EXHIBIT B
SECOND AMENDMENT
DATED FEBRUARY 16, 1999
TO THE
SECURITIES PURCHASE AGREEMENT
DATED MAY 13, 1998
BY AND AMONG
XXXXXX XXXX INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
BANCBOSTON VENTURES INC.
XXXXX PARTNERS
AND
ASCENT PEDIATRICS, INC.
SECOND AMENDMENT dated as of the 16th day of February 1999 (the
"Second Amendment") among Ascent Pediatrics, Inc. (the "Company"), Xxxxxx Xxxx
Investors II L.P. ("Investors"), FS Employee Investors LLC ("Employee"), FS
Parallel Fund L.P. ("Parallel"), BancBoston Ventures Inc. ("BancBoston") and
Xxxxx Partners ("Xxxxx"), (each of Investors, Employee, Parallel, BancBoston and
Xxxxx are herein referred to as "Purchaser", and collectively, the
"Purchasers").
WHEREAS, the Company and the Purchasers are parties to a Securities
Purchase Agreement dated as of May 13, 1998, as amended September 30, 1998 (the
"Series G Purchase Agreement");
WHEREAS, the Company is negotiating a Loan Agreement (the "Loan
Agreement") with Alpharma, Inc., a Delaware corporation ("Parent"), and Alpharma
USPD Inc., a Maryland corporation and a wholly-owned subsidiary of Parent
("Alpharma"), pursuant to which the Company proposes to issue and sell to
Alpharma a 7.5% Convertible Subordinated Note in an aggregate principal amount
of up to $40,000,000 (the "Alpharma Convertible Note");
WHEREAS, in connection with the Loan Agreement, the Company and
Alpharma will enter into a Registration Rights Agreement (the "Registration
Rights Agreement"), pursuant to which the Company will grant Alpharma certain
demand and incidental registration rights with respect to the shares of Common
Stock issued or issuable upon conversion of the Alpharma Convertible Note (the
"Alpharma Registrable Shares");
WHEREAS, in connection with the Loan Agreement, (i) the Company and
Bird Merger Corporation, a Delaware corporation and wholly-owned subsidiary of
the Company (the "Merger Subsidiary"), will enter into an Agreement and Plan of
Merger (the "Merger Agreement"), (ii) the Company, Alpharma and Parent will
enter into a Master Agreement (the "Master Agreement"), and (iii) the Company,
Alpharma and State Street Bank and Trust Company will enter into a Depositary
Agreement (the "Depositary Agreement" and together with the Merger Agreement,
the Registration Rights Agreement and the Master Agreement, the "Ancillary
Agreements"), pursuant to which, among other things the Company will assign to
Alpharma the right and option (the "Call Option"), upon the terms and conditions
set forth in the Depositary Agreement, to purchase all of the outstanding shares
of common stock, $.00004 par value per share, of the Company (the "Common
Stock"); and
WHEREAS, the Purchasers are the holders of all of (i) the Preferred
Stock and Preferred Conversion Shares issuable upon conversion of the Preferred
Stock, (ii) the principal amount of the Subordinated Notes, and (iii) the
Warrants and Warrant Shares issuable upon exercise of the Warrants.
NOW THEREFORE, in order to induce Alpharma to enter into the Loan
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated thereby and in consideration of these premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION.
(a) All capitalized terms used herein which are not otherwise
specifically defined herein shall have the respective meaning as ascribed
thereto in the Series G Purchase Agreement.
(b) For purposes of this Second Amendment and the Series G Purchase
Agreement:
"ALPHARMA CLOSING DATE" shall mean the Closing Date as such term is
defined in the Master Agreement.
"DIRECT PURCHASE SHARES" shall have the meaning ascribed to such term
in Section 5.1 of this Second Amendment.
"SECOND AMENDMENT CLOSING DATE" shall have the meaning ascribed to
such term in Section 5.3 of this Second Amendment.
(c) Unless otherwise expressly indicated, all references contained
herein to SECTIONS or other subdivisions or SCHEDULES refer to the corresponding
SECTIONS and other subdivisions or SCHEDULES of the Series G Purchase Agreement.
(d) The sections and the headings in the sections in this Second
Amendment are for convenience only. Said sections and headings shall not be
deemed to be part of this Second Amendment and in no way define, limit, extend
or describe the scope or intent of its provisions.
ARTICLE II
CERTAIN AGREEMENTS, WAIVERS AND CONSENTS
SECTION 2.1 REGISTRATION RIGHTS. The Purchasers hereby consent to the
grant of registration rights to Alpharma pursuant to the Registration Rights
Agreement and agree that, in the event that (i) Alpharma initiates an
underwritten offering of shares of Common Stock pursuant to the Registration
Rights Agreement, (ii) the Holders (as defined in Section 10.2 of the Series G
Purchase Agreement) elect pursuant to Section 10.4 of the Series G Purchase
Agreement to include Registrable Securities (as defined in the Series G Purchase
Agreement) in such offering, and (iii) the managing underwriter of such offering
determines that the number of shares to be included in such offering needs to be
reduced, then the number of Registrable Securities to be included in the
offering shall be reduced or eliminated, as determined by the managing
underwriter of such offering, prior to any reduction in the number of Alpharma
Registrable Shares included in the offering. The Purchasers hereby waive
compliance with the requirements set forth in the last sentence of Section 10.9
of the Series G Purchase Agreement as such requirements apply to the
Registration Rights Agreement.
SECTION 2.2 WAIVER OF EVENTS OF DEFAULT. The Purchasers hereby waive
any Events of Default under Section 13.1 of the Series G Purchase Agreement
arising on or before the date hereof, including without limitation, (i) any
Event of Default resulting from the formation of the Merger Subsidiary as a
wholly-owned subsidiary of the Company, and (ii) any Event of Default resulting
from any failure of the Company to provide to the Purchasers any of the
financial information or notices set forth in Section 7.1 of the Series G
Purchase Agreement and agree that the Company shall have no further obligation
to provide any of such financial information or notices to the extent such
financial information or notices were otherwise required to be provided prior to
the date hereof.
SECTION 2.3 RIGHT OF FIRST REFUSAL. The Purchasers hereby waive any
rights of first refusal held by the Purchasers under Section 7.7 of the Series G
Purchase Agreement which were, are or may be, applicable to (i) the issuance of
any shares of New Common Stock, Depositary Receipts or Depositary Shares (each
as defined in the Depositary Agreement) pursuant to the Merger Agreement or the
Depositary Agreement, (ii) the issuance of the Alpharma Convertible Note and the
shares of Common Stock issuable upon conversion of the Alpharma Convertible
Note.
SECTION 2.4 SENIORITY OF NOTES. The Purchasers hereby agree that the
Alpharma Convertible Note issued pursuant to the Loan Agreement shall rank pari
passu in right of payment with the Subordinated Notes and any debt securities
issuable upon conversion or exchange of the shares of Preferred Stock of the
Company issued to the Purchasers pursuant to the Series G Purchase Agreement,
except as otherwise provided in the Subordination Agreement dated as of February
16, 1999 among the Company, the Purchasers and Alpharma.
SECTION 2.5 CONSENT TO LOAN AGREEMENT AND ANCILLARY AGREEMENTS. The
Purchasers hereby consent, in all respects under the Series G Purchase
Agreement, to the execution of the Loan Agreement and the Ancillary Agreements
and to the consummation of the transactions contemplated thereby, including
without limitation the incurrence of additional Indebtedness (as defined in the
Series G Purchase Agreement) by the Company.
SECTION 2.6 CONSENT TO LETTER AGREEMENT. The Purchasers hereby
consent, in all respects under the Series G Purchase Agreement, to the letter
agreement dated February 16, 1999 among the Company and FS Private Investments
LLC. The parties agree that paragraph 2 of such letter agreement shall be an
amendment to Article X of the Series G Purchase Agreement.
ARTICLE III
AMENDMENTS TO THE SERIES G PURCHASE AGREEMENT
SECTION 3.1 AMENDMENT TO SECTION 3.1. Section 3.1 of the Series G
Purchase Agreement is hereby amended by deleting in its entirely the text of the
penultimate sentence thereof and inserting in lieu thereof the following:
"Material Adverse Effect" means, when used in connection with the
Company, any development, change or effect that is materially
adverse to the business, properties (including, without
limitation, Intellectual Property (as defined in Section 3.11),
assets, net worth, financial conditions, results of operations or
future prospects (including, without limitation, future equity
value) of the Company and its Subsidiaries taken as a whole."
SECTION 3.2 AMENDMENT TO SECTIONS 7.1 THROUGH 7.4. Section 7.1 through
7.4 of the Series G Purchase Agreement are hereby amended by deleting in its
entirety the text thereof and inserting in lieu thereof the following:
"7.1 REPORTS. The Company will deliver to each Purchaser the
following:
(a) within thirty (30) days after the end of each of the twelve
(12) monthly accounting periods in each fiscal year (or when
furnished to the Board of Directors, if earlier), unaudited
consolidated statements of income and retained earnings and
cash flows of the Company and its Subsidiaries, if any, for
each monthly period and for the period from the beginning of
such fiscal year to the end of such monthly period, together
with consolidated balance sheets of the Company and its
Subsidiaries, if any, as at the end of each monthly period,
setting forth in each case comparisons to budget and to
corresponding periods in the preceding fiscal year which
statements will be prepared in accordance with GAAP,
consistently applied subject to the absence of footnotes and
year-end adjustments;
(b) within ninety (90) days after the end of each fiscal year,
consolidated statements of income and retained earnings and
cash flow of the Company and its Subsidiaries, if any, for
the period from the beginning of each fiscal year to the end
of such fiscal year, and consolidated balance sheets as at
the end of such fiscal year, setting forth in each case in
comparative form corresponding figures for the preceding
fiscal year, which statements will be prepared in accordance
with GAAP, consistently applied (except as approved by the
accounting firm examining such statements and disclosed by
the Company) and will be accompanied by a report on the
consolidated statements of a public accounting firm
reasonably acceptable to the Purchasers or one of the public
accounting firms currently known as the "Big Five" (either,
an "Approved Accounting Firm");
(c) within ten (10) days after transmission thereof, copies of
all financial statements, proxy statements, reports and
other communications which the Company sends to its
stockholders, copies of all registration statements and all
regular, special or periodic reports which it files with the
SEC or with any securities exchange on which any of the
securities of the Company are then listed or proposed to be
listed, and copies of all press releases made generally
available by the Company to the public concerning material
developments in the business of the Company and its
Subsidiaries, if any;
(d) promptly after the occurrence thereof (but in any event
within seven (7) days after such occurrence is known to the
Company) notice of any condition or event which constitutes,
or the occurrence of (i) an event which would lead the
Company to believe that the Company is not in compliance in
material respects with the covenants in this Agreement or
(ii) the institution or threatened institution of an action,
suit or proceeding against the Company or any of its
Subsidiaries by or before any court, regulatory authority,
administrative agency or any other governmental agency or
body, domestic or foreign, which, if adversely decided,
could have a Material Adverse Effect; and
(e) at least thirty (30) days prior to the end of each fiscal
year, a detailed annual operating budget and business plan
for the Company and its Subsidiaries, if any, for such
fiscal year. Such budgets shall be prepared on a monthly
basis, displaying consolidated statements of anticipated
cash flow and projected consolidated balance sheets, setting
forth in each case the assumption (which assumptions and
projections shall represent and be based upon the good faith
best judgment in respect thereof of the Chief Executive
Officer of the Company) behind the projections contained in
such financial statements, and which budgets shall have been
approved by the Board of Directors of the Company or prior
to the beginning of each twelve-month period to which they
pertain and, promptly upon preparation thereof, any other
budgets that the Company may prepare and any revisions of
such annual or other budgets.
7.2 ACCOUNTS AND RECORDS. The Company shall keep true records and
books of account in which entries will be made of all dealings or transactions
in relation to the business and affairs of the Company and its Subsidiaries, if
any, in accordance with GAAP, to the extent applicable, applied on a consistent
basis.
7.3 INSPECTION. The Company shall permit Xxxxxx Xxxx Investments LLC,
BancBoston Ventures Inc. or any of their respective officers, employees,
representatives or such other Person as Xxxxxx Xxxx Investments LLC or
BancBoston Ventures Inc. may designate, during regular business hours of the
Company, upon reasonable prior notice, to visit and inspect the offices and
properties of the Company and to (i) review and make extracts or copies of the
books, accounts and records of the Company, and (ii) discuss the affairs,
finances and accounts of the Company, with the Company's Officers, members of
the Board of Directors, Approved Accounting Firm, consultants and attorneys.
7.4 INDEPENDENT ACCOUNTANTS. The Company will retain an Approved
Accounting Firm to audit the Company's financial statements at the end of each
fiscal year. In the event the services of the Approved Accounting Firm shall be
terminated, the Company shall promptly thereafter seek to engage another
Approved Accounting Firm.
SECTION 3.3 AMENDMENTS TO SECTIONS 7.5.
(a) Section 7.5(a) of the Series G Purchase Agreement is hereby
amended by deleting in its entirety the text thereof and inserting in lieu
thereof the following:
"From and after the Alpharma Closing Date and prior to the
Option Expiration Date, the Company's Board of Directors shall consist
of a minimum of seven and a maximum of eleven directors. The Company
agrees to hold meetings of its Board of Directors at least four times a
year, at least once per calendar quarter. The Purchasers shall have the
right to have two (2) nominees included on the Board of Directors'
slate of nominees to stand for election to the Board of Directors. The
directors of the Company designated by the Purchasers pursuant to this
Section 7.5(a) shall be referred to hereinafter as the "Purchaser
Directors."'
(b) Section 7.5(b) of the Series G Purchase Agreement is hereby
amended by deleting in its entirety the text thereof and inserting in lieu
thereof the following:
"If at any time the Board of Directors designates a committee
or committees to act on behalf of the Board, at least one (1) of the
Purchaser Directors shall be a member of such committee or committees."
(c) Section 7.5(d) of the Series G Purchase Agreement is hereby
amended by deleting the word "the" before the term "Purchaser Director" in the
first line thereof and inserting the word "each" in lieu thereof.
SECTION 3.4 ADDITION OF SECTION 7.10. Article VII of the Series G
Purchase Agreement is hereby amended by adding the following immediately after
Section 7.9:
"7.10 INSURANCE. The Company shall keep in force with responsible
insurers, policies of insurance providing coverage, limits and
deductibles customary in the Company's industry."
SECTION 3.5 AMENDMENT TO SECTION 7.10. Section 7.10 of the Series G
Purchase Agreement is hereby amended by renumbering the same as Section 7.11.
SECTION 3.6 AMENDMENT TO SECTIONS 8.1 THROUGH 8.12. Sections 8.1
through 8.12 of the Series G Purchase Agreement are hereby amended by deleting
in its entirety the text thereof and inserting in lieu thereof the following:
"8.1 BORROWED MONEY INDEBTEDNESS. Create, incur, suffer or permit to
exist, or assume or guarantee, or become or remain liable with respect to
any Borrowed Money Indebtedness, except the following:
(a) the Alpharma Convertible Note;
(b) the Borrowed Money Indebtedness existing on the date of the
Second Amendment and disclosed in the Financial Statements,
and all renewals, extensions and replacements (but not
increases) of any of the foregoing, provided that the
accrual of interest on such liabilities, so long as it is
not converted to principal, shall not be deemed to increase
such liabilities;
(c) principal of up to $50,000,000 of Borrowed Money
Indebtedness in the aggregate outstanding at any time (which
(i) prior to or on the Option Expiration Date must consist
solely of Screened Project Indebtedness and (ii) thereafter,
may include up to $10,000,000 of Borrowed Money Indebtedness
that is not Screened Project Indebtedness), plus any accrued
interest thereon;
(d) purchase money Indebtedness permitted by Section 8.10 to the
extent liens securing the same are allowed by the other
provisions of this Agreement;
(e) capitalized lease obligations to the extent leases with
respect thereto are allowed by the other provisions of this
Agreement;
(f) the Convertible Notes;
(g) on or prior to the Option Expiration Date, any Screened
Project Indebtedness that is convertible directly or
indirectly into Common Stock; and
(h) after the Option Expiration Date, any Borrowed Money
Indebtedness that is convertible directly or indirectly into
Common Stock.
8.2 LIENS. Create or suffer to exist any Lien upon any of its Property
now owned or hereafter acquired, or acquire any Property upon any
conditional sale or other title retention device or arrangement or any
purchase money security agreement; provided, however, that the Company and
any Subsidiaries of the Company may create or suffer to exist Permitted
Liens.
8.3 CONTINGENT LIABILITIES. Directly or indirectly guarantee the
performance or payment of, or purchase or agree to purchase, or assume or
contingently agree to become or be secondarily liable in respect of, any
obligation or liability of any other Person except for:
(a) the endorsement of checks or other negotiable instruments in
the ordinary course of business;
(b) obligations disclosed to the Purchasers in the Financial
Statements (but not increases of such obligations after the
First Loan Date, provided that the accrual of interest on
such obligations, so long as it is not converted to
principal, shall not be deemed to increase such
obligations);
(c) obligations in respect of employees which shall not exceed
an aggregate amount equal to $200,000 at any time
outstanding; and
(d) those liabilities permitted under Section 8.1 hereof.
8.4 MERGERS, CONSOLIDATIONS AND DISPOSITIONS AND ACQUISITIONS OF
ASSETS. In any single transaction or series of related transactions,
directly or indirectly:
(a) liquidate or dissolve;
(b) be a party to any merger or consolidation unless (i) no
Default or Event of Default has occurred that is then
continuing; (ii) immediately thereafter and giving effect
thereto, no event will occur and be continuing which
constitutes a Default; (iii) the Company, or the Subsidiary,
if any, is the surviving Person; and (iv) the Purchasers are
given at least twenty (20) days prior notice of such merger
or consolidation or such lesser number of days as is
practicable;
(c) sell, convey or lease all or substantially all of its
assets, except for the sale of property in the ordinary
course of business;
(d) acquire all or a substantial portion of the assets or stock
of any person whether by merger or otherwise other than in a
transaction or series of transactions that constitute a
Screened Project, provided that this subsection shall not
prevent any Project funded with the proceeds of the First
Loan, any Unrestricted Loan or Project Loans; or
(e) pledge, transfer or otherwise dispose of any equity interest
in any of its Subsidiaries, if any exist, or issue or permit
any of its Subsidiaries, if any exist, to issue any
additional equity interests except to the Company or another
of its Subsidiaries. Nothing in this Agreement shall
prohibit the Company from selling obsolete equipment or from
replacing used equipment in the ordinary course of business.
8.5 REDEMPTION, DIVIDENDS AND DISTRIBUTIONS. At any time, except as
contemplated by this Agreement and the Securities and by the terms of the
Alpharma Convertible Note, by the Loan Agreement and, by the Ancillary
Agreements: (a) redeem, retire or otherwise acquire, directly or
indirectly, any equity interest of the Company or any of its Subsidiaries
(other than $250,000 in any fiscal year to be used to effectuate the
repurchase of restricted stock issued to employees, directors or
consultants of the Company pursuant to a restricted stock agreement) or (b)
make any distributions of any property or cash in respect of any of its
Capital Stock.
8.6 NATURE OF BUSINESS. Change the nature of its business or enter
into any business which is substantially different from the development,
manufacture and sale of pharmaceuticals principally for the pediatric
market.
8.7 TRANSACTIONS WITH RELATED PARTIES. Enter into any transaction or
agreement any Officer, director or beneficial owner of five percent (5%) or
more of the outstanding Capital Stock in the Company or any of its
Subsidiaries (or any Affiliate of any such Person) unless the transaction
is upon no less favorable terms than those that are obtainable from wholly
unrelated sources. The provisions of this Section 8.7 shall not apply to
(a) fees and compensation (including options and equity compensation) paid
to or indemnity provided on behalf of Officers, directors, employees or
consultants of the Company and any of its Subsidiaries, as determined by
the Board of Directors of the Company or any of such Subsidiaries or the
Chief Executive Officer thereof in good faith and (b) transactions
exclusively between or among the Company's Subsidiaries, provided such
transactions are not otherwise prohibited by this Agreement.
Notwithstanding the prior two sentences, the Company may not pay management
or consulting fees to such related person in excess of an aggregate of
$50,000 per year.
8.8 LOANS AND INVESTMENTS. Make any loan, advance, extension of credit
or capital contribution to, or make or have any Investment in, any Person,
or make any commitment to make any such extension of credit or investment,
except (a) Permitted Investments, (b) normal and reasonable advances in the
ordinary course of business to Officers and employees and (c) capital
contributions or Investments used to fund a Project permitted by Section
6.6 of the Loan Agreement, provided in the case of clause (c) that the
making of such capital contribution or Investment does not cause a Default
under any other provision hereof.
8.9 ORGANIZATIONAL DOCUMENTS. Amend, modify, restate or supplement its
Certificate of Incorporation or Bylaws if such action could reasonably be
expected to adversely affect the rights of the Purchasers under this
Agreement.
8.10 LEASE EXPENSES; PURCHASE MONEY INDEBTEDNESS. Permit aggregate
operating lease expenses (excluding lease payments under capital leases),
for the Company and its Subsidiaries in the aggregate in any fiscal year,
to exceed $500,000. Incur or create new capital lease obligations or
purchase money Indebtedness in any fiscal year in excess of $200,000 in the
aggregate for the Company and its Subsidiaries. Permit aggregate capital
lease obligations and purchase money Indebtedness outstanding at any one
time to exceed $2,000,000 in the aggregate for the Company and its
Subsidiaries.
8.11 SALE/LEASEBACKS. Enter into any sale/leaseback transactions
except as permitted under the provisions of Section 8.10.
8.12 ISSUANCE OF STOCK. On or prior to the Option Expiration Date,
issue, or become obligated to issue shares of Capital Stock or securities
convertible into Capital Stock, except for (i) shares of Common Stock, (ii)
rights, warrants or options to purchase shares of Common Stock granted
prior to March 31, 2002 and rights, warrants or options to purchase up to
100,000 shares of Common Stock on or after March 31, 2002 (such number to
be adjusted for stock splits or reclassifications), (iii) securities
permitted by Section 7.1(g) of the Loan Agreement. Prior to the Option
Expiration Date, establish a "Shareholders Rights Plan" or "Poison Pill" or
issue any securities in connection therewith.
8.13 SUBSIDIARIES. Form, create or acquire any Subsidiary other than
Merger Subsidiary or permit any Person other than the Company or a wholly
owned Subsidiary to hold an equity interest in any Subsidiary."
SECTION 3.7 AMENDMENT TO SECTION 8.13. Section 8.13 of the Series G
Purchase Agreement is hereby amended by renumbering the same as Section 8.14.
SECTION 3.8 AMENDMENTS TO SECTION 8.14.
(a) Section 8.14 of the Series G Purchase Agreement is hereby amended
by renumbering the same as Section 8.15.
(b) Section 8.15 of the Series G Purchase Agreement (as renumbered) is
hereby amended by deleting in its entirety the text thereof and inserting in
lieu thereof the following:
"8.15 DEFINITIONS. For purposes of this Article VIII, the following
terms shall have the meanings set forth in this Section 8.15.
"AFFILIATE" has the meaning ascribed to it in Rule 405 promulgated
under the Securities Act.
"ALPHARMA CLOSING DATE" means the "Closing Date" as such term is
defined in the Master Agreement.
"ALPHARMA CONVERTIBLE NOTE" has the meaning set forth in the Preamble
to the Second Amendment.
"ANCILLARY AGREEMENTS" shall mean the Depositary Agreement, the Master
Agreement, the Merger Agreement and the Registration Rights Agreement.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or
any committee of the Board authorized to act for it hereunder.
"BORROWED MONEY INDEBTEDNESS" means, with respect to any Person,
without duplication:
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments;
(c) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased
by such Person;
(d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services (excluding
obligations of such Person to creditors for raw materials,
inventory, services and supplies and deferred payment for
services to employees and former employees incurred in the
ordinary course of such Person's business);
(e) all capital lease obligations;
(f) all obligations of others secured by any Lien on
Property or assets owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed;
(g) all outstanding letters of credit, surety bonds and
currency swap or similar agreements issued for the account of
such Person; and
(h) all guarantees of such Person for obligations of the
type described above.
"BUSINESS DAY" means any day which is neither a Saturday nor a Sunday
nor a legal holiday on which banks are authorized or required to close in
Boston, Massachusetts, New York, New York or in any other city in which the
Depositary's Office (as defined in the Depositary Agreement) is located.
"CAPITAL STOCK" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of the Company, including any
preferred stock, but excluding any debt securities convertible into such
equity prior to such conversion.
"COMMON STOCK" means (i) prior to the Effective Time, the Old Common
Stock, and (ii) at and after the Effective Time, the New Common Stock.
"COMPANY" means the party named as such in the Preamble hereof until a
successor replaces it pursuant to the applicable provision hereof and
thereafter means the successor to such party.
"DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default (as defined in Article XIII this
Agreement).
"DEPOSITARY AGREEMENT" means the Depositary Agreement dated as of the
date hereof by and among the Company, the Lender and State Street Bank and
Trust Company, as Depositary.
"EFFECTIVE TIME" has the meaning set forth in the Merger Agreement.
"EVENT OF DEFAULT" has the meaning set forth in Article XIII of this
Agreement.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.7(a) of
the Loan Agreement.
"FIRST LOAN" has the meaning set forth in Section 2.3 of the Loan
Agreement.
"FIRST LOAN DATE" has the meaning set forth in Section 2.3 of the Loan
Agreement.
"GAAP" means U.S. generally accepted accounting principles as in
effect from time to time.
"INDEBTEDNESS" means and includes:
(a) all items which in accordance with GAAP would be
included on the liability side of a balance sheet on the date as
of which Indebtedness is to be determined (excluding capital
stock, surplus reserves and deferred credits);
(b) all guaranties, letter of credit, contingent
reimbursement obligations and other contingent obligations in
respect of, or any obligations to purchase or otherwise acquire,
indebtedness of others; and
(c) all indebtedness secured by any Lien existing on any
interest of the Person with respect to which indebtedness is
being determined in Property owned subject to such Lien whether
or not the indebtedness secured thereby shall been assumed.
"INVESTMENT" means the purchase or other acquisition of any
Indebtedness of, or the making of any loan, advance or capital contribution
to, or the incurring of any liability, contingent or otherwise, in respect
of the Indebtedness of, any Person.
"LENDER" means Alpharma USPD Inc., a Maryland corporation, the Lender
under the Loan Agreement.
"LIEN" means any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract,
and shall include reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions and other title
exceptions.
"LOAN" means any borrowing by the Company from the Lender of up to a
maximum principal amount of $40,000,000 pursuant to Section 2.1 of the Loan
Agreement and the other terms and conditions of the Loan Agreement.
"LOAN AGREEMENT" has the meaning set forth in the Preamble to the
Second Amendment.
"MASTER AGREEMENT" has the meaning set forth in the Preamble to the
Second Amendment.
"MERGER AGREEMENT" has the meaning set forth in the Preamble to the
Second Amendment.
"MERGER SUBSIDIARY" has the meaning set forth in the Preamble to the
Second Amendment.
"NEW COMMON STOCK" has the meaning set forth in the Depositary
Agreement.
"OFFICER" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"OLD COMMON STOCK" has the meaning set forth in the Depositary
Agreement.
"OPTION CLOSING DATE" has the meaning set forth in the Depositary
Agreement.
"OPTION EXPIRATION DATE" has the meaning set forth in the Depositary
Agreement.
"PERMITTED INVESTMENTS" means:
(a) readily marketable securities issued or fully guaranteed
by the United States of America with maturities of not more than
one year;
(b) commercial paper rated "Prime 1" by Xxxxx'x Investors
Services, Inc. or "A-1" by Standard and Poor's Rating Services
with maturities of not more than 180 days;
(c) certificates of deposit or repurchase obligations issued
by any bank organized under the laws of the United States of
America or any state thereof having capital surplus of at least
$100,000,000 or by any other financial institution acceptable to
the Purchasers (and permitted assignees of the Purchasers) in
accordance with Article XIV hereof, all of the foregoing not
having a maturity of more than one year from the date of issuance
thereof; and
(d) other Investments not exceeding, in the aggregate,
$50,000 in any fiscal year.
"PERMITTED LIENS" means each of the following:
(a) artisans' or mechanics' Liens arising in the ordinary
course of business, and Liens for taxes, but only to the extent
that payment thereof shall not at the time be due or if due, the
payment thereof is being diligently contested in good faith and
adequate reserves computed in accordance with GAAP have been set
aside therefor;
(b) Liens in effect on the First Loan Date and disclosed to
the Purchasers in the Financial Statements, provided that neither
the Borrowed Money Indebtedness secured thereby nor the Property
covered thereby shall increase after the First Loan Date without
the prior written consent of the Purchasers (and permitted
assignees of the Purchasers) in accordance with Article XIV
hereof, provided that, for purposes of this clause (b), the
accrual of interest on such Borrowed Money Indebtedness, so long
as it is not converted to principal, shall not be deemed to
increase such Borrowed Money Indebtedness;
(c) normal encumbrances and restrictions on title which do
not secure Borrowed Money Indebtedness and which do not have a
material adverse affect on the value or utility of the applicable
Property;
(d) Liens incurred or deposits made in the ordinary course
of business (i) in connection with workmen's compensation,
unemployment insurance, social security and other like laws, or
(ii) to secure insurance in the ordinary course of business, the
performance of bids, tenders, contracts, leases, licenses,
statutory obligations, surety, appeal and performance bonds and
other similar obligations incurred in the ordinary course of
business, but not, in any of the cases specified in this clause
(ii), incurred in connection with the borrowing of money, the
obtaining of advances or the payment of the deferred purchase of
Property;
(e) Liens in connection with or to secure Borrowed Money
Indebtedness permitted under Section 8.1(c) hereof;
(f) attachments, judgments and other similar Liens arising
in connection with court proceedings, provided that the execution
and enforcement of such Liens are effectively stayed and the
claims secured thereby are being actively contested in good faith
with adequate reserve made therefor in accordance with GAAP;
(g) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens incurred in good
faith in the ordinary course of business and securing obligations
which are not yet due or which are being contested in good faith
by appropriate proceedings if adequate reserves with respect
thereto are maintained in accordance with GAAP;
(h) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, and restrictions on
the use of Property, and which do not in any case singly or in
the aggregate materially impair the present use or value of
Property subject to any such restriction or materially interfere
with the ordinary conduct of the business of the Company and its
Subsidiaries, if any;
(i) Liens securing purchase money Indebtedness permitted
under Section 8.1 hereof and covering only the Property so
purchased;
(j) capital leases and sale/leaseback transactions permitted
under the other provisions of the Series G Purchase Agreement;
and
(k) extensions, renewals and replacements of Liens referred
to in paragraphs (a) through (j) of this definition; provided
that any such extension, renewal or replacement Lien shall be
limited to the Property or assets (and, in the case of clause
(e), categories of Property or assets) covered by the Lien
extended, renewed or replaced and that the Borrowed Money
Indebtedness secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the
amount of the Indebtedness secured by the Lien extended, renewed
or replaced.
"PERSON" means any individual, corporation, association, company,
business trust, partnership, joint venture, joint-stock company, limited
liability company, trust, unincorporated organization or association or
government or any agency or political subdivision thereof.
"PROJECT" means (i) the acquisition of all or a substantial part of
the stock or assets of any Person engaged in the development, manufacture
or sale of pharmaceuticals or other health care products principally for
the pediatric market; (ii) the acquisition of a product or product line
from, or the acquisition of the right to manufacture, distribute or sell
any product or product line of any Person, in each case with applications
in the pediatric pharmaceutical health care market; or (iii) any R&D
Project.
"PROJECT LOANS" has the meaning set forth in Section 2.1of the Loan
Agreement.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"R&D PROJECT" means any project for the research and development of
products or processes related to pediatric pharmaceuticals
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in the
Preamble to the Second Amendment.
"SCREENED PROJECT" means a Project that meets the criteria set forth
on Schedule II to the Loan Agreement.
"SCREENED PROJECT LOANS" has the meaning set forth in Section 2.1 of
the Loan Agreement.
"SCREENED PROJECT INDEBTEDNESS" means Borrowed Money Indebtedness
(other than Loans under the Loan Agreement) incurred for the purpose of
funding a Screened Project.
"SECOND AMENDMENT" means the Second Amendment dated February 16, 1999
to the Securities Purchase Agreement date May 13, 1998 by and among Xxxxxx
Xxxx Investors II L.P., FS Employee Investors LLC, FS Parallel Fund L.P.,
BancBoston Ventures Inc., Xxxxx Partners and the Company.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than
fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly
or indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof.
"UNRESTRICTED LOANS" means one or more Loans made on or after the
Alpharma Closing Date in an aggregate principal amount not to exceed
$8,000,000."
SECTION 3.9 AMENDMENT TO SECTION 10.2. Section 10.2 of the Series G
Purchase Agreement is amended by deleting the definition of "Registrable Warrant
Shares" included thereon and inserting in lieu thereof the following:
""REGISTRABLE WARRANT SHARES" shall mean the Warrant Shares and
the Direct Purchase Shares and any other securities issued in respect
of the Warrant Shares or the Direct Purchase Shares upon any stock
split, stock dividend, recapitalization, merger, consolidation or
similar event, provided, however, that shares of Common Stock which
are Registrable Warrant Shares shall cease to be Registrable Warrant
Shares upon any sale pursuant to a Registration Statement, Section
4(1) of the Securities Act or Rule 144 under the Securities Act, or
any sale in any manner to a person or entity which, by virtue of
Section 17.3 of this Agreement is not entitled to the rights provided
by this Article X or at such time as the Holder of such shares may
sell under Rule 144 under the Securities Act in a three-month period
all Registrable Securities then held by such Holder. For purposes of
this definition, Direct Purchase Shares shall have the meaning
ascribed to such term in the Second Amendment, as such term is defined
in Section 8.15."
SECTION 3.10 AMENDMENT TO ARTICLE XI. Article XI of the Series G
Purchase Agreement is amended by adding thereto the following:
"11.9 SENIOR INDEBTEDNESS UNDER THE ALPHARMA LOAN. If any
indebtedness of the Company would constitute both "Senior
Indebtedness" as defined in Section 11.1 and "Senior Indebtedness" as
defined in the Loan Agreement, as such term is defined in Section
8.15, the terms of subordination of the Notes relating to such
indebtedness shall be as set forth in the Subordination Agreement
dated as of February 16, 1999 among the Company, the Purchasers and
Alpharma USPD, Inc., a Maryland corporation without reference to this
Article XI."
SECTION 3.11 AMENDMENT TO SECTION 12.11. Section 12.11 of the Series G
Purchase Agreement is amended by deleting in its entirety the second sentence of
the first paragraph thereof and inserting in lieu thereof the following:
"Notwithstanding any additional or contrary rights of the
Purchasers contained in Section 9.3 hereof, the Convertible Notes
shall be automatically converted into shares of Common Stock at the
applicable Conversion Price in accordance with this Article XII
immediately prior to the Option Closing on the Option Closing Date, as
such terms are defined in the Depository Agreement (as such term is
defined in Section 8.15). The date on which either of the foregoing
conditions is first satisfied is hereinafter referred to as the
"Mandatory Conversion Date""
SECTION 3.12 AMENDMENT TO SECTION 13.1. Section 13.1 of the Series G
Purchase Agreement is amended by deleting the text thereof and inserting in lieu
thereof the following:
"13.1 EVENTS OF DEFAULT. An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on any Note
when the same becomes due and payable and such default
continues for a period of 5 Business Days;
(b) the Company defaults in the payment of the principal of any
Note when the same becomes due and payable at maturity, upon
acceleration or otherwise;
(c) the Company defaults in the performance of any covenants
under Article VIII of this Agreement;
(d) the Company fails to comply with any of the provisions of
this Agreement (other than Article VIII) and such failure
continues for 20 Business Days after notice specified in the
penultimate paragraph of this Section 13.1 (the "Default
Notice") without cure (the Company to give forthwith to all
other holders of the Notes at the time outstanding written
notice of the receipt of such Default Notice, specifying the
default referred to therein); or
(e) the Company defaults in payment on Borrowed Money
Indebtedness (giving effect to any applicable grace periods
and any extensions thereof) of at least $700,000 principal
amount;
(f) there has been an acceleration of the final stated maturity
of any Borrowed Money Indebtedness of the Company (which
acceleration shall not have been cured, waived, rescinded or
annulled for 10 Business Days) if the aggregate principal
amount of such Borrowed Money Indebtedness, together with
the principal amount of any other such Borrowed Money
Indebtedness in default for failure to pay principal at
maturity or which has been accelerated, aggregates $700,000
or more at any time;
(g) any representation or warranty of the Company under this
Agreement shall prove to have been incorrect in any material
respect when made;
(h) there exists an outstanding unsatisfied final judgment
which, either alone or together with other outstanding
unsatisfied final judgments against the Company, exceeds an
aggregate of $200,000 (to the extent not covered by
insurance) and such judgment shall have continued
undischarged or unstayed for 20 Business Days after entry
thereof;
(i) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(i) commenced a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of it
or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its
creditors; or
(j) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company in an
involuntary case,
(ii) appoints a custodian of the Company for all or
substantially all of its property, or
(iii) orders the liquidation of the Company,
and the order or decree remains unstayed and
in effect for 90 consecutive days.
A default under paragraph (d) of this Section 13.1 is not a default
unless the holders of at least eighty percent (80%) of the aggregate
principal amount then outstanding under the Notes notify the Company of
the default and the Company does not cure the default within twenty
(20) days after receipt of such notice. The notice must specify the
default and demand that it be remedied.
A "Business Day" means any day which is neither a Saturday nor a Sunday
nor a legal holiday on which banks are authorized or required to close
in Boston, Massachusetts or New York, New York. A "Default" means any
of the events specified in this Section 13.1, regardless of whether
there shall have occurred any passage of time or giving of notice or
both that would be necessary in order to constitute such event an Event
of Default."
SECTION 3.13 EFFECTIVENESS OF AMENDMENTS.
(a) The amendments to the Series G Purchase Agreement set forth in
this Article III shall be effective on and after the Second Amendment Closing
Date.
(b) If the average closing price of the Common Stock is not greater
than $12.00 per share as traded on the Nasdaq Stock Market or a registered
national securities exchange over the 60 trading days prior to the Option
Expiration Date, as such term is defined in the Depositary Agreement, then the
amendments to the Series G Purchase Agreement set forth in this Article III
shall cease to be effective, and the terms of the Series G Purchase Agreement
amended hereby shall be as if such amendments had never been made, as of the
Option Expiration Date; provided, however, that (i) Section 7.5 (a) of the
Series G Purchase Agreement shall be amended by deleting the word "nine" in the
first sentence thereof and inserting in lieu thereof the word "ten" and (ii) the
Amendment to Article XI set forth in Section 3.10 of this Second Amendment shall
remain in effect so long as the Subordination Agreement dated as of February 16,
1999 among the Company, the Purchasers and Alpharma remains in effect. In such
event, any Default or Event of Default due to the existence of circumstances
which would not have constituted a Default or Event of Default immediately prior
to the Option Expiration Date are hereby waived.
ARTICLE IV
AMENDMENT TO WARRANTS
SECTION 4.1 AMENDMENT TO THE DEFINITION OF "WARRANT PRICE" IN THE
WARRANTS. The definition of "Warrant Price" in Section 1.1(m) of each
outstanding Warrant is amended by deleting the phrase "four dollars and seventy
five cents ($4.75)" and inserting in lieu thereof the phrase "three dollars
($3.00)."
SECTION 4.2 EFFECTIVENESS OF THE AMENDMENT. The amendment to the
Warrants set forth in this Article IV shall be effective on and after the Second
Amendment Closing Date.
ARTICLE V
AUTHORIZATION AND SALE AND PURCHASE OF THE DIRECT PURCHASE SHARES
SECTION 5.1 AUTHORIZATION OF THE DIRECT PURCHASE SHARES. The Company
has, or before the Second Amendment Closing Date will have, authorized the
issuance and sale of 300,000 shares of Common Stock (the "Direct Purchase
Shares").
SECTION 5.2 SALE AND PURCHASE OF THE DIRECT PURCHASE SHARES. Subject
to the terms and conditions hereof and in reliance on the representations and
warranties contained herein, the Company will issue and sell to each Purchaser,
and such Purchaser will purchase from the Company, on the Second Amendment
Closing Date (as defined below), the number of Direct Purchase Shares set forth
opposite the name of such Purchaser on Schedule 1 attached hereto, for a
purchase price per share of Direct Purchase Shares of $3.00, with the aggregate
purchase price for all the Direct Purchase Shares being $900,000.
SECTION 5.3 CLOSING. The closing of the purchase and sale of the
Direct Purchase Shares (the "Second Amendment Closing") will take place at the
offices of Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at
1:00 p.m., local time, on the Alpharma Closing Date or such other time and date,
or place as shall be mutually agreed to by the Company and FS Private
Investments LLC, on behalf of the Purchasers. Such time and date are hereinafter
referred to as the "Second Amendment Closing Date." If the Second Amendment
Closing shall not have occurred on or before September 30, 1999, this Second
Amendment shall automatically terminate.
At the Second Amendment Closing, the Company will deliver to each
Purchaser a certificate or certificates (in definitive form) in the
denominations specified in Schedule 1 and registered in the name of such
Purchaser (or in the name of such Purchaser's nominee) representing the Direct
Purchase Shares to be purchased by such Purchaser against payment to the Company
of the purchase price of such Direct Purchase Shares, by delivery to the Company
of Subordinated Notes in an aggregate principal amount equal to the purchase
price to be paid by each Purchaser. Accrued interest on the Subordinated Notes
so delivered shall be paid to the Purchasers on the Second Amendment Closing
Date.
ARTICLE VI
EXCHANGE OF PREFERRED STOCK
AND EXERCISE OF WARRANTS
SECTION 6.1 EXCHANGE OF PREFERRED STOCK. Pursuant to the terms of the
Preferred Stock, the Company shall exchange all outstanding shares of the
Preferred Stock for Convertible Notes on the Second Amendment Closing Date. The
Exchange Date, as defined in the Certificate of Designation shall be the Second
Amendment Closing Date.
SECTION 6.2 EXERCISE OF WARRANTS. Pursuant to the terms of the
Warrants, each Purchaser agrees to exercise all Warrants held by such Purchaser
on the Second Amendment Closing Date. The Warrant Price, as such term is defined
in the Warrants, shall be paid by delivery to the Company of Subordinated Notes
in an aggregate principal amount equal to the Warrant Price to be paid by each
Purchaser. Accrued interest on the Subordinated Notes so delivered shall be paid
to the Purchasers on the Second Amendment Closing Date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 7.1 ORGANIZATION AND EXISTENCE, ETC. The Company (a) is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all requisite power and authority to carry on its business
as now conducted and as proposed to be conducted, and (b) is duly qualified to
do business as a foreign corporation and is in good standing (or the equivalent
thereof under applicable law) in each jurisdiction in which the conduct of its
business requires such qualification by reason of the ownership or leasing of
property or otherwise (except for those jurisdictions in which the failure so to
qualify does not have a Material Adverse Effect). "Material Adverse Effect"
means, when used in connection with the Company, any development, change or
effect that is materially adverse to the business, properties, assets, net
worth, financial condition, results of operations or future prospects (including
without limitation, future equity value) of the Company and its Subsidiaries
taken as a whole.
SECTION 7.2 CAPITALIZATION OF THE COMPANY.
(a) As of the date hereof, (i) the Company's authorized capital stock
consists of: 60,000,000 shares of Common Stock, of which 7,026,445 shares are
validly issued and outstanding, fully paid and non-assessable, and 5,000,000
shares of "blank check" preferred stock, $.01 par value per share, of which
7,000 shares have been designated Series G Convertible Exchangeable Preferred
Stock, all of which shares are validly issued and outstanding, fully paid and
non-assessable; and (ii) the Company has outstanding the securities set forth on
Schedule 7.2 attached hereto which are convertible into or exercisable or
exchangeable for Common Stock (the "Derivative Securities").
(b) All the issued and outstanding shares of capital stock of the
Company are free of preemptive and similar rights and have been offered, issued,
sold and delivered by the Company in transactions in compliance with the
applicable federal, state and foreign securities laws. Other than as set forth
in Schedule 7.2 attached hereto, there are no outstanding agreements or
commitments requiring the Company to issue capital stock or Derivative
Securities as of the date hereof.
SECTION 7.3 AUTHORIZATION; BINDING OBLIGATIONS.
(a) The Company has full power and authority to execute and deliver
this Second Amendment and such other documents furnished or to be furnished by
the Company hereunder, subject to the approval by the stockholders of the
Company of this Second Amendment and the transactions contemplated hereby. This
Second Amendment, subject to the approval by the stockholders of the Company of
this Second Amendment and the transactions contemplated hereby, has been duly
authorized, executed and delivered by the Company and, subject to the approval
by the stockholders of the Company of this Second Amendment and the transactions
contemplated hereby, constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. Subject to the approval by the stockholders of the Company
of this Second Amendment and the transactions contemplated hereby, the issuance,
offering and sale of the Direct Purchase Shares pursuant to this Second
Amendment, the compliance by the Company with the provisions of this Second
Amendment, and the consummation of the other transactions herein contemplated
will not result in the creation or imposition of any lien, charge, security
interest or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of or conflict with
any of the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, (i) the Certificate of Incorporation and
Bylaws of the Company, (ii) any contract or other agreement to which the Company
is a party or by which the Company or any of its respective properties is bound
or (iii) any judgment, ruling, decree, order, statute, rule or regulation of any
court or other governmental agency or body, domestic or foreign, applicable to
the business or properties of the Company, except, with respect to clauses (ii)
and (iii), circumstances that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) Subject to the approval by the stockholders of the Company of this
Second Amendment and the transactions contemplated hereby, the Direct Purchase
Shares have been duly authorized for issuance and, when issued and delivered in
accordance with the provisions of this Second Amendment, will be validly issued,
fully paid and nonassessable.
SECTION 7.4 COMPLIANCE WITH INSTRUMENTS, ETC. Except as set forth on
Schedule 7.4 hereto, the Company is not in breach or violation of, or in default
under, any term or provision of (i) its Certificate of Incorporation and Bylaws,
(ii) any indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note agreement, debt instrument or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
property is subject, the effect of which breach, violation or default,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, or (iii) any statute, judgment, decree, order, rule or
regulation applicable to the Company or of any arbitrator, court, regulatory
body, administrative agency or any other governmental agency or body, domestic
or foreign, having jurisdiction over the Company or any of its respective
activities or properties and the effect of which breach, violation or default,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
SECTION 7.5 LITIGATION. Except as set forth on Schedule 7.5 hereto,
there are no actions, suits, proceedings or investigations pending, or, to the
knowledge of the Company, threatened, against the Company before or by any
court, regulatory body or administrative agency or any other governmental agency
or body, domestic or foreign, which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, or any actions, suits,
proceedings or investigations pending, or, to the knowledge of the Company,
threatened, which challenges the validity of any action taken or to be taken
pursuant to or in connection with this Second Amendment or the issuance of the
Direct Purchase Shares which would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. As it pertains to the Company,
when used herein, the phrases "to the knowledge of" or derivatives thereof shall
mean the actual knowledge of the Chief Executive Officer or Vice President,
Finance of the Company.
SECTION 7.6 OFFERING. Subject to the Purchasers' representations and
warranties in Article VIII of this Second Amendment, the offer, sale and
issuance of the Direct Purchase Shares as contemplated by this Second Amendment
are not subject to the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act") and neither the Company nor anyone acting on
its behalf, has taken or will take any action that would cause such registration
requirements to be applicable.
SECTION 7.7 PERMITS; GOVERNMENTAL AND OTHER APPROVALS. No approval,
consent, authorization or other order of, and no designation, filing,
registration, qualification or recording with, any governmental authority,
domestic or foreign, is required for the Company's performance of this Second
Amendment or the consummation of the transactions contemplated hereby except for
applicable filings with the Nasdaq Stock Market, the filing of a Form D under
the Securities Act and the filing of a Form 8-K under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company that (i) it is an "accredited investor" as that term is
defined in Rule 501(a) promulgated under the Securities Act, (ii) it has the
requisite knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in the Company,
(iii) it has had an opportunity to discuss the Company's business, management
and financial affairs with the Company's management, (iv) it is acquiring the
Direct Purchase Shares for investment for its own account and not with a view
to, or for resale in connection with, any distribution thereof; nor with any
present intention of distributing or selling the same; and, except as
contemplated by the Series G Purchase Agreement, such Purchaser has no present
or contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition thereof, (v) it is not in material
breach or violation of, or in default under, any term or provision of (A) its
organizational and governing documents, (B) any indenture, mortgage, deed of
trust, voting trust agreement, stockholders, partners or members agreement, note
agreement or other agreement or instrument to which it is a party or by which it
is or may be bound or to which any of its property is or may be subject, or (C)
any statute, judgment, decree, order, rule or regulation applicable to such
Purchaser or of any arbitrator, court, regulatory body, administrative agency or
any other governmental agency or body, domestic or foreign, having jurisdiction
over such Purchaser or any of its activities or properties, (vi) any Purchaser
which is a corporation, partnership, limited liability company or trust
represents that it has not been organized, reorganized or recapitalized
specifically for the purpose of investing in the Company, (vii) it understands
that the Direct Purchase Shares have not been registered under the Securities
Act and it will not offer, sell, transfer, pledge, hypothecate or otherwise
dispose of any Direct Purchase Shares except pursuant to an exemption from, or
otherwise in a transaction not subject to, the registration requirements of the
Securities Act or pursuant to an effective registration statement under the
Securities Act, and, in each case, in accordance with any applicable state
securities or "blue sky" laws and (viii) it understands that any certificates
representing the Shares and any other securities issued in respect of such
securities upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall be stamped or otherwise imprinted with a
legend in the following form (in addition to any legend required under other
applicable securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
'ACT'), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD OR OFFERED FOR SALE EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
Each Purchaser further represents that (i) it has full power and authority to
execute, deliver and perform this Second Amendment, (ii) the person executing
this Second Amendment on behalf of such Purchaser has the appropriate authority
to act on behalf of such Purchaser, and (iii) this Second Amendment has been
duly authorized, executed and delivered by such Purchaser and constitutes a
legal, valid and binding agreement of such Purchaser, enforceable against such
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity, and (iv) it has not
employed any broker or finder in connection with the transactions contemplated
by this Second Amendment. To the best of its knowledge, each Purchaser
acknowledges receipt of, and the opportunity to review, the information that it
believes necessary to make an investment in the Direct Purchase Shares.
ARTICLE IX
CONDITIONS OF OBLIGATIONS OF THE PURCHASERS
The obligations of each of the Purchasers under this Second Amendment
are subject to the fulfillment to their reasonable satisfaction, or the waiver
by the Purchasers, on or prior to the Second Amendment Closing Date of each of
the following conditions:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties of the Company in Article VII hereof shall be
true and correct on and as of the date hereof, and shall be true and correct in
all material respects on and as of the Second Amendment Closing Date with the
same force and effect as if they had been made on and as of the Second Amendment
Closing Date.
SECTION 9.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Second Amendment to be performed or complied with on or prior
to the Second Amendment Closing Date by the Company shall have been performed or
complied with by the Company in all material respects on or prior to the Second
Amendment Closing Date.
SECTION 9.3 COMPLIANCE CERTIFICATE. The Company shall have delivered
to the Purchasers a certificate of the Company's President, dated the Second
Amendment Closing Date, certifying to the fulfillment of the conditions
specified in Sections 9.1, 9.2 and 9.5 of this Second Amendment and such other
matters as the Purchasers shall reasonably request.
SECTION 9.4 NO IMPEDIMENTS. No statute, judgment, order, decree of any
court, regulatory body, administrative agency or any other governmental agency
or body shall be in effect which would impose any material limitation on the
ability of the Purchasers to exercise full rights of ownership of the Direct
Purchase Shares.
SECTION 9.5 NO MATERIAL ADVERSE CHANGE. Except as set forth in the
Schedules attached to the Loan Agreement pursuant to Article III thereof, as
disclosed in the 1934 Act Filings (as defined in the Loan Agreement) filed with
the SEC prior to the date of the Master Agreement or as set forth in Schedule
4.1(e) to the Loan Agreement, since September 30, 1998, there shall have been no
Material Adverse Effect with respect to the Company (other than the continued
incurrence of losses in the ordinary course of business).
SECTION 9.6 LEGAL INVESTMENT. The purchase of the Direct Purchase
Shares by the Purchasers hereunder shall be legally permitted by all statutes,
rules and regulations to which the Purchasers and the Company are subject.
SECTION 9.7 QUALIFICATIONS. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body that are now required
in connection with the lawful issuance and sale of the Direct Purchase Shares
pursuant to this Second Amendment shall have been duly obtained and shall be in
full force and effect on and as of the Second Amendment Closing Date.
SECTION 9.8 PROCEEDINGS AND OTHER DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Second
Amendment shall have been taken and the Purchasers shall have received such
other documents and instruments in form and substance reasonably satisfactory to
them and their counsel, as to such other matters incident to the transaction
contemplated hereby as they may reasonably request.
SECTION 9.9 OPINION OF COUNSEL. The Purchasers shall have received the
opinion of Xxxx and Xxxx LLP, counsel for the Company, dated the Second
Amendment Closing Date, substantially in the form delivered in connection with
the original issuance of the Securities, but limited to matters relating to the
Second Amendment and the Direct Purchase Shares.
SECTION 9.10 OTHER MATTERS. The Company shall have delivered to the
Purchasers certificates (in definitive form) in the denominations specified by
the respective Purchasers and registered in their respective names (or in the
names of their respective nominees) representing the Direct Purchase Shares.
ARTICLE X
CONDITIONS OF OBLIGATIONS OF THE COMPANY
The Company's obligations under this Second Amendment are subject to
the fulfillment to its reasonable satisfaction, or the waiver by the Company, on
or prior to the Second Amendment Closing Date of each of the following
conditions:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties of the Purchasers in Article VIII hereof shall be
true and correct on and as of the date hereof and shall be true and correct in
all material respects on and as of the Second Amendment Closing Date with the
same force and effect as if they had been made on and as of the Second Amendment
Closing Date.
SECTION 10.2 LEGAL INVESTMENT. The purchase of the Direct Purchase
Shares by the Purchasers hereunder shall be legally permitted by all statutes,
rules and regulations to which the Purchasers and the Company are subject.
SECTION 10.3 STOCKHOLDER APPROVAL. The stockholders of the Company
shall have approved this Second Amendment and the transactions contemplated
hereby.
SECTION 10.4 PAYMENT OF PURCHASE PRICE. The Company shall have
received payment in full of the aggregate purchase price required to be paid
under Article V.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 THE SERIES G PURCHASE AGREEMENT. Except as amended by
this Second Amendment, the Series G Purchase Agreement shall remain in full
force and effect in accordance with its terms. This Second Amendment shall be
deemed to be part of the Series G Purchase Agreement.
SECTION 11.2 GOVERNING LAW. The rights and obligations of the parties
under or pursuant to this Second Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 11.3 REPRESENTATION AND WARRANTY. Each party hereto hereby
represents and warrants that this Second Amendment is a legal, valid and binding
obligation of such party and is enforceable against such party in accordance
with its terms.
SECTION 11.4 REFERENCES TO SERIES G PURCHASE AGREEMENT. Whenever in
any certificate, letter, notice or other instrument reference is made to the
Series G Purchase Agreement, such reference without more shall include this
Second Amendment.
SECTION 11.5 AMENDMENTS TO ALPHARMA AGREEMENTS.
(a) No amendment to the Loan Agreement or any of the Ancillary
Agreements shall have the effect of changing the meaning of any provision of
this Second Amendment or the Series G Purchase Agreement without the consent of
the Purchasers (and permitted assignees of the Purchasers) in accordance with
Article XIV of the Series G Purchase Agreement.
(b) The Company shall not consent to any amendment to the proviso to
the definition of "Option Exercise Price" in the Depositary Agreement without
the consent of the Purchasers (and permitted assignees of the Purchasers) in
accordance with Article XIV of the Series G Purchase Agreement.
SECTION 11.6 COUNTERPARTS. This Second Amendment may be executed
simultaneously in counterparts, each of which shall be deemed an original, and
it shall not be necessary in making proof of the contents of this Second
Amendment to produce or account for more than one such counterpart.
IN WITNESS WHEREOF this Second Amendment has been executed by duly
authorized representatives of the parties hereto on the day, month and year
first above written.
ASCENT PEDIATRICS, INC.
By: /s/ XXXX X. XXX
Name: Xxxx X. Xxx
Title: President
XXXXXX XXXX INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
By: FS PRIVATE INVESTMENTS LLC,
MANAGER
By: /s/ XXXXX X. XXXXXXX
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
BANCBOSTON VENTURES INC.
By: /s/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Managing Director
XXXXX PARTNERS
By: /s/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx, General Partner
Xxxxx Partners
Schedule 1
Purchasers
NUMBER OF DIRECT PURCHASE AGGREGATE PURCHASE
NAME OF PURCHASER SHARES TO BE PURCHASED: PRICE
--------------------------------------------------------------------------------
Xxxxxx Xxxx Investors II L.P. 198,350 $595,050
FS Employee Investors LLC 17,000 $51,000
FS Parallel Fund L.P. 9,650 28,950
BancBoston Ventures Inc. 71,250 213,750
Xxxxx Partners 3,750 $11,250
------------
Total 300,000 $900,000
