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EXHIBIT 10.6
CONVERTIBLE TERM NOTE AGREEMENT
This Agreement, dated as of January 11, 1999, is entered into between
Horizon Pharmaceuticals Corporation, a Delaware corporation (the "Company") and
Xxxxx-Pharma Investments, L.P. (the "Lender").
WHEREAS, the Company wishes to borrow, and the Lender is agreeable to
lend to the Company under a fixed rate, convertible note arrangement, and
WHEREAS, the Company has received the unanimous written consent of its
Board of Directors to the execution of this Agreement the issuance of the note
provided for herein and the future issuance of shares of the Company's stock
upon a conversion of the note, as well as the consent of its Senior Lender (as
herein defined) to the execution of this Agreement and the Note, all on the
terms and conditions herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, it is agreed by the parties hereto as follows:
1. Commitment of the Lender
A. Subject to the terms and conditions of this Agreement, the
Lender agrees to lend to the Company on and after the date hereof, an amount not
to exceed One Million Six Hundred Thousand and no/100 dollars ($1,600,000.00) or
such lesser principal sum as may be owed by the Company to the Lender under the
terms of the Convertible Term Loan Note attached hereto as Exhibit A (the
"Convertible Note" or the "Note") as reflected in the schedule attached to the
Convertible Note. In consideration for Lender's commitment to lend up to
$1,600,000 to the Company, the Company agrees to execute and deliver to the
Lender the Convertible Note. The loan commitment provided for in this Section 1
is hereinafter referred to as the "Loan."
2. Conditions To Loans
Notwithstanding any other provision of this Agreement, the Loan
provided for herein shall not be required to be funded except on the following
conditions.
A. Lender shall not be required to make any loan except as
necessary to fund the Company's product acquisition needs and day to day
operations and then only:
(i) upon Lender's determination that the Company is in
compliance with the covenants contained in Sections 5, 6, and 7 of this
Agreement; and
(ii) upon Lender's determination that no Event of Default
(as herein defined) exists.
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X. XxXxxxx National Bank, Chicago, Illinois (the "Senior Lender")
shall have consented to the Loan and to the Company's granting to Lender, in
order to secure the Loan of a blanket security interest in the assets of the
Company, which interest, however, will be subordinated to the security interest
of the Senior Lender.
C. The Company shall have executed a mutually acceptable security
agreement (the "Security Agreement").
D. Notwithstanding any other provisions of this Agreement, in no
event shall the total outstanding principal amount of all Loans exceed One
Million Six Hundred Thousand Dollars ($1,600,000) in the aggregate.
3. Note Evidencing Borrowing
A. The Loan from Lender hereunder shall be evidenced by the
single Convertible Note of the Company substantially in the form of Exhibit "A"
hereto, dated as of the date hereof and maturing on the earlier of (i) the date
Lender shall elect to convert the full outstanding principal of the Convertible
Note in accordance with Section 8 or (ii) December 1, 2001 ("Maturity"). Unless
the Note shall have been fully converted in accordance with Section 8, all
principal shall be due and payable in a single balloon payment on December 1,
2001, or such earlier date as shall be consented to by the Lender in accordance
with Paragraph 4.
B. From and after the date hereof the principal amount of the
Loan outstanding and unpaid hereunder from time to time shall bear interest
calculated at 200 basis points (2%) over the "Prime Rate" of interest. "Prime
Rate" for the purposes hereof shall mean the rate or interest charged from time
to time by and announced by the Senior Lender as its prime rate, which rate,
however, may not be the lowest offered by the Senior Lender to its customers.
The effective date of any change in said Prime Rate shall for purposes hereof be
the date the rate is changed by the Lender and such rate shall be adjusted each
January 1, April 1, July 1 and October 1 during which time any part of the Loan
is outstanding.
Interest on the balance of the Loan outstanding from time to time shall
be payable simultaneous with the payment of principal provided for in the
Convertible Note or, upon conversion of the Note in accordance with Section 8
hereof, all interest due and owing on the portion of the Note so converted shall
be paid on or prior to the date of conversion. Interest shall be calculated on
the basis of a 360 day year for the actual number of days elapsed. All payments
received by the Lender from the Company shall first be applied to accrued
interest, if any, and unpaid expenses and then to principal. Any amount of
principal or interest on the Convertible Note which is not paid when due,
whether at stated maturity, by acceleration or otherwise shall bear interest
payable on demand at a fluctuating interest rate per annum equal at all times to
four percent (4%) above the rate in effect an the Loan.
If any payment to be made by the Company hereunder or under the
Convertible Note shall become due on a Saturday, Sunday or business holiday
under the laws of the State of Illinois, such payment shall be made on the next
succeeding business day and such extension of
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time shall be included in computing any interest in respect of such payment.
Payment of any amounts owed to Lender hereunder or under the Convertible Note
shall be made to the Lender at 000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxx,
Xxxxxxxx 00000 or at such other address as shall be designated by the Lender.
The proceeds of the Loan will be used solely for the purpose of funding
the Company's acquisition of additional products and for day to day operations.
4. Prepayment
At any time during the term of the Loan, the Company may repay the
entire outstanding principal and interest of the Loan, without any prepayment
penalty whatsoever, provided, however, (i) the Company shall have first given
the Lender thirty (30) days prior written notice of the Company's intent to make
such prepayment, (ii) the Lender shall not, prior to the date set for
prepayment, have elected, or announced its intention to convert all or a portion
of the Loan into shares of stock of the Company pursuant to Section 8 hereof.
and (iii) the Company shall concurrently with the prepayment of the Loan pay all
interest then accrued and unpaid on the Loan.
5. Representations and Warranties
To induce the Lender to make the Loan provided for herein, the Company
represents and warrants to the Lender as follows ( it being acknowledged and
agreed that such representations and warranties shall be deemed to be restated
as of the date of each Loan request):
A. The Company is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware, with full and adequate
corporate power to carry on and conduct its business as presently conducted, and
is duly licensed or qualified in all jurisdictions wherein the nature of its
activities require such qualification or licensing.
B. The Company has full right, power and authority to enter into
this Agreement and to make the borrowings and execute and deliver the
Convertible Note as herein provided, and the execution and delivery of the
Agreement and the Convertible Note will not, nor will the observance or
performance of any of the matters and things herein or therein set forth,
violate or contravene any provision of law or of the charter or by-laws of the
Company or of any indenture, loan agreement or other agreement of or affecting
the Company or any of its properties. All necessary and appropriate corporate
action has been taken on the part of the Company to authorize the execution and
delivery of this Agreement, the Convertible Note and the Security Agreement and
this Agreement, the Convertible Note and the Security Agreement are each the
valid and binding agreements and contracts of the Company in accordance with
their respective terms.
C. No Event of Default as defined herein has occurred and is
continuing, and no event has occurred and is continuing which, with the length
of time, the giving of notice, or both, would constitute such an event of
default under this Agreement.
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D. The authorized and outstanding capital stock of the Company
consists of 40,000,000 shares of Common Stock, par value $.00025 per share, of
which 7,981,248 are outstanding and no shares of Preferred Stock, none of which
are outstanding. All of the Company's outstanding stock has been duly and
validly authorized and issued and is fully paid and nonassessable. The shares of
Common Stock and Preferred Stock initially to be reserved for issuance upon
conversion of the Convertible Note pursuant to this Agreement have been duly and
validly authorized and are sufficient in number for the conversion of the
Convertible Note at the initial Conversion Price (as herein defined). As of the
date hereof, and except as otherwise disclosed by the Company to the Lender in
writing on the Disclosure Schedule attached hereto, the Company has not granted
or issued, or agreed to grant or issue, any options or warrants or similar
rights to others to acquire or receive any of its authorized but unissued shares
of Common Stock, or securities convertible into its Common Stock other than the
Convertible Note to be issued pursuant to this Agreement.
E. Except as otherwise disclosed to the Lender in writing by the
Company, there is no litigation or governmental proceeding pending, nor to the
knowledge of the Company threatened, against the Company or any subsidiary of
the Company which if adversely determined would result in any material adverse
change in the financial condition, properties, business or operations of the
Company or any subsidiary of the Company including, without limitation, any
actual or threatened civil or criminal action brought under any federal, state,
or other environmental statute, regulation, ordinance, or other law. No
authorization, consent, license, exemption or filing or registration with any
court or governmental department, agency or instrumentality, is or will be
necessary to the valid execution, delivery or performance by the Company and its
subsidiaries of this Agreement, the Note, the Security Agreement or any other
documents provided for hereunder.
The foregoing representations and warranties shall survive the making
of this Agreement and the issuance of the Note pursuant hereto, and shall be
deemed to be continuing representations and warranties until such time as the
Company has fulfilled all obligations to the Lender and the Lender has been paid
in full.
6. Negative Covenants
From and after the date hereof and so long as any portion of the Loan
shall be outstanding, the Company, will not, directly or indirectly:
A. Create, assume, incur or have outstanding any indebtedness
(including purchase money indebtedness), nor become liable, whether as endorser,
guarantor or surety or otherwise, for any debt or obligation of any other
person, firm, or corporation, except (i) indebtedness of the Company to the
Senior Lender pursuant to that certain Amended and Restated Loan Agreement dated
as of December 22, 1998 as amended from time to time (the "Senior Loan"), or
with the consent of Lender, which consent will not be unreasonably withheld, to
another lender whose credit rating is as high or higher than the Senior Lender
and who agrees to take over all of the Senior Lender's debt or indebtedness
which is made subordinate to the Loan on terms acceptable to Lender; (ii)
indebtedness of the Company hereunder and any other indebtedness and liabilities
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of the Company to the Lender; (iii) endorsement for collection or deposit of any
commercial paper secured in the ordinary course of business; (iv) indebtedness
of the Company for taxes, assessments, municipal or other governmental charges;
(v) indebtedness of the Company for accounts payable, other than for money
borrowed, incurred in the ordinary course of business; and (vi) indebtedness
existing on the date hereof which is disclosed on the financial statements
delivered to Lender in accordance with Section 7(C) hereof and all of which
indebtedness, other than the LaSalle Loan, will be subordinate to the
indebtedness herein created.
B. Create, assume, incur or suffer or permit to exist any
mortgage, pledge, encumbrance, security interest assignment, lien or charge of
any kind or character upon any asset of the Company whether owned at the date
hereof or hereafter acquired except (i) liens securing the Senior Loan or other
debt now or hereafter owed to the Senior Lender; (ii) liens for taxes,
assessments or other governmental charges not yet due or which are being
contested in good faith by appropriate proceedings in such a manner as not to
make the property forfeitable; (iii) other liens charges and encumbrances
incidental to the conduct of its business or the ownership of its property and
assets which were not incurred in connection with the borrowing of money or the
obtaining of an advance or credit, and which do not in the aggregate materially
detract from the value of its property or assets or materially impair the use
thereof in the operation of its business; (iv) liens arising out of judgments or
awards against the Company with respect to which it shall concurrently therewith
be prosecuting an appeal or proceeding for review and with respect to which it
shall have secured a stay of execution pending such appeal or proceedings for
review; (v) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation; (vi) good faith deposits in connection
with lending contracts or leases to which the Company is a party; and (vii)
liens and security interests granted to the Lender or otherwise approved in
writing by the Lender.
C. Make or have outstanding any new investments (whether through
purchase of stocks or obligations or otherwise) in, or loans or advances to, any
other person, firm or corporation, or acquire all or any substantial part of the
assets or business of any other person, firm or corporation except (a)
investments in direct obligations of the United States; (b) investments in
certificates of deposit issued by the Senior Lender or any bank with assets
greater than One Hundred Million Dollars ($100,000,000.00); or (c) investments
in Prime Commercial Paper (for purposes hereof, Prime Commercial Paper shall
mean short-term unsecured promissory notes sold by large corporations and rates
A-1/P-1 by Standard & Poors Ratings Group, a division of McGraw Hill, Inc., and
Xxxxx'x Investment Service, Inc.).
D. Merge or consolidate, nor sell, transfer, lease or otherwise
dispose of all or any substantial part of its property, assets or business, nor
in any event sell or discount (with or without recourse any of its notes or
accounts receivable.
7. Affirmative Covenants
From and after the date hereof and so long as the Loan, or any part
thereof, remains outstanding (except to the extent compliance is in any case or
cases waived in writing by the Lender), the Company will:
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A. Maintain, preserve and keep its assets, properties and
equipment in good repair, working order and condition, and will from time to
time make all needed and proper repairs, renewals, replacements, and additions
thereto so that at all times the efficiency thereof shall be fully preserved and
maintained;
B. Pay and discharge all taxes, assessments and governmental
charges upon or against it or against any of its properties before the same
become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings;
C. To the extent that the Company shall be required to provide
financial or other information and notices to the Senior Lender, including, but
not limited to, monthly, quarterly and annual financial statements as well as
evidence of compliance with any affirmative or negative covenants required by
the Senior Lender. (collectively "Senior Lender Information") then simultaneous
with the Company's transmission of any such Senior Lender Information to the
Senior Lender, copies of such Senior Lender Information shall also be provided
to the holder of the Convertible Note, or its authorized representative;
D. At all times keep, in accordance with generally accepted
accounting principles, true and complete books and records in connection with
its assets and operations and allow Lender such access to its books and records,
as it may reasonably request;
E. Insure and keep insured with good and responsible insurance
companies, all insurable property owned by it which is of a character. usually
insured by companies similarly situated and operating like properties, against
loss or damage from fire and such other hazards or risks as are customarily
insured against by companies similarly situated and operating like properties;
and will similarly obtain insurance for products liability risks with good and
responsible insurance companies; and will upon request of the Lender furnish a
certificate setting forth in summary form the nature and extent of the insurance
maintained by the Company pursuant to this Section 7(E);
F. Immediately after the commencement thereof, give notice to the
holder of the Convertible Note in writing of all actions, suits, and proceedings
before any court or governmental department, commission, board or other
administrative agency which may have a material effect on the operations of the
Company;
G. Immediately after the commencement thereof, give notice to the
holder of the Convertible Note in writing of the occurrence of an Event of
Default (as herein defined), or an event which with notice or lapse of time or
both would constitute an Event of Default;
H. Preserve and maintain its corporate existence, rights,
franchises and privileges; and
I. Give notice to the holder of the Convertible Note within ten
(10) days after the Company shall have filed with the Securities and Exchange
Commission or with any national
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securities exchange (as defined in the Exchange Act) an application to register
any of the securities of the Company pursuant to Section 12 of the Exchange Act,
or any comparable federal statute.
8. Conversion of Convertible Notes
A. Right to Convert Conversion Price. Subject to and upon
compliance with the provisions hereto the holder of the Convertible Note shall
have the right, at such holder's option, at any time up to and including
December 1, 2001 or until the Convertible Note shall have been paid in full (the
"Conversion Period"), to convert all or any portion of the unpaid amount of such
Convertible Note into either Common Stock or Preferred Stock (which will be by
its terms convertible into Common Stock) of the Company at a price per share (i)
during the first two years from the date of this Agreement, equal to the lesser
of (a) the price per share that Common Stock or Convertible Preferred Stock, as
the case may be (the "Conversion Stock") shall first be sold in an amount of at
least $5,000,000, to any persons or entities as a single offering (the "Equity
Investors") or (b) $12.50 per share (calculated on a pre 4 for 1 split basis)
and (ii) during the third year from the date of this Agreement and thereafter to
Maturity, equal to the greater of (a) three (3) times gross revenues during the
twelve months preceding the "Valuation Date" (as defined in Section 8(D)(vii))
or (b) two (2) times the "Aggregate Book Value" (as defined in Section
8(D)(vii)) of the Company's assets, in either case divided by the number of
issued and outstanding shares of the Company's Common Stock, or, in case an
adjustment of the conversion price set forth in (i) or (ii) has taken place
pursuant to the further provisions of this Section 8, then at the price as last
adjusted and in effect at the date such Convertible Note or portion thereof is
surrendered for conversion (the conversion price or such price as last adjusted,
as the case may be, being referred to herein as the "Conversion Price");
provided, however, that in no event shall the Conversion Price be reduced below
the then applicable par value of the Conversion Stock into which the Convertible
Note is being converted, and, provided further, that to the extent that there
have not been sales of at least $5,000,000 to Equity Investors of the Common
Stock or the Preferred Stock during the first two years while the Loan is
outstanding, with the result that a Conversion Price based on the amount per
share paid by Equity Investors has not been established for such securities,
then the holder of the Convertible Note may only convert the Convertible Note
during the first two years of the Loan into either Common Stock or Preferred
Stock, as the case may be at a price of $12.50 per share (calculated on a pre 4
for 1 split basis), but adjusted, if necessary, as provided in this Section 8.
The number of shares of the Conversion Stock of the Company into which any
Convertible Note shall be convertible shall be subject to adjustment pursuant to
the further provisions of this Section 8. The number of such shares into which a
portion of the Convertible Note shall be convertible shall be that proportion of
the total number of such shares, as adjusted, into which such Convertible Note
is then convertible which the principal amount of such portion to be so
converted bears to the then unpaid principal amount of the Convertible Note.
In order to convert the Convertible Note, the holder thereof shall
surrender such Convertible Note to the Company at its principal office at 000
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx (or such other office or agency of
the Company as the Company may designate by notice in writing to the holder of
the Convertible Note), accompanied by a written statement
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designating the principal amount of such Convertible Note, or portion thereof,
to be so converted. If the Convertible Note is converted in part only, the
Company shall, upon such conversion, execute and deliver to the holder thereof
at the expense of the Company, a new Convertible Note in principal amount equal
to the unconverted portion of such Convertible Note.
B. Issuance of Stock: Continuing Obligation. Within a reasonable
time, not exceeding five days after the receipt of the written statement
referred to in subsection 8(A) and surrender of the Convertible Note as
aforesaid, the Company shall issue and deliver to the holder thereof
(hereinafter in this subsection, the term "holder" shall include the nominee of
any such holder), registered in the name of such holder, a certificate or
certificates for the number of full shares of Conversion Stock issuable upon the
conversion of such Convertible Note (or specified portion thereof), bearing the
restrictive legend required by subsection 8(H). To the extent permitted by law,
such conversion shall be deemed to have been effected and the Conversion Price
and the number of shares of Conversion Stock issuable in connection with such
conversion shall be determined as of the close of business on the date on which
such written statement shall have been received by the Company and the
Convertible Note shall have been surrendered as aforesaid, and at such time the
rights of the holder of the Convertible Note as to the converted portion of the
principal of the Convertible Note shall cease, and the person or persons in
whose name or names any certificate or certificates for shares of Conversion
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby. The Company will,
at the time of such conversion, in whole or in part, upon request of the holder
of the Convertible Note, acknowledge in writing its continuing obligation to
such holder in respect of any rights (including, without limitation, any right
of registration of the shares of Conversion Stock issued upon such conversion)
to which such holder shall continue to be entitled under this Agreement
(including issuance of a new Convertible Note for any non-converted portion of
the Convertible Note) after such conversion; provided, that the failure of such
holder to make any such requests shall not affect the continuing obligation of
the Company to such holder in respect of such rights.
C. Dividends and Interest. No payment or adjustments shall be
made upon any conversion on account of any cash dividends on the Conversion
Stock issued upon such conversion. The Company shall pay all interest on the
Convertible Note surrendered for conversion, accrued to the date upon which the
above-mentioned written statement shall have been received by the Company.
D. Anti-Dilution Provisions.
(i) Adjustment of Conversion Price. The Conversion Price
once established shall be subject to adjustment from time to time
thereafter only as follows:
(a) In case shares of Conversion Stock are
issued as a dividend or other distribution on any class of
stock of the Company, the Conversion Price which would
otherwise be in effect at the opening of business on the day
following the date fixed for determination of shareholders
entitled to receive such dividend or other distribution shall
be reduced by multiplying such Conversion
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Price by a fraction of which the numerator shall be the number
of shares of Common Stock or Preferred Stock into which the
conversion will take place, as applicable, outstanding at the
close of business on the date fixed for such determination and
the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately
after the opening of business on the day following the date
fixed for such determination. For the purpose of this
subparagraph (a), the number of shares at any time outstanding
shall include shares held by the Company if such dividend or
distribution is paid or made in respect thereof.
(b) In case the applicable Conversion Stock
shall be subdivided into a greater or combined into a lesser
number of shares of Conversion Stock, the Conversion Price in
effect immediately prior thereto, or immediately prior to the
record date for such subdivision or combination if a record
date is fixed, shall be proportionately adjusted so that it
will bear the same relation to the Conversion Price in effect
immediately prior to such subdivision or combination, or such
record date, as the total number of shares of Conversion Stock
outstanding immediately prior to such subdivision or
combination, or such record date, shall bear to the total
number of shares of Conversion Stock outstanding immediately
after such subdivision or combination or such record date. For
purposes of this subparagraph (b), the number of shares at any
time outstanding shall include shares held by the Company if
such subdivision or combination affect such shares.
(c) In the case of any capital reorganization of
the Company, or of any reclassification of the Conversion
Stock, or in case of the consolidation of the Company with, or
the merger of the Company into, any other corporation or of
the sale of all or substantially all of the properties and
assets of the Company to any other corporation, the
Convertible Note shall after such capital reorganization,
reclassification, consolidation, merger, or sale entitle the
holder to receive upon conversion the number of shares of
stock or other securities or property of the Company, or of
the corporation resulting from such consolidation or surviving
such merger or to which such sale shall be made, as the case
may be, to which the holder of securities deliverable (at the
time of such capital reorganization, reclassification,
consolidation, merger, or sale) upon conversion of such
Convertible Note would have been entitled upon such capital
reorganization, reclassification, consolidation, merger or
sale; and in any such case the provisions of this Section 8(D)
with respect to the rights and interest thereafter of the
holder of the Convertible Note shall be appropriately adjusted
so as to be applicable, as nearly as may reasonably be, to any
shares of stock or other securities or any property thereafter
deliverable on the conversion of the Convertible Note. Any
such adjustment which shall be approved by the Board of
Directors of the Company shall for all purposes of this
paragraph conclusively be deemed to be an appropriate
adjustment. The subdivision or combination of shares of
Conversion
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Stock deliverable upon conversion of the Convertible Note at
any time outstanding into a greater or lesser number of shares
of Conversion Stock (whether with or without par value) shall
not be deemed to be a reclassification of the Conversion Stock
for the purposes of this paragraph.
(d) In case the Company shall issue rights or
warrants to all holders of any of its Conversion Stock
entitling them to subscribe for or purchase shares of Common
Stock without consideration or at a price per share less than
the Current Market Value per share (as determined pursuant to
Section 8(D)(vii) on the record date for the issuance of such
rights or warrants, then the Conversion Price in effect on the
date immediately prior to such record date shall immediately
be adjusted to a price (computed to the nearest cent) equal to
the quotient obtained by dividing;
(1) an amount equal to the sum of (x)
the number of shares of Conversion Stock issued and
outstanding on such record date multiplied by the
Conversion Price in effect on such record date and
(y) the aggregate consideration to be received by the
Company if all such rights or warrants were exercised
by
(2) an amount equal to the sum of (x)
the number of shares of Conversion Stock issued and
outstanding on such record date and (y) the number of
shares issuable upon exercise of such rights or
warrants (in each case increased or decreased to the
extent that the number of such shares shall have been
increased by a dividend or distribution of the type
contemplated by subparagraph (a) of this Section
8(D)(i) or shall have been increased or decreased by
each subdivision or combination thereof);
provided, however, that such adjustment shall be made only if the aforesaid
quotient shall be less than the Conversion Price in effect immediately prior to
the issue of such rights or warrants. Such adjustment shall become effective
retroactively immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants.
(e) For the purpose of any adjustment of the
Conversion Price pursuant to this Section 8(D), the following
provisions shall be applicable:
(1) in case of the issuance of
Conversion Stock for a consideration part or all of
which shall be cash (including such issuance upon
exercise of rights, warrants or options, granted
without consideration, to subscribe for or purchase
such shares), the amount of the cash consideration
shall be the amount of such cash received by the
Company, provided that no deduction shall be made for
any commissions, discounts or expenses incurred by
the Company for any underwriting of the issue or
otherwise in connection therewith; and
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(2) in case of the issuance of
Conversion Stock for a consideration in whole or in
part other than cash, the consideration other than
cash shall be deemed to be the lower of the fair
value thereof as determined by the Board of Directors
of the Company or the value of the shares issued
based on the Current Market Value of the Common Stock
(determined as provided in Section 8(D)(vii)).
(f) For the purpose of this Section 8(D)(i),
shares of Conversion Stock or other securities held in the
treasury of the Company shall not be deemed to be outstanding,
except as specifically provided herein, and the sale or other
disposition of any shares of Conversion Stock or other
securities held in the treasury of the Company shall be deemed
an issuance thereof
(g) Anything in this Section 8(D) to the
contrary notwithstanding, no adjustment of the Conversion
Price shall be required in any case in which the amount of the
adjustment would be less than 5 cents but in such case any
adjustment that would otherwise be required then to be made
will be carried forward and made at the time and together with
the next subsequent adjustment which, together with any and
all such adjustments so carried forward, shall amount to 5
cents or more per share of Conversion Stock. Regardless of any
subdivision or combination of shares of Conversion Stock said
amount of 5 cents shall not be proportionately decreased or
increased.
(h) The certificate of any firm of independent
public accountants of recognized standing selected by the
Board of Directors of the Company shall be conclusive evidence
of the correctness of any computation made under this Section
8(D).
(ii) In any case in which this Section 8(D) shall require
that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such
event (a) issuing to the holder of the Convertible Note converted after
such record date and before the occurrence of such event the additional
shares issuable upon such conversion by reason of the adjustment
required by such event over and above the shares issuable upon such
conversion before giving effect to such adjustment and (b) paying to
such holder any amount in cash in lieu of a fractional share pursuant
to Section 8(D)(vi); provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares, and such cash,
upon the occurrence of the event requiring such adjustment.
(iii) Whenever the Conversion Price is adjusted as herein
provided the Company shall prepare a certificate signed by the Chairman
of the Board, the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of
the Company setting forth the adjusted Conversion Price and showing in
reasonable detail the facts (and computations) upon which such
adjustments
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are based, and such certificate, as well as any accountants'
certificate provided for in Section 8(D)(i)(h) on which the Company has
relied in making such adjustments, shall forthwith be mailed (by first
class mail postage prepaid) to the registered holder of the Convertible
Note at such holder's last address as shown on the register of die
Company.
(iv) In case at any time after the date hereof
and prior to December 1, 2001:
(a) The Company shall authorize the granting to
the holders of Conversion Stock of rights to subscribe for or
purchase any shares of stock of any class or of any other
rights; or
(b) There shall be any reclassification of the
Conversion Stock of the Company (other than a subdivision or
combination of its outstanding common stock); or
(c) There shall be any capital reorganization by
the Company; or
(d) There shall be any consolidation or merger
involving the Company or sale, transfer or other disposition
of all or substantially all of the Company's property, assets,
or business (except a merger or other reorganization in which
the Company shall be the surviving corporation and except a
consolidation, merger or sale, transfer or other disposition
involving a wholly owned subsidiary); or
(e) There shall be a voluntary or involuntary
dissolution, liquidation, or winding up of the Company or any
partial liquidation by the Company or distribution to holders
of the Conversion Stock (other than the Company's customary
cash and stock dividend);
then in any one or more of said cases, the Company shall cause to be mailed (by
first class mail postage prepaid) to the registered bolder of the Convertible
Note at such holder's last address as shown on the register of the Company, at
the earliest practicable time (and, in any event, not less than 20 days before
any record date or other date set for definitive action), notice of the date on
which the books of the Company shall close or a record shall be taken for such
dividend, distribution, or subscription rights or such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation, or
winding up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect, if any, of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the kind and amount of the shares of stock and other securities and
property deliverable upon conversion of the Convertible Note. Such notice shall
also specify the date as of which the holder of the shares of record shall
Participate in said dividend, distribution, or subscription rights or shall be
entitled to exchange their shares for securities or other property deliverable
upon such organization, reclassification, sale, consolidation, merger,
dissolution, liquidation, or winding up, as the case may be.
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(v) The form of the Convertible Note need not be changed
because of any change in the Conversion Price and the Convertible Note
issued before or after such change, and may state the same Conversion
Price as stated in the Convertible Note theretofore issued pursuant to
this Agreement. However, the Company may at any time in its sole
discretion (which shall be conclusive) make any change in the form of
Convertible Note that it may deem appropriate and that does not affect
the substance thereof; and any Convertible Note thereafter issued may
be in the form as so changed.
(vi) Anything contained herein to the contrary
notwithstanding, the Company shall not be required to issue any
fraction of a share in connection with the conversion of the
Convertible Note, but in any case where any holder of the Convertible
Note would, except for the provisions of this paragraph (ii), be
entitled under the terms of this Agreement to receive a fraction of a
share upon the conversion of the Convertible Note, the Company shall
pay a sum in cash equal to such fraction multiplied by the Current
Market Value of the shares (determined as provided in Section 8(D)(vii)
except that the Current Market Value shall be deemed to be the market
price for the business day next preceding the day of conversion).
(vii) For the purposes of any computation under this
Section 8(D), the Current Market Value per share of the Conversion
Stock or any other security (herein collectively referred to as a
"security") at the date then specified shall be determined by the most
recent sale price for such security to Equity Investors (provided there
has been a sale to Equity Investors within six months) or, in the
absence of a sale price, the value per share calculated based on the
"Value Per Share" calculated by the Company's independent accountants
as follows: "Value Per Share" shall mean the greater of (a) three (3)
times gross revenues received by the Company during the twelve months
preceding the "Valuation Date" divided by the number of shares issued
and outstanding on the "Valuation Date" or (b) two (2) times the
"Aggregate Book Value of the Shares" of the Company divided by the
number of Shares issued and outstanding on the "Valuation Date". The
term "Aggregate Book Value of the Shares" shall mean the excess of the
sum of (i) all cash, U.S. Treasury bills at cost and other securities
and obligations at their cost (plus accrued interest); (ii) other
assets (excluding goodwill) valued at cost; and (iii) all leasehold
rights, if any, valued in accordance with generally accepted accounting
principles, over the sum of (A) all determinable liabilities and any
reserves for depreciation maintained on the books of the Company, (B)
treasury stock, if any (iv) all dividends payable to Shareholders of
record as of a date prior to the Valuation Date. Where not inconsistent
with this Section, Value Per Share shall be determined in accordance
with generally accepted accounting principles. The term "Valuation
Date" shall mean the last day of the month preceding the month in which
the need to calculate the Value Per Share arose.
E. Share Issuable Upon Conversion. The Company covenants and
agrees that all shares of Conversion Stock which may be issued upon the
conversion of all or any portion of the Convertible Note will, upon issuance, be
duly and validly issued and fully paid and nonassessable and free from all
taxes, liens, and charges with respect to the issue thereof, but
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exclusive of any sum payable by Lender as a result of the Lender's receipt of
the shares of Conversion Stock. The Company further covenants and agrees that it
will at all times have authorized, and reserved and kept available solely for
the purpose of issue upon the conversion of the Convertible Note, as herein
provided, a sufficient number of shares of its shares of the Conversion Stock as
shall then be estimated to be issued upon the conversion of the Convertible
Note.
F. Registration, Approval or Listing of Common Stock. If any
shares of Conversion Stock required to be reserved for purposes of conversion of
the Convertible Note hereunder require registration with or approval of any
governmental authority under any federal (other that the Securities Act or
similar federal statute then in force) or state law, or listing on any national
securities exchange, before such shares may be issued upon conversion, the
Company will, at its expense, as expeditiously as possible exercise its best
efforts to cause such shares to be duly registered or approved or listed on the
relevant national securities exchange, as the case may be. Shares of Conversion
Stock issued upon conversion of the Convertible Note shall be registered by the
Company under the Securities Act if required by subsection (H) below and subject
to the conditions stated therein.
G. Issuance Tax and Expenses. Company shall Pay all expenses,
issuance taxes and other charges payable in connection with the preparation,
execution and delivery of certificates for Conversion Stock issuable upon each
conversion of the Convertible Note, except that, in case any such certificate
shall be registered in a name or names other than the name of the holder of the
Convertible Note, funds sufficient to pay all stock transfer taxes which shall
be payable upon the execution and delivery of such certificate shall be paid by
such holder to the Company at the time of the surrender of such Convertible Note
for conversion.
H. Restrictions.
(i) Legend: Restrictions On Conversion And Transfer. The
Convertible Note issued pursuant to this Agreement shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"This Note, and any shares or other securities acquired upon
the conversion of this Note, may not be transferred except
upon the conditions specified in the Convertible Term Note
Agreement dated as of January 11, 1999, providing for the
issuance of a Convertible Term Note, due December 1, 2001, of
Horizon Pharmaceuticals Corporation, a complete and correct
confirmed copy of which will be furnished to the holder of
such securities upon written request and without charge. This
Note, and any shares or other securities acquired upon the
conversion of this Note have not been registered under the
Securities Act of 1933 and may be offered and sold only if
registered pursuant to the provisions of that Act or if an
exemption from registration is available."
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Each stock certificate issued upon the conversion of any Convertible
Note (except as permitted by this Section 8) shall be stamped or imprinted with
a legend in substantially the following form:
"These securities may not be transferred except upon
the conditions specified in the Convertible Term Note
Agreement, dated as of January 11, 1999, providing for the
issuance of a Convertible Note, due December 1, 2001, of
Horizon Pharmaceuticals Corporation and in the Shareholders'
Agreement dated as of November 6, 1998, complete and correct
conformed copies of which will be furnished to the holder of
such securities upon written request and without charge. These
securities have not been registered under the Securities Act
of 1933 and may be offered and sold only if registered
pursuant to the provisions of that Act or if an exemption from
registration is available."
The outstanding stock of the Company evidenced by a certificate or
certificates bearing such legend is herein sometimes called "Legend Stock" Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution under a registration statement of the securities represented
thereby) shall also bear such legend unless in the opinion of such holder's
counsel specified in Clause (ii) below (addressed to such holder), the
securities represented thereby need no longer be subject to the restrictions
contained in this Section 8. The provisions of this Section 8 shall be binding
upon all subsequent holders of Legend Stock, and shall also be applicable to and
inure to the benefit of all subsequent holders of the Convertible Note.
(ii) Notice of Intention to Convert or Transfer; Opinions
of Counsel: Registration Required by Holders of Convertible Note. The
Convertible Note and the Legend Stock to be issued upon a conversion
thereof shall not be transferable except upon the conditions specified
in this subsection 8(H) and the restrictions on transfers of the
Company's Common Stock as provided in the Shareholders' Agreement dated
as of November 6, 1998. The holder of the Convertible Note or Legend
Stock, by acceptance thereof, agrees, prior to any transfer of such
Convertible Note or Legend Stock or concurrently with any conversion of
such Convertible Note, to give written notice to the Company expressing
such holder's intention to effect such transfer or conversion and
describing briefly the manner of the proposed transfer or, in the case
of such conversion, such holder's intention as to the disposition (and
the intended method thereof) or retention to be made of Conversion
Stock issuable upon the proposed conversion, together, if registration
of such Convertible Note or Legend Stock or Conversion Stock is deemed
unnecessary, with a copy of the opinion of counsel selected by such
holder and reasonably satisfactory to the Company (addressed to such
holder) as to the non-necessity for registration under the Securities
Act of such Convertible Note or Legend Stock or Conversion Stock in
connection with such proposed transfer or disposition or retention upon
such proposed conversion. The following provisions shall apply if in
the opinion of such counsel, the proposed transfer of such Convertible
Note or Legend Stock, or the proposed disposition or retention of
Conversion Stock to be issued upon such conversion,
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may be effected without such registration of such Convertible Note or
of such Legend Stock or of such Conversion Stock under the Securities
Act: such holder shall be entitled to transfer such Convertible Note or
Legend Stock or to dispose of or retain such Conversion Stock to be
issued upon conversion, all in accordance with the terms of the notice
delivered by such holder to the Company. Unless in the opinion of such
counsel subsequent disposition by such holder or by others of the
Conversion Stock to be issued upon conversion or of the Legend Stock to
be so transferred may require such registration, the Company will
promptly upon such conversion or transfer deliver certificates for
Conversion Stock not bearing a legend of the character set forth in the
first sentence of this subsection (H), all as contemplated by such form
of legend.
(iii) "Piggyback" Registration. If the Company at any time
proposes to register any of its securities under the Securities Act on
Form X-0, Xxxx X-0, Form S-1 8, or on any other form upon which may be
registered securities similar written notice to the holder of the
Convertible Note and/or Legend Stock of its intention so to do. Upon
the written request to the Company by the holder or holders of
outstanding Convertible Notes and/or Legend Stock, given within 30 days
after receipt of any such notice, the Company will use its best efforts
to cause the Legend Stock which the Company has been requested to
register by the holder thereof to be registered under the Securities
Act, all to the extent requisite to permit the sale or other
disposition by such holders of the Legend Stock so registered,
provided, however, that, if the registration is in connection with an
underwritten public offering and the managing underwriter shall
determine that inclusion of the Legend Stock in the registration will
materially impair the marketability of the stock being registered, the
Company shall not be obligated to include such shares.
(iv) Company's Obligations in Registration. If and
whenever the Company is obligated, or required to use its best efforts,
by the provision of this subsection 8(H), to effect the registration of
any Legend Stock under the Securities Act, as expeditiously as possible
the Company will:
(a) prepare and file with the Securities and
Exchange commission (herein, along with any other Federal
Agency then administering the Securities Act, called the
"Commission") a registration statement with respect to such
Legend Stock and cause such registration statement to become
and remain effective;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection thereafter as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the disposition of all Legend Stock covered by such
registration statement whenever the holders for whom such
Legend Stock are registered or are to be registered shall
desire to dispose of the same;
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(c) furnish to the holders of outstanding Legend
Stock so registered or to be registered such numbers of copies
of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and
such other documents as such holders may reasonably request in
order to facilitate the disposition of such Legend Stock;
(d) register or qualify the Legend Stock covered
by such registration statement under such other securities or
blue sky laws of such jurisdictions as the holders of the
Legend Stock so registered or to be registered shall
reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable such holders to
consummate the disposition in such jurisdictions of such
Legend Stock; provided, however, that the Company shall not be
obligated by reason thereof to qualify as a foreign
corporation or file any general consent to service of process
under the laws of any such jurisdiction or subject itself to
taxation as doing business in any such jurisdiction; and
(e) furnish to the holders of outstanding Legend
Stock so registered or to be registered at the time of the
disposition of Legend Stock by such holders an opinion of
counsel for the Company to the effect that a registration
statement covering such Legend Stock has been filed with the
commission under the Securities Act and has been made
effective by order of the Commission, that a prospectus
meeting the requirements of the Securities Act is available
for delivery, that no stop order has been issued by the
Commission suspending the effectiveness of such registration
statement and that, to the best of such counsel's knowledge,
no proceedings for the issuance of such a stop order are
threatened or contemplated, and that the applicable provisions
of the securities or blue sky law of each state in which the
Company shall be required, pursuant to clause (4) above, to
register or qualify such Legend Stock, have been complied
with.
(v) Payment of Registration Expenses. The cost and
expenses of all registrations and qualifications under the Securities
Act or otherwise, except as provided in Section 8(H)(iii) above, and of
all other actions, which the Company is required to effect or to take
pursuant to this Section 8(H), shall be paid by the Company (including
without limitation all registration and filing fees, printing expenses,
securities indemnities insurance premiums, fees and disbursements of
counsel for the Company and of special counsel for such holders of
outstanding Legend Stock and expenses of any special audits incident to
or required by any such registration). With respect to any registration
statement filed pursuant to clause (iii) of this Section 8(H), the
Company shall bear all the costs and expenses incidental thereto.
(vi) Information to be Furnished. Notices and requests
delivered pursuant to this Section 8(H) shall contain such information
regarding the Legend Stock and the intended method of disposition
thereof as shall reasonably be required in connection with the action
to be taken.
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(vii) Exchange of Stock Certificates. As expeditiously as
possible after the effectiveness of any registration pursuant to this
Section 8(H), the Company will deliver in exchange for any certificates
representing shares of Legend Stock so registered new common stock
certificates not bearing the legend set forth above.
(viii) Indemnification.
(a) In the event of any registration pursuant to
this Section 8(H), the Company will indemnify each holder of
Legend Stock so registered and each other person, if any, who
controls such holder within the meaning of the Securities Act
and each other person (including underwriters) who
participates in the offering of such Legend Stock against any
losses, claims, damages, or liabilities, joint or several, to
which such holder or controlling person or participating
person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, or
liabilities (or proceedings in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective
date thereof, in any registration statement under which such
Legend Stock was registered under the Securities Act, in any
preliminary prospectus or final prospectus contained therein,
or in any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse such holder and each such controlling person or
participating person for any legal or any other expenses
reasonably incurred by such holder or such controlling person
or participating person in connection with investigating or
defending any such loss, claim, damage, liability, or
proceeding; provided, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage,
or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in such registration statement, said preliminary
or final prospectus or said amendment or supplement in
reliance upon and in conformity with written information
furnished to the Company by an instrument with respect to such
holder or person duly executed by such holder or person
specifically for use in the preparation thereof.
(b) Each holder of Legend Stock included in the
Registration Statement shall agree to indemnify and hold
harmless the Company and each person, if any (including
underwriters), who participate m the offering to the same
extent as the foregoing indemnity from the Company but only
with respect to any information furnished in writing by or on
behalf of and with respect to such holder expressly for use in
any Preliminary Prospectus, the Registration Statement or any
amendment or supplement thereof. In case any action shall be
brought against the Company or any underwriter or any other
person so indemnified based on any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or
supplement thereof or any application, and in respect of which
indemnity may be sought against the holder of Legend Stock,
such holder shall
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have the rights and duties given to the Company by the
provisions in the preceding paragraph.
(ix) Survival of Obligations. The obligations of the
Company contained in this Section 8(H) shall survive payment in full of
the Convertible Note.
9. Events of Default.
If one or more of the following events of default occur:
A. Company defaults in the payment of the principal on the
Convertible Note executed pursuant to this Agreement or any part thereof when
the same shall become due and payable, either by its terms or as otherwise
herein provided, or does not pay any fee or interest on the Convertible Note
executed pursuant to this Agreement, within five days of when the same shall
become due and payable, either by its term or as otherwise herein provided;
B. There shall be a default under the Security Agreement;
C. Any representation or warranty in this Agreement, the Security
Agreement or any other agreement between the Company and the Lender shall be
false when made or at any time during the term of this Agreement or any
extension thereof, or the Company shall default in the performance of any
covenant, condition or agreement contained in this Agreement or any other
agreement with the Lender;
D. There shall be a default under the Senior Debt;
E. The Company makes an assignment for the benefit of creditors,
fails to pay, or admits in writing its inability to pay its debts as they
mature; or if a trustee of any substantial part of the assets of the Company is
applied for or appointed, and if appointed in a proceeding brought against the
Company, the Company by any action or failure to act indicates its approval of,
consent to, or acquiescence in such appointment, or within thirty (30) days
after such appointment, such appointment is not vacated or stayed on appeal or
otherwise, or shall not otherwise have ceased to continue in effect;
F. Default shall be made by the Company in the performance or
observance of any other of the covenants, conditions, or agreements on the part
of the Company, its successors, or assigns, set forth in this Agreement, or in
the Convertible Note, and such default shall continue for a period of thirty
(30) days; or
G. Any proceedings involving the Company are commenced by or
against the Company under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute of
the federal government or any state government and if such proceedings are
instituted against the Company, the Company by any action or failure to act
indicates its approval of, consent to or acquiescence therein, or an order shall
be entered approving the petition in such proceedings and within thirty (30)
days after the entry thereof such
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order is not vacated or stayed on appeal or otherwise, or shall not otherwise
have ceased to continue in effect;
H. Company defaults in any payment of principal or interest on
any other obligation beyond any period of grace provided with respect thereto or
in the performance of any other term, condition or covenant contained in any
agreement, including, but not limited to, an agreement in connection with the
deferred purchase price of any property, under which any such obligation is
created the effect of which default is to cause or permit the holder of such
obligation to cause such obligation to become due prior to its stated maturity;
I. If there shall be entered against the Company one or more
judgments or decrees involving in the aggregate a liability of $25,000 or more
which is not covered by insurance, and any such judgment or decree shall not
have been vacated, discharged or stayed pending appeal within 30 days from the
entry hereof:
then, upon any such event, Lender shall have all rights and remedies provided by
applicable law and, without limiting the generality of the foregoing, may, at
its option, declare its commitments to be terminated and the Convertible Note
shall thereupon be and become forthwith, due and payable, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Convertible Note to
the contrary notwithstanding, and may, also without limitation appropriate and
apply toward full payment of the Convertible Note any indebtedness of the Lender
to the Company however created or arising. There shall be no obligation to
exercise any remedy available to the Lender in any order.
10. Miscellaneous.
A. No failure or delay on the part of the Lender in exercising
any right, power or remedy hereunder shall operate as a waiver thereto nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right power or
remedy hereunder. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
B. This Agreement and the Security Agreement together constitute
the entire agreement between the parties and there are no promises expressed or
implied unless contained therein. No amendment, modification, termination or
waiver of any provision of this Agreement, of the Convertible Note or any
Security Agreement nor consent to any departure by the Company therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance for which given. No notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.
C. All notices. requests, demands and other communications
provided for hereunder shall be in writing and, if to the Company, mailed or
delivered to the Company, Attn: President, at the address of the Company
appearing at the end of this Agreement, and if to the Lender, mailed or
delivered to it at 000 X. Xxxxxxxx Xxxx., Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxx 00000
or, as
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to each party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this subsection. All notices, requests, demand and other communications provided
for hereunder shall be effective when deposited in the mails or delivered to the
telegraph Company, addressed as aforesaid.
D. This Agreement may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same instrument.
E. This Agreement shall become effective when it shall have been
executed by the Company and the Lender and thereafter shall be binding upon and
inure to the benefit of the Company and the Lender and thereafter respective
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender.
F. This Agreement has been and the Convertible Note will be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the laws of the State of Illinois, and for all purposes shall be
construed in accordance with the laws of said State and any action or other
legal proceeding relating to this Agreement or the Note may only be brought in a
federal or state court located in the County of Xxxx, State of Illinois.
G. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction, wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law.
H. All covenants, agreements, representations and warranties made
by the Company herein shall, notwithstanding any investigation by the Lender, be
deemed material and relied on by the Lender and shall survive the execution and
delivery to the Lender of this Agreement, the Note and the Security Documents.
I. This Agreement and the Security Documents shall secure and
govern the terms of any extensions or renewals to the Note.
J. The Company will pay all costs and expenses (including
reasonable attorney's fees), if any, in connection with the collection and
enforcement of this Agreement, the Note, the Security Documents, if any, and any
other instruments and documents to be delivered hereunder including, without
limitations, reasonable attorneys' fees and reasonable time charges of
attorney's who may be employees of the Lender. In addition, the Company shall
pay any and all stamp and other taxes determined to be payable in connection
with the execution and delivery of this Agreement, the Note, the Security
Agreement and the other instruments and documents to be
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delivered hereunder, and agrees to save the Lender harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
[Signatures contained on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
XXXXX-PHARMA INVESTMENTS, L.P. HORIZON PHARMACEUTICALS CORPORATION
By: By:
--------------------------------- ---------------------------------
Its: Its:
--------------------------------- ---------------------------------
Address: 000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
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AMENDMENT NO. 1 TO THE CONVERTIBLE TERM NOTE
THIS AMENDMENT NUMBER NO. 1 TO THE CONVERTIBLE TERM NOTE AGREEMENT ("Amendment
No. 1") by and between Horizon Pharmaceuticals Corporation, a Delaware
Corporation (the "Company") and Kapoor Pharma Investment, L.P. (the "Lender") is
entered into as of this 30th day of November, 1999 by and between the Company
and Lender (the Company and the Lender and sometimes referred to herein
singularly as a "Party" or collectively as the "Parties").
RECITALS:
WHEREAS, the Parties entered into that certain Convertible Term Note Agreement
dated as of January 11, 1999 (the "Note Agreement") providing for the terms and
conditions under which the Lender would lend an amount not to exceed One Million
Six Hundred Thousand Dollars ($1,600,000) to the Company and the Company would
agree to allow the Lender, at the Lender's sole option, to convert its
indebtedness into equity securities of the Company at any time prior to maturity
(terms not otherwise defined herein shall have the same meaning ascribed to
those terms in the Note Agreement); and
WHEREAS, the Parties now wish to amend the Note Agreement in accordance
with the provisions of Section 10 (B) of the Note Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and agreements contained herein, and intending to be legally bound
hereby, the parties hereby agree to amend the Note agreement as follows:
1. Amendment. Section 8 (C) is hereby deleted in its entirety and
the following is substituted in its place:
"C. Dividends and Interest. No payment or adjustment shall be made upon
any conversion on account of any cash dividends on the Conversion Stock
issued upon such conversion. The Company shall pay all interest on the
Convertible Note surrendered for conversion, accrued to the date upon
which the above-mentioned written statement shall have been received by
the Company; provided, however, that in lieu of receiving interest, the
Lender, at its sole option, may elect to have the amount of interest
otherwise payable, converted into Conversion Stock on the same terms
and at the same Conversion Stock as is provided in this Section 8. In
the event that Lender shall elect to receive its interest payment in
the form of Conversion Stock, such election by the Lender shall be made
in the written statement to be delivered by the Lender to the Company
as provided in the second paragraph of Section 8 (A) hereof."
2. Reaffirmation of Note Agreement. Other than as specifically
set forth above, in all other respects the Note Agreement is hereby ratified and
confirmed by the Parties.
25
IN WITNESS WHEREOF, the Parties have executed this Amendment No.1 as of
the day and date first above written:
HORIZON PHARMACEUTICALS CORPORATION
By:
---------------------------------------------
Its:
--------------------------------------------
KAPOOR PHARMA INVESTMENTS, L.P.
By:
---------------------------------------------
Its:
--------------------------------------------
2
