LOAN AND SECURITY AGREEMENT


 


THIS LOAN AND SECURITY
AGREEMENT (as the same may from time to time be amended, modified, supplemented or restated, this “Agreement”)
dated as of December 27, 2013 (the “Effective Date”) among OXFORD FINANCE LLC, a Delaware limited liability
company with an office located at 133 North Fairfax Street, Alexandria, Virginia 22314 (“Oxford”), as collateral
agent (in such capacity, “Collateral Agent”), the Lenders listed on Schedule 1.1 hereof or otherwise
a party hereto from time to time including Oxford in its capacity as a Lender (each a “Lender” and collectively,
the “Lenders”), and ACURA PHARMACEUTICALS, INC., a New York corporation with offices located at 616 N. North
Court, Suite 120, Palatine, Illinois (“Parent”) and ACURA PHARMACEUTICAL TECHNOLOGIES, INC., an Indiana corporation
with offices locates at 16235 State Road 17, Culver, IN 46511 (“APT”, and individually and collectively, jointly and
severally, “Borrower”), provides the terms on which the Lenders shall lend to Borrower and Borrower shall repay
the Lenders. The parties agree as follows:


 


		1.	ACCOUNTING AND OTHER TERMS



 


1.1           Accounting
terms not defined in this Agreement shall be construed in accordance with GAAP. Calculations and determinations must be made in
accordance with GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13.
All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent
such terms are defined therein. All references to “Dollars” or “$” are United States Dollars,
unless otherwise noted.


 


		2.	LOANS AND TERMS OF PAYMENT



 


2.1           Promise
to Pay. Borrower hereby unconditionally promises to pay each Lender, the outstanding principal amount of all Term Loans advanced
to Borrower by such Lender and accrued and unpaid interest thereon and any other amounts due hereunder as and when due in accordance
with this Agreement.


 


2.2           Term
Loan.


 


(a)          Availability.
(i) Subject to the terms and conditions of this Agreement, the Lenders agree, severally and not jointly, to make term loans to
Borrower on the Effective Date in an aggregate amount of Ten Million Dollars ($10,000,000) according to each Lender’s Term Loan
Commitment as set forth on Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a “Term Loan”,
and collectively as the “Term Loans”). After repayment, no Term Loan may be re-borrowed.


 


(b)          Repayment.
Borrower shall make monthly payments of interest only commencing on the first (1st) Payment Date following the Funding
Date of the Term Loan, and continuing on the Payment Date of each successive month thereafter through and including the Payment
Date immediately preceding the Amortization Date. Borrower agrees to pay, on the Funding Date of the Term Loan, any initial partial
monthly interest payment otherwise due for the period between the Funding Date of the Term Loan and the first Payment Date thereof.
Commencing on the Amortization Date, and continuing on the Payment Date of each month thereafter, Borrower shall make consecutive
equal monthly payments of principal and interest, in arrears, to each Lender, as calculated by Collateral Agent (which calculations
shall be deemed correct absent manifest error) based upon: (1) the amount of such Lender’s Term Loan, (2) the effective
rate of interest, as determined in Section 2.3(a), and (3) a repayment schedule equal to (A) forty-five (45) months if the
First Revenue Event does not occur, (B) thirty-three (33) months if the First Revenue Event occurs but the Second Revenue Event
does not occur and (C) twenty-one (21) months if both the First Revenue Event and the Second Revenue Event occur. All unpaid principal
and accrued and unpaid interest with respect to the Term Loan is due and payable in full on the Maturity Date. The Term Loan
may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).


 




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(c)          Mandatory
Prepayments. If the Term Loans are accelerated following the occurrence of an Event of Default, Borrower shall immediately
pay to Lenders, payable to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of: (i) all
outstanding principal of the Term Loans plus accrued and unpaid interest thereon through the prepayment date, (ii) the Final
Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations that are due and payable, including Lenders’ Expenses
and interest at the Default Rate with respect to any past due amounts. Notwithstanding (but without duplication with) the foregoing,
on the Maturity Date, if the Final Payment had not previously been paid in full in connection with the prepayment of the Term Loans
in full, Borrower shall pay to Collateral Agent, for payment to each Lender in accordance with its respective Pro Rata Share, the
Final Payment in respect of the Term Loan(s).


 


(d)          Permitted
Prepayment of Term Loans. Borrower shall have the option to prepay all, but not less than all, of the Term Loans advanced by
the Lenders under this Agreement, provided Borrower (i) provides written notice to Collateral Agent of its election to prepay
the Term Loans at least thirty (30) days prior to such prepayment, and (ii) pays to the Lenders on the date of such prepayment,
payable to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of (A) all outstanding
principal of the Term Loans plus accrued and unpaid interest thereon through the prepayment date, (B) the Final Payment, (C) the
Prepayment Fee, plus (D) all other Obligations that are due and payable, including Lenders’ Expenses and interest at the
Default Rate with respect to any past due amounts.


 


2.3           Payment
of Interest on the Credit Extensions.


 


(a)          Interest
Rate. Subject to Section 2.3(b), the principal amount outstanding under the Term Loans shall accrue interest at a fixed
per annum rate (which rate shall be fixed for the duration of the applicable Term Loan) equal to the Basic Rate, which interest
shall be payable monthly in arrears in accordance with Sections 2.2(b) and 2.3(e). Interest shall accrue on each Term Loan
commencing on, and including, the Funding Date of such Term Loan, and shall accrue on the principal amount outstanding under such
Term Loan through and including the day on which such Term Loan is paid in full.


 


(b)          Default
Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall accrue interest
at a fixed per annum rate equal to the rate that is otherwise applicable thereto plus five percentage points (5.00%) (the “Default
Rate”). Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights
or remedies of Collateral Agent.


 


(c)          360-Day
Year. Interest shall be computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) months of thirty
(30) days.


 


(d)          Debit
of Accounts. Collateral Agent and each Lender may debit (or ACH) any deposit accounts, maintained by Borrower or any of its
Subsidiaries, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes
the Lenders under the Loan Documents when due. Any such debits (or ACH activity) shall not constitute a set-off.


 


(e)          Payments.
Except as otherwise expressly provided herein, all payments by Borrower under the Loan Documents shall be made to the respective
Lender to which such payments are owed, at such Lender’s office in immediately available funds on the date specified herein.
Unless otherwise provided, interest is payable monthly on the Payment Date of each month. Payments of principal and/or interest
received after 12:00 noon Eastern time are considered received at the opening of business on the next Business Day. When a payment
is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable,
shall continue to accrue until paid. All payments to be made by Borrower hereunder or under any other Loan Document, including
payments of principal and interest, and all fees, expenses, indemnities and reimbursements, shall be made without set-off, recoupment
or counterclaim, in lawful money of the United States and in immediately available funds.


 


2.4           Secured
Promissory Notes. The Term Loans shall be evidenced by a Secured Promissory Note or Notes in the form attached as Exhibit D
hereto (each a “Secured Promissory Note”), and shall be repayable as set forth in this Agreement. Borrower irrevocably
authorizes each Lender to make or cause to be made, on or about the Funding Date of any Term Loan or at the time of receipt of
any payment of principal on such Lender’s Secured Promissory Note, an appropriate notation on such Lender’s Secured
Promissory Note Record reflecting the making of such Term Loan or (as the case may be) the receipt of such payment. The outstanding
amount of each Term Loan set forth on such Lender’s Secured Promissory Note Record shall be prima facie evidence of the principal
amount thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording, any such amount on such
Lender’s Secured Promissory Note Record shall not limit or otherwise affect the obligations of Borrower under any Secured
Promissory Note or any other Loan Document to make payments of principal of or interest on any Secured Promissory Note when due.
Upon receipt of an affidavit of an officer of a Lender as to the loss, theft, destruction, or mutilation of its Secured Promissory
Note, Borrower shall issue, in lieu thereof, a replacement Secured Promissory Note in the same principal amount thereof
and of like tenor.


 




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2.5           Fees.
Borrower shall pay to Collateral Agent:


 


(a)          Facility
Fee. A fully earned, non-refundable facility fee of Fifty Thousand Dollars ($50,000) to be shared between the Lenders pursuant
to their respective Commitment Percentages payable, the entire amount of which has already been paid on or about November 15, 2013;


 


(b)          Final
Payment. The Final Payment, when due hereunder, to be shared between the Lenders in accordance with their respective Pro Rata
Shares;


 


(c)          Prepayment
Fee. The Prepayment Fee, when due hereunder, to be shared between the Lenders in accordance with their respective Pro Rata
Shares; and


 


(d)          Lenders’
Expenses. All Lenders’ Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation
of this Agreement) incurred through and after the Effective Date, when due.


 


2.6           Withholding.
Payments received by the Lenders from Borrower hereunder will be made free and clear of and without deduction for any and all present
or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any governmental
authority (including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any
Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction
from any such payment or other sum payable hereunder to the Lenders, Borrower hereby covenants and agrees that the amount due from
Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that,
after the making of such required withholding or deduction, each Lender receives a net sum equal to the sum which it would have
received had no withholding or deduction been required and Borrower shall pay the full amount withheld or deducted to the relevant
Governmental Authority. Borrower will, upon request, furnish the Lenders with proof reasonably satisfactory to the Lenders indicating
that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the
amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which
payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section 2.6
shall survive the termination of this Agreement.


 


		3.	CONDITIONS OF LOANS



 


3.1           Conditions
Precedent to Initial Credit Extension. Each Lender’s obligation to make a Term Loan is subject to the condition
precedent that Collateral Agent and each Lender shall consent to or shall have received, in form and substance satisfactory to
Collateral Agent and each Lender, such documents, and completion of such other matters, as Collateral Agent and each Lender may
reasonably deem necessary or appropriate, including, without limitation:


 


(a)          original
Loan Documents, each duly executed by Borrower and each Subsidiary, as applicable;


 


(b)          Borrower
shall have recorded the Mortgage in Marshall County, Indiana providing for first priority mortgage lien in respect of the Mortgaged
Premises in favor of Collateral Agent and such other documents which are customary in commercial mortgage transactions in Indiana,
each in form and substance satisfactory to Collateral Agent.


 




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(c)          duly
executed original Control Agreements with respect to any Collateral Accounts maintained by Borrower or any of its Subsidiaries;


 


(d)          duly
executed original Secured Promissory Notes and Warrants, in number, form and content acceptable to each Lender, and in favor of
each Lender according to its Term Loan Commitment Percentage;


 


(e)          the
certificate(s) for the Shares, together with Assignment(s) Separate from Certificate, duly executed in blank;


 


(f)          the
Operating Documents and good standing certificates of Borrower and its Subsidiaries certified by the Secretary of State (or equivalent
agency) of Borrower’s and such Subsidiaries’ jurisdiction of organization or formation and each jurisdiction in which
Borrower and each Subsidiary is qualified to conduct business, each as of a date no earlier than thirty (30) days prior to the
Effective Date;


 


(g)          a
completed Perfection Certificate for Borrower and each of its Subsidiaries;


 


(h)          the
Annual Projections, for the current calendar year;


 


(i)          duly
executed original officer’s certificate for Borrower and each Subsidiary that is a party to the Loan Documents, in a form
acceptable to Collateral Agent and the Lenders;


 


(j)          certified
copies, dated as of date no earlier than thirty (30) days prior to the Effective Date, of financing statement searches, as Collateral
Agent shall request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any
such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will
be terminated or released;


 


(k)          a
landlord’s consent executed in favor of Collateral Agent in respect of all of Borrower’s and each Subsidiaries’
leased locations;


 


(l)          a
bailee waiver executed in favor of Collateral Agent in respect of each third party bailee where Borrower or any Subsidiary maintains
Collateral having a book value in excess of One Hundred Thousand Dollars ($100,000.00);


 


(m)          a
duly executed legal opinion of counsel to Borrower dated as of the Effective Date;


 


(n)          evidence
satisfactory to Collateral Agent and the Lenders that the insurance policies required by Section 6.5 hereof are in full force
and effect, together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor
of Collateral Agent, for the ratable benefit of the Lenders; and


 


(o)          payment
of the fees and Lenders’ Expenses then due as specified in Section 2.5 hereof.


 


3.2           Conditions
Precedent to all Credit Extensions. The obligation of each Lender to make each Credit Extension, including the initial Credit
Extension, is subject to the following conditions precedent:


 


(a)          receipt
by Collateral Agent of an executed Disbursement Letter in the form of Exhibit B attached hereto;


 


(b)          the
representations and warranties in Section 5 hereof shall be true, accurate and complete in all material respects on the date
of the Disbursement Letter and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or
result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations
and warranties in Section 5 hereof are true, accurate and complete in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality
in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall
be true, accurate and complete in all material respects as of such date;


 




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(c)          in
such Lender’s sole discretion, there has not been any Material Adverse Change or any material adverse deviation by Borrower
from the Annual Projections of Borrower presented to and accepted by Collateral Agent and each Lender;


 


(d)          to
the extent not delivered at the Effective Date, duly executed original Secured Promissory Notes and Warrants, in number, form and
content acceptable to each Lender, and in favor of each Lender according to its Commitment Percentage, with respect to each Credit
Extension made by such Lender after the Effective Date; and


 


(e)          payment
of the fees and Lenders’ Expenses then due as specified in Section 2.5 hereof.


 


3.3           Covenant
to Deliver. Borrower agrees to deliver to Collateral Agent and the Lenders each item required to be delivered to Collateral
Agent under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension
made prior to the receipt by Collateral Agent or any Lender of any such item shall not constitute a waiver by Collateral Agent
or any Lender of Borrower’s obligation to deliver such item, and any such Credit Extension in the absence of a required item
shall be made in each Lender’s sole discretion.


 


3.4           Procedures
for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of a Term Loan set forth
in this Agreement, to obtain a Term Loan, Borrower shall notify the Lenders (which notice shall be irrevocable) by electronic mail,
facsimile, or telephone by 12:00 noon Eastern time three (3) Business Days prior to the date the Term Loan is to be made. Together
with any such electronic, facsimile or telephonic notification, Borrower shall deliver to the Lenders by electronic mail or facsimile
a completed Disbursement Letter executed by a Responsible Officer or his or her designee. The Lenders may rely on any telephone
notice given by a person whom a Lender reasonably believes is a Responsible Officer or designee. On the Funding Date, each Lender
shall credit and/or transfer (as applicable) to the Designated Deposit Account, an amount equal to its Term Loan Commitment.


 


		4.	CREATION OF SECURITY INTEREST



 


4.1           Grant
of Security Interest. Borrower hereby grants Collateral Agent, for the ratable benefit of the Lenders, to secure the payment
and performance in full of all of the Obligations, a continuing security interest in, and pledges to Collateral Agent, for the
ratable benefit of the Lenders, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all
times continue to be a first priority perfected security interest in the Collateral, subject only to Permitted Liens that are permitted
by the terms of this Agreement to have priority to Collateral Agent’s Lien. If Borrower shall acquire a commercial tort claim
(as defined in the Code), Borrower, shall promptly notify Collateral Agent in a writing signed by Borrower, as the case may be,
of the general details thereof (and further details as may be required by Collateral Agent) and grant to Collateral Agent, for
the ratable benefit of the Lenders, in such writing a security interest therein and in the proceeds thereof, all upon the terms
of this Agreement, with such writing to be in form and substance reasonably satisfactory to Collateral Agent.


 


If this Agreement is
terminated, Collateral Agent’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity
obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations)
and at such time as the Lenders’ obligation to make Credit Extensions has terminated, Collateral Agent shall, at the sole
cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower.


 




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4.2           Authorization
to File Financing Statements. Borrower hereby authorizes Collateral Agent to file financing statements or take any other action
required to perfect Collateral Agent’s security interests in the Collateral, without notice to Borrower, with all appropriate
jurisdictions to perfect or protect Collateral Agent’s interest or rights under the Loan Documents, including a notice that
any disposition of the Collateral, except to the extent permitted by the terms of this Agreement, by Borrower, or any other Person,
shall be deemed to violate the rights of Collateral Agent under the Code.


 


4.3           Pledge
of Collateral. Borrower hereby pledges, assigns and grants to Collateral Agent, for the ratable benefit of the Lenders, a security
interest in all the Shares, together with all proceeds and substitutions thereof, all cash, stock and other moneys and property
paid thereon, all rights to subscribe for securities declared or granted in connection therewith, and all other cash and noncash
proceeds of the foregoing, as security for the performance of the Obligations. On the Effective Date, or, to the extent not certificated
as of the Effective Date, within ten (10) days of the certification of any Shares, the certificate or certificates for the Shares
will be delivered to Collateral Agent, accompanied by an instrument of assignment duly executed in blank by Borrower. To the extent
required by the terms and conditions governing the Shares, Borrower shall cause the books of each entity whose Shares are part
of the Collateral and any transfer agent to reflect the pledge of the Shares. Upon the occurrence and during the continuance of
an Event of Default hereunder, Collateral Agent may effect the transfer of any securities included in the Collateral (including
but not limited to the Shares) into the name of Collateral Agent and cause new (as applicable) certificates representing such securities
to be issued in the name of Collateral Agent or its transferee. Borrower will execute and deliver such documents, and take or cause
to be taken such actions, as Collateral Agent may reasonably request to perfect or continue the perfection of Collateral Agent’s
security interest in the Shares. Unless an Event of Default shall have occurred and be continuing, Borrower shall be entitled to
exercise any voting rights with respect to the Shares and to give consents, waivers and ratifications in respect thereof, provided
that no vote shall be cast or consent, waiver or ratification given or action taken which would be inconsistent with any of the
terms of this Agreement or which would constitute or create any violation of any of such terms. All such rights to vote and give
consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event of Default.


 


		5.	REPRESENTATIONS AND WARRANTIES



 


Borrower represents
and warrants to Collateral Agent and the Lenders as follows:


 


5.1           Due
Organization, Authorization: Power and Authority. Borrower and each of its Subsidiaries is duly existing and in good standing
as a Registered Organization in its jurisdictions of organization or formation and Borrower and each of its Subsidiaries is qualified
and licensed to do business and is in good standing in any jurisdiction in which the conduct of its businesses or its ownership
of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a Material
Adverse Change. In connection with this Agreement, Borrower and each of its Subsidiaries has delivered to Collateral Agent a completed
perfection certificate signed by an officer of Borrower or such Subsidiary (each a “Perfection Certificate”
and collectively, the “Perfection Certificates”). Borrower represents and warrants that (a) Borrower and
each of its Subsidiaries’ exact legal name is that which is indicated on its respective Perfection Certificate and on the
signature page of each Loan Document to which it is a party; (b) Borrower and each of its Subsidiaries is an organization
of the type and is organized in the jurisdiction set forth on its respective Perfection Certificate; (c) each Perfection Certificate
accurately sets forth each of Borrower’s and its Subsidiaries’ organizational identification number or accurately states
that Borrower or such Subsidiary has none; (d) each Perfection Certificate accurately sets forth Borrower’s and each
of its Subsidiaries’ place of business, or, if more than one, its chief executive office as well as Borrower’s and
each of its Subsidiaries’ mailing address (if different than its chief executive office); (e) Borrower and each of its
Subsidiaries (and each of its respective predecessors) have not, in the past five (5) years, changed its jurisdiction of organization,
organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information
set forth on the Perfection Certificates pertaining to Borrower and each of its Subsidiaries, is accurate and complete (it being
understood and agreed that Borrower and each of its Subsidiaries may from time to time update certain information in the Perfection
Certificates (including the information set forth in clause (d) above) after the Effective Date to the extent permitted by
one or more specific provisions in this Agreement); such updated Perfection Certificates subject to the review and approval of
Collateral Agent. If Borrower or any of its Subsidiaries is not now a Registered Organization but later becomes one, Borrower shall
notify Collateral Agent of such occurrence and provide Collateral Agent with such Person’s organizational identification
number within five (5) Business Days of receiving such organizational identification number.


 




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The execution, delivery
and performance by Borrower and each of its Subsidiaries of the Loan Documents to which it is a party have been duly authorized,
and do not (i) conflict with any of Borrower’s or such Subsidiaries’ organizational documents, including its respective
Operating Documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law
applicable thereto, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination
or award of any Governmental Authority by which Borrower or such Subsidiary, or any of their property or assets may be bound or
affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental
Authority (except such Governmental Approvals which have already been obtained and are in full force and effect) or are being obtained
pursuant to Section 6.1(b), or (v) constitute an event of default under any material agreement by which Borrower or any of
such Subsidiaries, or their respective properties, is bound. Neither Borrower nor any of its Subsidiaries is in default under any
agreement to which it is a party or by which it or any of its assets is bound in which such default could reasonably be expected
to have a Material Adverse Change.


 


5.2           Collateral.


 


(a)          Borrower
and each its Subsidiaries have good title to, have rights in, and the power to transfer each item of the Collateral upon which
it purports to grant a Lien under the Loan Documents, free and clear of any and all Liens except Permitted Liens, and neither Borrower
nor any of its Subsidiaries have any Deposit Accounts, Securities Accounts, Commodity Accounts or other investment accounts other
than the Collateral Accounts or the other investment accounts, if any, described in the Perfection Certificates delivered to Collateral
Agent in connection herewith with respect of which Borrower or such Subsidiary has given Collateral Agent notice and taken such
actions as are necessary to give Collateral Agent a perfected security interest therein. The Accounts are bona fide, existing obligations
of the Account Debtors.


 


(b)          On
the Effective Date, and except as disclosed on the Perfection Certificate (i) the Collateral is not in the possession of any third
party bailee (such as a warehouse) and (ii) no such third party bailee possesses components of the Collateral in excess of One
Hundred Thousand Dollars ($100,000.00). None of the components of the Collateral shall be maintained at locations other than as
disclosed in the Perfection Certificates on the Effective Date or as permitted pursuant to Section 6.11.


 


(c)          All
Inventory is in all material respects of good and marketable quality, free from material defects.


 


(d)          Borrower
and each of its Subsidiaries is the sole owner of the Intellectual Property each respectively purports to own, free and clear of
all Liens other than Permitted Liens. Except as noted on the Perfection Certificates, neither Borrower nor any of its Subsidiaries
is a party to, nor is bound by, any material license or other material agreement with respect to which Borrower or such Subsidiary
is the licensee that (i) prohibits or otherwise restricts Borrower or its Subsidiaries from granting a security interest in
Borrower’s or such Subsidiaries’ interest in such material license or material agreement or any other property, or
(ii) for which a default under or termination of could interfere with Collateral Agent’s or any Lender’s right
to sell any Collateral. Borrower shall provide written notice to Collateral Agent and each Lender within ten (10) days of Borrower
or any of its Subsidiaries entering into or becoming bound by any license or agreement with respect to which Borrower or any Subsidiary
is the licensee (other than over-the-counter software that is commercially available to the public).


 


5.3           Litigation.
Except as disclosed (i) on the Perfection Certificates, or (ii) in accordance with Section 6.9 hereof, there are
no actions, suits, investigations, or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing
by or against Borrower or any of its Subsidiaries involving more than One Hundred Thousand Dollars ($100,000.00).


 


5.4           No
Material Deterioration in Financial Condition; Financial Statements. All consolidated financial statements for Borrower and
its Subsidiaries, delivered to Collateral Agent fairly present, in conformity with GAAP, in all material respects the consolidated
financial condition of Borrower and its Subsidiaries, and the consolidated results of operations of Borrower and its Subsidiaries.
There has not been any material deterioration in the consolidated financial condition of Borrower and its Subsidiaries since the
date of the most recent financial statements submitted to any Lender.


 




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5.5           Solvency.
Borrower and each of its Subsidiaries is Solvent.


 


5.6           Regulatory
Compliance. Neither Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act of 1940, as amended. Neither Borrower nor any of its Subsidiaries
is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair
Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate”
of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined
and used in the Public Utility Holding Company Act of 2005. Neither Borrower nor any of its Subsidiaries has violated any laws,
ordinances or rules, the violation of which could reasonably be expected to have a Material Adverse Change. Neither Borrower’s
nor any of its Subsidiaries’ properties or assets has been used by Borrower or such Subsidiary or, to Borrower’s knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material
compliance with applicable laws. Borrower and each of its Subsidiaries has obtained all consents, approvals and authorizations
of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue
their respective businesses as currently conducted.


 


None of Borrower, any
of its Subsidiaries, or any of Borrower’s or its Subsidiaries’ Affiliates, or any of their respective agents acting
or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any
Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a
Blocked Person. None of Borrower, any of its Subsidiaries, or to the knowledge of Borrower and any of their Affiliates or agents,
acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business
or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or
(y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive
Order No. 13224, any similar executive order or other Anti-Terrorism Law.


 


5.7           Investments.
Neither Borrower nor any of its Subsidiaries owns any stock, shares, partnership interests or other equity securities except for
Permitted Investments.


 


5.8           Tax
Returns and Payments; Pension Contributions. Borrower and each of its Subsidiaries has timely filed all required tax returns
and reports, and Borrower and each of its Subsidiaries, has timely paid all foreign, federal, state, and local taxes, assessments,
deposits and contributions owed by Borrower and such Subsidiaries, in all jurisdictions in which Borrower or any such Subsidiary
is subject to taxes, including the United States, unless such taxes are being contested in accordance with the following sentence.
Borrower and each of its Subsidiaries, may defer payment of any contested taxes, provided that Borrower or such Subsidiary, (a) in
good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted,
(b) notifies Collateral Agent in writing of the commencement of, and any material development in, the proceedings, and (c) posts
bonds or takes any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien
upon any of the Collateral that is other than a “Permitted Lien.” Neither Borrower nor any of its Subsidiaries
is aware of any claims or adjustments proposed for any of Borrower’s or such Subsidiaries’, prior tax years which could
result in additional taxes (in an aggregate amount exceeding $25,000) becoming due and payable by Borrower or its Subsidiaries.
Borrower and each of its Subsidiaries have paid all amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, and neither Borrower nor any of its Subsidiaries have, withdrawn from participation
in, and have not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of Borrower or its Subsidiaries, including any liability
to the Pension Benefit Guaranty Corporation or its successors or any other Governmental Authority.


 


5.9           Use
of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business
requirements in accordance with the provisions of this Agreement, and not for personal, family, household or agricultural purposes.


 




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5.10         Shares.
Borrower has full power and authority to create a first lien on the Shares and no disability or contractual obligation exists that
would prohibit Borrower from pledging the Shares pursuant to this Agreement. To Borrower’s knowledge, there are no subscriptions,
warrants, rights of first refusal or other restrictions on transfer relative to, or options exercisable with respect to the Shares.
The Shares have been and will be duly authorized and validly issued, and are fully paid and non-assessable. To Borrower’s
knowledge, the Shares are not the subject of any present or threatened suit, action, arbitration, administrative or other proceeding,
and Borrower knows of no reasonable grounds for the institution of any such proceedings.


 


5.11         Full
Disclosure. No written representation, warranty or other statement of Borrower or any of its Subsidiaries in any certificate
or written statement given to Collateral Agent or any Lender, as of the date such representation, warranty, or other statement
was made, taken together with all such written certificates and written statements given to Collateral Agent or any Lender, contains
any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates
or statements not misleading (it being recognized that the projections and forecasts provided by Borrower in good faith and based
upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections
and forecasts may differ from the projected or forecasted results). 


 


5.12         Definition
of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s
knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of the Responsible Officers.


 


		6.	AFFIRMATIVE COVENANTS



 


Borrower shall, and
shall cause each of its Subsidiaries to, do all of the following:


 


6.1           Government
Compliance.


 


(a)          Maintain
its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of organization and maintain
qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Change.
Comply with all laws, ordinances and regulations to which Borrower or any of its Subsidiaries is subject, the noncompliance with
which could reasonably be expected to have a Material Adverse Change.


 


(b)          Obtain
and keep in full force and effect, all of the material Governmental Approvals necessary for the performance by Borrower and its
Subsidiaries of their respective businesses and obligations under the Loan Documents and the grant of a security interest to Collateral
Agent for the ratable benefit of the Lenders, in all of the Collateral. Borrower shall promptly provide copies to Collateral Agent
of any material Governmental Approvals obtained by Borrower or any of its Subsidiaries; provided, however, that if such Governmental
Approval necessarily includes a filing with a Governmental Authority of an Investigational New Drug Application or New Drug Application
(or similar filing with the U.S. Food and Drug Administration or foreign equivalent), Borrower shall provide Collateral Agent with
written notice within five (5) days after such filing and promptly make available to Collateral Agent electronically a copy of
such New Drug Application (or similar filing with the U.S. Food and Drug Administration or foreign equivalent) upon Collateral
Agent’s request.


 


6.2           Financial
Statements, Reports, Certificates.


 


(a)          Deliver
to each Lender:


 


(i)          as
soon as available, but no later than forty five (45) days after the last day of each calendar month, a company prepared consolidated
and consolidating balance sheet, income statement and cash flow statement covering the consolidated operations of Borrower and
its Subsidiaries for such month certified by a Responsible Officer and in a form reasonably acceptable to Collateral Agent;


 




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(ii)         as
soon as available, but no later than one hundred twenty (120) days after the last day of Borrower’s fiscal year or within
five (5) days of filing with the SEC, audited consolidated financial statements prepared under GAAP, consistently applied, together
with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Collateral
Agent in its reasonable discretion;


 


(iii)        as
soon as available after approval thereof by Borrower’s Board of Directors, but not less than annually and no later than ten
(10) days after approval thereof by Borrower’s Board of Directors, Borrower’s annual financial projections for the
entire current fiscal year as approved by Borrower’s Board of Directors, which such annual financial projections shall be
set forth in a month-by-month format (such annual financial projections as originally delivered to Collateral Agent and the Lenders
are referred to herein as the “Annual Projections”; provided that, any revisions of the Annual Projections approved
by Borrower’s Board of Directors shall be delivered to Collateral Agent and the Lenders no later than seven (7) days after
such approval);


 


(iv)        within
five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or
holders of Subordinated Debt;


 


(v)         in
the event that Borrower becomes subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, within
five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission,


 


(vi)        prompt
notice of any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower
or any of its Subsidiaries, together with any copies reflecting such amendments or changes with respect thereto;


 


(vii)       prompt
notice of (A) any material change in the composition of the Intellectual Property, (B) the registration in the United States of
any copyright, including any subsequent ownership right of Borrower or any of its Subsidiaries in or to any copyright, patent or
trademark, including a copy of any such registration, and (C) any event that could reasonably be expected to materially and adversely
affect the value of the Intellectual Property;


 


(viii)      as
soon as available, but no later than thirty (30) days after the last day of each month, copies of the month-end account statements
for each Collateral Account maintained by Borrower or its Subsidiaries, which statements may be provided to Collateral Agent and
each Lender by Borrower or directly from the applicable institution(s), and


 


(ix)         other
information as reasonably requested by Collateral Agent or any Lender.


 


Notwithstanding the foregoing,
documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise
filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on
which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the internet at Borrower’s
website address.


 


(b)          Concurrently
with the delivery of the financial statements specified in Section 6.2(a)(i) above but no later than thirty (30) days
after the last day of each month, deliver to each Lender, a duly completed Compliance Certificate signed by a Responsible Officer.


 


(c)          Keep
proper books of record and account in accordance with GAAP in all material respects, in which full, true and correct entries shall
be made of all dealings and transactions in relation to its business and activities. Borrower shall, and shall cause each of its
Subsidiaries to, allow, at the sole cost of Borrower, Collateral Agent or any Lender, during regular business hours upon reasonable
prior notice (provided that no notice shall be required when an Event of Default has occurred and is continuing), to visit and
inspect any of its properties, to examine and make abstracts or copies from any of its books and records, and to conduct a collateral
audit and analysis of its operations and the Collateral. Such audits shall be conducted no more often than twice every year unless
(and more frequently if) an Event of Default has occurred and is continuing.


 




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6.3           Inventory;
Returns. Keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower,
or any of its Subsidiaries, and their respective Account Debtors shall follow Borrower’s, or such Subsidiary’s, customary
practices. Borrower must promptly notify Collateral Agent and the Lenders of all returns, recoveries, disputes and claims that
involve more than One Hundred Thousand Dollars ($100,000.00) individually or more than $250,000 in the aggregate in any calendar
year.


 


6.4           Taxes;
Pensions. Timely file and require each of its Subsidiaries to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely file, all foreign, federal, state, and local taxes, assessments, deposits and
contributions owed by Borrower or its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of
Section 5.8 hereof, and shall deliver to Lenders, promptly on demand, appropriate certificates attesting to such payments,
and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with the
terms of such plans.


 


6.5           Insurance.
Keep Borrower’s and its Subsidiaries’ business and the Collateral insured for risks and in amounts standard for companies
in Borrower’s and its Subsidiaries’ industry and location and as Collateral Agent may reasonably request.  Insurance
policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Collateral Agent and Lenders. 
All property policies shall have a lender’s loss payable endorsement showing Collateral Agent as lender loss payee and waive
subrogation against Collateral Agent, and all  liability policies (other than Directors and Officers Insurance, Fiduciary
Liability, Employment Practices Liability, Workers Compensation and  Automobile insurance) shall show, or have endorsements
showing, Collateral Agent, as additional insured.  The Collateral Agent shall be named as lender loss payee and/or additional
insured with respect to any such insurance providing coverage in respect of any Collateral, and each provider or responsible broker
of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished
to the Collateral Agent, that it will give the Collateral Agent thirty (30) days (10 days for non-payment) prior written notice
before any such policy or policies are canceled and in the case of the aforementioned liability policies if policy limits are reduced. 
Lender will receive a certificate and applicable endorsements of any renewal of any such liability policy.  At Collateral
Agent’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments.  Proceeds
payable under any policy shall, at Collateral Agent’s option, be payable to Collateral Agent, for the ratable benefit of
the Lenders, on account of the Obligations.  Notwithstanding the foregoing, (a) so long as no Event of Default has occurred
and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to One Hundred
Thousand Dollars ($100,000.00) with respect to any loss, but not exceeding Two Hundred Fifty Thousand Dollars ($250,000.00), in
the aggregate for all losses under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged
property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired
Collateral and (ii) shall be deemed Collateral in which Collateral Agent has been granted a first priority security interest,
and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy
shall, at the option of Collateral Agent, be payable to Collateral Agent, for the ratable benefit of the Lenders, on account of
the Obligations.  If Borrower or any of its Subsidiaries fails to obtain insurance as required under this Section 6.5
or to pay any amount or furnish any required proof of payment to third persons, Collateral Agent and/or any Lender may make, at
Borrower’s expense, all or part of such payment or obtain such insurance policies required in this Section 6.5, and
take any action under the policies Collateral Agent or such Lender deems prudent.


 


6.6           Operating
Accounts.


 


(a)          Subject
to the provisions of subsection (d) below, maintain all of Borrower’s and its Subsidiaries’ Collateral Accounts with
one or more banking institutions in accounts that are subject to Control Agreement(s) in favor of Collateral Agent.


 


(b)          Borrower
shall provide Collateral Agent five (5) days’ prior written notice before Borrower or any of its Subsidiaries establishes
any Collateral Account at or with any Person other than with a bank or financial institution with which one or more Control Agreement(s)
in favor of Collateral Agent that are satisfactory to Collateral Agent are then in place (it being understood Bank of America is
not such a bank). In addition, for each Collateral Account that Borrower or any of its Subsidiaries, at any time maintains, Borrower
or such Subsidiary shall cause the applicable bank or financial institution at or with which such Collateral Account is maintained
to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Collateral
Agent’s Lien in such Collateral Account in accordance with the terms hereunder prior to the establishment of such Collateral
Account, which Control Agreement may not be terminated without prior written consent of Collateral Agent. The provisions of the
previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower’s, or any of its Subsidiaries’, employees and identified to Collateral Agent
by Borrower as such in the Perfection Certificates.


 




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(c)          Neither
Borrower nor any of its Subsidiaries shall maintain any Collateral Accounts except Collateral Accounts maintained in accordance
with Sections 6.6(a) and (b).


 


(d)          Notwithstanding
the provisions of subsections (a) - (c) above,


 


(i)          Borrower
may continue to maintain Collateral Accounts with Charles Schwab (that are identified in the Perfection Certificate delivered to
the Collateral Agent) for a period of up to ninety (90) days from the Effective Date, by the end of which period, Borrower must
either deliver evidence of closure of all such Collateral Accounts to the Collateral Agent in form and substance satisfactory to
the Collateral Agent or the Collateral Agent must have entered into Control Agreement(s) with respect to such Collateral Accounts
with Borrower and Charles Schwab in form and substance satisfactory to the Collateral Agent.


 


(ii)         Borrower
must, within ninety (90) days from the Effective Date, (A) deliver evidence of closure of all such Collateral Accounts maintained
by Borrower at Bank of America (that are identified in the Perfection Certificate delivered to the Collateral Agent), and (B) establish
Collateral Account(s) at a bank or financial institution which Collateral Account(s) shall be subject to one or more Control Agreement(s)
between the Borrower, Collateral Agent and such bank or financial institution in form and substance satisfactory to Collateral
Agent.


 


(iii)        Prior
to the fulfillment of Borrower’s covenants set forth in Section 6.6(d)(ii) above, the aggregate cash balance (which shall
not be deemed to include the value of any securities but shall include “cash equivalents”) in the Collateral Accounts
maintained at Merrill Lynch, Pierce, Fenner & Smith Incorporated (that are subject to Control Agreement(s) in favor of the
Collateral Agent) shall at all times be not less than the aggregate amount of the Term Loans made under this Agreement.


 


6.7           Protection
of Intellectual Property Rights. Borrower and each of its Subsidiaries shall: (a) use commercially reasonable efforts
to protect, defend and maintain the validity and enforceability of its Intellectual Property that is material to Borrower’s
business; (b) promptly advise Collateral Agent in writing of material infringement by a third party of its Intellectual Property;
and (c) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Collateral Agent’s prior written consent.


 


6.8           Litigation
Cooperation. Commencing on the Effective Date and continuing through the termination of this Agreement, make available to Collateral
Agent and the Lenders, without expense to Collateral Agent or the Lenders, Borrower and each of Borrower’s officers, employees
and agents and Borrower’s Books, to the extent that Collateral Agent or any Lender may reasonably deem them necessary to
prosecute or defend any third-party suit or proceeding instituted by or against Collateral Agent or any Lender with respect to
any Collateral or relating to Borrower.


 


6.9           Notices
of Litigation and Default. Borrower will give prompt written notice to Collateral Agent and the Lenders of any litigation or
governmental proceedings pending or threatened (in writing) against Borrower or any of its Subsidiaries, which could reasonably
be expected to result in damages or costs to Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000.00)
or more or which could reasonably be expected to have a Material Adverse Change. Without limiting or contradicting any other more
specific provision of this Agreement, promptly (and in any event within three (3) Business Days) upon Borrower becoming aware of
the existence of any Event of Default or event which, with the giving of notice or passage of time, or both, would constitute an
Event of Default, Borrower shall give written notice to Collateral Agent and the Lenders of such occurrence, which such notice
shall include a reasonably detailed description of such Event of Default or event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default.


 


6.10         Intentionally
Omitted.


 


6.11         Landlord
Waivers; Bailee Waivers. In the event that Borrower or any of its Subsidiaries, after the Effective Date, intends to add any
new offices or business locations, including warehouses, or otherwise store any portion of the Collateral with, or deliver any
portion of the Collateral to, a bailee, in each case pursuant to Section 7.2, then Borrower or such Subsidiary will first
provide thirty (30) days’ prior written notice to Collateral Agent and, in the event that the Collateral at any new location
is valued in excess of One Hundred Thousand ($100,000.00) in the aggregate, such bailee or landlord, as applicable, must execute
and deliver a bailee waiver or landlord waiver, as applicable, in form and substance reasonably satisfactory to Collateral Agent
prior to the addition of any new offices or business locations, or any such storage with or delivery to any such bailee, as the
case may be.


 




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6.12         Creation/Acquisition
of Subsidiaries. In the event Borrower, or any of its Subsidiaries creates or acquires any Subsidiary, Borrower shall provide
prior written notice to Collateral Agent and each Lender of the creation or acquisition of such new Subsidiary and take all such
action as may be reasonably required by Collateral Agent or any Lender to cause each such Subsidiary to become a co-Borrower hereunder
or to guarantee the Obligations of Borrower under the Loan Documents and, in each case, grant a continuing pledge and security
interest in and to the assets of such Subsidiary (substantially as described on Exhibit A hereto); and Borrower (or
its Subsidiary, as applicable) shall grant and pledge to Collateral Agent, for the ratable benefit of the Lenders, a perfected
security interest in the stock, units or other evidence of ownership of each such newly created Subsidiary.


 


6.13         Further
Assurances.


 


(a)          Execute
any further instruments and take further action as Collateral Agent or any Lender reasonably requests to perfect or continue Collateral
Agent’s Lien in the Collateral or to effect the purposes of this Agreement.


 


(b)          Deliver
to Collateral Agent and Lenders, within five (5) days after the same are sent or received, copies of all material correspondence,
reports, documents and other filings with any Governmental Authority that could reasonably be expected to have a material adverse
effect on any of the Governmental Approvals material to Borrower’s business or otherwise could reasonably be expected to
have a Material Adverse Change; provided, however, that if such filing with a Governmental Authority is an Investigational New
Drug Application or New Drug Application (or similar filing with the U.S. Food and Drug Administration or foreign equivalent),
Borrower shall provide Collateral Agent with written notice within five (5) days after such filing and promptly make available
to Collateral Agent electronically a copy of such New Drug Application (or similar filing with the U.S. Food and Drug Administration
or foreign equivalent) upon Collateral Agent’s request.


 


7.          NEGATIVE
COVENANTS


 


Borrower shall not,
and shall not permit any of its Subsidiaries to, do any of the following without the prior written consent of the Required Lenders:


 


7.1           Dispositions.
Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of
its Subsidiaries to Transfer, all or any part of its business or property (excluding any equity securities of Parent or instruments
or securities convertible into equity securities of Parent, so long as such securities are not debt securities and so long as transfer,
assignment, conveyance, sale or other disposition thereof is not used to effect a merger or consolidation in violation of the provisions
of Section 7.3 or other provisions of this Agreement), except for Transfers (a) of Inventory in the ordinary course of business;
(b) of worn out or obsolete Equipment; and (c) in connection with Permitted Liens, Permitted Investments and Permitted Licenses.


 




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7.2           Changes
in Business, Management, Ownership, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in
any business other than the businesses engaged in by Borrower as of the Effective Date or reasonably related thereto; (b) liquidate
or dissolve; or (c) (i) any Key Person shall cease to be actively engaged in the management of Borrower unless written
notice thereof is provided to Collateral Agent within 5 days of such change, or (ii) enter into any transaction or series
of related transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction
own more than forty nine percent (49%) of the voting stock of Borrower immediately after giving effect to such transaction or related
series of such transactions (other than by the sale of Borrower’s equity securities in a public offering, a private placement
of public equity or to venture capital investors so long as Borrower identifies to Collateral Agent the venture capital investors
prior to the closing of the transaction). Borrower shall not, without at least thirty (30) days’ prior written notice to
Collateral Agent: (A) add any new offices or business locations, including warehouses (unless such new offices or business
locations contain less than One Hundred Thousand Dollars ($100,000.00) in assets or property of Borrower or any of its Subsidiaries);
(B) change its jurisdiction of organization, (C) change its organizational structure or type, (D) change its legal name, or
(E) change any organizational number (if any) assigned by its jurisdiction of organization.


 


7.3           Mergers
or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock, shares or property of another
Person. A Subsidiary may merge or consolidate into another Subsidiary (provided such surviving Subsidiary is a “co-Borrower”
hereunder or has provided a secured Guaranty of Borrower’s Obligations hereunder) or with (or into) Borrower provided Borrower
is the surviving legal entity, and as long as no Event of Default is occurring prior thereto or arises as a result therefrom. Without
limiting the foregoing, Borrower shall not, without Collateral Agent’s prior written consent, enter into any binding contractual
arrangement with any Person to attempt to facilitate a merger or acquisition of Borrower, unless (i) no Event of Default exists
when such agreement is entered into by Borrower, and (ii) such agreement does not give such Person the right to claim any fees,
payments or damages from Borrower in excess of Two Hundred Fifty Thousand Dollars ($250,000), and (iii) Borrower notifies Collateral
Agent in advance of entering into such an agreement.


 


7.4           Indebtedness.
Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.


 


7.5           Encumbrance.
Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the
sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be
subject to the first priority security interest granted herein (except for Permitted Liens that are permitted by the terms of this
Agreement to have priority over Collateral Agent’s Lien), or enter into any agreement, document, instrument or other arrangement
(except with or in favor of Collateral Agent, for the ratable benefit of the Lenders) with any Person which directly or indirectly
prohibits or has the effect of prohibiting Borrower, or any of its Subsidiaries, from assigning, mortgaging, pledging, granting
a security interest in or upon, or encumbering any of Borrower’s or such Subsidiary’s Intellectual Property, except
as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein.


 


7.6           Maintenance
of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6 hereof.


 


7.7           Distributions;
Investments. (a) Pay any dividends (other than dividends payable solely in capital stock or dividends payable to Parent
from APT) or make any distribution or payment in respect of or redeem, retire or purchase any capital stock (other than repurchases
pursuant to the terms of employee stock purchase plans, employee restricted stock agreements, stockholder rights plans, director
or consultant stock option plans, or restricted stock unit plans or similar plans, provided such repurchases do not exceed, in
the aggregate, One Million Dollars ($1 million) for the fiscal year 2014 and Three Hundred Fifty Thousand Dollars ($350,000) for
any other fiscal year during the term of this Agreement), or (b) directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so.


 


7.8           Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower
or any of its Subsidiaries, except for (a) transactions that are in the ordinary course of Borrower’s or such Subsidiary’s
business, upon fair and reasonable terms that are no less favorable to Borrower or such Subsidiary than would be obtained in an
arm’s length transaction with a non-affiliated Person, (b) Subordinated Debt or equity investments by Borrower’s
investors in Borrower or its Subsidiaries and (c) the Voting Agreement.  


 




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7.9           Subordinated
Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating
to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations owed
to the Lenders.


 


7.10         Compliance.
Become an “investment company” or a company controlled by an “investment company”, under the Investment
Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock
(as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension
for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction,
as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation,
if the violation could reasonably be expected to have a Material Adverse Change, or permit any of its Subsidiaries to do so; withdraw
or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence
of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be
expected to result in any liability of Borrower or any of its Subsidiaries, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other Governmental Authority.


 


7.11         Compliance
with Anti-Terrorism Laws. Collateral Agent hereby notifies Borrower and each of its Subsidiaries that pursuant to the requirements
of Anti-Terrorism Laws, and Collateral Agent’s policies and practices, Collateral Agent is required to obtain, verify and
record certain information and documentation that identifies Borrower and each of its Subsidiaries and their principals, which
information includes the name and address of Borrower and each of its Subsidiaries and their principals and such other information
that will allow Collateral Agent to identify such party in accordance with Anti-Terrorism Laws. Neither Borrower nor any of its
Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any Affiliate to, directly or indirectly, knowingly enter
into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists. Borrower and each of its Subsidiaries
shall immediately notify Collateral Agent if Borrower or such Subsidiary has knowledge that Borrower, or any Subsidiary or Affiliate
of Borrower, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted
on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering. Neither
Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any Affiliate to, directly or
indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation,
the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal
in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order
No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
Executive Order No. 13224 or other Anti-Terrorism Law.


 


8.          EVENTS
OF DEFAULT


 


Any one of the following
shall constitute an event of default (an “Event of Default”) under this Agreement:


 


8.1           Payment
Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day grace
period shall not apply to payments due on the Maturity Date or the date of acceleration pursuant to Section 9.1 (a) hereof).
During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made
during the cure period);


 


8.2           Covenant
Default.


 


(a)          Borrower
or any of its Subsidiaries fails or neglects to perform any obligation in Sections 6.2 (Financial Statements, Reports, Certificates),
6.4 (Taxes), 6.5 (Insurance), 6.6 (Operating Accounts), 6.7 (Protection of Intellectual Property Rights), 6.9 (Notice of Litigation
and Default), 6.11 (Landlord Waivers; Bailee Waivers), 6.12 (Creation/Acquisition of Subsidiaries) or 6.13 (Further Assurances)
or Borrower violates any covenant in Section 7; or


 




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(b)          Borrower,
or any of its Subsidiaries, fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement
contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under
such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10)
days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day
period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be
cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days)
to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an
Event of Default (but no Credit Extensions shall be made during such cure period). Grace periods provided under this Section shall
not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above;


 


8.3           Material
Adverse Change. A Material Adverse Change occurs;


 


8.4           Attachment;
Levy; Restraint on Business.


 


(a)          (i) The
service of process seeking to attach, by trustee or similar process, any funds of Borrower or any of its Subsidiaries or of any
entity under control of Borrower or its Subsidiaries on deposit with any Lender or any Lender’s Affiliate or any bank or
other institution at which Borrower or any of its Subsidiaries maintains a Collateral Account, or (ii) a notice of lien, levy,
or assessment is filed against Borrower or any of its Subsidiaries or their respective assets by any government agency, and the
same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed
(whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10)
day cure period; and


 


(b)          (i) any
material portion of Borrower’s or any of its Subsidiaries’ assets is attached, seized, levied on, or comes into possession
of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower or any of its Subsidiaries from
conducting any part of its business;


 


8.5           Insolvency.
(a) Borrower or any of its Subsidiaries is or becomes Insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency
Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and not dismissed or stayed
within forty-five (45) days (but no Credit Extensions shall be made while Borrower or any Subsidiary is Insolvent and/or until
any Insolvency Proceeding is dismissed);


 


8.6           Other
Agreements. There is a default in any agreement to which Borrower or any of its Subsidiaries is a party with a third party
or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness
in an amount in excess of One Hundred Thousand Dollars ($100,000.00) or that could reasonably be expected to have a Material Adverse
Change;


 


8.7           Judgments.
One or more judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least
Two Hundred Fifty Thousand Dollars ($250,000.00) (not covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower or any of its Subsidiaries and shall remain unsatisfied,
unvacated, or unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions will be made prior
to the satisfaction, vacation, or stay of such judgment, order or decree), including but not limited to any judgment, order, decree,
or arbitration award relating to any litigation, arbitration, or other dispute disclosed by Borrower to Collateral Agent prior
to the Effective Date and set forth on the Perfection Certificate delivered as of the Effective Date;


 


8.8           Misrepresentations.
Borrower or any of its Subsidiaries or any Person acting for Borrower or any of its Subsidiaries makes any representation, warranty,
or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Collateral Agent and/or Lenders
or to induce Collateral Agent and/or the Lenders to enter this Agreement or any Loan Document, and such representation, warranty,
or other statement is incorrect in any material respect when made;


 




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8.9           Subordinated
Debt. A default or breach occurs under any agreement between Borrower or any of its Subsidiaries and any creditor of Borrower
or any of its Subsidiaries that signed a subordination, intercreditor, or other similar agreement with Collateral Agent or the
Lenders, or any creditor that has signed such an agreement with Collateral Agent or the Lenders breaches any terms of such agreement;


 


8.10         Mortgage.
An event of default occurs under the Mortgage;


 


8.11         Governmental
Approvals. Any Governmental Approval shall have been revoked, rescinded, suspended, modified in an adverse manner, or not renewed
in the ordinary course for a full term and such revocation, rescission, suspension, modification or non-renewal has resulted
in or could reasonably be expected to result in a Material Adverse Change;


 


8.12         Lien
Priority. Any Lien created hereunder or by any other Loan Document shall at any time fail to constitute a valid and perfected
Lien on any of the Collateral purported to be secured thereby, subject to no prior or equal Lien, other than Permitted Liens which
are permitted to have priority in accordance with the terms of this Agreement; or


 


9.          RIGHTS
AND REMEDIES


 


9.1           Rights
and Remedies.


 


(a)          Upon
the occurrence and during the continuance of an Event of Default, Collateral Agent may, and at the written direction of Required
Lenders shall, without notice or demand, do any or all of the following: (i) deliver notice of the Event of Default
to Borrower, (ii) by notice to Borrower declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations shall be immediately due and payable without any action by Collateral Agent or the Lenders)
or (iii) by notice to Borrower suspend or terminate the obligations, if any, of the Lenders to advance money or extend credit
for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Collateral Agent and/or the
Lenders (but if an Event of Default described in Section 8.5 occurs all obligations, if any, of the Lenders to advance money
or extend credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Collateral
Agent and/or the Lenders shall be immediately terminated without any action by Collateral Agent or the Lenders).


 


(b)          Without
limiting the rights of Collateral Agent and the Lenders set forth in Section 9.1(a) above, upon the occurrence and during
the continuance of an Event of Default, Collateral Agent shall have the right at the written direction of the Required Lenders,
without notice or demand, to do any or all of the following:


 


(i)          foreclose
upon and/or sell or otherwise liquidate, the Collateral;


 


(ii)         apply
to the Obligations any (a) balances and deposits of Borrower that Collateral Agent or any Lender holds or controls, or (b) any
amount held or controlled by Collateral Agent or any Lender owing to or for the credit or the account of Borrower; and/or


 


(iii)        commence
and prosecute an Insolvency Proceeding or consent to Borrower commencing any Insolvency Proceeding.


 


(c)          Without
limiting the rights of Collateral Agent and the Lenders set forth in Sections 9.1(a) and (b) above, upon the occurrence
and during the continuance of an Event of Default, Collateral Agent shall have the right, without notice or demand, to do any or
all of the following:


 




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(i)          settle
or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Collateral Agent considers
advisable, notify any Person owing Borrower money of Collateral Agent’s security interest in such funds, and verify the amount
of such account;


 


(ii)         make
any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Collateral Agent requests and make it available in a location as Collateral
Agent reasonably designates. Collateral Agent may enter premises where the Collateral is located, take and maintain possession
of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its
security interest and pay all expenses incurred. Borrower grants Collateral Agent a license to enter and occupy any of its premises,
without charge, to exercise any of Collateral Agent’s rights or remedies;


 


(iii)        ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, and/or advertise for sale, the Collateral. Collateral Agent
is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s and each of its
Subsidiaries’ labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising
for sale, and selling any Collateral and, in connection with Collateral Agent’s exercise of its rights under this Section 9.1,
Borrower’s and each of its Subsidiaries’ rights under all licenses and all franchise agreements inure to Collateral
Agent, for the benefit of the Lenders;


 


(iv)        place
a “hold” on any account maintained with Collateral Agent or the Lenders and/or deliver a notice of exclusive control,
any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control
of any Collateral;


 


(v)         demand
and receive possession of Borrower’s Books;


 


(vi)        appoint
a receiver to seize, manage and realize any of the Collateral, and such receiver shall have any right and authority as any competent
court will grant or authorize in accordance with any applicable law, including any power or authority to manage the business of
Borrower or any of its Subsidiaries; and


 


(vii)       subject
to clauses 9.1(a) and (b), exercise all rights and remedies available to Collateral Agent and each Lender under the Loan Documents
or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms
thereof).


 


Notwithstanding any provision of this Section 9.1
to the contrary, upon the occurrence of any Event of Default, Collateral Agent shall have the right to exercise any and all remedies
referenced in this Section 9.1 without the written consent of Required Lenders following the occurrence of an Exigent Circumstance.
As used in the immediately preceding sentence, “Exigent Circumstance” means any event or circumstance that,
in the reasonable judgment of Collateral Agent, imminently threatens the ability of Collateral Agent to realize upon all or any
material portion of the Collateral, such as, without limitation, fraudulent removal, concealment, or abscondment thereof, destruction
or material waste thereof, or failure of Borrower or any of its Subsidiaries after reasonable demand to maintain or reinstate adequate
casualty insurance coverage, or which, in the judgment of Collateral Agent, could reasonably be expected to result in a material
diminution in value of the Collateral.


 


9.2           Power
of Attorney. Borrower hereby irrevocably appoints Collateral Agent as its lawful attorney-in-fact, exercisable upon the occurrence
and during the continuance of an Event of Default, to: (a) endorse Borrower’s or any of its Subsidiaries’ name
on any checks or other forms of payment or security; (b) sign Borrower’s or any of its Subsidiaries’ name on any
invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about
the Accounts directly with Account Debtors, for amounts and on terms Collateral Agent determines reasonable; (d) make, settle,
and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance,
security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate
or discharge the same; and (f) transfer the Collateral into the name of Collateral Agent or a third party as the Code or any
applicable law permits. Borrower hereby appoints Collateral Agent as its lawful attorney-in-fact to sign Borrower’s or any
of its Subsidiaries’ name on any documents necessary to perfect or continue the perfection of Collateral Agent’s security
interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations (other than inchoate indemnity
obligations) have been satisfied in full and Collateral Agent and the Lenders are under no further obligation to make Credit Extensions
hereunder. Collateral Agent’s foregoing appointment as Borrower’s or any of its Subsidiaries’ attorney in fact,
and all of Collateral Agent’s rights and powers, coupled with an interest, are irrevocable until all Obligations (other than
inchoate indemnity obligations) have been fully repaid and performed and Collateral Agent’s and the Lenders’ obligation
to provide Credit Extensions terminates.


 




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9.3           Protective
Payments. If Borrower or any of its Subsidiaries fail to obtain the insurance called for by Section 6.5 or fails to pay
any premium thereon or fails to pay any other amount which Borrower or any of its Subsidiaries is obligated to pay under this Agreement
or any other Loan Document, Collateral Agent may obtain such insurance or make such payment, and all amounts so paid by Collateral
Agent are Lenders’ Expenses and immediately due and payable, bearing interest at the Default Rate, and secured by the Collateral.
Collateral Agent will make reasonable efforts to provide Borrower with notice of Collateral Agent obtaining such insurance or making
such payment at the time it is obtained or paid or within a reasonable time thereafter. No such payments by Collateral Agent are
deemed an agreement to make similar payments in the future or Collateral Agent’s waiver of any Event of Default.


 


9.4           Application
of Payments and Proceeds. Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence and during
the continuance of an Event of Default, (a) Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times thereafter received by Collateral Agent from or on behalf of Borrower or any of its Subsidiaries
of all or any part of the Obligations, and, as between Borrower on the one hand and Collateral Agent and Lenders on the other,
Collateral Agent shall have the continuing and exclusive right to apply and to reapply any and all payments received against the
Obligations in such manner as Collateral Agent may deem advisable notwithstanding any previous application by Collateral Agent,
and (b) the proceeds of any sale of, or other realization upon all or any part of the Collateral shall be applied: first,
to the Lenders’ Expenses; second, to accrued and unpaid interest on the Obligations (including any interest which, but for
the provisions of the United States Bankruptcy Code, would have accrued on such amounts); third, to the principal amount of the
Obligations outstanding; and fourth, to any other indebtedness or obligations of Borrower owing to Collateral Agent or any Lender
under the Loan Documents. Any balance remaining shall be delivered to Borrower or to whoever may be lawfully entitled to receive
such balance or as a court of competent jurisdiction may direct. In carrying out the foregoing, (x) amounts received shall be applied
in the numerical order provided until exhausted prior to the application to the next succeeding category, and (y) each of the Persons
entitled to receive a payment in any particular category shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant thereto for such category. Any reference in this Agreement to an allocation between or sharing by the Lenders
of any right, interest or obligation “ratably,” “proportionally” or in similar terms shall refer to Pro
Rata Share unless expressly provided otherwise. Collateral Agent, or if applicable, each Lender, shall promptly remit to the other
Lenders such sums as may be necessary to ensure the ratable repayment of each Lender’s portion of any Term Loan and the ratable
distribution of interest, fees and reimbursements paid or made by Borrower. Notwithstanding the foregoing, a Lender receiving a
scheduled payment shall not be responsible for determining whether the other Lenders also received their scheduled payment on such
date; provided, however, if it is later determined that a Lender received more than its ratable share of scheduled payments made
on any date or dates, then such Lender shall remit to Collateral Agent or other Lenders such sums as may be necessary to ensure
the ratable payment of such scheduled payments, as instructed by Collateral Agent. If any payment or distribution of any kind or
character, whether in cash, properties or securities, shall be received by a Lender in excess of its ratable share, then the portion
of such payment or distribution in excess of such Lender’s ratable share shall be received by such Lender in trust for and
shall be promptly paid over to the other Lender for application to the payments of amounts due on the other Lenders’ claims.
To the extent any payment for the account of Borrower is required to be returned as a voidable transfer or otherwise, the Lenders
shall contribute to one another as is necessary to ensure that such return of payment is on a pro rata basis. If any Lender shall
obtain possession of any Collateral, it shall hold such Collateral for itself and as agent and bailee for Collateral Agent and
other Lenders for purposes of perfecting Collateral Agent’s security interest therein.


 




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9.5           Liability
for Collateral. So long as Collateral Agent and the Lenders comply with reasonable and customary banking practices regarding
the safekeeping of the Collateral in the possession or under the control of Collateral Agent and the Lenders, Collateral Agent
and the Lenders shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman,
bailee, or other Person. Except to the extent of any loss, damage or destruction of the Collateral caused by Collateral Agent’s
or the Lenders’ failure to comply with reasonable and customary banking practices regarding the safekeeping of the Collateral
in the possession or control of the Collateral Agent or the Lenders, as applicable, Borrower bears all risk of loss, damage or
destruction of the Collateral.


 


9.6           No
Waiver; Remedies Cumulative. Failure by Collateral Agent or any Lender, at any time or times, to require strict performance
by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Collateral
Agent or any Lender thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be
effective unless signed by Collateral Agent and the Required Lenders and then is only effective for the specific instance and purpose
for which it is given. The rights and remedies of Collateral Agent and the Lenders under this Agreement and the other Loan Documents
are cumulative. Collateral Agent and the Lenders have all rights and remedies provided under the Code, any applicable law, by law,
or in equity. The exercise by Collateral Agent or any Lender of one right or remedy is not an election, and Collateral Agent’s
or any Lender’s waiver of any Event of Default is not a continuing waiver. Collateral Agent’s or any Lender’s
delay in exercising any remedy is not a waiver, election, or acquiescence.


 


9.7           Demand
Waiver. Borrower waives, to the fullest extent permitted by law, demand, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Collateral Agent or any Lender on which Borrower or any Subsidiary
is liable.


 


10.         NOTICES


 


All notices, consents,
requests, approvals, demands, or other communication (collectively, “Communication”) by any party to this Agreement
or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon
the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified
mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by facsimile transmission; (c) one
(1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered
by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address
indicated below. Any of Collateral Agent, Lender or Borrower may change its mailing address or facsimile number by giving the other
party written notice thereof in accordance with the terms of this Section 10.


 


	If to Borrower:	 	ACURA PHARMACEUTICALS, INC.
	 	 	616 N. North Court, Suite 120
	 	 	Palatine, Illinois
	 	 	Attn: Peter A. Clemens
	 	 	Fax:  (847) 705-5399
	 	 	Email: pclemens@acurapharm.com
	 	 	 
	 	 	ACURA PHARMACEUTICAL
	 	 	TECHNOLOGIES, INC.
	 	 	c/o Acura Pharmaceuticals, Inc.
	 	 	616 N. North Court, Suite 120
	 	 	Palatine, Illinois
	 	 	Attn: Peter A. Clemens
	 	 	Fax:  (847) 705-5399
	 	 	Email: pclemens@acurapharm.com


 




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	with a copy (which shall not constitute notice) to:	 	LeClairRyan
	 	 	One Riverfront Plaza
	 	 	1037 Raymond Boulevard
	 	 	Sixteenth Floor
	 	 	Newark, New Jersey 07102
	 	 	Attn: John P. Reilly
	 	 	Fax:  (973) 491-3511
	 	 	Email: John.Reilly@leclairryan.com
	 	 	 
	If to Collateral Agent:	 	OXFORD FINANCE LLC
	 	 	133 North Fairfax Street
	 	 	Alexandria, Virginia 22314
	 	 	Attention: Legal Department
	 	 	Fax: (703) 519-5225
	 	 	Email: LegalDepartment@oxfordfinance.com
	 	 	 
	with a copy (which shall not constitute notice) to:	 	Greenberg Traurig, LLP
	 	 	One International Place
	 	 	Boston, MA 02110
	 	 	Attn: Jonathan Bell, Esq.
	 	 	Fax: (617) 310-6001
	 	 	Email: bellj@gtlaw.com


 


		11.	CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER



 


New York law governs the Loan Documents
without regard to principles of conflicts of law. Borrower, Lenders and Collateral Agent each submit to the exclusive jurisdiction
of the State and Federal courts in the City of New York, Borough of Manhattan. NOTWITHSTANDING THE FOREGOING, COLLATERAL AGENT
AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION WHICH COLLATERAL AGENT AND THE LENDERS (IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.1) DEEM NECESSARY OR APPROPRIATE
TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE COLLATERAL AGENT’S AND THE LENDERS’ RIGHTS AGAINST BORROWER OR
ITS PROPERTY. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such
court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum
non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower
hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service
of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address
set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made
shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit
in the U.S. mails, first class, registered or certified mail return receipt requested, proper postage prepaid.


 


TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER, COLLATERAL AGENT, AND THE LENDERS EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH
OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL.


 




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		12.	GENERAL PROVISIONS



 


12.1         Successors
and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may
not transfer, pledge or assign this Agreement or any rights or obligations under it without Collateral Agent’s and each Lender’s
prior written consent (which may be granted or withheld in Collateral Agent’s and each Lender’s discretion, subject
to Section 12.6). The Lenders have the right, without the consent of or notice to Borrower, to sell, transfer, assign, pledge,
negotiate, or grant participation in (any such sale, transfer,
assignment, negotiation, or grant of a participation, a “Lender Transfer”) all or any part of, or any
interest in, the Lenders’ obligations, rights, and benefits under this Agreement and the other Loan Documents; provided,
however, that any such Lender Transfer (other than a transfer, pledge, sale or assignment to an Eligible Assignee) of its
obligations, rights, and benefits under this Agreement and the other Loan Documents shall require the prior written consent of
the Required Lenders (such approved assignee, an “Approved Lender”). Borrower and Collateral Agent shall
be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned until Collateral
Agent shall have received and accepted an effective assignment agreement in form satisfactory to Collateral Agent executed, delivered
and fully completed by the applicable parties thereto, and shall have received such other information regarding such Eligible Assignee
or Approved Lender as Collateral Agent reasonably shall require. Notwithstanding anything to the contrary contained herein, so
long as no Event of Default has occurred and is continuing, no Lender Transfer (other than a Lender Transfer (i) in respect
of the Warrants or (ii) in connection with (x) assignments by a Lender due to a forced divestiture at the request of any regulatory
agency; or (y) upon the occurrence of a default, event of default or similar occurrence with respect to a Lender’s own financing
or securitization transactions) shall be permitted, without Borrower’s consent, to any Person which is an Affiliate or Subsidiary
of Borrower, a direct competitor of Borrower or a vulture hedge fund, each as determined by Collateral Agent.


 


12.2         Indemnification.
Borrower agrees to indemnify, defend and hold Collateral Agent and the Lenders and their respective directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing Collateral Agent or the Lenders (each, an “Indemnified
Person”) harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”)
asserted by any other party in connection with; related to; following; or arising from, out of or under, the transactions contemplated
by the Loan Documents; and (b) all losses or Lenders’ Expenses incurred, or paid by Indemnified Person in connection
with; related to; following; or arising from, out of or under, the transactions contemplated by the Loan Documents between Collateral
Agent, and/or the Lenders and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by such Indemnified Person’s gross negligence or willful misconduct. Borrower hereby further indemnifies,
defends and holds each Indemnified Person harmless from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the fees and disbursements
of counsel for such Indemnified Person) in connection with any investigative, response, remedial, administrative or judicial matter
or proceeding, whether or not such Indemnified Person shall be designated a party thereto and including any such proceeding initiated
by or on behalf of Borrower, and the reasonable expenses of investigation by engineers, environmental consultants and similar technical
personnel and any commission, fee or compensation claimed by any broker (other than any broker retained by Collateral Agent or
Lenders) asserting any right to payment for the transactions contemplated hereby which may be imposed on, incurred by or asserted
against such Indemnified Person as a result of or in connection with the transactions contemplated hereby and the use or intended
use of the proceeds of the loan proceeds except for liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements directly caused by such Indemnified Person’s gross negligence or willful misconduct.


 


12.3         Time
of Essence. Time is of the essence for the performance of all Obligations in this Agreement.


 


12.4         Severability
of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of
any provision.


 


12.5         Correction
of Loan Documents. Collateral Agent and the Lenders may correct patent errors and fill in any blanks in this Agreement and
the other Loan Documents consistent with the agreement of the parties.


 




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12.6         Amendments
in Writing; Integration. (a) No amendment, modification, termination or waiver of any provision of this Agreement or any
other Loan Document, no approval or consent thereunder, or any consent to any departure by Borrower or any of its Subsidiaries
therefrom, shall in any event be effective unless the same shall be in writing and signed by Borrower, Collateral Agent and the
Required Lenders provided that:


 


(i)          no
such amendment, waiver or other modification that would have the effect of increasing or reducing a Lender’s Term Loan Commitment
or Commitment Percentage shall be effective as to such Lender without such Lender’s written consent;


 


(ii)         no
such amendment, waiver or modification that would affect the rights and duties of Collateral Agent shall be effective without Collateral
Agent’s written consent or signature;


 


(iii)        no
such amendment, waiver or other modification shall, unless signed by all the Lenders directly affected thereby, (A) reduce the
principal of, rate of interest on or any fees with respect to any Term Loan or forgive any principal, interest (other than default
interest) or fees (other than late charges) with respect to any Term Loan (B) postpone the date fixed for, or waive, any payment
of principal of any Term Loan or of interest on any Term Loan (other than default interest) or any fees provided for hereunder
(other than late charges or for any termination of any commitment); (C) change the definition of the term “Required Lenders”
or the percentage of Lenders which shall be required for the Lenders to take any action hereunder; (D) release all or substantially
all of any material portion of the Collateral, authorize Borrower to sell or otherwise dispose of all or substantially all or any
material portion of the Collateral or release any Guarantor of all or any portion of the Obligations or its guaranty obligations
with respect thereto, except, in each case with respect to this clause (D), as otherwise may be expressly permitted under this
Agreement or the other Loan Documents (including in connection with any disposition permitted hereunder); (E) amend, waive or otherwise
modify this Section 12.6 or the definitions of the terms used in this Section 12.6 insofar as the definitions affect
the substance of this Section 12.6; (F) consent to the assignment, delegation or other transfer by Borrower of any of its
rights and obligations under any Loan Document or release Borrower of its payment obligations under any Loan Document, except,
in each case with respect to this clause (F), pursuant to a merger or consolidation permitted pursuant to this Agreement; (G) amend
any of the provisions of Section 9.4 or amend any of the definitions of Pro Rata Share, Term Loan Commitment, Commitment Percentage
or that provide for the Lenders to receive their Pro Rata Shares of any fees, payments, setoffs or proceeds of Collateral hereunder;
(H) subordinate the Liens granted in favor of Collateral Agent securing the Obligations; or (I) amend any of the provisions
of Section 12.10. It is hereby understood and agreed that all Lenders shall be deemed directly affected by an amendment, waiver
or other modification of the type described in the preceding clauses (C), (D), (E), (F), (G) and (H) of the preceding sentence;


 


(iv)        the
provisions of the foregoing clauses (i), (ii) and (iii) are subject to the provisions of any interlender or agency agreement
among the Lenders and Collateral Agent pursuant to which any Lender may agree to give its consent in connection with any amendment,
waiver or modification of the Loan Documents only in the event of the unanimous agreement of all Lenders.


 


(b)          Other
than as expressly provided for in Section 12.6(a)(i)-(iii), Collateral Agent may, if requested by the Required Lenders,
from time to time designate covenants in this Agreement less restrictive by notification to a representative of Borrower.


 


(c)          This
Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.
All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter
of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.


 


12.7         Counterparts.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, is an original, and all taken together, constitute one Agreement.


 


12.8         Survival.
All covenants, representations and warranties made in this Agreement continue in full force and effect until this Agreement has
terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.2
to indemnify each Lender and Collateral Agent, as well as the confidentiality provisions in Section 12.9 below, shall survive
until the statute of limitations with respect to such claim or cause of action shall have run.


 




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12.9         Confidentiality.
In handling any confidential information of Borrower, the Lenders and Collateral Agent shall exercise the same degree of care that
it exercises for their own proprietary information, but disclosure of information may be made: (a) subject to the terms and
conditions of this Agreement, to the Lenders’ and Collateral Agent’s Subsidiaries or Affiliates, or in connection with
a Lender’s own financing or securitization transactions and upon the occurrence of a default, event of default or similar
occurrence with respect to such financing or securitization transaction; (b) to prospective transferees (other than those
identified in (a) above) or purchasers of any interest in the Credit Extensions (provided, however, the Lenders and Collateral
Agent shall, except upon the occurrence and during the continuance of an Event of Default, obtain such prospective transferee’s
or purchaser’s agreement to the terms of this provision or to similar confidentiality terms at least as protective as this
Section 12.9); (c) as required by law, regulation, subpoena, or other order, upon reasonable prior written notice to Borrower
if providing such notice is practicable and legally feasible; (d) to Lenders’ or Collateral Agent’s regulators
or as otherwise required in connection with an examination or audit; (e) as Collateral Agent reasonably considers appropriate
in exercising remedies under the Loan Documents; and (f) to third party service providers of the Lenders and/or Collateral
Agent so long as such service providers have executed a confidentiality agreement with the Lenders and Collateral Agent with terms
at least as protective as those contained herein. Confidential information does not include information that either: (i) is
in the public domain or in the Lenders’ and/or Collateral Agent’s possession when disclosed to the Lenders and/or Collateral
Agent, or becomes part of the public domain after disclosure to the Lenders and/or Collateral Agent; or (ii) is disclosed
to the Lenders and/or Collateral Agent by a third party, if the Lenders and/or Collateral Agent does not know that the third party
is prohibited from disclosing the information. Collateral Agent and the Lenders may use confidential information for any purpose
related to this Agreement and (to the extent any of the following purposes shall not be deemed to be related to this Agreement)
may also: (i) use confidential information for any of their internal record keeping, due diligence, risk analysis, market analysis,
maintenance and development of client databases, statistical and reporting purposes; (ii) use Borrower's name and the
principal terms of the Loans for customary client reference purposes; and (iii) use masked confidential information
for regulatory reporting purposes to the extent required by or advisable under applicable law. The provisions of the immediately
preceding sentence shall survive the termination of this Agreement. The agreements provided under this Section 12.9 supersede
all prior agreements, understanding, representations, warranties, and negotiations between the parties about the subject matter
of this Section 12.9.


 


12.10         Right
of Set Off. Borrower hereby grants to Collateral Agent and to each Lender, a lien, security interest and right of set off as
security for all Obligations to Collateral Agent and each Lender hereunder, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of
Collateral Agent or the Lenders or any entity under the control of Collateral Agent or the Lenders (including a Collateral Agent
affiliate) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without
demand or notice, Collateral Agent or the Lenders may set off the same or any part thereof and apply the same to any liability
or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES
THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.


 


12.11         Cooperation
of Borrower. If necessary, Borrower agrees to (i) execute any documents (including new Secured Promissory Notes) reasonably
required to effectuate and acknowledge each assignment of a Term Loan Commitment or Loan to an assignee in accordance with Section 12.1,
(ii) make Borrower’s management available to meet with Collateral Agent and prospective participants and assignees of
Term Loan Commitments or Credit Extensions (which meetings shall be conducted no more often than twice every twelve months unless
an Event of Default has occurred and is continuing), and (iii) assist Collateral Agent or the Lenders in the preparation of
information relating to the financial affairs of Borrower as any prospective participant or assignee of a Term Loan Commitment
or Term Loan reasonably may request. Subject to the provisions of Section 12.9, Borrower authorizes each Lender to disclose
to any prospective participant or assignee of a Term Loan Commitment, any and all information in such Lender’s possession
concerning Borrower and its financial affairs which has been delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement, or which has been delivered to such Lender by or on behalf of Borrower in connection with such Lender’s credit
evaluation of Borrower prior to entering into this Agreement.


 




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		13.	DEFINITIONS



 


13.1         Definitions.
As used in this Agreement, the following terms have the following meanings:


 


“Account”
is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to Borrower.


 


“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.


 


“Affiliate”
of any Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by
or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and,
for any Person that is a limited liability company, that Person’s managers and members.


 


“Agreement”
is defined in the preamble hereof.


 


“Amortization
Date” is April 1, 2015, but shall automatically become April 1, 2016 if the First Revenue Event occurs. Furthermore,
if after the occurrence of the First Revenue Event, the Second Revenue Event occurs, Amortization Date shall automatically become
April 1, 2017.


 


“Annual Projections”
is defined in Section 6.2(a).


 


“Anti-Terrorism
Laws” are any laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September
24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.


 


“Approved
Fund” is any (i) investment company, fund, trust, securitization vehicle or conduit that is (or will be) engaged
in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course
of its business or (ii) any Person (other than a natural person) which temporarily warehouses loans for any Lender or any
entity described in the preceding clause (i) and that, with respect to each of the preceding clauses (i) and (ii), is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person (other than a natural person)
or an Affiliate of a Person (other than a natural person) that administers or manages a Lender.


 


“Approved
Lender” is defined in Section 12.1.


 


“Basic Rate”
is, with respect to a Term Loan, the per annum rate of interest (based on a year of three hundred sixty (360) days) equal to Eight
and Thirty-Five Hundredths percent (8.35%).


 


“Blocked Person”
is any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a
Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated
national” or “blocked person” on the most current list published by OFAC or other similar list.


 


“Borrower”
is defined in the preamble hereof.


 




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“Borrower’s
Books” are Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, and state
tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations
or financial condition, and all computer programs or storage or any equipment containing such information.


 


“Business
Day” is any day that is not a Saturday, Sunday or a day on which Collateral Agent is closed.


 


“Cash Equivalents”
are (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more
than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., and (c) certificates of deposit maturing no more than one (1) year after issue provided that the
account in which any such certificate of deposit is maintained is subject to a Control Agreement in favor of Collateral Agent.
For the avoidance of doubt, the direct purchase by Borrower or any of its Subsidiaries of any Auction Rate Securities, or purchasing
participations in, or entering into any type of swap or other derivative transaction, or otherwise holding or engaging in any ownership
interest in any type of Auction Rate Security by Borrower or any of its Subsidiaries shall be conclusively determined by the Lenders
as an ineligible Cash Equivalent, and any such transaction shall expressly violate each other provision of this Agreement governing
Permitted Investments. Notwithstanding the foregoing, Cash Equivalents does not include and Borrower, and each of its Subsidiaries,
are prohibited from purchasing, purchasing participations in, entering into any type of swap or other equivalent derivative transaction,
or otherwise holding or engaging in any ownership interest in any type of debt instrument, including, without limitation, any corporate
or municipal bonds with a long-term nominal maturity for which the interest rate is reset through a dutch auction and more commonly
referred to as an auction rate security (each, an “Auction Rate Security”).  


 


“Claims”
are defined in Section 12.2.


 


“Code”
is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York provided,
that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently
in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided
further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority
of, or remedies with respect to, Collateral Agent’s Lien on any Collateral is governed by the Uniform Commercial Code in
effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such provisions.


 


“Collateral”
is any and all properties, rights and assets of Borrower described on Exhibit A.


 


“Collateral
Account” is any Deposit Account, Securities Account, or Commodity Account, or any other bank account maintained by Borrower
or any Subsidiary at any time.


 


“Collateral
Agent” is, Oxford, not in its individual capacity, but solely in its capacity as agent on behalf of and for the benefit
of the Lenders.


 


“Commitment
Percentage” is set forth in Schedule 1.1, as amended from time to time.


 


“Commodity
Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter
be made.


 


“Communication”
is defined in Section 10.


 


“Compliance
Certificate” is that certain certificate in the form attached hereto as Exhibit C.


 




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“Contingent
Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any
indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed,
endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest
rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated
to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined
amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any
guarantee or other support arrangement.


 


“Control Agreement”
is any control agreement entered into among the depository institution at which Borrower or any of its Subsidiaries maintains a
Deposit Account or the securities intermediary or commodity intermediary at which Borrower or any of its Subsidiaries maintains
a Securities Account or a Commodity Account, Borrower and such Subsidiary, and Collateral Agent pursuant to which Collateral Agent
obtains control (within the meaning of the Code) for the benefit of the Lenders over such Deposit Account, Securities Account,
or Commodity Account.


 


“Copyrights”
are any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship
and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.


 


“Credit Extension”
is any Term Loan or any other extension of credit by Collateral Agent or Lenders for Borrower’s benefit.


 


“Default Rate”
is defined in Section 2.3(b).


 


“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.


 


“Designated
Deposit Account” is Borrower’s deposit account, account number 5800103177, maintained with Bank of America Merrill
Lynch.


 


“Disbursement
Letter” is that certain form attached hereto as Exhibit B.


 


“Dollars,”
“dollars” and “$” each mean lawful money of the United States.


 


“Effective
Date” is defined in the preamble of this Agreement.


 


“Eligible
Assignee” is (i) a Lender, (ii) an Affiliate of a Lender, (iii) an Approved Fund and (iv) any commercial
bank, savings and loan association or savings bank or any other entity which is an “accredited investor” (as defined
in Regulation D under the Securities Act of 1933, as amended) and which extends credit or buys loans as one of its businesses,
including insurance companies, mutual funds, lease financing companies and commercial finance companies, in each case, which either
(A) has a rating of BBB or higher from Standard & Poor’s Rating Group and a rating of Baa2 or higher from Moody’s
Investors Service, Inc. at the date that it becomes a Lender or (B) has total assets in excess of Five Billion Dollars ($5,000,000,000.00),
and in each case of clauses (i) through (iv), which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include, unless an Event of Default has occurred and is continuing, (i) Borrower or any of Borrower’s Affiliates
or Subsidiaries or (ii) a direct competitor of Borrower or a vulture hedge fund, each as determined by Collateral Agent. Notwithstanding
the foregoing, (x) in connection with assignments by a Lender due to a forced divestiture at the request of any regulatory agency,
the restrictions set forth herein shall not apply and Eligible Assignee shall mean any Person or party and (y) in connection with
a Lender’s own financing or securitization transactions, the restrictions set forth herein shall not apply and Eligible Assignee
shall mean any Person or party providing such financing or formed to undertake such securitization transaction and any transferee
of such Person or party upon the occurrence of a default, event of default or similar occurrence with respect to such financing
or securitization transaction; provided that no such sale, transfer, pledge or assignment under this clause (y) shall release such
Lender from any of its obligations hereunder or substitute any such Person or party for such Lender as a party hereto until Collateral
Agent shall have received and accepted an effective assignment agreement from such Person or party in form satisfactory to Collateral
Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information
regarding such Eligible Assignee as Collateral Agent reasonably shall require.


 




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“Equipment”
is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.


 


“ERISA”
is the Employee Retirement Income Security Act of 1974, as amended, and its regulations.


 


“Event of
Default” is defined in Section 8.


 


“Final Payment”
is a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) due on
the earliest to occur of (a) the Maturity Date, or (b) the acceleration of any Term Loan, or (c) the prepayment
of a Term Loan pursuant to Section 2.2(c) or (d), equal to the original principal amount of such Term Loan multiplied
by the Final Payment Percentage, payable to Lenders in accordance with their respective Pro Rata Shares.


 


“Final Payment
Percentage” is: (A) Seven and Ninety-Five Hundredths percent (7.95%) if the First Revenue Event does not occur, (B) Eight
and Ninety-Five Hundredths percent (8.95%) if the First Revenue Event occurs but the Second Revenue Event does not occur and (C)
Nine and Ninety-Five Hundredths percent (9.95%) if both the First Revenue Event and the Second Revenue Event occur.


 


“First
Revenue Event” is the achievement by Borrower, for the fiscal year 2014, of (i) seventy-five percent (75%) of its
projected net Nexafed cash receipts set forth in the Projected Receipts and (ii) seventy-five percent (75%) of its projected Oxecta
royalty receipts set forth in the Projected Receipts, and delivery of evidence of such achievement by Borrower to Collateral Agent,
on or before February 15, 2015, in such form and substance as is acceptable to Collateral Agent in its discretion.


 


“Foreign Subsidiary”
is a Subsidiary that is not an entity organized under the laws of the United States or any territory thereof.


 


“Funding Date”
is any date on which a Credit Extension is made to or on account of Borrower which shall be a Business Day.


 


“GAAP”
is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession
in the United States, which are applicable to the circumstances as of the date of determination.


 


“General Intangibles”
are all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, trademarks,
service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, any trade
secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income and other tax refunds,
security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter
pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind.


 




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“Governmental
Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.


 


“Governmental
Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory organization.


 


“Guarantor”
is any Person providing a Guaranty in favor of Collateral Agent.


 


“Guaranty”
is any guarantee of all or any part of the Obligations, as the same may from time to time be amended, restated, modified or otherwise
supplemented.


 


“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations
for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital
lease obligations, and (d) Contingent Obligations.


 


“Indemnified
Person” is defined in Section 12.2.


 


“Insolvency
Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy
or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.


 


“Insolvent”
means not Solvent.


 


“Intellectual
Property” means all of Borrower’s or any Subsidiary’s right, title and interest in and to the following:


 


(a)          its
Copyrights, Trademarks and Patents;


 


(b)         any
Investigational New Drug Application, New Drug Application, Abbreviated New Drug Application or similar application (or foreign
equivalent) filed with the U.S. Food and Drug Administration (or foreign equivalent) or licensed to Borrower or any of its Subsidiaries;


 


(c)          any
and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating
manuals, preclinical and clinical studies, abuse liability studies, bioequivalence studies, pseudoephedrine conversion and extraction
studies, and the results of such studies;


 


(d)         any
and all source code;


 


(e)          any
and all design rights which may be available to Borrower;


 


(f)          any
and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above;
and


 


(g)         all
amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.


 


“Inventory”
is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter
be made, and includes without limitation all merchandise, product samples, raw materials, parts, supplies, packing and shipping
materials, work in process and finished products, including without limitation such inventory as is temporarily out of any Person’s
custody or possession or in transit and including any returned goods and any documents of title representing any of the above.


 




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“Investment”
is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance,
payment or capital contribution to any Person.


 


“Key Person”
is each of Borrower’s (i) Chief Executive Officer, who is Robert B. Jones as of the Effective Date, (ii) Chief
Financial Officer, who is Peter A. Clemens as of the Effective Date and (iii) Vice President of Technical Affairs, who is
Albert W. Brzeczko as of the Effective Date.


 


“Lender”
is any one of the Lenders.


 


“Lenders”
are the Persons identified on Schedule 1.1 hereto and each assignee that becomes a party to this Agreement pursuant
to Section 12.1.


 


“Lenders’
Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses,
as well as appraisal fees, fees incurred on account of lien searches, inspection fees, and filing fees) for preparing, amending,
negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection
with appeals or Insolvency Proceedings) or otherwise incurred by Collateral Agent and/or the Lenders in connection with the Loan
Documents.


 


“Lien”
is a claim, mortgage, deed of trust, levy, charge, pledge, security interest, or other encumbrance of any kind, whether voluntarily
incurred or arising by operation of law or otherwise against any property.


 


“Loan Documents”
are, collectively, this Agreement, the Warrants, the Perfection Certificates, each Compliance Certificate, each Disbursement Letter,
Mortgage, the Post Closing Letter and any subordination agreements, any note, or notes or guaranties executed by Borrower or any
other Person, and any other present or future agreement entered into by Borrower, any Guarantor or any other Person for the benefit
of the Lenders and Collateral Agent in connection with this Agreement; all as amended, restated, or otherwise modified.


 


“Material
Adverse Change” is (a) a material impairment in the perfection or priority of Collateral Agent’s Lien in the
Collateral or in the value of such Collateral; (b) a material impairment in the perfection or priority of Collateral Agent’s
Lien in the Mortgaged Premises or in the value of the Mortgaged Premises; (c) a material adverse change in the business, operations
or condition (financial or otherwise) or prospects of Borrower or any Subsidiary; or (d) a material impairment of the prospect
of repayment of any portion of the Obligations.


 


“Maturity
Date” is December 1, 2018.


 


“Mortgage”
is a first lien Mortgage, Assignment, Security Agreement, and Fixture Filing in respect of the Mortgaged Premises in favor of Collateral
Agent to secure the Obligations.


 


“Mortgaged
Premises” is the real property owned by Borrower located at 16235 State Road 17, Culver, Indiana 46511.


 


“Obligations”
are all of Borrower’s obligations to pay when due any debts, principal, interest, Lenders’ Expenses, the Prepayment
Fee, the Final Payment, and other amounts Borrower owes the Lenders now or later, in connection with, related to, following, or
arising from, out of or under, this Agreement or, the other Loan Documents (other than the Warrants), or otherwise, and including
interest accruing after Insolvency Proceedings begin (whether or not allowed) and debts, liabilities, or obligations of Borrower
assigned to the Lenders and/or Collateral Agent, and the performance of Borrower’s duties under the Loan Documents (other
than the Warrants).


 


“OFAC”
is the U.S. Department of Treasury Office of Foreign Assets Control.


 


“OFAC Lists”
are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No.
13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant
to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.


 




    	30



    	 



    

 


“Operating
Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent
agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective
Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability
company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.


 


“Patents”
means all patents, patent applications and like protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.


 


“Payment Date”
is the first (1st) calendar day of each calendar month, commencing on February 1, 2014.


 


“Perfection
Certificate” and “Perfection Certificates” is defined in Section 5.1.


 


“Permitted
Indebtedness” is:


 


(a)          Borrower’s
Indebtedness to the Lenders and Collateral Agent under this Agreement and the other Loan Documents;


 


(b)         Indebtedness
existing on the Effective Date and disclosed on the Perfection Certificate(s);


 


(c)          Subordinated
Debt;


 


(d)         unsecured
Indebtedness to trade creditors incurred in the ordinary course of business;


 


(e)          Indebtedness
consisting of capitalized lease obligations and purchase money Indebtedness, in each case incurred by Borrower or any of its Subsidiaries
to finance the acquisition, repair, improvement or construction of fixed or capital assets of such person, provided that (i) the
aggregate outstanding principal amount of all such Indebtedness does not exceed Two Hundred Fifty Thousand Dollars ($250,000.00)
at any time and (ii) the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value
of the property so acquired or built or of such repairs or improvements financed with such Indebtedness (each measured at the time
of such acquisition, repair, improvement or construction is made);


 


(f)          Indebtedness
incurred as a result of endorsing negotiable instruments received in the ordinary course of Borrower’s business; and


 


(g)         Indebtedness
relating to loans from Parent to APT; and


 


(h)         extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (e) above,
provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome
terms upon Borrower, or its Subsidiary, as the case may be.


 


“Permitted
Investments” are:


 


(a)          Investments
disclosed on the Perfection Certificate(s) and existing on the Effective Date;


 


(b)          (i) Investments
consisting of cash and Cash Equivalents, (ii) any Investments permitted by Borrower’s investment policy as of Effective
Date, and (iii) any Investments permitted by Borrower’s investment policy and added by amendment following the Effective
Date, provided that such amendment to the investment policy has been approved in writing by Collateral Agent;


 


(c)          Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of Borrower;


 




    	31



    	 



    

 


(d)          Investments
consisting of Deposit Accounts in which Collateral Agent has a perfected security interest;


 


(e)          Investments
in connection with Transfers permitted by Section 7.1;


 


(f)           Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course
of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors; not
to exceed One Hundred Thousand Dollars ($100,000) in the aggregate for (i) and (ii) in any fiscal year;


 


(g)          Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;


 


(h)          Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (h) shall not apply to Investments of Borrower in any Subsidiary;


 


(i)           Investments
by Parent in APT; and


 


(j)           non-cash
Investments in joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the licensing
of technology, the development of technology or the providing of technical support, provided that if such license is exclusive,
it shall be subject to the prior written consent of Required Lenders and the Required Lenders shall be obligated to respond to
Borrower within ten (10) calendar days regarding their decision to grant or withhold such consent after receipt of a request for
such consent from Borrower in writing.


 


“Permitted
Licenses” are (A) licenses of over-the-counter software that is commercially available to the public, and (B) non-exclusive
and exclusive licenses for the use of the Intellectual Property of Borrower or any of its Subsidiaries entered into in the ordinary
course of business, provided, that, with respect to each such license described in clause (B), (i) no Event of Default
has occurred and is continuing at the time of such license; (ii) the license constitutes an arms-length transaction, the terms
of which, on their face, do not provide for a sale or assignment of any Intellectual Property and do not restrict the ability of
Borrower or any of its Subsidiaries, as applicable, to pledge, grant a security interest in or lien on, or assign or otherwise
Transfer any Intellectual Property; (iii) in the case of any exclusive license, (x) Borrower delivers ten (10) days’
prior written notice and a brief summary of the terms of the proposed license to Collateral Agent and the Lenders and delivers
to Collateral Agent and the Lenders copies of the final executed licensing documents in connection with the exclusive license promptly
upon consummation thereof and (y) any such license could not result in a legal transfer of title of the licensed property, but
may be exclusive as to geographic areas outside the United States, and may be exclusive in the United States (and its territories
and possessions) subject to the prior written consent of Required Lenders, and the Required Lenders shall be obligated to respond
to Borrower within ten (10) calendar days regarding their decision to grant or withhold such consent after receipt of a request
for such consent from Borrower in writing; and (iv) all upfront payments, royalties, milestone payments or other proceeds arising
from the licensing agreement that are payable to Borrower or any of its Subsidiaries are paid to a Deposit Account that is governed
by a Control Agreement.


 


“Permitted
Liens” are:


 


(a)          Liens
existing on the Effective Date and disclosed on the Perfection Certificates or arising under this Agreement and the other Loan
Documents;


 


(b)          Liens
for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested
in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been
filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;


 




    	32



    	 



    

 


(c)          liens
securing Indebtedness permitted under clause (e) of the definition of “Permitted Indebtedness,” provided
that (i) such liens exist prior to the acquisition of, or attach substantially simultaneous with, or within twenty (20) days
after the, acquisition, lease, repair, improvement or construction of, such property financed or leased by such Indebtedness and
(ii) such liens do not extend to any property of Borrower other than the property (and proceeds thereof) acquired, leased
or built, or the improvements or repairs, financed by such Indebtedness;


 


(d)          Liens
of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business
so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Twenty Five Thousand
Dollars ($25,000.00), and which are not delinquent or remain payable without penalty or which are being contested in good faith
and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;


 


(e)          Liens
to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations
incurred in the ordinary course of business (other than Liens imposed by ERISA);


 


(f)           Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but
any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness may not increase;


 


(g)          leases
or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal
property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit
granting Collateral Agent or any Lender a security interest therein;


 


(h)          banker’s
liens, rights of setoff and Liens in favor of financial institutions incurred in the ordinary course of business arising in connection
with Borrower’s deposit accounts or securities accounts held at such institutions solely to secure payment of fees and similar
costs and expenses and provided such accounts are maintained in compliance with Section 6.6(b) hereof;


 


(i)           Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or
8.7;


 


(j)           easements,
reservations, rights-of-way, restrictions, minor defects or irregularities in title and similar charges or encumbrances affecting
real property not constituting a material adverse effect on the business or condition (financial or otherwise) of Borrower;


 


(k)          easements,
zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of
business that do not secure any monetary obligations and do not materially detract from the value of the Mortgaged Premises or
interfere with the ordinary conduct of business of Borrower; and


 


(l)           Liens
consisting of Permitted Licenses.


 


“Person”
is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.


 


“Post Closing
Letter” is that certain Post Closing Letter dated as of the Effective Date by and among Collateral Agent, the Lenders
and Borrower.


 




    	33



    	 



    

 


“Prepayment
Fee” is, with respect to any Term Loan subject to prepayment prior to the Maturity Date, whether by mandatory or voluntary
prepayment, acceleration or otherwise, an additional fee payable to the Lenders in amount equal to:


 


(i)          for
a prepayment made on or after the Funding Date of such Term Loan through and including the first anniversary of the Funding Date
of such Term Loan, three percent (3.00%) of the principal amount of such Term Loan prepaid;


 


(ii)         for
a prepayment made after the date which is after the first anniversary of the Funding Date of such Term Loan through and including
the second anniversary of the Funding Date of such Term Loan, two percent (2.00%) of the principal amount of the Term Loans prepaid;
and


 


(iii)        for
a prepayment made after the date which is after the second anniversary of the Funding Date of such Term Loan and before the Maturity
Date of such Term Loan, one percent (1.00%) of the principal amount of the Term Loans prepaid.


 


“Pro Rata
Share” is, as of any date of determination, with respect to each Lender, a percentage (expressed as a decimal, rounded
to the ninth decimal place) determined by dividing the outstanding principal amount of Term Loans held by such Lender by the aggregate
outstanding principal amount of all Term Loans.


 


“Projected
Receipts” means the projected net cash receipts and royalty receipts for Nexafed and Oxecta, as provided by Borrower
to Collateral Agent and Lenders (and acknowledged thereby) on the Effective Date.


 


“Registered
Organization” is any “registered organization” as defined in the Code with such additions to such term as
may hereafter be made.


 


“Required
Lenders” means (i) for so long as all of the Persons that are Lenders on the Effective Date (each an “Original
Lender”) have not assigned or transferred any of their interests in their Term Loan, Lenders holding one hundred percent
(100%) of the aggregate outstanding principal balance of the Term Loan, or (ii) at any time from and after any Original Lender
has assigned or transferred any interest in its Term Loan, Lenders holding at least sixty six percent (66%) of the aggregate outstanding
principal balance of the Term Loan and, in respect of this clause (ii), (A) each Original Lender that has not assigned or transferred
any portion of its Term Loan, (B) each assignee or transferee of an Original Lender’s interest in the Term Loan, but only
to the extent that such assignee or transferee is an Affiliate or Approved Fund of such Original Lender, and (C) any Person providing
financing to any Person described in clauses (A) and (B) above; provided, however, that this clause (C) shall only apply upon the
occurrence of a default, event of default or similar occurrence with respect to such financing.


 


“Requirement
of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or any of its property is subject.


 


“Responsible
Officer” is any of the President, Chief Executive Officer, or Chief Financial Officer of Borrower acting alone.


 


“Second
Revenue Event” is the achievement by Borrower, for the fiscal year 2015, of (i) seventy-five percent (75%) of its
projected net Nexafed cash receipts set forth in the Projected Receipts and (ii) seventy-five percent (75%) of its projected Oxecta
royalty receipts set forth in the Projected Receipts, and delivery of evidence of such achievement by Borrower to Collateral Agent,
on or before February 15, 2016, in such form and substance as is acceptable to Collateral Agent in its discretion.  The
occurrence of the First Revenue Event is a precondition for the occurrence of the Second Revenue Event.


 


“Secured Promissory
Note” is defined in Section 2.4.


 




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“Secured Promissory
Note Record” is a record maintained by each Lender with respect to the outstanding Obligations owed by Borrower to Lender
and credits made thereto.


 


“Securities
Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter
be made.


 


“Shares”
is one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned or held of
record by Borrower or Borrower’s Subsidiary, in any Subsidiary; provided that, in the event Borrower, demonstrates to Collateral
Agent’s reasonable satisfaction, that a pledge of more than sixty five percent (65%) of the Shares of such Subsidiary which
is a Foreign Subsidiary, creates a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code,
“Shares” shall mean sixty-five percent (65%) of the issued and outstanding capital stock, membership units or other
securities owned or held of record by Borrower or its Subsidiary in such Foreign Subsidiary.


 


“Solvent”
is, with respect to any Person: the fair salable value of such Person’s consolidated assets (including goodwill minus disposition
costs) exceeds the fair value of such Person’s liabilities; such Person is not left with unreasonably small capital after
the transactions in this Agreement; and such Person is able to pay its debts (including trade debts) as they mature.


 


“Subordinated
Debt” is indebtedness incurred by Borrower or any of its Subsidiaries subordinated to all Indebtedness of Borrower and/or
its Subsidiaries to the Lenders (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory
to Collateral Agent and the Lenders entered into between Collateral Agent, Borrower, and/or any of its Subsidiaries, and the other
creditor), on terms acceptable to Collateral Agent and the Lenders.


 


“Subsidiary”
is, with respect to any Person, any Person of which more than fifty percent (50%) of the voting stock or other equity interests
(in the case of Persons other than corporations) is owned or controlled, directly or indirectly, by such Person or through one
or more intermediaries.


 


“Term Loan”
is defined in Section 2.2(a)(ii) hereof.


 


“Term Loan
Commitment” is, for any Lender, the obligation of such Lender to make a Term Loan, up to the principal amount shown on
Schedule 1.1. “Term Loan Commitments” means the aggregate amount of such commitments of all
Lenders.


 


“Trademarks”
means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.


 


“Transfer”
is defined in Section 7.1.


 


“Voting Agreement”
means the Voting Agreement dated as of February 6, 2004, as amended to date, between Parent, Galen Partners III, L.P., Galen Partners
International III, L.P., Galen Employee Fund III, L.P., Essex Woodlands Health Ventures V, L.P., Care Capital investments II, LP
and Care Capital Offshore Investments II, LP.


 


“Warrants”
are those certain Warrants to Purchase Stock dated as of the Effective Date, or any date thereafter, issued by Parent in favor
of each Lender or such Lender’s Affiliates.


 


[Balance
of Page Intentionally Left Blank]


  




    	35



    	 



    

 


IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the Effective Date.


 


	BORROWER:	 	 
	 	 	 
	ACURA PHARMACEUTICALS, INC.	 	 
	 	 	 
	By /s/ Peter A. Clemens	 	 
	Name: Peter A. Clemens	 	 
	Title: Sr. V.P. & C.F.O.	 	 
	 	 	 
	BORROWER:	 	 
	 	 	 
	ACURA PHARMACEUTICAL TECHNOLOGIES, INC.	 	 
	 	 	 
	By  /s/ Peter A. Clemens	 	 
	Name: Peter A. Clemens	 	 
	Title: Sr. V.P. & C.F.O.	 	 
	 	 	 
	COLLATERAL AGENT AND LENDER:	 	 
	 	 	 
	OXFORD FINANCE LLC
	 	 	 
	By    /s/ Mark Davis	 	 
	Name: 	 	 
	Title: Vice President Finance,  Secretary & Treasurer	 	 


 


[Signature Page to Loan and Security
Agreement] 


 




    	 



    	 



    

 


SCHEDULE 1.1



Lenders and Commitments


 


Term Loans


	Lender	 	Term Loan Commitment	 	 	Commitment Percentage	 
	OXFORD FINANCE LLC	 	$	10,000,000	 	 	 	100.00	%
	TOTAL	 	$	10,000,000	 	 	 	100.00	%



  




    	 



    	 



    

 


EXHIBIT A






Description of Collateral


 


The Collateral consists of all of Borrower’s
right, title and interest in and to the following personal property:


 


All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights, rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as noted below), commercial tort claims, documents, instruments (including any
promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts and other Collateral Accounts, all certificates
of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and
all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever
located; and


 


All Borrower’s
Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or
all of the foregoing.


 


Notwithstanding the
foregoing, the Collateral does not include (i) any Intellectual Property; provided, however, the Collateral shall include all Accounts
and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security
interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that
are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include
the Intellectual Property to the extent necessary to permit perfection of Collateral Agent’s security interest in such Accounts
and such other property of Borrower that are proceeds of the Intellectual Property; and (ii) any license or contract, in each case
if the granting of a Lien in such license or contract is prohibited by or would constitute a default under the agreement governing
such license or contract (but (A) only to the extent such prohibition is enforceable under applicable law and (B) other than to
the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-408 or 9-409 (or any other Section) of
Division 9 of the Code); provided that upon the termination, lapsing or expiration of any such prohibition, such license or contract,
as applicable, shall automatically be subject to the security interest granted in favor of Collateral Agent hereunder and become
part of the “Collateral.”


 


Pursuant to the terms
of a certain negative pledge arrangement with Collateral Agent and the Lenders, Borrower has agreed not to encumber any of its
Intellectual Property (excluding Permitted Licenses). 


 




    	 



    	 



    

 


EXHIBIT B



Form of Disbursement Letter


 


[see attached]


 




    	 



    	 



    

 


DISBURSEMENT LETTER



[DATE]


 


The undersigned, being the duly
elected and acting  _________________ of                     ACURA PHARMACEUTICALS, INC., a New York corporation with offices located at 616 N. North
Court, Suite 120, Palatine, Illinois for and on behalf of each Borrower under the Loan Agreement (as defined below)
(collectively, “Borrower”), does hereby certify to OXFORD FINANCE LLC (“Oxford”
and “Lender”), as collateral agent (the “Collateral Agent”) in connection with that
certain Loan and Security Agreement dated as of December [_], 2013, by and among Borrower, Collateral Agent and the Lenders
from time to time party thereto (the “Loan Agreement”; with other capitalized terms used below having the
meanings ascribed thereto in the Loan Agreement) that:


 


1.          The
representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true
and correct in all material respects as of the date hereof.


 


2.          No
event or condition has occurred that would constitute an Event of Default under the Loan Agreement or any other Loan Document.


 


3.          Borrower
is in compliance with the covenants and requirements contained in Sections 4, 6 and 7 of the Loan Agreement.


 


4.          All
conditions referred to in Section 3 of the Loan Agreement to the making of the Loan to be made on or about the date hereof
have been satisfied or waived by Collateral Agent.


 


5.          No
Material Adverse Change has occurred.


 


6.          The
undersigned is a Responsible Officer.


 


[Balance of Page Intentionally
Left Blank]


 




    	 



    	 



    

 


7.          The
proceeds of the Term Loan shall be disbursed as follows:


 


	Disbursement from Oxford:	 	 	 	 
	Loan Amount	 	$	_______________	 
	Plus:	 	 	 	 
	—Deposit Received	 	$	50,000	 
	 	 	 	 	 
	Less:	 	 	 	 
	—Facility Fee	 	$	(50,000	)
	[—Interim Interest	 	$	(_________	)]
	—Lender’s Legal Fees	 	$	(_________	)*
	 	 	 	 	 
	Net Proceeds due from Oxford:	 	$	_______________ 	 
	 	 	 	 	 
	TOTAL TERM LOAN NET PROCEEDS FROM LENDERS	 	$	_______________
	 



 


8.          The
Term Loan shall amortize in accordance with the Amortization Table attached hereto.


 


9.          The
aggregate net proceeds of the Term Loans shall be transferred to the Designated Deposit Account as follows:


 


	Account Name:	ACURA PHARMACEUTICALS INC. 
	Bank Name:	Bank of America, N.A.
	Bank Address:	135 S. LaSalle Street, Chicago, IL 60603
	Account Number:	5800103177
	ABA Number:	0260-0959-3


 


[Balance of Page Intentionally
Left Blank]


 





 



* Legal fees and costs are through the
Effective Date. Post-closing legal fees and costs, payable after the Effective Date, to be invoiced and paid post-closing.


 




    	 



    	 



    

 


Dated as of the date first set forth above.


 


	BORROWER:	 
	 	 
	ACURA PHARMACEUTICALS, INC. for 

itself and on behalf of all Borrowers	 
	 	 
	By	 	 
	Name: 	 	 
	Title:	 	 
	 	 	 
	COLLATERAL AGENT AND LENDER:	 
	 	 
	OXFORD FINANCE LLC	 
	 	 	 
	By:	 	 
	Name: 	 	 
	Title:	 	 


 


[Signature Page to Disbursement Letter]


  




    	 



    	 



    

 


AMORTIZATION
TABLE

(Term Loan)


 


[see attached]


  




    	 



    	 



    

 


EXHIBIT C



Compliance Certificate


 


 


	TO:	OXFORD FINANCE LLC, as Collateral Agent and Lender
	 	 
	FROM:	ACURA PHARMACEUTICALS, INC., for itself and on behalf of all Borrowers


 


The undersigned authorized officer (“Officer”)
of ACURA PHARMACEUTICALS, INC., a New York corporation with offices located at 616 N. North Court, Suite 120, Palatine, Illinois
for and on behalf of each Borrower under the Loan Agreement (as defined below) (collectively, “Borrower”), hereby
certifies that in accordance with the terms and conditions of the Loan and Security Agreement by and among Borrower, Collateral
Agent, and the Lenders from time to time party thereto (the “Loan Agreement;” capitalized terms used but not
otherwise defined herein shall have the meanings given them in the Loan Agreement),


 


(a)          Borrower
is in complete compliance for the period ending _______________ with all required covenants except as noted below;


 


(b)          There
are no Events of Default, except as noted below;


 


(c)          Except
as noted below, all representations and warranties of Borrower stated in the Loan Documents are true and correct in all material
respects on this date and for the period described in (a), above; provided, however, that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof;
and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate
and complete in all material respects as of such date.


 


(d)          Borrower,
and each of Borrower’s Subsidiaries, has timely filed all required tax returns and reports, Borrower, and each of Borrower’s
Subsidiaries, has timely paid all foreign, federal, state, and local taxes, assessments, deposits and contributions owed by Borrower,
or Subsidiary, except as otherwise permitted pursuant to the terms of Section 5.8 of the Loan Agreement;


 


(e)          No
Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits
of which Borrower has not previously provided written notification to Collateral Agent and the Lenders.


 


Attached are the required documents, if
any, supporting our certification(s). The Officer, on behalf of Borrower, further certifies that the attached financial statements
are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to
the next except as explained in an accompanying letter or footnotes and except, in the case of unaudited financial statements,
for the absence of footnotes and subject to year-end audit adjustments as to the interim financial statements.


 


Please indicate compliance status
since the last Compliance Certificate by circling Yes, No, or N/A under “Complies” column.


 




    	 



    	 



    

 





	 	 	Reporting Covenant	 	Requirement	 	Actual	 	Complies
	 	 	 	 	 	 	 	 	 
	1)	 	Financial statements	 	Monthly within 45 days	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	2)	 	Annual (CPA Audited) statements	 	Within 120 days after FYE	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	3)	 	Annual Financial Projections/Budget (prepared on a monthly basis)	 	Annually (within 10 days of Board Approval), and when revised	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	4)	 	A/R & A/P agings	 	If applicable	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	5)	 	8-K, 10-K and 10-Q Filings	 	If applicable, within 5 days of filing	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	6)	 	Compliance Certificate	 	Monthly within 30 days	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	7)	 	IP Report	 	When required	 	 	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	8)	 	Total amount of Borrower’s cash and cash equivalents at the last day of the measurement period	 	 	 	$______	 	Yes	 	No	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 
	9)	 	Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last day of the measurement period	 	 	 	$______	 	Yes	 	No	 	N/A




 


Deposit and Securities Accounts


(Please list all accounts; attach separate sheet if additional
space needed)


 


	 	Institution Name 	Account Number 	New Account? 	Account Control Agreement in place? 
	1)	 	 	Yes	No	Yes	No
	2)	 	 	Yes	No	Yes	No
	3)	 	 	Yes	No	Yes	No
	4)	 	 	Yes	No	Yes	No


 


Other Matters


 


	1)	Have there been any changes in management since the last Compliance Certificate?	Yes	No
	 	 	 	 
	2)	Have there been any transfers/sales/disposals/retirement of Collateral or Intellectual Property prohibited by the Loan Agreement?	Yes	No
	 	 	 	 
	3)	Have there been any new or pending claims or causes of action against Borrower that involve more than One Hundred Thousand Dollars ($100,000.00)?	Yes	No
	 	 	 	 
	4)	Have there been any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries?  If yes, provide copies of any such amendments or changes with this Compliance Certificate. 	Yes	No


 




    	 



    	 



    

 


Exceptions


 


Please explain any exceptions with respect to the certification
above: (If no exceptions exist, state “No exceptions.” Attach separate sheet if additional space needed.)


 


ACURA PHARMACEUTICALS, INC., for itself and on behalf of all
Borrowers


 


	By:	 	 
	Name: 	 	 
	Title:	 	 


 


Date:


 


	 	LENDER USE ONLY
	 	 	 
	 	Received by: ______________________	Date: ________________
	 	 	 
	 	Verified by: _______________________	Date: ________________
	 	 	 
	 	Compliance Status:                  Yes             No


 




    	 



    	 



    

 


EXHIBIT D



Form of Secured Promissory Note


 


[see attached]


  




    	 



    	 



    

 


SECURED PROMISSORY NOTE

(Term Loan)


 


	$____________________	Dated:  December [_], 2013


 


FOR VALUE RECEIVED,
the undersigned, ACURA PHARMACEUTICALS, INC., a New York corporation with offices located at 616 N. North Court, Suite 120, Palatine,
Illinois and ACURA PHARMACEUTICAL TECHNOLOGIES, INC., an Indiana corporation with offices locates at 16235 State Road 17, Culver,
IN 46511 (individually and collectively, jointly and severally, “Borrower”) HEREBY PROMISES TO PAY to the order
of OXFORD FINANCE LLC (“Lender”) the principal amount of TEN MILLION DOLLARS ($10,000,000) or such lesser amount
as shall equal the outstanding principal balance of the Term Loan made to Borrower by Lender, plus interest on the aggregate
unpaid principal amount of such Term Loan, at the rates and in accordance with the terms of the Loan and Security Agreement
dated December [_], 2013 by and among Borrower, Lender, Oxford Finance LLC, as Collateral Agent, and the other Lenders from time
to time party thereto (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”).
If not sooner paid, the entire principal amount and all accrued and unpaid interest hereunder shall be due and payable on the Maturity
Date as set forth in the Loan Agreement. Any capitalized term not otherwise defined herein shall have the meaning attributed to
such term in the Loan Agreement.


 


Principal, interest and all other amounts
due with respect to the Term Loan, are payable in lawful money of the United States of America to Lender as set forth in the
Loan Agreement and this Secured Promissory Note (this “Note”). The principal amount of this Note and the interest
rate applicable thereto, and all payments made with respect thereto, shall be recorded by Lender and, prior to any transfer hereof,
endorsed on the grid attached hereto which is part of this Note.


 


The Loan Agreement, among other things,
(a) provides for the making of a secured Term Loan by Lender to Borrower, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.


 


This Note may not be prepaid except as
set forth in Section 2.2 (c) and Section 2.2(d) of the Loan Agreement.


 


This Note and the obligation of Borrower
to repay the unpaid principal amount of the Term Loan, interest on the Term Loan and all other amounts due Lender under
the Loan Agreement is secured under the Loan Agreement.


 


Presentment for payment, demand, notice
of protest and all other demands and notices of any kind in connection with the execution, delivery, performance and enforcement
of this Note are hereby waived.


 


Borrower shall pay all reasonable fees
and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred by Lender in the enforcement
or attempt to enforce any of Borrower’s obligations hereunder not performed when due.


 


This Note shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York.


 


The ownership of an interest in this Note
shall be registered on a record of ownership maintained by Lender or its agent. Notwithstanding anything else in this Note to the
contrary, the right to the principal of, and stated interest on, this Note may be transferred only if the transfer is registered
on such record of ownership and the transferee is identified as the owner of an interest in the obligation. Borrower shall be entitled
to treat the registered holder of this Note (as recorded on such record of ownership) as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest in this Note on the part of any other person or
entity.


 


[Balance of Page Intentionally
Left Blank]


  




    	 



    	 



    

 


IN WITNESS WHEREOF,
Borrower has caused this Note to be duly executed by one of its officers thereunto duly authorized on the date hereof.


 


	 	 	BORROWER:
	 	 	 
	 	 	ACURA PHARMACEUTICALS, INC.
	 	 	 	 
	 	 	By	 
	 	 	Name: 	 
	 	 	Title:	 


 


	 	BORROWER:
	 	 
	 	ACURA PHARMACEUTICAL TECHNOLOGIES, INC.
	 	 	 
	 	By	 
	 	Name: 	 
	 	Title:	 


 





Term Loan Secured Promissory Note







 




    	 



    	 



    

 


LOAN INTEREST RATE AND PAYMENTS OF
PRINCIPAL


 





	Date	 	
        Principal

        Amount
	 	Interest Rate	 	
        Scheduled

        Payment Amount
	 	Notation By
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 




 




    	 



    	 



    

 


CORPORATE BORROWING CERTIFICATE


 


	Borrower:	
        [ACURA PHARMACEUTICALS, INC.][

        ACURA PHARMACEUTICAL

        TECHNOLOGIES, INC.]
	Date: [DATE]
	Lender:	OXFORD FINANCE LLC, as Collateral Agent and Lender	 


 


I hereby certify as follows, as of the
date set forth above:


 


1.          I
am the Secretary, Assistant Secretary or other officer of Borrower. My title is as set forth below.


 


2.          Borrower’s
exact legal name is set forth above. Borrower is a [ACURA PHARMACEUTICALS, INC.][ ACURA PHARMACEUTICAL TECHNOLOGIES, INC.] existing
under the laws of the State of [New York][Indiana].


 


3.          Attached
hereto as Exhibit A and Exhibit B, respectively, are true, correct and complete copies of (i) Borrower’s
Articles/Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower
is incorporated as set forth in paragraph 2 above; and (ii) Borrower’s Bylaws. Neither such Articles/Certificate of
Incorporation nor such Bylaws have been amended, annulled, rescinded, revoked or supplemented, and such Articles/Certificate of
Incorporation and such Bylaws remain in full force and effect as of the date hereof.


 


4.          The
following resolutions were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors
(or pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect
as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and the Lenders may rely
on them until each Lender receives written notice of revocation from Borrower.


 




    	 



    	 



    

 


[Balance
of Page Intentionally Left Blank]


 




    	 



    	 



    

 


Resolved,
that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on
behalf of Borrower:


 


 


	Name	 	Title	 	Signature	 	Authorized to

Add or Remove

Signatories
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 ̈
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 ̈
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 ̈
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 ̈


 


Resolved
Further, that any one of the persons designated above with a checked box beside his or her name may, from time
to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower.


 


Resolved
Further, that such individuals may, on behalf of Borrower:


 


Borrow Money. Borrow money
from the Lenders.


Execute Loan Documents.
Execute any loan documents any Lender requires.


Grant Security. Grant
Collateral Agent a security interest in any of Borrower’s assets.


Negotiate Items. Negotiate
or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive
cash or otherwise use the proceeds.


Issue Warrants. Issue
warrants for Borrower’s capital stock.


Further Acts. Designate
other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement
that waive Borrower’s right to a jury trial) they believe to be necessary to effectuate such resolutions.


 


Resolved
Further, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.


 


[Balance
of Page Intentionally Left Blank]


 




    	 



    	 



    

 


5.          The
persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.


 


	 	By:	 
	 	 	 
	 	Name: 	 
	 	 	 
	 	Title:	 


 


*** If the Secretary, Assistant
Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized
signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.


 


I, the __________________________ of Borrower, hereby certify
as to paragraphs 1 through 5 above, as


[print title]


of the date set forth above.


 


	 	 	By:	 
	 	 	 	 
	 	 	Name: 	 
	 	 	 	 
	 	 	Title:	 


 


[Signature Page to Corporate Borrowing
Certificate]


 




    	 



    	 



    

 


EXHIBIT A



Articles/Certificate of Incorporation (including amendments)


 


[see attached]


 




    	 



    	 



    

 


EXHIBIT B



Bylaws


 


[see attached]


 




    	 



    	 



    

 


	DEBTOR:	[ACURA PHARMACEUTICALS, INC.][ ACURA PHARMACEUTICAL TECHNOLOGIES, INC.]
	SECURED PARTY:	OXFORD FINANCE LLC,
	 	as Collateral Agent


 


EXHIBIT A TO UCC FINANCING STATEMENT






Description of Collateral


 


The Collateral consists of all of Debtor’s
right, title and interest in and to the following personal property:


 


All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights, rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as noted below), commercial tort claims, documents, instruments (including any
promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts and other Collateral Accounts, all certificates
of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and
all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever
located; and


 


All Borrower’s
Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or
all of the foregoing.


 


Notwithstanding the
foregoing, the Collateral does not include (i) any Intellectual Property; provided, however, the Collateral shall include all Accounts
and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security
interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that
are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include
the Intellectual Property to the extent necessary to permit perfection of Collateral Agent’s security interest in such Accounts
and such other property of Borrower that are proceeds of the Intellectual Property; and (ii) any license or contract, in each case
if the granting of a Lien in such license or contract is prohibited by or would constitute a default under the agreement governing
such license or contract (but (A) only to the extent such prohibition is enforceable under applicable law and (B) other than to
the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-408 or 9-409 (or any other Section) of
Division 9 of the Code); provided that upon the termination, lapsing or expiration of any such prohibition, such license or contract,
as applicable, shall automatically be subject to the security interest granted in favor of Collateral Agent hereunder and become
part of the “Collateral.”


 


Pursuant to the terms
of a certain negative pledge arrangement with Collateral Agent and the Lenders, Debtor has agreed not to encumber any of its Intellectual
Property (excluding Permitted Licenses).


 


Capitalized terms used
but not defined herein have the meanings ascribed in the Uniform Commercial Code in effect in the State of New York as in effect
from time to time (the “Code”) or, if not defined in the Code, then in the Loan and Security Agreement by and between
Debtor, Secured Party and the other Lenders party thereto (as modified, amended and/or restated from time to time).