CONTINUING 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 Xxxxx 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., 000 X. Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000;
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/ Xxxxxx X. Xxxxxxx | |
|
Name: Xxxxxx X. Xxxxxxx |
||
| Title: President and CEO | ||
