<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1999
REGISTRATION NO. 333-79383
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ASCENT PEDIATRICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2834 04-3047405
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
187 BALLARDVALE STREET, SUITE B125
WILMINGTON, MA 01887
(978) 658-2500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ALAN R. FOX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ASCENT PEDIATRICS, INC.
187 BALLARDVALE STREET, SUITE B125
WILMINGTON, MA 01887
(978) 658-2500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
DAVID E. REDLICK, ESQ.
PHILIP P. ROSSETTI, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MA 02109
(617) 526-6000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
promptly as practicable after this registration statement becomes effective and
certain other conditions under the merger agreement are met or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
The purpose of this amendment is to supplement Ascent's proxy
statement/prospectus dated June 8, 1999. The supplement contained herein
describes a supplemental agreement with Alpharma USPD Inc. amending the terms of
our loan agreement with Alpharma and the other strategic alliance agreements
described in the proxy statement/prospectus and a third amendment to the May
1998 securities purchase agreement under which funds affiliated with ING Furman
Selz have agreed to loan Ascent up to $4.0 million.
<PAGE> 3
ASCENT PEDIATRICS, INC.
SUPPLEMENT
DATED JULY , 1999
TO
PROXY STATEMENT/PROSPECTUS
OF
ASCENT PEDIATRICS, INC.
INTRODUCTION
This supplement is provided for the purpose of supplementing the proxy
statement/ prospectus dated June 8, 1999 of Ascent Pediatrics, Inc., a Delaware
corporation.
This supplement is being furnished to holders of Ascent common stock and
Ascent Series G preferred stock in connection with the solicitation of proxies
by the Board of Directors of Ascent for use at the annual meeting of
stockholders of Ascent, which was initially scheduled to be held on Wednesday,
July 7, 1999 and which, as described below, has been rescheduled to Friday, July
23, 1999, at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, commencing at 10:00 a.m., local time.
As more fully described in the proxy statement/prospectus, at the annual
meeting of stockholders you will be asked to vote on proposals relating to our
strategic alliance with Alpharma Inc. and Alpharma USPD Inc., which we announced
in February 1999, and specified other proposals. As described in the proxy
statement/prospectus, as part of our strategic alliance with Alpharma, we have
agreed to assign to Alpharma a call option, exercisable in 2002, to purchase all
of the Ascent common stock then issued and outstanding at a price to be
determined by a formula based on our 2001 earnings. In order to subject your
stock to the call option, we have formed a subsidiary and entered into a merger
agreement with it which provides that the subsidiary will merge with and into us
and that each share of Ascent common stock owned by you will be converted into a
depositary share evidencing one share of Ascent common stock, subject to the
call option and represented by a depositary receipt.
This supplement is first being mailed to stockholders of Ascent on or about
July , 1999. This supplement should be read in conjunction with Ascent's proxy
statement/ prospectus dated June 8, 1999.
BACKGROUND
In the proxy statement/prospectus, we indicated under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that our existing capital resources and internally generated funds
would only satisfy our capital requirements into June 1999 (and not through the
annual meeting of stockholders). As part of our discussions with Alpharma and
ING Furman Selz regarding obtaining bridge financing to fund our capital
requirements until the annual meeting of stockholders, we reviewed with them our
most recent budget. The anticipated losses in this budget for 1999 were higher
than anticipated in our original budget for 1999.
One concern prompted by these anticipated higher losses relates to our
stockholders' deficit in future periods. Under our loan agreement with Alpharma,
Alpharma has the right to decline to make a loan to us if our balance sheet
reflects a stockholders' deficit (calculated in a manner that treats as equity
any amounts outstanding under our 8%
<PAGE> 4
subordinated notes and any amounts outstanding under any debt securities issued
upon exchange of our Series G preferred stock).
As a result, in order to provide additional assurances to Alpharma with
respect to our anticipated losses, address our stockholders' deficit and obtain
bridge financing to fund our operations through the annual meeting of
stockholders, on July 1, 1999, we entered into a supplemental agreement with
Alpharma amending the terms of our loan agreement with Alpharma and the other
strategic alliance agreements described in the proxy statement/ prospectus. On
July 1, 1999, we also entered into a third amendment to the May 1998 securities
purchase agreement under which funds affiliated with ING Furman Selz have agreed
to loan us up to an aggregate of $4.0 million, $2.0 million of which was
advanced to Ascent upon the signing of the third amendment. The supplemental
agreement is included as Annex A to this supplement. The third amendment is
filed as an exhibit to the registration statement of which this supplement is a
part.
Although we are not seeking your consent to the supplemental agreement or
the third amendment, in order to give you an opportunity to assess the impact of
these agreements on our strategic alliance with Alpharma, we have rescheduled
the annual meeting of stockholders from Wednesday, July 7, 1999 to Friday, July
23, 1999, at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, commencing at 10:00 a.m., local time.
SUPPLEMENTAL AGREEMENT
Under the Supplemental Agreement, we have agreed as follows:
- Prior to the approval and commercial launch of both our Primsol and
Orapred products, we will not use any funds for any purpose other than
normal operating expenses and expenses relating to such products as set
forth in our operating plan, as updated from time to time.
- A screening committee comprised of two nominees of Ascent, one nominee of
Alpharma and one nominee of ING Furman Selz will be established for the
purpose of approving any changes to our operating plan involving
materially increased expenditures and reviewing and approving
acquisitions of companies, products or product lines or rights to sell a
product or product line and research and development projects. Our two
nominees will together have one vote, and the nominees of Alpharma and
ING Furman Selz will each have one vote. The screening committee will act
by unanimous approval prior to the approval and commercial launch of our
Primsol and Orapred products and by majority approval following the
approval and commercial launch of these products.
Under the supplemental agreement, we have also agreed to additional
restrictions on our rights to borrow funds under our loan agreement with
Alpharma. Under the loan agreement, prior to its amendment by the supplemental
agreement, we were entitled to borrow up to an additional $36.0 million on or
after the closing of the merger as follows:
- up to an additional $8.0 million for general corporate purposes;
- up to an additional $8.0 million in order to (a) acquire all of the stock
or assets of a company, (b) acquire a product or product line or the
right to sell a product or product line or (c) support a research and
development project; and
- up to an additional $20.0 million in order to (a) acquire all of the
stock or assets of a company that meets specified criteria, (b) acquire a
product or product line or
2
<PAGE> 5
the right to sell a product or product line that meets specified criteria
or (c) support a research and development project.
The additional restrictions we have agreed to under the supplemental
agreement are as follows:
- We may only use the $8.0 million allocated for general corporate purposes
under the loan agreement for the purposes set forth in our operating
plan, as updated from time to time; and
- we may only borrow the remaining $28.0 million for acquisitions and
research and development projects approved by the screening committee.
The supplemental agreement also amends the loan agreement, the depositary
agreement and the subordination agreement in order to reflect the 7.5%
convertible subordinated notes issued to funds affiliated with ING Furman Selz
and to treat such notes in the same manner as our existing 8% subordinated notes
and the 8% convertible notes issuable upon conversion of our Series G preferred
stock.
ING FURMAN SELZ LOAN ARRANGEMENT
On July 1, 1999, we and the Series G purchasers entered into a third
amendment to the May 1998 securities purchase agreement under which funds
affiliated with ING Furman Selz agreed to loan us up to $4.0 million. Upon
executing the third amendment, we borrowed $2.0 million from these funds and
issued them 7.5% convertible subordinated notes in the aggregate principal
amount of up to $4.0 million and warrants to purchase 300,000 shares of Ascent
common stock. The funds affiliated with ING Furman Selz have agreed to loan us
the additional $2.0 million under the third amendment in one or more
installments on or before June 30, 2001 solely to prevent or eliminate any
stockholders' deficit reflected on our balance sheet (calculated in a manner
that treats as equity any amounts outstanding under our 8% subordinated notes
and our 7.5% convertible subordinated notes and any amounts outstanding under
any debt securities issued upon exchange of our Series G preferred stock). The
obligation of the funds affiliated with ING Furman Selz to loan us the
additional $2.0 million is subject to the fulfillment to their reasonable
satisfaction or the waiver by the funds of conditions, including the following:
- we are not in default under the May 1998 securities purchase agreement;
- we have or expect to have a stockholders' deficit reflected on our
balance sheet (calculated in a manner that treats as equity any amounts
outstanding under our 8% subordinated notes and our 7.5% convertible
subordinated notes and any amounts outstanding under any debt securities
issued upon exchange of our Series G preferred stock) and either the
requested loan from the funds affiliated with ING Furman Selz will
prevent or eliminate such stockholders' deficit or Alpharma agrees in
writing that it will not deny Ascent's next borrowing request under the
Alpharma loan agreement because of such stockholders' deficit; and
- no event has occurred and is continuing since September 30, 1998 which
makes it reasonably probable that our operating income for the 2001
fiscal year will be less than $10.0 million or, if such an event has
occurred, Alpharma has agreed in writing that it will not deny Ascent's
next borrowing request under the Alpharma loan agreement because of such
event.
We have agreed that, if we borrow any portion of the additional $2.0
million, we will issue additional warrants to purchase shares of Ascent common
stock to the funds affiliated
3
<PAGE> 6
with ING Furman Selz. The warrants will be exercisable for a number of shares of
Ascent common stock equal to 1.5 shares for each additional $10.00 borrowed. All
of the warrants we have issued or may issue under the third amendment have an
exercise price of $3.00 per share and expire on July 1, 2006.
The 7.5% convertible subordinated notes issued under the third amendment
expire on July 1, 2004 and are convertible into shares of Ascent common stock at
a conversion price of $3.00 per share in accordance with the terms of the May
1998 securities purchase agreement, as amended. Interest on the notes is due and
payable quarterly, in arrears, on the last day of each calendar quarter, and the
outstanding principal on the notes is payable in full on July 1, 2004.
VOTING PROCEDURES
Enclosed for your convenience is a duplicate proxy card. If you have not
already voted or would like to change your vote, please complete, sign, date and
promptly return the enclosed proxy card in the enclosed envelope. If we receive
the enclosed proxy card, duly executed and dated, prior to the rescheduled
annual meeting, any proxy that you previously granted will be, without further
action, revoked. Any proxy previously granted to Ascent may also be revoked by
delivering written notice of revocation to the Secretary of Ascent, prior to the
time voting is declared closed or by attending the rescheduled annual meeting of
stockholders and voting in person.
IF YOU HAVE ALREADY RETURNED A PROXY CARD AND DO NOT WISH TO CHANGE YOUR
VOTE, NO FURTHER ACTION IS REQUIRED.
If you have questions or require an additional copy of the proxy
statement/prospectus, please contact us at 187 Ballardvale Street, Suite B125,
Wilmington, Massachusetts 01887, Attention: John G. Bernardi at 978-658-2500.
By order of the Board of Directors
Alan R. Fox
President
July , 1999
4
<PAGE> 7
ANNEX A
ASCENT PEDIATRICS, INC.
SUPPLEMENTAL AGREEMENT
DATE: JULY 1, 1999
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS, ETC.......................................... A-1
ARTICLE II
AMOUNT AND TERMS OF SECURITIES............................ A-2
ARTICLE III
ADDITIONAL CONDITIONS OF OBLIGATIONS OF THE LENDER........ A-2
ARTICLE IV
COVENANTS OF THE COMPANY.................................. A-3
ARTICLE V
ADDITIONAL REPRESENTATIONS OF THE COMPANY................. A-4
ARTICLE VI
OTHER AMENDMENTS.......................................... A-4
</TABLE>
i
<PAGE> 9
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.
<PAGE> 10
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.
2.1 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
A-2
<PAGE> 11
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
A-3
<PAGE> 12
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
6.1 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))."
6.2 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
A-4
<PAGE> 13
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"
6.3 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;"
6.4 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."
6.5 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.
6.6 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."
6.7 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.
6.8 The Subordination Agreement is hereby amended to include the New Notes
in the definition of "Furman Notes."
6.9 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."
A-5
<PAGE> 14
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
A-6
<PAGE> 15
BANCBOSTON VENTURES INC.
By:
-----------------------------------
Name:
Title:
FLYNN PARTNERS
By: /s/ JAMES E. FLYNN
-----------------------------------
Name: James E. Flynn
Title: General Partner
A-7
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article EIGHTH of the Registrant's Second Amended and Restated Certificate
of Incorporation provides that no director of the Registrant shall be personally
liable for any monetary damages for any breach of fiduciary duty as a director,
except to the extent that the Delaware General Corporation law prohibits the
elimination or limitation of liability of directors for breach of fiduciary
duty.
Article NINTH of the Registrant's Amended and Restated Certificate of
Incorporation provides that a director or officer of the Registrant (a) shall be
indemnified by the Registrant against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement incurred in connection with any
litigation or other legal proceeding (other than an action by or in the right of
the Registrant) brought against him by virtue of his position as a director or
officer of the Registrant if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by the Registrant against all expenses (including attorneys' fees)
and amounts paid in settlement incurred in connection with any action by or in
the right of the Registrant brought against him by virtue of his position as a
director or officer of the Registrant if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Registrant, except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by the Registrant against all expenses (including attorneys' fees)
incurred in connection therewith. Expenses shall be advanced to a Director or
officer at his request, provided that he undertakes to repay the amount advanced
if it is ultimately determined that he is not entitled to indemnification for
such expenses.
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
indemnification, or if the Registrant fails to make an indemnification payment
within 60 days after such payment is claimed by such person, such person is
permitted to petition the court to make an independent determination as to
whether such person is entitled to indemnification. As a condition precedent to
the right of indemnification, the director or officer must give the Registrant
notice of the action for which indemnity is sought and the Registrant has the
right to participate in such action or assume the defense thereof.
Article NINTH of the Registrant's Second Amended and Restated Certificate
of Incorporation further provides that the indemnification provided therein is
not exclusive, and provides that in the event that the Delaware General
Corporation Law is amended to expand the indemnification permitted to directors
or officers the Registrant must indemnify those persons to the full extent
permitted by such law as so amended.
II-1
<PAGE> 17
Article NINTH also permits the Registrant to purchase and maintain
insurance, at the Registrant's expense, to protect any director against any
expense, liability or loss incurred by such director in such capacity or arising
out of his status as such.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are exhibits to the registration statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
2.1(1) Agreement and Plan of Merger dated as of February 16, 1999
by and between the Registrant and Bird Merger Corporation.
3.1(2) Amended and Restated Certificate of Incorporation of the
Registrant.
3.2(3) Certificate of Designation, Voting Powers, Preferences and
Rights of Series G Convertible Exchangeable Preferred Stock
of the Registrant.
3.3(2) Amended and Restated By-Laws of the Registrant.
4.1(2) Specimen Certificate for shares of Common Stock, par value
$.00004 per share, of the Registrant.
4.2(1) Form of Depositary Receipt (included in Exhibit 10.1).
4.3(1) Form of 7.5% Convertible Subordinated Note of the Registrant
issued on February 19, 1999 under the Alpharma Loan
Agreement (as defined below) (included in Exhibit 10.3).
4.4(1) Form of 8% Subordinated Note of the Registrant issued on
June 1, 1998 under the May 1998 Securities Purchase
Agreement (as defined below) (included in Exhibit 10.7).
4.5(1) Form of 8% Convertible Subordinated Note of the Registrant
issuable under the May 1998 Securities Purchase Agreement
(included in Exhibit 10.7).
4.6 Form of 7.5% Convertible Note of the Registrant issued under
the Third Amendment (as defined below) (included in Exhibit
10.35).
5.1* Opinion of Hale and Dorr LLP as to the legality of the
securities being offered.
8.1* Opinion of Hale and Dorr LLP as to the material United
States federal income tax consequences of the merger.
10.1(1) Depositary Agreement (the "Depositary Agreement") dated as
of February 16, 1999 by and among the Registrant, Alpharma
USPD, Inc. ("Alpharma") and State Street Bank and Trust
Company (included in Exhibit 2.1).
10.2(1) Master Agreement (the "Master Agreement") dated as of
February 16, 1999 by and among the Registrant, Alpharma and
Alpharma, Inc. (included in Exhibit 2.1).
10.3(1) Loan Agreement (the "Alpharma Loan Agreement") dated as of
February 16, 1999 by and among the Registrant, Alpharma and
Alpharma, Inc.
10.4(1) Guaranty Agreement dated as of February 16, 1999 by and
between the Registrant and Alpharma, Inc.
</TABLE>
II-2
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
10.5(1) Subordination Agreement (the "Subordination Agreement")
dated as of February 16, 1999 by and among the Registrant,
Alpharma and the Original Lenders (as defined therein).
10.6(1) Registration Rights Agreement dated as of February 16, 1999
by and between the Registrant and Alpharma.
10.7(3) Securities Purchase Agreement (the "May 1998 Securities
Purchase Agreement") dated as of May 13, 1998, by and among
the Registrant, Furman Selz Investors II L.P., FS Employee
Investors LLC, FS Parallel Fund L.P., BancBoston Ventures
Inc. and Flynn Partners.
10.8(1) Second Amendment dated as of February 16, 1999 to the May
1998 Securities Purchase Agreement.
10.9(2)(4) Amended and Restated 1992 Equity Incentive Plan.
10.10(2)(4) 1997 Director Stock Option Plan.
10.11(2)(4) 1997 Employee Stock Purchase Plan.
10.12(2) Lease dated November 21, 1996 between the Registrant and New
Boston Wilmar Limited Partnership.
10.13(2)(4) Employment Agreement dated as of March 15, 1994 between the
Registrant and Emmett Clemente (the "Clemente Employment
Agreement").
10.14(2)(4) Consulting Agreement dated as of April 1, 1996 between the
Registrant and Robert E. Baldini.
10.15(2)+ Development and License Agreement dated as of October 8,
1996 by and between the Registrant and Recordati S.A.
Chemical and Pharmaceutical Company ("Recordati").
10.16(2) Amendment No. 1 dated February 28, 1997 to the Development
and License Agreement dated as of October 8, 1996 by and
between the Registrant and Recordati.
10.17(2)+ Manufacturing and Supply Agreement dated as of October 8,
1996 by and between the Registrant and Recordati.
10.18(2)+ Supply Agreement dated as of October 12, 1994 by and between
the Registrant and Lyne Laboratories, Inc.
10.19(2) Securities Purchase Agreement dated as of January 31, 1997
among the Registrant, Triumph-Connecticut Limited
Partnership and the purchasers identified therein (the
"Triumph Agreement").
10.20(2) Waiver and Amendment to the Triumph Agreement dated as of
March 13, 1997.
10.21(3) Second Waiver and Amendment to the Triumph Agreement dated
as of May 13, 1998.
10.22(2) Series F Convertible Preferred Stock and Warrant Purchase
Agreement dated as of June 28, 1996 between the Registrant
and certain purchasers identified therein as amended by
Amendment No. 1 dated as of June 28, 1996 and Amendment No.
2 dated February 3, 1997.
10.23(2) Form of Common Stock Purchase Warrant issued to Chestnut
Partners, Inc. on February 28, 1997.
10.24(2) Common Stock Purchase Warrant issued to Banque Paribas on
February 28, 1997.
10.25(2) Form of Common Stock Purchase Warrant with an exercise price
of $.01 per share issued to designees of Bentley Securities
on February 28, 1997.
10.26(2) Form of Common Stock Purchase Warrant with an exercise price
of $5.91 per share issued to designees of Bentley Securities
on February 28, 1997.
10.27(2)+ Asset Purchase Agreement dated as of March 25, 1997, between
the Registrant and Upsher-Smith (the "Asset Purchase
Agreement"), which includes the form of Manufacturing
Agreement between the Registrant and Upsher-Smith as Exhibit
E thereto.
10.28(5)+ Addendum to Asset Purchase Agreement dated as of July 10,
1997, between the Registrant and Upsher-Smith.
10.29(6)+ Promotion Agreement dated as of November 25, 1998, between
the Registrant and Warner-Lambert Company.
10.30(7) 1999 Stock Incentive Plan.
</TABLE>
II-3
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
10.31* Amendment No. 1 dated as of March 15, 1999 to Clemente
Employment Agreement.
10.32* Financial Advisory Services Fee Arrangement dated as of May
13, 1998 by and among Ascent Pediatrics, Inc., FS Private
Investments LLC and BancBoston Ventures Inc. as amended by
the Letter Agreement dated as of February 16, 1999.
10.33* Agreement among the Registrant and the Purchasers (as
defined in the May 1998 Securities Purchase Agreement) dated
as of May 26, 1999.
10.34 Supplemental Agreement dated as of July 1, 1999, amending
and supplementing the Alpharma Loan Agreement, the
Depositary Agreement, the Subordination Agreement and the
Master Agreement.
10.35 Third Amendment (the "Third Amendment") dated as of July 1,
1999 to the May 1998 Securities Purchase Agreement.
10.36 Form of Common Stock Purchase Warrant of the Registrant with
an exercise price of $3.00 per share issued pursuant to the
Third Amendment (included in Exhibit 10.35).
23.1 Consent of PricewaterhouseCoopers LLC, independent
accountants.
23.2 Consent of KPMG Peat Marwick LLP.
23.3* Consent of Adams, Harkness & Hill, Inc. (included in Annex
C-1 to the proxy statement/prospectus which is a part of
this Registration Statement).
23.4* Consent of Hale and Dorr LLP (included in Exhibits 5.1 and
8.1 of this registration statement).
24.1* Powers of Attorney (included in the signature page of this
Registration Statement).
99.1* Form of the proxy card for the annual meeting of the
Registrant.
99.2 Form of the revised proxy card for the annual meeting of the
Registrant.
</TABLE>
- ---------------
(1) Incorporated herein by reference to the Exhibits to the Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission (the
"Commission") on February 22, 1999.
(2) Incorporated herein by reference to the Exhibits to the Registrant's
Registration Statement on Form S-1 (File No. 333-23319).
(3) Incorporated herein by reference to the Exhibits to the Registrant's Current
Report on Form 8-K filed with the Commission on June 2, 1998.
(4) Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Registration Statement.
(5) Incorporated herein by reference to Exhibits to the Registrant's Current
Report on Form 8-K filed with the Commission on July 25, 1997.
(6) Incorporated herein by reference to the Exhibits to the Registrant's Annual
Report on Form 10-K filed with the Commission on March 31, 1999.
(7) Incorporated herein by reference to the 1999 Stock Incentive Plan of the
Registrant included as Annex D to the proxy statement/prospectus which is a
part of this Registration Statement.
* Previously filed.
+ Confidential treatment granted as to certain portions, which portions were
omitted and filed separately with the Commission.
(b) Not applicable.
(c) The opinion of Adams, Harkness & Hill, Inc. is included as Annex C-1,
to the proxy statement/prospectus which is part of this registration
statement and is incorporated herein by reference.
II-4
<PAGE> 20
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar amount of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment
II-5
<PAGE> 21
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the proxy
statement/prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Post-Effective Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Wilmington, Commonwealth of Massachusetts on this 2nd
day of July, 1999.
ASCENT PEDIATRICS, INC.
By: /s/ ALAN R. FOX
----------------------------------
Alan R. Fox
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ ALAN R. FOX President, Chief Executive July 2, 1999
- --------------------------------------------- Officer and Director
Alan R. Fox (Principal Executive
Officer)
/s/ JOHN G. BERNARDI Vice President, Finance and July 2, 1999
- --------------------------------------------- Treasurer (Principal
John G. Bernardi Financial and Accounting
Officer)
* Chairman July 2, 1999
- ---------------------------------------------
Emmett Clemente, Ph.D.
* Vice Chairman July 2, 1999
- ---------------------------------------------
Robert E. Baldini
* Director July 2, 1999
- ---------------------------------------------
Raymond F. Baddour, Ph.D.
* Director July 2, 1999
- ---------------------------------------------
Michael J.F. DuCros
* Director July 2, 1999
- ---------------------------------------------
Andre L. Lamotte, Sc.D.
* Director July 2, 1999
- ---------------------------------------------
James L. Luikart
* Director July 2, 1999
- ---------------------------------------------
Lee J. Schroeder
</TABLE>
*By: /S/ ALAN R. FOX
-----------------------------
Alan R. Fox
Attorney-in-Fact
II-7
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2.1(1) Agreement and Plan of Merger dated as of February 16, 1999
by and between the Registrant and Bird Merger Corporation.
3.1(2) Amended and Restated Certificate of Incorporation of the
Registrant.
3.2(3) Certificate of Designation, Voting Powers, Preferences and
Rights of Series G Convertible Exchangeable Preferred Stock
of the Registrant.
3.3(2) Amended and Restated By-Laws of the Registrant.
4.1(2) Specimen Certificate for shares of Common Stock, par value
$.00004 per share, of the Registrant.
4.2(1) Form of Depositary Receipt (included in Exhibit 10.1).
4.3(1) Form of 7.5% Convertible Subordinated Note of the Registrant
issued on February 19, 1999 under the Alpharma Loan
Agreement (as defined below) (included in Exhibit 10.3).
4.4(1) Form of 8% Subordinated Note of the Registrant issued on
June 1, 1998 under the May 1998 Securities Purchase
Agreement (as defined below) (included in Exhibit 10.7).
4.5(1) Form of 8% Convertible Subordinated Note of the Registrant
issuable under the May 1998 Securities Purchase Agreement
(included in Exhibit 10.7).
4.6 Form of 7.5% Convertible Note of the Registrant issued under
the Third Amendment (as defined below) (included in Exhibit
10.35).
5.1* Opinion of Hale and Dorr LLP as to the legality of the
securities being offered.
8.1* Opinion of Hale and Dorr LLP as to the material United
States federal income tax consequences of the merger.
10.1(1) Depositary Agreement (the "Depositary Agreement") dated as
of February 16, 1999 by and among the Registrant, Alpharma
USPD, Inc. ("Alpharma") and State Street Bank and Trust
Company (included in Exhibit 2.1).
10.2(1) Master Agreement (the "Master Agreement") dated as of
February 16, 1999 by and among the Registrant, Alpharma and
Alpharma, Inc. (included in Exhibit 2.1).
10.3(1) Loan Agreement (the "Alpharma Loan Agreement") dated as of
February 16, 1999 by and among the Registrant, Alpharma and
Alpharma, Inc.
10.4(1) Guaranty Agreement dated as of February 16, 1999 by and
between the Registrant and Alpharma, Inc.
10.5(1) Subordination Agreement (the "Subordination Agreement")
dated as of February 16, 1999 by and among the Registrant,
Alpharma and the Original Lenders (as defined therein).
10.6(1) Registration Rights Agreement dated as of February 16, 1999
by and between the Registrant and Alpharma.
10.7(3) Securities Purchase Agreement (the "May 1998 Securities
Purchase Agreement") dated as of May 13, 1998, by and among
the Registrant, Furman Selz Investors II L.P., FS Employee
Investors LLC, FS Parallel Fund L.P., BancBoston Ventures
Inc. and Flynn Partners.
10.8(1) Second Amendment dated as of February 16, 1999 to the May
1998 Securities Purchase Agreement.
10.9(2)(4) Amended and Restated 1992 Equity Incentive Plan.
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.10(2)(4) 1997 Director Stock Option Plan.
10.11(2)(4) 1997 Employee Stock Purchase Plan.
10.12(2) Lease dated November 21, 1996 between the Registrant and New
Boston Wilmar Limited Partnership.
10.13(2)(4) Employment Agreement dated as of March 15, 1994 between the
Registrant and Emmett Clemente (the "Clemente Employment
Agreement").
10.14(2)(4) Consulting Agreement dated as of April 1, 1996 between the
Registrant and Robert E. Baldini.
10.15(2)+ Development and License Agreement dated as of October 8,
1996 by and between the Registrant and Recordati S.A.
Chemical and Pharmaceutical Company ("Recordati").
10.16(2) Amendment No. 1 dated February 28, 1997 to the Development
and License Agreement dated as of October 8, 1996 by and
between the Registrant and Recordati.
10.17(2)+ Manufacturing and Supply Agreement dated as of October 8,
1996 by and between the Registrant and Recordati.
10.18(2)+ Supply Agreement dated as of October 12, 1994 by and between
the Registrant and Lyne Laboratories, Inc.
10.19(2) Securities Purchase Agreement dated as of January 31, 1997
among the Registrant, Triumph-Connecticut Limited
Partnership and the purchasers identified therein (the
"Triumph Agreement").
10.20(2) Waiver and Amendment to the Triumph Agreement dated as of
March 13, 1997.
10.21(3) Second Waiver and Amendment to the Triumph Agreement dated
as of May 13, 1998.
10.22(2) Series F Convertible Preferred Stock and Warrant Purchase
Agreement dated as of June 28, 1996 between the Registrant
and certain purchasers identified therein as amended by
Amendment No. 1 dated as of June 28, 1996 and Amendment No.
2 dated February 3, 1997.
10.23(2) Form of Common Stock Purchase Warrant issued to Chestnut
Partners, Inc. on February 28, 1997.
10.24(2) Common Stock Purchase Warrant issued to Banque Paribas on
February 28, 1997.
10.25(2) Form of Common Stock Purchase Warrant with an exercise price
of $.01 per share issued to designees of Bentley Securities
on February 28, 1997.
10.26(2) Form of Common Stock Purchase Warrant with an exercise price
of $5.91 per share issued to designees of Bentley Securities
on February 28, 1997.
10.27(2)+ Asset Purchase Agreement dated as of March 25, 1997, between
the Registrant and Upsher-Smith (the "Asset Purchase
Agreement"), which includes the form of Manufacturing
Agreement between the Registrant and Upsher-Smith as Exhibit
E thereto.
10.28(5)+ Addendum to Asset Purchase Agreement dated as of July 10,
1997, between the Registrant and Upsher-Smith.
10.29(6)+ Promotion Agreement dated as of November 25, 1998, between
the Registrant and Warner-Lambert Company.
10.30(7) 1999 Stock Incentive Plan.
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.31* Amendment No. 1 dated as of March 15, 1999 to Clemente
Employment Agreement.
10.32* Financial Advisory Services Fee Arrangement dated as of May
13, 1998 by and among Ascent Pediatrics, Inc., FS Private
Investments LLC and BancBoston Ventures Inc. as amended by
the Letter Agreement dated as of February 16, 1999.
10.33* Agreement among the Registrant and the Purchasers (as
defined in the May 1998 Securities Purchase Agreement) dated
as May 26, 1999.
10.34 Supplemental Agreement dated as of July 1, 1999, amending
and supplementing the Alpharma Loan Agreement, the
Depositary Agreement, the Subordination Agreement and the
Master Agreement.
10.35 Third Amendment (the "Third Amendment") dated as of July 1,
1999 to the May 1998 Securities Purchase Agreement.
10.36 Form of Common Stock Purchase Warrant of the Registrant with
an exercise price of $3.00 per share issued pursuant to the
Third Amendment (included in Exhibit 10.35).
23.1 Consent of PricewaterhouseCoopers LLC, independent
accountants.
23.2 Consent of KPMG Peat Marwick LLP.
23.3* Consent of Adams, Harkness & Hill, Inc. (included in Annex
C-1 to the proxy statement/prospectus which is a part of
this Registration Statement).
23.4* Consent of Hale and Dorr LLP (included in Exhibits 5.1 and
8.1 of this registration statement).
24.1* Powers of Attorney (included in the signature page of this
Registration Statement).
99.1* Form of the proxy card for the annual meeting of the
Registrant.
99.2 Form of the revised proxy card for the annual meeting of the
Registrant.
</TABLE>
- ---------------
(1) Incorporated herein by reference to the Exhibits to the Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission (the
"Commission") on February 22, 1999.
(2) Incorporated herein by reference to the Exhibits to the Registrant's
Registration Statement on Form S-1 (File No. 333-23319).
(3) Incorporated herein by reference to the Exhibits to the Registrant's Current
Report on Form 8-K filed with the Commission on June 2, 1998.
(4) Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Registration Statement.
(5) Incorporated herein by reference to Exhibits to the Registrant's Current
Report on Form 8-K filed with the Commission on July 25, 1997.
(6) Incorporated herein by reference to the Exhibits to the Registrant's Annual
Report on Form 10-K filed with the Commission on March 31, 1999.
(7) Incorporated herein by reference to the 1999 Stock Incentive Plan of the
Registrant included as Annex D to the proxy statement/prospectus which is
part of this Registration Statement.
* Previously filed.
+ Confidential treatment granted as to certain portions, which portions were
omitted and filed separately with the Commission.
<PAGE> 1
EXECUTION COPY
ASCENT PEDIATRICS, INC.
SUPPLEMENTAL AGREEMENT
DATE: JULY 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
i
<PAGE> 3
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:
<PAGE> 4
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.
2
<PAGE> 5
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.
3
<PAGE> 6
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
4
<PAGE> 7
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
6.1 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))."
6.2 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
5
<PAGE> 8
1 to the Series G Agreement as so amended or an Affiliate of any
such purchasers), the Original Option Exercise Price; and"
6.3 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;"
6.4 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."
6.5 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.
6.6 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."
6.7 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.
6.8 The Subordination Agreement is hereby amended to include the New Notes
in the definition of "Furman Notes."
6
<PAGE> 9
6.9 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."
7
<PAGE> 10
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
8
<PAGE> 11
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:
-------------------------------------
Name:
Title:
FLYNN PARTNERS
By: /s/ James E. Flynn
-------------------------------------
Name: James E. Flynn
Title: General Partner
9
<PAGE> 1
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> 2
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.
<PAGE> 3
(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.
2
<PAGE> 4
(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
3
<PAGE> 5
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
4
<PAGE> 6
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.
5
<PAGE> 7
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
6
<PAGE> 8
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
7
<PAGE> 9
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
8
<PAGE> 10
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
9
<PAGE> 11
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
10
<PAGE> 12
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
11
<PAGE> 13
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
12
<PAGE> 14
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.
13
<PAGE> 15
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
14
<PAGE> 16
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.
15
<PAGE> 17
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:
-------------------------------------
Name:
Title:
FLYNN PARTNERS
By: /s/ James E. Flynn
-------------------------------------
Name: James E. Flynn, General Partner
Flynn Partners
16
<PAGE> 18
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.
A-1
<PAGE> 19
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.
A-2
<PAGE> 20
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
A-3
<PAGE> 21
EXHIBIT B
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR
SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON JULY 1, 2006, OR IF NOT A BUSINESS DAY,
AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS
DAY.
WARRANT TO PURCHASE
_________ SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
OF
ASCENT PEDIATRICS, INC.
--------------------------
This certifies that, for value received, ____________ or registered
assigns ("Warrantholder"), is entitled to purchase from Ascent Pediatrics, Inc.,
a Delaware corporation (the "Company"), subject to the terms set forth below, at
any time prior to the Expiration Date, after which time this Warrant shall
become void, _________ Warrant Shares at the Warrant Price. The Warrant Price
and the number of Warrant Shares purchasable hereunder are subject to adjustment
from time to time as provided herein.
This Warrant is one of a series of warrants (the "Warrants")
evidencing the right to purchase shares of Common Stock of the Company issued
pursuant to a certain Third Amendment (the "Third Amendment"), dated as of July
1, 1999, to the Series G Securities Purchase Agreement, dated as of May 13,
1998, by and between the Company and the persons named therein, as amended (such
Securities Purchase Agreement, as amended on September 30, 1998 and February 16,
1999 and by the Third Amendment being referred to herein as the "Purchase
Agreement"), copies of which Purchase Agreement are on file at the
B-1
<PAGE> 22
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.
B-2
<PAGE> 23
(g) "Person" shall mean any individual, corporation, association,
company, business trust, partnership, limited liability company, joint venture,
joint-stock company, trust, unincorporated organization, association or any
other entity or government or any agency or political subdivision thereof.
(h) "Preferred Stock" shall mean the Series G Convertible
Exchangeable Preferred Stock of the Company, $.01 par value per share.
(i) "Purchase Agreement" shall mean that certain Securities Purchase
Agreement, dated as of May 13, 1998, among the Company and the persons named
therein, as amended.
(j) "Related Person" of any Person means any other Person directly
or indirectly owning (A) twenty percent (20%) or more of the outstanding common
stock of such Person (or, in the case of a Person that is not a corporation,
twenty percent (20%) or more of the equity interest in such Person) or (B)
twenty percent (20%) or more of the combined voting power of the voting capital
stock of such Person.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(l) "Subordinated Notes" shall mean the Company's 8% Subordinated
Notes due 2005 issued pursuant to the Purchase Agreement.
(m) "Third Amendment" shall mean the Third Amendment, dated as of
July 1, 1999, to the Purchase Agreement.
(m) "Warrant Price" shall mean Three Dollars ($3.00) per Warrant
Share, as such price may be adjusted from time to time pursuant to Article III
hereof.
(n) "Warrant Shares" shall mean the shares of Common Stock
purchasable upon exercise of this Warrant.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.1. Exercise of Warrant. The Warrantholder may exercise
this Warrant, in whole or in part, by presentation and surrender of this Warrant
at the address of the Company set forth in Section 4.6 hereof or at such other
address as the Company may
B-3
<PAGE> 24
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
B-4
<PAGE> 25
cashier's check or by wire transfer to an account in the United States
designated by the Company.
(b) Payment of the aggregate Warrant Price may also be made in full
by (i) delivery to the Company of shares of Preferred Stock beneficially owned
by the Warrantholder, plus accumulated dividends thereon, in an aggregate
principal amount equal to the aggregate Warrant Price, (ii) delivery to the
Company of Convertible Notes plus accrued interest thereon, in an aggregate
principal amount equal to the aggregate Warrant Price, (iii) delivery to the
Company of Subordinated Notes plus accrued interest thereon, in an aggregate
principal amount equal to the aggregate Warrant Price or (iv) a combination of
cash (payable by wire transfer or certified or bank check), shares of Preferred
Stock, Convertible Notes or Subordinated Notes beneficially owned by such
Warrantholder and such accumulated dividends or accrued interest, as the case
may be, in an aggregate principal amount equal to the aggregate Warrant Price.
Any shares of Preferred Stock or Convertible Notes or Subordinated Notes
surrendered for exchange hereunder shall be, if so required by the Company,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly delivered by the Warrantholder.
(c) Notwithstanding any provisions herein to the contrary, if the
Fair Market Value of one share of Common Stock is greater than the Warrant Price
(at the date of calculation as set forth below), in lieu of exercising this
Warrant for cash, the Warrantholder may elect to receive shares equal to the
value (as determined below) of this Warrant (or the portion thereof, which
portion shall be canceled) by surrender of this Warrant at the principal office
of the Company together with the properly endorsed Subscription Form annexed
hereto and notice of such election in which event the Company shall issue to the
Warrantholder a number of shares of Common Stock computed using the following
formula:
Y(A-B)
X = ------
A
Where X = the number of shares of Common Stock to be issued to
the Warrantholder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
A = the Fair Market Value of one share of the Common Stock
(at the date of such calculation)
B = Warrant Price (as adjusted to the date of such
calculation)
B-5
<PAGE> 26
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
B-6
<PAGE> 27
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.
B-7
<PAGE> 28
(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
B-8
<PAGE> 29
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.
B-9
<PAGE> 30
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
B-10
<PAGE> 31
(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
B-11
<PAGE> 32
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.
B-12
<PAGE> 33
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.
B-13
<PAGE> 34
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company under its corporate seal as of the 1st day of July, 1999.
ASCENT PEDIATRICS, INC.
By:_________________________________
Name:
Title:
ATTEST:
- ----------------------------------
Secretary
B-14
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Post-Effective Amendment No. 1 to the
Registration Statement on Form S-4 of Ascent Pediatrics, Inc. of our report,
which includes an explanatory paragraph regarding the Company's ability to
continue as a going concern, dated February 24, 1999, relating to the financial
statements of Ascent pediatrics, Inc., which appear in such Registration
Statement. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
July 2, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report in the Registration Statement on Form S-4
of Ascent Pediatrics, Inc. as amended by Post-Effective Amendment No. 1 and to
the reference to our firm under the heading "Experts" in the Proxy
Statement/Prospectus of Ascent Pediatrics, Inc.
Our report dated February 21, 1997 contains an explanatory paragraph that states
that the financial statements were prepared to present the assets related to the
product line to be sold by Upsher-Smith Laboratories, Inc. and the net sales and
the identified costs and expenses and that they are not intended to be a
complete presentation of the product line's financial position, results of
operations or cash flows.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
July 2, 1999
<PAGE> 1
EXHIBIT 99.2
PROXY PROXY
ASCENT PEDIATRICS, INC.
RESCHEDULED ANNUAL MEETING OF STOCKHOLDERS
JULY 23, 1999
This Proxy is Solicited by the Board of Directors of the Company
The undersigned, having received notice of the meeting and the Proxy Statement
therefor and revoking all prior proxies, hereby appoint(s) Emmett Clemente,
Alan R. Fox and John G. Bernardi, and each of them (with full power of
substitution) as proxies of the undersigned, to attend the Annual Meeting of
Stockholders of Ascent Pediatrics, Inc. ("Ascent") to be held on ,
July 23, 1999 and any adjourned session thereof, and there to vote and act, as
indicated, upon the matters on the reverse side in respect of all shares of
Common Stock of Ascent which the undersigned would be entitled to vote or act
upon, with all powers the undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned session thereof
will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of the undersigned to vote said
shares in person. If the undersigned hold(s) any of the shares of Ascent in a
fiduciary, custodial or joint capacity or capacities, this proxy is signed by
the undersigned in every such capacity as well as individually.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator or other fiduciary, please give your full title as such.
Joint owners should each sign personally. If a corporation, sign in full
corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
<PAGE> 2
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------
ASCENT PEDIATRICS, INC.
- ---------------------------
Mark box at right if an address change or comment has been noted on
the reverse side of this card. [ ]
CONTROL NUMBER:
RECORD DATE SHARES:
--------------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- --------Stockholder sign here--------------------Co-owner sign here-------------
1. To approve and adopt an Agreement and Plan of Merger (including the related
agreements attached as exhibits) dated as of February 16, 1999 by and
between Ascent and Bird Merger Corporation, our wholly owned subsidiary,
and the transactions contemplated by these agreements. The merger agreement
provides that Bird Merger Corporation will merge into Ascent and that you
will receive one depositary share for each share of Ascent common stock
that you own, which represents one share of Ascent common stock subject to
a call option.
2. To approve the reduction in the exercise price from $4.75 per share to
$3.00 per share of warrants to purchase an aggregate of 2,116,958 shares of
Ascent common stock issued under the Securities Purchase Agreement dated as
of May 13, 1998 by and among Ascent and the purchasers named therein, the
sale and issuance to the holders of these warrants of an aggregate of
300,000 shares of Ascent common stock at a price of $3.00 per share and the
issuance to an affiliate of some of these holders of 150,000 shares of
Ascent common stock in lieu of the payment of certain financial advisory
fees, all pursuant to the Second Amendment dated as of February 16, 1999 to
the Securities Purchase Agreement and a related amendment to a Financial
Services Fee Agreement dated as of May 13, 1998.
3. To elect the following persons as Class II For All With- For All
Directors for the ensuing three years: Nominees hold Except
Robert E. Baldini [ ] [ ] [ ]
James L. Luikart
Alan R. Fox
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominees.
4. To approve the adoption of our 1999 For Against Abstain
Stock Incentive Plan.
[ ] [ ] [ ]
5. To ratify the selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as our
independent auditors for the current
fiscal year.
In their discretion, the named Proxies are authorized to vote upon the other
matters that may properly come before the meeting, or any adjournment thereof.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal specified hereon, this proxy will be voted FOR such election to office
or proposal.
RETURN CARD RETURN CARD
