FIFTH AMENDMENT, WAIVER AND CONSENT TO LOAN AGREEMENT
FIFTH
AMENDMENT, WAIVER AND CONSENT
TO
THIS
FIFTH AMENDMENT, WAIVER AND CONSENT TO LOAN AGREEMENT, dated as of August 20,
2007 (the “Fifth
Amendment”),
is
made and entered into by and between Acura Pharmaceuticals, Inc., a New York
corporation (“Borrower”),
and
▇▇▇▇▇ 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 ▇▇▇▇▇▇ Pharmaceuticals, Inc. (“▇▇▇▇▇▇”)) 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
▇▇▇▇▇▇ 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, ▇▇▇▇▇▇, Care Capital Investment II, L.P.,
Essex Woodlands Health Ventures V, LP, ▇▇▇▇▇ Partners III, L.P. and the other
signatories thereto (collectively, but excluding the Borrower and ▇▇▇▇▇▇, the
"Investor Group"), in consideration of Borrower's payment to ▇▇▇▇▇▇ of
$4,000,000, ▇▇▇▇▇▇ (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
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WHEREAS,
pursuant
to the terms of the Umbrella Agreement, ▇▇▇▇▇▇ 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,
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,
the
parties hereto, wish to further extend the maturity of the June 2007 Replacement
Note and make the other changes set forth below;
NOW,
THEREFORE,
the
parties hereto agree as follows:
AGREEMENT
1. Article
One of the Loan Agreement is hereby amended in its entirety to read as
follows:
"1.
AMOUNT AND TERMS OF LOANS.
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"1.1
Term
Loans.
Subject
to the terms herein, ▇▇▇▇▇▇ Pharmaceuticals, Inc. (“▇▇▇▇▇▇”) 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) ▇▇▇▇▇▇ 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) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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.
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 Fifth
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 June 2007 Replacement Note. In lieu of the payment of
interest in stock as set forth in the June 2007 Replacement Note, 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 to have interest payable by the
Borrower to such Holder pursuant to the Note in cash quarterly, as provided
in
the Note. Upon execution and delivery of the Note, the June 2007 Replacement
Note shall be null and void and of no further legal force or effect. Lender
agrees to promptly return to Borrower the June 2007 Replacement Note after
receipt of the Fifth Amendment to the Loan Agreement and the Note.
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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.
2. Section
12.1 of the Loan Agreement is hereby amended by adding the following definitions
in alphabetical order:
“June
2007 Replacement Note” shall mean the Replacement Note in the principal amount
of $5 million issued to ▇▇▇▇▇ Partner’s III, LP, as agent, amending and
restating the 2004 Replacement Note pursuant to the Fourth 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
Fifth 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
Fifth 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.
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IN
WITNESS WHEREOF, Borrower and Lender have caused this Fifth 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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▇▇▇▇▇
PARTNERS III, L.P., as Agent
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By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
Senior Vice President
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Title:
Managing Director
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and
Chief Financial Officer
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5
EXHIBIT
A
Note