Unassociated Document


    SECURED
      PROMISSORY NOTE

     

    ACURA
      PHARMACEUTICALS, INC.

     

     

    
      	$______________________	
              No.
                N-__

            
	January 31, 2006	 
	 	 


    

    


    ACURA
      PHARMACEUTICALS, INC., a corporation organized under the laws of the State
      of
      New York (the “Company”),
      for
      value received, hereby promises to pay to _______________,  or
      registered assigns (the “Payee”
or
      “Holder”),
      upon
      due presentation and surrender of this Secured Promissory Note (this
“Note”),
      on
      the Maturity Date, the principal amount of [____________ ]
      ($______)
      and all
      accrued but unpaid interest thereon as hereinafter provided. As used herein,
      the
“Maturity
      Date”
means
      June 1, 2006. 

    


    This
      Note
      was issued by the Company pursuant to a certain Loan Agreement dated as of
      January  ,
      2006
      among the Company and certain lenders identified therein, including the Payee
      (together with the Schedules and Exhibits thereto, the “Loan
      Agreement”).
      The
      holders from time to time of the Notes issued under the Loan Agreement
      (including the Holder) are referred to hereinafter as the “Holders”.
      The
      Holder is entitled to the benefits of the Loan Agreement, including, without
      limitation, the rights upon the occurrence and during the continuance of an
      Event of Default and the benefits of security interests and guaranties referred
      to below. Reference is made to the Loan Agreement and the documents entered
      into
      pursuant thereto with respect to certain additional rights of the Holder and
      obligations of the Company and its Subsidiaries not expressly set forth herein.
      Capitalized terms used herein but not otherwise defined herein shall have the
      meaning ascribed thereto in the Loan Agreement. All such rights and obligations
      set forth in the Loan Agreement are incorporated herein by
      reference.

    


    ARTICLE
      I

     

    PAYMENT
      OF PRINCIPAL AND INTEREST; METHOD OF PAYMENT

     

     

    1.1.   Payment,
      if any, of the principal and accrued interest on this Note shall be made in
      cash, in immediately available funds, in such coin or currency of the United
      States of America as at the time of payment shall be legal tender for the
      payment of public and private debts. Interest (computed on the basis of a
      360-day year of twelve 30-day months) shall accrue on the unpaid portion of
      said
      principal amount from time to time outstanding at the Stated Interest Rate
      (as
      defined below), and shall be paid by the Company to the Payee in arrears on
      the
      last day of each calendar quarter unless required to be paid earlier by the
      terms of the Loan Agreement. Both principal hereof and interest hereon are
      payable at such address as the Holder shall designate from time to time by
      written notice to the Company. The Company will pay or cause to be paid all
      sums
      becoming due hereon for principal and interest by check or wire transfer, at
      the
      Holder’s election, and, without any requirement for the presentation of this
      Note or making any notation thereon, except that the Holder hereof agrees that
      payment of the final amount due shall be made only upon surrender of this Note
      to the Company for cancellation. Prior to any sale or other disposition of
      this
      instrument, the Holder hereof agrees to endorse hereon the amount of principal
      paid hereon and the last date to which interest has been paid hereon and to
      notify the Company of the name and address of the transferee. As used herein,
      the “Stated Interest Rate” means the rate of (i) ten percent (10%) per annum
      prior to the occurrence of an Event of Default, and (ii) thirteen percent (13%)
      per annum after the occurrence of an Event of Default and during the continuance
      thereof (regardless of whether the Loans have been accelerated), in each case
      subject to the limitations of applicable law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.2. If
      this
      Note or any portion hereof becomes due and payable on a Saturday, Sunday or
      public holiday under the laws of the State of New York, the due date hereof
      shall be extended to the next succeeding full business day and interest shall
      be
      payable at the Stated Interest Rate per annum during such extension. All
      payments received by the Holder shall be applied first to the payment of all
      accrued interest payable hereunder.

     

     

    1.3 The
      Company shall have the right to prepay the principal amount of this Note, in
      whole or in part, at any time without penalty or premium. Any prepayment of
      principal shall be accompanied by a payment of all interest accrued and unpaid
      on the portion of the principal amount being prepaid. In addition, this Note
      is
      subject to mandatory prepayment as provided in the Loan Agreement.

     

    ARTICLE
      II

     

    SECURITY

     

    2.1.  The
      obligations of the Company under this Note are secured pursuant to security
      interests on and collateral assignments of, assets, tangible and intangible,
      of
      the Company granted by the Company to the Holder and the other Holders (or
      their
      agent) pursuant to a General Security Agreement of even date herewith, and
      the
      collateral assignments referred to in the Loan Agreement. In addition, Acura
      Pharmaceutical Technologies, Inc. (“APT”), a wholly owned subsidiary of the
      Company (the “Guarantor”), has executed and delivered in favor of the Holder and
      the other Holders (or their agent) a Continuing Unconditional Guaranty, dated
      an
      even date herewith (the “Guaranty”), guaranteeing the full and unconditional
      payment when due of the amounts payable by the Company to the Holder and the
      other Holders pursuant to the terms of their respective Notes. The obligations
      of the Guarantor under its Guaranty are secured pursuant to security interests
      on and collateral assignments of, assets, tangible and intangible, of the
      Guarantor granted by the Guarantor to the Holder and the other Holders (or
      their
      agent) pursuant to a security agreement of even date herewith, and the
      collateral assignments referred to in the Loan Agreement. 

     

    
      
         

      

      
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    ARTICLE
      III

     

    MISCELLANEOUS

     

     

    3.1.  Default.
      Subject to the terms of the Loan Agreement, upon the occurrence of any one
      or
      more of the Events of Default specified in the Loan Agreement all amounts then
      remaining unpaid on this Note may be declared to be, or automatically become,
      immediately due and payable as provided in the Loan Agreement.

     

     

    3.2.  Collection
      Costs. In the event that this Note shall be placed in the hands of an attorney
      for collection by reason of any event of default hereunder, the undersigned
      agrees to pay reasonable attorney’s fees and disbursements and other reasonable
      expenses incurred by the Holder or its agent in connection with the collection
      of this Note. In addition, the undersigned shall be responsible for all other
      expenses of the Holder and its agent to the extent provided by the Loan
      Agreement.

     

     

    3.3.  Rights
      Cumulative; Specific Performances. The rights, powers and remedies given to
      the
      Payee under this Note shall be in addition to all rights, powers and remedies
      given to it by virtue of the Loan Agreement, any document or instrument executed
      in connection therewith, or any statute or rule of law. 

     

     

    3.4.  No
      Waivers. Any forbearance, failure or delay by the Payee in exercising any right,
      power or remedy under this Note, the Loan Agreement, any documents or
      instruments executed in connection therewith or otherwise available to the
      Payee
      shall not be deemed to be a waiver of such right, power or remedy, nor shall
      any
      single or partial exercise of any right, power or remedy preclude the further
      exercise thereof.

     

     

    3.5.  Amendments
      in Writing. Subject to the terms of the Loan Agreement, no amendment,
      modification or waiver of any provision of this Note shall be effective unless
      it shall be in writing and signed by the Holder, and any such amendment,
      modification or waiver shall apply only in the specific instance for which
      given. 

     

     

    3.6.  Governing
      Law; Jurisdiction. (a)  This
      Note and the rights of the holders hereof shall be governed by, and construed
      in
      accordance with, the laws of the State of New York wherein the terms of this
      Note 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)  The
      undersigned 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 out of or relating to this Note
      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. The undersigned 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 judgment or any other manner provided by law. Nothing in this Note
      or any other Transaction Document shall affect any right that any party may
      otherwise have to bring any action or proceeding relating to this Note or any
      of
      the other Transaction Documents in the courts of any jurisdiction.

     

    
      
         

      

      
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    (c)  The
      Company 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 Note or any other transaction document to which it is a party
      in any such New York State or United States Federal Court. The Company 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. 

     

    3.7.  No
      Counterclaims. The Company waives the right to interpose counterclaims or
      set-offs of any kind and description in any litigation arising hereunder
      (whether or not arising out of or relating to this Note).

     

    3.8.  Successors.
      The term “Payee” and “Holder” as used herein shall be deemed to include the
      Holder and its successors, endorsees and assigns.

     

    3.9.  Certain
      Waivers. The Company hereby waives presentment, demand for payment, protest,
      notice of protest and notice of non-payment hereof.

     

    3.10.  Mutilated,
      Lost, Stolen or Destroyed Notes. In case this Note shall be mutilated, lost,
      stolen or destroyed, the Company shall issue and deliver in exchange and
      substitution for and upon cancellation of the mutilated Note, or in lieu of
      and
      substitution for the Note, mutilated, lost, stolen or destroyed, a new Note
      of
      like tenor and representing an equivalent right or interest, but only upon
      receipt of evidence reasonably satisfactory to the Company of such loss, theft
      or destruction and an indemnity, if requested, also reasonably satisfactory
      to
      it (but without requirement of posting any bond).

     

    3.11.  Maintenance
      of Office. The Company covenants and agrees that so long as this Note shall
      be
      outstanding, it will maintain an office or agency in New York (or such other
      place as the Company may designate in writing to the holder of this Note) where
      notices, presentations and demands to or upon the Company in respect of this
      Note may be given or made.

     

    3.12.  WAIVER
      OF
      JURY TRIAL. THE COMPANY IRREVOCABLY WAIVES 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 THIS DEBENTURE OR ANY OTHER TRANSACTION
      DOCUMENT TO WHICH IT IS A PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
      OR ENFORCEMENT THEREOF. 

     

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, Acura Pharmaceuticals, Inc. has caused this Note to be signed
      by its authorized officer and to be dated the day and year first above
      written.

     

     

    
      	 	 	 
	ATTEST
              [SEAL]	ACURA
              PHARMACEUTICALS, INC.
	 
 	 
 	 
 
	____________________________________	By:  	/s/ 
	 	
              
Name:
              Peter Clemens 
	 	Title
              :
              Senior Vice President and CFO 




    
      	 	 
	 	 
	 	 


    

         

    
      
         

      

      
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    ATTACHMENT
      I

    


    Assignment

    


    


    For
      value
      received, the undersigned hereby assigns subject to the provisions of the Loan
      Agreement, to ________ $_________________ principal amount of the Secured
      Promissory Note evidenced hereby and hereby irrevocably appoints _______________
      attorney to transfer the Note on the books of the within named corporation
      with
      full power of substitution in the premises.

    


    Dated:

    


    In
      the
      presence of:

    


    
      
         

      

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