UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
____________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act Of 1934
Date
of
Report (Date of earliest event reported)
___________________________________________________________
ACURA
PHARMACEUTICALS, INC.
(Exact
Name of Registrant as Specified in Charter)
___________________________________________________________
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State
of New York
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1-10113
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11-0853640
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(State
of Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
Number)
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616
N. North Court, Suite 120
Palatine,
Illinois 60067
(Address
of principal executive offices) (Zip Code)
(847)
705-7709
(Registrant’s
telephone number, including area code)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o› Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o› Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o› Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d- 2(b))
o› Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR
240.13e- 4(c))
Item
1.01 Entry
Into a Material Definitive Agreement
On
November
30, 2006,
the
Registrant amended bridge loan agreements with Essex Woodlands Health Venture
V,
L.P., Care Capital Investments II, L.P., Care Capital Offshore Investments
II,
L.P., Galen Partners III, L.P., Galen Partners International III, L.P. and
Galen
Employee Fund III, L.P. (collectively, the “VC Lenders”) and certain individual
lenders, dated June 22, 2005, September 16, 2005, November 9, 2005 and January
31, 2006 (the “Bridge Loan Agreements”), under which the Registrant has borrowed
the principal amount of $7.278 million (inclusive of the November
30, 2006
bridge
loan in the principal amount of $534,000 described in Item 8.01 below)
(collectively, the “Bridge Loans”). The amendments to the Bridge Loan Agreements
provide for:
| (i) |
the
extension of the maturity date of the Bridge Loans from December 1,
2006
to March 31, 2007;
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| (ii) |
the
satisfaction of interest payments in the Registrant’s common stock based
upon the average of the closing bid and asked prices of the common
stock
for the five (5) trading days immediately preceding the interest payment
date;
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| (iii) |
the
commitment for additional bridge funding to be provided by the VC Lenders
in the principal amount of up to $1.466 million (after giving effect
to
the Bridge Loan of $534,000 made by the VC Lenders on November 30,
2006
and described in Item 8.01 below); and
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| (iv) |
the
right of the bridge lenders to convert the Bridge Loans (including
the
additional bridge loans to be advanced under subsection (iii) above)(the
“Bridge Loan Financing”), into
the Registrant’s common stock upon the completion of a third-party equity
financing providing gross proceeds to the Registrant in the aggregate
amount of at least $8 million (a “Third Party Equity Financing”), a Change
of Control Transaction or upon the maturity date of the Bridge Loan
Financing (each a “Triggering Event”). Upon the occurrence of a Triggering
Event, the bridge
lenders may convert the $534,000 bridge loan secured November 30, 2006
and
any financing secured by the Registrant under funding commitment described
in subsection (iii) above into the Registrant’s common stock at a
conversion price equal to (A)
in the case of the completion of a Third Party Equity Financing, the
lesser of (i) 80% of the average closing bid and asked prices of the
Registrant’s common stock for the twenty trading days immediately
preceding the public announcement of the Third Party Investor Financing,
(ii) the average price of the securities sold by the Registrant in
such
Third Party Equity Financing, and (iii) $0.44 per share, and (B) in
the
case of a Change of Control Transaction or upon the maturity date of
the
Bridge Loan Financing, the lesser of (i) 80% of the average closing
bid
and asked prices of the Registrant’s common stock for the twenty trading
days immediately preceding the public announcement of the Change of
Control Transaction or the maturity date, as applicable, and (ii) $0.44
per share. In addition, upon a Triggering Event, the bridge lenders
may
convert $2.55 million of Bridge Loan Financing into the Company's common
stock at a conversion price of $0.20 per share, $2.3 million of Bridge
Loan Financing at a conversion price of $0.225 per share and $1.894
million of bridge loan financing at a conversion price of $0.25 per
share.
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GCE
Holdings, LLC, which is controlled by the VC Lenders, beneficially owns
approximately 78% of the Registrant's outstanding common stock and has the
right
to designate four directors (of which it has exercised the right with respect
to
three directors) to the Registrant’s Board of Directors.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation Under an Off Balance Sheet
Arrangement
The
contents of Items 1.01 and 8.01 are hereby incorporated by
reference.
Item
8.01 Other
Events
On
November
30, 2006,
the
Registrant borrowed $534,000 pursuant to a certain Bridge Loan Agreement dated
January 31, 2006 with various lenders. The Bridge Loan bears interest at a
rate
of 10% and matures on March 31, 2007. The Bridge Loan contains customary default
and acceleration provisions and provides the conversion rights described in
Item
1.01 above.
Item
9.01 Financial
Statements and Exhibits
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Exhibit Number
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Description
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10.1
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Omnibus
Amendment and Consent effective as of November
30, 2006
between the Registrant and various lenders.
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99.1
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Press
Release dated November
30, 2006
Announcing Receipt of Bridge Funding
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
ACURA
PHARMACEUTICALS, INC.
By:__/s/
Peter Clemens________________
Peter
A.
Clemens
Senior
Vice President & Chief Financial Officer
Date: November
30, 2006
Exhibit
Index
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Exhibit Number
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Description
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10.1
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Omnibus
Amendment and Consent effective as of November
30, 2006
between the Registrant and various lenders.
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|
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99.1
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Press
Release dated November
30, 2006
Announcing Receipt of Bridge Funding
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OMNIBUS
AMENDMENT AND CONSENT
OMNIBUS
AMENDMENT AND CONSENT EFFECTIVE AS OF November 30, 2006 (this “Omnibus
Amendment and Consent”)
by and
among Acura Pharmaceuticals, Inc. (the “Company”),
and
Acura Pharmaceutical Technologies, Inc. and the following lenders (“Lenders”):
Galen
Partners III, L.P. (as agent for the other lenders (“Agent”)
and as
a lender itself), Galen Partners International, III, L.P., Galen Employee Fund
III, L.P., Care Capital Offshore Investments II, LP, Care Capital Investments
II, LP, Essex Woodlands Health Ventures V, L.P. (the foregoing Lenders, being
the “VC
Lenders”),
Dennis
Adams, George E. Boudreau, Michael Weisbrot, Susan Weisbrot; and the following
persons with respect to Sections 5, 6, 7, and 8: John E. Heppe Jr. and Peter
Steiglitz (“Additional
Watson Holders”).
Capitalized
terms used herein and not defined herein have the meanings set forth in the
Subordination Agreement dated as of January 31, 2006 among the Lenders, the
Company and others (the “Subordination
Agreement”).
R
E C I T A L S
WHEREAS
the
Company and one or more Lenders have entered into the June 2005 Loan Agreement,
the September 2005 Loan Agreement, the November 2005 Loan Agreement and the
January 2006 Loan Agreement (collectively, the “Loan
Agreements”)
and
such other agreements, notes and instruments executed in connection with such
loan agreements (collectively, the “Loan
Documents”);
and
WHEREAS,
the
Company and certain Lenders and the Additional Watson Holders are parties to
the
Watson Note (as defined in the Subordination Agreement); and
WHEREAS,
the
loans extended pursuant to the Loan Agreements are due to mature on December
1,
2006 (the “Original
Maturity Date”);
WHEREAS,
pursuant
to Section 1(a) of the Omnibus Amendment dated August 16, 2006 among the parties
hereto (the “August
2006 Omnibus Amendment”),
Section 5.12 was added to each Loan Agreement to grant the Lenders a the right
to convert their Notes under certain circumstances into equity securities of
the
Company (the “August
2006 Rollover Right”);
WHEREAS,
pursuant to Section 7 of the Omnibus Amendment dated October 20, 2006 among
the
parties hereto (the “October
2006 Omnibus Amendment”)
certain Lenders agreed to accept the next interest payment due under the Loan
Agreements in the form of common stock of the Company (the “Common
Stock Interest Payment”);
and
WHEREAS,
the
Company and the Lenders wish to extend the Original Maturity Date, replace
the
August 2006 Rollover Right with a substitute rollover right and amend the terms
of the Common Stock Interest Payment.
NOW,
THEREFORE,
in
consideration of the mutual covenants herein contained, the parties mutually
agree as follows:
1
1.
Amendments:
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(a)
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The
January 2006 Loan Agreement is amended by adding thereto Schedule
1.3
attached hereto and by deleting Section 1.1 in its entirety and replacing
same with the following:
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“1.1
TERM LOAN
On
the terms and subject to the conditions of this Agreement, each Lender severally
agrees to make to the Company on the Closing Date a term loan (each, a
“Loan”)
in
a principal amount equal to such Lender’s initial Commitment. The Lenders shall
make additional Loans commencing November 2006, as set forth in Section 1.3,
and
may, in their sole and absolute discretion, make additional Loans to the Company
as provided in Section 1.3 hereof. The Company and the Lenders acknowledge
and
agree that no Lender is under any obligation to make any Loan in excess of
its
respective Commitment. No amounts paid or prepaid with respect to any Loan
may
be reborrowed.”
;and
by
amending and restating the definition of Commitment in Article XVI as
follows;
““Commitment”
means, with respect to each Lender, the commitment of such Lender to make such
Loan hereunder. The initial amount of the Commitment of each of Essex, Care
Capital and Galen is set forth opposite its signature hereto. The additional
mandatory Commitments of the Lenders are set forth in Section 1.3. The
Commitment of each Additional Lender and/or any additional Commitment of Essex,
Care Capital and/or Galen will be set forth opposite its signature on the
Joinder Agreement to which it is a party.”
;
and by
replacing Section 1.3 thereof with the following
“1.3 CLOSING
The
initial closing (the “Closing”)
at
which the Loans from Essex, Care Capital and Galen shall be disbursed to the
Company will take place at the offices of St. John & Wayne, L.L.C., Two Penn
Plaza East, Newark, New Jersey 07105 upon the satisfaction of the conditions
to
Closing set forth in this Agreement on the date hereof, or such other place,
time and date as shall be mutually agreed to by the Company and the Lenders.
Each Lender agrees to fund additional Loans (“Mandatory Loans”) upon the
Company’s written request during the months and in the percentage of the monthly
amount specified next to each Lender’s name on Schedule 1.3 attached hereto. The
Company will provide each Lender at least ten days notice of the date of the
Closing of a Mandatory Loan (which date shall be binding on all parties), and
the amount of Lender’s funding Commitment (based on the Lender’s commitment
percentage set forth on Schedule 1.3). Any amounts not borrowed by the Company
during any month may be borrowed by the Company from the Lenders (and will
be
funded by the Lenders according to each Lender’s commitment percentage) in
succeeding months until the earlier of (i) the date advanced to the Company
under this Agreement, or (ii) March 31, 2007. The Company and the Lenders
acknowledge and agree that additional Loans (“Non-Mandatory Loans”) may be
funded to the Company by any one or more of Galen, Care Capital, Essex and
any
Additional Lender pursuant to the terms of this Agreement on one or more Closing
Dates; provided,
however,
that (i) the aggregate principal amount of the Non-Mandatory Loans shall not
exceed $1,000,000 without the prior written consent of any two (2) of Essex,
Care Capital and Galen,(ii) no such Additional Lender may participate without
the prior written consent of any two (2) of Essex, Care Capital and Galen,
and
(iii) no Lender is under any obligation to fund any Loan other than its
respective Commitment. Upon the funding of any additional Loans (whether
Mandatory Loans or Non-Mandatory Loans), under this Agreement, the Company
and
each Lender and/or Additional Lender making a Loan shall be required to execute
a Joinder Agreement, which Joinder Agreement shall specify the Commitment of
such Lender and/or Additional Lender. Any Additional Lender executing a Joinder
Agreement shall be deemed a “Lender” for all purposes of this Agreement. On the
date of a Closing (each a “Closing
Date”),
the Company shall deliver to each Lender at such Closing a Note, dated the
applicable Closing Date, in the principal amount equal to such Lender’s
Commitment or, in the event Galen, Care Capital and/or Essex shall make an
additional Loan hereunder, the Company shall issue to such Lender an additional
Note dated the applicable Closing Date in the principal amount equal to such
Lender’s additional Commitment. The Company shall deliver the foregoing Notes
against receipt by the Company from each Lender of an amount equal to the
Commitment of such Lender, in each case by wire transfer in immediately
available funds in U.S. dollars to an account designated by the Company.
Notwithstanding anything to the contrary herein, no Lender shall be required
in
any circumstances to make Mandatory Loans (x) in an aggregate amount that
exceeds the aggregate amount of such Lender’s committed amount set forth on
Schedule 1.3, or (y) at any time after the occurrence and during the continuance
of an Event of Default (including, for such purposes, after any event, fact
or
occurrence that, with the passage of time or giving of notice, would become
an
Event of Default) .”;
and
2
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(b)
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Each
of the June 2005 Loan Agreement, the September 2005 Loan Agreement,
the
November 2005 Loan Agreement and the January 2006 Loan Agreement
is
amended as follows:
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(i)
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Section
2.1 is amended to replace “December 1, 2006” with “March 31, 2007 (or such
later date as may be agreed to by Lenders holding not less than 66
2/3% of
the outstanding principal amount of the Loans)”; and
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(ii)
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Section
5.12 is hereby deleted in its entirety and replaced with the
following:
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5.12. ROLLOVER
RIGHT
Each
Lender shall have the one-time right (the “Rollover
Right”)
on
the terms provided below, to purchase, through the conversion of all or any
portion of such Lender’s Notes (including principal and accrued and unpaid
interest), securities of the Company, on the first to occur of a Third-Party
Investor Financing, a Conversion Change of Control Transaction or the Maturity
Date (each a “Material
Event”)
after the date hereof, under the terms and conditions set forth in this Section
5.12. Any portion of such Notes which are not so converted pursuant to this
Section 5.12 shall become immediately due and payable simultaneously with such
Material Event.
3
(a) Simultaneous
with the completion of an equity financing pursuant to which the Company issues
its common stock or other equity securities of the Company and, after the
effectiveness thereof, the Company will have cumulatively received at least
$8
million in gross proceeds from equity financings after the date hereof
(including all equity financings after the date hereof, including such final
financing which causes the aggregate cumulative proceeds to exceed $8 million,
but expressly excluding the principal and interest under the Notes for which
a
Lender’s Rollover Right is exercised) from unaffiliated, thirty-party investors
(a “Third-Party Investor Financing”) other than (i) issuances of options or
restricted stock units to employees, consultants or directors, (ii) interest
on
debt payable in common stock or (iii) pursuant to the conversion of warrants,
options, restricted stock units or other convertible securities outstanding
on
the date hereof, each Lender may convert all or any portion (except as provided
below) of its Notes, at the option of such Lender, under either (but not both
or
a combination of each) of the following:
(i)
into the same equity securities as are issued in such Third-Party Investor
Financing on the same terms as provided in such Third-Party Investor Financing
(but at the average price of all equity securities sold that have combined
to
exceed the cumulative $8 million in proceeds), or
(ii)
(A) for Notes issued in or prior to November 2005 (the “June to November 2005
Bridge Notes”), convert such Notes into Common Stock at a price of $0.20 per
share, (B) for Notes issued after November 2005 and in or prior to May 2006
(the
“January to May 2006 Bridge Notes”), convert such Notes into Common Stock at a
price of $0.225 per share; (C) for Notes issued after May 2006 and in or prior
to October 2006 (the “June to October 2006 Bridge Notes”), convert such Notes
into Common Stock at a price of $0.25 per share;
and
(D)
for other Notes issued or to be issued under the Loan Agreement dated January
31, 2006 (the “Future Bridge Notes”), convert such Notes into the Common Stock
at a conversion price equal to the lesser of (X) 80% of the average of the
closing bid and asked prices of the Common Stock for the twenty (20) trading
days immediately preceding the public announcement of the Third-Party Investor
Financing, (Y) the average price of the equity securities sold that have
combined to exceed the cumulative $8 million in proceeds, and (Z) $0.44 per
share; provided that a Lender choosing this option must convert all (and not
less than all) of its Notes pursuant to this option.
4
(b) Simultaneous
with the completion of the first Conversion Change of Control Transaction to
occur after the date hereof, each Lender may, at the option of such Lender
convert all (and not less than all) of its Notes as follows, (i) for the June
to
November 2005 Bridge Notes, convert such Notes into Common Stock at a price
of
$0.20 per share, (ii) for the January to May 2006 Bridge Notes, convert such
Notes into Common Stock at a price of $0.225 per share; (iii) for the June
to
October 2006 Bridge Notes, convert such Notes into Common Stock at a price
of
$0.25 per share;
and
(iv)
for the Future Bridge Notes convert such Notes into Common Stock at a price
equal to 80% of the value per fully diluted share of the Company’s common stock
provided in the Conversion Change of Control Transaction; provided, however,
that if such Conversion Change of Control Transaction is a transaction of the
type described in subsection (D) or (E) of the definition of Conversion Change
of Control Transaction below, each Lender’s Future Bridge Notes will be
convertible, at the option of such Lender, into Common Stock at a price equal
to
the lesser of (X) 80% of the average closing bid and asked prices of the Common
Stock for the twenty (20) trading days immediately preceding the public
announcement of such Conversion Change of Control Transaction; and (Y) $0.44
per
share. For purposes hereof, a Conversion Change of Control Transaction shall
mean any
of the following in one or a series of related transactions:(A) the acquisition
(other than solely from the Company) by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act)
other than the Company, any Subsidiary, any Lender or its Affiliates or GCE
Holdings, LLC or its Affiliates, of the beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act) of more than
sixty-six and 2/3 percent (66.66%) of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the
election of directors (the “Voting Securities”); (B) a merger, consolidation,
share exchange, recapitalization, business combination or similar combination
involving the Company or its capital stock (a "Business
Combination"),
other than a Business Combination in which more than thirty-three and 1/3
percent (33.33%) of the combined voting power of the outstanding voting
securities of the surviving or resulting entity immediately following the
Business Combination is held by the persons who, immediately prior to the
Business Combination, were the holders of the Voting Securities; (C) a sale
or
other transfer (other than license) of all or substantially all of the Company’s
assets (measured by the value or earning power of the assets); (D) the license
or similar agreement by the Company to a third party of all or substantially
all
rights in and to the Company’s Aversion® technology and, as a result of such
transaction, all or substantially all of the Company’s activities consist of
monitoring such arrangements and collecting fees and payments due thereunder;
or
(E) a liquidation or dissolution of the Company.
(c) At
the Maturity Date (as the same may be extended pursuant to Section 2.2 hereof)
each
Lender may, at the option of such Lender, convert all (and not less than all)
of
its Notes as follows, (i) for the June to November 2005 Bridge Notes, convert
such Notes into Common Stock at a price of $0.20 per share, (ii) for the January
to May 2006 Bridge Notes, convert such Notes into Common Stock at a price of
$0.225 per share; (iii) for the June to October 2006 Bridge Notes, convert
such
Notes into Common Stock at a price of $0.25 per share;
and
(iv)
for the Future Bridge Notes convert such Notes into Common Stock at the lesser
of (X) 80% of the average of the closing bid and asked prices of the Common
Stock for the twenty (20) trading days immediately preceding the Maturity Date
and (Y) $0.44 per share.
5
(d) The
Company shall give each Lender written notice (a “Material
Event Notice”)
of
the first Material Event to occur after the date hereof, which notice shall
be
provided not later than 20 days prior to the closing of said transaction (or,
in
the case of the Maturity Date, the Maturity Date) and describe the material
terms of such transaction, (or, in the case of the Maturity Date, state the
Maturity Date), the proposed closing date and the principal amount and interest
accrued on the Lender’s outstanding Notes.
(e) Each
Lender may exercise its Rollover Right with respect to the first Material Event
to occur after the date hereof by (i) providing written notice to the Company
exercising such Rollover Right, and (ii) surrendering such Lender’s applicable
Notes, in each case not later than five (5) days prior to the effectiveness
of
the Material Event (the “Rollover
Right Exercise Period”).
If the material terms of the actual Material Event differ in any material
respect from those specified in the Material Event Notice, each Lender shall
be
given the opportunity change the conversion election they had made under the
prior terms (including to elect to convert if they previously did not do
so).
(f) Upon
a Lender’s timely exercise of the Rollover Right pursuant to Section 5.12(e)
above, the issuance of the Company’s equity securities upon conversion of such
Lender’s Notes in the applicable Material Event shall occur simultaneous with
the closing of such Material Event (or, in the case of the Maturity Date, on
the
Maturity Date).
(g) Subject
to the last sentence of Section 5.12(e), and provided that the Company has
complied with the terms of this Section 5.12, the Rollover Right provided in
this Section 5.12 shall apply solely to the first Material Event occurring
after
the date hereof, and shall terminate upon the earlier of (i) the expiration
of
the Rollover Right Exercise Period (if not exercised by such Lender pursuant
to
Section 5.12(e)) and (ii) the closing of the first Material Event (or, in the
case of the Maturity Date, the Maturity Date) occurring after the date
hereof.
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(c)
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Each
of the June 2005 Notes, the September 2005 Notes, the November 2005
Notes
and the January 2006 Notes (collectively, the “Notes”) (and each of the
forms of such Notes attached to the June 2005 Loan Agreement, the
September 2005 Loan Agreement, the November 2005 Loan Agreement and
the
January 2006 Loan Agreement) is amended
by:
|
(i)
deleting Section 1.3 of each Note in its entirety and replacing it with the
following:
The
Company may not prepay the principal amount of this Note, or
any interest thereon, in whole or in part, at any time without the prior written
consent of Holder. Any permitted prepayment of principal shall be without
penalty or premium and shall be accompanied by a payment of all interest accrued
and unpaid on the portion of the principal amount being prepaid. In addition,
this Note is subject to mandatory prepayment as provided in the Loan
Agreement.
6
(ii)
replacing the words December 1, 2006, wherever they appear therein with “March
31, 2007 (or such later date as may be agreed to by Lenders holding not less
than 66 2/3% of the outstanding principal amount of the Loans)”;
and
(iii) appending
the following additional section to such note:
“References
to Loan Agreement.
References to the Loan Agreement in this Note shall mean references to the
Loan
Agreement, as amended, and as the same may be further amended, supplemented
or
modified from time to time.”
| (d) |
In
the event a Replacement Note (as hereinafter defined) is issued pursuant
to Section 4 hereof, then in such Replacement Note the words “Secured
Promissory Note” shall be replaced with “Amended and Restated Promissory
Secured Note” and the following section shall be appended thereto:
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“Amended
and Restated Secured Promissory Note.
This Amended and Restated Secured Promissory Note issued by the Company in
favor
of the Payee amends and restates in its entirety, and is issued by the Company
in replacement of and substitution for a Secured Promissory Note of identical
principal amount issued to Payee pursuant to the Loan Agreement(the “Original
Note”). The Company and the Payee acknowledge and agree that upon the execution
delivery of this Amended and Restated Secured Promissory Note, the Original
Note
shall be null and void and of no further legal force or effect.
“
The
form
of such Replacement Note shall be also be attached to the applicable Loan
Agreement
as an acceptable form of note to be issued pursuant thereto.
2. References
to Loan Documents:
Any
reference to any Loan Document in any other Loan Document shall mean the Loan
Document, as amended hereby.
3.
Attachment
to All Notes:
The
Lenders covenant to give a copy of this Omnibus Amendment and Consent to any
purchaser of the June 2005 Notes, the September 2005 Notes, the November 2005
Notes or the January 2006 Notes prior to the actual purchase and to attach
a
copy of this Omnibus Amendment and Consent to any of such notes where the
undersigned is the named payee or holder.
4. Amended
and Restated Notes.
Upon
request of the Company, each Lender agrees to deliver to the Company any of
the
June 2005 Notes, the September 2005 Notes, the November 2005 Notes or the
January 2006 Notes issued to them, in exchange for an amended and restated
Note
(the “Replacement
Note”)
incorporating the amendments set forth in this Omnibus Amendment and Consent.
5. Subordination
Agreement. Each
Lender and Additional Watson Holder agrees to the provisions of this Omnibus
Amendment and Consent, including without limitation, to the amendments to the
June 2005, September 2005 Notes, the November 2005 Notes and the January 2006
Notes and acknowledges that the Subordination Agreement shall remain in full
force and effect .
6. Notes
and Agreements Not Assigned. The
undersigned Lenders and Additional Watson Holders acknowledge that they have
not
transferred, conveyed or assigned any of the Watson Note, the June 2005 Notes,
the September 2005 Notes, the November 2005 Notes or the January 2006 Notes
issued to them and the undersigned Lenders and Additional Watson Holders
acknowledge that they have not assigned any rights under the Loan Documents
or
under the Subordination Agreement.
7
7. Interest
Payable to Lenders in Stock; Prepayments. Notwithstanding
anything in the Loan Documents to the contrary (except as set forth in Section
5.12 thereof), the Company (a) may, at the Company’s option, in full payment of
all payments of interest on the Notes to the undersigned Lenders (“Interest
Due”)
make
payment of the Interest Due in such number of shares of Common Stock of the
Company equal to the quotient of the Interest Due such Lender, divided by the
average of the closing bid and asked price of the Company’s Common Stock for the
five (5) trading days immediately preceding the due date of such Interest Due,
as reported by the Nasdaq OTCBB, and (b) may not prepay the principal amount
of
any Note, or any interest thereon, in whole or in part, at any time without
the
prior written consent of the holder thereof.
8.
Counterparts:
This
Omnibus Amendment and Consent may be executed in one or more counterparts and
by
different parties hereto in separate counterparts, including by facsimile,
each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
9.
Governing
Law:
THIS
OMNIBUS AMENDMENT AND CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
8
IN
WITNESS WHEREOF, each of the Parties have caused this Omnibus Amendment and
Consent to be duly executed and delivered as of the day and year first above
written.
ACURA
PHARMACEUTICALS, INC.
By: /s/
Peter A. Clemens
Name:
Peter A. Clemens
Title:
Sr. Vice President and CFO
ACURA
PHARMACEUTICAL
TECHNOLOGIES
, INC.
By: /s/
Peter A. Clemens
Name:
Peter A. Clemens
Title:
Sr. Vice President and CFO
|
LENDER
AND AGENT:
GALEN
PARTNERS III, L.P.
By:
Claudius, L.L.C., General Partner
610
Fifth Avenue, 5th
Fl.
New
York, New York 10019
/s/
Bruce Wesson
By:
Bruce Wesson
Its:
General Partner
|
LENDER:
CARE
CAPITAL OFFSHORE INVESTMENTS II, LP
By:
Care Capital II, LLC, as general partner
47
Hulfish Street, Suite 310
Princeton,
NJ 08542
By:
/s/
David Ramsay
By:
David R. Ramsay
Its:
Authorized Signatory
|
|
|
LENDER:
GALEN
PARTNERS INTERNATIONAL, III, L.P.
By:
Claudius, L.L.C., General Partner
610
Fifth Avenue, 5th
Floor
New
York, New York 10020
/s/
Bruce Wesson
By:
Bruce Wesson
Its:
General Partner
|
LENDER:
CARE
CAPITAL INVESTMENTS II, LP
By:
Care Capital II, LLC, as general partner
47
Hulfish St., Suite 310
Princeton,
NJ 08542
By:
/s/
David Ramsay
Name:
David R. Ramsay
Title:
Authorized Signatory
|
|
|
LENDER:
GALEN
EMPLOYEE FUND III, L.P.
By:
Wesson Enterprises, Inc.
610
Fifth Avenue, 5th
Floor
New
York, New York 10020
/s/
Bruce F. Wesson
By:
Bruce F. Wesson
Its:
General Partner
|
LENDER:
ESSEX
WOODLANDS HEALTH
VENTURES
V, L.P.
190
South LaSalle Street, Suite 2800
Chicago,
IL 60603
/s/
Immanuel Thangaraj
By:
Immanuel Thangaraj
Its:
Managing Director
|
|
|
LENDER:
MICHAEL
WEISBROT
1136
Rock Creek Road
Gladwyne,
Pennsylvania 19035
/s/
Michael Weisbrot
|
LENDER:
SUSAN
WEISBROT
1136
Rock Creek Road
Gladwyne,
Pennsylvania 19035
/s/
Susan Weisbrot
|
|
|
LENDER:
DENNIS
ADAMS
120
Kynlyn Road
Radnor,
Pennsylvania 19312
/s/
Dennis Adams
|
LENDER:
GEORGE
E. BOUDREAU
222
Elbow Lane
Haverford,
PA 19041
/s/
George Boudreau
|
|
|
ADDITIONAL
WATSON HOLDER:
PETER
STIEGLITZ
RJ
Palmer LLC
156
West 56th Street, 5th Floor
New
York, New York 10019
/s/
Peter Stieglitz
|
ADDITIONAL
WATSON HOLDER:
JOHN
E. HEPPE, JR.
237
W. Montgomery Avenue
Haverford,
Pennsylvania 19041
/s/
John Heppe
|
|
Schedule
1.3
Funding
Schedule of $ 2,000,000 in Bridge Loans
|
Lender
Name
|
Month
Commitment to be Funded
|
Commitment
Amount
|
Percentage
of Commitment
|
|
GALEN
PARTNERS III, L.P.
|
November
2006
|
$203,014.61
|
30.452191%
|
|
GALEN
PARTNERS INTERNATIONAL, III, L.P.
|
$18,376.31
|
2.756447%
|
|
|
GALEN
EMPLOYEE FUND III, L.P.
|
$
831.31
|
0.124696%
|
|
|
ESSEX
WOODLANDS HEALTH VENTURES V, L.P.
|
$222,222.20
|
33.33333%
|
|
|
CARE
CAPITAL INVESTMENTS II, LP
|
$207,955.53
|
31.19333%
|
|
|
CARE
CAPITAL OFFSHORE INVESTMENTS II, LP
|
$14,266.67
|
2.14000%
|
|
|
TOTAL
FOR NOVEMBER 2006
|
$666,666.67
|
||
|
GALEN
PARTNERS III, L.P.
|
December
2006
|
$203,014.61
|
30.452191%
|
|
GALEN
PARTNERS INTERNATIONAL, III, L.P.
|
$18,376.31
|
2.756447%
|
|
|
GALEN
EMPLOYEE FUND III, L.P.
|
$
831.31
|
0.124696%
|
|
|
ESSEX
WOODLANDS HEALTH VENTURES V, L.P.
|
$222,222.20
|
33.33333%
|
|
|
CARE
CAPITAL INVESTMENTS II, LP
|
$207,955.53
|
31.19333%
|
|
|
CARE
CAPITAL OFFSHORE INVESTMENTS II, LP
|
$14,266.67
|
2.14000%
|
|
|
TOTAL
FOR DECEMBER 2006
|
$666,666.67
|
||
|
GALEN
PARTNERS III, L.P.
|
January
2007
|
$203,014.61
|
30.452191%
|
|
GALEN
PARTNERS INTERNATIONAL, III, L.P.
|
$18,376.31
|
2.756447%
|
|
|
GALEN
EMPLOYEE FUND III, L.P.
|
$
831.31
|
0.124696%
|
|
|
ESSEX
WOODLANDS HEALTH VENTURES V, L.P.
|
$222,222.20
|
33.33333%
|
|
|
CARE
CAPITAL INVESTMENTS II, LP
|
$207,955.53
|
31.19333%
|
|
|
CARE
CAPITAL OFFSHORE INVESTMENTS II, LP
|
$14,266.67
|
2.14000%
|
|
|
TOTAL
FOR JANUARY 2007
|
$666,666.67
|
CONTACT:
Acura
Pharmaceuticals, Inc.,
Investor
Relations, Peter A. Clemens, SVP & CFO 847-705-7709
FOR
IMMEDIATE RELEASE
ACURA
PHARMACEUTICALS, INC. SECURES BRIDGE FUNDING
Palatine,
IL, November 30, 2006:
Acura
Pharmaceuticals, Inc. (OTC.BB-ACUR) today announced it has secured gross
proceeds of $534,000 and a commitment for additional funding of up to $1.466
million under a term loan agreement (the “November Bridge Loan”) with Essex
Woodlands Health Ventures V, L.P., Care Capital Investments II, L.P., Care
Capital Offshore Investments II, L.P., Galen Partners III, L.P., Galen Partners
International III, L.P. and Galen Employee Fund III, L.P. The November Bridge
Loan bears an annual interest rate of 10%, is secured by a lien on all assets
of
the Company and its subsidiary, matures on March 31, 2007 and is senior to
all
other Company debt. Coincident with the November Bridge Loan, all prior bridge
loans to the Company were amended (the "Bridge Loan Amendment") to extend the
maturity date to March 31, 2007 and to accept in satisfaction of the interest
payments due under all bridge loans, including the November Bridge Loan, a
number of shares of Common Stock of the Company based on the average of the
closing bid and asked prices of the Common Stock for the five trading days
immediately preceding the interest payment date. Including the $534,000 secured
today, the Company has a total of $7.278 million in bridge loans outstanding
and
due on March 31, 2007.
In
addition, the Company, pursuant to the Bridge Loan Amendment, has granted the
bridge lenders the right to convert the bridge loans, including any financing
secured in connection with the November Bridge Loan, (collectively the “Bridge
Loan Financing”) into the Company’s common stock upon the occurrence of any one
of certain “Triggering Events”. These Triggering Events include; (i) the
completion of a third-party equity financing providing gross proceeds to the
Company in the aggregate amount of at least $8.0 million (a “Third Party Equity
Financing”); (ii) a change of control transaction or (iii) upon the maturity
date of the Bridge Loan Financing. Upon the occurrence of a Triggering Event,
the bridge
lenders may convert any financing secured by the Company under the November
Bridge Loan into the Company’s common stock at a conversion price equal to
$0.44
per
share although this price is subject to downward adjustment depending upon
the
terms of any Third Party Equity Financing or change of control transaction,
or
the trading price of the Company’s common stock at the public announcement of
the Third Party Equity Financing or the maturity date of the Bridge Loan
Financing, as applicable. In addition, upon a Triggering Event, the bridge
lenders may convert the balance of the Bridge Loan Financing into the Company's
common stock with $2.55 million convertible at $0.20 per share, $2.3 million
convertible at $0.225 per share and $1.894 million convertible at $0.25 per
share. The Company will utilize the net proceeds from the November Bridge Loan
to continue funding product development and licensing activities relating to
OxyADF Tablets and other product candidates utilizing its Aversion®
Technology.
Cash
Reserves Update
The
Company estimates that its current cash reserves, including the net proceeds
from the November Bridge Loan, will fund product development and licensing
activities through
mid-February, 2007.
To
continue operating thereafter, the Company must raise additional financing
or
enter into appropriate collaboration agreements with third parties providing
for
cash payments to the Company. No assurance can be given that the Company will
be
successful in obtaining any such financing or in securing collaborative
agreements with third parties on acceptable terms, if at all, or if secured,
that such financing or collaborative agreements will provide for payments to
the
Company sufficient to continue funding operations. In the absence of such
financing or third-party collaborative agreements, the Company will be required
to scale back or terminate operations and/or seek protection under applicable
bankruptcy laws.
About
Acura Pharmaceuticals, Inc.
Acura
Pharmaceuticals, Inc., together with its subsidiary, is a specialty
pharmaceutical company engaged in research, development and manufacture of
innovative abuse deterrent, abuse resistant and tamper resistant formulations
("Aversion® Technology") intended for use in orally administered
opioid-containing pharmaceutical products.
Forward
Looking Statements
This
press release contains "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. These statements are based on current
expectations of future events. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could vary materially
from the Company’s expectations and projections. The most significant of such
risks and uncertainties include, but are not limited to, the Company’s ability
to secure additional financing to fund continued product development and
operations, the Company’s ability to enter into contractual arrangements with
qualified pharmaceutical partners to license, develop and commercialize the
Company’s technology and product candidates, the Company’s ability to avoid
infringement of patents, trademarks and other proprietary rights or trade
secrets of third parties, and the Company’s ability to fulfill the FDA’s
requirements for approving the Company’s product candidates for commercial
distribution in the United States, including, without limitation, the adequacy
of the results of the clinical studies completed to date and the results of
other clinical studies, to support FDA approval of the Company’s product
candidates, the adequacy of the development program for the Company’s product
candidates, changes in regulatory requirements, adverse safety findings relating
to the Company’s product candidates, the risk that the FDA may not agree with
the Company’s analysis of its clinical studies and may evaluate the results of
these studies by different methods or conclude that the results of the studies
are not statistically significant, clinically meaningful or that there were
human errors in the conduct of the studies or otherwise, the risk that further
studies of the Company’s product candidates are not positive, and the
uncertainties inherent in scientific research, drug development, clinical trials
and the regulatory approval process. You are encouraged to review other
important risk factors relating to the Company on our web site at
www.acurapharm.com under the link, “Company Risk Factors” and detailed in
Company filings with the Securities and Exchange Commission. The Company is
at
development stage and may never have any products or technologies that generate
revenue. Acura Pharmaceuticals, Inc. assumes no obligation to update any
forward-looking statements as a result of new information or future events
or
developments. All Acura Pharmaceuticals, Inc. press releases may be reviewed
at
www.acurapharm.com.