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
September
24, 2007
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
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(Commission
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(I.R.S.Employer
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of
Incorporation)
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File
Number)
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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)
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
September 24, 2007, the Registrant amended its Loan Agreement dated as of
March
29,
2000, as previously amended, 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 (with the VC Lenders, the “Lenders”)
and its $5,000,000 note (the “Note”) held by such Lenders, dated as of December
20, 2002, as amended, to provide for the accrual and deferral of accrued
interest payments under the Note and Loan Agreement until the earlier of (i)
the
maturity date of the Note, and (ii) Registrant’s receipt of proceeds in excess
of $5 million from a third party pharmaceutical company or companies pursuant
to
which the Registrant, in one or more transactions, grants such pharmaceutical
company or companies rights to any of the Registrant’s products or product
candidates or rights to the Registrant’s Aversion® Technology, with such
proceeds including any up front payments, progress payments, milestone payments,
license fees, royalties and similar payments, but excluding fees for services,
reimbursements or advances for costs and expenses. Deferred interest is due
on
the maturity date, or if earlier, ten days after the occurrence of an event
described in (ii) above. Upon the occurrence of an event described in (ii)
above, all future interest payments are to be paid in cash on a quarterly
basis.
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 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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Sixth
Amendment, Waiver and Consent dated as of September 24, 2007 to
Loan
Agreement dated as of March 29, 2000.
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10.2
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Amended
and Restated $5,000,000 Senior
Note
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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. | ||
| |
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| By: | /s/ Peter Clemens | |
|
Peter A. Clemens |
||
| Senior Vice President & Chief Financial Officer | ||
Date: September
24, 2007
Exhibit
Index
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Exhibit
Number
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Description
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10.1
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Sixth
Amendment, Waiver and Consent dated as of September 24, 2007 to Loan
Agreement dated as of March 29, 2000.
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10.2
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Amended
and Restated $5,000,000 Senior
Note
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SIXTH
AMENDMENT, WAIVER AND CONSENT
TO
LOAN
AGREEMENT
THIS
SIXTH AMENDMENT, WAIVER AND CONSENT TO LOAN AGREEMENT, dated as of September
27,
2007 (the “Sixth
Amendment”),
is
made and entered into by and between Acura Pharmaceuticals, Inc., a New York
corporation (“Borrower”),
and
Galen Partners III, L.P., a Delaware limited partnership, as Agent under that
certain Noteholders Agreement dated as of February 6, 2004 (“Lender”).
Capitalized terms used herein and not otherwise defined shall have the meaning
provided in the Loan Agreement (as defined below).
RECITALS
WHEREAS,
Borrower
and Lender (as assignee of Watson Pharmaceuticals, Inc. (“Watson”)) are parties
to that certain Loan Agreement, dated as of March 29, 2000, as amended by a
certain Amendment to Loan Agreement dated as of March 31, 2000, as further
amended by a certain Second Amendment to Loan Agreement dated as of December
20,
2002 and as further amended by a certain Third Amendment, Waiver and Consent
to
Loan Agreement dated as of February 6, 2004 (the “Third Amendment”) (as so
amended, the "Loan Agreement"); and
WHEREAS,
in
accordance with the terms of the Loan Agreement, Borrower previously issued
to
Watson two Promissory Notes, the first dated December 20, 2002 in the principal
amount of $17,500,000 (the "Replacement Note"), and the second dated December
20, 2002 in the principal amount of $3,901,331 (the "$3.9 Million Note", and
together with the Replacement Note, collectively, the "Old Notes"); and
WHEREAS,
in order
to allow the Borrower to complete each of the transactions contemplated pursuant
to that certain Term Sheet dated December 19, 2003 between the Borrower and
the
other signatories thereto (the "Term Sheet Transactions"), at Borrower’s request
and in accordance with the Third Amendment, Lender consented to the Term Sheet
Transactions and waived certain restrictions contained in the Loan Agreement;
and
WHEREAS,
pursuant
to a certain Umbrella Agreement dated as of February 6, 2004 (the "Umbrella
Agreement") by and among Borrower, Watson, Care Capital Investment II, L.P.,
Essex Woodlands Health Ventures V, LP, Galen Partners III, L.P. and the other
signatories thereto (collectively, but excluding the Borrower and Watson, the
"Investor Group"), in consideration of Borrower's payment to Watson of
$4,000,000, Watson (i) cancelled and discharged in full the $3.9 Million Note,
(ii) forgave $12,500,000 in principal amount of the Replacement Note and amended
and restated the Replacement Note as provided in the Third Amendment, and (iii)
amended the Loan Agreement as provided in the Third Amendment (collectively,
the
"2004 Note and Loan Agreement Amendments"); and
WHEREAS,
pursuant
to the terms of the Umbrella Agreement, Watson transferred and conveyed to
the
Investor Group all of its right, title and interest in and to the Loan Agreement
and Replacement Note after giving effect to the 2004 Note and Loan Agreement
Amendments;
WHEREAS,
simultaneous with the completion of the transactions contemplated in the
Umbrella Agreement, the Replacement Note was amended and restated in the form
of
Exhibit A to the Third Amendment to Loan Agreement (the “2004 Replacement
Note”);
WHEREAS,
in
accordance with the Fourth Amendment, Waiver and Consent to Loan Agreement
dated
June 28, 2007, between Borrower and Lender (the “Fourth Amendment to Loan
Agreement”), the 2004 Replacement Note was amended and restated to provide for
the extension of the Maturity Date of the 2004 Replacement Note from June 30,
2007 to September 30, 2007 (the “June 2007 Replacement Note”);
WHEREAS,
in
accordance with the Fifth Amendment, Waiver and Consent to Loan Agreement dated
August 20, 2007 between Borrower and Lender (the “Fifth Amendment to Loan
Agreement”), the June 2007 Replacement Note was amended and restated to provide
for, among other things, the extension of the Maturity Date of the June 2007
Replacement Note from September 30, 2007 to December 31, 2008 (the “August 2007
Replacement Note”);
WHEREAS,
the
parties hereto, wish to defer the payment of interest accruing under the June
2007 Replacement Note and make the other changes set forth below;
NOW,
THEREFORE,
the
parties hereto agree as follows:
2
AGREEMENT
1. Article
One of the Loan Agreement is hereby amended in its entirety to read as
follows:
"1.
AMOUNT AND TERMS OF LOANS.
"1.1
Term
Loans.
Subject
to the terms herein, Watson Pharmaceuticals, Inc. (“Watson”) has previously
loaned to Borrower the aggregate principal amount of Twenty One Million Four
Hundred One Thousand Three Hundred Thirty One Dollars ($21,401,331) (the
"Original Loan"). Effective the date of the Third Amendment to the Loan
Agreement, (i) Watson forever forgave, discharged, cancelled and rendered null
and void Borrower's obligation to repay Sixteen Million Four Hundred One
Thousand Three Hundred Thirty One Dollars ($16,401,331) in principal amount,
plus accrued and unpaid interest on such principal amount, of the Original
Loan,
resulting in a remaining principal balance of the Original Loan of Five Million
Dollars ($5,000,000) (the "Loan"), and (ii) Watson forever forgave and
discharged Borrower's obligation to pay interest under the Original Loan, as
evidenced by the Old Notes, to the extent accrued and unpaid through and
including the date of the Third Amendment to the Loan Agreement. The Old Notes
previously issued by Borrower to Watson hereunder were amended or cancelled,
as
appropriate, in accordance with Section 1.2 below. Notwithstanding any
prepayment of the Loan by Borrower, sums repaid may not be re-borrowed.
Effective the date of the Fourth Amendment to the Loan Agreement, the 2004
Replacement Note was amended and restated by the June 2007 Replacement Note,
which extended the maturity of the 2004 Replacement Note. Effective the date
of
the Fifth Amendment to Loan Agreement, the June 2007 Replacement Note was
amended and restated by the August 2007 Replacement Note which extended the
maturity of the June 2007 Replacement Note.
1.2
Promissory
Notes.
Borrower’s obligation to pay the principal of, and interest on, the Loan shall
be evidenced by a promissory note dated as of December 20, 2002 duly executed
and delivered by Borrower in the form attached as Exhibit A to the Sixth
Amendment to the Loan Agreement and representing the $5,000,000 principal
balance of the Loan (the “Note”), which Note shall be an amendment and
restatement of the August 2007 Replacement Note. Notwithstanding anything to
the
contrary contained in the Note or the Loan Agreement, Borrower and each Holder
(as defined in that certain Noteholders Agreement dated as of February 6, 2004,
as amended, between the Borrower and the signatories thereto (the “Noteholders
Agreement”)) hereby agree that all interest under the August 2007 Replacement
Note will accrue quarterly and be payable in cash to the extent accrued on
the
earlier of (i) the maturity date of the Note, and (ii) Borrower’s (or its
subsidiaries’) receipt of proceeds in excess of $5 million from a third party
pharmaceutical company or companies pursuant to which the Borrower (or any
subsidiary), in one or more transactions, grants such pharmaceutical company
or
companies rights to any of the Borrower’s (or its subsidiaries’) products or
product candidates or rights to the Borrower’s Aversion® Technology - such
proceeds shall include up front payments, progress payments, milestone payments,
license fees, royalties and similar payments, but shall exclude fees for
services, reimbursements or advances for costs and expenses. Within ten (10)
days of the occurrence of an event described in subsection (ii) above, the
Borrower shall remit to Lender such accrued and unpaid interest payments and
all
future interest payments shall be paid in cash on a quarterly basis as provided
in the Note. Upon execution and delivery of the Note, the August 2007
Replacement Note shall be null and void and of no further legal force or effect.
Lender agrees to promptly return to Borrower the August 2007 Replacement Note
after receipt of the Sixth Amendment to the Loan Agreement and the Note.
3
1.3 Mandatory
Prepayment.
The
principal amount of the Note shall be mandatorily pre-paid by the Borrower,
in
whole or in part, with all proceeds in excess of $5 million received by the
Borrower from a third party pharmaceutical company or companies pursuant to
which the Borrower, in one or more transactions, grants such pharmaceutical
company or companies rights to any of the Borrower’s products or product
candidates or rights to the Borrower’s Aversion® Technology. Such proceeds shall
include, without limitation, up-front fees, progress payments, milestone
payments, license fees, royalties and any similar payments, but shall exclude
fees for services, reimbursements or advances for costs and expenses. The
Borrower shall remit such mandatory pre-payment not later than ten (10) days
following receipt of any such excess proceeds from such transaction(s). All
references to the Borrower in this paragraph shall be interpreted to include
the
Borrower and its subsidiaries.”
4
2. Section
12.1 of the Loan Agreement is hereby amended by adding the following definitions
in alphabetical order:
“August
2007 Replacement Note” shall mean the Replacement Note in the principal amount
of $5 million issued to Galen Partner’s III, LP, as agent, amending and
restating the June 2007 Replacement Note pursuant to the Fifth Amendment to
Loan
Agreement.”
3. Limitation
of Amendment.
Except
as amended above, the terms of the Loan Agreement shall remain in full force
and
effect.
4.Governing
Law.
This
Sixth Amendment and the rights of the parties hereunder shall be governed in
all
respects by the laws of the State of New York wherein the terms of this Fourth
Amendment were negotiated.
5.Counterparts.
This
Sixth Amendment may be executed in any number of counterparts, including by
facsimile, each of which shall be an original, but all of which together shall
constitute one instrument.
IN
WITNESS WHEREOF, Borrower and Lender have caused this Sixth Amendment to be
duly
executed by their duly authorized officers all as of the day and year first
above written.
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"BORROWER"
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"LENDER"
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ACURA
PHARMACEUTICALS, INC.
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GALEN
PARTNERS III, L.P., as Agent
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By:
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/s/
Peter Clemens
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By:
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/s/
Bruce F. Wesson
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Name:
Peter A. Clemens
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Name:
Bruce F. Wesson
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Title:
Senior Vice President and
Chief Financial Officer
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Title:
Managing Director
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5
EXHIBIT
A
Note
SECURED
PROMISSORY NOTE
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$5,000,000
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As
of December 20, 2002
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Corona,
California
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1. Promise
to Pay.
For
good and valuable consideration, the receipt of which is hereby acknowledged,
ACURA PHARMACEUTICALS, INC., a New York corporation (“Maker”),
promises to pay to GALEN PARTNERS III, L.P., a Delaware limited partnership,
as
Agent under that certain Noteholders Agreement dated as of February 6, 2004,
as
amended (“Galen”), or order (either, the “Holder”),
on
the Maturity Date (as defined below), unless sooner paid as provided in
Section 5
hereof,
the principal sum of Five Million Dollars ($5,000,000), plus accrued unpaid
interest thereon. The outstanding principal balance of this Note shall bear
interest at a variable rate equal to the prime rate announced from time to
time
by Bank of America (the “Prime
Rate”)
plus
four and one half percent (4.5%) per annum from February 6, 2004 to the date
of
the Fifth Amendment (as defined in Section 15 below), and at a fixed rate of
ten
percent (10%) per annum thereafter until the date the principal sum is paid
in
full. Interest payments shall be made as provided in Section
2
below.
All payments under this Note shall be made to the order of the Holder at the
address Holder may designate in writing to Maker. All payments of principal
under this Note shall be made in U.S. Dollars.
2. Payment
of Interest.
Except
as otherwise provided in the Loan Agreement, all accrued interest shall be
paid
on each March 31, June 30, September 30 and December 31 during the term of
this
Note, commencing March 31, 2004. From and after the date of the Fifth Amendment,
the payment of accrued interest on this Note shall be made in U.S.
Dollars.
3. Maturity
Date.
The
date that this Note shall mature, and the principal amount outstanding
hereunder, plus accrued unpaid interest thereon and any charges pertaining
thereto, shall become due and payable (the “Maturity
Date”)
shall
be December 31, 2008.
4. Loan
and Security Agreements.
Maker
and Galen, as assignee of Watson Pharmaceuticals, Inc., are parties to that
certain Loan Agreement, dated as of March 29, 2000, as amended by that certain
Amendment to Loan Agreement dated as of March 31, 2000, as further amended
by
that certain Second Amendment to Loan Agreement dated as of December 20, 2002,
as further amended by that certain Third Amendment, Waiver and Consent to Loan
Agreement dated as of February 6, 2004, as further amended by that certain
Fourth Amendment, Waiver and Consent to Loan Agreement dated as of June 28,
2007, as further amended by that Fifth Amendment to Loan Agreement dated as
of
August 20, 2007, and as further amended by that Sixth Amendment to Loan
Agreement dated as of September __, 2007 (as so amended, the “Loan
Agreement”).
The
full and punctual payment and performance of this Note by Maker are secured
and
guaranteed by the Company General Security Agreement, the Company Collateral
Assignments, the Stock Pledge Agreement, the Guaranties, the Guarantors Security
Agreement, the Guarantor Collateral Assignments and the Mortgage, as those
terms
are defined in the Loan Agreement (the “Security
Agreements”).
The
security interest granted to Holder under the Security Agreements extends to
the
proceeds of any sale or other transfer or disposition of such assets, whether
by
Maker, its affiliates, the Holder or any other person, that occurs prior to
the
payment in full of this Note. Copies of the Loan Agreement and the Security
Agreements may be obtained from Maker without charge.
5. Prepayments.
Maker
may voluntarily prepay this Note either in whole or in part without penalty
or
premium. This Note is subject to mandatory pre-payment, in whole or in part,
as
provided in Section 1.3 of the Loan Agreement.
6. Waivers.
Maker
hereby waives diligence, presentment for payment, demand, protest, notice of
non-payment, notice of dishonor, notice of protest, and any and all other
notices and demands whatsoever. Maker shall remain bound under this Note until
all principal and interest and any other amounts that are payable hereunder
or
under the Loan Agreement or the Security Agreements have been paid in full,
notwithstanding any extensions or renewals granted with respect to this Note
or
the release of any party liable hereunder or any security for the payment of
this Note. Maker, and any and all endorsers hereof, also waive the right to
plead any and all statutes of limitations as a defense to any demand on this
Note or any and all obligations or liabilities arising out of or in connection
with this Note, the Loan Agreement or the Security Agreements, to the fullest
extent permitted by law.
7. Events
of Default.
Any of
the following events shall constitute an event of default by Maker under this
Note (an “Event
of Default”):
(a) the
failure of Maker to pay to Holder, on the Maturity Date, any and all principal
amounts due and owing under this Note;
(b) the
failure of Maker to pay to Holder interest payments when due; or
(c) there
occurs any other event or circumstance that constitutes an “Event of Default” as
defined in Section 9.1
of the
Loan Agreement.
Subject
to the forbearance provisions contained in Section 9.4 of the Loan Agreement,
upon the occurrence of any Event of Default, as defined herein above, at
Holder’s option, Holder may declare immediately due and payable, and on any such
declaration there shall become immediately due and payable, the entire unpaid
principal balance of this Note, together with all accrued and unpaid interest
under this Note and any other sums owing at the time of such declaration
pursuant to this Note, the Loan Agreement or the Security Agreements, and Holder
shall be entitled to exercise all rights and remedies available to Holder under
this Note, under the Loan Agreement and the Security Agreements and under
applicable law, all of which rights and remedies shall be cumulative. Without
limiting the generality of the foregoing, upon the occurrence of an Event of
Default, the interest rate at which interest shall accrue on the principal
sum
and any other amounts that are due under this Note shall increase to the lower
of (i) twelve percent (12%) per annum or (ii) the maximum interest rate
permitted under applicable law (the “Default
Rate”),
until
all such amounts have been paid in full.
2
8. No
Waiver by Holder.
Subject
to the forbearance provisions contained in Section 9.4 of the Loan Agreement,
any delay or omission on the part of Holder to exercise any of Holder’s rights
or remedies hereunder, under the Loan Agreement or the Security Agreements
or
under applicable law, including, without limitation, the right to accelerate
amounts owing under this Note, shall not be deemed a waiver of that right or
remedy or of any other right or remedy of Holder in respect thereof. The
acceptance by Holder of any payment pursuant to the terms of this Note which
is
less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
Holder’s rights or remedies under this Note, the Loan Agreement, the Security
Agreements or under applicable law at that time or at any subsequent time or
nullify any prior exercise of any such rights or remedies without the express
written consent of Holder, except as and to the extent provided to the contrary
by applicable law.
9. Governing
Law.
This
Note shall be governed by and construed according to and enforced under the
internal laws of the State of New York without giving effect to its choice
of
laws rules.
10. Enforcement
of the Note.
Maker
agrees that the Superior Court in and for the County of New York, New York
shall
have exclusive jurisdiction over any disputes, between the Maker and Holder
and
any action, suit or other proceeding brought by Maker or Holder relating to
the
interpretation or enforcement of this Note, and Maker agrees as follows: (a)
Maker shall accept and not contest the personal or subject matter jurisdiction
of such Court; (b) Maker shall accept and not object to or challenge the venue
of such Court or assert the doctrine of forum non conveniens with respect to
such Court; (c) Maker shall accept and not contest the validity or effectiveness
of service of process in any such action, suit or other proceeding by registered
or certified first class mail; and (d) TO THE MAXIMUM EXTENT PERMITTED BY LAW,
MAKER WAIVES AND SHALL WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
OTHER
PROCEEDING BROUGHT WITH RESPECT TO THIS NOTE OR ITS ENFORCEMENT OR
INTERPRETATION. If Maker fails to pay any amounts due hereunder when due, then
Maker shall pay all costs of enforcement and collection, including, without
limitation, reasonable attorneys’ fees and costs incurred by Holder, whether or
not enforcement and collection includes the filing of a lawsuit, and whether
or
not that lawsuit is prosecuted to judgment. The costs of enforcement and
collection shall be added to the principal amount of the Note and shall accrue
interest at the Default Rate from the Date incurred until the date paid by
Maker.
11. Binding
Nature.
The
provisions of this Note shall be binding on Maker and shall inure to the benefit
of Holder.
12. Usury
Savings Provisions.
In the
event Holder receives any sums under this Note which constitute interest in
an
amount in excess of that permitted by any applicable law, then, all such sums
constituting interest in excess of that permitted to be paid under applicable
law shall, at Holder’s option, either be credited to the payment of principal
owing hereunder or returned to Maker. The provisions of this Section 12
control
the other provisions of this Note and any other agreement between Maker and
Holder.
3
13. Severability.
If, but
only to the extent that, any provision of this Note shall be invalid or
unenforceable, then, such offending provision shall be deleted from this Note,
but only to the extent necessary to preserve the validity and effectiveness
of
this Note to the fullest extent permitted by applicable law.
14. Interpretation.
No
provision of this Note shall be interpreted for or against Maker or Holder
because that person or that person’s legal representative drafted such
provision. Unless otherwise indicated elsewhere in this Note, (a) the term
“or”
shall not be exclusive, (b) the term “including” shall mean “including, but not
limited to,” and (c) the terms “below,” “above,” “herein,” “hereof,” “hereto,”
“hereunder” and other terms similar to such terms shall refer to this Note as a
whole and not merely to the specific section, subsection, paragraph or clause
where such terms may appear. The section and sub-section headings in this Note
are included for convenience of reference only and shall be ignored in the
construction or interpretation of this Note.
15. Amended
and Restated Note.
This
Note is issued in accordance with that certain Sixth Amendment to Loan Agreement
dated as of September __, 2007, between Maker and Galen (the "Sixth
Amendment"),
and
is issued by Maker as an amendment and restatement of that certain Secured
Promissory Note issued by Maker to Galen in the principal amount of $5,000,000
dated December 20, 2002 (the "Original
Note").
Upon
execution and delivery of this Note to Galen, the Original Note shall be null
and void and of no further legal force or effect.
[SIGNATURE
PAGE TO FOLLOW]
4
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“MAKER”
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ACURA
PHARMACEUTICALS, INC.
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|
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/s/
Peter Clemens
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By:
Peter A. Clemens
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Its:
Senior Vice President and Chief Financial
Officer
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5