Unassociated Document


    Exhibit
      10.3

    
      


      SECURED
        PROMISSORY NOTE

       

      ACURA
        PHARMACEUTICALS, INC.

       

       

      
        
          	$_____________________	 	
                   No.
                    N-__

                


        

      

      November
        __, 2005

      


      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
        November  ,
        2005
        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, each
        of
        Acura Pharmaceutical Technologies, Inc. (“APT”) and Axiom Pharmaceutical
        Corporation, each a wholly owned subsidiary of the Company (individually
        a
“Guarantor” and collectively, the “Guarantors”), 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 (each a “Guarantee”),
        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 each Guarantor under its Guaranty
        are
        secured pursuant to security interests on and collateral assignments of,
        assets,
        tangible and intangible, of such 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:

              	 
	
                

              	 	 	
                

              
	
              	 	 	
                Name:
                  Peter Cleme

                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:

      


      


      ______________________   _____


       

       

      
 

      CHIDMS1/569044.2 

       

      
        
          
          

        

        
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