SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 2)
ASCENT PEDIATRICS, INC.
(Name of Issuer)
Common Stock,
$.00004 PAR VALUE PER SHARE
(Title of Class of Securities)
04362X101
(CUSIP Number)
Brian P. Friedman
FS Private Investments LLC
55 East 52nd Street, 37th Floor
New York, New York 10055-0002
(212) 309-8348
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 1, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 2
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
FS Private Investments LLC 13-3940694
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 4,068,646, which includes
EACH 1,105,263 shares of Common Stock
REPORTING issuable upon the conversion of $5,250,000
PERSON aggregate principal amount of the
WITH Company's 8.0% Convertible Subordinated Notes
and 666,667 shares of Common Stock
issuable upon conversion of $2,000,000
aggregate principal amount of Third
Amendment Notes and 300,000 shares of Common
Stock issuable upon the exercise of
Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 4,068,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon conversion
of $2,000,000 aggregate principal amount of
Third Amendment Notes and 300,000 shares of
Common Stock issuable upon the exercise of
Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,068,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IA
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 3
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Furman Selz Investors II L.P. 13-3937561
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,454,418 which includes
EACH 974,316 shares of Common Stock issuable upon
REPORTING the conversion of $4,628,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and includes
587,704 shares of Common Stock issuable upon
the conversion of $1,763,111 aggregate
principal amount of the Third Amendment Notes
and 264,467 shares of Common Stock issuable
upon the exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,454,418, which
includes 974,316 shares of Common Stock
issuable upon the conversion of $4,628,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 587,704
shares of Common Stock issuable upon the
conversion of $1,763,111 aggregate principal
amount of the Third Amendment Notes and 264,467
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,454,418
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
39.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 4
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
FS Employee Investors LLC 13-3937563
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 296,250 which includes
EACH 83,569 shares of Common Stock issuable upon
REPORTING the conversion of $397,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 50,371
shares of Common Stock issuable upon the
conversion of $151,111 aggregate principal
amount of Third Amendment Notes and 22,667
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 296,250, which
includes 83,579 shares of Common Stock
issuable upon the conversion of $397,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 50,371
shares of Common Stock issuable upon the
conversion of $151,111 aggregate principal
amount of Third Amendment Notes and 22,667
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
296,250
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.1%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 5
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
FS Parallel Fund L.P. 13-3974766
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 167,978, which includes
EACH 47,368 shares of Common Stock issuable upon
REPORTING the conversion of $225,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 28,592
shares of Common Stock issuable upon conversion
of $85,778 aggregate principal amount of Third
Amendment Notes and 12,866 shares of Common
Stock issuable upon the exercise of Third
Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 167,978, which
includes 47,368 shares of Common Stock
issuable upon the conversion of $225,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 28,592
shares of Common Stock issuable upon conversion
of $85,778 aggregate principal amount of
Third Amendment Notes and 12,866 shares of
Common Stock issuable upon the exercise of
Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
167,978
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 6
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Furman Selz Investments II LLC 13-3937560
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,918,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,918,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,918,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IA
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 7
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ING Barings LLC 13-3856626
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF and WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,918,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,918,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,918,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 8
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ING Groep N.V.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
The Netherlands
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,918,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,918,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,918,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 9
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ING Merger, LLC 75-2085140
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,918,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,918,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,918,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/_/
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 10
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ING (U.S.) Financial Holdings Corporation 51-0262561
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,918,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,918,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,918,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 11
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ING Bank N.V.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
The Netherlands
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 3,918,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 3,918,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,918,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
BK
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 12
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Brian P. Friedman ###-##-####
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 4,068,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 4,068,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,068,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- -------------------------------- ------------------------
CUSIP No. 04362 XI 01 Page 13
- -------------------------------- ------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
James L. Luikart ###-##-####
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 4,068,646 which includes
EACH 1,105,263 shares of Common Stock issuable upon
REPORTING the conversion of $5,250,000 aggregate
PERSON principal amount of the Company's 8.0%
WITH Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
---------------------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------------------
10 SHARED DISPOSITIVE POWER 4,068,646, which
includes 1,105,263 shares of Common Stock
issuable upon the conversion of $5,250,000
aggregate principal amount of the Company's
8.0% Convertible Subordinated Notes and 666,667
shares of Common Stock issuable upon the
conversion of $2,000,000 aggregate principal
amount of Third Amendment Notes and 300,000
shares of Common Stock issuable upon the
exercise of Third Amendment Warrants.
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,068,646
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND ISSUER.
The securities to which this statement relates are shares of common
stock, $0.00004 par value per share (the "Common Stock"), of Ascent Pediatrics,
Inc., a Delaware corporation ("Ascent" or the "Company"). The principal
executive office of Ascent is located at 187 Ballardvale Street, Wilmington,
Massachusetts 01887.
The Reporting Persons are filing this Amendment No. 2 to Schedule 13D
because of an amendment, dated July 1, 1999 (the "Third Amendment"), to the
Securities Purchase Agreement dated May 13, 1998 and amended on February 16,
1999 (the "Purchase Agreement") among the Company, and the persons named as
purchasers on Schedule I attached thereto (each a "Purchaser" and collectively,
the "Purchasers"). Pursuant to the Purchase Agreement, certain of the Reporting
Persons acquired shares of the Series G Convertible Exchangeable Preferred
Stock, $.01 par value per share (the "Preferred Shares"), warrants to purchase
shares of Common Stock (the "Warrants") and 8% Subordinated Notes due 2005 of
the Company (the "Subordinated Notes"). The Preferred Shares are convertible
into Common Stock and exchangeable into convertible subordinated notes of the
Company (the "Convertible Notes").
Pursuant to an amendment to the Purchase Agreement on February 16,
1999 (the "Second Amendment"), certain of the Reporting Persons agreed to
purchase additional shares of Common Stock from the Company (the "Direct
Shares"), to exercise all outstanding Warrants and to the exchange of all
outstanding Preferred Shares for Convertible Notes in accordance with the terms
of the Certificate of Designation, Voting Powers, Preferences and Rights of the
Preferred Shares as of the Alpharma Transaction Closing Date (as defined in Item
4 below). Pursuant to the Third Amendment, the Purchasers agreed to purchase up
to $4,000,000 aggregate principal amount of 7.5% Convertible Subordinated Notes
of the Company (the "Third Amendment Notes") and warrants to purchase up to an
aggregate of 600,000 shares of Common Stock (the "Third Amendment Warrants" and,
collectively with the Third Amendment Notes, the "Third Amendment Securities").
ITEM 2. IDENTITY AND BACKGROUND.
The following table provides certain information about each of the
Reporting Persons.
CITIZENSHIP OR
STATE OF PRINCIPAL
INCORPORATION/ OCCUPATION OR
NAME AND ADDRESS ORGANIZATION BUSINESS
Furman Selz Investors II L.P. Delaware Limited Partnership for
("Investors") Investments
55 East 52nd Street, 37th Floor
New York, New York 10055-0002
FS Employee Investors LLC Delaware Limited Liability
("Employee Investors") Company for Investments
55 East 52nd Street, 37th Floor
New York, New York 10055-0002
FS Parallel Fund L.P. Delaware Limited Partnership for
("Parallel Fund") Investments
55 East 52nd Street, 37th Floor
New York, New York 10055-0002
FS Private Investments LLC Delaware Manager of Investors,
("Private Investments") Employee Investors and
55 East 52nd Street, 37th Floor Parallel Fund
New York, New York 10055-0002
Furman Selz Investments II LLC Delaware Holding Company
("FS Investments II")
55 East 52nd Street
New York, NY 10055-0002
ING Barings LLC Delaware Investment Banking
("ING Baring")
55 East 52nd Street
New York, NY 10055-0002
ING Merger, LLC Delaware Holding Company
("ING Merger")
667 Madison Avenue
New York, New York 10021
ING (U.S.) Financial Holdings Delaware Holding Company
Corporation
("ING (U.S.)")
135 East 57th Street
New York, New York 10022
ING Bank N.V. The Netherlands Bank
("ING Bank")
P.O. Box 810
1000 AV
Amsterdam, The Netherlands
ING Groep N.V. The Netherlands Insurance Company
("ING Groep")
Strawinskylaan 2631
1097 ZZ Amsterdam
Brian P. Friedman USA Managing Member of
55 East 52nd Street, 37th Floor Private Investments
New York, New York 10055-0002
James L. Luikart USA Managing Member of
55 East 52nd Street, 37th Floor Private Investments
New York, New York 10055-0002
The Executive Board of ING Groep is the following:
Executive Board:
G.J.A. van der Lugt
drs. J.H. Holsboer
mr. E. Kist
ir. J.H.M. Lindenbergh
drs.ing. C. Maas
dr. A.H.G. Rinnooy Kan
M. Tilmant
The directors and executive officers of ING Merger, LLC are the
following:
Directors:
Fernando Gentil
Wietze Prinsen
Officers:
Mark Seffinger Assistant Secretary
Fernando Gentil President
David Distler Vice President
Benjamin Emanuel Vice President
David Rutkin Vice President
William Austin General Counsel and Secretary
Thalia Cody Assistant General Counsel and Assistant
Secretary
Edmund A. Hajim Senior Managing Director
Joseph Kaminsky Senior Vice President
Wietze Prinsen Senior Managing Director
Patrick Murphy Assistant Secretary
John Cirrito Managing Director
The directors and executive officers of ING (U.S.) Financial Holdings
Corporation are the following:
Directors:
Fernando Gentil
Bart Staal
Officers:
Fernando Gentil President
Bart Staal Executive Vice President
Joseph Kaminsky Senior Vice President
Benjamin Emanuel Vice President
David Rutkin Vice President
Phil Schulze Vice President
Robert Tankoos Vice President
William A. Austin Secretary and General Counsel
Patrick Murphy Assistant Secretary
Mark Seffinger Assistant Secretary
The Executive Board of ING Bank is the following:
G.J.A van der Lugt
drs. J.H. Holsboer
mr. E. Kist
ir. J.H.M. Lindenbergh
drs.ing. C. Maas
dr. A.H.G. Rinnooy Kan
M. Tilmant
ING Groep owns 100% of ING Bank, which owns 100% of ING (U.S.), which
owns 100% of ING Merger, which is the sole managing member and owner of 100% of
the interests of ING Barings, which is the sole managing member and owner of
100% of the interests of FS Investments II, which is the sole managing member
and owner of 100% of the interests of, Employee Investors, which directly owns
296,250 shares of Common Stock of the Company. FS Investments II is the sole
general partner of Investors, which directly owns 3,454,418 shares of Common
Stock of the Company. FS Investments II is the sole general partner of Parallel
Fund, which directly owns 167,978 shares of Common Stock of the Company.
As a result of its role as manager of Investors, Employee Investors
and Parallel Fund (the "Funds"), Private Investments may be deemed to be the
beneficial owner of the shares held by the Funds.
As a result of Brian P. Friedman's and James L. Luikart's positions as
Managing Members of Private Investments, they may be deemed to be the beneficial
owners of the shares beneficially owned by Private Investments and therefore
deemed to be the beneficial owners of the shares held by the Funds.
(d) and (e). None of the Reporting Persons, and to the knowledge of
the Reporting Persons, none of the other individuals named have, within the last
five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or have been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding been or are subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violations with respect to
such laws.
(f) Brian P. Friedman and James L. Luikart are United States citizens.
The filing of this statement shall not be construed as an admission
that Private Investments, FS Investments II, ING Barings, ING Merger, ING
(U.S.), ING Bank, ING Groep, Brian P. Friedman or James L. Luikart are, for
purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934, the
beneficial owner of any shares covered by this statement.
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
The funds for the purchase of Third Amendment Securities by Investors
and Parallel Fund were provided from the partner's capital contributions.
The funds for the purchase of Third Amendment Securities by Employee
Investors were provided from member contributions.
ITEM 4. PURPOSE OF TRANSACTION.
On May 13, 1998, Investors, Employee Investors and Parallel Fund
purchased (i) 4,628, 397 and 225 Preferred Shares, respectively, (ii)
$5,950,667, $509,668 and $289,665, aggregate principal amount, respectively, of
Subordinated Notes and (iii) Warrants to purchase an aggregate of 1,399,662,
119,961 and 68,095 shares of Common Stock, respectively, pursuant to the
Purchase Agreement.
On February 16, 1999, the Company entered into a Loan Agreement with
Alpharma USPD Inc. ("Lender") and Alpharma Inc. ("Parent"), pursuant to which
Lender agreed to lend to the Company up to $40,000,000 (the "Loan"). In
connection with the Loan, the Company agreed to grant to the Lender an option
during a specified period during the first half of 2002 to purchase all of the
outstanding shares of the Company's Common Stock. The Company and a wholly-owned
subsidiary of the Company, entered into an Agreement and Plan of Merger,
pursuant to which, each share of Common Stock will be converted into the right
to receive one Depositary Share. Each Depositary Share will evidence one share
of common stock of the Company that will be subject to the Lender's option. The
Company, Lender and Parent executed a Master Agreement as of February 16, 1999,
which sets forth the terms and conditions of the consummation of the above
referenced transactions (the "Alpharma Transaction") and specifies the closing
date of the Alpharma Transaction (the "Alpharma Transaction Closing Date").
In connection with the Alpharma Transaction, the Second Amendment to
the Purchase Agreement was executed on February 16, 1999, pursuant to which the
Company, among other things, agreed to issue and sell 300,000 shares of its
Common Stock for an aggregate purchase price of $900,000 to the Purchasers as of
the Alpharma Transaction Closing Date. Pursuant to the Second Amendment, each of
Investors, Employee Investors and Parallel Fund agreed to (i) purchase an
aggregate of 225,000 shares of Common Stock (the "Direct Purchase Shares") for
an aggregate purchase price of $675,000 and (ii) exercise all of their Warrants
as of the Alpharma Transaction Closing Date, at an exercise price adjusted from
$4.75 per share of Common Stock to $3.00 per share of Common Stock.
Also in connection with the Alpharma Transaction, as of the Alpharma
Transaction Closing Date, the Company will exchange the outstanding Preferred
Shares as of such date for its Convertible Notes in accordance with the terms of
the Preferred Shares. The Convertible Notes are convertible at the option of the
holder into shares of Common Stock and will automatically convert into Common
Stock under certain circumstances. Pursuant to the terms of the Convertible
Notes, the conversion price and number of shares of Common Stock issuable upon
the conversion of the Convertible Notes are subject to adjustment upon the
occurrence of certain events, such as stock splits, stock dividends, mergers,
reclassifications and similar corporate events.
If the Alpharma Transaction Closing Date has not occurred as of
September 30, 1999, the Second Amendment will automatically terminate.
On July 1, 1999 the Company and the Purchasers executed the Third
Amendment, pursuant to which, among other things, Investors, Employee Investors
and Parallel Fund (collectively, the "Funds") collectively agreed to lend to the
Company up to $4,000,000 in exchange for the Third Amendment Notes and Third
Amendment Warrants. $2,000,000 of the total $4,000,000 loan was advanced to the
Company and the Company issued Third Amendment Warrants to purchase up to
300,000 shares of Common Stock upon the signing of the Third Amendment. The
Funds have agreed to loan the remaining $2,000,000 under the Third Amendment to
the Company in one or more installments on or before June 30, 2001 if certain
conditions have been fulfilled. The Company agreed that if it borrows any
portion of such additional $2,000,000, it will issue additional Third Amendment
Warrants to purchase 1.5 shares of Common Stock for each additional $10.00
borrowed.
The Third Amendment Notes are convertible into shares of Common Stock
at a conversion price of $3.00 per share in accordance with the terms of the
Purchase Agreement as amended and are due on July 1, 2004. The Third Amendment
Warrants are exercisable at $3.00 per share of Common Stock and expire on July
1, 2006.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b)
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES SHARED SHARED SOLE SOLE
TO BE BENEFICIALLY VOTING INVESTMENT VOTING INVESTMENT PERCENTAGE
NAME OWNED POWER POWER POWER POWER OF CLASS
<S> <C> <C> <C> <C> <C> <C>
Private Investments 4,068,646 4,068,646 4,068,646 0 0 44.7
Investors 3,454,418 3,454,418 3,454,418 0 0 39.0
Employee Investors 296,250 296,250 296,250 0 0 4.1
Parallel Fund 167,978 167,978 167,978 0 0 2.4
FS Investments II 3,918,646 3,918,646 3,918,646 0 0 43.0
ING Baring 3,918,646 3,918,646 3,918,646 0 0 43.0
ING Merger 3,918,646 3,918,646 3,918,646 0 0 43.0
ING (U.S.) 3,918,646 3,918,646 3,918,646 0 0 43.0
ING Bank 3,918,646 3,918,646 3,918,646 0 0 43.0
ING Groep 3,918,646 3,918,646 3,918,646 0 0 43.0
Brian P. Friedman 4,068,646 4,068,646 4,068,646 0 0 44.7
James L. Luikart 4,068,646 4,068,646 4,068,646 0 0 44.7
</TABLE>
<PAGE>
As of July 1, 1999, the Company had 7,026,445 shares of Common Stock
outstanding.
(b) See the answer to Item 2 hereof.
(c) Other than the transactions described herein, no transactions by
any of the Reporting Persons required to be reported by this Item have taken
place in the last sixty (60) days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Private Investments is the manager of each of Investors, Employee
Investors and Parallel Fund. The general partner of each of Investors and
Parallel Fund and the managing member of Employee Investors have delegated all
relevant rights to Private Investments.
Brian P. Friedman and James L. Luikart are the managing members of
Private Investments.
ITEM 7. MATERIAL FILED AS EXHIBITS. PAGE
A. Joint Reporting Agreement and Power of Attorney on
Behalf of Each Reporting Person........................................
B. Third Amendment, dated July 1, 1999, to the Securities
Purchase Agreement dated May 13, 1998 and amended on February
16, 1999...............................................................
C. Supplemental Agreement, dated July 1, 1999 among the Company, Alpharma
USPD, Inc, Parent, State Street Bank and Trust Company and each of the
Purchasers.............................................................
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 14, 1999
FURMAN SELZ INVESTORS II L.P.
By: FS PRIVATE INVESTMENTS LLC
By: **
-------------------------
Name: Brian P. Friedman
Title: Managing Member
FS EMPLOYEE INVESTORS LLC
By: FS PRIVATE INVESTMENTS LLC
By: **
--------------------------**
Name: Brian P. Friedman
Title: Managing Member
FS PARALLEL FUND, L.P.
By: FS PRIVATE INVESTMENTS LLC
By: **
--------------------------
Name: Brian P. Friedman
Title: Managing Member
FS PRIVATE INVESTMENTS LLC
By: **
---------------------------
Name: Brian P. Friedman
Title: Managing Member
FURMAN SELZ INVESTMENTS II LLC
By: *
--------------------------
Name: Steven Blecher
Title:
ING BARINGS LLC
By: *
-----------------------
Name: Steven Blecher
Title: Vice Chairman
ING MERGER, LLC.
By: *
-----------------------------------
Name: Steven Blecher
Title: Senior Managing Director and
Assistant Secretary
ING (U.S.) FINANCIAL HOLDINGS CORPORATION
By: *
--------------------------------
Name: William A. Austin
Title: Secretary
ING BANK N.V.
By: *
--------------------------------
Name: J.H.J. Houben
Title:
By: *
--------------------------------
Name: P.F.M. Van Lierop
Title: Senior Legal Advisor
ING GROEP N.V.
By: *
-------------------------------
Name: J.H.J. Houben
Title:
**
--------------------------
Name: Brian P. Friedman
/s/ James L. Luikart
-------------------------
Name: James L. Luikart
*By: /s/ Robert Miller
---------------------
Robert Miller
Attorney-in-Fact
**By: /s/ James L. Luikart
---------------------
James L. Luikart
Attorney-in-Fact
<PAGE>
EXHIBIT A
JOINT REPORTING AGREEMENT
AND
POWER OF ATTORNEY
WHEREAS, the statement or amended statement of Schedule 13D (the
"Joint Statement") to which this joint reporting agreement and power of attorney
(the "Agreement") is an exhibit is being filed on behalf of two or more persons
(collectively, the "Reporting Persons"); and
WHEREAS, the Reporting Persons prefer to file the Joint Statement on
behalf of all of the Reporting Persons rather than individual statements on
Schedule 13D on behalf of each of the Reporting Persons;
NOW THEREFORE, the undersigned hereby agree as follows with each of
the other Reporting Persons:
1. Each of the Reporting Persons is responsible for the timely filing
of the Joint Statement and any amendments thereto.
2. Each of the Reporting Persons is responsible for the completeness
and accuracy of the information concerning such Reporting Person contained in
the Joint Statement.
3. None of the Reporting Persons is responsible for the completeness
or accuracy of the information concerning the other Reporting Persons contained
in the Joint Statement, unless such Reporting Person knows or has reason to
believe that such information is inaccurate.
4. The undersigned agrees that the Joint Statement is, and any
amendment thereto will be, filed on behalf of each of the Reporting Persons.
5. Each of ING Baring Furman Selz LLC, ING Merger, Inc., ING (U.S.)
Financial Holdings Corporation, ING Bank N.V., ING Groep N.V. hereby appoints
Robert Miller as attorney-in-fact with authority to execute and deliver on
behalf of it any and all documents (including any amendments thereto) required
to be filed or otherwise executed and delivered by it pursuant to the Securities
Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, all
other federal, state and local securities and corporation laws, and all
regulations promulgated thereunder.
6. Each of Brian P. Friedman and James L. Luikart hereby appoints
Brian P. Friedman and James L. Luikart, and each of them, as attorney-in-fact
with authority to execute and deliver on his behalf any and all documents
(including any amendments thereto) required to be filed or otherwise executed
and delivered by him pursuant to the Securities Exchange Act of 1934, as
amended, the Securities Act of 1933, as amended, all other federal, state and
local securities and corporation laws, and all regulations promulgated
thereunder.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
<PAGE>
Dated: February 28, 1999
ING BARING FURMAN SELZ LLC
By: /S/ STEVEN BLECHER
-----------------------------
Name: Steven Blecher
Title: Vice Chairman
ING MERGER, INC.
By: /S/ STEVEN BLECHER
------------------------------------
Name: Steven Blecher
Title: Senior Managing Director and
Assistant Secretary
ING (U.S.) FINANCIAL HOLDINGS
CORPORATION
By: /S/ WILLIAM A. AUSTIN
--------------------------------
Name: William A. Austin
Title: Secretary
ING BANK N.V.
By: /S/ J.H. HOUBEN
--------------------------------
Name: J.H.J. Houben
Title:
By: /S/ P.F.M. VAN LIEROP
-------------------------------
Name: P.F.M. Van Lierop
Title: Senior Legal Advisor
ING GROEP N.V.
By: /S/ J.H.J. HOUBEN
------------------------------
Name: J.H.J. Houben
Title:
/S/ BRIAN P. FRIEDMAN
---------------------------------
Brian P. Friedman
/S/ JAMES L. LUIKART
----------------------------------
James L. Luikart
<PAGE>
EXHIBIT B
THIRD AMENDMENT
DATED JULY 1, 1999
TO THE
SECURITIES PURCHASE AGREEMENT
DATED MAY 13, 1998
BY AND AMONG
FURMAN SELZ INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
BANCBOSTON VENTURES INC.
FLYNN PARTNERS
AND
ASCENT PEDIATRICS, INC.
<PAGE>
THIRD AMENDMENT dated as of the 1st day of July 1999 (the "Third
Amendment") among Ascent Pediatrics, Inc. (the "Company"), Furman Selz Investors
II L.P. ("Investors"), FS Employee Investors LLC ("Employee"), FS Parallel Fund
L.P. ("Parallel" and together with Investors and Employee, the "Furman Selz
Entities"), BancBoston Ventures Inc. ("BancBoston") and Flynn Partners
("Flynn"), (each of Investors, Employee, Parallel, BancBoston and Flynn 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 Furman Selz Entities wish to purchase from the Company,
and the Company wishes to issue and sell to the Furman Selz 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 Furman Selz 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.
(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
Furman Selz Entity severally agrees to make loans (each, an "Advance" and
collectively the "Advances") in an aggregate amount not to exceed such Furman
Selz 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 Furman Selz
Entity, the amount shown as such Furman Selz 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 Furman Selz Entity a Third
Amendment Convertible Note in an original principal amount equal to the Furman
Selz 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.
(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 Furman Selz Entity
shall pay the portion of such Advance equal to such Furman Selz Entity's
Commitment Percentage of the initial Advance by surrendering for cancellation
the demand promissory notes issued to the Furman Selz 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 Furman Selz 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 Furman Selz
Entity specifying the date (which date shall be a Business Day) and the amount
of such Advance. The Company shall promptly notify each Furman Selz 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 Furman Selz
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
Furman Selz Entity shall pay the portion of such Advance equal to such Furman
Selz 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 Furman Selz Entity hereby agrees to the making of Advances up to and until
the Termination Date upon receipt of Notices (other than with respect to the
initial Advance) from the Company. All obligations of the Furman Selz Entities
hereunder shall be several, and not joint and several.
(b) CONDITIONS TO THE INITIAL ADVANCE. The agreement of each Furman
Selz Entity to make the initial Advance is subject to the condition that each
Furman Selz 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 Furman
Selz Entity, and the Furman Selz Entities shall have received from Hale and Dorr
LLP, counsel for the Company, such firm's opinion addressed to the Furman Selz
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 Furman
Selz Entity to make any subsequent Advance shall be subject to the fulfillment
to their reasonable satisfaction, or the waiver by the Furman Selz 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 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
Furman Selz Entity, the Company will issue to such Furman Selz 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 Furman Selz 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 Furman Selz 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
Furman Selz Entity reaffirms the representations and warranties contained in
Article IV.
Section 2.4 PURCHASE PRICE ALLOCATION. The Company and the Furman Selz
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 Furman Selz 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Furman Selz 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 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 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 Furman Selz 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 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 FURMAN SELZ ENTITIES
Each Furman Selz 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 Furman Selz 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 Furman Selz Entity or of any arbitrator, court, regulatory
body, administrative agency or any other governmental agency or body, domestic
or foreign, having jurisdiction over such Furman Selz Entity or any of its
activities or properties, (vi) any Furman Selz 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 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 Furman Selz 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 Furman Selz Entity has
the appropriate authority to act on behalf of such Furman Selz Entity, (iii)
this Third Amendment has been duly authorized, executed and delivered by such
Furman Selz Entity and constitutes a legal, valid and binding agreement of such
Furman Selz Entity, enforceable against such Furman Selz 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 Furman Selz 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 FURMAN SELZ ENTITIES. Each of the Furman Selz
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 Third Amendment Warrants issued or
issuable to such Furman Selz 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 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 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 Furman Selz 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 Furman Selz 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.
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 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 Furman Selz 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.
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/ ALAN R. FOX
--------------------------------
Name: Alan R. Fox
Title: President and
Chief Executive Officer
FURMAN SELZ INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
By: FS PRIVATE INVESTMENTS LLC,
MANAGER
By: /S/ JAMES L. LUIKART
-------------------------------
Name: James L. Luikart
Title: Managing Member
BANCBOSTON VENTURES INC.
By: /S/ MARCIA T. BATES
-----------------------------
Name: Marcia T. Bates
Title: Managing Director
FLYNN PARTNERS
By: /S/ JAMES E. FLYNN
--------------------------------
Name: James E. Flynn, General Partner
Flynn Partners
<PAGE>
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.
$_________ JULY 1, 1999
WILMINGTON, MASSACHUSETTS
FOR VALUE RECEIVED, ASCENT PEDIATRICS, INC., a Delaware corporation
(the "undersigned"), hereby promises to pay to the order of____________, or
registered assigns, the principal amount of _______________ Dollars
($__________), 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 187 Ballardvale
Street, Suite B125, Wilmington, Massachusetts 01887, 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.
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.
<PAGE>
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
<PAGE>
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 Jly
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 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.
(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 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 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:
X = Y(A-B)
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)
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 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.
(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 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.
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
(D) 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 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.
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 187
Ballardvale Street, Suite B125, Wilmington, MA 01887, 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.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the 1 st day of July, 1999.
ASCENT PEDIATRICS, INC.
By:_________________________________
Name:
Title:
ATTEST:
- ----------------------------------
Secretary
<PAGE>
EXHIBIT C
ASCENT PEDIATRICS, INC.
SUPPLEMENTAL AGREEMENT
DATE: JULY 1, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS, ETC..................................................2
ARTICLE II AMOUNT AND TERMS OF SECURITIES...................................3
ARTICLE III ADDITIONAL CONDITIONS OF OBLIGATIONS OF THE
LENDER............................................................3
ARTICLE IV COVENANTS OF THE COMPANY.........................................4
ARTICLE V ADDITIONAL REPRESENTATIONS OF THE COMPANY.........................5
ARTICLE VI OTHER AMENDMENTS.................................................5
<PAGE>
SUPPLEMENTAL AGREEMENT (the "Agreement") dated as of July 1, 1999
among Ascent Pediatrics, Inc., a Delaware corporation (the "Company"), Alpharma
USPD Inc., a Maryland corporation (the "Lender"), and Alpharma Inc., a Delaware
corporation (the "Parent"), State Street Bank and Trust Company (the
"Depositary") and each of the Original Lenders named in the Subordination
Agreement described below.
WHEREAS, pursuant to the Loan Agreement dated as of February 16, 1999
among the Company, the Lender and the Parent (the "Loan Agreement"), the Lender
has agreed to loan to the Company an aggregate of up to $40 million from time to
time upon the terms and conditions set forth therein;
WHEREAS, the Lender, the Company and the Depositary are parties to a
Depositary Agreement dated February 16, 1999 (the "Depositary Agreement");
WHEREAS, the Lender, the Company and the Original Purchasers named
therein are parties to a Subordination Agreement dated February 16, 1999 (the
"Subordination Agreement");
WHEREAS, the Company, the Lender and the Parent are parties to a
Master Agreement dated February 16, 1999 (the "Master Agreement");
WHEREAS, the parties wish to supplement and amend the Loan Agreement,
the Depositary Agreement, the Master Agreement and the Subordination Agreement
upon the terms and conditions set forth herein;
WHEREAS, the Lender is the sole Holder of the Note (as defined in the
Loan Agreement) and the parties are entering into this Agreement (to the extent
it modifies the Loan Agreement) pursuant to Section 12.1 of the Loan Agreement.
WHEREAS, on or prior to the date hereof, this Agreement has been
approved by a majority of the Non-Alpharma Directors pursuant to Section 9.01 of
the Depositary Agreement and Section 8.5 of the Master Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
among the parties hereto as follows:
ARTICLE I
DEFINITIONS, ETC.
1.1 Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement or in the
Ancillary Agreements (as defined in the Loan Agreement).
1.2 Unless the context otherwise requires:
a. a term has the meaning assigned to it;
b. an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
c. "or" is not exclusive;
d. words in the singular include the plural and in the plural
include the singular;
e. provisions apply to successive events and transactions; and
f. "herein", "hereof" and other words of similar import refer
to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
1.3 This Agreement amends and supplements the Loan Agreement, the
Depositary Agreement, the Subordination Agreement, the Guaranty Agreement and
the Master Agreement. In case of any inconsistency between the terms of this
Agreement and the Loan Agreement, the Depositary Agreement, the Subordination
Agreement, the Guaranty Agreement or the Master Agreement, the terms of this
Agreement shall govern. In the absence of such inconsistency, all provisions of
the Loan Agreement, the Depositary Agreement, the Subordination Agreement, the
Guaranty Agreement and the Master Agreement shall remain in full force and
effect. Without limiting the foregoing, (a) the conditions set forth in Article
III hereof shall for all purposes be considered part of Section 4.2 or 4.3 of
the Loan Agreement, as applicable; (b) the representations set forth in Article
V hereof shall for all purposes be considered part of Article III of the Loan
Agreement; and (c) the covenants set forth in Sections 6.5 and 6.7 and Article
IV hereof shall for all purposes (including defining Defaults and Events of
Default) be considered part of Article VI of the Loan Agreement. Any reference
in the Loan Agreement, the Depositary Agreement, the Master Agreement, the
Guaranty Agreement or the Subordination Agreement to any such agreement or to
the Ancillary Agreements shall be deemed to be a reference to such agreement as
modified hereby. Any reference in any such agreement to approval or adoption of
the Merger Agreement and the transactions contemplated thereby shall be deemed
to be a reference to the Merger Agreement and such transactions as modified
hereby.
1.4 The parties may sign any number of copies of this Agreement. Each
signed copy shall be an original and may be signed in counterparts, but all of
them together represent the same agreement.
1.5 The laws of the State of New York, without regard to principles of
conflicts of law, shall govern this Agreement to the extent it modifies the Loan
Agreement or the Subordination Agreement. The laws of the State of Delaware,
without regard to principles of conflicts of laws, shall govern this Agreement
to the extent it modifies the Depositary Agreement or the Master Agreement.
ARTICLE II
AMOUNT AND TERMS OF SECURITIES
2.1 In addition to its obligations under Section 2.3(a) of the Loan
Agreement, with respect to any Project Loan or Screened Project Loan, the
Company shall, on the date required by such Section, deliver a Notice of
Borrowing to each member of the Screening Committee (as defined herein) and to
the Lender.
2.2 In addition to the requirements under 2.3(b) of the Loan
Agreement, each Notice of Borrowing shall describe the proposed use of proceeds,
and shall provide sufficient information to allow the Lender and the Screening
Committee to reasonably determine that the proceeds of the requested Loan will
be used as required by Section 4.1 or 4.3 of this Agreement.
ARTICLE III
ADDITIONAL CONDITIONS OF OBLIGATIONS OF THE LENDER
The obligation of the Lender to make any Loans on or after the date
hereof, including the first Unrestricted Loan, is subject to the fulfillment to
its reasonable satisfaction, or the waiver by the Lender, on or prior to the
applicable Loan Date, of each of the following additional conditions:
(a) The Third Amendment to the May 1998 Securities Purchase Agreement
in the form attached hereto as Exhibit A (the "Investment Agreement") shall be
in full force and effect.
(b) The Furman Selz Entities (as defined in the Investment Agreement)
shall have invested $2,000,000 in the Company in exchange for 7.5% Convertible
Subordinated Notes due July 1, 2004 (the "New Notes") as required by the
Investment Agreement and such other amounts as may be required from time to time
pursuant to the Investment Agreement; the Company and each Furman Selz Entity
shall have performed in all material respects all of their respective
obligations under the Investment Agreement;
(c) The Lender shall be reasonably satisfied that the proceeds of any
Unrestricted Loans being made will be used as set forth in Section 4.1 of this
Agreement and that the proceeds of any Project Loans or Screened Project Loans
will be used for the purposes approved by the Screening Committee pursuant to
Section 4.3 of this Agreement.
ARTICLE IV
COVENANTS OF THE COMPANY
Subject to Section 6.10 of the Loan Agreement, the Company hereby
covenants and agrees that prior to the Option Expiration Date:
4.1 The Lender agrees that the Company delivered to the Lender on or
about May 19, 1999 a detailed operating plan (designated the 1999 P-1 plan)
covering the period ending December 31, 2001 (the "Plan"). Not later than the
first day of each calendar month, the Company shall notify the Lender in writing
of any material changes to the Plan or to the assumptions underlying the Plan
(each such notification, an "Update"). Notwithstanding Section 6.6 of the Loan
Agreement, the Company shall use the proceeds of Unrestricted Loans only for the
purposes specified in the Plan or any Update; provided, however that the Company
shall not make any expenditures that are (in the aggregate) materially in excess
of those contemplated by the Plan (or by any Update that has previously received
Screening Committee Approval (as defined below)) unless such expenditures shall
have received Screening Committee Approval. Prior to the date (the "Final Launch
Date") on which (i) the FDA has granted marketing approval to the Company for
both Primsol and the Orapred refrigerated product and (ii) both of such products
have been commercially launched by the Company, the Plan and any Updates, shall
contemplate only normal operating expenses of the Company, and expenses related
to Primsol and the Orapred refrigerated product and any other purpose that
receives Screening Committee Approval. Prior to the Final Launch Date, the
Company shall not use the proceeds of Unrestricted Loans, any amounts received
pursuant to the Investment Agreement or any other available funds (other than
Project Loans or Screened Project Loans that receive Screening Committee
Approval) for any other purpose, including, without limitation, any purpose
related to Pediavent or the Orapred non-refrigerated product (other than as
reflected in the Plan but not any Update).
4.2 The Company and the Lender hereby form a committee under this
agreement (the "Screening Committee"), consisting of two nominees of the Company
(who together shall have one vote), one nominee of the Lender (who shall have
one vote) and one nominee of the Furman Selz Entities as a group (who shall have
one vote). The initial nominees of the Company shall be the Chairman and the
President and Chief Executive Officer of the Company. Vacancies on the Screening
Committee shall be filled by the Company, the Lender or the Furman Selz
Entities, as applicable. The Screening Committee is not a committee of the
Company or of the Board of Directors. The nominee of Alpharma shall have no duty
to protect the interests of the Company, its stockholders or any of its
creditors other than the Lender. The nominees of the Company and the Furman Selz
Entities shall have no duty to protect the interests of the Lender.
4.3 Except as provided in Section 4.1, the Company shall not (a) use
any funds for any Project or (b) enter into commitments or agreements with
respect to any Project, unless in each case such action has received Screening
Committee Approval. Notwithstanding Section 6.6 of the Loan Agreement, the
Company shall use the proceeds of any Project Loan or Screened Project Loan only
for purposes that have received Screening Committee Approval. Prior to the Final
Launch Date, "Screening Committee Approval" means approval by all three votes on
the Screening Committee. On and after the Final Launch Date, "Screening
Committee Approval" means approval by two of the three votes on the Screening
Committee. The Screening Committee may, in its discretion, refuse to give
Screening Committee Approval to any Project or other action.
ARTICLE V
ADDITIONAL REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Lender that the Plan, each
operating budget or business plan required by the Loan Agreement to be delivered
and each Update required by this Agreement to be delivered is or will be based
on underlying assumptions of the Company which provide a reasonable basis for
the projections contained therein and which the Company reasonably believes are
fair and reasonable in light of the historical financial performance of the
Company and of current and reasonably foreseeable business conditions (based
upon the good faith best judgment in respect thereof of the Chief Executive
Officer of the Company).
ARTICLE VI
OTHER AMENDMENTS
5.1 The definition of the term "Option Expiration Date" in the
Depositary Agreement is amended by adding the following text to the end of such
definition:
"or Article III of the Supplemental Agreement dated as of July 1,
1999 among the Company, Alpharma, Alpharma Inc., State Street
Bank and Trust Company and the other parties named on the
signature pages thereof (including, without limitation, the
failure of such condition due to the lack of Screening Committee
Approval (as defined in such agreement))."
5.2 Clause (Y) of the proviso in the definition of the term "Option
Exercise Price" in the Depositary Agreement is amended and restated in its
entirety as follows:
"(Y) with respect to each Depositary Share (the "Series G
Shares") issued or issuable upon conversion of the (I) the Series
G Preferred, (II) any convertible notes issuable upon exchange of
the Series G Preferred or (III) the 7.5% Convertible Subordinated
Notes due July 1, 2004, in each case outstanding as of the Option
Closing Date, or issued or issuable upon exercise of the warrants
issued pursuant to the Series G Agreement, as amended by the
third amendment thereto, dated as of July 1, 1999 (to the extent
any such shares continue to be held as of the Option Closing Date
by one of the purchasers set forth on Schedule 1 to the Series G
Agreement as so amended or an Affiliate of any such purchasers),
the Original Option Exercise Price; and"
5.3 The Loan Agreement is hereby amended to amend and restate clause
(i) of the definition of "Impairment Event" in its entirety as follows:
"(i) the existence of a Negative Equity Position, provided,
however, that notwithstanding the requirements of GAAP, (A) any
amounts outstanding under the 8% Subordinated Notes, (B) any
amounts outstanding under any debt securities issued upon
conversion or exchange of the Series G Preferred and (C) any
amounts outstanding under the Company's 7.5% Convertible
Subordinated Notes due July 1, 2004 shall be considered to be
equity for purposes of this clause only;"
5.4 The Loan Agreement is hereby amended to amend and restate the
definition of "Negative Equity Position" in its entirety as follows:
"'NEGATIVE EQUITY POSITION' means the existence of a
stockholders' deficit on the Company's balance sheet, determined
in accordance with GAAP, as of (i) the last day of any monthly
fiscal period or (ii) if so requested by the Lender or the
Original Lenders (as defined in the Subordination Agreement) at
any time when the maximum amount of Unrestricted Loans is
outstanding, the latest practicable date."
5.5 The Lender consents to the Company entering into the Investment
Agreement and consummating the transactions contemplated thereby. Subject to
Section 6.10 of the Loan Agreement, the Company hereby covenants and agrees that
any amendment to the Investment Agreement or the New Notes shall require the
consent of the Lender.
5.6 Section 7.1 of the Loan Agreement is hereby amended to add a new
subsection (i) to read as follows:
"(i) Indebtedness incurred pursuant to the Third Amendment to the
May 1998 Securities Purchase Agreement."
5.7 Subject to Section 6.10 of the Loan Agreement, the Company hereby
covenants and agrees that (a) all amounts required to be invested in the Company
from time to time pursuant to the Investment Agreement shall be so invested, (b)
the Company shall not make any payments on the 8% Subordinated Notes, the
convertible notes issuable pursuant to the May 1998 Securities Purchase
Agreement or the New Notes except pursuant to their terms on the date hereof.
5.8 The Subordination Agreement is hereby amended to include the New
Notes in the definition of "Furman Notes."
5.9 The Subordination Agreement is hereby amended to add the
following sentence to the end of Section 2.1:
"To the extent the Company makes any payment of principal or
interest on the Furman Notes in contravention of this paragraph,
the Original Lenders shall promptly repay such amounts to the
Company."
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above set forth.
ASCENT PEDIATRICS, INC.
By: /S/ ALAN R. FOX
---------------------------------
Name: Alan R. Fox
Title: President and Chief Executive
Officer
ALPHARMA USPD INC.
By: /S/ THOMAS L. ANDERSON
---------------------------------
Name: Thomas L. Anderson
Title: President
ALPHARMA INC.
By: /S/ JEFFREY E. SMITH
--------------------------------
Name: Jeffrey E. Smith
Title: Vice President, Finance
STATE STREET BANK AND TRUST
COMPANY
By: /S/ CHARLES ROSSI
--------------------------------
Name: Charles Rossi
Title: Vice President
ORIGINAL LENDERS:
FURMAN SELZ INVESTORS II L.P.
FS EMPLOYEE INVESTORS L.L.C.
FS PARALLEL FUND L.P.
By: FS PRIVATE INVESTMENTS LLC
MANAGER
By: /S/ JAMES L. LUIKART
--------------------------------
Name: James L. Luikart
Title: Managing Member
BANCBOSTON VENTURES INC.
By: /S/ MARCIA T. BATES
-------------------------------
Name: Marcia T. Bates
Title: Managing Director
FLYNN PARTNERS
By: /S/ JAMES E. FLYNN
------------------------------
Name: James E. Flynn
Title: General Partner
