Document:

CONSENT
      AND AMENDMENT TO NOTEHOLDERS AGREEMENT

     

    This
      Consent and Amendment (the “Amendment”)
      to
      Noteholders Agreement (“Agreement”)
      dated
      as of February 6, 2004 by and among Essex Woodlands Health Ventures V, L.P.,
      a
      Delaware limited partnership (“Essex”),
      Galen
      Partners III, L.P., a Delaware limited partnership (“Galen”),
      acting in its capacity as a Holder (as defined herein) and as agent for the
      Holders (“Agent”)
      and
      Care Capital Investments II, L.P., a Delaware limited partnership (“Care
      Capital”),
      certain of the affiliates of Care Capital and Galen and certain other
      participants in the Senior Note (such affiliates and participants, together
      with
      Galen, Care and Essex, the “Holders”),
      is
      dated as of June 28, 2007. Capitalized terms appearing in this Amendment without
      definition will have the meanings ascribed to such terms in the
      Agreement.

     

    PRELIMINARY
      STATEMENTS

     

    The
      parties thereto wish to amend the Agreement to allow the Agent with the consent
      of holders of not less than 98.38% of the aggregate Participation Percentage
      to
      amend the Senior Note and the Loan (as defined in the Loan Agreement, as amended
      through the date hereof) with respect to the maturity date and interest rate
      applicable thereto. In addition, the parties hereto wish to consent to extension
      of the maturity date of the Senior Note and the Loan to September 30, 2007.
      Previously said Loan and Senior Note were due to mature on June 30,
      2007.

     

    AMENDMENT
      AND CONSENT

     

    In
      consideration of the mutual covenants contained in this Amendment and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereby agree as follows:

     

    ARTICLE
      1  
      CONSENT

     

    The
      parties hereto hereby irrevocably consent to the extension of the maturity
      date
      of the Loan and the Senior Note to September 30, 2007. 

     

    ARTICLE
      2  

     

    AMENDMENT
      OF NOTEHOLDERS AGREEMENT

     

    2.1  
      The
      Agreement is hereby amended as follows:

     

    A.  Section
      2.1 of the Agreement is amended by adding a new subsection (f) as follows:
      

     

    (f)
      “Notwithstanding the foregoing the Agent is authorized to amend the Senior Note
      and the Loan (as defined in the Loan Agreement, as amended through the date
      of
      Amendment of the Agreement dated as of June 28, 2007) to modify the interest
      rate applicable thereto and to extend the maturity thereof, with the consent
      of
      the holders
      of not less than 98.38% of the aggregate Participation Percentage.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B.  Section
      5.6 of the Agreement is replaced in its entirety with the following:

     

    “No
      modification or amendment to this Agreement may be made except by a written
      instrument signed by the Agent and the Requisite Holders; provided,
      that
      any amendment to Article 4 shall require the written consent of each Claimant;
      and further
      provided
      that any
      modification to Section 2.1(f) shall require the approval of holders of not
      less
      than 98.38% of the aggregate Participation Percentage.”

     

    ARTICLE
      3  

     

    MISCELLANEOUS

     

    3.1  GOVERNING
      LAW

     

    This
      Amendment 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
      Amendment 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.

     

    3.2  SEVERABILITY

     

    If
      any
      provision or portion of any provision of this Amendment is held to be
      unenforceable or invalid by any court of competent jurisdiction, the remaining
      portions of any such provision and the remaining provisions hereof shall remain
      in effect.

     

    3.3  COUNTERPARTS

     

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

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Consent and Amendment
      to
      Noteholders Agreement as of the date first written above.

     

    
      	
              LENDER
                AND AGENT:

              GALEN
                PARTNERS III, L.P.

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

              610
                Fifth Avenue, 5th
                Fl.

              New
                York, New York 10019

               

            	
            	
              LENDER:

              CARE
                CAPITAL OFFSHORE INVESTMENTS II, LP

              By:
                Care Capital II, LLC, as general partner

              47
                Hulfish Street, Suite 310

              Princeton,
                NJ 08542

            
	/s/ Bruce
              Wesson	By:	/s/
              David
              Ramsay   
	
              
                

              

              By:
                Bruce Wesson

            	 	
              
                
By:
                David R. Ramsay

            
	
              Its:
                General Partner

            	 	
              Its:
                Authorized Signatory

            
	 	 	 
	 	 	 
	
              LENDER:

              GALEN
                PARTNERS INTERNATIONAL, III, L.P.

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

              610
                Fifth Avenue, 5th
                Floor

              New
                York, New York 10020

            	
            	
              LENDER:

              CARE
                CAPITAL INVESTMENTS II, LP

              By:
                Care Capital II, LLC, as general partner

              47
                Hulfish St., Suite 310

              Princeton,
                NJ 08542

            
	 	 	 
	 	 	 
	/s/ Bruce
              Wesson   	By:	/s/
              David
              Ramsay   
	
              

              By:
                Bruce Wesson

            	 	
              
Name:
              David R. Ramsay
	Its: General
              Partner
              	 	
              Title:
                Authorized Signatory

            
	 	 	 
	 	 	 
	
              LENDER:

              GALEN
                EMPLOYEE FUND III, L.P.

              By:
                Wesson Enterprises, Inc.

              610
                Fifth Avenue, 5th
                Floor

              New
                York, New York 10020

            	
            	
              LENDER:

              ESSEX
                WOODLANDS HEALTH 

              VENTURES
                V, L.P.

              190
                South LaSalle Street, Suite 2800

              Chicago,
                IL 60603

            
	 	 	 
	 	 	 
	/s/
              Bruce
              Wesson	 	/s/
              Immanuel Tharangaj  
	
              
By:
              Bruce F. Wesson	 	
              
By:
              Immanuel Thangaraj
	
              Its:
                General Partner

            	 	
              Its:
                Managing Director

            
	 	 	 
	 	 	 
	
              LENDER:

              MICHAEL
                WEISBROT

              1136
                Rock Creek Road

              Gladwyne,
                Pennsylvania 19035

            	
            	
              LENDER:

              SUSAN
                WEISBROT

              1136
                Rock Creek Road

              Gladwyne,
                Pennsylvania 19035

            
	 	 	 
	 	 	 
	
              /s/
                Michael Weisbrot    

            	 	/s/
              Susan
              Weisbrot    
	
              

            	 	
              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              LENDER:

              DENNIS
                ADAMS

              120
                Kynlyn Road

              Radnor,
                Pennsylvania 19312

            	 	
              LENDER:

              GEORGE
                E. BOUDREAU

              222
                Elbow Lane

              Haverford,
                PA 19041

            
	 	 	 
	 	 	 
	
              /s/
                Dennis Adams    

            	 	
              /s/
                George Boudreau     

            
	
              

            	 	
              

            
	 	 	 
	
              LENDER:

              PETER
                STIEGLITZ

              RJ
                Palmer LLC

              156
                West 56th Street, 5th Floor

              New
                York, New York 10019

            	
            	
              LENDER:

              JOHN
                E. HEPPE, JR. 

              237
                W. Montgomery Avenue

              Haverford,
                Pennsylvania 19041    

               

            
	 	 	 
	 	 	 
	
               /s/
                Peter Stieglitz      

            	 	/s/
              John HeppeSECURED
      PROMISSORY NOTE

    

    
      	
              $5,000,000

            	
              As
                of December 20, 2002

            
	 	
              Corona,
                California

            

    

    

    1. Promise
      to Pay.
      For
      good and valuable consideration, the receipt of which is hereby acknowledged,
      ACURA PHARMACEUTICALS, INC., a New York corporation (“Maker”),
      promises to pay to GALEN PARTNERS III, L.P., a Delaware limited partnership,
      as
      Agent under that certain Noteholders Agreement dated as of February 6, 2004,
      as
      amended (“Galen”), or order (either, the “Holder”),
      on
      the Maturity Date (as defined below), unless sooner paid as provided in
Section 5
      hereof,
      the principal sum of Five Million Dollars ($5,000,000), plus accrued unpaid
      interest thereon. The outstanding principal balance of this Note shall bear
      interest at a variable rate equal to the prime rate announced from time to
      time
      by Bank of America (the “Prime
      Rate”)
      plus
      four and one half percent (4.5%) per annum (the “Interest
      Rate”)
      from
      February 6, 2004 to the date the principal sum is paid in full. Interest
      payments shall be made as provided in Section
      2
      below.
      All payments under this Note shall be made to the order of the Holder at the
      address Holder may designate in writing to Maker. All payments of principal
      under this Note shall be made in U.S. dollars.

    

    2. Payment
      of Interest.
      Interest shall be paid on each March 31, June 30, September 30 and December
      31
      during the term of this Note, commencing March 31, 2004 (each such date being
      an
      "Interest
      Payment Date").
      The
      payment of accrued interest on this Note shall be made in the form of Maker's
      common stock, par value $.01 per share (the "Common
      Stock")
      with
      the number of shares of Maker's Common Stock equal to the quotient of (x) the
      interest payment amount, divided by (y) the average of the closing bid and
      asked
      prices for Maker's Common Stock as reported in the Over-The-Counter Bulletin
      Board ("OTC
      Bulletin Board")
      (or
      such other over-the-counter market or exchange on which the Maker's Common
      Stock
      may then be traded or admitted for trading) for the twenty (20) trading days
      immediately preceding such Interest Payment Date, rounded up to the nearest
      whole share of Maker's Common Stock. No cash interest payments shall be made
      on
      this Note.

    

    3. Maturity
      Date.
      The
      date that this Note shall mature, and the principal amount outstanding
      hereunder, plus accrued unpaid interest thereon and any charges pertaining
      thereto, shall become due and payable (the “Maturity
      Date”)
      shall
      be September 30, 2007.

    

    4. Loan
      and Security Agreements.
      Maker
      and Galen, as assignee of Watson Pharmaceuticals, Inc., are parties to that
      certain Loan Agreement, dated as of March 29, 2000, as amended by that certain
      Amendment to Loan Agreement dated as of March 31, 2000, as further amended
      by
      that certain Second Amendment to Loan Agreement dated as of December 20, 2002,
      as further amended by that certain Third Amendment, Waiver and Consent to Loan
      Agreement dated as of February 6, 2004, and as further amended by that certain
      Fourth Amendment, Waiver and Consent to Loan Agreement dated as of June __,
      2007
      (as so amended, the “Loan
      Agreement”).
      The
      full and punctual payment and performance of this Note by Maker are secured
      and
      guaranteed by the Company General Security Agreement, the Company Collateral
      Assignments, the Stock Pledge Agreement, the Guaranties, the Guarantors Security
      Agreement, the Guarantor Collateral Assignments and the Mortgage, as those
      terms
      are defined in the Loan Agreement (the “Security
      Agreements”).
      The
      security interest granted to Holder under the Security Agreements extends to
      the
      proceeds of any sale or other transfer or disposition of such assets, whether
      by
      Maker, its affiliates, the Holder or any other person, that occurs prior to
      the
      payment in full of this Note. Copies of the Loan Agreement and the Security
      Agreements may be obtained from Maker without charge.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    5. Prepayments.
      Maker
      may voluntarily prepay this Note either in whole or in part without penalty
      or
      premium.

    

    6. Waivers.
      Maker
      hereby waives diligence, presentment for payment, demand, protest, notice of
      non-payment, notice of dishonor, notice of protest, and any and all other
      notices and demands whatsoever. Maker shall remain bound under this Note until
      all principal and interest and any other amounts that are payable hereunder
      or
      under the Loan Agreement or the Security Agreements have been paid in full,
      notwithstanding any extensions or renewals granted with respect to this Note
      or
      the release of any party liable hereunder or any security for the payment of
      this Note. Maker, and any and all endorsers hereof, also waive the right to
      plead any and all statutes of limitations as a defense to any demand on this
      Note or any and all obligations or liabilities arising out of or in connection
      with this Note, the Loan Agreement or the Security Agreements, to the fullest
      extent permitted by law.

    

    7. Events
      of Default.
      Any of
      the following events shall constitute an event of default by Maker under this
      Note (an “Event
      of Default”):

    

    (a) the
      failure of Maker to pay to Holder, on the Maturity Date, any and all principal
      amounts due and owing under this Note; 

    

    (b) the
      failure of Maker to pay to Holder interest payments when due; or

    

    (c) there
      occurs any other event or circumstance that constitutes an “Event of Default” as
      defined in Section 9.1
      of the
      Loan Agreement.

    

    Subject
      to the forbearance provisions contained in Section 9.4 of the Loan Agreement,
      upon the occurrence of any Event of Default, as defined herein above, at
      Holder’s option, Holder may declare immediately due and payable, and on any such
      declaration there shall become immediately due and payable, the entire unpaid
      principal balance of this Note, together with all accrued and unpaid interest
      under this Note and any other sums owing at the time of such declaration
      pursuant to this Note, the Loan Agreement or the Security Agreements, and Holder
      shall be entitled to exercise all rights and remedies available to Holder under
      this Note, under the Loan Agreement and the Security Agreements and under
      applicable law, all of which rights and remedies shall be cumulative. Without
      limiting the generality of the foregoing, upon the occurrence of an Event of
      Default, the interest rate at which interest shall accrue on the principal
      sum
      and any other amounts that are due under this Note shall increase to the lower
      of (i) the Prime Rate plus six and one-half percent (6.5%) per annum or (ii)
      the
      maximum interest rate permitted under applicable law (the “Default
      Rate”),
      until
      all such amounts have been paid in full.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    8. No
      Waiver by Holder.
      Subject
      to the forbearance provisions contained in Section 9.4 of the Loan Agreement,
      any delay or omission on the part of Holder to exercise any of Holder’s rights
      or remedies hereunder, under the Loan Agreement or the Security Agreements
      or
      under applicable law, including, without limitation, the right to accelerate
      amounts owing under this Note, shall not be deemed a waiver of that right or
      remedy or of any other right or remedy of Holder in respect thereof. The
      acceptance by Holder of any payment pursuant to the terms of this Note which
      is
      less than payment in full of all amounts due and payable at the time of such
      payment shall not constitute a waiver of the right to exercise any of the
      Holder’s rights or remedies under this Note, the Loan Agreement, the Security
      Agreements or under applicable law at that time or at any subsequent time or
      nullify any prior exercise of any such rights or remedies without the express
      written consent of Holder, except as and to the extent provided to the contrary
      by applicable law.

    

    9. Governing
      Law.
      This
      Note shall be governed by and construed according to and enforced under the
      internal laws of the State of New York without giving effect to its choice
      of
      laws rules.

    

    10. Enforcement
      of the Note.
      Maker
      agrees that the Superior Court in and for the County of New York, New York
      shall
      have exclusive jurisdiction over any disputes, between the Maker and Holder
      and
      any action, suit or other proceeding brought by Maker or Holder relating to
      the
      interpretation or enforcement of this Note, and Maker agrees as follows: (a)
      Maker shall accept and not contest the personal or subject matter jurisdiction
      of such Court; (b) Maker shall accept and not object to or challenge the venue
      of such Court or assert the doctrine of forum non conveniens with respect to
      such Court; (c) Maker shall accept and not contest the validity or effectiveness
      of service of process in any such action, suit or other proceeding by registered
      or certified first class mail; and (d) TO THE MAXIMUM EXTENT PERMITTED BY LAW,
      MAKER WAIVES AND SHALL WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
      OTHER
      PROCEEDING BROUGHT WITH RESPECT TO THIS NOTE OR ITS ENFORCEMENT OR
      INTERPRETATION. If Maker fails to pay any amounts due hereunder when due, then
      Maker shall pay all costs of enforcement and collection, including, without
      limitation, reasonable attorneys’ fees and costs incurred by Holder, whether or
      not enforcement and collection includes the filing of a lawsuit, and whether
      or
      not that lawsuit is prosecuted to judgment. The costs of enforcement and
      collection shall be added to the principal amount of the Note and shall accrue
      interest at the Default Rate from the Date incurred until the date paid by
      Maker.

    

    11. Binding
      Nature.
      The
      provisions of this Note shall be binding on Maker and shall inure to the benefit
      of Holder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    12. Usury
      Savings Provisions.
      In the
      event Holder receives any sums under this Note which constitute interest in
      an
      amount in excess of that permitted by any applicable law, then, all such sums
      constituting interest in excess of that permitted to be paid under applicable
      law shall, at Holder’s option, either be credited to the payment of principal
      owing hereunder or returned to Maker. The provisions of this Section 12
      control
      the other provisions of this Note and any other agreement between Maker and
      Holder.

    

    13. Severability.
      If, but
      only to the extent that, any provision of this Note shall be invalid or
      unenforceable, then, such offending provision shall be deleted from this Note,
      but only to the extent necessary to preserve the validity and effectiveness
      of
      this Note to the fullest extent permitted by applicable law.

    

    14. Interpretation.
      No
      provision of this Note shall be interpreted for or against Maker or Holder
      because that person or that person’s legal representative drafted such
      provision. Unless otherwise indicated elsewhere in this Note, (a) the term
“or”
shall not be exclusive, (b) the term “including” shall mean “including, but not
      limited to,” and (c) the terms “below,” “above,” “herein,” “hereof,” “hereto,”
“hereunder” and other terms similar to such terms shall refer to this Note as a
      whole and not merely to the specific section, subsection, paragraph or clause
      where such terms may appear. The section and sub-section headings in this Note
      are included for convenience of reference only and shall be ignored in the
      construction or interpretation of this Note.

    

    15. Amended
      and Restated Note.
      This
      Note is issued in accordance with that certain Fourth Amendment to Loan
      Agreement dated as of June __, 2007, between Maker and Galen (the "Fourth
      Amendment"),
      and
      is issued by Maker as an amendment and restatement of that certain Secured
      Promissory Note issued by Maker to Watson Pharmaceuticals, Inc. (and
      subsequently assigned to Galen, as Agent) in the principal amount of $5,000,000
      dated December 20, 2002 (the "Original
      Note").
      Upon
      execution and delivery of this Note to Galen, the Original Note shall be null
      and void and of no further legal force or effect.

     

    [SIGNATURE
      PAGE TO FOLLOW]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	 	 	“MAKER”
	 	 	 	 
	 	 	 	ACURA PHARMACEUTICALS, INC.
	 	 	 	
               

               

            
	
            	 	 	/s/
              Peter A. Clemens
	
            	 	 	
              
By:
              Peter A. Clemens
	
            	 	 	
              Its: Senior Vice President and Chief 

              Financial
                Officer

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