RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT (this "Agreement"), is dated as of October
1, 2002, by and among InKine Pharmaceutical Company, Inc., a New York
corporation (the "Company"), S.A.C. Capital Associates, LLC and SDS Merchant
Fund, L.P. (together, the "Purchasers").
BACKGROUND
WHEREAS, on June 15, 2001, pursuant to that certain Securities Purchase
Agreement, dated as of June 15, 2001, by and among the Company and the
Purchasers (the "Securities Purchase Agreement"), the Purchasers purchased (i)
convertible notes of the Company in aggregate principal amount of Ten Million
Dollars ($10,000,000) (the "Notes") and (ii) warrants to acquire an aggregate of
265,487 shares of the Company's common stock (the "Original Transaction");
WHEREAS, the Company and the Purchasers desire to restructure the
Original Transaction (the "Restructuring") by (i) amending and restating the
Notes, in the form attached hereto as Exhibit A, (the "Amended Notes"), (ii)
entering into a Security Agreement in connection with the Amended Notes, in the
form attached hereto as Exhibit B (the "Security Agreement"), (iii) the issuance
of warrants (the "New Warrants"), in the form attached hereto as Exhibit C,
allowing the Purchasers to acquire an aggregate of five hundred thousand
(500,000) shares of the Company's common stock and (iv) entering into a
Registration Rights Agreement, in the form attached hereto as Exhibit D (the
"New Registration Rights Agreement"), providing for certain registration rights
with respect to the New Warrants; and
WHEREAS, the Company and the Purchasers desire to enter into this
Agreement to effect certain aspects of the Restructuring and to amend certain
provisions of the Securities Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Company and the Purchasers hereby agree as follows:
1. Representations and Warranties of the Purchasers. The Purchasers,
severally and not jointly, hereby make to the Company as of the date hereof the
representations and warranties contained in Section 2 of the Securities Purchase
Agreement with respect to themselves, this Agreement, the New Securities (as
hereinafter defined) and the New Registration Rights Agreement, as applicable.
As used in this Agreement, the term "New Securities" means the Amended Notes,
including the shares of the Company's common stock issuable upon conversion
thereof, and the New Warrants, including the shares of the Company's common
stock issuable upon exercise thereof.
2. Representations and Warranties of the Company. Except as modified
below in this Section 2, the Company hereby makes to the Purchasers as of the
date hereof the representations and warranties contained in Section 3 (other
than Section 3(n) and 3(o)) of the Securities Purchase Agreement with respect to
itself, this Agreement, the New Securities and the New Registration Rights
Agreement, as applicable. Attached hereto are copies of the schedules called for
by Section 3 of the Securities Purchase Agreement, as well as a schedule listing
any other exceptions to the representations and warranties made by the Company
in the preceding sentence, in each case as of the date hereof and as applicable
to the representations and warranties made by the Company in the preceding
sentence. The representations and warranties contained in Section 3 of the
Securities Purchase Agreement are hereby modified as follows:
a. Section 3(c). The phrase "Rule 4460(i)" is hereby deleted and the
phrase "Rule 4350(i)" is hereby inserted.
b. Section 3(f). The penultimate and last sentences are hereby
deleted.
c. Section 3(h). The date "December 31, 2000" is hereby deleted and
the date "December 31, 2001" is hereby inserted.
d. Section 3(i). The opening phrase "Except as disclosed" is hereby
deleted and the phrase "Except as disclosed on Schedule 3(i) or
in" is hereby inserted. The phrase "or NNM" is hereby deleted.
e. Section 3(q). The phrase "Rule 4460(i)" is hereby deleted and the
phrase "Rule 4350(i)" is hereby inserted.
3. Covenants of the Company. Except as modified below in this Section
3, the Company hereby makes to the Purchasers the covenants contained in
Sections 4(b), 4(c), 4(h), 4(i), 4(j), 4(k), 4(l), 4(m) and 4(o) of the
Securities Purchase Agreement as if made as of the date hereof, and agrees to
act in accordance with Section 2(g) and Section 5 of the Securities Purchase
Agreement, in each case with respect to the New Warrants and the shares of the
Company's common stock issuable upon exercise thereof, as applicable. The
covenants contained in Section 4 of the Securities Purchase Agreement are hereby
modified as follows:
a. Section 4(c). The phrase "take all actions necessary" in the last
sentence is hereby deleted and the phrase "use its reasonable best
efforts to" is hereby inserted. The phrase "to continue" in the
last sentence is hereby deleted.
b. Section 4(i). Is hereby deleted in its entirety and the following
is hereby inserted so that Section 4(i) reads, in its entirety, as
follows:
Listing. The Company shall maintain, so long as the Purchasers
(or any of its affiliates) owns any Securities, the listing of
all Conversion Shares and Warrant Shares from time to time
issuable upon conversion of the Notes and exercise of the
Warrants on each national securities exchange or automated
quotation system on which shares of Common Stock are currently
listed. The Company will use its best efforts to have its
Common Stock on Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, the American Stock
Exchange or the OTC Bulletin Board, and will comply in all
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respects with the reporting, filing and other obligations
under the bylaws or rules of the NASD and such exchanges, as
applicable. The Company shall promptly provide to the
Purchasers copies of any notices it receives regarding the
continued eligibility of the Common Stock for trading on such
markets or, if applicable, any securities exchange or
automated quotation system on which securities of the same
class or series issued by the Company are then listed or
quoted, if any.
c. Section 4(j). The phrase "NNM, NYSE or AMEX" is hereby deleted and
the phrase "Nasdaq National Market, the Nasdaq SmallCap Market,
the New York Stock Exchange, the American Stock Exchange or the
OTC Bulletin Board" is hereby inserted.
4. Amendment and Restatement of the Securities Purchase Agreement.
Subject to the terms of this Agreement, the Company and the Purchasers hereby
amend and restate the Securities Purchase Agreement in its entirety. Except as
provided in this Agreement, the Securities Purchase Agreement shall continue to
apply to the warrants and notes contemplated thereby as provided therein. In
connection with the foregoing, the parties agree, that Sections 3 and 4 of the
Securities Purchase Agreement, are amended as provided in Sections 2 and 3 of
this Agreement, such that: (i) Sections 2 of this Agreement provides for all of
the Company's representations and warranties; and (ii) Sections 3 of this
Agreement provides for all of the Company's covenants. To this end, the parties
agree and acknowledge that: (y) each representation and warranty contained in
Section 3 of the Securities Purchase Agreement, but not specifically reaffirmed
in Sections 2 of this Agreement, is extinguished; and (z) each covenant
contained in Section 4 of the Securities Purchase Agreement, but not
specifically reaffirmed in Sections 3 of this Agreement, is extinguished.
5. Payments to and Reimbursement of the Purchasers. Concurrently with
the execution hereof, the Company shall (i) pay to the Purchasers an aggregate
of one hundred and fifty thousand dollars ($150,000) and (ii) reimburse the
Purchasers for up to twenty thousand dollars ($20,000) of out-of-pocket expenses
(including attorneys' fees and expenses) incurred by the Purchasers and their
affiliates and advisors in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other documents executed in
connection with the Restructuring.
6. Delivery of Notes. Upon the effectiveness of this Agreement,
simultaneous with the delivery of the Amended Notes by the Company, the
Purchasers shall surrender and deliver the Notes to the Company.
7. Capital Transaction. In the event the Company completes a capital
raising financing with an unaffiliated third party involving the issuance by the
Company of convertible promissory notes ("New Notes") on terms that are
customary and reasonably acceptable to Purchasers, and which nets the Company at
least five million dollars ($5,000,000) (a "New Financing"), then, simultaneous
with the closing of the New Financing (i) the Company shall redeem a portion of
the Amended Notes resulting in an aggregate principal payment to the Purchasers
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of at least five million dollars ($5,000,000), plus the applicable premium
provided for in the Amended Notes and (ii) the Purchasers shall exchange their
remaining Amended Notes for New Notes (such New Notes having the same terms as
those issued in the New Financing). Upon the exchange of the Purchasers' Amended
Notes pursuant to the foregoing, the Security Agreement shall terminate.
8. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company and the
Purchasers irrevocably consent to the jurisdiction of the United States federal
courts and the state courts located in the County of New York, State of New York
in any suit or proceeding based on or arising under this Agreement and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the right of
the Purchasers to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
9. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof, provided that the failure to so deliver any manually executed
Execution Page shall not affect the validity or enforceability of this
Agreement.
10. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
11. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the Purchasers, the
Company, their affiliates and persons acting on their behalf with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchasers makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and the
Purchasers.
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12. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally, by responsible overnight carrier or
by confirmed facsimile, and shall be effective five (5) days after being placed
in the mail, if mailed, or upon receipt or refusal of receipt, if delivered
personally or by responsible overnight carrier or confirmed facsimile, in each
case addressed to a party. The addresses for such communications shall be:
If to the Company, to:
InKine Pharmaceutical Company, Inc.
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxx 00, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Chief Executive Officer
with a copy simultaneously transmitted by like means to:
Xxxx Xxxxx XXX
Xxxxxx Xxxxxx Xxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Esquire
If to the Purchasers, to:
S.A.C. Capital Associates, LLC
c/o S.A.C. Capital Advisors, LLC
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
AND
SDS Merchant Fund, L.P.
c/o SDS Capital Partners, LLC
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone:
Facsimile:
Attention: General Counsel
with a copy simultaneously transmitted by like means to:
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Each party shall provide notice to the other party of any change in
address.
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13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
provided herein or therein, neither the Company nor the Purchasers shall assign
this Agreement or any rights or obligations hereunder. Notwithstanding the
foregoing, each Purchaser may assign its rights hereunder to any of its
"affiliates," as that term is defined under the Exchange Act, without the
consent of the Company or to any other person or entity with the consent of the
Company, which consent shall not be unreasonably withheld. This provision shall
not limit any Purchaser's right to transfer the Amended Notes or the New
Warrants pursuant to the terms thereof and of this Agreement or to assign the
Purchaser's rights hereunder or thereunder to any such transferee. In addition,
and notwithstanding anything to the contrary contained in this Agreement, the
New Registration Rights Agreement, the Amended Notes, the New Warrants or the
New Securities may be pledged and all rights of the Purchasers under this
Agreement or any other agreement or document related to the transactions
contemplated hereby may be assigned, without further consent of the Company, to
a bona fide pledgee in connection with the Purchasers' margin or brokerage
account.
14. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
15. Survival. The representations and warranties of the Company and the
agreements and covenants set forth in Sections 1, 2 and 3 hereof shall survive
for two years after the date hereof notwithstanding any due diligence
investigation conducted by or on behalf of the Purchasers. Moreover, none of the
representations and warranties made by the Company herein shall act as a waiver
of any rights or remedies the Purchasers may have under applicable U.S. federal
or state securities laws. The Company shall indemnify and hold harmless the
Purchasers and each Purchaser's officers, directors, employees, partners,
members, agents and affiliates for all losses or damages arising as a result of
or related to any breach or alleged breach by the Company of any of its
representations or covenants set forth herein, including advancement of expenses
as they are incurred.
16. Publicity. The Company and the Purchasers shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the Purchasers, to make
any press release or SEC filings with respect to such transactions as is
required by applicable law and regulations (although the Purchasers shall be
consulted by the Company in connection with any press release prior to its
release and shall be provided with a copy thereof).
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17. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
18. Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Amended
Notes, the New Warrants and the New Registration Rights Agreement. As such, the
language used herein and therein shall be deemed to be the language chosen by
the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party to this Agreement.
19. Equitable Relief. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Purchasers by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder (including, but not limited to, its obligations pursuant
to Section 5 of the Securities Purchase Agreement as made applicable hereto by
Section 3 hereof) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited to, its obligations pursuant to Section 5 of the Securities
Purchase Agreement as made applicable hereto by Section 3 hereof), that the
Purchasers shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer
of the New Securities, without the necessity of showing economic loss and
without any bond or other security being required.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this Agreement to be duly executed as of the date first above written.
INKINE PHARMACEUTICAL COMPANY, INC.
By:
------------------------------------
Name: Xxxxxx X. Apple
Title: Executive Vice President and
Chief Financial Officer
PURCHASERS:
S.A.C. CAPITAL ASSOCIATES, LLC
By:
------------------------------------
Name:
Title:
SDS MERCHANT FUND, L.P.
By: SDS Capital Partners, L.L.C.,
its General Partner
By:
-------------------------------------
Name:
Title:
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