Unassociated Document


    


    


    AMENDMENT
      TO EXECUTIVE EMPLOYMENT AGREEMENT

    


    THIS
      AMENDMENT
      TO EXECUTIVE EMPLOYMENT AGREEMENT (this
      “Amendment”)
      made
      this 22nd day of December, 2005 by and between ACURA
      PHARMACEUTICALS, INC.,
      (formerly Halsey Drug Co., Inc.), a New York corporation (the “Corporation”),
      with
      offices at 616 N. North Court, Suite 120, Palatine, Illinois 60067 and
RON
      J. SPIVEY, residing
      at 3514 Bimini Avenue, Cooper City, Florida 33026 (the “Employee”).

    


    R E C I T 
      ;A L S

    


    
      	A.  	
              The
                Corporation and the Employee executed an employment agreement dated
                as of
                April 5, 2004 (the “Employment
                Agreement”).

            


    

    


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

            


    

    


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

    


    1.    Section
      2
      of the Employment Agreement is hereby deleted in its entirety and the following
      is inserted in its place:

    


    “The
      term
      of the Employee’s employment under this Agreement shall commence on the date of
      this Agreement and shall expire on December 31, 2006 (the “Initial
      Term”),
      unless sooner terminated pursuant to Section 7 of this Agreement; provided,
      however,
      that
      the term
      of the Employee’s employment hereunder shall automatically be extended for
      successive one (1) year periods (each, a “Renewal
      Period”
      and
      together with the Initial Term, the “Term”)
      unless
      either the Corporation or the Employee provides written notice of non-renewal
      of
      the Employee’s employment with the Corporation ninety (90) days prior to the
      expiration of the Initial Term or any Renewal Period.”

    


    2.    Section
      3(b) of the Employment Agreement is hereby deleted in its entirety and the
      following is inserted in its place:

    


    “(b) Annual
      Bonus.
      During
      the Term, the Employee will be eligible to receive from the Corporation an
      annual bonus (the “Bonus”)
      in the
      amount of up to one hundred percent (100%) of the Employee’s then current annual
      Base Salary during the fiscal year (or portion thereof) for which the Bonus
      may
      be awarded. The Bonus will be based upon the achievement of such targets,
      conditions or parameters (the “Bonus
      Criteria”)
      as
      will be agreed upon by the Employee and the Board of Directors or the
      Compensation Committee of the Board of Directors of the Corporation within
      sixty
      (60) days of (before or after) the beginning of each fiscal year during the
      Term. The Bonus shall be paid at the same time as the bonuses are paid to other
      executive officers, but in any event within seventy five (75) days following
      the
      end of the Corporation’s fiscal year.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Notwithstanding
      the foregoing, with respect to the Corporation’s fiscal year ending December 31,
      2006 (“Fiscal
      2006”),
      in
      the event the Corporation completes one or more Funding Transactions during
      Fiscal 2006 which results in the Corporation’s receipt of aggregate gross
      Funding Proceeds of at least Fifteen Million Dollars ($15,000,000)(the
“Minimum
      Funding Threshold”),
      the
      Corporation shall pay the Employee a bonus in an amount equal to one hundred
      percent (100%) of the Employee’s then current annual Base Salary not later than
      thirty (30) calendar days following the Corporation’s receipt of Funding
      Proceeds satisfying the Minimum Funding Threshold. For purposes of this Section
      3(b) “Funding
      Transaction”
      shall
      mean (a) any equity financing, and/or (b) any licensing or similar arrangement
      (including, by means of a joint venture, option or similar arrangement) whereby
      the Corporation licenses or otherwise grants any interest in or to any of the
      Corporation’s intellectual property rights, technology, know-how or similar
      property rights (whether existing now or hereafter) to a non-affiliated third
      party, or any similar transaction. “Funding
      Proceeds”
      shall
      mean and include (a) in the case of a Funding Transaction comprising an equity
      financing, the gross proceeds received by the Corporation from the issuance
      or
      sale of its equity securities, and (b) in the case of a Funding Transaction
      comprising a licensing or similar arrangement, the gross proceeds (consisting
      of
      signing fees, upfront fees, license fees, sublicense fees, milestone payments
      or
      any similar fees or payments, but expressly excluding any royalty payments,
      profit sharing payments or similar payments calculated based on the sale of
      products incorporating the Company’s technology) received by the Corporation
      with respect to such arrangement, and (c) in each case, the gross proceeds
      are
      received by the Corporation on or before March 31, 2007 with respect to a
      Funding Transaction pursuant to a definitive agreement executed on or before
      December 31, 2006 by the Corporation and the other party to such
      transaction.

    


    In
      the
      event the Corporation does not satisfy the Minimum Funding Threshold, but
      receives Funding Proceeds of at least Eleven Million Dollars ($11,000,000)
      on or
      before March 31, 2007, the Corporation shall pay the Employee a Bonus in an
      amount equal to a percentage of the Employee’s then current annual Base Salary
      in an amount equal to the product of (x) 100%, multiplied by (y) the quotient
      of
      (A) the Funding Proceeds received by the Corporation on or before March 31,
      2007, divided by (B) Fifteen Million Dollars ($15,000,000).”

     

    
      
        
        

      

      
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    3.    Section
      5(b) of the Employment Agreement is hereby deleted in its entirety and the
      following inserted in its place:

    


    “(b)
      Stock
      Options.
      Upon
      execution of this Agreement, the Employee is hereby granted stock options to
      purchase 3,000,000 shares of the Corporation’s common stock, $.01 par value per
      share at an exercise price of $0.13 per share (the "Execution
      Date Option").
      Upon
      the execution of the Amendment to Executive Employment Agreement dated December
      22, 2005 between the Corporation and the Employee, (the “Amendment”)
      the
      Employee is granted stock options to purchase 4,000,000 shares of the
      Corporation’s common stock at an exercise price of $0.13 per share (the
“Amendment
      Date Option”,
      and
      collectively with the Execution Date Option, the “Option”).
      The
      Option shares shall vest and be exercisable as follows: (i) 1,000,000 Option
      shares on October 1, 2004; (ii) 333,333 Option shares on each of January 1,
      2005, April 1, 2005, July 1, 2005 and October 1, 2005; (iii) 3,888,667 Option
      shares on January 1, 2006; and (iv) 778,001 Option shares on April 1, 2006.
      for
      purposes of this Employment Agreement, the portion of the Option which vests
      prior to January 1, 2005 shall be referred to as the “Pre-409A
      Option Portion,”
      and
      the portion of the Option which vests on or after January 1, 2005 shall be
      referred to as the “Post-409A
      Option Portion.”
      The
      Option shall have a ten (10) year term, subject to earlier termination as set
      forth in Section 7 upon the termination of the Employee’s employment with the
      Corporation. The Execution Date Option is evidenced by the Non-Qualified Stock
      Option Agreement in the form of Exhibit
      A
      hereto.
      The Company covenants and agrees to promptly prepare a Non-Qualified Stock
      Option Agreement for execution by the Corporation and the Employee that will
      (i)
      consolidate the Execution Date Option and the Amendment Date Option, and (ii)
      provide for compliance with Section 409A of the Internal Revenue Code of 1986,
      as amended, and the regulations promulgated thereunder (“Section
      409A”).
      The
      Employee and the Corporation agree that the Option shall be issued pursuant
      to
      the Corporation’s 1998 Stock Option Plan, as amended, as such Plan shall be
      further amended in accordance with this Section 5(b) to comply with Section
      409A. The Employee will also be eligible in the future to
      receive option grants based on performance or on achievement of milestones
      as
      determined by the Board of Directors or the Compensation Committee.


    


    The
      Corporation will promptly amend the Corporation’s 1998 Stock Option Plan to
      comply with Section 409A and prepare and issue to the Employee an amended and
      restated non-qualified stock option agreement conforming to the requirements
      of
      Section 409A with respect to the Post-409A Option Portion, in form and substance
      satisfactory to the parties, in replacement of the Execution Date Option. The
      Corporation acknowledges and agrees that shareholder approval of the Option
      has
      been obtained and that the shares underlying the Option have been duly
      registered.”

    


    
      
        
        

      

      
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    4.    Section
      5(c) of the Employment Agreement is hereby deleted in its entirety and the
      following is inserted in its place: 

    


    “(c) Restricted
      Stock Units.
      Simultaneously with the execution of the Amendment, the Corporation granted
      to
      the Employee a Restricted Stock Units Award Agreement which, subject to its
      terms and the terms of the Corporation’s 2005 Restricted Stock Unit Award Plan,
      provides for the Corporation’s issuance of up to Six Million Six Hundred
      Thousand (6,600,000) shares of the Corporation’s common stock, $.01 par value
      per share (the “Restricted
      Stock Units”).
      Notwithstanding anything to the contrary contained in this Employment Agreement,
      the grant, vesting and distribution relating to the Restricted Stock Units
      will
      be governed solely by Corporation’s Restricted Stock Units Award Plan dated
      December 22, 2005 and the Restricted Stock Unit Award Agreement dated December
      22, 2005 between the Corporation and the Employee. The shares underlying the
      Restricted Stock Units shall be duly registered under a registration statement
      on Form S-8 filed by the Corporation with the Securities and Exchange Commission
      promptly following the grant of such Restricted Stock Units.”

    


    5.    The
      last
      sentence of Section 7.1 of the Employment Agreement is hereby deleted in its
      entirety and the following is inserted in its place:

    


    “Additionally,
      notwithstanding any language to the contrary contained in any option agreements
      with the Employee (or any other applicable agreement or plan), the Employee’s
      Designees shall be entitled to exercise (i) the Pre-409A Option Portion during
      the twelve (12) month period following the date of termination under this
      Section 7.1, and (ii) the vested portion of the Post-409A Option Portion during
      the lesser of (A) the twelve (12) month period following the date of termination
      under this Section 7.1, or (B) the maximum exercise period permitted under
      Section 409A. At the expiration of the applicable exercise period, the
      unexercised stock options shall terminate.”

    


    6.    The
      last
      sentence of the first paragraph of Section 7.2 of the Employment Agreement
      is
      hereby deleted in its entirety and the following is inserted in its
      place:

    


    “Additionally,
      notwithstanding any language to the contrary contained in any option agreements
      with the Employee (or any other applicable agreement or plan), the Employee’s
      Designees shall be entitled to exercise (i) the Pre-409A Option Portion during
      the twelve (12) month period following the date of termination under this
      Section 7.2, and (ii) the vested portion of the Post-409A Option Portion during
      the lesser of (A) the twelve (12) month period following the date of termination
      under this Section 7.2, or (B) the maximum exercise period permitted under
      Section 409A. At the expiration of the applicable exercise period, the
      unexercised stock options shall terminate.”

     

    
      
        
        

      

      
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    7.    Section
      7.3 of the Employment Agreement is hereby amended to add the following at the
      end of such Section:

    


    “In
      the
      event the Employee is terminated by the Corporation for Cause or if the Employee
      resigns other than for Good Reason (as defined in Section 7.5), the Employee
      shall be entitled to exercise (i) the Pre-409A Option Portion within forty
      (40)
      days of such termination or resignation, and (ii) the vested portion of the
      Post-409A Option Portion within the forty (40) day period commencing upon the
      end of the applicable holding period under Section 409A following such
      termination or resignation. At the expiration of the applicable exercise period,
      the unexercised stock options shall terminate.”

    


    8.    Section
      7.6(c) of the Employment Agreement is hereby deleted in its entirety and the
      following is inserted in its place:

    


    “(c)
      Stock
      Options.”
      In the
      event of a termination of the Employee’s employment by the Corporation without
      Cause or if the Employee resigns for Good Reason, the Corporation shall
      accelerate fully the vesting of any outstanding stock options to purchase shares
      of stock of the Corporation granted to the Employee. In connection therewith,
      the Corporation shall cause all restrictive legends, stop transfer orders or
      similar restrictions to be removed from such stock options and the underlying
      shares, except as required by applicable law. Additionally, notwithstanding
      any
      language to the contrary contained in any stock option agreements with the
      Employee (or any other applicable agreement or plan), the Employee shall be
      entitled to exercise (i) the Pre-409A Option Portion during the twelve (12)
      month period following the date of termination, and (ii) the vested portion
      of
      the Post-409A Option Portion during an exercise period commencing upon the
      end
      of any applicable holding period under Section 409A following the date of
      termination, such exercise period being the lesser of (A) the twelve (12) month
      period following the date of termination, or (B) the maximum exercise period
      permitted under Section 409A. At the expiration of the applicable exercise
      period, the unexercised stock options shall terminate.”

    


    9.    The
      Employment Agreement is hereby amended to add a new Section 8.7 as
      follows:

    


    “8.7
      Assignment
      of Invention.
      All
      discoveries, inventions, improvements and innovations, whether patentable or
      not
      (including all data and records pertaining thereto), which Employee may have
      invented, discovered, originated or conceived of during the Term of his
      employment with the Corporation prior to the date of the Amendment or may
      invent, discover, originate or conceive during the Term of this Agreement and
      which directly relate to the business of the Corporation or any of its
      subsidiaries as described in the Corporation’s filings with the Securities and
      Exchange Commission, shall be the sole and exclusive property of the
      Corporation. Employee shall promptly and fully disclose each and all such
      discoveries, inventions, improvements or innovations to the Corporation.
      Employee shall assign to the Corporation his entire right, title and interest
      in
      and to all of his discoveries, inventions, improvements and innovation described
      in this Section 8.7 and any related U.S. or foreign patent and patent
      applications, shall execute any instruments reasonably necessary to convey
      or
      perfect the Corporation’s ownership thereof, and shall assist the Corporation in
      obtaining, defending and enforcing its rights therein. The Corporation shall
      bear all expenses it authorizes to be incurred in connection with such activity
      and shall pay the Employee reasonable compensation for time spent by the
      Employee in performing such duties at the request of the Corporation after
      the
      termination of his employment, for a period not to exceed three (3)
      years.”

    


    
      
        
        

      

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

    


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

    


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

     

    
      
        	ATTEST:	 	ACURA PHARMACEUTICALS, INC.
	 	 	 
	___________________	 	By: /s/ Andrew D.
                Reddick
	 	 	
                Andrew
                  D. Reddick

              
	 	 	
                President
                  and

              
	 	 	
                Chief
                  Executive Officer

              
	 	 	 
	WITNESS:	 	EMPLOYEE
	 	 	 
	___________________ 	 	By: /s/ Ron
                J. Spivey
	 	 	
                
                  
                    Ron
                      J. Spivey

                  

                

              


      



    
      
        
        

      

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