Document:

Unassociated Document

    OMNIBUS
      AMENDMENT AND CONSENT 

    

    OMNIBUS
      AMENDMENT AND CONSENT EFFECTIVE AS OF July 10, 2007 (this “Omnibus
      Amendment and Consent”)
      by and
      among Acura Pharmaceuticals, Inc. (the “Company”),
      and
      Acura Pharmaceutical Technologies, Inc. and the following lenders (“Lenders”):
      Galen
      Partners III, L.P. (as agent for the other lenders (“Agent”)
      and as
      a lender itself), Galen Partners International, III, L.P., Galen Employee Fund
      III, L.P., Care Capital Offshore Investments II, LP, Care Capital Investments
      II, LP, Essex Woodlands Health Ventures V, L.P. (the foregoing Lenders, being
      the “VC
      Lenders”),
      Dennis
      Adams, George E. Boudreau, Michael Weisbrot, Susan Weisbrot; and the following
      persons with respect to Sections 5, 6, 7, and 8: John E. Heppe Jr. and Peter
      Steiglitz (“Additional
      Watson Holders”).

    

    Capitalized
      terms used herein and not defined herein have the meanings set forth in the
      Subordination Agreement dated as of January 31, 2006 among the Lenders, the
      Company and others (the “Subordination
      Agreement”).

    

    R
      E C I T A L S

    

    WHEREAS
      the
      Company and one or more Lenders have entered into the June 2005 Loan Agreement,
      the September 2005 Loan Agreement, the November 2005 Loan Agreement and the
      January 2006 Loan Agreement (collectively, the “Loan
      Agreements”)
      and
      such other agreements, notes and instruments executed in connection with such
      loan agreements (collectively, the “Loan
      Documents”);
      and

    

    WHEREAS,
      the
      Company and certain Lenders and the Additional Watson Holders are parties to
      the
      Watson Note (as defined in the Subordination Agreement); and

    

    WHEREAS,
      pursuant
      to Section 1(a) of the Omnibus Amendment dated August 16, 2006 among the parties
      hereto (the “August
      2006 Omnibus Amendment”),
      Section 5.12 was added to each Loan Agreement to grant the Lenders the right
      to
      convert their Notes under certain circumstances into equity securities of the
      Company (the “August
      2006 Rollover Right”);

    

    WHEREAS,
      pursuant
      to Section 1(a) of the Omnibus Amendment dated November 30, 2006 among the
      parties hereto (the “November
      2006 Omnibus Amendment”),
      Section 5.12 of each Loan Agreement was amended and restated to grant the
      Lenders a the right to convert their Notes under certain circumstances into
      equity securities of the Company (the “November
      2006 Rollover Right”);

    

    WHEREAS,
      pursuant
      to Section 1(a) of the Omnibus Amendment dated March 30, 2007 among the parties
      hereto (the “March
      2007 Omnibus Amendment”),
      Section 5.12 of each Loan Agreement was amended and restated to grant the
      Lenders a the right to convert their Notes under certain circumstances into
      equity securities of the Company (the “March
      2007 Rollover Right”);

    

    WHEREAS,
      the
      Company and the Lenders wish to amend and restate in its entirety the March
      2007
      Rollover Right as provided herein modified and provide for additional bridge
      loan commitments by certain Lenders.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants herein contained, the parties mutually
      agree as follows:

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    1.
       Amendments:

    

    (a) The
      January 2006 Loan Agreement is amended by adding thereto Schedule 1.3B attached
      hereto and by deleting Section 1.1 in its entirety and replacing same with
      the
      following:

     

    “1.1
      TERM LOAN

     

    On
      the terms and subject to the conditions of this Agreement, each Lender severally
      agrees to make to the Company on the Closing Date a term loan (each, a
“Loan”)
      in
      a principal amount equal to such Lender’s initial Commitment. The Lenders shall
      make additional Loans commencing November 2006, as set forth in Section 1.3,
      and
      may, in their sole and absolute discretion, make additional Loans to the Company
      as provided in Section 1.3 hereof. The Company and the Lenders acknowledge
      and
      agree that no Lender is under any obligation to make any Loan in excess of
      its
      respective Commitment. No amounts paid or prepaid with respect to any Loan
      may
      be reborrowed.”

     

    ;and
      by
      amending and restating the definition of Commitment in Article XVI as
      follows;

     

    ““Commitment”
      means, with respect to each Lender, the commitment of such Lender to make such
      Loan hereunder. The initial amount of the Commitment of each of Essex, Care
      Capital and Galen is set forth opposite its signature hereto. The additional
      mandatory Commitments of the Lenders are set forth in Section 1.3. The
      Commitment of each Additional Lender and/or any additional Commitment of Essex,
      Care Capital and/or Galen will be set forth opposite its signature on the
      Joinder Agreement to which it is a party.”

     

    ;
      and by
      replacing Section 1.3 thereof with the following 

     

    “1.3 CLOSING

     

    The
      initial closing (the “Closing”)
      at
      which the Loans from Essex, Care Capital and Galen shall be disbursed to the
      Company will take place at the offices of St. John & Wayne, L.L.C., Two Penn
      Plaza East, Newark, New Jersey 07105 upon the satisfaction of the conditions
      to
      Closing set forth in this Agreement on the date hereof, or such other place,
      time and date as shall be mutually agreed to by the Company and the Lenders.
      Each Lender agrees to fund additional Loans (“Mandatory Loans”) upon the
      Company’s written request during the months and in the percentage of the monthly
      amount specified next to each Lender’s name on Schedule 1.3 attached hereto and
      on Schedule 1.3A attached hereto and on Schedule 1.3B attached hereto. The
      Company will provide each Lender at least ten days notice of the date of the
      Closing of a Mandatory Loan (which date shall be binding on all parties), and
      the amount of Lender’s funding Commitment (based on the Lender’s commitment
      percentage set forth on Schedule 1.3, Schedule 1.3A and Schedule 1.3B). Any
      amounts not borrowed by the Company during any month may be borrowed by the
      Company from the Lenders (and will be funded by the Lenders according to each
      Lender’s commitment percentage) in succeeding months until the earlier of (i)
      the date advanced to the Company under this Agreement, or (ii) September 30,
      2007. The Company and the Lenders acknowledge and agree that additional Loans
      (“Non-Mandatory Loans”) may be funded to the Company by any one or more of
      Galen, Care Capital, Essex and any Additional Lender pursuant to the terms
      of
      this Agreement on one or more Closing Dates; provided,
      however,
      that (i) the aggregate principal amount of the Non-Mandatory Loans shall not
      exceed $1,000,000 without the prior written consent of any two (2) of Essex,
      Care Capital and Galen,(ii) no such Additional Lender may participate without
      the prior written consent of any two (2) of Essex, Care Capital and Galen,
      and
      (iii) no Lender is under any obligation to fund any Loan other than its
      respective Commitment. Upon the funding of any additional Loans (whether
      Mandatory Loans or Non-Mandatory Loans), under this Agreement, the Company
      and
      each Lender and/or Additional Lender making a Loan shall be required to execute
      a Joinder Agreement, which Joinder Agreement shall specify the Commitment of
      such Lender and/or Additional Lender. Any Additional Lender executing a Joinder
      Agreement shall be deemed a “Lender” for all purposes of this Agreement. On the
      date of a Closing (each a “Closing
      Date”),
      the Company shall deliver to each Lender at such Closing a Note, dated the
      applicable Closing Date, in the principal amount equal to such Lender’s
      Commitment or, in the event Galen, Care Capital and/or Essex shall make an
      additional Loan hereunder, the Company shall issue to such Lender an additional
      Note dated the applicable Closing Date in the principal amount equal to such
      Lender’s additional Commitment. The Company shall deliver the foregoing Notes
      against receipt by the Company from each Lender of an amount equal to the
      Commitment of such Lender, in each case by wire transfer in immediately
      available funds in U.S. dollars to an account designated by the Company.
      Notwithstanding anything to the contrary herein, no Lender shall be required
      in
      any circumstances to make Mandatory Loans (x) in an aggregate amount that
      exceeds the aggregate amount of such Lender’s committed amount set forth on
      Schedule 1.3, Schedule 1.3A, and Schedule 1.3B or (y) at any time after the
      occurrence and during the continuance of an Event of Default (including, for
      such purposes, after any event, fact or occurrence that, with the passage of
      time or giving of notice, would become an Event of Default) .”;
      and

     

    
      
         

      

      
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    	(b)  	
            Each
              of the June 2005 Loan Agreement, the September 2005 Loan Agreement,
              the
              November 2005 Loan Agreement and the January 2006 Loan Agreement is
              amended as follows:

          

    

    	(i)  	
            Section
              5.12 is hereby deleted in its entirety and replaced with the
              following:

          

    

    5.12. ROLLOVER
      RIGHT

     

    Each
      Lender shall have the one-time right (the “Rollover
      Right”)
      on
      the terms provided below, to purchase, through the conversion of all or any
      portion of such Lender’s Notes (including principal and accrued and unpaid
      interest), securities of the Company, on the first to occur of a Third-Party
      Investor Financing, a Conversion Change of Control Transaction or the Maturity
      Date (each a “Material
      Event”)
      after the date hereof, under the terms and conditions set forth in this Section
      5.12. Any portion of such Notes which are not so converted pursuant to this
      Section 5.12 shall become immediately due and payable simultaneously with such
      Material Event. 

     

    
      
         

      

      
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    (a) Simultaneous
      with the completion of an equity financing pursuant to which the Company issues
      its common stock or other equity securities of the Company and, after the
      effectiveness thereof, the Company will have cumulatively received at least
      $5
      million in gross proceeds from equity financings after the date hereof
      (including all equity financings after the date hereof, including such final
      financing which causes the aggregate cumulative proceeds to exceed $5 million,
      but expressly excluding the principal and interest under the Notes for which
      a
      Lender’s Rollover Right is exercised) from unaffiliated, thirty-party investors
      (a “Third-Party Investor Financing”) other than (i) issuances of options or
      restricted stock units to employees, consultants or directors, (ii) interest
      on
      debt payable in common stock or (iii) pursuant to the conversion of warrants,
      options, restricted stock units or other convertible securities outstanding
      on
      the date hereof, each Lender may convert all or any portion (except as provided
      below) of its Notes, at the option of such Lender, under either (but not both
      or
      a combination of each) of the following: 

     

    (i)
      into the same equity securities as are issued in such Third-Party Investor
      Financing on the same terms as provided in such Third-Party Investor Financing
      (but at (A) for all Notes other than the March 2007 to May 2007 Bridge Notes
      and
      the Future Bridge Notes, the average price of all equity securities sold that
      have combined to exceed the cumulative $5 million in proceeds, and (B) for
      the
      March 2007 to May 2007 Bridge Notes and the Future Bridge Notes, 80% of the
      average price of all equity securities sold that have combined to exceed the
      cumulative $5 million in proceeds), provided that the conversion price per
      share
      of Common Stock determined pursuant to subsection (A) and (B) shall in no event
      be less than $0.21, or 

     

    (ii)
      (A) for Notes issued in or prior to November 2005 (the “June to November 2005
      Bridge Notes”), convert such Notes into Common Stock at a price of $0.20 per
      share, (B) for Notes issued after November 2005 and in or prior to May 2006
      (the
“January to May 2006 Bridge Notes”), convert such Notes into Common Stock at a
      price of $0.225 per share; (C) for Notes issued after May 2006 and in or prior
      to October 2006 (the “June to October 2006 Bridge Notes”), convert such Notes
      into Common Stock at a price of $0.25 per share; (D)
      for Notes issued or to be issued under the Loan Agreement dated January 31,
      2006
      after October 2006 but prior to March, 2007 (the “November 2006 to February 2007
      Bridge Notes”), convert such Notes into Common Stock at a conversion price equal
      to the lesser of (X) 80% of the average of the closing bid and asked prices
      of
      the Common Stock for the twenty (20) trading days immediately preceding the
      public announcement of the Third-Party Investor Financing, (Y) the average
      price
      of the equity securities sold that have combined to exceed the cumulative $5
      million in proceeds, and (Z) $0.44 per share; provided that the conversion
      price
      per share of Common Stock determined pursuant to subsection (X) and (Y) above
      shall in no event be less than $0.21; provided further that a Lender choosing
      this option must convert all (and not less than all) of its Notes pursuant
      to
      this option; (E) for Notes issued or to be issued under the Loan Agreement
      dated
      January 31, 2006 after February 2007 but prior to June, 2007 (the “March 2007 to
      May 2007 Bridge Notes”), convert such Notes into Common Stock at a conversion
      price equal to the lesser of (X) 80% of the average of the closing bid and
      asked
      prices of the Common Stock for the twenty (20) trading days immediately
      preceding the public announcement of the Third-Party Investor Financing, (Y)
      80%
      of the average price of the equity securities sold that have combined to exceed
      the cumulative $5 million in proceeds, and (Z) $0.46 per share; provided that
      the conversion price per share of Common Stock determined pursuant to subsection
      (X) and (Y) above shall in no event be less than $0.21; provided further that
      a
      Lender choosing this option must convert all (and not less than all) of its
      Notes pursuant to this option; and (F) for other Notes issued or to be issued
      under the Loan Agreement dated January 31, 2006 during June 2007 or thereafter
      (the “Future Bridge Notes”), convert such Notes into Common Stock at a
      conversion price equal to the lesser of (X) 80% of the average of the closing
      bid and asked prices of the Common Stock for the twenty (20) trading days
      immediately preceding the public announcement of the Third-Party Investor
      Financing, (Y) 80% of the average price of the equity securities sold that
      have
      combined to exceed the cumulative $5 million in proceeds, and (Z)
      $0.46 per
      share; provided that the conversion price per share of Common Stock determined
      pursuant to subsection (X) and (Y) above shall in no event be less than $0.21;
      provided further that a Lender choosing this option must convert all (and not
      less than all) of its Notes pursuant to this option.

     

    
      
         

      

      
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    (b) Simultaneous
      with the completion of the first Conversion Change of Control Transaction to
      occur after the date hereof, each Lender may, at the option of such Lender
      convert all (and not less than all) of its Notes as follows, (i) for the June
      to
      November 2005 Bridge Notes, convert such Notes into Common Stock at a price
      of
      $0.20 per share, (ii) for the January to May 2006 Bridge Notes, convert such
      Notes into Common Stock at a price of $0.225 per share; (iii) for the June
      to
      October 2006 Bridge Notes, convert such Notes into Common Stock at a price
      of
      $0.25 per share; and
      (iv) for the November 2006 to February 2007 Bridge Notes, the March 2007 to
      May
      2007 Bridge Notes and the Future Bridge Notes convert such Notes into Common
      Stock at a price equal to 80% of the value per fully diluted share of the
      Company’s common stock provided in the Conversion Change of Control Transaction,
      but in no event less than $0.21 per share; provided, however, that if such
      Conversion Change of Control Transaction is a transaction of the type described
      in subsection (D) or (E) of the definition of Conversion Change of Control
      Transaction below, (i) each Lender’s November 2006 to February 2007 Bridge Notes
      will be convertible, at the option of such Lender, into Common Stock at a price
      equal to the lesser of (X) 80% of the average closing bid and asked prices
      of
      the Common Stock for the twenty (20) trading days immediately preceding the
      public announcement of such Conversion Change of Control Transaction, but in
      no
      event less than $0.21 per share; and (Y) $0.44 per share; (ii) each Lender’s
      March 2007 to May 2007 Bridge Notes will be convertible, at the option of such
      Lender, into Common Stock at a price equal to the lesser of (X) 80% of the
      average closing bid and asked prices of the Common Stock for the twenty (20)
      trading days immediately preceding the public announcement of such Conversion
      Change of Control Transaction, but in no event less than $0.21 per share; and
      (Y) $0.46 per share; and (iii) each Lender’s Future Bridge Notes will be
      convertible, at the option of such Lender, into Common Stock at a price equal
      to
      the lesser of (X) 80% of the average closing bid and asked prices of the Common
      Stock for the twenty (20) trading days immediately preceding the public
      announcement of such Conversion Change of Control Transaction, but in no event
      less than $0.21 per share; and (Y) $0.46
      per
      share. For purposes hereof, a Conversion Change of Control Transaction shall
      mean any
      of the following in one or a series of related transactions:(A) the acquisition
      (other than solely from the Company) by any individual, entity or group (within
      the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act)
      other than the Company, any Subsidiary, any Lender or its Affiliates or GCE
      Holdings, LLC or its Affiliates, of the beneficial ownership (within the meaning
      of Rule 13d-3 promulgated under the Securities Exchange Act) of more than
      sixty-six and 2/3 percent (66.66%) of the combined voting power of the then
      outstanding voting securities of the Company entitled to vote generally in
      the
      election of directors (the “Voting Securities”); (B) a merger, consolidation,
      share exchange, recapitalization, business combination or similar combination
      involving the Company or its capital stock (a "Business
      Combination"),
      other than a Business Combination in which more than thirty-three and 1/3
      percent (33.33%) of the combined voting power of the outstanding voting
      securities of the surviving or resulting entity immediately following the
      Business Combination is held by the persons who, immediately prior to the
      Business Combination, were the holders of the Voting Securities; (C) a sale
      or
      other transfer (other than license) of all or substantially all of the Company’s
      assets (measured by the value or earning power of the assets); (D) the license
      or similar agreement by the Company to a third party of all or substantially
      all
      rights in and to the Company’s Aversion® technology and, as a result of such
      transaction, all or substantially all of the Company’s activities consist of
      monitoring such arrangements and collecting fees and payments due thereunder;
      or
      (E) a liquidation or dissolution of the Company.

     

    
      
         

      

      
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    (c) At
      the Maturity Date (as the same may be extended pursuant to Section 2.2 hereof)
      each
      Lender may, at the option of such Lender, convert all (and not less than all)
      of
      its Notes as follows, (i) for the June to November 2005 Bridge Notes, convert
      such Notes into Common Stock at a price of $0.20 per share, (ii) for the January
      to May 2006 Bridge Notes, convert such Notes into Common Stock at a price of
      $0.225 per share; (iii) for the June to October 2006 Bridge Notes, convert
      such
      Notes into Common Stock at a price of $0.25 per share; (iv)
      for the November 2006 to February 2007 Bridge Notes convert such Notes into
      Common Stock at the lesser of (X) 80% of the average of the closing bid and
      asked prices of the Common Stock for the twenty (20) trading days immediately
      preceding the Maturity Date, but in no event less than $0.21 per share, and
      (Y)
      $0.44 per share; (v) for the March 2007 to May 2007 Bridge Notes convert such
      Notes into Common Stock at the lesser of (X) 80% of the average of the closing
      bid and asked prices of the Common Stock for the twenty (20) trading days
      immediately preceding the Maturity Date, but in no event less than $0.21 per
      share, and (Y) $0.46 per share; and (vi)
      for the Future Bridge Notes convert such Notes into Common Stock at the lesser
      of (X) 80% of the average of the closing bid and asked prices of the Common
      Stock for the twenty (20) trading days immediately preceding the Maturity Date,
      but in no event less than $0.21 per share, and (Y) $0.46 per
      share.

     

    (d) The
      Company shall give each Lender written notice (a “Material
      Event Notice”)
      of
      the first Material Event to occur after the date hereof, which notice shall
      be
      provided not later than 20 days prior to the closing of said transaction (or,
      in
      the case of the Maturity Date, the Maturity Date) and describe the material
      terms of such transaction, (or, in the case of the Maturity Date, state the
      Maturity Date), the proposed closing date and the principal amount and interest
      accrued on the Lender’s outstanding Notes.

     

    (e) Each
      Lender may exercise its Rollover Right with respect to the first Material Event
      to occur after the date hereof by (i) providing written notice to the Company
      exercising such Rollover Right, and (ii) surrendering such Lender’s applicable
      Notes, in each case not later than five (5) days prior to the effectiveness
      of
      the Material Event (the “Rollover
      Right Exercise Period”).
      If the material terms of the actual Material Event differ in any material
      respect from those specified in the Material Event Notice, each Lender shall
      be
      given the opportunity change the conversion election they had made under the
      prior terms (including to elect to convert if they previously did not do
      so).

     

    (f) Upon
      a Lender’s timely exercise of the Rollover Right pursuant to Section 5.12(e)
      above, the issuance of the Company’s equity securities upon conversion of such
      Lender’s Notes in the applicable Material Event shall occur simultaneous with
      the closing of such Material Event (or, in the case of the Maturity Date, on
      the
      Maturity Date). 

     

    (g) Subject
      to the last sentence of Section 5.12(e), and provided that the Company has
      complied with the terms of this Section 5.12, the Rollover Right provided in
      this Section 5.12 shall apply solely to the first Material Event occurring
      after
      the date hereof, and shall terminate upon the earlier of (i) the expiration
      of
      the Rollover Right Exercise Period (if not exercised by such Lender pursuant
      to
      Section 5.12(e)) and (ii) the closing of the first Material Event (or, in the
      case of the Maturity Date, the Maturity Date) occurring after the date
      hereof.

     

    

    	(c)  	
            Each
              of the June 2005 Notes, the September 2005 Notes, the November 2005
              Notes
              and the January 2006 Notes (collectively, the “Notes”) (and each of the
              forms of such Notes attached to the June 2005 Loan Agreement, the
              September 2005 Loan Agreement, the November 2005 Loan Agreement and
              the
              January 2006 Loan Agreement) is amended by appending the following
              additional section to such note (to the extent not already included
              therein):

          

    

    “References
      to Loan Agreement.
      References to the Loan Agreement in this Note shall mean references to the
      Loan
      Agreement, as amended, and as the same may be further amended, supplemented
      or
      modified from time to time.”

    

    	(d)  	
            In
              the event a Replacement Note (as hereinafter defined) is issued pursuant
              to Section 4 hereof, then in such Replacement Note the words “Secured
              Promissory Note” shall be replaced with “Amended and Restated Promissory
              Secured Note” and the following section shall be appended thereto:
              

          

    

    
      
         

      

      
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    “Amended
      and Restated Secured Promissory Note.
      This Amended and Restated Secured Promissory Note issued by the Company in
      favor
      of the Payee amends and restates in its entirety, and is issued by the Company
      in replacement of and substitution for a Secured Promissory Note of identical
      principal amount issued to Payee pursuant to the Loan Agreement(the “Original
      Note”). The Company and the Payee acknowledge and agree that upon the execution
      delivery of this Amended and Restated Secured Promissory Note, the Original
      Note
      shall be null and void and of no further legal force or effect.
“

    

    The
      form
      of such Replacement Note shall be also be attached to the applicable Loan
 Agreement
      as an acceptable form of note to be issued pursuant thereto.

    

    2. References
      to Loan Documents:
      Any
      reference to any Loan Document in any other Loan Document shall mean the Loan
      Document, as amended hereby. 

     

    3.
       Attachment
      to All Notes:
      The
      Lenders covenant to give a copy of this Omnibus Amendment and Consent to any
      purchaser of the June 2005 Notes, the September 2005 Notes, the November 2005
      Notes or the January 2006 Notes prior to the actual purchase and to attach
      a
      copy of this Omnibus Amendment and Consent to any of such notes where the
      undersigned is the named payee or holder.

    

    4. Amended
      and Restated Notes. 
      Upon
      request of the Company, each Lender agrees to deliver to the Company any of
      the
      June 2005 Notes, the September 2005 Notes, the November 2005 Notes or the
      January 2006 Notes issued to them, in exchange for an amended and restated
      Note
      (the “Replacement
      Note”)
      incorporating the amendments set forth in this Omnibus Amendment and Consent.
      

    

    5. Subordination
      Agreement.  Each
      Lender and Additional Watson Holder agrees to the provisions of this Omnibus
      Amendment and Consent, including without limitation, to the amendments to the
      June 2005, September 2005 Notes, the November 2005 Notes and the January 2006
      Notes and acknowledges that the Subordination Agreement shall remain in full
      force and effect .

     

    6.  Notes
      and Agreements Not Assigned. The
      undersigned Lenders and Additional Watson Holders acknowledge that they have
      not
      transferred, conveyed or assigned any of the Watson Note, the June 2005 Notes,
      the September 2005 Notes, the November 2005 Notes or the January 2006 Notes
      issued to them and the undersigned Lenders and Additional Watson Holders
      acknowledge that they have not assigned any rights under the Loan Documents
      or
      under the Subordination Agreement.

    

    7.  Interest
      Payable to Lenders in Stock; Prepayments. Notwithstanding
      anything in the Loan Documents to the contrary (except as set forth in Section
      5.12 thereof), the Company (a) may, at the Company’s option, in full payment of
      all payments of interest on the Notes to the undersigned Lenders  (“Interest
      Due”)
      make
      payment of the Interest Due in such number of shares of Common Stock of the
      Company equal to the quotient of the Interest Due such Lender, divided by the
      average of the closing bid and asked price of the Company’s Common Stock for the
      five (5) trading days immediately preceding the due date of such Interest Due,
      as reported by the Nasdaq OTCBB, and (b) may not prepay the principal amount
      of
      any Note, or any interest thereon, in whole or in part, at any time without
      the
      prior written consent of the holder thereof. 

    

    
      
         

      

      
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    8.
       Counterparts:
      This
      Omnibus Amendment and Consent may be executed in one or more counterparts and
      by
      different parties hereto in separate counterparts, including by facsimile,
      each
      of which when so executed and delivered shall be deemed an original, but all
      such counterparts together shall constitute but one and the same instrument.
      

    

    

    9.
       Governing
      Law:
      THIS
      OMNIBUS AMENDMENT AND CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
      HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
      THE
      STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAWS.

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, each of the Parties have caused this Omnibus Amendment and
      Consent to be duly executed and delivered as of the day and year first above
      written.

     

    
      	 	 	 
	 	ACURA
              PHARMACEUTICALS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Peter
              A.
              Clemens 
	 	
              
Name:
              Peter A. Clemens
	 	Title:
              Sr. Vice President and CFO

    

    
      	 	 	 
	 	
              ACURA
                PHARMACEUTICAL

              TECHNOLOGIES
                , INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Peter
              A.
              Clemens 
	 	
              
Name:
              Peter A. Clemens
	 	Title:
              Sr. Vice President and CFO

    

     

    
      	 	 	 	 
	LENDER
              AND AGENT:
              GALEN
                PARTNERS III, L.P.

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

              610
                Fifth Avenue, 5th
                Fl.

              New
                York, New York 10019

            	LENDER:
              CARE
                CAPITAL OFFSHORE INVESTMENTS II, LP

              By:
                Care Capital II, LLC, as general partner

              47
                Hulfish Street, Suite 310

              Princeton,
                NJ 08542

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

              By:
                Bruce Wesson

            	By:
	 	
              
David
              R. Ramsay
	
              Its:
                General Partner

            	Its:	 	Authorized
              Signatory

    

    
       

      
        	 	 	 	 
	
                
                  LENDER:

                  GALEN
                    PARTNERS INTERNATIONAL, III, L.P.

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

                  610
                    Fifth Avenue, 5th
                    Floor

                  New
                    York, New York 10020

                

              	
                
                  LENDER:

                  CARE
                    CAPITAL INVESTMENTS II, LP

                  By:
                    Care Capital II, LLC, as general partner

                  47
                    Hulfish St., Suite 310

                  Princeton,
                    NJ 08542

                

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

                By:
                  Bruce Wesson

              	By:
	 	
                
David
                R. Ramsay
	
                Its:
                  General Partner

              	Title:
	 	Authorized
                Signatory

      

    

    
      
         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        
          	 	 	 	 
	
                  
                    
                      LENDER:

                      GALEN
                        EMPLOYEE FUND III, L.P.

                      By:
                        Wesson Enterprises, Inc.

                      610
                        Fifth Avenue, 5th
                        Floor

                      New
                        York, New York 10020

                    

                  

                	
                  
                    
                      LENDER:

                      ESSEX
                        WOODLANDS HEALTH 

                      VENTURES
                        V, L.P.

                      190
                        South LaSalle Street, Suite 2800

                      Chicago,
                        IL 60603

                    

                  

                
	 	 	 	 
	 	 	 	 
	/s/ Bruce
                  Wesson 	 /s/ Immanuel
                  Thangaraj 
	
                  
By:
                  Bruce Wesson	
                  
By:
                  Immanuel Thangaraj
	
                  Its:
                    General Partner

                	
                  Its:
                    Managing
                    Director

                

        

      

      
        
           

          
            	 	 	 	 
	
                    
                      
                        
                          LENDER:

                          MICHAEL
                            WEISBROT

                          1136
                            Rock Creek Road

                          Gladwyne,
                            Pennsylvania 19035

                        

                      

                    

                  	
                    
                      
                        
                          LENDER:

                          SUSAN
                            WEISBROT

                          1136
                            Rock Creek Road

                          Gladwyne,
                            Pennsylvania
                            19035

                        

                      

                    

                  
	 	 	 	 
	 	 	 	 
	/s/ Michael
                    Weisbrot  	 /s/ Susan
                    Weisbrot 
	
                    

                  	
                    

                  

          

        

      

      
        
           

          
            	 	 	 	 
	
                    
                      
                        
                          
                            LENDER:

                            DENNIS
                              ADAMS

                            120
                              Kynlyn Road

                            Radnor,
                              Pennsylvania
                              19312

                          

                        

                      

                    

                  	
                    
                      
                        
                          
                            LENDER:

                            GEORGE
                              E. BOUDREAU

                            222
                              Elbow Lane

                            Haverford,
                              PA
                              19041

                          

                        

                      

                    

                  
	 	 	 	 
	 	 	 	 
	/s/ Dennis
                    Adams 	 /s/ George
                    Boudreau
	
                    

                  	
                    

                  

          

        

      

      
        
           

          
            	 	 	 	 
	
                    
                      
                        
                          
                            
                              ADDITIONAL
                                WATSON HOLDER:

                              PETER
                                STIEGLITZ

                              RJ
                                Palmer LLC

                              156
                                West 56th Street, 5th Floor

                              New
                                York, New York
                                10019

                            

                          

                        

                      

                    

                  	
                    
                      
                        
                          
                            
                              ADDITIONAL
                                WATSON HOLDER:

                              JOHN
                                E. HEPPE, JR. 

                              237
                                W. Montgomery Avenue

                              Haverford,
                                Pennsylvania
                                19041

                            

                          

                        

                      

                    

                  
	 	 	 	 
	 	 	 	 
	/s/ Peter
                    Stieglitz	/s/ John
                    Heppe
	
                    

                  	
                    

                  

          

        

      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
      1.3

    Funding
      Schedule of $ 2,000,000 in Bridge Loans

    All
      Amounts Under This Schedule Have Already Been Funded

    

      
        	
                Lender
                  Name

              	 

                Month
                  Commitment to be Funded

              	 	
                Commitment
                  

                Amount

              	 	
                Percentage
                  of Commitment

              	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                November
                  2006

              	 	
                $

              	
                203,014.61

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                18,376.31

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                831.31

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                222,222.20

              	 	 	
                33.33333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                207,955.53

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                14,266.67

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR NOVEMBER 2006

              	 	 	
                $

              	
                666,666.67

              	 	 	 	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                December
                  2006

              	 	
                $

              	
                203,014.61

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                18,376.31

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                831.31

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                222,222.20

              	 	 	
                33.33333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                207,955.53

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                14,266.67

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR DECEMBER 2006

              	 	 	
                $

              	
                666,666.67

              	 	 	 	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                January
                  2007

              	 	
                $

              	
                203,014.61

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                18,376.31

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                831.31

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                222,222.20

              	 	 	
                33.33333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                207,955.53

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                14,266.67

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR JANUARY 2007

              	 	 	
                $

              	
                666,666.67

              	 	 	 	 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    Schedule
      1.3A

    Funding
      Schedule of $ 1,200,000 in Bridge Loans

    All
      Amounts Under This Schedule Have Already Been Funded

    

      
        	
                Lender
                  Name

              	 

                Month
                  Commitment to be Funded

              	 	
                Commitment
                  

                Amount

              	 	
                Percentage
                  of Commitment

              	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                March
                  2007

              	 	
                $

              	
                182,713.15

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                16,538.68

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                748.18

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                199,999.98

              	 	 	
                33.33333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                187,159.98

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                12,840.00

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR March 2007

              	 	 	
                $

              	
                600,000

              	 	 	 	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                April
                  2007

              	 	
                $

              	
                91,356.57

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                8,269.34

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                374.09

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                99,999.99

              	 	 	
                33.33333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                93,579.99

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                6,420.00

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR April 2007

              	 	 	
                $

              	
                300,000

              	 	 	 	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                May
                  2007

              	 	
                $

              	
                91,356.57

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                8,269.34

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                374.09

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                99,999.99

              	 	 	
                33.33333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                93,579.99

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                6,420.00

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR May 2007

              	 	 	
                $

              	
                300,000

              	 	 	 	 

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      1.3B

    

      
        	
                Lender
                  Name

              	 

                Month
                  Commitment to be Funded

              	 	
                Commitment
                  

                Amount

              	 	
                Percentage
                  of Commitment

              	 
	
                GALEN
                  PARTNERS III, L.P.

              	
                July
                  2007

              	 	
                $

              	
                182,713.15

              	 	 	
                30.452191

              	
                %

              
	
                GALEN
                  PARTNERS INTERNATIONAL, III, L.P.

              	 	 	
                $

              	
                16,538.68

              	 	 	
                2.756447

              	
                %

              
	
                GALEN
                  EMPLOYEE FUND III, L.P.

              	 	 	
                $

              	
                748.18

              	 	 	
                0.124696

              	
                %

              
	
                ESSEX
                  WOODLANDS HEALTH VENTURES V, L.P.

              	 	 	
                $

              	
                200,000.00

              	 	 	
                33.3333333

              	
                %

              
	
                CARE
                  CAPITAL INVESTMENTS II, LP

              	 	 	
                $

              	
                187,159.98

              	 	 	
                31.19333

              	
                %

              
	
                CARE
                  CAPITAL OFFSHORE INVESTMENTS II, LP

              	 	 	
                $

              	
                12,840.00

              	 	 	
                2.14000

              	
                %

              
	
                TOTAL
                  FOR July 2007

              	 	 	
                $

              	
                600,000AMENDMENT
      NO. 1
      AND WAIVER

     

    This Amendment
      No. 1 and Waiver (this
      "Agreement")
      dated
      as of July 3,
      2007
      (the "Effective
      Date"),
      is by
      and among Tekoil
      and Gas Gulf Coast, LLC,
      a
      Delaware limited liability company (the "Company"),
      Tekoil
      & Gas Corporation,
      a
      Delaware corporation, as guarantor (the "Guarantor"),
      the
      lenders party to the Credit Agreement described below ("Lenders"),
      J.
      Aron & Company,
      as Lead
      Arranger and as Syndication Agent (in such capacities, "Syndication
      Agent"),
      and
J.
      Aron & Company,
      as
      Administrative Agent for such Lenders (together with its permitted successors
      in
      such capacity, the "Administrative
      Agent").

     

    RECITALS

     

    A.  Reference
      is made to that certain Credit and Guaranty Agreement dated as of May 11,
      2007 among the Company, the Guarantor, the Lenders, the Syndication Agent and
      the Administrative Agent (the "Credit
      Agreement").

     

    B.  Subject
      to the terms and conditions of this Agreement, the Company, the Guarantor,
      the
      Lenders, the Syndication Agent and the Administrative Agent, wish to (i) make
      certain amendments to the Credit Agreement as provided herein and (ii) provide
      a
      waiver for the Waiver Defaults, as defined below.

     

    NOW
      THEREFORE, in consideration of their mutual undertakings, the Company, the
      Guarantor, the Lenders, the Syndication Agent and the Administrative Agent
      hereby agree as follows:

     

    Section
      1.  Definitions
      and Interpretations.
      As used
      in this Agreement, each of the terms defined in the opening paragraph and the
      Recitals above shall have the meanings assigned to such terms therein. Each
      term
      defined in the Credit Agreement and used herein without definition shall have
      the meaning assigned to such term in the Credit Agreement, unless expressly
      provided to the contrary. Article, Section, Schedule, and Exhibit references
      are
      to this Agreement, unless otherwise specified. Paragraph headings have been
      inserted in this Agreement as a matter of convenience for reference only and
      it
      is agreed that such paragraph headings are not a part of this Agreement and
      shall not be used in the interpretation of any provision of this
      Agreement.

     

    Section
      2.  Waiver.
      

     

    (a)  The
      Company hereby acknowledges the existence of the following Events of Default
      (the "Waiver
      Defaults"):
      (i)
      the Company did not furnish the title opinions required by the Credit Agreement
      (the "Post-Closing
      Title Opinions")
      on or
      before June 23, 2007 and (ii) the bonds and/or letters of credit in lieu of
      bonds maintained by Sellers with respect to the Properties for the Railroad
      Commission of Texas ceased to be in full force and effect prior to June 11,
      2007
      without Company first providing all such bonds and/or letters of credit in
      lieu
      of bonds with respect to the Properties.

     

    (b)  Subject
      to the terms and conditions of this Agreement, the Lenders hereby waive the
      Waiver Defaults. The waiver by the Lenders described in this Section 2 is
      contingent upon the satisfaction of the conditions precedent set forth below
      in
      this Agreement and is limited to the Waiver Defaults. Such waiver shall not
      be
      construed to be a consent to or a permanent waiver of any Section covered by
      either of the Waiver Defaults or any other terms, provisions, covenants,
      warranties or agreements contained in the Credit Agreement or in any of the
      other Transaction Documents. The Lenders reserve the right to exercise any
      rights and remedies available to them in connection with any other present
      or
      future defaults with respect to the Credit Agreement or any other provision
      of
      any Transaction Document. The description herein of the Waiver Defaults is
      based
      upon the information available to the Lenders on the date hereof and shall
      not
      be deemed to exclude the existence of any other Events of Default. The failure
      of the Lenders to give notice to any Credit Party of any such other Events
      of
      Default is not intended to be nor shall be a waiver thereof. The Company and
      the
      Guarantor hereby agree and acknowledge that the Lenders require and will require
      strict performance by the Company and the Guarantor of all of their respective
      obligations, agreements and covenants contained in the Credit Agreement and
      the
      other Transaction Documents, as amended hereby, and no inaction or action
      regarding any Event of Default is intended to be or shall be a waiver thereof.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Without
      limitation of the foregoing, any failure to deliver the Post-Closing Title
      Opinions by the date set forth in Section 8.1(s) of the Credit Agreement (as
      amended hereby), or any failure of Company to maintain hereafter all bonds
      and/or letters of credit in lieu of bonds required with respect to the
      Properties for the Railroad Commission of Texas, shall constitute an Event
      of
      Default.

     

    Section
      3.  Amendments
      to the Credit Agreement.
      

     

    (a)  Section
      1.1 of the Credit Agreement is amended by adding the following new terms in
      alphabetical order:

     

    "July
      2007 Uncommitted Loan"
      means
      the $6,752,200 Uncommitted Loan made pursuant to the Amendment No. 1 and Waiver
      dated as of July 3, 2007.

     

    "July
      2007 Uncommitted Loan Maturity Date"
      means,
      with respect to the July 2007 Uncommitted Loan, the earlier of (a) July 3,
      2008,
      and (b) the date that all Loans shall become due and payable in full hereunder,
      whether by acceleration or otherwise.

     

    (b)  Section
      2.1(b) of the Credit Agreement is amended by deleting the reference to "Maturity
      Date" and replacing it with the phrase "July 2007 Uncommitted Loan Maturity
      Date." 

     

    (c)  Section
      2.6(c) of the Credit Agreement is amended by deleting clause (iv) thereof and
      replacing it with the following clause (iv):

     

    (iv)
      at
      maturity, including the July 2007 Uncommitted Loan Maturity Date and the
      Maturity Date, as applicable.

     

    (d)  Section
      2.4 of the Credit Agreement is amended by deleting the second sentence thereof
      and replacing such second sentence with the following two
      sentences:

     

    The
      proceeds of the Loans made after the Closing Date (other than the July 2007
      Uncommitted Loan) shall be applied by Company (a) to implement the Approved
      Plan
      of Development, (b) to make other expenditures from time to time approved by
      Required Lenders, (c) subject to the requirements of Section 6.3, to
      purchase crude oil puts / natural gas floors, and (d) for Company's working
      capital. The proceeds of the July 2007 Uncommitted Loan shall be applied by
      Company (a) to provide as cash collateral to Amegy Bank National Association
      in
      connection with the issuance by such bank of a letter of credit (the
      "Letter
      of Credit")
      in the
      amount of $6,370,000 in favor of the Texas Railroad Commission with respect
      to
      the Properties and (b) to pay related expenses, costs and fees.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (e)  Section
      2.11 of the Credit Agreement is hereby deleted in its entirety and replaced
      with
      the following:

     

    2.11 ANCF
      Payment of Principal.
      On each
      Quarterly Payment Date, Company will pay (or prepay) the principal of the Loans,
      without premium or penalty, in an amount equal to 100% of ANCF (or such lesser
      percentage of ANCF, not to be less than 50%, as may be selected by Agent in
      its
      sole discretion) for the immediately preceding Calculation Quarter.
      Such
      amount shall be applied first
      to pay
      (or prepay) the principal of Loans other than the July 2007 Uncommitted Loan
      and
second
      to pay
      (or prepay) the principal of the July 2007 Uncommitted Loan.

     

    (f)  Section
      2.13 of the Credit Agreement is hereby amended by adding the following clause
      (b) in appropriate alphabetical order:

     

    2.13 Mandatory
      Prepayments.
      

     

    (b) In
      the
      event that any cash collateral or other funds held by Amegy Bank National
      Association with respect to the Letter of Credit are returned to Company or
      otherwise released (other than for reimbursement of the issuer for any draws
      under such Letter of Credit or payment of usual and customary fees with respect
      thereto), Company shall immediately prepay outstanding principal amount of
      the
      July 2007 Uncommitted Loan by an amount equal to the amount so released. No
      Make-Whole Amount shall be payable with respect to any such prepayment of the
      July 2007 Uncommitted Loan unless the outstanding principal amount of the Loans
      made pursuant to Section 2.1(a) has been or is prepaid contemporaneously or
      otherwise in connection with such prepayment of the July 2007 Uncommitted
      Loan.

     

    (g)  Section
      5.8 of the Credit Agreement is amended by deleting the 6th
      sentence
      thereof in its entirety and replacing such 6th
      sentence
      with the following:

     

    Company
      agrees to be insured by insurers with a financial strength rating of "A-" or
      better and financial size category of "VII" or better from AM Best, "A-" or
      better by Standard & Poor's or an equivalent rating from a recognized rating
      agency; provided
      that
      Company may be insured by Southern County Mutual Insurance Company as
      Administrative Agent deems reasonable.

     

    (h)  Section
      8.1(s) of the Credit Agreement is hereby deleted in its entirety and replaced
      with the following:

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (s) Borrower
      shall fail to (i) furnish, on or before July 23, 2007, title opinions, in form
      and substance reasonably satisfactory to Administrative Agent, covering Texas
      State Lease MF030085 (State Tract 5-8A), Texas State Lease MF062790 (State
      Tract
      343), and any lease pooled or unitized therewith, specifically addressing,
      without limitation, the interests of Borrower in and to the following wells
      and
      non-producing reserves: (a) State Tract 5-8A #02, (b) State Tract 5-8A #01,
      State Tract 5-8 #01(BP01), State Tract 5-8A #01(BP02), State Tract 343#014,
      State Tract 343 #009, State Tract 343 #018 (BP01), State Tract 343 #014 (BP03),
      or (ii) comply with all reasonable requirements made by Administrative Agent
      pursuant to such title opinions; or

     

    (j) Section
      8.1 of the Credit Agreement is amended by adding the following clause (t) in
      appropriate alphabetical order:

     

    (t) Any
      drawing shall be made or requested under the Letter of Credit.

     

    Section
      4.  July
      2007 Loan.
      Subject
      to the terms and conditions of this Agreement, the Credit Agreement and the
      other Transaction Documents, the Lenders and the Company hereby agree that
      as of
      the Effective Date the Lenders have agreed to provide Uncommitted Loans pursuant
      to Section 2.1(b) of the Credit Agreement in an aggregate amount equal to
      $6,752,200. Such Uncommitted Loan shall be made in a single advance on the
      Effective Date. In addition to the Funding Notice required by Section 2.2 of
      the
      Credit Agreement, the Company shall deliver all such information in connection
      with such Uncommitted Loan as the Administrative Agent may reasonably request.
      The Uncommitted Loan of each Lender shall constitute a "Loan" as provided in
      the
      Credit Agreement. The determination of the Lenders to provide Uncommitted Loans
      in the amount set forth above was discretionary as provided in Section 2.1(b)
      of
      the Credit Agreement, and the Company acknowledges that the Lenders are not
      required to provide any Loans.

     

    Section
      5.  Additional
      Agreement of the Parties.
      In
      order to avoid including the July 2007 Uncommitted Loan and the Letter of Credit
      obtained therewith on a duplicative basis in calculating the financial covenants
      set forth in the Credit Agreement, and in order to make certain conforming
      changes in connection therewith, the parties hereto agree and acknowledge the
      following: (i) solely for the purpose of calculating the Debt to EBITDA ratio
      in
      Section 6.11 and determining the PDP Collateral Coverage Ratio and the Proved
      Collateral Coverage ratio in Section 6.12, "Indebtedness" shall not include
      the
      amount of the Company's Liabilities with respect to the Letter of Credit, (ii)
      solely for the purpose of calculating the Current Ratio in Section 6.10,
      "Consolidated Current Liabilities" shall not include the amount of the Company's
      Liabilities with respect to the Letter of Credit, and (iii) solely for the
      purpose of calculating the Current Ratio in Section 6.10, "Consolidated Current
      Assets" shall not include the amount of the cash collateral held by the issuing
      bank with respect to the Letter of Credit.

     

    Section
      6.  Representations
      and Warranties.
      

     

    (a)  The
      Guarantor represents and warrants that (i) after giving effect to this
      Agreement, the representations and warranties set forth in the Credit Agreement
      and the representations and warranties contained in the other Transaction
      Documents to which the Guarantor is a party are true and correct in all material
      respects on and as of the Effective Date as if made on and as of such date;
      (ii)
      other than the Waiver Defaults, no Default or Event of Default has occurred
      and
      is continuing; (iii) the execution, delivery and performance of this Agreement
      and the other documents, instruments, certificates and agreements required
      to be
      delivered by this Agreement ("Other
      Documents")
      and to
      which the Guarantor is a party are within the corporate power and authority
      of
      the Guarantor and have been duly authorized by appropriate corporate action
      and
      proceedings; (iv) this Agreement and the Other Documents to which the Guarantor
      is a party constitute legal, valid, and binding obligations of the Guarantor
      enforceable in accordance with their respective terms, except as limited by
      applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
      affecting the rights of creditors generally and general principles of equity;
      (v) there are no governmental or other third party consents, licenses and
      approvals required in connection with the execution, delivery, performance,
      validity and enforceability of this Agreement or any of the Other Documents
      to
      which the Guarantor is a party; and (vi) the Liens under the Security Documents
      are valid and subsisting and secure the Company's and the Guarantor's
      obligations under the Transaction Documents.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (b)  The
      Company represents and warrants that: (i) after giving effect to this Agreement,
      the representations and warranties contained in the Credit Agreement and the
      representations and warranties contained in the other Transaction Documents
      to
      which the Company is a party are true and correct in all material respects
      on
      and as of the Effective Date as if made on and as of such date; (i) other than
      the Waiver Defaults, no Default or Event of Default has occurred and is
      continuing; (ii) the execution, delivery and performance of this Agreement
      and
      the Other Documents to which the Company is a party are within the limited
      liability company power and authority of the Company and have been duly
      authorized by appropriate limited liability company action and proceedings;
      (iv)
      this Agreement and the Other Documents to which the Company is a party
      constitute legal, valid, and binding obligations of the Company enforceable
      in
      accordance with their respective terms, except as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
      the rights of creditors generally and general principles of equity; (v) there
      are no governmental or other third party consents, licenses and approvals
      required in connection with the execution, delivery, performance, validity
      and
      enforceability of this Agreement or any of the Other Documents to which the
      Company is a party; and (vi) the Liens under the Security Documents are valid
      and subsisting and secure Company's obligations under the Transaction
      Documents.

     

    Section
      7.  Conditions
      to Effectiveness.
      This
      Agreement shall become effective and enforceable against the parties hereto,
      the
      Credit Agreement shall be amended as provided herein, upon the occurrence of
      the
      following conditions precedent on or before the Effective Date:

     

    (a)  Agreement.
      The
      Administrative Agent shall have received multiple original counterparts of
      this
      Agreement duly and validly executed and delivered by duly authorized officers
      of
      the Company, the Guarantor, the Administrative Agent, and the
      Lenders;

     

    (b)  Cash
      Collateral Agreement.
      The
      Company shall have executed a cash collateral agreement with Amegy Bank National
      Association ("Amegy")
      and
      the Company, Amegy, and the Administrative Agent shall have executed a letter
      agreement in connection therewith (i) providing, in the case of the letter
      agreement, that any funds returned to Company or otherwise released by Amegy
      (other than for reimbursement of Amegy for any draws under such Letter of Credit
      or payment of usual and customary fees with respect thereto) shall be paid
      directly to the Administrative Agent and (ii) in the case of both such
      agreements, otherwise on terms acceptable to the Administrative
      Agent.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (c)  Closing
      Documents List.
      The
      Administrative Agent shall have received, and shall be satisfied in its sole
      discretion with, the other items listed on the Closing Documents List attached
      hereto as Exhibit
      A
      (other
      than any items noted as being deliverable post-closing).

     

    (d)  No
      Default; Representations.
      Other
      than the Waiver Defaults, no Default or Event of Default shall have occurred
      and
      be continuing as of the Effective Date. The representations and warranties
      in
      this Agreement, and in the Credit Agreement, shall be true and correct in all
      material respects.

     

    (e)  Fees.
      The
      Company shall have paid (i) a waiver and amendment fee equal to $334,425,
      (ii) a funding fee of $47,775, and (ii) all fees and expenses of the
      Administrative Agent's outside legal counsel and other consultants pursuant
      to
      all invoices presented for payment on or prior to the Effective
      Date.

     

    Section
      8.  Effect
      on Transaction Documents; Acknowledgments.
      

     

    (a)  The
      Company and the Guarantor each acknowledges that on the date hereof all
      Obligations are payable without defense, offset, counterclaim or
      recoupment.

     

    (b)  Except
      as
      set forth in Section 2 above, the Lenders and Administrative Agent hereby
      expressly reserve all of their respective rights, remedies, and claims under
      the
      Transaction Documents. Nothing in this Agreement shall constitute a waiver
      or
      relinquishment of (i) any Default or Event of Default under any of the
      Transaction Documents other than as expressly set forth in Section 2 above,
      (ii)
      any of the agreements, terms or conditions contained in any of the Transaction
      Documents, (iii) any rights or remedies of the Lenders or Administrative Agent
      with respect to the Transaction Documents, or (iv) the rights of Lenders and
      Administrative Agent to collect the full amounts owing to it under the
      Transaction Documents.

     

    (c)  The
      Company, the Guarantor, the Lenders and Administrative Agent, each hereby
      adopts, ratifies, and confirms the Credit Agreement, as amended hereby, and
      acknowledges and agrees that the Credit Agreement, as amended hereby, and the
      other Transaction Documents are and remain in full force and effect, and the
      Company and the Guarantor each acknowledges and agrees that its liabilities
      under the Credit Agreement and the other Transaction Documents are not impaired
      in any respect by this Agreement.

     

    (d)  From
      and
      after the Effective Date, all references to the Credit Agreement and the
      Transaction Documents shall mean such Credit Agreement and such Transaction
      Documents as amended by this Agreement.

     

    (e)  This
      Agreement and each of the Other Documents is a Transaction Document for the
      purposes of the provisions of the other Transaction Documents. Without limiting
      the foregoing, any breach of representations, warranties, and covenants under
      this Agreement shall be a Default or Event of Default, as applicable, under
      the
      Credit Agreement.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    Section
      9.  Reaffirmation
      of the Guaranty.
      The
      Guarantor hereby ratifies, confirms, and acknowledges that its obligations
      under
      the Guaranty are in full force and effect and that the Guarantor continues
      to
      unconditionally and irrevocably guarantee the full and punctual payment, when
      due, whether at stated maturity or earlier by acceleration or otherwise, all
      of
      the Guaranteed Obligations as such Guaranteed Obligations have been increased
      and amended by this Agreement. The Guarantor hereby acknowledges that its
      execution and delivery of this Agreement does not indicate or establish an
      approval or consent requirement by the Guarantor under the Credit Agreement
      in
      connection with the execution and delivery of amendments to the Credit
      Agreement, the Notes or any of the other Loan Documents.

     

    Section
      10.  Miscellaneous.
      

     

    (a)  Counterparts.
      This
      Agreement may be signed in any number of counterparts, each of which shall
      be an
      original and all of which, taken together, constitute a single instrument.
      This
      Agreement may be executed by facsimile signature and all such signatures shall
      be effective as originals.

     

    (b)  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns permitted pursuant to the Credit
      Agreement.

     

    (c)  Invalidity.
      In the
      event that any one or more of the provisions contained in this Agreement shall
      for any reason be held invalid, illegal or unenforceable in any respect, such
      invalidity, illegality or unenforceability shall not affect any other provision
      of this Agreement.

     

    (d)  Governing
      Law.
      THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
      THEREOF.

     

    THIS
      AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE NOTES, AND
      THE
      OTHER TRANSACTION DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
      PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
      PRIOR
      AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

     

    THERE
      ARE NO UNWRITTEN
      ORAL AGREEMENTS AMONG THE PARTIES.

     

    [Remainder
      of this page intentionally left blank. Signature pages to follow.]

     

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their respective officers thereunto duly authorized, as of the date first above
      written.

     

    
      	 	 	 
	 	COMPANY
	 	 
	 	TEKOIL AND GAS GULF COAST, LLC
	 	 
	 	By: Tekoil & Gas Corporation, its Managing
              Member
	 
 	 
 	 
 
	 	 	 
	 	By:  	/s/ Mark
              Western
	 	
              
Mark
              Western
	 	CEO
              and
              Chairman of the Board of Directors

    

     

    
      	 	 	 
	 	 
	 	GUARANTOR
	 	 
	 	TEKOIL & GAS CORPORATION
	 
 	 
 	 
 
	 	 	 
	 	By:  	/s/ Mark
              Western
	 	
              
Mark
              Western
	 	CEO
              and
              Chairman of the Board of Directors

    
      	 	 	 
	 	 
	 	
              J.
                ARON & COMPANY,

              as
                Lead Arranger, Syndication Agent,

              Administrative
                Agent and a Lender

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Authorized
              Signatory

    

     

     

    
      
         

      

      
        
          Signature
            Page to Amendment No. 1 and Waiver

        

        
          

        

      

      
         

      

    

    EXHIBIT
      A 

    TO
      AMENDMENT NO. 1 AND WAIVER

    

    [CLOSING
      DOCUMENT LIST]

    

     

     

     

     

    
      
         

      

      
        
          Exhibit
            A
            to Amendment No. 1 and Waiver

          -1-

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