc., a
      New
      York corporation (the “Pledgor”),
      and
      Galen Partners III, L.P., a Delaware limited partnership, acting in its capacity
      as agent for the Lenders, as hereinafter defined (the “Agent”),
      for
      the benefit of the Lenders.

     

     

    PRELIMINARY
      STATEMENTS

     

    The
      Pledgor has entered into a Loan Agreement of even date herewith (as the same
      may
      be amended, modified, supplemented or restated from time to time, the
“Loan
      Agreement;”
terms
      which are capitalized in this Agreement and not otherwise defined shall have
      the
      meanings ascribed to them in the Loan Agreement) with the Lenders party thereto
      (the “Lenders”).
      It is
      a condition precedent to the effectiveness of the Loan Agreement that the
      Pledgor shall have executed this Agreement and made the pledges referred to
      herein in favor of the Agent, for the ratable benefit of the Lenders, as
      contemplated hereby.

     

     

    AGREEMENT

     

    In
      consideration of the premises and to induce the Lenders to enter into the Loan
      Agreement, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Pledgor hereby agrees with
      the
      Agent as follows:

     

    ARTICLE
      1

     

    PLEDGE
      OF PLEDGED STOCK

     

    1.1  DEFINITIONS;
      INTERPRETATION OF AGREEMENT

     

    Unless
      the context otherwise requires, all terms not defined herein or in the Loan
      Agreement shall have the meaning set forth in the New York Uniform Commercial
      Code (the “Code”).
      Acceptance of or acquiescence in a course of performance rendered under this
      Agreement shall not be relevant in determining the meaning of this Agreement
      even though the accepting or acquiescing party had knowledge of the nature
      of
      the performance and opportunity for objection.

     

    1.2  PLEDGE
      OF THE PLEDGED STOCK; POWER OF ATTORNEY

     

    (a)  As
      security for the prompt payment and performance when due of the obligations
      now
      or hereafter owing by the Pledgor to the Lenders under the Loan Agreement,
      the
      Notes, the other Transaction Documents and under the agreements, documents
      and
      instruments delivered by the Pledgor pursuant thereto or in connection therewith
      (collectively, the “Obligations”),
      the
      Pledgor hereby pledges to the Agent, for the ratable benefit of the Lenders,
      and
      grants to the Agent, for the ratable benefit of the Lenders, a lien on and
      security interest having priority over any and all other security interests,
      in
      the following (collectively the “Pledged
      Collateral”):
      (i)
      all of the issued and outstanding shares of common stock of Acura Pharmaceutical
      Technologies, Inc. (“APT”
or
      “Subsidiary”),
      which
      shares are more particularly described on Schedule
      A
      attached
      hereto (the “Pledged
      Stock”),
      (ii)
      all additional shares of common stock at any time issued to the Pledgor by
      APT,
      (iii) the certificates evidencing all Pledged Collateral, (iv) subject to
      Section 1.6 hereof, all dividends, cash, securities, investment property,
      instruments and other property from time to time received, receivable or
      otherwise distributed in respect of or in exchange for any or all of the Pledged
      Stock and such shares and securities, and (v) all proceeds of any and all
      Pledged Collateral (including, without limitation, proceeds constituting any
      property of the types described above). The Pledgor shall deliver to the Agent
      original stock certificates for all of the Pledged Stock, each accompanied
      by an
      undated stock power executed in blank by the Pledgor.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  The
      Agent
      shall have no obligation with respect to the Pledged Collateral or any other
      property held or received by it hereunder except to use reasonable care in
      the
      custody thereof. The Agent may hold the Pledged Collateral in the form in which
      it is received by it.

     

    (c)  The
      Pledgor, to the fullest extent permitted by law, hereby constitutes and
      irrevocably appoints the Agent (and any officer or agent of the Agent, with
      full
      power of substitution and revocation) as the Pledgor’s true and lawful
      attorney-in-fact, in the Pledgor’s stead and in the name of the Pledgor or in
      the name of the Agent, to transfer, upon the occurrence and during the
      continuance of an Event of Default or at any time the Agent, based on all the
      facts and circumstances then existing, and in the exercise of its commercially
      reasonable credit judgment, believes, and has so notified the Pledgor in
      writing, that, in connection with the Loan Agreement and the agreements,
      documents and instruments delivered by the Pledgor pursuant thereto or in
      connection therewith, fraud has occurred with respect to the Pledgor or any
      other Person controlling, controlled by, or under common control with the
      Pledgor which has a material adverse effect on the operations or condition
      (financial or otherwise) of the Pledgor and its subsidiaries, taken as a whole
      (a “Fraud”),
      the
      Pledged Collateral on the books of APT, in whole or in part, to the name of
      the
      Agent or such other Person or Persons as the Agent may designate and, upon
      the
      occurrence and during the continuance of an Event of Default or at any time
      the
      Agent, based on all the facts and circumstances then existing, and in the
      exercise of its commercially reasonable credit judgment, believes, and has
      so
      notified the Pledgor in writing, that Fraud has occurred, to take all such
      other
      and further actions as the Pledgor could have taken with respect to the Pledged
      Collateral which the Agent in its reasonable judgment determines to be necessary
      or appropriate to accomplish the purposes of this Agreement.

     

    (d)  The
      powers of attorney granted pursuant to this Agreement and all authority hereby
      conferred are granted and conferred solely to protect the Agent’s interests in
      the Pledged Collateral and shall not impose any duty upon the attorney-in-fact
      to exercise such powers. Such powers of attorney shall be irrevocable prior
      to
      the payment in full of the Obligations and shall not be terminated prior thereto
      or affected by any act of the Pledgor or other Persons or by operation of law.
      The foregoing power of attorney, being coupled with an interest, is irrevocable
      so long as any Obligation remains outstanding.

     

    (e)  Except
      to
      the extent that the Agent releases its pledge of any of the Pledged Collateral,
      each Person who shall be a transferee of the beneficial ownership of any of
      the
      Pledged Collateral shall be deemed to have irrevocably appointed the Agent,
      with
      full power of substitution and revocation, as such Person’s true and lawful
      attorney-in-fact in such Person’s name and otherwise to do any and all acts
      herein permitted and to exercise any and all powers herein conferred;
provided,
      however,
      that no
      Person shall exercise any such power of attorney unless an Event of Default
      shall have occurred and be continuing, and subject to the terms of the Loan
      Agreement regarding the exercise of remedies upon an Event of Default, or from
      and after such time as such Person has notified the Pledgor in writing that
      based on all the facts and circumstances then existing, and in the exercise
      of
      its commercially reasonable judgment, such Person believes that Fraud has
      occurred.

     

    
      
         

      

      
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    1.3  RIGHTS
      OF PLEDGOR; VOTING

     

    (a)  During
      the term of this Agreement, and so long as the Pledgor has not received a Voting
      Notice (as defined below) from the Agent following (i) the occurrence and during
      the continuance of an Event of Default, and subject to the terms of the Loan
      Agreement regarding the exercise of remedies upon an Event of Default, or (ii)
      from and after such time as the Agent determines that based on all the facts
      and
      circumstances then existing, and in the exercise of its commercially reasonable
      judgment, the Agent believes that Fraud has occurred, the Pledgor shall have
      the
      right to vote any of the Pledged Collateral in all corporate matters except
      those which would contravene this Agreement, the Loan Agreement or any of the
      agreements, documents and instruments delivered by the Pledgor and each
      Subsidiary pursuant thereto unless the Agent consents in writing thereto.


     

    (b)  Upon
      the
      occurrence and during the continuance of an Event of Default, and subject to
      the
      terms of the Loan Agreement regarding the exercise of remedies upon an Event
      of
      Default, or from or from and after such time as the Agent has notified the
      Pledgor in writing that based on all the facts and circumstances then existing,
      and in the exercise of its commercially reasonable judgment, Agent believes
      that
      Fraud has occurred, the Pledgor shall give the Agent at least fifteen (15)
      days’
prior notice of (i) any meeting of stockholders of the Subsidiary or any meeting
      of directors of the Subsidiary convened for any purpose and (ii) any written
      consent which the Pledgor proposes to execute as the stockholder of the
      Subsidiary or which any of the representatives of the Pledgor proposes to
      execute as a director of the Subsidiary. During the continuance of an Event
      of
      Default, and subject to the terms of the Loan Agreement regarding the exercise
      of remedies upon an Event of Default, or from and after such time as the Agent
      determines that based on all the facts and circumstances then existing, and
      in
      the exercise of its commercially reasonable judgment, the Agent believes that
      Fraud has occurred, the Pledgor hereby authorizes the Agent to send its agents
      and representatives to any such meeting of stockholders or directors of the
      Subsidiary that the Agent wishes to attend, and agrees to take such steps as
      may
      be necessary to confirm and effectuate such authority, including, without
      limitation, causing the Subsidiary to give reasonable prior written notice
      to
      the Agent of the time and place of any such meeting and the principal actions
      to
      be taken thereat.

     

    (c)  Notwithstanding
      the occurrence of an Event of Default, and subject to the terms of the Loan
      Agreement regarding the exercise of remedies upon an Event of Default, or the
      determination by the Agent that based on all the facts and circumstances then
      existing, and in the exercise of its commercially reasonable judgment, the
      Agent
      believes that Fraud has occurred, the Pledgor may continue to exercise the
      voting rights of the Pledgor as herein described (and subject to the limitations
      herein) except to the extent that the Agent elects to exercise voting power
      (as
      determined by it in its sole discretion) by providing written notice to the
      Pledgor at any time during the continuance of an Event of Default or from and
      after such time as the Agent has determined that based on all the facts and
      circumstances then existing, and in the exercise of its commercially reasonable
      judgment, the Agent believes that Fraud has occurred (a “Voting
      Notice”),
      whereupon the Agent shall have the exclusive right during the continuance of
      an
      Event of Default or from and after the Agent’s determination of Fraud to
      exercise such rights to the extent specified in such Voting Notice, and the
      Pledgor shall take all such steps as may be necessary to effectuate such rights
      until the Agent notifies the Pledgor in writing of the release of such rights.
      Once any such Event of Default has been cured or waived and such cure or waiver
      is confirmed by the Agent to the Pledgor in writing, any relevant Voting Notice
      shall be deemed to be rescinded.

     

    
      
         

      

      
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    1.4  NO
      RESTRICTIONS ON TRANSFER

     

     

    The
      Pledgor warrants and represents that except as otherwise provided in (i) the
      Watson Stock Pledge Agreement dated March 29, 2000 executed by the Pledgor
      to
      secure the Senior Note (as amended, the “Watson
      Stock Pledge Agreement”);
      (ii)
      the Stock Pledge Agreement dated as of June 22, 2005 executed by the Pledgor
      to
      secure a certain bridge loan (the “June Bridge
      Loan”)
      extended
      pursuant to the terms of that certain Loan Agreement, dated as of June 22,
      2005
      (the “June
      Bridge Loan Stock Pledge Agreement”);
      (iii)
      the Stock Pledge Agreement dated as of September 16, 2005 executed by the
      Pledgor to secure a certain bridge loan (the “September
      Bridge Loan”)
      extended
      pursuant to the terms of that certain Loan Agreement, dated as of September
      16,
      2005 (the “September
      Bridge Loan Stock Pledge Agreement”);
      and
      (iv) the Stock Pledge Agreement dated as of November 9, 2005 executed by the
      Pledgor to secure a certain bridge loan (the “November
      Bridge Loan”)
      extended
      pursuant to the terms of that certain Loan Agreement, dated as of November
      9,
      2005 (the “November
      Bridge Loan Stock Pledge Agreement”),
      there
      are no restrictions on the transfer of the Pledged Stock (except for such
      restrictions imposed by operation of law), that there are no options, warrants
      or rights pertaining thereto, and that the Pledgor has the right to transfer
      the
      Pledged Stock free of any encumbrances and without the consent of the creditors
      of the Pledgor or the consent of the Subsidiary or any other Person or any
      governmental agency whatsoever.

     

    1.5  NO
      TRANSFER OF LIENS; ADDITIONAL SECURITIES

     

    The
      Pledgor agrees that it will not sell, transfer or convey any interest in, or
      suffer or permit any lien or encumbrance to be created upon or with respect
      to,
      any of the Pledged Collateral during the term of this Agreement, except to
      or in
      favor of the Agent, or as agreed to in writing in advance by the Agent in
      accordance with the terms of the Loan Agreement. The Pledgor shall not cause,
      suffer or permit the Subsidiary to issue any common or preferred stock, or
      any
      other equity security or any other instruments convertible into equity
      securities, to any Person, unless the Agent otherwise consents in writing (which
      consent may be withheld in the Agent’s reasonable credit judgment).

     

    
      
         

      

      
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    1.6  ADJUSTMENTS
      OF CAPITAL STOCK; PAYMENT AND APPLICATION OF DIVIDENDS

     

    Subject
      to the Loan Agreement, in the event that during the term of this Agreement
      any
      stock dividend, reclassification, readjustment or other change is declared
      or
      made in the capital structure of the Subsidiary or if any other or additional
      shares of stock of the Subsidiary are issued to the Pledgor, all new,
      substituted and additional shares or other securities issued by reason of any
      such change or acquisition shall immediately be delivered by the Pledgor to
      the
      Agent and shall be deemed to be part of the Pledged Collateral under the terms
      of this Agreement in the same manner as the shares of capital stock originally
      pledged hereunder. Subject to the Loan Agreement, upon the occurrence and during
      the continuance of an Event of Default and subject to the terms of the Loan
      Agreement regarding the exercise of remedies upon an Event of Default, or from
      and after such time as the Agent determines that based on all the facts and
      circumstances then existing, and in the exercise of its commercially reasonable
      judgment, the Agent believes that Fraud has occurred, all cash dividends
      received by or payable to the Pledgor in respect of the Pledged Collateral,
      including any additional shares of stock or investment property received by
      the
      Pledgor as a result of the Pledgor’s record ownership of the Pledged Stock,
      shall immediately be delivered by the Pledgor to the Agent, to be held by the
      Agent as Pledged Collateral hereunder or to be applied by the Agent against
      the
      Obligations. Upon the occurrence and during the continuance of an Event of
      Default and subject to the terms of the Loan Agreement regarding the exercise
      of
      remedies upon an Event of Default, or from and after such time as the Agent
      determines that based on all the facts and circumstances then existing, and
      in
      the exercise of its commercially reasonable judgment, the Agent believes that
      Fraud has occurred, the Pledgor will not demand and will not be entitled to
      receive, any cash dividends or other income, interest or property in or with
      respect to the Pledged Collateral, and if the Pledgor receives any of the same,
      the Pledgor shall immediately deliver it to the Agent to be held by it and
      applied as provided in the preceding sentence.

     

    1.7  WARRANTS
      AND OPTIONS

     

    In
      the
      event that during the term of this Agreement subscription warrants or other
      rights or options shall be issued to the Pledgor in connection with the Pledged
      Collateral, all such stock warrants, rights and options shall forthwith be
      assigned to the Agent by the Pledgor, and such stock warrants, rights and
      options shall be, and, if exercised by the Pledgor, all new stock issued
      pursuant thereto shall be, pledged by the Pledgor to the Agent to be held as,
      and shall be deemed to be part of, the Pledged Collateral under the terms of
      this Agreement in the same manner as the shares of capital stock originally
      pledged hereunder.

     

    1.8  RETURN
      OF PLEDGED COLLATERAL UPON TERMINATION

     

    Upon
      the
      termination of the Loan Agreement and the indefeasible payment in full in cash
      of the Obligations and all other amounts payable under this Agreement, the
      Agent
      shall cause to be transferred or returned to the Pledgor all of the stock
      pledged by the Pledgor herein and any money, property and rights received by
      the
      Agent pursuant hereto, to the extent the Agent has not taken, sold or otherwise
      realized upon the same as permitted hereunder, together with all other documents
      reasonably required by the Pledgor to evidence termination of the pledge
      contemplated hereby.

     

    
      
         

      

      
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    ARTICLE
      2

     

    EVENTS
      OF DEFAULT; REMEDIES

     

    2.1  RIGHTS
      OF AGENT UPON DEFAULT

     

    Upon
      the
      occurrence and during the continuance of any Event of Default and subject to
      the
      terms of the Loan Agreement regarding the exercise of remedies upon an Event
      of
      Default, or from and after such time as the Agent determines that based on
      all
      the facts and circumstances then existing, and in the exercise of its
      commercially reasonable judgment, the Agent believes that Fraud has occurred,
      the Agent shall have and at any time may exercise with respect to the Pledged
      Collateral, the proceeds thereof, and any other property or money held by the
      Agent hereunder, all rights and remedies available to it under law, including,
      without limitation, those given, allowed or permitted to a secured party by
      or
      under the Code, and all rights and remedies provided for herein and in the
      Loan
      Agreement.

     

    2.2  DISPOSITION
      OF PLEDGED STOCK

     

    (a)  Without
      limiting the foregoing, in the event that the Agent elects to sell the Pledged
      Stock (such term including, for purposes of this Section 2.2, the Pledged Stock
      and all other shares of stock or securities at any time forming part of the
      Pledged Collateral), the Agent shall have the power and right in connection
      with
      any such sale, exercisable at its option and in its absolute discretion, to
      sell, assign, and deliver the whole or any part of the Pledged Stock or any
      additions thereto at a private or public sale for cash, on credit or for future
      delivery and at such price as the Agent deems to be satisfactory. Any such
      disposition which shall be made by private sale or other private proceeding
      shall be made upon not less than ten (10) days’ prior written notice to Pledgor
      specifying the date and time at which such disposition is to be made. Notice
      of
      any public sale shall be sufficient if it describes the Pledged Collateral
      to be
      sold in general terms, and is published at least once in The New York Times
      not
      less than ten (10) days prior to the date of sale. If The New York Times is
      not
      then being published, publication may be made in lieu thereof in any newspaper
      then being circulated in the City of New York, New York, as the Agent may elect.
      If any notice of a proposed sale or other disposition of Pledged Collateral
      shall be required by law, such notice shall be deemed reasonable and proper
      if
      mailed, postage prepaid, to the Pledgor at its address set forth in Section
      5.5
      hereof or such other address as the Pledgor may have, in writing, provided
      to
      the Agent. The Agent may, if it deems it reasonable, postpone or adjourn any
      sale of any collateral from time to time by an announcement at the time and
      place of the sale to be so postponed or adjourned without being required to
      give
      a new notice of sale. 

     

    (b)  Because
      federal and state securities laws may restrict the methods of disposition of
      the
      Pledged Stock which are readily available to the Agent, and specifically because
      a public sale thereof may be impossible or impracticable by reason of certain
      restrictions under the Securities Act or under applicable “blue sky” or other
      state securities laws as now or hereafter in effect, the Pledgor agrees that
      the
      Agent may from time to time attempt to sell the Pledged Stock by means of a
      private placement restricting the offering or sale to a limited number of
      prospective purchasers who meet suitability standards the Agent deems
      appropriate and who agree that they are purchasing for their own accounts for
      investment and not with a view to distribution, and the Agent’s acceptance of
      the highest offer obtained therefrom shall be deemed to be a commercially
      reasonable disposition of the Pledged Stock. To the extent permitted by law,
      the
      Agent or its assigns may purchase all or any part of the Pledged Stock and
      any
      purchaser thereof shall thereafter hold the same absolutely free from any right
      or claim of any kind. To the fullest extent permitted by law, the Agent shall
      not be obligated to make any such sale pursuant to notice and may, without
      notice or publication, adjourn any public or private sale by announcement at
      the
      time and place fixed for the sale, and such sale may be held at any time or
      place to which the same may be adjourned. If any of the Pledged Stock is sold
      by
      the Agent upon credit or for future delivery, the Agent shall not be liable
      for
      the failure of the purchaser to pay for same and, in such event, the Agent
      may
      resell such Pledged Stock and the Pledgor shall continue to be liable to the
      Agent for the full amount of the Obligations to the extent the Agent does not
      receive full and final payment in cash therefor.

     

    
      
         

      

      
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    (c)  Except
      as
      otherwise provided in the Loan Agreement or by applicable law, the Agent shall
      have the sole right to determine the order in which Obligations shall be deemed
      discharged by the application of the proceeds of Pledged Stock or any other
      property or money held hereunder or any amount realized thereon.

     

    ARTICLE
      3

     

    REPRESENTATIONS
      AND WARRANTIES

     

    The
      Pledgor represents and warrants to the Agent that:

     

    3.1  CAPITALIZATION;
      GOOD TITLE

     

    (a)  All
      shares of Pledged Stock are fully paid, duly and properly issued, nonassessable
      and owned by the Pledgor free and clear of any lien or encumbrance of any kind
      whatsoever, excepting those herein granted to the Agent hereunder and in
      connection with the June Bridge Loan Agreement, the September Bridge Loan
      Agreement and the November Bridge Loan Agreement and those granted to the
      holders of the Senior Note. The Pledged Stock constitutes all of the outstanding
      securities of any class or kind of the Subsidiary.

     

    (b)  Except
      in
      the case of the liens granted to the holders of the Senior Note and the June
      Bridge Loan lenders, the September Bridge Loan lenders and the November Bridge
      Loan lenders, no effective financing statement or other instrument similar
      in
      effect covering all or any part of the Pledged Collateral is on file in any
      recording office.

     

    3.2  VALID
      SECURITY INTEREST

     

    The
      pledge of the Pledged Collateral pursuant to this Agreement creates a valid
      and
      perfected first-priority security interest, securing the payment of the
      Obligations, and all filings and other actions necessary or desirable to perfect
      and protect such security interest having been duly made or taken.

     

    
      
         

      

      
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    3.3  CONSENTS

     

    Except
      for the consent of the holders of the Senior Note, the June Bridge Loan lenders,
      the September Bridge Loan lenders and the November Bridge Loan lenders, no
      authorization, approval or other action by, and no notice to or filing with,
      any
      governmental authority or regulatory body is required for (a) the pledge by
      the
      Pledgor of the Pledged Collateral pursuant to this Agreement, the grant by
      the
      Pledgor of the assignment or security interest granted hereby or the execution,
      delivery or performance of this Agreement by the Pledgor, (b) the perfection
      of
      or exercise by the Agent of its rights and remedies provided for in this
      Agreement, or (c) the exercise by the Agent of the voting or other rights
      provided for in this Agreement or the remedies in respect of the Pledged
      Collateral pursuant to this Agreement (except as may be required in connection
      with a judicial foreclosure, if applicable, or the disposition of the Pledged
      Stock by laws affecting the offering and sale of securities
      generally).

     

    3.4  AUTHORIZATION;
      ENFORCEABILITY

     

    The
      Pledgor has full right, power and authority to enter into this Agreement and
      to
      grant the security interest in the Pledged Collateral made hereby, and this
      Agreement constitutes the legal, valid and binding obligation of the Pledgor
      enforceable against the Pledgor in accordance with its terms, except as the
      enforceability thereof may be (a) limited by bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforceability of
      creditors’ rights generally, and (b) subject to general principles of equity
      (regardless of whether such enforceability is considered in a proceeding in
      equity or at law).

     

    3.5  NO
      CONFLICT

     

    The
      execution, delivery and performance by the Pledgor of this Agreement will not
      result in any violation, conflict with, or result in a breach of any of the
      terms of, or constitute a default under, any agreements, contracts, court orders
      or consent decrees, the Certificate of Incorporation or the By-laws, as amended,
      of the Pledgor.

     

    ARTICLE
      4

     

    Indemnity
      and Expenses

     

    4.1  INDEMNITY

     

    The
      Pledgor agrees to and hereby indemnifies the Agent and each of the Lenders
      from
      and against any and all Losses arising out of, or in connection with, or
      resulting from this Agreement (including, without limitation, enforcement of
      this Agreement) unless resulting from or arising out of the gross negligence
      or
      willful misconduct of the Agent or such Lender.

     

    
      
         

      

      
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    4.2  EXPENSES

     

    The
      Pledgor agrees promptly upon the Agent’s or such Lender’s demand to pay or
      reimburse the Agent or such Lender for all reasonable expenses (including,
      without limitation, reasonable fees and disbursements of counsel) incurred
      by
      the Agent or such Lender in connection with (a) any modification or amendment
      to
      or waiver of any provision of this Agreement requested by the Pledgor, (b)
      the
      custody or preservation of the Pledged Collateral, (c) any actual or attempted
      sale or exchange of, or any enforcement, collection, compromise or settlement
      respecting, the Pledged Collateral or any other property or money held hereunder
      or any other action taken by the Agent or such Lender hereunder reasonably
      necessary to enforce its rights, whether directly or as attorney-in-fact
      pursuant to the power of attorney herein conferred, or (d) the failure by the
      Pledgor to perform or observe any of the provisions hereof. All such expenses
      shall be deemed a part of the Obligations for all purposes of this Agreement
      and
      the Agent may apply the Pledged Collateral or any other property or money held
      hereunder to payment of or reimbursement for such expenses after notice and
      demand to the Pledgor.

     

    ARTICLE
      5

     

    MISCELLANEOUS

     

    5.1  AGENT
      MAY PERFORM

     

    If
      the
      Pledgor fails to perform any representation, warranty, covenant or agreement
      required to be performed by it contained herein, the Agent may, but shall not
      be
      obligated to, perform, or cause performance of, such representation, warranty,
      covenant or agreement, and the out-of-pocket expenses of the Agent incurred
      in
      connection therewith shall be payable by the Pledgor.

     

    5.2  WAIVERS
      AND AMENDMENT

     

    The
      rights and remedies given hereby are in addition to all others however arising,
      but it is not intended that any right or remedy be exercised in any jurisdiction
      in which such exercise would be prohibited by law. No action, failure to act
      or
      knowledge of the Agent shall be deemed to constitute a waiver of any power,
      right or remedy hereunder, nor shall any single or partial exercise thereof
      preclude any further exercise thereof or the exercise of any other power, right
      or remedy. Any right or power of the Agent hereunder in respect of the Pledged
      Collateral and any other property or money held hereunder may at the option
      of
      the Agent be exercised as to all or any part of the same and the term the
“Pledged Collateral” wherever used herein, unless the context clearly requires
      otherwise, shall be deemed to mean (and shall be read as) “the Pledged
      Collateral and any other property or money held hereunder or any part thereof.”
This Agreement shall not be amended nor shall any right hereunder be deemed
      waived except by a written agreement expressly setting forth the amendment
      or
      waiver and signed by the Agent.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    5.3  CONTINUING
      SECURITY INTEREST; ASSIGNMENTS OF SECURED DEBT

     

    This
      Agreement shall create a continuing security interest having priority over
      any
      and all security interests in the Pledged Collateral and shall (a) remain in
      full force and effect, (b) be binding upon the Pledgor, and the Pledgor’s
      successors and assigns, and upon the Subsidiary, and their successors and
      assigns, and (c) inure, together with the rights and remedies of the Agent
      and
      the Lenders hereunder, to the benefit of the Agent, its successors and permitted
      assigns. Without limiting the generality of the foregoing clause (c), the Agent
      may assign or otherwise transfer all or any portion of its rights and
      obligations under this Agreement to any other Person, to the extent and in
      the
      manner provided in the Loan Agreement and such other Person shall thereupon
      become vested with all the benefits in respect hereof granted to the Agent
      herein; the Agent shall, however, retain all of its rights and powers with
      respect to any part of the Pledged Collateral not transferred. Any agent or
      nominee of the Agent shall have the benefit of this Agreement as if named herein
      and may exercise all the rights and powers given to the Agent
      hereunder.

     

    5.4  GOVERNING
      LAW; CONSENT TO JURISDICTION

     

    (a)  This
      Agreement and the rights of the parties hereunder shall be governed in all
      respects by the laws of the State of New York wherein the terms of this
      Agreement were negotiated, excluding to the greatest extent permitted by law
      any
      rule of law that would cause the application of the laws of any jurisdiction
      other than the State of New York.

     

    (b)  Each
      of
      the parties hereto hereby irrevocably and unconditionally submits, for itself
      and its property, to the nonexclusive jurisdiction of any New York State court
      or United States Federal court sitting in New York City, and any appellate
      court
      from any thereof, in any action or proceeding arising our of or relating to
      this
      Agreement or any of the other Transaction Documents to which it is a party,
      or
      for recognition or enforcement of any judgment, and each of the parties hereto
      irrevocably and unconditionally agrees that all claims in respect of any such
      action or proceeding may be heard and determined in any such New York State
      court or, to the fullest extent permitted by law, in such United States Federal
      court. Each of the parties hereto agrees that a final judgment in any such
      action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the right that any party may otherwise have to bring
      any action or proceeding relating to this Agreement or any of the other
      Transaction Documents in the courts of any other jurisdiction. 

     

    (c)  Each
      of
      the parties hereto irrevocably and unconditionally waives, to the fullest extent
      it may legally and effectively do so, any objection that it may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      in relation to this Agreement or any other Transaction Document to which it
      is a
      party in any such New York State or United States Federal court sitting in
      New
      York City. Each of the parties hereto hereby irrevocably waives, to the fullest
      extent permitted by law, the defense of an inconvenient forum to the maintenance
      of such action or proceeding in any such court.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    5.5  NOTICES

     

    All
      notices hereunder shall be in writing (except only as otherwise provided in
      Section 5.2) and shall be conclusively deemed to have been received and shall
      be
      effective (a) on the day on which delivered if delivered personally (including
      delivery by courier or overnight mail providing evidence of delivery), or
      transmitted by telex or telegram or telecopier with transmission confirmed,
      or
      (b) five (5) days after the date on which the same is deposited in the United
      States mail (certified or registered if required under Section 5.4), with
      postage prepaid and properly addressed, and any notice mailed shall be
      addressed:

     

    (a) 
 in
      the
      case of the Pledgor, to:

     

    Acura
      Pharmaceuticals, Inc.

    616
      N.
      North Court, Suite 120

    Palatine,
      Illinois 60067

    Telecopier
      No.: (847) 705-5399

    


    with
      copies to:

    


    St.
      John
& Wayne

    2
      Penn
      Plaza East

    Newark,
      New Jersey 07105

    Attention:
      John P. Reilly, Esq.

    Telephone
      No.: (973) 491-3600

    Telecopier
      No.: (973) 491-3555

    


    (b) 
 in
      the
      case of the Agent, to:

     

    Galen
      Partners III, L.P.

    610
      Fifth
      Avenue, Fifth Floor

    New
      York,
      NY 10020

    Telecopier
      No.: (212) 218-4999

    Attention:
      Bruce F. Wesson

    with
      a
      copies to:

    


    Blank
      Rome, LLP

    Chrysler
      Building

    405
      Lexington Avenue

    New
      York,
      New York 10174

    Attention:
      George N. Abrahams, Esq.

    Telephone
      No.: (212) 885-5207

    Telecopier
      No.: (917) 332-3763

    


    or
      at
      such other address as the party giving such notice shall have been advised
      of in
      writing for such purpose by the party to whom or to which the same is
      directed.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    5.6  SEVERABILITY;
      ENTIRE AGREEMENT

     

    (a)  If
      any
      provision of this Agreement shall be invalid, illegal, or unenforceable in
      any
      jurisdiction, the validity, legality or enforceability of any such provision
      in
      any other jurisdiction shall not be affected or impaired, and to the extent
      any
      provision is held invalid, illegal or unenforceable, then such provision shall
      be deemed severable from, and shall in no way affect the validity or
      enforceability of the remaining provisions of this Agreement.

     

    (b)  This
      Agreement, together with the other Transaction Documents, constitutes the entire
      agreement of the Pledgor and replaces any other or prior agreements or
      undertakings, with respect to the subject matter hereof, and there are no other
      agreements or undertakings, oral or written, respecting such subject matter
      which are intended to have any force or effect after the execution
      hereof.

     

    5.7  SUCCESSORS
      AND ASSIGNS; HEADINGS

     

    This
      Agreement shall be binding upon and shall inure to the benefit of the Pledgor
      and the Agent and their respective successors and permitted assigns. Section
      headings used herein are for convenience only and shall not affect the meaning
      or construction of any of the provisions hereof.

     

    5.8  COUNTERPARTS

     

    This
      Agreement may be executed in any number of counterparts, including by facsimile
      copy, each executed counterpart constituting an original but all counterparts
      together constituting only one instrument.

     

    5.9  FURTHER
      ASSURANCES

     

    Pledgor
      shall execute, in a proper and timely manner, at or after the date hereof,
      such
      additional documents and instruments as may be reasonably requested by the
      Agent
      in connection with the consummation or confirmation of the transactions
      contemplated by this Agreement.

     

    5.10  NO
      ASSIGNMENT

     

    This
      Agreement may not be assigned by the Pledgor without the prior express written
      consent of the Agent.

     

    5.11  WAIVERS
      OF JURY TRIAL

     

    THE
      PLEDGOR AND, BY ITS ACCEPTANCE HEREOF, THE AGENT HEREBY IRREVOCABLY WAIVE ALL
      RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
      ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY TRANSACTION
      DOCUMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION,
      PERFORMANCE OR ENFORCEMENT THEREOF.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    5.12  WAIVERS
      OF CONSEQUENTIAL DAMAGES

     

    NEITHER
      THE PLEDGOR, THE AGENT OR ANY LENDER, NOR ANY EMPLOYEE, AGENT OR ATTORNEY OF
      ANY
      OF THEM, SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL DAMAGES ARISING FROM
      ANY
      BREACH OF CONTRACT, TORT OR OTHER WRONG RELATING TO THIS AGREEMENT OR THE
      ESTABLISHMENT, ADMINISTRATION OR COLLECTION OF THE OBLIGATIONS, EXCEPT FOR
      BAD
      FAITH.

     

    5.13  LIMITATION
      OF LIABILITY

     

    THE
      AGENT
      AND THE LENDERS SHALL NOT HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER SOUNDING
      IN
      TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
      WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
      CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
      CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
      JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR LENDER, AS APPLICABLE, THAT
      THE
      LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR
      WILLFUL MISCONDUCT.

     

    


    


    [SIGNATURE
      PAGE TO FOLLOW]

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    



    IN
      WITNESS WHEREOF, the Pledgor has caused this Stock Pledge Agreement to be
      executed by its duly authorized officer as of the date first written
      above.

     

    
      	 	 	 
	 	ACURA
              PHARMACEUTICALS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Andrew
              D.
              Reddick
	 	
              
Name:
              Andrew D. Reddick
	 	Title:
              President and Chief Executive Officer


    

    


    Accepted
      and Agreed to:

    


    GALEN
      PARTNERS III, L.P.

    on
      behalf
      of itself and as Agent

    By:
      Claudius, L.L.C, General Partner

    610
      Fifth
      Avenue, 5th
      Fl.

    New
      York,
      New York 10019

    


    


    By:  /s/
      Bruce F. Wesson    

    Name:
      Bruce F. Wesson, its General Partner

    
      
         

      

      
        14

        
          

        

      

      
         

      

    


    


    SCHEDULE
      A

    


    


    Designation
      and Number of

    shares
      of
      capital stock owned by Pledgor

    


    


    


    
      	
               

               

              Issuer

            	
               

               

               Certificate
                No.

            	
               

               

              Designation

            	
               

              Number
                of Shares

            
	
               

              Acura
                Pharmaceutical Technologies, Inc.

            	
               

              1

            	
               

              Common
                Stock, $.01 par value

            	
               

              100