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THIRD AMENDMENT
DATED JULY 1, 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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THIRD AMENDMENT dated as of the 1st day of July 1999 (the "Third
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 and
February 16, 1999 (the "Series G Purchase Agreement");
WHEREAS, the ▇▇▇▇▇▇ ▇▇▇▇ Entities wish to purchase from the Company,
and the Company wishes to issue and sell to the ▇▇▇▇▇▇ ▇▇▇▇ Entities, (i) up to
$4,000,000 aggregate principal amount of 7.5% Convertible Subordinated Notes of
the Company substantially in the form attached hereto as Exhibit A (the "Third
Amendment Convertible Notes"), and (ii) warrants substantially in the form
attached hereto as Exhibit B (the "1999 Third Amendment Warrants") to purchase
up to an aggregate of 600,000 shares of Common Stock of the Company, par value
$0.00004 per share (the "Common Stock");
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:
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.
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(c) The sections and the headings in the sections in this Third Amendment
are for convenience only. Said sections and headings shall not be deemed to be
part of this Third Amendment and in no way define, limit, extend or describe the
scope or intent of its provisions.
ARTICLE II
SALE AND PURCHASE OF THIRD AMENDMENT
CONVERTIBLE NOTES AND THIRD 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 (each, an "Advance" and
collectively the "Advances") in an aggregate amount not to exceed such ▇▇▇▇▇▇
▇▇▇▇ Entity's Commitment Percentage (as defined in clause (ii) below) of
$4,000,000 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 the
earlier of (A) June 30, 2001 or (B) the occurrence of an Event of Default (as
defined in Article XIII of the Series G Purchase Agreement) (such earlier date
or time being referred to herein as 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.
(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) Third Amendment Convertible Notes. On the date of the initial Advance
hereunder, the Company shall issue to each ▇▇▇▇▇▇ ▇▇▇▇ Entity a Third Amendment
Convertible Note in an original principal amount equal to the ▇▇▇▇▇▇ ▇▇▇▇
Entity's Commitment Percentage of $4,000,000. There shall be attached to each
Third 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 Advance under the Third Amendment Convertible Note, and (ii) the date and
amount of any principal and interest payments made by the Company under the
Third Amendment Convertible Note. The entries made in the register by the
Company shall be conclusive and binding for all purposes, absent manifest error.
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(c) Making the Advances.
(i) The initial Advance hereunder shall be made on the date hereof
in the aggregate original principal amount of $2,000,000. Upon fulfillment of
the applicable conditions set forth in Section 2.2 hereof, each ▇▇▇▇▇▇ ▇▇▇▇
Entity shall pay the portion of such Advance equal to such ▇▇▇▇▇▇ ▇▇▇▇ Entity's
Commitment Percentage of the initial Advance by surrendering for cancellation
the demand promissory notes issued to the ▇▇▇▇▇▇ ▇▇▇▇ Entities on June 30, 1999
in the aggregate principal amount of $2,000,000. Upon the surrender and
cancellation of such notes, the Company will pay the ▇▇▇▇▇▇ ▇▇▇▇ Entities any
accrued interest on such notes.
(ii) Any subsequent 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 Advance. The Company shall promptly notify each ▇▇▇▇▇▇ ▇▇▇▇ Entity in
writing of any change to the Plan (as defined in the Supplemental Agreement
dated as of the date hereof among the Company, Alpharma USPD Inc. ("Alpharma"),
Alpharma Inc., State Street Bank and Trust Company and the Purchasers) that
contemplates the occurrence of an Impairment Event (as defined by clause (i) of
the definition of "Impairment Event" in the Loan Agreement) (a "Negative Equity
Impairment Event"). The Company shall deliver a Notice to each ▇▇▇▇▇▇ ▇▇▇▇
Entity (i) no later than 30 days prior to the expected occurrence of such
Negative Equity Impairment Event (as set forth in the Plan, as updated) or (ii)
promptly upon becoming aware of the occurrence of a Negative Equity Impairment
Event for which the Company has not previously given a Notice hereunder, such
Notice specifying an Advance in an amount equal to the lesser of (a) an amount
reasonably necessary to prevent or eliminate such Negative Equity Impairment
Event as of the date of such Advance and (b) an amount equal to the aggregate
amount which remains available for borrowing under this Third Amendment. Upon
fulfillment of the applicable conditions set forth in Section 2.2 hereof, each
▇▇▇▇▇▇ ▇▇▇▇ Entity shall pay the portion of such 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.
(iii) 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.
(iv) 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 Advances up to and until the
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Termination Date upon receipt of Notices (other than with respect to the initial
Advance) from the Company. All obligations of the ▇▇▇▇▇▇ ▇▇▇▇ Entities hereunder
shall be several, and not joint and several.
(b) Conditions to the Initial Advance. The agreement of each ▇▇▇▇▇▇ ▇▇▇▇
Entity to make the initial Advance is subject to the condition that each ▇▇▇▇▇▇
▇▇▇▇ Entity shall have received the following, each dated as of the date of such
Advance:
(i) The applicable Third Amendment Convertible Note and Third
Amendment Warrant executed by the Company.
(ii) Certified copies of the resolutions of the Board of Directors
of the Company approving this Third Amendment, the Third Amendment Convertible
Notes and the Third Amendment Warrants and all documents evidencing other
necessary corporate action, governmental approvals and consents of other
persons, if any, with respect to this Third Amendment, each Third Amendment
Convertible Note and each Third Amendment Warrant.
(iii) 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.
(iv) The Company shall have obtained the consent of Alpharma to the
transactions contemplated by this Third Amendment, and the Subordination
Agreement (as defined below) shall have been amended to reflect the issuance of
the Third Amendment Convertible Notes.
(c) Conditions to Subsequent Advances. The agreement of each ▇▇▇▇▇▇ ▇▇▇▇
Entity to make any subsequent 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 Advance of each of the following conditions:
(i) No event has occurred and is continuing which constitutes a
Default or an Event of Default (as such terms are defined in the Series G
Purchase Agreement);
(ii) The Company shall be in a Negative Equity Position (as defined
in the Loan Agreement dated as of February 16, 1999 between the Company and
Alpharma, as amended (the "Loan Agreement")); provided that (a) notwithstanding
the requirements of generally accepted accounting principles, any amounts
outstanding under the Notes (as defined in the Purchase Agreement), including
without limitation the Third Amendment Convertible Notes, shall be considered to
be equity of the Company for purposes of determining the Company's Negative
Equity
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Position and (b) notwithstanding the foregoing, the condition set forth in this
clause (ii) shall not be deemed to be fulfilled if following such Advance 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 requested of it by
the Company under the Loan Agreement; and
(iii) 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); provided that this condition shall be 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. Upon receipt of any Advance hereunder from a ▇▇▇▇▇▇
▇▇▇▇ Entity, the Company will issue to such ▇▇▇▇▇▇ ▇▇▇▇ Entity a Third Amendment
Warrant to acquire 1.5 shares of Common Stock of the Company (subject to
appropriate adjustment for stock splits, stock dividends, reclassifications or
any similar recapitalization affecting the Common Stock) for each $10.00 in
principal amount of Advances made by such ▇▇▇▇▇▇ ▇▇▇▇ Entity, at an exercise
price of $3.00 per share (subject to appropriate adjustment for stock splits,
stock dividends, reclassifications or any similar recapitalization affecting the
Common Stock); provided that (i) in the event that the Company is required
hereunder to issue to a ▇▇▇▇▇▇ ▇▇▇▇ Entity a Third Amendment Warrant to purchase
fractional shares of Common Stock, the number of shares issuable upon exercise
of such Third 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 Third Amendment Warrants issued on the date hereof is adjusted
pursuant to Article III of such Third Amendment Warrants, the initial exercise
price of the Third Amendment Warrants issued after the date hereof in connection
with any subsequent Advance shall equal the adjusted exercise price of the Third
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 Third Amendment Convertible Notes and
the Third 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 Third
Amendment Convertible Notes and the Third Amendment Warrants upon each
subsequent Advance made hereunder.
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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). "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: 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 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
Third Amendment, the Third Amendment Convertible Notes, the Third Amendment
Warrants and such other documents furnished or to be furnished by the Company
hereunder. This Third 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
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creditors' rights and to general principles of equity. The issuance, offering
and sale of the Third Amendment Convertible Notes and the Third Amendment
Warrants pursuant to this Third Amendment and the compliance by the Company with
the provisions of this Third Amendment, the Third Amendment Convertible Notes
and the Third 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 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 Third 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 Third Amendment Convertible Notes have been duly authorized for
issuance and the shares of Common Stock issuable upon conversion of the Third
Amendment Convertible Notes have been duly authorized and reserved for issuance,
and (i) the Third Amendment Convertible Notes have been duly executed and
delivered 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 Third Amendment Convertible
Notes will be convertible into shares of Common Stock in accordance with the
provisions of this Third Amendment and the Third Amendment Convertible Notes,
and (iii) the shares of Common Stock initially issuable upon such conversion,
when issued and delivered in accordance with the provisions of this Third
Amendment and the Third Amendment Convertible Notes, will be validly issued,
fully paid and nonassessable.
(c) The Third Amendment Warrants have been duly authorized for issuance
and the shares of Common Stock issuable upon exercise of the Third Amendment
Warrants have been duly authorized and reserved for issuance and (i) the Third
Amendment Warrants being delivered on the date hereof have been, and the Third
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 Third 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
Third Amendment Warrants will be exercisable for shares of Common Stock in
accordance with their terms, and (iii) the
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shares of Common Stock issuable upon exercise of the Third Amendment Warrants,
when issued and delivered in accordance with the provisions of the Third
Amendment Warrants, will be validly issued, fully paid and nonassessable.
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 Third Amendment and the transactions
contemplated hereby, 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 Third Amendment or the issuance of the
Third Amendment Convertible Notes or the Third Amendment Warrants and the shares
of Common Stock 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 Third Amendment, the offer, sale and
issuance of the Third Amendment Convertible Notes and the Third Amendment
Warrants as contemplated by this Third 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 Third Amendment and the transactions contemplated
hereby, no approval, consent, authorization or other order of, and no
designation, filing, registration, qualification or recording with, any
governmental authority, domestic or
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foreign, is required for the Company's performance of this Third 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").
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
Third Amendment Convertible Notes and the Third Amendment Warrants and the
shares of Common Stock 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 Third 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 Third Amendment
Convertible Notes and the Third Amendment Warrants and the shares of Common
Stock 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 Third Amendment Convertible Notes
or the Third Amendment Warrants or the shares of Common Stock 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
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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 Third Amendment Convertible Notes
and the Third Amendment Warrants and any certificates representing the shares of
Common Stock 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 Third Amendment, (ii) the person
executing this Third Amendment on behalf of such ▇▇▇▇▇▇ ▇▇▇▇ Entity has the
appropriate authority to act on behalf of such ▇▇▇▇▇▇ ▇▇▇▇ Entity, (iii) this
Third 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 Third 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 Third Amendment Convertible Notes and the Third Amendment
Warrants and the shares of Common Stock issuable upon the conversion or exercise
thereof.
ARTICLE V
AMENDMENTS TO THE SERIES G PURCHASE AGREEMENT
SECTION 5.1 Agreement of ▇▇▇▇▇▇ ▇▇▇▇ Entities. Each of the ▇▇▇▇▇▇ ▇▇▇▇
Entities, by its execution of this Third 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
Third Amendment Convertible Notes and the
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Third Amendment Warrants issued or issuable to such ▇▇▇▇▇▇ ▇▇▇▇ Entities and the
shares of Common Stock 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
Third Amendment Convertible Notes; (b) the term "Note Conversion Shares" shall
hereby be amended to include the shares of Common Stock issued or issuable upon
conversion of the Third Amendment Convertible Notes; (c) the term "Warrants"
shall hereby be amended to include the Third Amendment Warrants; (d) the term
"Warrant Shares" shall hereby be amended to include the shares of Common Stock
issued or issuable upon exercise of the Third Amendment Warrants; and (e) the
term "Securities" shall hereby be amended to include the Third Amendment
Convertible Notes and the Third 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:
""8% Convertible Notes" means the 8% convertible notes issued or
issuable upon exchange of the Preferred Stock hereunder.
"Convertible Notes" means the 8% Convertible Notes and the Third
Amendment Convertible Notes.
"Third Amendment Convertible Notes" means the 7.5% convertible notes
issued as of July 1, 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. 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 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
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adjusted (such price or adjusted price being referred to herein as the "Third
Amendment Conversion Price," and together with the 8% Note 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."
(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:
"(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; and
(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."
(d) Section 12.8 of Article XII is hereby deleted in its entirety and the
following paragraph is hereby inserted in lieu thereof:
"12.8. Provisions in Case of Consolidation, Merger or Sale of
Assets. In the case of any reorganization or reclassification of the outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination) or in the case of any
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consolidation of the Company into, or merger of the Company with another entity
in which the Company is not the surviving entity (or it is the surviving entity,
but its shares of Common Stock become shares of another entity), or in the case
of any sale, lease or conveyance of all, or substantially all, of the property,
assets, business and goodwill of the Company as an entirety, each holder of
Convertible Notes shall thereafter have the right to convert such Convertible
Notes into the kind and amount of securities, cash and other property receivable
upon such reorganization, reclassification, consolidation, merger or disposition
by a holder of the number of shares of Common Stock which the holder of
Convertible Notes would have received had it converted its Convertible Notes
immediately prior to such reorganization, reclassification, consolidation,
merger or disposition, at a price equal to the applicable aggregate Conversion
Price then in effect; provided, however, that the kind and amount of such
securities, cash and other property shall be determined as if any payment made
to the holders of warrants issued pursuant to the Securities Purchase Agreement
dated as of January 31, 1997 among the Company, Triumph-Connecticut Limited
Partnership and the other purchasers named therein upon such reorganization,
reclassification, consolidation, merger or disposition in excess of the amount
such holders would otherwise have been entitled to receive under the terms of
such warrants without regard to Section 8.3(b) (or successor provision) of such
Securities Purchase Agreement had not been made. The foregoing provisions of
this Section shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers and dispositions."
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. (the
"Alpharma Loan Agreement") shall rank pari passu in right of payment with the
Third Amendment Convertible Notes issued to the ▇▇▇▇▇▇ ▇▇▇▇ Entities pursuant to
this Third Amendment, 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 Third Amendment Convertible Notes
and Third 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 Third Amendment, including without limitation the issuance of the Third
Amendment Convertible Notes and the Third Amendment Warrants.
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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 Third Amendment Convertible Notes and the shares of Common Stock issuable
upon the conversion thereof, (ii) the issuance of the Third Amendment Warrants
and the shares of Common Stock issuable upon the exercise thereof, (iii) the
issuance of the Direct Purchase Shares and (iv) the issuance of shares of Common
Stock pursuant to the letter agreement dated February 16, 1999 between the
Company and FS Private Investments LLC.
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 with respect to (i) the issuance of the
Third Amendment Convertible Notes and the shares of Common Stock issuable upon
the conversion thereof, (ii) the issuance of the Third Amendment Warrants and
the shares of Common Stock issuable upon the exercise thereof, (iii) the
issuance of the Direct Purchase Shares and (iv) the issuance of shares of Common
Stock pursuant to the letter agreement dated February 16, 1999 between the
Company and FS Private Investments LLC.
SECTION 6.5 Dividend and Interest Payments Due July 1, 1999.
(a) Series G Dividend. The Company and the Purchasers acknowledge that,
under Section 2.1(b) of the Certificate of Designation, Voting Powers,
Preferences and Rights of Series G Convertible Exchangeable Preferred Stock
filed with the Secretary of State of the State of Delaware on May 29, 1998 (the
"Series G Certificate of Designation"), because the Company did not pay the
dividend required to be paid on June 1, 1999 (the "Series G Dividend"), the
Dividend Rate (as defined in the Series G Certificate of Designation) increased
from 8% to 9% as of June 1, 1999, and that, effective upon payment of the
required Series G Dividend, the Dividend Rate shall decrease as of the date of
such payment to 8%. The Company agrees that it shall pay the Series G Dividend
on the earlier of (i) July 30, 1999 and (ii) the Closing Date (as defined in the
Loan Agreement) (such earlier date being referred to herein as the "Payment
Date"), and that, on such Payment Date, it shall also pay to the Purchasers
dividends in an amount equal to the additional 1% dividend that accrued during
the period from June 1, 1999 through the Payment Date.
(b) Subordinated Notes Interest Payment. The Purchasers agree that the
Subordinated Notes shall hereby be amended to provide that the accrued interest
due and payable on July 1, 1999 under the Subordinated Notes (as previously
agreed by the Purchasers) shall instead be due and payable on the Payment Date
and hereby waive any default arising under the Purchase Agreement from the
Company's failure to make the required interest payment on July 1, 1999. In
connection with such amendment, the Company hereby agrees that during the period
from June 1, 1999 through the Payment Date the interest rate on the Subordinated
Notes shall be increased from 8% to 9% and that, at such time as the Company
pays the Subordinated Notes Interest Payment
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otherwise due on July 1, 1999, the Company shall also pay the Purchasers an
amount equal to the additional 1% interest that accrued during the period from
June 1, 1999 through the Payment Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 The Series G Purchase Agreement. Except as amended by this
Third Amendment, the Series G Purchase Agreement shall remain in full force and
effect in accordance with its terms. This Third 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 Third 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 Third Amendment and the
transactions contemplated by this Third 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 Third
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 Third 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 Third 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 Third
Amendment to produce or account for more than one such counterpart.
SECTION 7.7 Effectiveness. This Third Amendment to the Series G Purchase
Agreement shall be effective on the date hereof.
SECTION 7.8 Waiver of Notice. The Purchasers hereby waive their right to
notice under Section 8.4 of the Series G Purchase Agreement with respect to the
consummation of the merger contemplated by the Agreement and Plan of Merger
dated as of February 16, 1999 by and among the Company and Bird Merger
Corporation.
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IN WITNESS WHEREOF this Third 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: President and
Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇ 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:
-------------------------------------
Name:
Title:
▇▇▇▇▇ PARTNERS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, General Partner
▇▇▇▇▇ Partners
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EXHIBIT A
FORM OF 7.5% CONVERTIBLE SUBORDINATED NOTE DUE JULY 1, 2004
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
$_________ JULY 1, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, ASCENT PEDIATRICS, INC., a Delaware corporation (the
"undersigned"), hereby promises to pay to the order of____________, or
registered assigns, the principal amount of _______________ Dollars
($__________), or if less, the aggregate unpaid amount of all Advances made to
the undersigned under the Third Amendment (as defined below), on July 1, 2004,
and to pay interest from the date hereof (computed on the basis of a 360-day
year of twelve 30-day months) on the unpaid principal amount hereof at the rate
of 7.5% per annum until the unpaid principal amount outstanding hereunder shall
become due and payable, and to pay, on demand, interest on any overdue
principal, including any overdue prepayment of principal and premium, if any, at
the rate of 12% per annum.
Schedule A attached hereto and incorporated herein by reference records
(i) the date and amount of each Advance hereunder and (ii) the date and amount
of any principal and interest payments made by the Company hereunder; provided
however that any failure to endorse such information on such Schedule or
continuation thereof shall not in any manner affect the obligation of the
Company to make payments of principal and interest in accordance with the terms
of this Note.
Payments of principal, premium, if any, and interest shall be made to the
registered holder hereof in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, at the office of the Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, subject to the right of the
registered holder hereof under the Third Amendment to receive direct
payment in immediately available funds.
Accrued interest shall be paid by the undersigned quarterly on March 31,
June 30, September 30 and December 31 of each year, commencing on September 30,
1999.
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If any amounts under this Note become due and payable on a Saturday or
Sunday or a day on which banks in the State of New York or the Commonwealth of
Massachusetts are authorized by law to remain closed, such amounts shall be paid
on the next succeeding day that such banks shall be open for business.
This Note has been issued pursuant to, and is one of a series of notes
(the "Third Amendment Convertible Notes") issued pursuant to the Third Amendment
dated as of July 1, 1999 (the "Third Amendment") to the Securities Purchase
Agreement dated as of May 13, 1998 between the undersigned and the Purchasers
named therein, as amended (such Securities Purchase Agreement, as amended on
September 30, 1998 and February 16, 1999 and by the Third Amendment being
referred to herein as the "Purchase Agreement"). This Note is subject to and
entitled to the benefits of all of the provisions of the Purchase Agreement.
Capitalized terms herein are used as defined in the Purchase Agreement unless
otherwise defined herein.
This Note may be redeemed by either the undersigned or the holder as
provided in Article IX of the Purchase Agreement. This Note may, or in certain
circumstances, shall automatically, be converted into Common Stock, par value
$0.00004 per share, of the Company in accordance with Section 7.3 of the Third
Amendment.
This Note is a general unsecured obligation of the undersigned and is
subordinated to all Senior Indebtedness in accordance with Article XI of the
Purchase Agreement and, as provided under Article XI, in certain circumstances,
to Senior Indebtedness under the Subordination Agreement dated as of February
16, 1999 among the Company, Alpharma USPD Inc. and the Original Lenders named
therein. Upon the occurrence of any one or more Events of Default, all amounts
then remaining unpaid on this Note may be declared to be immediately due and
payable subject to and as provided in the Purchase Agreement.
This Note may be amended and the provisions hereof may be waived only in
accordance with Article XIV of the Purchase Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of New York.
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IN WITNESS WHEREOF, ASCENT PEDIATRICS, INC. has caused this Note
to be duly executed.
ASCENT PEDIATRICS, INC.
(CORPORATE SEAL)
ATTEST: By:____________________________
Name:
Title:
_______________________________
Name:
Title: Secretary
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EXHIBIT B
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR
SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON JULY 1, 2006, OR IF NOT A BUSINESS DAY,
AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS
DAY.
WARRANT TO PURCHASE
_________ SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
OF
ASCENT PEDIATRICS, INC.
--------------------------
This certifies that, for value received, ____________ or registered
assigns ("Warrantholder"), is entitled to purchase from Ascent Pediatrics, Inc.,
a Delaware corporation (the "Company"), subject to the terms set forth below, at
any time prior to the Expiration Date, after which time this Warrant shall
become void, _________ Warrant Shares at the Warrant Price. The Warrant Price
and the number of Warrant Shares purchasable hereunder are subject to adjustment
from time to time as provided herein.
This Warrant is one of a series of warrants (the "Warrants")
evidencing the right to purchase shares of Common Stock of the Company issued
pursuant to a certain Third Amendment (the "Third Amendment"), dated as of July
1, 1999, to the Series G Securities Purchase Agreement, dated as of May 13,
1998, by and between the Company and the persons named therein, as amended (such
Securities Purchase Agreement, as amended on September 30, 1998 and February 16,
1999 and by the Third Amendment being referred to herein as the "Purchase
Agreement"), copies of which Purchase Agreement are on file at the
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principal office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits of and be bound by all of the applicable
obligations of the Purchase Agreement, as provided therein.
ARTICLE I
DEFINED TERMS
Section 1.1. Definition of Terms. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
(a) "Business Day" shall mean a 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) "Convertible Notes" shall mean the 7.5% Convertible Subordinated
Notes due July 1, 2004 issued pursuant to the Third Amendment and the 8.0%
Convertible Subordinated Notes issued or issuable upon exchange of the Company's
Preferred Stock pursuant to the Purchase Agreement.
(c) "Common Stock" shall mean the Common Stock, $.00004 par value
per share, of the Company.
(d) "Closing Price" shall mean, with respect to any day, the last
reported sales price of the Common Stock, regular way, or in case no sale takes
place on such day, the average of the reported closing bid and asked prices of
the Common Stock, regular way, in either case as reported on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, but is traded in the over-the-counter market, the
closing sale price of the Common Stock or in case no sale is publicly reported,
the average of the representative closing bid and asked quotations for the
Common Stock on the Nasdaq National Market, or, if bid and asked prices for such
day shall not have been reported on The Nasdaq Stock Market, the average of the
bid and asked prices for the Common Stock as furnished by any New York Stock
Exchange, Inc. member firm regularly making a market in the Common Stock and
selected for such purpose by the Board of Directors of the Company.
(e) "Expiration Date" shall mean the earlier of (a) July 1, 2006, or
if such day is not a Business Day, the next succeeding day which is a Business
Day.
(f) "Fair Market Value" with respect to the date of any exercise by
the Warrantholder of all or a portion of this Warrant, shall mean the average
daily Closing Price of the Common Stock for thirty (30) consecutive trading days
commencing forty-five (45) days before the date of such exercise by the
Warrantholder of all or a portion of this Warrant, provided, however, that where
no public market exists for the Common Stock at the time of the exercise of all
or a portion of this Warrant, the fair market value per share of Common Stock
shall be determined by the Company's Board of Directors in good faith.
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23
(g) "Person" shall mean any individual, corporation, association,
company, business trust, partnership, limited liability company, joint venture,
joint-stock company, trust, unincorporated organization, association or any
other entity or government or any agency or political subdivision thereof.
(h) "Preferred Stock" shall mean the Series G Convertible
Exchangeable Preferred Stock of the Company, $.01 par value per share.
(i) "Purchase Agreement" shall mean that certain Securities Purchase
Agreement, dated as of May 13, 1998, among the Company and the persons named
therein, as amended.
(j) "Related Person" of any Person means any other Person directly
or indirectly owning (A) twenty percent (20%) or more of the outstanding common
stock of such Person (or, in the case of a Person that is not a corporation,
twenty percent (20%) or more of the equity interest in such Person) or (B)
twenty percent (20%) or more of the combined voting power of the voting capital
stock of such Person.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(l) "Subordinated Notes" shall mean the Company's 8% Subordinated
Notes due 2005 issued pursuant to the Purchase Agreement.
(m) "Third Amendment" shall mean the Third Amendment, dated as of
July 1, 1999, to the Purchase Agreement.
(m) "Warrant Price" shall mean Three Dollars ($3.00) per Warrant
Share, as such price may be adjusted from time to time pursuant to Article III
hereof.
(n) "Warrant Shares" shall mean the shares of Common Stock
purchasable upon exercise of this Warrant.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.1. Exercise of Warrant. The Warrantholder may exercise
this Warrant, in whole or in part, by presentation and surrender of this Warrant
at the address of the Company set forth in Section 4.6 hereof or at such other
address as the Company may
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designate by notice in writing to the Warrantholder with the Subscription Form
annexed hereto duly executed, accompanied by payment of the Warrant Price for
each Warrant Share purchased. Upon receipt thereof, the Company shall cause to
be issued certificates for the Warrant Shares so purchased in such denominations
as are requested for delivery to the Warrantholder. Such certificates shall be
delivered as promptly as practicable to the Warrantholder. Upon any partial
exercise of this Warrant, the Company shall execute and deliver a new Warrant of
like tenor and date for the balance of the Warrant Shares purchasable hereunder.
Upon exercise, the Warrantholder shall be deemed to be the holder of record of
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Warrantholder. If at the time this Warrant is exercised, a registration
statement is not in effect to register under the Securities Act the Warrant
Shares issuable upon exercise of this Warrant, the Company may require the
Warrantholder to make such representations, and may place such legends on
certificates representing the Warrant Shares, as may be reasonably required to
permit the Warrant Shares to be issued without such registration. The Company
shall pay any and all stock transfer and similar taxes which may be payable in
respect of the issue of the Warrant or in respect of the issue of any of the
Warrant Shares, except the Company shall not pay such transfer taxes if the
Warrant Shares are issued to a Person other than the Warrantholder.
Section 2.2. Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of shares of Common Stock or other shares of capital
stock of the Company as may be from time to time issuable upon exercise of this
Warrant. All such shares shall be duly authorized, and when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, free and clear
of all liens, security interests, charges and other encumbrances or
restrictions, other than those restrictions imposed by the Securities Act of
1933, and free and clear of all preemptive and similar rights.
Section 2.3. Fractional Shares. The Company shall not be required to
issue any fraction of a share of its capital stock in connection with the
exercise of this Warrant, and in any case where the Warrantholder would, except
for the provisions of this Section 2.3, be entitled under the terms of this
Warrant to receive a fraction of a share upon the exercise of this Warrant, the
Company shall, upon the exercise of this Warrant and receipt of the Warrant
Price (as adjusted to cover the balance of the share), issue the largest number
of whole shares purchasable upon exercise of this Warrant, but in no event shall
the Company issue more than such number of shares of Common Stock as are
issuable pursuant to the exercise of this Warrant. The Company shall not be
required to make any cash or other adjustment in respect of such fraction of a
share to which the Warrantholder would otherwise be entitled.
Section 2.4. Payment for Warrant Shares.
(a) Payment of the aggregate Warrant Price for Warrant Shares to be
purchased upon exercise of all or a portion of this Warrant shall be made in
full by delivery to the Company, at its address set forth in Section 4.6 hereof
or at such other address as the Company may designate by notice in writing to
the Warrantholder, of a certified or bank
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cashier's check or by wire transfer to an account in the United States
designated by the Company.
(b) Payment of the aggregate Warrant Price may also be made in full
by (i) delivery to the Company of shares of Preferred Stock beneficially owned
by the Warrantholder, plus accumulated dividends thereon, in an aggregate
principal amount equal to the aggregate Warrant Price, (ii) delivery to the
Company of Convertible Notes plus accrued interest thereon, in an aggregate
principal amount equal to the aggregate Warrant Price, (iii) delivery to the
Company of Subordinated Notes plus accrued interest thereon, in an aggregate
principal amount equal to the aggregate Warrant Price or (iv) a combination of
cash (payable by wire transfer or certified or bank check), shares of Preferred
Stock, Convertible Notes or Subordinated Notes beneficially owned by such
Warrantholder and such accumulated dividends or accrued interest, as the case
may be, in an aggregate principal amount equal to the aggregate Warrant Price.
Any shares of Preferred Stock or Convertible Notes or Subordinated Notes
surrendered for exchange hereunder shall be, if so required by the Company,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly delivered by the Warrantholder.
(c) Notwithstanding any provisions herein to the contrary, if the
Fair Market Value of one share of Common Stock is greater than the Warrant Price
(at the date of calculation as set forth below), in lieu of exercising this
Warrant for cash, the Warrantholder may elect to receive shares equal to the
value (as determined below) of this Warrant (or the portion thereof, which
portion shall be canceled) by surrender of this Warrant at the principal office
of the Company together with the properly endorsed Subscription Form annexed
hereto and notice of such election in which event the Company shall issue to the
Warrantholder a number of shares of Common Stock computed using the following
formula:
Y(A-B)
X = ------
A
Where X = the number of shares of Common Stock to be issued to
the Warrantholder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
A = the Fair Market Value of one share of the Common Stock
(at the date of such calculation)
B = Warrant Price (as adjusted to the date of such
calculation)
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ARTICLE III
ADJUSTMENT OF WARRANT PRICE OR WARRANT SHARES
Section 3.1. Adjustment of Warrant Price.
(a) Except as hereinafter provided, in case the Company shall at any
time after the date hereof issue or sell any obligations or shares of Common
Stock, for a consideration per share less than the Warrant Price in effect
immediately prior to the issuance or sale of such shares, or without
consideration, then, and thereafter successively upon each issuance or sale, the
Warrant Price in effect immediately prior to each such issuance or sale shall
forthwith be reduced to a price determined by dividing (i) an amount equal to
(X) the total number of shares of Common Stock outstanding immediately prior to
such issuance or sale multiplied by the Warrant Price in effect immediately
prior to such issuance or sale, plus (Y) the consideration, if any, received by
the Company upon such issuance or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issuance or sale.
For the purposes of any computation to be made in accordance
with the provisions of this paragraph (a), the following shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash
received by the Company for such shares (or, if such shares of Common
Stock are offered by the Company for subscription, the subscription price,
or, if shares of Common Stock shall be sold to underwriters or dealers for
public offering without a subscription offering, the public offering
price) before deducting therefrom any commissions or other expenses paid
or incurred by the Company for any underwriting of, or otherwise in
connection with the issuance of such shares;
(ii) In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which shall be other than cash
(otherwise than as a dividend or other distribution on any shares of
Common Stock of the Company or on conversion, exercise or exchange of
other securities of the Company or upon acquisition of the assets or
securities of another company or upon merger or consolidation with another
entity), the amount of consideration therefor other than cash shall be the
value of such consideration as of the date of the issuance or sale of the
shares of Common Stock, irrespective of accounting treatment, but as
determined by the Board of Directors of the Company in good faith. The
reclassification of securities other than Common Stock into Common Stock
shall be deemed to involve the issuance for a consideration other than
cash of such Common Stock immediately prior to the close of business on
the date fixed for the determination of security holders entitled to
receive such Common Stock;
(iii) In case of the issuance of shares of Common Stock upon
conversion or exchange of any obligations or of any securities of the
Company that
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shall be convertible into or exchangeable for shares of Common Stock or
upon the exercise of rights or options to subscribe for or to purchase
shares of Common Stock (other than upon exercise of this Warrant), the
amount of consideration received by the Company for such shares of Common
Stock shall be deemed to be the sum of (A) the amount of the consideration
received by the Company upon the original issuance of such obligations,
shares, rights or options, as the case may be, plus (B) the consideration,
if any, other than such obligations, shares, rights or options, received
by the Company upon such conversion, exchange, or exercise except in
adjustment of interest and dividends. The amount of the consideration
received by the Company upon the original issuance of the obligations,
shares, rights or options so converted, exchanged or exercised and the
amount of the consideration, if any, other than such obligations, shares,
rights or options, received by the Company upon such conversion, exchange
or exercise shall be determined in the same manner provided in
subparagraphs (i) and (ii) above with respect to the consideration
received by the Company in case of the issuance of shares of Common Stock;
if such obligations, shares, rights or options shall have been issued as a
dividend upon any securities of the Company, the amount of the
consideration received by the Company upon the original issuance thereof
shall be deemed to be zero. In case of the issuance of Warrant Shares upon
exercise of this Warrant, the Company shall be deemed to have received the
Warrant Price then in effect as the consideration for each share of Common
Stock so issued;
(iv) Shares of Common Stock issuable by way of dividend or
other distribution on any securities of the Company shall be deemed to
have been issued and to be outstanding at the close of business on the
record date fixed for the determination of security holders entitled to
receive such dividend or other distribution and shall be deemed to have
been issued without consideration. Shares of Common Stock issued otherwise
than as a dividend, shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue;
(v) The number of shares of Common Stock at any time
outstanding shall not include any shares then owned or held by or for the
account of the Company, but shall include the aggregate number of shares
deliverable in respect of options, rights and exercisable, convertible and
exchangeable securities at all times while such options, rights or
securities remain outstanding and unexercised, unconverted or unexchanged,
as the case may be; and
(vi) No adjustment shall be made to the Warrant Price in
effect upon conversion or exchange of (i) securities convertible or
exercisable or exchangeable for Common Stock or for other securities that
are subsequently exercisable for Common Stock that are outstanding as of
the date of the Third Amendment, or (ii) any obligations or any securities
of the Company that shall be convertible into or exercisable or
exchangeable for shares of Common Stock or upon the exercise of rights or
options to subscribe for or to purchase shares of Common Stock for which
an adjustment in the Warrant Price has previously been made in accordance
with paragraph (b) of this Section 3.1.
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(vii) In the event that any payment is made to the holders of
warrants issued pursuant to the Securities Purchase Agreement dated as of
January 31, 1997 among the Company, Triumph Connecticut Limited
Partnership and the other purchasers named therein pursuant to Section
8.3(b) (or successor provision) of such Securities Purchase Agreement
which does not result in a modification pursuant to Section 3.4, the
Company shall be deemed to have issued without consideration as of the
date of the event giving rise to such payment a number of shares of Common
Stock equal to the amount of such payment divided by the Closing Price on
the date of such event.
(b) In case the Company shall at any time after the date hereof
issue options or rights to subscribe for shares of Common Stock, or issue any
obligations or securities convertible into or exchangeable for shares of Common
Stock, otherwise than as contemplated by Section 3.1(a)(vi) or pursuant to
Section 3.3 hereof, for a consideration per share less than the Warrant Price in
effect immediately prior to the issuance of such options or rights or
convertible or exchangeable securities, or without consideration, the Warrant
Price in effect immediately prior to the issuance of such options or rights or
securities shall be reduced to a price determined by making a computation in
accordance with the provisions of paragraph (a) of this Section 3.1, provided
that:
(i) the aggregate maximum number of shares of Common Stock
deliverable under such options or rights shall be considered to have been
delivered at the time such options or rights were issued, and for a
consideration equal to the minimum purchase price per share of Common Stock
provided for in such options or rights, plus the consideration (determined in
the same manner as consideration received on the issue or sale of Common Stock),
if any, received by the Company for such options or rights;
(ii) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or exchange for any such obligations or
securities shall be considered to have been delivered at the time of issuance of
such securities, and for a consideration equal to the consideration (determined
in the same manner as consideration received on the issue or sale of Common
Stock) received by the Company for such securities, plus the consideration, if
any, to be received by the Company upon the exchange or conversion thereof; and
(iii) on the expiration of such options or rights, or an increase in
the minimum exercise price thereof, or a decrease in the maximum number of
shares of Common Stock deliverable upon exercise or conversion of such options,
rights or convertible or exchangeable securities pursuant to the terms thereof
(and not as a result of exercise or conversion), or the termination of such
right to convert or exchange, the Warrant Price in effect shall forthwith be
readjusted to such Warrant Price as would have obtained (A) in the case of the
expiration or termination of options or rights or the termination of the right
to convert or exchange convertible or exchangeable securities, had no
adjustments been made upon the issuance of such options, rights or convertible
or exchangeable securities, or (B) in the case of an increase in the minimum
exercise price thereof, or a decrease in the maximum number of shares
deliverable thereunder, had the adjustments made upon the issuance of such
options, rights or convertible or exchangeable securities been made upon the
basis of the
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delivery of only the number of shares of Common Stock (A) actually deliverable
upon the exercise of such options or rights or upon conversion or exchange of
such securities, or (B) deliverable by reason of such increase in price or
decrease in number of shares.
(c) No adjustment to the Warrant Price shall be made in connection
with the issuance of:
(i) the Series G Preferred Stock, the Convertible Notes, the
Warrants issued pursuant to the Third Amendment, the Warrants issued
pursuant to the Purchase Agreement and the New Warrants, as such term is
defined in the Purchase Agreement (together, the "Convertible
Securities"), and the securities issued or issuable upon conversion or
exercise of the Convertible Securities, or other currently outstanding
securities that are convertible, exercisable or exchangeable for shares of
Common Stock; and
(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 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;
(d) In case the Company shall at any time after the date hereof
subdivide or combine the outstanding shares of Common Stock, the Warrant Price
in effect shall forthwith be proportionately decreased in the case of the
subdivision or proportionately increased in the case of combination to the
nearest one cent. Any such adjustment shall become effective at the close of
business on the date that such subdivision or combination shall become
effective.
Section 3.2. Adjustment of Warrant Shares. In the event of an
adjustment of the Warrant Price, the number of shares of Common Stock (or
reclassified or recapitalized stock) issuable upon exercise of this Warrant
after such adjustment shall be equal to the number determined by multiplying the
number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment by a fraction, of which the numerator is
the Warrant Price in effect immediately prior to such adjustments, and the
denominator is the Warrant Price in effect immediately after such adjustment.
Section 3.3. Dividends and Distributions. In the event that the
Company shall at any time after the date hereof pay any dividend (other than in
shares of Common Stock) on, or make any distribution of its assets upon or with
respect to, the Common Stock, or in the event that the Company shall offer
options or rights to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, to all
of its holders of Common Stock, then on the record date for such payment,
distribution or offer or, in the absence of a record date, on the date of such
payment, distribution or offer, the Warrantholder shall receive what the
Warrantholder would have received had it exercised this Warrant in full
immediately prior to the record date of such payment, distribution or offer or,
in the absence of a record date, immediately prior to the date of such payment,
distribution or offer.
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Section 3.4. Mergers, Consolidations, Reclassifications. In the case
of any reorganization or reclassification of the outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination)
or in the case of any consolidation of the Company into, or merger of the
Company with another corporation in which it is not the surviving entity (or it
is the surviving entity, but its shares of Common Stock become shares of another
corporation), or in the case of any sale, lease or conveyance of all, or
substantially all, of the property, assets, business and goodwill of the Company
as an entirety, the Warrantholder shall thereafter have the right upon exercise
of this Warrant to receive the kind and amount of shares of stock and other
securities, cash and property receivable upon such reorganization,
reclassification, consolidation, merger or disposition by a holder of the number
of shares of Common Stock which the Warrantholder would have received had it
exercised this Warrant immediately prior to such reorganization,
reclassification, consolidation, merger or disposition, at a price equal to the
aggregate Warrant Price then in effect for exercising this Warrant in full (the
kind, amount and price of such stock and other securities to be subject to
adjustment as herein provided); provided, however, that the kind and amount of
such shares of stock and other securities, cash and other property shall be
determined as if any payment made to the holders of warrants issued pursuant to
the Securities Purchase Agreement dated as of January 31, 1997 among the
Company, Triumph Connecticut Limited Partnership and the other purchasers named
therein upon such reorganization, reclassification, consolidation, merger or
disposition in excess of the amount such holders would otherwise have been
entitled to receive under the terms of such warrants without regard to Section
8.3(b) (or successor provision) of such Securities Purchase Agreement had not
been made. The foregoing provisions of this Section 3.4 shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers and
dispositions.
Section 3.5. Notice of Adjustment. Whenever the Warrant Price or the
number of Warrant Shares shall be adjusted pursuant to the provisions of Article
III, the Company shall prepare and deliver forthwith to the Warrantholder a
certificate signed by the President of the Company and by its Chief Financial
Officer, setting forth the adjusted number of Warrant Shares purchasable upon
the exercise of this Warrant and the Warrant Price calculated to the nearest
cent and setting forth in reasonable detail the method of calculation and the
facts requiring such adjustment and upon which such calculation is based.
Section 3.6. Notice of Certain Corporate Action. In case at any
time:
(A) the Company shall declare any dividend (or any other
distributions) on shares of Common Stock; or
(B) the Company shall authorize the granting to all holders
of its Common Stock of rights to subscribe for or
purchase any shares of stock of any class or of any
other rights; or
(C) there shall be any reclassification of the capital stock
of the Company; or
▇-▇▇
▇▇
(▇) there shall be any capital reorganization by the
Company; or
(E) there shall be any (i) consolidation or merger involving
the Company, other than the merger contemplated by the
Merger Agreement, or (ii) sale, transfer or other
disposition of all or substantially all of the Company's
property, assets or business (except a merger or other
reorganization in which the Company shall be the
surviving corporation and its shares of capital stock
shall continue to be outstanding and unchanged and
except a consolidation, merger, sale, transfer or other
disposition involving a wholly-owned subsidiary); or
(F) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company or any partial
liquidation of the Company or distribution to holders of
Common Stock;
then, in each of such cases, the Company shall give written notice to the
Warrantholder of the date on which (i) the books of the Company shall close or a
record date shall be fixed for such dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding-up, as the case may be, shall
take place. Such notice also shall specify the date as of which the holders of
Common Stock of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their certificates for
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be. Such notice shall be
given at least twenty (20) days prior to the action in question and not less
than twenty (20) days prior to the record date or the date on which the
Company's transfer books are closed in respect thereto.
Section 3.7. Form of Warrant after Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Warrant Price or
the number or kind of the Warrant Shares.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Successors and Assigns; Transfers.
(a) The terms of this Warrant shall be binding upon, inure to the
benefit of and be enforceable by and against any successors or assigns of the
Company and of the
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Warrantholder; provided, however, that the Company may not assign its rights or
obligations hereunder.
(b) Subject to the provisions of paragraph (f) below and Section
17.3 of the Purchase Agreement, this Warrant and all rights hereunder are
transferable by the Warrantholder, in whole or in party, upon surrender of this
Warrant with a properly executed assignment at the principal office of the
Company.
(c) Any transferee to whom rights hereunder are transferred shall,
as a condition to such transfer, deliver to the Company a written instrument by
which such transferee agrees to be bound by the obligations imposed upon the
Warrantholder under this Warrant to the same extent as if such transferee was
the Warrantholder.
(d) The Company will maintain a register containing the names and
addresses of the Warrantholders of the Warrants. Any Warrantholder may change
its or his address as shown on the warrant register by written notice to the
Company requesting such change.
(e) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Warrantholder as the absolute owner hereof
for all purposes; provided, however, that if and when this Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
(f) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act or (ii) the Company first shall have been furnished with an
opinion of legal counsel, reasonably satisfactory to the Company, to the effect
that such sale or transfer is exempt from the registration requirements of the
Securities Act.
(g) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until such
securities are registered under such Act or an opinion of
counsel reasonably satisfactory to the Company is obtained
to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder thereof, at such
time as they become eligible for resale pursuant to Rule 144(k) under the
Securities Act.
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Section 4.2. Rights as Stockholder. Except as provided herein, the
Warrantholder, as such, shall not be entitled to vote or be deemed to be a
stockholder of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Warrantholder, as such, any rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action or receive notice of meetings.
Section 4.3. Acceptance by Warrantholder. Receipt of this Warrant by
the Warrantholder shall constitute acceptance of an agreement to the foregoing
terms and conditions.
Section 4.4. Governing Law. This Warrant and the rights of the
parties hereunder shall be governed in all respects by the laws of the State of
New York, without giving effect to the provisions thereof relating to conflicts
of law.
Section 4.5. Severability. In case any provision of this Warrant
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 4.6. Notices. Any notices or certificates by the Company to
the Warrantholder and by the Warrantholder to the Company shall be deemed
delivered if in writing and delivered in person or by registered mail (return
receipt requested) to the Warrantholder, at its address in the registry of
Warrantholders maintained by the Company, and if to the Company, at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Principal
Financial Officer. The Company may change its address by written notice to the
Warrantholder.
Section 4.7. Amendment. This Warrant may be amended or modified (or
any provision hereof waived) only if Warrantholders holding at least eighty
percent (80%) of the Warrant Shares (assuming exercise of all the Warrants)
shall approve such amendment, modification or waiver in writing; provided,
however, that no amendment that adversely affects the rights of any
Warrantholder in a manner different from the rights of the other Warrantholders
shall be effective against such Warrantholder unless approved in writing by such
Warrantholder. After an amendment, modification or waiver of a provision the
Warrants becomes effective, the Company shall mail to the Warrantholders a
notice briefly describing the amendment, modification or waiver.
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IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company under its corporate seal as of the 1st day of July, 1999.
ASCENT PEDIATRICS, INC.
By:_________________________________
Name:
Title:
ATTEST:
----------------------------------
Secretary
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