SECURED PROMISSORY NOTE
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As
of December 20, 2002
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Corona,
California
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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 XXXXX PARTNERS III, L.P., a Delaware limited partnership,
as
Agent under that certain Noteholders Agreement dated as of February 6, 2004,
as
amended (“Xxxxx”), 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 Xxxxx, as assignee of Xxxxxx 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 Xxxxxx.
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 Xxxxxx, 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 Xxxxxx’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 Xxxxx (the "Fourth
Amendment"),
and
is issued by Maker as an amendment and restatement of that certain Secured
Promissory Note issued by Maker to Xxxxxx Pharmaceuticals, Inc. (and
subsequently assigned to Xxxxx, 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 Xxxxx, the Original Note shall be null
and void and of no further legal force or effect.
[SIGNATURE
PAGE TO FOLLOW]
| “MAKER” | |||
| ACURA PHARMACEUTICALS, INC. | |||
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| /s/ Xxxxx X. Xxxxxxx | |||
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By: Xxxxx X. Xxxxxxx |
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Its: Senior Vice President and Chief
Financial
Officer
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