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Exhibit 10.3
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FOURTH AMENDMENT
DATED OCTOBER 15, 1999
TO THE
SECURITIES PURCHASE AGREEMENT
DATED MAY 13, 1998
BY AND AMONG
▇▇▇▇▇▇ ▇▇▇▇ INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
BANCBOSTON VENTURES INC.
▇▇▇▇▇ PARTNERS
AND
ASCENT PEDIATRICS, INC.
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FOURTH AMENDMENT dated as of the 15th day of October 1999 (the
"Fourth Amendment") among Ascent Pediatrics, Inc. (the "Company"), ▇▇▇▇▇▇ ▇▇▇▇
Investors II L.P. ("Investors"), FS Employee Investors LLC ("Employee"), FS
Parallel Fund L.P. ("Parallel" and together with Investors and Employee, the
"▇▇▇▇▇▇ ▇▇▇▇ Entities"), BancBoston Ventures Inc. ("BancBoston") and ▇▇▇▇▇
Partners ("▇▇▇▇▇"), (each of Investors, Employee, Parallel, BancBoston and ▇▇▇▇▇
are herein referred to individually as a "Purchaser", and collectively, as 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, February 16, 1999 and July 1, 1999 (the "Series G Purchase Agreement");
WHEREAS, pursuant to the Third Amendment dated as of July 1,
1999 (the "Third Amendment") to the Series G Purchase Agreement, the ▇▇▇▇▇▇ ▇▇▇▇
Entities advanced $2,000,000 to the Company and agreed to advance an additional
$2,000,000 to the Company pursuant to the terms set forth therein;
WHEREAS, the ▇▇▇▇▇▇ ▇▇▇▇ Entities wish to purchase from the
Company, and the Company wishes to issue and sell to the ▇▇▇▇▇▇ ▇▇▇▇ Entities,
(i) up to $10,000,000 aggregate principal amount of 7.5% Convertible
Subordinated Notes of the Company substantially in the form attached hereto as
Exhibit A (the "Fourth Amendment Convertible Notes"), and (ii) warrants
substantially in the form attached hereto as Exhibit B (the "Fourth Amendment
Warrants") to purchase up to an aggregate of 5,000,000 depositary shares of the
Company ("Depositary Shares"), each Depositary Share representing one share of
Common Stock of the Company subject to a call option and represented by a
depositary receipt;
WHEREAS, the ▇▇▇▇▇▇ ▇▇▇▇ Entities and the Company desire to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith; and
WHEREAS, in connection with such purchase and sale, the
Purchasers and the Company desire to amend certain provisions of the Series G
Purchase Agreement.
NOW THEREFORE, 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:
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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) 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.
(c) The sections and the headings in the sections in this Fourth
Amendment are for convenience only. Said sections and headings shall not be
deemed to be part of this Fourth Amendment and in no way define, limit, extend
or describe the scope or intent of its provisions.
ARTICLE II
SALE AND PURCHASE OF FOURTH AMENDMENT
CONVERTIBLE NOTES AND FOURTH AMENDMENT WARRANTS
Section 2.1 Advances.
(a) Amount and Term.
(i) Subject to the terms and conditions hereinafter set forth,
each ▇▇▇▇▇▇ ▇▇▇▇ Entity severally agrees to make loans hereunder (each, a
"Fourth Amendment Advance" and collectively the "Fourth Amendment Advances") in
an aggregate amount not to exceed such ▇▇▇▇▇▇ ▇▇▇▇ Entity's Commitment
Percentage (as defined in clause (ii) below) of $10,000,000 to the Company from
time to time on any Business Day (as defined in clause (iv) below) occurring on
and after the date hereof to and including June 30, 2001 (the "Termination
Date").
(ii) "Commitment Percentage" shall mean, as to each ▇▇▇▇▇▇
▇▇▇▇ Entity, the amount shown as such ▇▇▇▇▇▇ ▇▇▇▇ Entity's Commitment Percentage
on Schedule 1 hereto.
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(iii) As used herein, the term "Business Day" shall mean any
day other than a Saturday, Sunday or other day on which banks in the State of
New York or the Commonwealth of Massachusetts are authorized by law to remain
closed.
(b) Fourth Amendment Convertible Notes. On the date hereof, the Company
shall issue to each ▇▇▇▇▇▇ ▇▇▇▇ Entity a Fourth Amendment Convertible Note in an
original principal amount equal to the ▇▇▇▇▇▇ ▇▇▇▇ Entity's Commitment
Percentage of $10,000,000. There shall be attached to each Fourth Amendment
Convertible Note, and maintained by the Company, a register in which the Company
shall, from time to time, record (i) the date and amount of each Fourth
Amendment Advance under the Fourth Amendment Convertible Note, and (ii) the date
and amount of any principal and interest payments made by the Company under the
Fourth Amendment Convertible Note. The entries made in the register by the
Company shall be conclusive and binding for all purposes, absent manifest error.
(c) Making the Fourth Amendment Advances.
(i) Any Fourth Amendment Advance, including without limitation
the initial Fourth Amendment Advance, shall be made on at least twelve (12)
Business Days' notice (each, a "Notice") from the Company to each ▇▇▇▇▇▇ ▇▇▇▇
Entity specifying the date (which date shall be a Business Day) and the amount
of such Fourth Amendment Advance. Upon fulfillment of the applicable conditions
set forth in Section 2.2 hereof, each ▇▇▇▇▇▇ ▇▇▇▇ Entity shall pay the portion
of such Fourth Amendment Advance equal to such ▇▇▇▇▇▇ ▇▇▇▇ Entity's Commitment
Percentage of the aggregate amount specified in the Notice in United States
dollars by wire transfer of same day funds to the account of the Company at such
banking institution as may be designated by the Company.
(ii) Each Notice shall contain a certificate from the Chief
Executive Officer of the Company that the conditions set forth in Section 2.2(c)
below have been met.
(iii) Fourth Amendment Advances shall be made, upon
fulfillment of the applicable conditions, in installments of no less than
$250,000.
Section 2.2 Conditions of Lending.
(a) Obligation to Lend. Subject to the conditions set forth herein,
each ▇▇▇▇▇▇ ▇▇▇▇ Entity hereby agrees to the making of Fourth Amendment Advances
up to and until the Termination Date upon receipt of Notices from the Company.
All obligations of the ▇▇▇▇▇▇ ▇▇▇▇ Entities hereunder shall be several, and not
joint and several.
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(b) Conditions to the Initial Fourth Amendment Advance. The agreement
of each ▇▇▇▇▇▇ ▇▇▇▇ Entity to make the initial Fourth Amendment Advance is
subject to the condition that each ▇▇▇▇▇▇ ▇▇▇▇ Entity shall have received the
following, each dated as of the date hereof:
(i) The applicable Initial Fourth Amendment Warrant (as
defined in Section 2.3) executed by the Company;
(ii) The applicable Fourth Amendment Convertible Note executed
by the Company.
(iii) Certified copies of the resolutions of the Board of
Directors of the Company approving this Fourth Amendment, the Fourth Amendment
Convertible Notes and the Fourth Amendment Warrants and all documents evidencing
other necessary corporate action, governmental approvals and consents of other
persons, if any, with respect to this Fourth Amendment, each Fourth Amendment
Convertible Note and each Fourth Amendment Warrant.
(iv) All legal matters incident to the consummation of the
transactions contemplated hereby shall be satisfactory to counsel for the ▇▇▇▇▇▇
▇▇▇▇ Entity, and the ▇▇▇▇▇▇ ▇▇▇▇ Entities shall have received from ▇▇▇▇ and ▇▇▇▇
LLP, counsel for the Company, such firm's opinion addressed to the ▇▇▇▇▇▇ ▇▇▇▇
Entities and dated the date hereof in the form attached hereto as Exhibit C.
(v) The Company shall have obtained the consent of Alpharma
USPD Inc. ("Alpharma") to the transactions contemplated by this Fourth
Amendment, and the Subordination Agreement (as defined below) shall have been
amended to reflect the issuance of the Fourth Amendment Convertible Notes.
(c) Conditions to Fourth Amendment Advances. The agreement of each
▇▇▇▇▇▇ ▇▇▇▇ Entity to make any Fourth Amendment Advance shall be subject to the
fulfillment to their reasonable satisfaction, or the waiver by the ▇▇▇▇▇▇ ▇▇▇▇
Entities, on or prior to the date of such Fourth Amendment Advance of each of
the following conditions:
(i) No event has occurred and is continuing which constitutes
a Default or an Event of Default;
(ii) No event has occurred and is continuing which constitutes
an Impairment Event (as defined by clause (ii) of the definition of "Impairment
Event" in the Loan Agreement dated as of February 16, 1999 between the Company
and Alpharma, as amended (the "Loan Agreement")); provided that this condition
shall be
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deemed to be fulfilled if Alpharma agrees in writing that the occurrence of such
an Impairment Event will not be a condition to its obligation to make the next
Loan requested of it by the Company under the Loan Agreement.
Section 2.3. Warrants.
(a) Initial Fourth Amendment Warrants. Upon execution of this Fourth
Amendment, the Company will issue to each ▇▇▇▇▇▇ ▇▇▇▇ Entity a Fourth Amendment
Warrant (each, an "Initial Fourth Amendment Warrant") to acquire a number of
Depositary Shares equal to the product of such ▇▇▇▇▇▇ ▇▇▇▇ Entity's Commitment
Percentage and 1,000,000, at an exercise price of $3.00 per share; provided that
in the event that the Company is required hereunder to issue to a ▇▇▇▇▇▇ ▇▇▇▇
Entity a Fourth Amendment Warrant to purchase fractional Depositary Shares, the
number of shares issuable upon exercise of such Fourth Amendment Warrant shall
be rounded down to the nearest whole number.
(b) Subsequent Fourth Amendment Warrants. Upon receipt of any Advance
hereunder from a ▇▇▇▇▇▇ ▇▇▇▇ Entity, the Company will issue to such ▇▇▇▇▇▇ ▇▇▇▇
Entity a Fourth Amendment Warrant (each, a "Subsequent Fourth Amendment
Warrant") to acquire:
(i) in the case of Advances hereunder which, together with all
previous Advances hereunder total $4,000,000 or less, 1 Depositary
Share of the Company (subject to appropriate adjustment for stock
splits, stock dividends, reclassifications or any similar
recapitalization affecting the Depositary Shares) for each $4.00 in
principal amount of Advances made by such ▇▇▇▇▇▇ ▇▇▇▇ Entity;
(ii) in the case of Advances hereunder which, together with
all previous Advances hereunder total from $4,000,001 to $7,000,000, 1
Depositary Share of the Company (subject to appropriate adjustment for
stock splits, stock dividends, reclassifications or any similar
recapitalization affecting the Depositary Shares) for each $3.00 in
principal amount of Advances made by such ▇▇▇▇▇▇ ▇▇▇▇ Entity;
(iii) in the case of Advances hereunder which, together with
all previous Advances hereunder total from $7,000,001 to $9,000,000, 1
Depositary Share of the Company (subject to appropriate adjustment for
stock splits, stock dividends, reclassifications or any similar
recapitalization affecting the Depositary Shares) for each $2.00 in
principal amount of Advances made by such ▇▇▇▇▇▇ ▇▇▇▇ Entity; and
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(iv) in the case of Advances hereunder which, together with
all previous Advances hereunder total from $9,000,001 to $10,000,000, 1
Depositary Share of the Company (subject to appropriate adjustment for
stock splits, stock dividends, reclassifications or any similar
recapitalization affecting the Depositary Shares) for each $1.00 in
principal amount of Advances made by such ▇▇▇▇▇▇ ▇▇▇▇ Entity.
Each Subsequent Fourth Amendment Warrant shall have an exercise price of $3.00
per share (subject to appropriate adjustment for stock splits, stock dividends,
reclassifications or any similar recapitalization affecting the Depositary
Shares); provided that (i) in the event that the Company is required hereunder
to issue to a ▇▇▇▇▇▇ ▇▇▇▇ Entity a Subsequent Fourth Amendment Warrant to
purchase fractional Depositary Shares, the number of shares issuable upon
exercise of such Subsequent Fourth Amendment Warrant shall be rounded down to
the nearest whole number and (ii) in the event that subsequent to the date
hereof the exercise price of the Initial Fourth Amendment Warrants issued on the
date hereof is adjusted pursuant to Article III of such Initial Fourth Amendment
Warrants, the initial exercise price of the Subsequent Fourth Amendment Warrants
issued after the date hereof in connection with any subsequent Advance shall
equal the adjusted exercise price of the Initial Fourth Amendment Warrants
issued on the date hereof; and provided further that such ▇▇▇▇▇▇ ▇▇▇▇ Entity
reaffirms the representations and warranties contained in Article IV.
Section 2.4 Purchase Price Allocation. The Company and the ▇▇▇▇▇▇ ▇▇▇▇
Entities agree to use their best efforts to reach agreement with respect to the
allocation of the purchase price for the Initial Fourth Amendment Warrants to be
issued on the date hereof. The Company and the ▇▇▇▇▇▇ ▇▇▇▇ Entities further
agree to use their best efforts to reach agreement with respect to the
allocation of the purchase price for the Fourth Amendment Convertible Notes and
Subsequent Fourth Amendment Warrants issued upon each Fourth Amendment Advance
made hereunder.
Section 2.5. Third Amendment Advances.
(a) The ▇▇▇▇▇▇ ▇▇▇▇ Entities each hereby confirm that, notwithstanding
this Fourth Amendment, each ▇▇▇▇▇▇ ▇▇▇▇ Entity is and shall remain obligated to
make advances under the Third Amendment (each, a "Third Amendment Advance") in
accordance with the terms of the Third Amendment, as amended by this Section
2.5.
(b) Clause (c)(ii)(b) of Section 2.2 of the Third Amendment is hereby
deleted in its entirety and replaced with the following:
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"(b) notwithstanding the foregoing, the condition set forth in
this clause (ii) shall not be deemed to be fulfilled if
following such Advance and any advance under the Fourth
Amendment dated as of October 15, 1999 to the Series G
Purchase Agreement made as of the date of such Advance
hereunder, the Company would continue to be in a Negative
Equity Position unless Alpharma agrees in writing that the
occurrence of a Negative Equity Impairment Event will not be a
condition to its obligation to make the next Loan (as defined
in the Loan Agreement) requested of it by the Company under
the Loan Agreement; and"
SECTION 2.6 Security. As security for the full and timely payment of
all Fourth Amendment Advances and the performance of the obligations contained
herein in connection with the Fourth Amendment Advances, the Company covenants
that it will, on or before the date of each Fourth Amendment Advance hereunder,
do or cause to be done, all things necessary in the reasonable opinion of the
▇▇▇▇▇▇ ▇▇▇▇ Entities and their counsel, to grant the ▇▇▇▇▇▇ ▇▇▇▇ Entities a duly
perfected security interest in all of the Collateral (as defined in the Loan
Agreement) acquired by the Company with the proceeds of Secured Loans, such
security interest to be junior to any security interest in the Collateral
granted by the Company to Alpharma pursuant to the Second Supplemental Agreement
(as defined below). At the request of the ▇▇▇▇▇▇ ▇▇▇▇ Entities, the Company will
cause its duly authorized officers to execute on its behalf, any certificate,
instrument, statement or document, or to take such other action which the ▇▇▇▇▇▇
▇▇▇▇ Entities' counsel reasonably deems necessary, from time to time, to create,
continue or preserve the ▇▇▇▇▇▇ ▇▇▇▇ Entities' security interest in and to the
Collateral (and the perfection and priority thereof) as contemplated hereby,
specifically including the execution of such security agreement and the filing
of such financing statements in the form reasonably requested by counsel to the
▇▇▇▇▇▇ ▇▇▇▇ Entities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the ▇▇▇▇▇▇ ▇▇▇▇ Entities as
follows:
SECTION 3.1 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).
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"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 3.2 Capitalization of the Company.
(a) As of the date hereof, (i) the Company's authorized capital stock
consists of: (1) 60,000,000 shares of Common Stock, of which 9,643,833 shares
are validly issued and outstanding, fully paid and non-assessable, each of which
shares is subject to a call option held by Alpharma, represented by a Depositary
Share and held of record by State Street Bank and Trust Company, as Depositary,
and (2) 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 were exchanged for 8%
convertible subordinated notes of the Company on July 23, 1999; and (ii) the
Company has outstanding the securities set forth on Schedule 3.2 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 3.2 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 3.3 Authorization; Binding Obligations.
(a) The Company has full power and authority to execute and deliver
this Fourth Amendment, the Fourth Amendment Convertible Notes, the Fourth
Amendment Warrants and such other documents furnished or to be furnished by the
Company hereunder. This Fourth Amendment has been duly authorized, executed and
delivered by the Company and 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. The issuance, offering and sale of the Fourth Amendment
Convertible Notes and the Fourth Amendment Warrants pursuant to this Fourth
Amendment and the compliance by the Company with the provisions of this Fourth
Amendment, the Fourth Amendment Convertible Notes and the Fourth Amendment
Warrants, 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
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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) subject to Alpharma's consent to this Fourth Amendment and the
transactions contemplated hereby, any contract or other agreement to which the
Company is a party or by which the Company or any of its 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) The Fourth Amendment Convertible Notes have been duly authorized
for issuance and the Depositary Shares issuable upon conversion of the Fourth
Amendment Convertible Notes have been duly authorized and reserved for issuance,
and (i) the Fourth Amendment Convertible Notes have been duly executed and
delivered by the Company and constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity, (ii) the principal amount outstanding under the Fourth
Amendment Convertible Notes will be convertible into Depositary Shares in
accordance with the provisions of this Fourth Amendment and the Fourth Amendment
Convertible Notes, and (iii) the Depositary Shares initially issuable upon such
conversion, when issued and delivered in accordance with the provisions of this
Fourth Amendment and the Fourth Amendment Convertible Notes, will be validly
issued, fully paid and nonassessable.
(c) The Fourth Amendment Warrants have been duly authorized for
issuance and the Depositary Shares issuable upon exercise of the Fourth
Amendment Warrants have been duly authorized and reserved for issuance and (i)
the Initial Fourth Amendment Warrants being delivered on the date hereof have
been, and the Subsequent Fourth Amendment Warrants being delivered after the
date hereof in connection with any subsequent Advance, when delivered, will have
been, duly executed and delivered by the Company in accordance with this Fourth
Amendment and constitute and will constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity, (ii) the Fourth Amendment Warrants will be exercisable for
Depositary Shares in accordance with their terms, and (iii) the Depositary
Shares issuable upon exercise of the Fourth Amendment Warrants, when issued and
delivered in accordance with the provisions of the Fourth Amendment Warrants,
will be validly issued, fully paid and nonassessable.
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SECTION 3.4 Compliance with Instruments, etc. Except as set forth on
Schedule 3.4 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) subject to Alpharma's approval of this Fourth Amendment and the
transactions contemplated hereby and the execution on the date hereof of the
Second Supplemental Agreement (the "Second Supplemental Agreement") by and among
the Company, Alpharma., Alpharma Inc., State Street Bank and Trust Company and
the Purchasers, 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 3.5 Litigation. Except as set forth on Schedule 3.5 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 challenge the validity of any action taken or to be taken
pursuant to or in connection with this Fourth Amendment or the issuance of the
Fourth Amendment Convertible Notes or the Fourth Amendment Warrants and the
Depositary Shares issuable upon the conversion or exercise thereof 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 3.6 Offering. Subject to the ▇▇▇▇▇▇ ▇▇▇▇ Entities'
representations and warranties in Article IV of this Fourth Amendment, the
offer, sale and issuance of the Fourth Amendment Convertible Notes and the
Fourth Amendment Warrants as contemplated by this Fourth 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 3.7 Permits; Governmental and Other Approvals. Subject to the
consent of Alpharma to this Fourth Amendment and the transactions contemplated
hereby, no
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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 Fourth
Amendment or the consummation of the transactions contemplated hereby except for
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").
SECTION 3.8 Subsidiaries. The Company has no subsidiaries and owns no
securities of other corporations or entities other than short-term money market
investments.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ▇▇▇▇▇▇ ▇▇▇▇ ENTITIES
Each ▇▇▇▇▇▇ ▇▇▇▇ Entity, 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
Fourth Amendment Convertible Notes and the Fourth Amendment Warrants and the
Depositary Shares issuable upon the conversion or exercise thereof 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 or this Fourth Amendment, such ▇▇▇▇▇▇ ▇▇▇▇ Entity 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 ▇▇▇▇▇▇ ▇▇▇▇ Entity or of any arbitrator, court, regulatory
body, administrative agency or any other governmental agency or body, domestic
or foreign, having jurisdiction over such ▇▇▇▇▇▇ ▇▇▇▇ Entity or any of its
activities or properties, (vi) any ▇▇▇▇▇▇ ▇▇▇▇ Entity 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 Fourth Amendment
Convertible Notes and the Fourth Amendment Warrants and the Depositary Shares
issuable upon the conversion or exercise thereof have not been registered under
the Securities Act and it will not offer, sell, transfer, pledge, hypothecate or
otherwise dispose of any of the Fourth Amendment Convertible Notes or
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the Fourth Amendment Warrants or the Depositary Shares issuable upon the
conversion or exercise thereof 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 the Fourth
Amendment Convertible Notes and the Fourth Amendment Warrants and any
certificates representing the Depositary Shares issuable upon the conversion or
exercise thereof 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 ▇▇▇▇▇▇ ▇▇▇▇ Entity further represents that (i) it has full power
and authority to execute, deliver and perform this Fourth Amendment, (ii) the
person executing this Fourth Amendment on behalf of such ▇▇▇▇▇▇ ▇▇▇▇ Entity has
the appropriate authority to act on behalf of such ▇▇▇▇▇▇ ▇▇▇▇ Entity, (iii)
this Fourth Amendment has been duly authorized, executed and delivered by such
▇▇▇▇▇▇ ▇▇▇▇ Entity and constitutes a legal, valid and binding agreement of such
▇▇▇▇▇▇ ▇▇▇▇ Entity, enforceable against such ▇▇▇▇▇▇ ▇▇▇▇ Entity 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 Fourth Amendment. To
the best of its knowledge, each ▇▇▇▇▇▇ ▇▇▇▇ Entity acknowledges receipt of, and
the opportunity to review, the information that it believes necessary to make an
investment in the Fourth Amendment Convertible Notes and the Fourth Amendment
Warrants and the Depositary Shares issuable upon the conversion or exercise
thereof.
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ARTICLE V
AMENDMENTS TO THE SERIES G PURCHASE AGREEMENT
SECTION 5.1 Agreement of ▇▇▇▇▇▇ ▇▇▇▇ Entities. Each of the ▇▇▇▇▇▇ ▇▇▇▇ Entities,
by its execution of this Fourth Amendment, hereby joins in and agrees to be
bound by and subject to the provisions of Articles VII, VIII, IX, X, XI, XII,
XIII, XIV, XV, XVI and XVII of the Series G Purchase Agreement, all as amended
from time to time in accordance with Article XIV of the Series G Purchase
Agreement, as a Purchaser or a Holder thereunder, with respect to the Fourth
Amendment Convertible Notes and the Fourth Amendment Warrants issued or issuable
to such ▇▇▇▇▇▇ ▇▇▇▇ Entities and the Depositary Shares issued or issuable upon
conversion or exercise thereof.
SECTION 5.2 Definitions. For purposes of Articles VII, VIII, IX, X, XI,
XII, XIII, XIV, XV, XVI and XVII of the Series G Purchase Agreement: (a) the
terms "Notes" and "Convertible Notes" shall hereby be amended to include the
Fourth Amendment Convertible Notes; (b) the term "Note Conversion Shares" shall
hereby be amended to include the Depositary Shares issued or issuable upon
conversion of the Fourth Amendment Convertible Notes; (c) the term "Warrants"
shall hereby be amended to include the Fourth Amendment Warrants; (d) the term
"Warrant Shares" shall hereby be amended to include the Depositary Shares issued
or issuable upon exercise of the Fourth Amendment Warrants; and (e) the term
"Securities" shall hereby be amended to include the Fourth Amendment Convertible
Notes and the Fourth Amendment Warrants.
SECTION 5.3 Conversion. Article XII of the Series G Purchase Agreement
is hereby amended as follows:
(a) Section 12.1 of Article XII is hereby amended by inserting
immediately following the definition of "Person" the following definitions:
"Convertible Notes" means the 8% Convertible Notes, the Third
Amendment Convertible Notes and the Fourth Amendment Convertible Notes.
"Fourth Amendment Convertible Notes" means the 7.5% convertible notes
issued as of October 15, 1999."
(b) Section 12.2 of Article XII is hereby deleted in its entirety and
the following paragraph is hereby inserted in lieu thereof:
"12.2 Right of Conversion; Conversion Price.
(a) Conversion to Common Stock. Any holder of Convertible Notes shall
have the right, at its option, at any time to convert, subject to the terms and
provisions of this Article
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XII, such Convertible Notes into shares of Common Stock upon surrender of the
Convertible Notes to be so converted, accompanied by written notice of
conversion duly executed, to the Company, and, if so required by the Company,
duly endorsed to the Company or in blank or accompanied by proper instruments of
transfer to the Company or in blank. The 8% Convertible Notes shall be
convertible at the conversion price of $4.75 per share of Common Stock, or in
case an adjustment of such price has taken place pursuant to the provisions of
this Article XII, the price as last adjusted (such price or adjusted price being
referred to herein as the "8% Note Conversion Price"). The Third Amendment
Convertible Notes shall be convertible at the conversion price of $3.00 per
share of Common Stock, or in case an adjustment of such price has taken place
pursuant to the provisions of this Article XII, the price as last adjusted (such
price or adjusted price being referred to herein as the "Third Amendment
Conversion Price"). The Fourth Amendment Convertible Notes shall be convertible
at the conversion price of $3.00 per share of Common Stock, or in case an
adjustment of such price has taken place pursuant to the provisions of this
Article XII, the price as last adjusted (such price or adjusted price being
referred to herein as the "Fourth Amendment Conversion Price," and together with
the 8% Note Conversion Price and the Third Amendment Conversion Price, the
"Conversion Price"). The number of shares of Common Stock issuable upon such
conversion shall be equal to (a) the aggregate principal amount of the
Convertible Note to be converted plus accrued but unpaid interest thereon to the
date of conversion, divided by (b) the applicable Conversion Price. Whenever the
Conversion Price in effect shall be adjusted pursuant to this Article XII, the
Company shall promptly provide to each holder of Convertible Notes a notice
stating that the Conversion Price has been adjusted and setting forth the
adjusted Conversion Price, which notice shall be signed on behalf of the Company
by the President and the Chief Financial Officer of the Company and shall set
forth in reasonable detail a calculation to the nearest cent of the Conversion
Price, the method of calculation and the facts requiring such adjustment.
(b) Conversion to Depositary Shares; Call Option Exercise.
Notwithstanding the foregoing, from and after July 23, 1999 until the Option
Determination Date (as defined in the Depositary Agreement dated as of February
16, 1999 by and among the Company, Alpharma and State Street Bank and Trust
Company (the "Depositary Agreement")), each Convertible Note shall be
convertible into a number of depositary shares, each Depositary Share
representing one share of Common Stock of the Company subject to a call option
(a "Depositary Share"), equal to the number of shares of Common Stock that would
otherwise be issuable upon conversion of such Convertible Note. From and after
the Option Expiration Date (as defined in the Depositary Agreement), each
Convertible Note shall be convertible into Common Stock of the Company in
accordance with subclause (a) of this Section 12.2."
(c) Section 12.4 of Article XII is hereby amended by deleting Section
12.4(c) in its entirety and inserting in lieu thereof the following:
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"(c) Notwithstanding Sections 12.4(a) and (b), no adjustment
to the applicable Conversion Price with respect to the Convertible Notes shall
be made in connection with the issuance of:
(i) the Securities and the securities issued or issuable upon
conversion or exercise of the Securities, or other Derivative Securities
outstanding as of June 1, 1998;
(ii) shares of Common Stock or rights, options or warrants to
acquire Common Stock issued to directors, employees or consultants of the
Company pursuant to a stock option plan, employee stock purchase plan,
restricted stock plan or other similar stock plan or agreement (and, in the case
of rights, options, or warrants, the Common Stock issued or issuable upon
exercise thereof) and approved by the Board of Directors;
(iii) the Direct Purchase Shares and the shares of Common
Stock issuable pursuant to the letter agreement dated February 16, 1999 among
the Company and FS Private Investments LLC;
(iv) the Third Amendment Convertible Notes and the associated
Third Amendment Warrants and the shares of Common Stock issued or issuable upon
conversion or exercise thereof; and
(v) the Fourth Amendment Convertible Notes and the associated
Fourth Amendment Warrants and the securities issued or issuable upon conversion
or exercise thereof."
SECTION 5.4 Secured Loans. Article VIII of the Series G Purchase
Agreement is hereby amended as follows:
(a) Section 8.2 of Article VIII is hereby amended by adding the
following clause to the beginning of the first sentence thereof:
"Except for any security interest in the Collateral with respect
to Secured Loans or Fourth Amendment Advancements,".
(b) Section 8.12 of Article VIII is hereby amended by deleting clause
(iii) in its entirety and replacing it with the following:
"(iii) securities permitted by Section 8.1(g) of the Loan
Agreement."
(c) Section 8.15 of Article VIII is hereby amended by adding the
following definitions:
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"Secured Loans" means all Project Loans and all Screened
Project Loans (each as defined in the Second Supplemental
Agreement dated October 15, 1999 by and between the Company,
Alpharma USPD Inc., Alpharma Inc., State Street Bank and Trust
Company and the Purchasers).
"Collateral" means all assets, properties, contract rights and
other intangibles and choses in action purchased, licensed or
otherwise acquired by the Company with the proceeds of a Secured
Loan.
ARTICLE VI
OTHER AGREEMENTS, WAIVERS AND CONSENTS
SECTION 6.1 Seniority of Notes. The ▇▇▇▇▇▇ ▇▇▇▇ Entities hereby agree
that the 7.5% Convertible Subordinated Note in the aggregate principal amount of
up to $40,000,000 (the "Alpharma Convertible Note") issued by the Company on
February 19, 1999 to Alpharma pursuant to the Loan Agreement dated as of
February 16, 1999 by and among the Company, Alpharma and Alpharma Inc., as
amended (the "Alpharma Loan Agreement"), shall rank pari passu in right of
payment with the Fourth Amendment Convertible Notes, the Third Amendment
Convertible Notes, the Subordinated Notes and the Convertible Notes issuable
upon exchange of the Preferred Stock, except as otherwise provided in the
Subordination Agreement dated as of February 16, 1999 among the Company, the
Purchasers and Alpharma, as amended (the "Subordination Agreement").
SECTION 6.2 Consent to Issuance of the Fourth Amendment Convertible
Notes and Fourth Amendment Warrants. The Purchasers hereby consent, in all
respects under the Series G Purchase Agreement, including without limitation
under Sections 8.1 and 8.7, to the consummation of the transactions contemplated
by this Fourth Amendment, including without limitation the issuance of the
Fourth Amendment Convertible Notes and the Fourth Amendment Warrants.
SECTION 6.3 Rights 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
the Fourth Amendment Convertible Notes and the Depositary Shares issuable upon
the conversion thereof and (ii) the issuance of the Fourth Amendment Warrants
and the Depositary Shares issuable upon the exercise thereof.
SECTION 6.4 Antidilution Adjustment. The Purchasers hereby agree that
no adjustment shall be made to the Conversion Price of the Convertible Notes
under Section 12.4 of the Purchase Agreement or the Warrant Price and the
Warrant Shares under Article III of the Warrants or under Article III of the
Third Amendment Warrants with respect to
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(i) the issuance of the Fourth Amendment Convertible Notes and the Depositary
Shares issuable upon the conversion thereof and (ii) the issuance of the Fourth
Amendment Warrants and the Depositary Shares issuable upon the exercise thereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 The Series G Purchase Agreement. Except as amended by this
Fourth Amendment, the Series G Purchase Agreement shall remain in full force and
effect in accordance with its terms. This Fourth Amendment shall be deemed to be
included in the Series G Purchase Agreement as defined above.
SECTION 7.2 Governing Law. The rights and obligations of the parties
under or pursuant to this Fourth Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 7.3 Expenses. The Company will pay all reasonable legal fees
and disbursements of counsel for the ▇▇▇▇▇▇ ▇▇▇▇ Entities incurred with respect
to the negotiation, execution and consummation of this Fourth Amendment and the
transactions contemplated by this Fourth Amendment.
SECTION 7.4 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 Fourth
Amendment.
SECTION 7.5 Amendments to Alpharma Agreements. No amendment to the
Alpharma Loan Agreement or any of the Ancillary Agreements shall have the effect
of changing the meaning of any provision of this Fourth 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.
SECTION 7.6 Counterparts. This Fourth 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 Fourth
Amendment to produce or account for more than one such counterpart.
SECTION 7.7 Effectiveness. This Fourth Amendment to the Series G
Purchase Agreement shall be effective on the date hereof.
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SECTION 7.8 Depositary Share Conversion. From and after the Option
Expiration Date, the term Depositary Shares as used herein shall be deemed to
include the shares of Common Stock issuable upon the exchange of the Depositary
Shares upon expiration of the Call Option (as defined in the Depositary
Agreement).
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF this Fourth 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/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
▇▇▇▇▇▇ ▇▇▇▇ INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
By: FS PRIVATE INVESTMENTS LLC,
MANAGER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
BANCBOSTON VENTURES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇ PARTNERS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, General Partner
▇▇▇▇▇ Partners
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Schedule 1
COMMITMENT PERCENTAGES
▇▇▇▇▇▇ ▇▇▇▇ Entity Commitment Percentage
▇▇▇▇▇▇ ▇▇▇▇ Investors II LP 88.15555%
FS Employee Investors LLC 7.55555%
FS Parallel Fund LP 4.28890%
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SCHEDULE 3.2
Capitalization
Pursuant to the terms of the Depositary Agreement dated as of February 16, 1999
by and among the Company, Alpharma, USPD Inc. and State Street Bank and Trust
Company, as amended (the "Depositary Agreement"), each share of Common Stock of
the Company is held of record by State Street Bank and Trust Company, as
Depositary, is represented by a Depositary Share, and is subject to a call
option held by Alpharma USPD Inc.
The following securities outstanding securities of the Company are convertible
into or exercisable for Depositary Shares:
1. Warrants to purchase an aggregate of 555,063 and 218,195 Depositary
Shares at an exercise price of $0.01 and $5.29 per share, respectively,
issued to Triumph- Connecticut Limited Partnership and certain
affiliated persons and entities.
2. $1,749,126 aggregate principal amount of 8% subordinated notes and
$7,000,000 aggregate principal amount of 8% convertible subordinated
notes issued to the Purchasers pursuant to the Series G Purchase
Agreement.
3. $2,000,000 aggregate principal amount of 7.5% convertible subordinated
notes and warrants to purchase an aggregate of 300,000 Depositary
Shares issued to the ▇▇▇▇▇▇ ▇▇▇▇ Entities pursuant to the Third
Amendment.
3. Convertible Subordinated Note in the principal amount of up to $40.0
Million issued on February 19, 1999 to Alpharma USPD, Inc.
4. Warrants to purchase an aggregate of 103,891 Depositary Shares at an
exercise price of $10.59 per share, 496,033 Depositary Shares at an
exercise price of $9.00 per share and 48,449 Depositary Shares at
weighted average exercise price of $4.60 per share.
5. The Company maintains an Employee Stock Purchase Plan that provides for
the purchase of up to an aggregate of 500,000 Depositary Shares by
employees of the Company.
6. The Company maintains a Director Stock Option Plan that provides for
the issuance of up to 300,000 Depositary Shares to non-employee
directors of the Company pursuant to the exercise of options granted
thereunder.
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7. The Company maintains a 1992 Equity Incentive Plan that provides for
the issuance of up to 1,850,000 Depositary Shares to employees,
officers and directors of and consultants to Company pursuant to the
exercise of options granted thereunder.
8. The Company maintains a 1999 Stock Inventive Plan that provides for the
issuance of up to 500,000 Depositary Shares to employees, officers and
directors of and consultants to Company pursuant to the exercise of
options granted thereunder.
Pursuant to the terms of the Third Amendment, the Company has agreed to issue
the ▇▇▇▇▇▇ ▇▇▇▇ Entities warrants to purchase up to an additional 300,000
Depositary Shares in connection with the borrowing of the remaining $2,000,000
available thereunder.
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SCHEDULE 3.4
Compliance With Instruments
The consent of Alpharma USPD Inc. is required for execution of the Fourth
Amendment and the consummation of the transactions contemplated thereby.
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SCHEDULE 3.5
Litigation
None.
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