Termination Agreement
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This Agreement (the "Agreement") is entered into as of the 29th day of
December, 2000 by and among Ascent Pediatrics, Inc., a Delaware corporation (the
"Company"), Alpharma USPD, Inc., a Maryland corporation (the "Lender"), Alpharma
Inc., a Delaware corporation (the "Parent"),State Street Bank and Trust Company
(the "Depositary") and the Original Lenders signatory hereto.
WHEREAS, on the date hereof, the Company has sold to the Lender, and the Lender
has purchased from the Company, the Product Assets (as defined in the Product
Purchase Agreement dated as of December 29, 2000 by and between the Lender and
the Company (the "Product Agreement")) pursuant to the Product Agreement;
WHEREAS, as full payment of the purchase price for the Product Assets and the
Retained Intellectual Property License as defined in the Product Agreement, the
Lender has delivered to the Company for cancellation that certain promissory
note (the "Note") in the present principal amount of $12,000,000 executed by the
Company in favor of the Lender pursuant to the Loan Agreement dated as of
February 16, 1999 by and among the Company, the Lender and the Parent, as
amended (the "Loan Agreement");
WHEREAS, in connection with the full payment and cancellation of the Note, the
parties have agreed that the Lender shall cease to have the right to exercise
the Call Option (as defined in the Depositary Agreement dated as of February 16,
1999 by and among the Company, the Lender and State Street Bank and Trust
Company (the "Depositary"), as amended (the "Depositary Agreement"));
NOW, THEREFORE, in consideration of the premises, it is agreed by and among the
parties hereto as follows:
1. Call Option.
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The Lender irrevocably and unconditionally agrees that
(i) it shall not exercise the Call Option (as defined in the Depositary
Agreement);
(ii) at any time upon the request of the Company, it shall deliver to the
Company a Call Option Rejection Notice (as defined in the Depositary Agreement)
indicating that it has elected not to exercise its Call Option; and
(iii) at any time upon the request of the Company, it shall promptly execute
and deliver such instruments, agreements and confirmations and take such other
actions as the Company may reasonably request to terminate the Call Option and
the Lender's rights under the Depositary Agreement, to confirm the Lender's
obligation hereunder not to exercise the Call Option and to carry out the
purposes and intent of this Agreement.
b. In connection with the Lender's agreements under paragraph a above, the
parties agree that, notwithstanding anything in Section 4.01 of the Depositary
Agreement to the contrary,
(i) the Company shall not be required to deliver to the Lender the Option
Exercise Deliverables (as defined in the Depositary Agreement);
(ii) the Company shall not be obligated to afford Lender, and the Lender
shall have no right, under Section 4.01(b)(v) to access the Company's books,
accounts, records, work papers and the Company's employees and independent
public accountants; and
(iii) in accordance with the terms and conditions of the Depositary
Agreement, upon the earlier of (A) delivery by the Lender of the Call Option
Rejection Notice and (B) March 31, 2003, the "Option Expiration Date" shall be
deemed to have occurred.
c. In connection with the Lender's agreements under paragraph a above, the
parties agree that the provisions of Section 4.03 of the Depository Agreement
shall be of no further force or effect.
2. Alpharma Director and Assistance. Upon the execution hereof, (i) Thomas
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Anderson shall resign as a director of the Company, and the Lender shall have no
further rights under the Loan Agreement, including without limitation under
Section 4.5 of the Loan Agreement, or otherwise to designate a nominee to stand
for election to the Board of Directors of the Company (ii) the Company shall no
longer receive any administrative services or management assistance (including,
without limitation, the services of Robert Estey) from the Lender except
distribution services in the general scope and upon the payment terms as
presently in effect between the Company and the Lender for a term ending on
December 31, 2001 subject to earlier cancellation by the Company upon 90 days
notice (which the Lender and the Company shall set forth in a definitive
Distribution Agreement within 30 days after the date hereof) and (iii) any other
commercial arrangements in existence prior to this date shall have no further
force and effect. For avoidance of doubt the letter from the Company to Mr.
Estey containing an indemnification obligation of the Company shall continue in
full force and effect in accordance with its terms (other than Mr. Estey's
commitment thereunder to perform services for the Company).
3. Termination of Ascent/Alpharma Agreements.
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a. The Master Agreement dated as of February 16, 1999 by and among the
Company, the Lender and the Parent, as amended, shall terminate in its entirety
and be of no further force or effect upon the date hereof except that Sections
4.4, 6.1 (with the Standstill Period (as defined therein) ending on the seventh
anniversary of the date hereof), 6.4 and 8.12 of the Master Ageement shall
survive termination thereof.
b. The Loan Agreement, other than Section 13.8 thereof, shall terminate and
be of no further force or effect upon the date hereof. For avoidance of doubt,
interest as required under the Loan Agreement and underlying note shall be paid
by Company through the date of this Agreement.
c. The Guaranty Agreement dated as of February 16, 1999 from the Parent for
the benefit of the Company shall terminate and be of no further force or effect
upon the date hereof.
d. The Registration Rights Agreement dated as February 16, 1999 by and
between the Company and the Lender shall terminate and be of no further force or
effect upon the date hereof.
e. The covenants and obligations of the parties under the Supplemental
Agreement dated as of July 1, 1999 by and among the Company, the Lender, the
Parent, the Depositary and each of the Original Lenders (as defined therein) and
the Second Supplemental Agreement dated as of October 15, 1999 by and among the
Company, the Lender, the Parent, the Depositary and each of the Original Lenders
shall terminate and be of no further force or effect upon the date hereof.
f. The Subordination Agreement dated as of February 16, 1999 between the
Company, the Lender and the Original Lenders and the Amended and Restated
Subordination Agreement dated as of October 15, 1999 between the Company, the
Lender and the Original Lenders shall terminate and be of no further force or
effect on the date hereof.
4. Miscellaneous.
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a. Certain Payments. The Company hereby agrees that at the closing of any
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Change in Control or Sale (as defined in the Loan Agreement dated the date
hereof by and between the Company and FS Ascent Investments L.L.C.), excluding
transactions contemplated by clause (b) of said definition, the Company shall
pay to Lender in immediately available funds a cash fee equal to 2% of the
aggregrate Consideration for such Change in Control of Sale in excess of $65
million.
For purposes of this Section, "Consideration" shall mean the gross value of
all cash, securities and other property paid directly or indirectly by an
acquirer to a seller or sellers in connection with a sale of the Company, in
respect of the assets of the Company or the then outstanding securities of the
Company (including without limitation all amounts paid or distributed by the
Company to the holders of capital stock of the Company (except that compensation
received by the Company and distributed by the Company shall be counted once)
and all amounts paid, distributed or issued to the holders of convertible
securities, options, warrants, stock appreciation rights or similar rights or
securities in the Company in connection with such sale in respect of such
securities; provided that if an acquirer pays an amount inclusive of any
underlying exercise or strike price in respect of any convertible or other
securities, consideration shall include such amount net of such exercise or
strike price) or the gross value of all cash, securities and assets contributed
by the Company or any other parties in the case of sale of the Company involving
a joint venture or strategic partnership. The value of any such securities
(whether debt or equity) or other property constituting part of the
consideration shall be determined as follows: (i) the value of securities for
which there is an established public market will be equal to the closing market
price two days prior to the day of closing of such sale and (ii) the value of
securities that have no established public market, and the value of
consideration that consists of other property, shall be the fair market value
thereof. "Consideration" also shall be deemed to include the aggregate
principal amount of any indebtedness for money borrowed and any unfunded pension
liabilities and guarantees of the Company or its subsidiaries assumed, directly
or indirectly, whether contractually or by operation of law, in connection with
such sale of the Company. If the consideration to be paid is computed in any
foreign currency, the value of such foreign currency for purposes hereof shall
be converted into U.S. dollars at the prevailing exchange rate on the date or
dates on which such consideration is paid.
b. Entire Agreement. This Agreement (including the documents referred to
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herein) constitutes the entire agreement between the parties and supersedes any
prior understanding, agreements, or representations by or among the parties,
written or oral, that may have related in any way to the subject matter hereof.
c. Successsion and Assignment. This Agreement shall be binding upon and
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inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder unless such assignee shall agree in
writing to be subject to and bound by the terms of this Agreement.
d. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
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together shall constitute one and the same instrument.
e. Headings. The section headings contained in this Agreement are inserted
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for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
f. Notices. All notices, requests, demands, claims and other communications
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hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly delivered two business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
If to the Company: Copy to:
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Ascent Pediatrics, Inc. Hale and Dorr LLP
187 Ballardvale St., Suite B125 60 State Street
Wilmington, MA 01887 Boston, MA 02109
Attention: President Attention: Stuart Falber, Esq.
If to the Lender: Copy to:
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Alpharma USPD Inc. Alpharma Inc.
7205 Windsor Boulevard One Executive Drive
Baltimore, MD 21244 Fort Lee, NJ 07024
Attention: President Attention: Chief Legal Officer
If to the Parent: Copy to:
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Alpharma Inc. Alpharma Inc.
One Executive Drive One Executive Drive
Fort Lee, NJ 07024 Fort Lee, NJ 07024
Attention: President Attention: Chief Legal Officer
If to the Depositary:
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State Street Bank and Trust Company
c/o Equiserve L.P.
150 Royall Street
Canton, MA 02021
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other party or parties notices in the manner herein set forth.
g. Governing Law. This Agreement shall be governed by and construed in
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accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
h. Amendments and Waivers. No amendment of any provision of this Agreement
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shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
i. Severability. Any term or provision of this Agreement that is invalid or
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unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
j. Expenses. Except as otherwise expressly provided herein, each of the
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parties hereto will pay its own fees and expenses (including, without
limitation, legal and accounting fees and expenses) incurred by it in connection
with the transactions contemplated hereby.
k. Construction. The language used in this Agreement shall be deemed to be
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the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Any reference
to any federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
LENDER:
Alpharma USPD Inc.
By: /s/ Thomas L. Anderson
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Title: President
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COMPANY:
Ascent Pediatrics, Inc.
By: /s/ Emmett Clemente
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Title: President
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PARENT:
Alpharma Inc.
By: /s/ Thomas L. Anderson
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Title: Vice President
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DEPOSITARY:
(AS TO SECTIONS 1 AND 4 B. THROUGH K. ONLY)
State Street Bank and Trust Company
By:___________________
Title:____________________
ORIGINAL LENDERS:
(AS TO SECTIONS 3 E. AND F. AND 4 B. THROUGH K. ONLY)
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 Luikart
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Title: Manager
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BancBoston Ventures Inc.
By: /s/ Marcia T. Bates
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Title: Managing Director
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Flynn Partners
By: /s/ James Flynn
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Title: General Partner
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