Document:

COMPANY
      GENERAL SECURITY AGREEMENT

     

    This
      Company General Security Agreement (the “Agreement”)
      is
      dated as of June 22, 2005 by and among Acura Pharmaceuticals, Inc., a New York
      corporation with its principal place of business at 616 N. North Court,
      Palatine, Illinois, 60067 (“Debtor”),
      and
      Galen Partners III, L.P., a Delaware limited partnership with its principal
      place of business at 610 Fifth Avenue, Fifth Floor, New York, New York, 10020,
      acting in its capacity as agent for the Lenders, as defined below (the
“Agent”),
      for
      the benefit of the Lenders.

     

     

    PRELIMINARY
      STATEMENTS

     

    Debtor
      has entered into a Loan Agreement of even date herewith (as the same may be
      amended, modified, supplemented or restated from time to time, the “Loan
      Agreement;”
      terms
      which are capitalized in this Agreement and not otherwise defined shall have
      the
      meanings ascribed to them in the Loan Agreement) with the Lenders party thereto
      (the “Lenders”).
      The
      Lenders have required, as a condition precedent to the effectiveness of the
      Loan
      Agreement, that the Debtor (a) grant to the Agent, for the ratable benefit
      of
      the Lenders, a security interest in and to the Collateral (as defined in Section
      2.1 below) and (b) execute and deliver this Agreement in order to secure the
      payment and performance by the Debtor of the obligations owing by the Debtor
      to
      the Lenders under the Loan Agreement, the Notes, the other Transaction Documents
      and each of the agreements, documents and instruments delivered by the Debtor
      pursuant thereto or in connection therewith (collectively, the “Obligations”).

     

     

    AGREEMENT

     

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

     

    ARTICLE
      1

     

    CREATION
      OF SECURITY INTEREST

     

    1.1  SECURITY
      INTEREST

     

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

     

    1.2  DEBTOR
      REMAINS LIABLE

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
      2

     

    COLLATERAL

     

    2.1  COLLATERAL

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

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

     

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

     

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

     

    (h)  all
      of
      the shares of stock or other securities of Acura Pharmaceutical Technologies,
      Inc. and Axiom Pharmaceutical Corporation, and the certificates, if any,
      representing such shares or other securities, and all dividends, distributions,
      return of capital, cash, instruments and other property from time to time
      received, receivable or otherwise distributed in respect of or in exchange
      for
      any or all of such shares or securities and all subscription warrants, rights
      or
      options issued thereon or with respect thereto, and all investment property,
      all, to the extent applicable, as further set forth in the Stock Pledge
      Agreement.

     

    2.2  PROCEEDS

     

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

     

    
      
         

      

      
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    ARTICLE
      3

     

    REPRESENTATIONS
      AND WARRANTIES

     

    The
      Debtor represents and warrants as follows:

     

    3.1  ORGANIZATION
      AND EXISTENCE

     

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

     

    3.2  AUTHORIZATION

     

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

     

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

     

    3.3  PLACES
      OF BUSINESS

     

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

     

    3.4  LOCATION
      OF COLLATERAL

     

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

     

    3.5  RESTRICTIONS
      ON COLLATERAL DISPOSITION

     

    Except
      for any restrictions imposed under the Watson Security Agreement (as hereinafter
      defined),none of the Collateral is subject to contractual obligations that
      may
      restrict or inhibit the Agent’s rights or ability to sell or dispose of the
      Collateral or any part thereof after the occurrence of an Event of
      Default.

     

    
      
         

      

      
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    3.6  STATUS
      OF ACCOUNTS

     

    Each
      Account is based on an actual and bona fide rendition of services or sale of
      goods or products to customers, made by the Debtor in the ordinary course of
      its
      business. The Accounts created are the Debtor’s exclusive property and are not
      and shall not be subject to any lien, consignment arrangement, encumbrance,
      security interest or financing statement whatsoever, except the lien in favor
      of
      the holders of the Senior Note under the Watson Term Loan and the documents
      executed in connection therewith, including, without limitation, the Watson
      Security Agreement dated as of March 29, 2000 (the “Watson
      Security Agreement”).
      To
      the best knowledge of the Debtor, the Debtor’s customers have accepted the
      goods, products and services and owe and are obligated to pay the full amounts
      stated in the invoices according to their terms, without any dispute, offset,
      defense or counterclaim.

     

    3.7  COPYRIGHTS,
      TRADEMARKS AND PATENTS

     

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

     

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

     

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

     

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

     

    3.8  INVENTORY

     

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

     

    
      
         

      

      
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    3.9  OWNERSHIP

     

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

     

    ARTICLE
      4

     

    COVENANTS

     

    The
      Debtor agrees as follows:

     

    4.1  DEFEND
      AGAINST CLAIMS

     

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

     

    4.2  CHANGE
      IN COLLATERAL LOCATION

     

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

     

    4.3  ADDITIONAL
      FINANCING STATEMENTS

     

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

     

    
      
         

      

      
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4.4  ADDITIONAL
        LIENS; TRANSFERS

    

     

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

     

    4.5  CONTRACTUAL
      OBLIGATIONS

     

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

     

    4.6  AGENT’S
      RIGHT TO PROTECT COLLATERAL

     

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

     

    4.7  FURTHER
      OBLIGATIONS WITH RESPECT TO ACCOUNTS

     

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

     

    
      
         

      

      
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    4.8  INSURANCE

     

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

     

    4.9  TAXES

     

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

     

    4.10  COMPLIANCE
      WITH LAWS

     

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

     

    
      
         

      

      
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    4.11  MAINTENANCE
      OF PROPERTY

     

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

     

    4.12  ENVIRONMENTAL
      AND OTHER MATTERS

     

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

     

    4.13  INTELLECTUAL
      PROPERTY

     

    With
      respect to each item of its Intellectual Property, the Debtor agrees to take,
      at
      its expense, all necessary steps, including, without limitation, in the U.S.
      Patent and Trademark Office, the U.S. Copyright Office and any other
      governmental authority, to (a) maintain the validity and enforceability of
      such
      Intellectual Property and maintain such Intellectual Property in full force
      and
      effect, and (b) pursue the registration and maintenance of each patent,
      trademark, or copyright registration or application, now or hereafter included
      in such Intellectual Property of the Debtor, including, without limitation,
      the
      payment of required fees and taxes, the filing of responses to office actions
      issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or
      other governmental authorities, the filing of applications for renewal or
      extension, the filing of affidavits under Sections 8 and 15 of the U.S.
      Trademark Act, the filing of divisional, continuation, continuation-in-part,
      reissue and renewal applications or extensions, the payment of maintenance
      fees
      and the participation in interference, reexamination, opposition, cancellation,
      infringement and misappropriation proceedings. The Debtor shall not, without
      the
      prior written consent of the Agent, discontinue use of or otherwise abandon
      any
      Intellectual Property, or abandon any right to file an application for any
      patent, trademark or copyright, unless the Debtor shall have previously
      determined that such use or the pursuit or maintenance of such Intellectual
      Property is no longer desirable in the conduct of the Debtor’s business and that
      the loss thereof would not be reasonably likely to have a Material Adverse
      Effect, in which case, the Debtor will give prompt notice of any such
      abandonment to the Agent.

     

    4.14  FURTHER
      ASSURANCES

     

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

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    ARTICLE
      5

     

    REMEDIES

     

    5.1  OBTAINING
      COLLATERAL UPON DEFAULT

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    5.2  DISPOSITION
      OF COLLATERAL

     

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

     

    5.3  POWER
      OF ATTORNEY

     

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

     

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

     

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

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

    5.4  WAIVER
      OF CLAIMS

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    5.5  REMEDIES
      CUMULATIVE

     

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

     

    ARTICLE
      6

     

    MISCELLANEOUS
      PROVISIONS

     

    6.1  NOTICES

     

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

     

    6.2  HEADINGS

     

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

     

    6.3  SEVERABILITY

     

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

     

    6.4  AMENDMENTS,
      WAIVERS AND CONSENTS

     

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

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    6.5  INTERPRETATION
      OF AGREEMENT

     

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

     

    6.6  CONTINUING
      SECURITY INTEREST

     

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

     

    6.7  REINSTATEMENT

     

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

     

    6.8  SURVIVAL
      OF PROVISIONS

     

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

     

    6.9  SETOFF

     

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

     

    6.10  POWER
      OF ATTORNEY

     

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

     

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

     

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

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    6.11  INDEMNIFICATION;
      AUTHORITY OF AGENT

     

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

     

    6.12  RELEASE;
      TERMINATION OF AGREEMENT

     

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

     

    6.13  COUNTERPARTS

     

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

     

    6.14  GOVERNING
      LAW

     

    This
      Agreement and the rights of the parties hereunder shall be governed by, and
      construed in accordance with, the laws of the State of New York wherein the
      terms of this Agreement were negotiated, excluding to the greatest extent
      permitted by law any rule of law that would cause the application of the laws
      of
      any jurisdiction other than the State of New York.

     

    6.15  SUBMISSION
      TO JURISDICTION

     

    (a)  Each
      of
      the parties hereto hereby irrevocably and unconditionally submits, for itself
      and its property, to the nonexclusive jurisdiction of any New York State court
      or United States Federal court sitting in New York City, and any appellate
      court
      from any thereof, in any action or proceeding arising our of or relating to
      this
      Agreement or any of the other Transaction Documents to which it is a party,
      or
      for recognition or enforcement of any judgment, and each of the parties hereto
      irrevocably and unconditionally agrees that all claims in respect of any such
      action or proceeding may be heard and determined in any such New York State
      court or, to the fullest extent permitted by law, in such United States Federal
      court. Each of the parties hereto agrees that a final judgment in any such
      action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the right that any party may otherwise have to bring
      any action or proceeding relating to this Agreement or any of the other
      Transaction Documents in the courts of any other jurisdiction. 

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (b)  Each
      of
      the parties hereto irrevocably and unconditionally waives, to the fullest extent
      it may legally and effectively do so, any objection that it may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      in relation to this Agreement or any other Transaction Document to which it
      is a
      party in any such New York State or United States Federal court sitting in
      New
      York City. Each of the parties hereto hereby irrevocably waives, to the fullest
      extent permitted by law, the defense of an inconvenient forum to the maintenance
      of such action or proceeding in any such court.

     

    6.16  SERVICE
      OF PROCESS

     

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

     

    6.17  LIMITATION
      OF LIABILITY

     

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

     

    6.18  DELAYS;
      PARTIAL EXERCISE OF REMEDIES

     

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

     

    6.19  JURY
      TRIAL

     

    THE
      DEBTOR AND THE AGENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
      ANY
      ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
      OTHERWISE) ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT OR THE ACTIONS
      OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
      THEREOF.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    

    [SIGNATURE
      PAGE TO FOLLOW]

    

    
      
         

      

      
        17

        
          

        

      

      
         

        
        

      

    

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

     

    

    ACURA
      PHARMACEUTICALS, INC.

    

    

    By:
      /s/
      Andrew D. Reddick

    Name:
      Andrew D. Reddick

    Title:
      President and Chief Executive Office

    

    

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

    

    GALEN
      PARTNERS III, L.P. 

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

    610
      Fifth
      Avenue, 5th
      Fl.

    New
      York,
      New York 10019

    

    By:
      /s/
      Srini Conjeevaram

    Name:
      Srini Conjeevaram, its General Partner

    Title:
      President and Chief Executive Officer

    
      
         

      

      
        18

        
          

        

      

      
         

        
        

      

    

    

    SCHEDULE
      A

    

    Section
      3.3  Places
      of Business

    

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

    

    

    
      
         

      

      
        19CONTINUING
      UNCONDITIONAL SECURED GUARANTY

     

    This
      Continuing Unconditional Secured Guaranty (“Guaranty”)
      is
      made as of June 22, 2005 by Axiom Pharmaceutical Corporation, a Delaware
      corporation (“Guarantor”)
      in
      favor of Galen Partners III, L.P., a Delaware limited partnership, acting in
      its
      capacity as agent for the Lenders, as defined below (“Agent”),
      for
      the benefit of the Lenders.

     

    PRELIMINARY
      STATEMENTS

     

    Acura
      Pharmaceuticals, Inc., a New York corporation (the “Borrower”),
      entered into a Loan Agreement of even date herewith (the “Loan
      Agreement;”
      terms
      used in this Guaranty and not otherwise defined shall have the meanings given
      to
      them in the Loan Agreement) with the Lenders party (each a “Lender”
      and
      collectively, the “Lenders”).
      Pursuant to the Loan Agreement, the Lenders have made financial accommodations
      to the Borrower in accordance with the terms of the Loan Agreement. The
      Guarantor will continue to receive certain benefits from such accommodations
      and
      is therefore willing to guaranty the prompt payment and performance of the
      obligations of the Borrower, on the terms set forth in this Guaranty. The
      extension of credit by the Lenders to the Borrower is necessary and desirable
      to
      the conduct and operation of the business of the Borrower and will inure to
      the
      financial benefit of the Guarantor.

     

    AGREEMENT

     

    For
      value
      received and in consideration of any loan, advance, or financial accommodation
      of any kind whatsoever heretofore, now or hereafter made, given or granted
      to
      the Borrower by the Lenders (including, without limitation, the loans evidenced
      by the Notes as made by the Lenders to the Borrower pursuant to, the Loan
      Agreement) and other good and valuable consideration (the sufficiency and
      receipt of which are hereby acknowledged), the Grantor hereby agrees as follows:
      

     

    ARTICLE
      1

     

    GUARANTY

     

    1.1  GUARANTY

     

    The
      Guarantor unconditionally guarantees to the Agent for the benefit of the Lenders
      (a) the full and prompt payment and performance when due, whether at maturity
      or
      earlier, by reason of acceleration or otherwise, and at all times thereafter,
      of
      all liabilities of the Borrower to the Lenders and (b) the prompt, full and
      faithful discharge by the Borrower of each and every term, condition, agreement,
      representation, warranty or covenant now or hereafter made by the Borrower
      to
      the Lenders or the Agent, in each case, under these clauses (a) and (b),
      pursuant to the Loan Agreement, the Notes, the other Transaction Documents
      or
      any document or instrument delivered by the Borrower to the Lenders in
      connection therewith or pursuant thereto (which, together with the liabilities
      described in clause (a) of this Section 1.1, are collectively referred to in
      this Guaranty as the “Borrower’s
      Liabilities”).
      The
      Guarantor further agrees to pay all reasonable out-of-pocket costs and expenses,
      including, without limitation, all court costs and reasonable attorneys’ and
      paralegals’ fees paid or incurred by the Lenders and the Agent (on behalf of the
      Lenders), in endeavoring to collect all or any part of the Borrower’s
      Liabilities from, or in prosecuting any action against the Guarantor or any
      other guarantor of all or any part of the Borrower’s Liabilities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.2  NO
      FRAUDULENT CONVEYANCE

     

    Notwithstanding
      any provision of this Guaranty to the contrary, it is intended that this
      Guaranty, and any liens and security interests granted by the Guarantor to
      secure this Guaranty, will not constitute a Fraudulent Conveyance (as defined
      below). Consequently, the Guarantor agrees that if this Guaranty, or any liens
      or security interests securing this Guaranty, would, but for the application
      of
      this sentence, constitute a Fraudulent Conveyance, this Guaranty and each such
      lien and security interest shall be valid and enforceable only to the maximum
      extent that would not cause this Guaranty or such lien or security interest
      to
      constitute a Fraudulent Conveyance, and this Guaranty shall automatically be
      deemed to have been amended accordingly at all relevant times. For purposes
      hereof, “Fraudulent
      Conveyance”
      means a
      transfer of property or the incurrence of liability which would be avoidable
      under Section 548 or 544(b) of the Bankruptcy Code (as defined herein) or a
      fraudulent conveyance or fraudulent transfer under the provisions of any
      applicable fraudulent conveyance or fraudulent transfer law or similar law
      of
      any state, nation or other governmental unit, as in effect from time to
      time.

     

    1.3  GUARANTY
      UNCONDITIONAL

     

    The
      Guarantor hereby agrees that, except as hereinafter provided, and to the extent
      permitted by applicable law, its obligations under this Guaranty shall be
      unconditional, irrespective of (a) the validity or enforceability of the
      Borrower’s Liabilities or any part thereof, or of any Note or other document
      evidencing all or any part of the Borrower’s Liabilities, (b) the absence of any
      attempt to collect the Borrower’s Liabilities from the Borrower or any other
      guarantor or other action to enforce the same, (c) the waiver or consent by
      the
      Agent, any Lender or Lenders with respect to any provision of any instrument
      evidencing the Borrower’s Liabilities, or any part thereof, or any other
      agreement heretofore, now or hereafter executed by the Borrower and delivered
      to
      the Agent, the Lender or Lenders, (d) the failure by the Agent or any Lender
      to
      take any steps to perfect and maintain its security interest in, or to preserve
      its rights to, any security or collateral for the Borrower’s Liabilities, (e)
      the institution of any proceeding under Chapter 11 of Title 11 of the United
      States Code (11 U.S.C. §101 et seq.), as amended (the “Bankruptcy
      Code”),
      or
      any similar proceeding, by or against the Borrower, or the Agent’s or any
      Lender’s election in any such proceeding of the application of Section
      1111(b)(2) of the Bankruptcy Code, (f) any borrowing or grant of a security
      interest by the Borrower as debtor-in-possession, under Section 364 of the
      Bankruptcy Code, (g) the disallowance, under Section 502 of the Bankruptcy
      Code,
      of all or any portion of the Lenders’ claim(s) for repayment of the Borrower’s
      Liabilities, or (h) any other circumstance which might otherwise constitute
      a
      legal or equitable discharge or defense of a guarantor.

     

    1.4  WAIVERS

     

    (a)  The
      Guarantor hereby waives diligence, presentment, demand of payment, filing of
      claims with a court in the event of receivership or bankruptcy of the Borrower,
      protest or notice with respect to the Borrower’s Liabilities and all demands
      whatsoever, and covenants that this Guaranty will not be discharged, except
      by
      complete performance of the obligations and liabilities contained herein. Upon
      the occurrence and during the continuance of an Event of Default under the
      Loan
      Agreement, Lenders may, at their sole election, proceed directly and at once,
      without notice, against the Guarantor to collect and recover the full amount
      or
      any portion of the Borrower’s Liabilities, without first proceeding against any
      other Person, or against any security or collateral for the Borrower’s
      Liabilities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  The
      Guarantor hereby waives any and all claims (including, without limitation,
      any
      claim for reimbursement, contribution or subrogation) of the Guarantor against
      the Borrower, any endorser or any other guarantor of all or any part of the
      Borrower’s Liabilities, or against any of the Borrower’s properties, arising by
      reason of any payment by the Guarantor to the Lenders pursuant to the provisions
      hereof.

     

    1.5  NO
      SUBROGATION

     

    The
      Guarantor hereby unconditionally and irrevocably agrees not to exercise any
      rights that it may now have or hereafter acquire against the Borrower or any
      other insider guarantor that arise from the existence, payment, performance
      or
      enforcement of the Borrower’s Liabilities under or in respect of this Guaranty,
      the Loan Agreement, the Notes, the other Transaction Documents or any document
      or instrument delivered by the Borrower to the Lenders in connection therewith
      or pursuant thereto, including, without limitation, any right of subrogation,
      reimbursement, exoneration, contribution or indemnification and any right to
      participate in any claim or remedy of the Agent or the Lenders against the
      Borrower or any other insider guarantor or any Collateral, whether or not such
      claim, remedy or right arises in equity or under contract, statute or common
      law, including, without limitation, the right to take or receive from the
      Borrower or any other insider guarantor, directly or indirectly, in cash or
      other property or by set-off or in any other manner, payment or security on
      account of such claim, remedy or right. If any amount shall be paid to any
      Guarantor in violation of the immediately preceding sentence at any time prior
      to the indefeasible payment in full in cash of the Borrower’s Liabilities and
      all other amounts payable under this Guaranty, such amount shall be received
      and
      held in trust for the benefit of the Lenders, shall be segregated from other
      property and funds of the Guarantor and shall forthwith be paid or delivered
      to
      the Agent in the same form as so received (with any necessary endorsement or
      assignment) to be credited and applied to the Borrower’s Liabilities and all
      other amounts payable under this Guaranty, whether matured or unmatured, in
      accordance with the terms of the Notes and the Loan Agreement, or to be held
      as
      collateral for any Borrower’s Liabilities or other amounts payable under this
      Guaranty thereafter arising. After the Loan Agreement has been terminated and
      the Notes canceled and the indefeasible payment in full in cash of the
      Borrower’s Liabilities and all other amounts payable under this Guaranty has
      occurred, except in the case of a Reinstatement Event (as defined below), the
      Agent and the Lenders will, at the Guarantor’s request and expense, execute and
      deliver to the Guarantor appropriate documents, without recourse and without
      representation or warranty, necessary to evidence the transfer by subrogation
      to
      the Guarantor of an interest in the Borrower’s Liabilities resulting from such
      payment made by the Guarantor pursuant to this Guaranty.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.6  LENDERS’
      RIGHTS WITH RESPECT TO BORROWER’S LIABILITIES

     

    The
      Lenders are hereby authorized, without notice or demand and without affecting
      the liability of the Guarantor hereunder, at any time and from time to time
      to
      (a) increase the amount of, renew, extend, accelerate or otherwise change the
      time for payment of, or other terms relating to the Borrower’s Liabilities or
      otherwise modify, amend or change the terms of any debenture, note or other
      agreement, document or instrument now or hereafter executed by the Borrower
      and
      delivered to the Lenders; (b) accept partial payments on the Borrower’s
      Liabilities; (c) take and hold security or collateral for the payment of the
      Borrower’s Liabilities guaranteed hereby, or for the payment of this Guaranty,
      or for the payment of any other guaranties of the Borrower’s Liabilities or
      other liabilities of the Borrower, and exchange, enforce, waive and release
      any
      such security or collateral; (iv) apply such security or collateral and direct
      the order or manner of sale thereof as in their sole discretion they may
      determine; and (v) settle, release, compromise, collect or otherwise liquidate
      the Borrower’s Liabilities and any security or collateral therefor in any
      manner, without affecting or impairing the obligations of the Guarantor
      hereunder. The Lenders shall have the exclusive right to determine the time
      and
      manner of application of any payments or credits, whether received from the
      Borrower or any other source, and such determination shall be binding on the
      Guarantor. All such payments and credits may be applied, reversed and reapplied,
      in whole or in part, to any of the Borrower’s Liabilities as the Lenders shall
      determine in their sole discretion without affecting the validity or
      enforceability of this Guaranty (unless otherwise required pursuant to the
      Loan
      Agreement).

     

    1.7  INFORMATION

     

    The
      Guarantor hereby assumes responsibility for keeping itself informed of the
      financial condition of the Borrower, and any and all endorsers and/or other
      guarantors of any instrument or document evidencing all or any part of the
      Borrower’s Liabilities and of all other circumstances bearing upon the risk of
      nonpayment of the Borrower’s Liabilities or any part thereof that diligent
      inquiry would reveal, and the Guarantor hereby agrees that neither the Agent
      nor
      the Lenders shall have any duty to advise the Guarantor of information known
      to
      any of them regarding such condition or any such circumstances or to undertake
      any investigation not a part of their respective regular business routines.
      If
      the Agent or any Lender, in their respective sole discretions, undertake at
      any
      time or from time to time to provide any such information to the Guarantor,
      the
      Agent or such Lender, as the case may be, shall not be under any obligation
      to
      update any such information or to provide any such information to the Guarantor
      on any subsequent occasion.

     

    1.8  REINSTATEMENT

     

    The
      Guarantor consents and agrees that neither the Agent nor the Lenders shall
      be
      under any obligation to marshal any assets in favor of the Guarantor or against
      or in payment of any or all of the Borrower’s Liabilities. The Guarantor further
      agrees that, to the extent that the Borrower makes a payment or payments to
      the
      Lenders or the Lenders receive any proceeds of collateral, which payment or
      payments or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside and/or required to be repaid to the
      Borrower, its estate, trustee, receiver or any other party, including, without
      limitation, the Guarantor, under any bankruptcy law or state or federal
      statutory or common law, then to the extent of such payment or repayment, the
      Borrower’s Liabilities or the part thereof which has been paid, reduced or
      satisfied by such amount, and the Guarantor’s obligations hereunder with respect
      to such portion of the Borrower’s Liabilities, shall be reinstated and continued
      in full force and effect as of the date such initial payment, reduction or
      satisfaction occurred. Notwithstanding anything else to the contrary contained
      herein, the Guarantor consents and agrees that this Guaranty shall continue
      to
      be effective or be reinstated, as the case may be, if at any time any payment
      of
      any of the Borrower’s Liabilities is rescinded or must otherwise be returned by
      any Lender or any other Person upon the insolvency, bankruptcy or reorganization
      of the Borrower or the Guarantor or otherwise, all as though such payment had
      not been made (each such continuation or reinstatement, a “Reinstatement
      Event”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.9  ASSIGNMENTS
      BY LENDERS

     

    Each
      Lender may, to the extent and in the manner set forth in the Loan Agreement,
      sell or assign the Borrower’s Liabilities or any part thereof, or grant
      participations therein, and in any such event each and every permitted assignee
      or holder of, or participant in, all or any of the Borrower’s Liabilities shall
      have the right to enforce this Guaranty, by suit or otherwise for the benefit
      of
      such assignee, holder, or participant, as fully as if herein by name
      specifically given such right.

     

    ARTICLE
      2

     

    REPRESENTATIONS
      AND WARRANTIES

     

    The
      Guarantor hereby represents and warrants that: (a) it is a corporation duly
      organized, validly existing and in good standing under the laws of the State
      of
      Delaware; (b) it is duly authorized and empowered to execute and deliver this
      Guaranty; (c) all corporate action on the part of the Guarantor requisite for
      the due execution and delivery of this Guaranty and the due granting and
      creation of the security interests referred to herein has been duly and
      effectively taken; (d) the Guarantor’s chief executive office is located at c/o
      Acura Pharmaceuticals, Inc., 616 N. North Court, Palatine, Illinois 60067;
      and
      (e) the execution, delivery and performance of this Guaranty will not result
      in
      any violation of, conflict with, or result in a breach of, any of the terms
      of,
      or constitute a default under, any agreements, contracts, court orders or
      consent decrees, the Certificate of Incorporation or the By-laws, as amended,
      of
      the Guarantor.

     

    ARTICLE
      3

     

    MISCELLANEOUS

     

    3.1  SUCCESSORS
      AND ASSIGNS; ASSIGNMENT BY GUARANTOR

     

    This
      Guaranty shall be binding upon the Guarantor and upon the successors (including
      without limitation, any receiver, trustee or debtor in possession of or for
      the
      Guarantor) of the Guarantor and shall inure to the benefit of the Lenders and
      their respective successors and permitted assigns. Notwithstanding anything
      contained herein to the contrary, this Guaranty may not be assigned by the
      Guarantor without the prior written consent of the Lenders.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.2  TERM
      OF GUARANTY

     

    This
      Guaranty shall continue in full force and effect, and the Lenders shall be
      entitled to make loans and advances and extend financial accommodations to
      the
      Borrower on the faith hereof, until the Loan Agreement has been terminated
      and
      the Notes canceled and the indefeasible payment in full in cash of the
      Borrower’s Liabilities and all other amounts payable under this Guaranty has
      occurred. The Guarantor hereby unconditionally and irrevocably waives any right
      to revoke this Guaranty and acknowledges that this Guaranty is continuing in
      nature and applies to all Borrower’s Liabilities, whether existing now or in the
      future.

     

    3.3  SEVERABILITY

     

    Wherever
      possible each provision of this Guaranty shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Guaranty shall be prohibited by or invalid under such law, such provision shall
      be ineffective to the extent of such prohibition or invalidity without
      invalidating the remainder of such provision or the remaining provisions of
      this
      Guaranty.

     

    3.4  GOVERNING
      LAW

     

    THIS
      GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
      THE
      STATE OF NEW YORK WHEREIN THE TERMS OF THIS GUARANTY WERE NEGOTIATED, EXCLUDING
      TO THE GREATEST EXTENT PERMITTED BY LAW ANY RULE OF LAW THAT WOULD CAUSE THE
      APPLICATION OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

     

    3.5  CONSENT
      TO JURISDICTION

     

    (a)  The
      Guarantor hereby irrevocably and unconditionally submits, for itself and its
      property, to the nonexclusive jurisdiction of any New York State court or United
      States Federal court sitting in New York City, and any appellate court from
      any
      thereof, in any action or proceeding arising our of or relating to this Guaranty
      or any of the other Transaction Documents to which it is a party, or for
      recognition or enforcement of any judgment, and each of the parties hereto
      irrevocably and unconditionally agrees that all claims in respect of any such
      action or proceeding may be heard and determined in any such New York State
      court or, to the fullest extent permitted by law, in such United States Federal
      court. The Guarantor agrees that a final judgment in any such action or
      proceeding shall be conclusive and may be enforced in other jurisdictions by
      suit on the right that any party may otherwise have to bring any action or
      proceeding relating to this Guaranty or any of the other Transaction Documents
      in the courts of any other jurisdiction.

     

    (b)  The
      Guarantor irrevocably and unconditionally waives, to the fullest extent it
      may
      legally and effectively do so, any objection that it may now or hereafter have
      to the laying of venue of any suit, action or proceeding arising out of or
      in
      relation to this Guaranty or any other Transaction Document to which it is
      a
      party in any such New York State or United States Federal court sitting in
      New
      York City. The Guarantor hereby irrevocably waives, to the fullest extent
      permitted by law, the defense of an inconvenient forum to the maintenance of
      such action or proceeding in any such court.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.6  WAIVER
      OF JURY TRIAL

     

    EACH
      OF
      THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
      ANY
      ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
      OTHERWISE) ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT OR THE ACTIONS
      OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
      THEREOF.

     

    

    

    [SIGNATURE
      PAGE TO FOLLOW]

    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    

    
       

    

    IN
      WITNESS WHEREOF,
      this
      Guaranty has been duly executed by the undersigned as of the date first written
      above.

     

    
      	 	 	 
	 	AXIOM
              PHARMACEUTICAL CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ Andrew
              D. Reddick 
	 	
              
Name:
              Andrew D. Reddick
	 	Title:
              President and CEO

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