GUARANTORS GENERAL SECURITY AGREEMENT

This Guarantors General Security Agreement (the “Agreement”) is dated as of June 22, 2005 by and among Acura Pharmaceutical Technologies, Inc., an Indiana corporation with its principal place of business at 16235 State Road 17, Culver, Indiana, 46511 (“APT”), Axiom Pharmaceutical Corporation, a Delaware corporation with its principal place of business at c/o Acura Pharmaceuticals, Inc., 616 N. North Court, Suite 120, Palatine, Illinois, 60067 (“Axiom” and, together with Houba, the “Guarantors”), and [Galen Partners III, L.P., a Delaware limited partnership] with its principal place of business at 610 Fifth Avenue, Fifth Floor, New York, New York, 10020, acting in its capacity as agent for the Lenders, as defined below (the “Agent”), for the benefit of the Lenders.

PRELIMINARY STATEMENTS

A.Acura Pharmaceuticals, Inc. (the “Company”) has entered into a Loan Agreement of even date herewith (as the same may be amended, modified, supplemented or restated from time to time, the “Loan Agreement;” terms which are capitalized in this Agreement and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement) with the Lenders party thereto (the “Lenders”).

B.Each of the Guarantors has executed and delivered to Agent, for the benefit of the Lenders, a Continuing Unconditional Secured Guaranty of even date herewith (each a “Guaranty”) of the Company’s obligations under the Loan Agreement (collectively, the “Obligations”).

C.The Lenders have required, as a condition precedent to the effectiveness of the Loan Agreement, that each Guarantor (a) grant to the Agent, for the ratable benefit of the Lenders, a security interest in and to the Collateral (as defined in Section 2.1 below) and (b) execute and deliver this Agreement in order to secure the payment and performance by such Guarantor of the Guaranty.

AGREEMENT

In consideration of the premises and in order to induce the Lenders to enter into and perform the Loan Agreement, each Guarantor hereby agrees as follows:

ARTICLE 1

CREATION OF SECURITY INTEREST

1.1SECURITY INTEREST

Each Guarantor hereby pledges, assigns and grants to the Agent a continuing perfected lien and security interest having priority over any and all other security interests in all of such Guarantor’s right, title and interest in and to the Collateral (as defined in Section 2.1 below) in order to secure the payment and performance of all Obligations owing by such Guarantor.

1.2GUARANTORS REMAIN LIABLE

Anything herein to the contrary notwithstanding, (a) the Guarantors shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of their duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of the rights hereunder shall not release the Guarantors from any of their duties or obligations under the contracts and agreements included in the Collateral and (c) neither the Agent nor any Lender shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, the Loan Agreement or any other Transaction Document, nor shall the Agent or any Lender be obligated to perform any of the obligations or duties of the Guarantors thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

ARTICLE 2

COLLATERAL

2.1COLLATERAL

For purposes of this Agreement, the term “Collateral” shall mean, with respect to each Guarantor, all of the assets of such Guarantor including all of the kinds and types of property described in clauses (a) through (g) of this Section 2.1, whether now owned or hereafter at any time arising, acquired or created by such Guarantor and wherever located, and includes all replacements, additions, accessions, substitutions, repairs, proceeds and products relating thereto or therefrom, and all documents, ledger sheets and files of such Guarantor relating thereto and all Proceeds (as defined in Section 2.2 below) of Collateral:

(a)all of such Guarantor’s accounts, whether now existing or existing in the future, including without limitation (i) all accounts receivable (whether or not specifically listed on schedules furnished to the Agent), including, without limitation, all accounts created by or arising from all of such Guarantor’s sales of goods or rendition of services made under any of such Guarantor’s trade names, or through any of its divisions, (ii) all unpaid seller’s rights (including rescission, replevin, reclamation and stoppage in transit) relating to the foregoing or arising therefrom, (iii) all rights to any goods represented by any of the foregoing, including returned or repossessed goods, (iv) all reserves and credit balances held by such Guarantor with respect to any such accounts receivable or account debtors, (v) all health-care-insurance receivables, and (vi) all guarantees or collateral for any of the foregoing (all of the foregoing property and similar property being hereinafter referred to as “Accounts”);

(b)all of such Guarantor’s inventory, including without limitation (i) all raw materials, work in process, parts, components, assemblies, supplies and materials used or consumed in such Guarantor’s businesses, wherever located and whether in the possession of such Guarantor or any other Person; (ii) all goods, wares and merchandise, finished or unfinished, held for sale or lease or leased or furnished or to be furnished under contracts of service, wherever located and whether in the possession of such Guarantor or any other person or entity; and (iii) all goods returned to or repossessed by such Guarantor (all of the foregoing property being hereinafter referred to as “Inventory”);

(c)all of the equipment owned or leased by such Guarantor, including, without limitation, machinery, equipment, office equipment and supplies, computers and related equipment, furniture, furnishings, tools, tooling, jigs, dies, fixtures, manufacturing implements, fork lifts, trucks, trailers, motor vehicles, and other equipment (all of the foregoing property being hereinafter referred to as “Equipment”);

(d)all of such Guarantor’s general intangibles (including, without limitation, payment intangibles), instruments, securities (including without limitation United States of America Treasury Bills), credits, claims, demands, documents, letters of credit and letter of credit proceeds, documents of title, certificates of title, certificates of deposit, warehouse receipts, bills of lading, leases which are permitted to be assigned or pledged, deposit accounts, money, tax refund claims, and contract rights which are permitted to be assigned or pledged (all of the foregoing property being hereinafter referred to as “Intangibles”);

(e)all of each Guarantor’s intellectual property, including, without limitation, New Drug Applications, Investigatory New Drug Applications, Abbreviated New Drug Applications, Alternative New Drug Applications, registrations and quotas as issued by the DEA or the Attorney General of the United States pursuant to the CSA, certifications, permits and approvals of federal and state governmental agencies, patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade names, domain names, technical knowledge and processes, formal or informal licensing arrangements which are permitted to be assigned or pledged, blueprints, technical specifications, computer software, programs, databases, copyrights, copyright applications and all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, databases and data, including, without limitation, technical data, financial and marketing and business data, customer lists, supplier lists, pricing and cost information and business and marketing plans, and all embodiments thereof, and rights thereto, including, without limitation, all of such Guarantor’s rights to use the patents, trademarks, copyrights, service marks, or other property of the aforesaid nature of other Persons now or hereafter licensed to such Guarantor, together with the goodwill of the business symbolized by or connected with such Guarantor’s trademarks, copyrights, service marks, licenses and the other rights included in this Section 2.1(e) (all of the foregoing property being hereinafter referred to as “Intellectual Property”);

(f)all deposit accounts, letter-of-credit rights, instruments (including, without limitation, promissory notes), investment property and chattel paper; and

(g)all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Collateral.

2.2PROCEEDS

For purposes of this Agreement, the term “Proceeds” shall include (a) whatever is now or hereafter received by such Guarantor upon the sale, exchange, collection or other disposition of any item of Collateral, whether such proceeds constitute Inventory, Accounts, Intangibles, royalties, payment under insurance (whether or not the Agent is the loss payee thereof), or any indemnities, warranties or guaranties, payable by reason of loss or damage to or otherwise with respect to any or the foregoing Collateral, and (b) any such items which are now or hereafter acquired by such Guarantor with any proceeds of Collateral hereunder.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Each Guarantor severally represents and warrants as follows:

3.1ORGANIZATION AND EXISTENCE

Such Guarantor is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and is qualified to do business in such other jurisdictions as the nature or conduct of its operations or the ownership of its properties require such qualification. Such Guarantor does not own or lease any property or engage in any activity in any jurisdiction that might require qualification to do business as a foreign corporation in such jurisdiction and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect or subject such Guarantor to a material liability.

3.2AUTHORIZATION

(a)Such Guarantor has all requisite corporate power and authority (i) to execute and deliver, and to perform and observe its obligations under, the Transaction Documents to which it is a party, and (ii) to consummate the transactions contemplated hereby and thereby, including, without limitation, the grant of any security interest, mortgage, payment trust, guaranty or other security arrangement by such Guarantor in, on or in respect of the Collateral.

(b)All corporate action on the part of such Guarantor and its directors and stockholders necessary for the authorization,execution, delivery and performance by such Guarantor of this Agreement, the Guaranty by such Guarantor in favor of Agent, and the transactions contemplated therein or in any other Transaction Document to which it is a party, has been taken.

3.3PLACES OF BUSINESS

Such Guarantor has no places of business, or warehouses in which it leases space, other than those set forth on Section 3.3 of Schedule A, a copy of which is attached hereto and made a part hereof (“Schedule A”).

3.4LOCATION OF COLLATERAL

Except for the movement of Collateral from time to time from one place of business or warehouse listed on Section 3.3 of Schedule A to another place of business or warehouse listed on Section 3.3 of Schedule A, the Collateral is located at such Guarantor’s chief executive offices or other places of business or warehouses listed on Section 3.3 of Schedule A, and not at any other location.

3.5RESTRICTIONS ON COLLATERAL DISPOSITION

Except for any restrictions imposed under the Guarantors General Security Agreement dated as of March 29, 2000 given by the Guarantors in connection with the Senior Note (the “Watson Guarantors Security Agreement”), none of the Collateral is subject to contractual obligations that may restrict or inhibit the Agent’s rights or ability to sell or dispose of the Collateral or any part thereof after the occurrence of an Event of Default.

3.6STATUS OF ACCOUNTS

Each Account is based on an actual and bona fide rendition of services or sale of goods or products to customers, made by such Guarantor in the ordinary course of its business. The Accounts created are such Guarantor’s exclusive property and are not and shall not be subject to any lien, consignment arrangement, encumbrance, security interest or financing statement whatsoever, except the lien in favor of the holders of the Senior Note under the Watson Term Loan and the documents executed in connection therewith, including, without limitation, the Watson Guarantors Security Agreement. To the best knowledge of such Guarantor, such Guarantor’s customers have accepted the goods, products and services and owe and are obligated to pay the full amounts stated in the invoices according to their terms, without any dispute, offset, defense or counterclaim.

3.7COPYRIGHTS, TRADEMARKS AND PATENTS

(a)Such Guarantor owns outright all of the Intellectual Property Rights listed on Section 4.12 of the Schedule of Exceptions attached to the Loan Agreement free and clear of all liens and encumbrances except for the Permitted Liens and pays no royalty to anyone under or with respect to any of them.

(b)Such Guarantor has not licensed to anyone the use of any of such Intellectual Property Rights and has no knowledge of the infringing use by the Company or any Guarantor of any Intellectual Property Rights of third parties.

(c)Other than as disclosed to the Company’s or the Guarantors’ Board of Directors, Such Guarantor has no knowledge, nor has it received any notice (i) of any conflict with the asserted rights of others with respect to any Intellectual Property Rights used in, or useful to, the operation of the business conducted by the Company and the Guarantors or with respect to any license under which the Company or a Guarantor is licensor or licensee; or (ii) that the Intellectual Property Rights infringe upon the rights of any third party.

(d)Such Guarantor has made or performed all filings, recordings and other acts and has paid all required fees and taxes to maintain and protect its interest in each and every item of Intellectual Property in full force and effect throughout the world, and to protect and maintain its interest therein including, without limitation, recordations of any of its interests in patents and trademarks with the U.S. Patent and Trademark Office and in corresponding national and international patent offices, and recordation of any of its interests in any copyrights with the U.S. Copyright Office and in corresponding national and international copyright offices. Such Guarantor has used proper statutory notice in connection with its use of each patent, trademark and copyright.

3.8INVENTORY

All Inventory of such Guarantor consists of a quality and quantity usable and salable in the ordinary course of business, except for obsolete items and items of below-standard quality, all of which have been or will be written off or written down to net realizable value on the consolidated balance sheet of the Guarantors and its Subsidiaries as of March 31, 2005. The quantities of each type of Inventory (whether raw materials, work-in-process, or finished goods) are not excessive, but are reasonable and warranted in the present circumstances of such Guarantor.

3.9OWNERSHIP

Such Guarantor is the legal and beneficial owner of its Collateral free and clear of any lien, claim, option or right of others, except for the security interest created under this Agreement and the Watson Security Agreement. No effective financing statement or other instrument similar in effect covering all or any part of such Collateral or listing such Guarantor or any trade name of such Guarantor is on file in any recording office, except such as may have been filed relating to the Watson Term Loan. The Agent has, for the benefit of the Lenders, a valid and perfected security interest in the Collateral which security interest has priority over any and all other security interests in such Collateral.

ARTICLE 4

COVENANTS

Each Guarantor agrees (which agreements shall be several as to each Guarantor except as otherwise provided) as follows:

4.1DEFEND AGAINST CLAIMS

Such Guarantor will defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein unless both the Agent and such Guarantor determine that the claim or demand is not material and that, consequently, such defense would not be consistent with good business judgment. Such Guarantor will not permit any lien notices with respect to the Collateral or any portion thereof to exist or be on file in any public office except for those in favor of the Agent and those permitted under the terms of the Loan Agreement.

4.2CHANGE IN COLLATERAL LOCATION

Such Guarantor will not (a) change its corporate name, (b) change the location of its chief executive office or establish any place of business other than those specified in Section 3.3 of Schedule A, or (c) move or permit movement of the Collateral from the locations specified therein except from one such location to another such location, unless in each case such Guarantor shall have given the Agent at least thirty (30) days prior written notice thereof, and shall have, in advance, executed and caused to be filed or delivered to the Agent any financing statements or other documents required by the Agent to perfect the security interest of the Agent in the Collateral in accordance with Section 4.3 of this Agreement, all in form and substance satisfactory to the Agent.

4.3ADDITIONAL FINANCING STATEMENTS

Promptly upon the reasonable request of the Agent, such Guarantor will execute and deliver or use its best efforts to procure any document, give any notices, execute and file any financing statements, mortgages or other documents, all in form and substance satisfactory to the Agent, mark any chattel paper, deliver any chattel paper or instruments to the Agent and take any other actions that are necessary or, in the opinion of the Agent, desirable to perfect or continue the perfection and the first priority of the Agent’s security interest in the Collateral, to protect the Collateral against the rights, claims, or interests of third persons, or to effect the purposes of this Agreement. Such Guarantor will pay the costs incurred in connection with any of the foregoing.

4.4ADDITIONAL LIENS; TRANSFERS

Without the prior written consent of the Agent, such Guarantor will not, in any way, hypothecate or create or permit to exist any lien, security interest, charge or encumbrance on or other interest in the Collateral, other than those permitted under the terms of the Loan Agreement and the liens in favor of the holders of the Senior Note pursuant to the Watson Term Loan and documents relative thereto, and such Guarantor will not sell, transfer, assign, pledge, collaterally assign, exchange or otherwise dispose of the Collateral, other than the sale of Inventory in the ordinary course of business and the sale of obsolete or worn out Equipment. Notwithstanding the foregoing, if the proceeds of any such sale consist of notes, instruments, documents of title, letters of credit or chattel paper, such proceeds shall be promptly delivered to the Agent to be held as Collateral hereunder. If the Collateral, or any part thereof, is sold, transferred, assigned, exchanged, or otherwise disposed of in violation of these provisions, the security interest of the Agent shall continue in such Collateral or part thereof notwithstanding such sale, transfer, assignment, exchange or other disposition, and such Guarantor will hold the proceeds thereof for the benefit of the Agent, and promptly transfer such proceeds to the Agent in kind.

4.5CONTRACTUAL OBLIGATIONS

Such Guarantor will not enter into any contractual obligations which may restrict or inhibit the Agent’s rights or ability to sell or otherwise dispose of the Collateral or any part thereof after the occurrence or during the continuance of an Event of Default.

4.6AGENT’S RIGHT TO PROTECT COLLATERAL

Upon the occurrence or continuance of an Event of Default, the Agent shall have the right at any time to make any payments and do any other acts the Agent may deem necessary to protect the security interests of the Lenders in the Collateral, including, without limitation, the rights to pay, purchase, contest or compromise any encumbrance, charge or lien which, in the reasonable judgment of the Agent, appears to be prior to or superior to the security interests granted hereunder, and appear in and defend any action or proceeding purporting to affect its security interests in, or the value of, the Collateral. The Guarantors hereby jointly and severally agree to reimburse the Agent for all payments made and expenses incurred under this Agreement including reasonable fees, expenses and disbursements of attorneys and paralegals acting for the Agent, including any of the foregoing payments under, or acts taken to protect its security interests in, the Collateral, which amounts shall be secured under this Agreement, and agree they shall be bound by any payment made or act taken by the Agent hereunder absent the Agent’s gross negligence or willful misconduct. The Agent shall have no obligation to make any of the foregoing payments or perform any of the foregoing acts.

4.7FURTHER OBLIGATIONS WITH RESPECT TO ACCOUNTS

In furtherance of the continuing assignment and security interest in the Accounts of such Guarantor granted pursuant to this Agreement, upon the creation of Accounts, upon the Agent’s request, such Guarantor will execute and deliver to the Agent in such form and manner as the Agent may require, solely for its convenience in maintaining records of Collateral, such confirmatory schedules of Accounts, and other appropriate reports designating, identifying and describing the Accounts as the Agent may reasonably require. In addition, upon the Agent’s request, such Guarantor shall provide the Agent with copies of agreements with, or purchase orders from, the customers of such Guarantor and copies of invoices to customers, proof of shipment or delivery and such other documentation and information relating to such Accounts and other Collateral as the Agent may reasonably require. Furthermore, upon the Agent’s request, such Guarantor shall deliver to the Agent any documents or certificates of title issued with respect to any property included in the Collateral, and any promissory notes, letters of credit or instruments related to or otherwise in connection with any property included in the Collateral, which in any such case came into the possession of such Guarantor, or shall cause the issuer thereof to deliver any of the same directly to the Agent, in each case with any necessary endorsements in favor of the Agent. Failure to provide the Agent with any of the foregoing shall in no way affect, diminish, modify or otherwise limit the security interests granted herein. Each Guarantor hereby authorizes the Agent to regard such Guarantor’s printed name or rubber stamp signature on assignment schedules or invoices as the equivalent of a manual signature by such Guarantor’s authorized officers or agents.

4.8INSURANCE

Such Guarantor agrees to maintain public liability insurance, third party property damage insurance and replacement value insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts and covering such risks as are at all times satisfactory to the Agent in its commercially reasonable judgment. All policies covering the Collateral are to name the Agent as an additional insured and the loss payee in case of loss, and are to contain such other provisions as the Agent may reasonably require to fully protect the Agent’s interest in the Collateral and to any payments to be made under such policies. Without limiting the generality of the foregoing, all such policies shall contain standard lender’s loss payable clauses in favor of the Agent and shall provide that the same may not be cancelled, terminated or revised without giving the Agent at least 30 days prior written notice of such cancellation, termination or revision. Proceeds of such insurance policy or policies will be applied to the Obligations unless written consent to the contrary is obtained from the Agent. Such Guarantor will furnish the Agent with certificates of insurance or such other evidence satisfactory to the Agent so as to evidence compliance with the provisions of this Section.

4.9TAXES

Such Guarantor agrees to pay, when due, all taxes lawfully levied or assessed against such Guarantor or any of the Collateral before any penalty or interest accrues thereon; provided, however, that, unless such taxes have become a federal tax or ERISA lien on any of the assets of such Guarantor, no such tax need be paid if the same is being contested, in good faith, by appropriate proceedings promptly instituted and diligently conducted and if an adequate reserve or other appropriate provision shall have been made therefor as required in order to be in conformity with GAAP.

4.10COMPLIANCE WITH LAWS

Such Guarantor agrees to comply in all material respects with all Legal Requirements applicable to the Collateral or any part thereof, or to the operation of its business or its assets generally, unless such Guarantor contests in good faith, by appropriate legal, administrative or other proceedings promptly instituted and diligently conducted, any such Legal Requirements in a reasonable manner and in good faith. Such Guarantor agrees to maintain in full force and effect, its respective licenses and permits granted by any governmental authority as may be necessary or advisable for such Guarantor to conduct its business in all material respects.

4.11MAINTENANCE OF PROPERTY

Such Guarantor agrees to keep all property useful and necessary to its business in good working order and condition (ordinary wear and tear excepted) and not to commit or suffer any waste with respect to any of its properties.

4.12ENVIRONMENTAL AND OTHER MATTERS

Such Guarantor will conduct its business so as to comply in all respects with all environmental, land use, occupational, safety or health Legal Requirements in all jurisdictions in which it is or may at any time be doing business, except to the extent that such Guarantor is contesting, in good faith by appropriate legal, administrative or other proceedings, promptly instituted and diligently conducted, any such Legal Requirement; provided, further, that such Guarantor shall comply with the order of any court or other governmental authority relating to such Legal Requirements unless such Guarantor shall currently be prosecuting an appeal, proceedings for review or administrative proceedings and shall have secured a stay of enforcement or execution or other arrangement postponing enforcement or execution pending such appeal, proceedings for review or administrative proceedings.

4.13INTELLECTUAL PROPERTY

With respect to each item of its Intellectual Property, each of the Guarantors agrees to take, at its expense, all necessary steps, including, without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority, to (a) maintain the validity and enforceability of such Intellectual Property and maintain such Intellectual Property in full force and effect, and (b) pursue the registration and maintenance of each patent, trademark, or copyright registration or application, now or hereafter included in such Intellectual Property of the Guarantors, including, without limitation, the payment of required fees and taxes, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings. Neither Guarantor shall, without the prior written consent of the Agent, discontinue use of or otherwise abandon any Intellectual Property, or abandon any right to file an application for any patent, trademark or copyright, unless such Guarantor shall have previously determined that such use or the pursuit or maintenance of such Intellectual Property is no longer desirable in the conduct of such Guarantor’s business and that the loss thereof would not be reasonably likely to have a Material Adverse Effect, in which case, such Guarantor will give prompt notice of any such abandonment to the Agent.

4.14FURTHER ASSURANCES

Such Guarantor shall take all such further actions and execute all such further documents and instruments (including, but not limited to, collateral assignments of Intellectual Property and Intangibles or any portion thereof) as the Agent may at any time reasonably determine in its sole discretion to be necessary or desirable to further carry out and consummate the transactions contemplated by the Loan Agreement and the documentation relating thereto, including this Agreement, and to perfect or protect the liens (and the priority status thereof) of the Agent in the Collateral.

ARTICLE 5

REMEDIES

5.1OBTAINING COLLATERAL UPON DEFAULT

If any Event of Default shall have occurred and be continuing, then and in every such case, subject to the terms of the Loan Agreement and any mandatory requirements of applicable law then in effect, the Agent, in addition to any rights now or hereafter existing under applicable law, shall have all rights as a secured creditor under the Uniform Commercial Code in all relevant jurisdictions and may:

(a)personally, or by agents or attorneys, immediately retake possession of the Collateral or any part thereof, from any Guarantor or any other Person who then has possession of any part thereof, with or without notice or process of law, and for that purpose may enter upon such Guarantor’s premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Guarantor;

(b)instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Accounts) constituting the Collateral to make any payment required by the terms of such instrument or agreement directly to the Agent;

(c)withdraw all monies, securities and instruments held pursuant to any pledge arrangement for application to the Obligations;

(d)sell, assign or otherwise liquidate, or direct any Guarantor to sell, assign or otherwise liquidate, any or all of the Collateral or any part thereof, and take possession of the proceeds of any such sale or liquidation;

(e)take possession of the Collateral or any part thereof, by directing any Guarantor in writing to deliver the same to the Agent at any place or places designated by the Agent, in which event such Guarantor shall at its own expense:

(1)forthwith cause the same to be moved to the place or places so designated by the Agent and there delivered to the Agent,

(2)store and keep any Collateral so delivered to the Agent at such place or places pending further action by the Agent as provided in Section 5.2, and

(3)while the Collateral shall be so stored and kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain the Collateral in good condition;

it being understood that any Guarantor’s obligation to so deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Agent shall be entitled to a decree requiring specific performance by such Guarantor of said obligation.

5.2DISPOSITION OF COLLATERAL

Any Collateral repossessed by the Agent under or pursuant to Section 5.1 and any other Collateral whether or not so repossessed by the Agent may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Agent or after any overhaul or repair which the Agent shall determine to be commercially reasonable. Any such disposition which shall be a private sale or other private proceedings permitted by such requirements shall be made upon not less than ten (10) days’ written notice to such Guarantor specifying the time at which such disposition is to be made and the intended sale price or other consideration therefor, and shall be subject, for the ten (10) days after the giving of such notice, to the right of such Guarantor or any nominee of such Guarantor to acquire the Collateral involved at a price or for such other consideration at least equal to the intended sale price or other consideration so specified. Any such disposition which shall be a public sale permitted by such requirements shall be made upon not less than ten (10) days’ written notice to such Guarantor specifying the time and place of such sale and, in the absence of applicable requirements of law, shall be by public auction (which may, at the option of the Agent, be subject to reserve), after publication at least once in The New York Times not less than ten (10) days prior to the date of sale. If The New York Times is not then being published, publication may be made in lieu thereof in any newspaper then being circulated in the City of New York, New York, as the Agent may elect. All requirements of reasonable notice under this Section 5.2 shall be met if such notice is mailed, postage prepaid at least ten (10) days before the time of such sale or disposition, to the Guarantor at its address set forth herein or such other address as the Guarantor may have, in writing, provided to the Agent. The Agent may, if it deems it reasonable, postpone or adjourn any sale of any Collateral from time to time by an announcement at the time and place of the sale to be so postponed or adjourned without being required to give a new notice of sale. The proceeds realized from the sale of any Collateral shall be applied as follows: first, to the reasonable costs, expenses and attorneys’ fees and expenses incurred by Agent for collection and for acquisition, completion, protection, removal, storage, sale and delivery of the Collateral; second, to interest due on any of the Obligations and any fees payable under this Agreement; and third, to the principal of the Obligations. If any deficiency shall arise, Guarantors shall remain liable to Agent and Lenders therefor.

5.3POWER OF ATTORNEY

Each Guarantor hereby irrevocably authorizes and appoints the Agent, or any Person or agent the Agent may designate, as such Guarantor’s attorney-in-fact, at such Guarantor’s cost and expense, subject to the terms of the Loan Agreement, to exercise all of the following powers upon and at any time after the occurrence and during the continuance of an Event of Default, which powers, being coupled with an interest, shall be irrevocable until all of the Obligations owing by such Guarantor shall have been paid and satisfied in full:

(a)accelerate or extend the time of payment, compromise, issue credits, bring suit or administer and otherwise collect Accounts or proceeds of any Collateral;

(b)receive, open and dispose of all mail addressed to such Guarantor and notify postal authorities to change the address for delivery thereof to such address as the Agent may designate;

(c)give customers indebted on Accounts notice of the Agent’s interest therein, or to instruct such customers to make payment directly to the Agent for such Guarantor’s account;

(d)convey any item of Collateral to any purchaser thereof;

(e)give any notices or record any liens under Section 4.3 hereof; and

(f)make any payments or take any acts under Section 4.6 hereof.

The Agent’s authority under this 5.3 shall include, without limitation, the authority to execute and give receipt for any certificate of ownership or any document, transfer title to any item of Collateral, sign such Guarantor’s name on all financing statements or any other documents deemed necessary or appropriate to preserve, protect or perfect the security interest in the Collateral and to file the same, prepare, file and sign such Guarantor’s name on any notice of lien, assignment or satisfaction of lien or similar document in connection with any Account and prepare, file and sign such Guarantor’s name on a proof of claim in bankruptcy or similar document against any customer of such Guarantor, and to take any other actions arising from or incident to the rights, powers and remedies granted to the Agent in this Agreement. This power of attorney is coupled with an interest and is irrevocable by such Guarantor.

5.4WAIVER OF CLAIMS

Except as otherwise provided in this Agreement, EACH GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE AGENT’S OR ANY LENDER’S TAKING POSSESSION OF OR DISPOSING OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH ANY GUARANTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and each Guarantor hereby further waives, to the extent permitted by law:

(a)all damages occasioned by such taking of possession except any damages which are the direct result of the Agent’s or Lender’s gross negligence or willful misconduct;

(b)all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Agent’s or Lender’s rights hereunder, except as expressly provided herein; and

(c)all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and such Guarantor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.

Any sale of, or the grant of options to purchase, or any other realization upon any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of such Guarantor therein and thereto, and shall be a perpetual bar both at law and in equity against such Guarantor and against any and all persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Guarantor.

5.5REMEDIES CUMULATIVE

Each and every right, power and remedy hereby specifically given to the Agent shall be in addition to every other right, power and remedy specifically given under this Agreement, under the Loan Agreement or under other documentation relating thereto or now or hereafter existing at law or in equity, or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of exercise of one shall not be deemed a waiver of the right to exercise of any other or others. No delay or omission of the Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any default or Event of Default or any acquiescence therein.

ARTICLE 6

MISCELLANEOUS PROVISIONS

6.1NOTICES

All notices, approvals, consents or other communications required or desired to be given hereunder shall be delivered in person, by facsimile transmission followed promptly by first class mail, by a nationally recognized courier service marked for next business day delivery or by overnight mail, and delivered if to the Agent, then to the attention of Bruce F. Wesson, c/o Galen Partners III, L.P., 610 Fifth Avenue, Fifth Floor, New York, New York, 10020, fax no. (212) 218-4990, with a copy to George N. Abrahams, Esq., c/o Blank Rome, LLP, Chrysler Building, 405 Lexington Avenue, New York, New York 10174, fax no. (917) 332-3763, and if to the Guarantors, then to c/o Acura Pharmaceuticals, Inc., attention of Mr. Andrew D. Reddick, 695 N. Perryville Road, Rockford, Illinois, 61107, with a copy to John P. Reilly, Esq., St. John & Wayne, L.L.C., 2 Penn Plaza East, Newark, New Jersey, 07105, fax no. (973) 491-3555.

6.2HEADINGS

The headings in this Agreement are for purposes of reference only and shall not affect the meaning or construction of any provision of this Agreement.

6.3SEVERABILITY

The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect, in that jurisdiction only, such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Agreement in any jurisdiction.

6.4AMENDMENTS, WAIVERS AND CONSENTS

Any amendment or waiver of any provision of this Agreement and any consent to any departure by any Guarantor from any provision of this Agreement shall be effective only if made or given in writing signed by the Agent.

6.5INTERPRETATION OF AGREEMENT

All terms not defined herein or in the Loan Agreement shall have the meaning set forth in the applicable Uniform Commercial Code. Acceptance of or acquiescence in a course of performance rendered under this Agreement shall not be relevant in determining the meaning of this Agreement even though the accepting or acquiescing party had knowledge of the nature of the performance and opportunity for objection.

6.6CONTINUING SECURITY INTEREST

This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect, (b) be binding upon each Guarantor, and its successors and assigns and (b) inure to the benefit of the Agent and its successors and assigns.

6.7REINSTATEMENT

To the extent permitted by law, this Agreement shall continue to be effective or be reinstated if at any time any amount received by the Agent in respect of the Obligations owing by the Guarantors is rescinded or must otherwise be restored or returned by the Agent upon the occurrence or during the pendency of any Event of Default, all as though such payments had not been made.

6.8SURVIVAL OF PROVISIONS

All representations, warranties and covenants of the Guarantors contained herein shall survive the execution and delivery of this Agreement, and shall terminate only upon the full and final indefeasible payment and performance by the Guarantors of the Obligations secured hereby.

6.9SETOFF

The Agent shall have all rights of setoff available at law or in equity.

6.10POWER OF ATTORNEY

In addition to the powers granted to the Agent under Section 5.3, each Guarantor hereby irrevocably authorizes and appoints the Agent, or any Person or agent the Agent may designate, as such Guarantor’s attorney-in-fact, at such Guarantor’s cost and expense, to exercise all of the following powers, which being coupled with an interest, shall be irrevocable until all of the Obligations shall have been indefeasibly paid and satisfied in full:

(a)after the occurrence of an Event of Default, to receive, take, endorse, sign, assign and deliver, all in the name of the Agent or such Guarantor, any and all checks, notes, drafts, and other documents or instruments relating to the Collateral; and

(b)to request, at any time from customers indebted on Accounts, verification of information concerning the Accounts and the amounts owing thereon.

6.11INDEMNIFICATION; AUTHORITY OF AGENT

Neither the Agent or any Lender nor any director, officer, employee, attorney or agent of the Agent or any Lender shall be liable to any Guarantor for any action taken or omitted to be taken by it or them hereunder, except for its or their own gross negligence or willful misconduct, nor shall the Agent or any Lender be responsible for the validity, effectiveness or sufficiency of this Agreement or of any document or security furnished pursuant hereto. The Agent, the Lenders and their respective directors, officers, employees, attorneys and agents shall be entitled to rely on any communication, instrument or document reasonably believed by it or them to be genuine and correct and to have been signed or sent by the proper person or persons. Each Guarantor agrees to indemnify and hold harmless the Agent, the Lenders and any other person from and against any and all costs, expenses (including reasonable fees, expenses and disbursements of attorneys and paralegals (including, without duplication, reasonable charges of inside counsel)), claims or liability incurred by the Agent, any Lender or such person hereunder, unless such claim or liability shall be due to willful misconduct or gross negligence on the part of the Agent, the Lender or such person.

6.12RELEASE; TERMINATION OF AGREEMENT

Subject to the provisions of Section 6.7 of this Agreement, this Agreement shall terminate upon the termination of the Guaranties and the full and final indefeasible payment and performance of all the Obligations owing by each Guarantor. At such time, the Agent shall, at the request of any Guarantor, reassign and redeliver to such Guarantor all of the Collateral hereunder which has not been sold, disposed of, retained or applied by the Agent in accordance with the terms hereof. Such reassignment and redelivery shall be without warranty by or recourse to the Agent, except as to the absence of any prior assignments by the Agent of its interest in the Collateral, and shall be at the expense of such Guarantor.

6.13COUNTERPARTS

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

6.14GOVERNING LAW

This Agreement and the rights of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York wherein the terms of this Agreement 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.

6.15SUBMISSION TO JURISDICTION

(a)Each of the parties hereto 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 our of or relating to this Agreement or any of the other Transaction Documents to which it is a party, 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. Each of the parties hereto 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 right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Transaction Documents in the courts of any other jurisdiction.

(b)Each of the parties hereto 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 Agreement or any other Transaction Document to which it is a party in any such New York State or United States Federal court sitting in New York City. Each of the parties hereto 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.

6.16SERVICE OF PROCESS

EACH GUARANTOR HEREBY IRREVOCABLY AGREES THAT SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS SET FORTH IN SECTION 6.1 HEREOF.

6.17LIMITATION OF LIABILITY

THE AGENT AND THE LENDERS SHALL NOT HAVE ANY LIABILITY TO ANY GUARANTOR (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY ANY GUARANTOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR LENDER, AS APPLICABLE, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

6.18DELAYS; PARTIAL EXERCISE OF REMEDIES

No delay or omission of the Agent to exercise any right or remedy hereunder, whether before or after the happening of any Event of Default, shall impair any such right or shall operate as a waiver thereof or as a waiver of any such Event of Default. No single or partial exercise by the Agent of any right or remedy shall preclude any other or further exercise thereof, or preclude any other right or remedy.

6.19JURY TRIAL

EACH OF THE GUARANTORS AND THE AGENT HEREBY 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 ANY TRANSACTION DOCUMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

[SIGNATURE PAGE TO FOLLOW]

IN WITNESS WHEREOF, each Guarantor has caused this Guarantors General Security Agreement to be duly executed and delivered as of the date first written above.

ACURA PHARMACEUTICAL 

TECHNOLOGIES, INC.

By: /s/ Andrew D. Reddick

Name: Andrew D. Reddick

Title: President and Chief Executive Officer

AXIOM PHARMACEUTICAL

CORPORATION

By: /s/ Andrew D. Reddick

Name: Andrew D. Reddick

Title: President and Chief Executive Officer

By its acceptance hereof, as of the day and year first above written, the Agent agrees to be bound by the provisions hereof applicable to it.

GALEN PARTNERS III, L.P.

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

610 Fifth Avenue, 5^th Fl.

New York, New York 10019

By: /s/ Srini Coonjeevaram

Name: Srini Conjeevaram, its General Partner

Title: President and Chief Executive Officer

SCHEDULE A

Section 3.3

·APT

16235 State Road 17, Culver, Indiana 46511.

·Axiom

616 N. North Court, Suite 120, Palatine, Illinois 60067.