GUARANTOR GENERAL SECURITY AGREEMENT
This
Guarantor General Security Agreement (the “Agreement”)
is
dated January 31, 2006 by and among Acura Pharmaceutical Technologies, Inc.,
an
Indiana corporation with its principal place of business at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ (“APT”
or
the
“Guarantor”),
and
▇▇▇▇▇ Partners III, L.P., a Delaware limited partnership with its principal
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
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. The
Guarantor has executed and delivered to Agent, for the benefit of the Lenders,
a
Continuing Unconditional Secured Guaranty of even date herewith (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 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 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, Guarantor hereby agrees as follows:
ARTICLE
1
CREATION
OF SECURITY INTEREST
1.1 SECURITY
INTEREST
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 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 Guarantor.
1.2 GUARANTOR
REMAINS LIABLE
Anything
herein to the contrary notwithstanding, (a) the Guarantor shall remain liable
under the contracts and agreements included in the Collateral to the extent
set
forth therein to perform all of its 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 Guarantor from any
of
its 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 Guarantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
ARTICLE
2
COLLATERAL
2.1 COLLATERAL
For
purposes of this Agreement, the term “Collateral”
shall
mean, all of the assets of the 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 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 Guarantor relating thereto and all
Proceeds (as defined in Section 2.2 below) of Collateral:
(a) all
of
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 Guarantor’s sales of goods or
rendition of services made under any of 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 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
Guarantor’s inventory, including without limitation (i) all raw materials, work
in process, parts, components, assemblies, supplies and materials used or
consumed in Guarantor’s businesses, wherever located and whether in the
possession of 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 Guarantor or any other person or entity; and (iii)
all goods returned to or repossessed by Guarantor (all of the foregoing property
being hereinafter referred to as “Inventory”);
(c) all
of
the equipment owned or leased by 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
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
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 ▇▇▇▇ 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 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 Guarantor, together with the goodwill
of
the business symbolized by or connected with 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
2.2 PROCEEDS
For
purposes of this Agreement, the term “Proceeds”
shall
include (a) whatever is now or hereafter received by 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 Guarantor with any proceeds of
Collateral hereunder.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
Guarantor
represents and warrants as follows:
3.1 ORGANIZATION
AND EXISTENCE
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. 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 Guarantor to a material liability.
3.2 AUTHORIZATION
(a) 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 Guarantor
in,
on or in respect of the Collateral.
(b) All
corporate action on the part of Guarantor and its directors and stockholders
necessary for the authorization, execution,
delivery and performance by Guarantor of this Agreement, the Guaranty by
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.
3.3 PLACES
OF BUSINESS
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
3.4 LOCATION
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 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.
3.5 RESTRICTIONS
ON COLLATERAL DISPOSITION
Except
for any restrictions imposed under the Guarantors General Security Agreement
dated as of March 29, 2000 given by the Guarantor in connection with the Senior
Note (the “▇▇▇▇▇▇
Guarantors Security Agreement”),
the
Guarantors General Security Agreement dated as of June 22, 2005 given by the
Guarantors in connection with a certain Loan Agreement, dated of even date
therewith (“June
Bridge Loan Guarantors Security Agreement”),
the
Guarantors General Security Agreement dated as of September 16, 2005 given
by
the Guarantors in connection with a certain Loan Agreement, dated of even date
therewith (“September
Bridge Loan Guarantors Security Agreement”)
and
the Guarantors General Security Agreement dated as of November 9, 2005 given
by
the Guarantors in connection with a certain Loan Agreement, dated of even date
therewith (“November
Bridge Loan 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.
3.6 STATUS
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 Guarantor in the ordinary course of
its
business. The Accounts created are 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 (i) the lien in
favor of the holders of the Senior Note under the ▇▇▇▇▇▇ Term Loan and the
documents executed in connection therewith, including, without limitation,
the
▇▇▇▇▇▇ Guarantors Security Agreement, (ii) the lien in favor of the holders
of
the Secured Promissory Notes issued in connection with a bridge loan (the
“June
Bridge Loan”)
extended pursuant to the terms of that certain Loan Agreement, dated as of
June
22, 2005 and the documents executed in connection therewith, including, without
limitation, the June Bridge Loan Guarantors Security Agreement, (iii) the lien
in favor of the holders of the Secured Promissory Notes issued in connection
with a bridge loan (the “September
Bridge Loan”)
extended pursuant to the terms of that certain Loan Agreement, dated as of
September 16, 2005 and the documents executed in connection therewith,
including, without limitation, the September Bridge Loan Guarantors Security
Agreement and (iv) the lien in favor of the holders of the Secured Promissory
Notes issued in connection with a bridge loan (the “November
Bridge Loan”)
extended pursuant to the terms of that certain Loan Agreement, dated as of
November 9, 2005 and the documents executed in connection therewith, including,
without limitation, the November Bridge Loan Guarantors Security Agreement.
To
the best knowledge of Guarantor, 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.
4
3.7 COPYRIGHTS,
TRADEMARKS AND PATENTS
(a) 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) 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 Guarantor’s Board of Directors,
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 Guarantor or with respect to any license under which the Company
or Guarantor is licensor or licensee; or (ii) that the Intellectual Property
Rights infringe upon the rights of any third party.
(d) 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. Guarantor has used proper statutory notice in connection
with
its use of each patent, trademark and copyright.
3.8 INVENTORY
All
Inventory of 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 Guarantor
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
Guarantor.
3.9 OWNERSHIP
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, the ▇▇▇▇▇▇ Guarantors Security Agreement, the June Bridge Loan
Guarantors Security Agreement, the September Bridge Loan Guarantors Security
Agreement and the November Bridge Loan Guarantors Security Agreement. No
effective financing statement or other instrument similar in effect covering
all
or any part of such Collateral or listing Guarantor or any trade name of
Guarantor is on file in any recording office, except such as may have been
filed
relating to the ▇▇▇▇▇▇ Term Loan, the June Bridge Loan, the September Bridge
Loan and the November Bridge 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.
5
ARTICLE
4
COVENANTS
Guarantor
agrees as follows:
4.1 DEFEND
AGAINST CLAIMS
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
Guarantor determine that the claim or demand is not material and that,
consequently, such defense would not be consistent with good business judgment.
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.
4.2 CHANGE
IN COLLATERAL LOCATION
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
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.
4.3 ADDITIONAL
FINANCING STATEMENTS
Promptly
upon the reasonable request of the Agent, 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, ▇▇▇▇ 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. Guarantor will pay the
costs incurred in connection with any of the foregoing.
6
4.4 ADDITIONAL
LIENS; TRANSFERS
Without
the prior written consent of the Agent, 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 (i) the ▇▇▇▇▇▇ Term Loan and documents relative
thereto; (ii) the June Bridge Loan and the documents relative thereto; (iii)
the
September Bridge Loan and the documents relative thereto; and (iv) the November
Bridge Loan and the documents relative thereto, and 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 Guarantor will
hold the proceeds thereof for the benefit of the Agent, and promptly transfer
such proceeds to the Agent in kind.
4.5 CONTRACTUAL
OBLIGATIONS
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.
4.6 AGENT’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. Guarantor
hereby agrees 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 agrees
it
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.
7
4.7 FURTHER
OBLIGATIONS WITH RESPECT TO ACCOUNTS
In
furtherance of the continuing assignment and security interest in the Accounts
of Guarantor granted pursuant to this Agreement, upon the creation of Accounts,
upon the Agent’s request, 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,
Guarantor shall provide the Agent with copies of agreements with, or purchase
orders from, the customers of 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, 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 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. Guarantor
hereby authorizes the Agent to regard Guarantor’s printed name or rubber stamp
signature on assignment schedules or invoices as the equivalent of a manual
signature by Guarantor’s authorized officers or agents.
4.8 INSURANCE
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. 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.
4.9 TAXES
Guarantor
agrees to pay, when due, all taxes lawfully levied or assessed against 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 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.
8
4.10 COMPLIANCE
WITH LAWS
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 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.
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 Guarantor to conduct its business in all material respects.
4.11 MAINTENANCE
OF PROPERTY
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.
4.12 ENVIRONMENTAL
AND OTHER MATTERS
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 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
Guarantor shall comply with the order of any court or other governmental
authority relating to such Legal Requirements unless 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.
4.13 INTELLECTUAL
PROPERTY
With
respect to each item of its Intellectual Property, Guarantor 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 Guarantor, 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 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 Guarantor’s business and that
the loss thereof would not be reasonably likely to have a Material Adverse
Effect, in which case, Guarantor will give prompt notice of any such abandonment
to the Agent.
9
4.14 FURTHER
ASSURANCES
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
5.1 OBTAINING
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 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 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;
10
(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 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 Guarantor of said obligation.
5.2 DISPOSITION
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 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 Guarantor or any nominee of 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 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, Guarantor shall remain liable to Agent and Lenders
therefor.
11
5.3 POWER
OF ATTORNEY
Guarantor
hereby irrevocably authorizes and appoints the Agent, or any Person or agent
the
Agent may designate, as Guarantor’s attorney-in-fact, at 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 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 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 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 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 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 Guarantor’s name on a proof of claim in
bankruptcy or similar document against any customer of 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 Guarantor.
12
5.4 WAIVER
OF CLAIMS
Except
as
otherwise provided in this Agreement, 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 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 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 Guarantor therein and thereto, and shall be
a
perpetual bar both at law and in equity against 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
Guarantor.
5.5 REMEDIES
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.
13
ARTICLE
6
MISCELLANEOUS
PROVISIONS
6.1 NOTICES
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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, c/o ▇▇▇▇▇ Partners III, L.P.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, fax no. (▇▇▇)
▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., c/o Blank Rome, LLP, Chrysler
Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, fax no. (▇▇▇)
▇▇▇-▇▇▇▇, and if to the Guarantor, then to c/o Acura Pharmaceuticals, Inc.,
attention of ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., St. ▇▇▇▇ & ▇▇▇▇▇,
L.L.C., ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, fax no. (▇▇▇)
▇▇▇-▇▇▇▇.
6.2 HEADINGS
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.
6.3 SEVERABILITY
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.
6.4 AMENDMENTS,
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.
6.5 INTERPRETATION
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.
14
6.6 CONTINUING
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 Guarantor, and
its successors and assigns and (b) inure to the benefit of the Agent and its
successors and assigns.
6.7 REINSTATEMENT
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 Guarantor 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.
6.8 SURVIVAL
OF PROVISIONS
All
representations, warranties and covenants of the Guarantor 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
Guarantor of the Obligations secured hereby.
6.9 SETOFF
The
Agent
shall have all rights of setoff available at law or in equity.
6.10 POWER
OF ATTORNEY
In
addition to the powers granted to the Agent under Section 5.3, Guarantor hereby
irrevocably authorizes and appoints the Agent, or any Person or agent the Agent
may designate, as Guarantor’s attorney-in-fact, at 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 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.
6.11 INDEMNIFICATION;
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 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. 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.
15
6.12 RELEASE;
TERMINATION OF AGREEMENT
Subject
to the provisions of Section 6.7 of this Agreement, this Agreement shall
terminate upon the termination of the Guaranty and the full and final
indefeasible payment and performance of all the Obligations owing by Guarantor.
At such time, the Agent shall, at the request of any Guarantor, reassign and
redeliver to 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
Guarantor.
6.13 COUNTERPARTS
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.
6.14 GOVERNING
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.
6.15 SUBMISSION
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.
16
(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.
6.16 SERVICE
OF PROCESS
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 GUARANTOR AT ITS
ADDRESS SET FORTH IN SECTION 6.1 HEREOF.
6.17 LIMITATION
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.
6.18 DELAYS;
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.
6.19 JURY
TRIAL
GUARANTOR
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.
17
IN
WITNESS WHEREOF,
Guarantor has caused this Guarantor General Security Agreement to be duly
executed and delivered as of the date first written above.
| ACURA PHARMACEUTICAL TECHNOLOGIES, INC. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
||
| 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.
| ▇▇▇▇▇ PARTNERS III, L.P. | ||
| By: | Claudius, L.L.C, General Partner | |
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇. | ||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, its General Partner |
||
18
SCHEDULE
A
Section
3.3
APT
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
19