SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 1)
Under the Securities Exchange Act of 1934
Halsey Drug Co., Inc.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
4063691087
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(CUSIP Number of Class of Securities)
Larry N. Feinberg
c/o Oracle Strategic Partners, L.P.
200 Greenwich Avenue, 3rd Floor
Greenwich, CT 06830
(203) 862-7900
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Daniel Schloendorn, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
(212) 728-8000
December 20, 2002
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(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box: [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d-7 for other
parties to whom copies are to be sent.
SCHEDULE 13D
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CUSIP No. 4063691087 Page 2 of 13 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Larry N. Feinberg
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
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3 SEC USE ONLY
------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 22,605,245
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
22,605,245
------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
22,605,245
------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.5%
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14 TYPE OF REPORTING PERSON*
IN
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SCHEDULE 13D
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CUSIP No. 4063691087 Page 3 of 13 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Oracle Strategic Capital, L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 22,605,245
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
22,605,245
------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
22,605,245
------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.5%
------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
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SCHEDULE 13D
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CUSIP No. 4063691087 Page 4 of 13 Pages
----------------------------------- --------------------------
------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Oracle Strategic Partners, L.P.
------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
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7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 22,605,245
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
22,605,245
------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
22,605,245
------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.5%
------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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This Amendment No. 1 to Schedule 13D (this "Amendment No. 1") is being filed
with respect to the shares of common stock, $0.01 par value ("Common Stock"), of
Halsey Drug Co., Inc., a New York corporation (the "Company"), to amend and
restate the Schedule 13D filed with respect to the Common Stock on August 10,
2001 (the "Schedule 13D").
Item 1. Security and Issuer.
This Amendment No. 1 to the Schedule 13D is being filed with respect to the
Common Stock of the Company. The Company's principal executive office is located
at 695 N. Perryville Road, Rockford, Illinois 61107.
Item 2. Identity and Background.
(a) This statement is filed by:
(i) Oracle Strategic Partners, L.P., a Cayman Islands limited
partnership ("Strategic Partners"), with respect to shares of Common Stock
directly owned by it;
(ii) Oracle Strategic Capital, L.L.C., a Delaware limited liability
company ("Strategic Capital"), which serves as general partner to Strategic
Partners and has investment discretion over the shares of Common Stock
directly owned by it; and
(iii) Mr. Larry N. Feinberg ("Mr. Feinberg"), who serves as managing
member of Strategic Capital with control over its business activities.
The foregoing persons are hereinafter sometimes collectively referred to as
the "Reporting Persons." Any disclosures herein with respect to persons other
than the Reporting Persons are made on information and belief after making
inquiry to the appropriate party.
(b) The address of the principal business and principal office of Strategic
Partners and Strategic Capital is 200 Greenwich Avenue, Greenwich, Connecticut
06830. The business address of Mr. Feinberg is 200 Greenwich Avenue, Greenwich,
Connecticut, 06830.
(c) The principal business of Strategic Partners is to invest in
securities. The principal business of Strategic Capital is to serve as general
partner to and exercise
5
investment discretion over securities held by Strategic Partners. Mr. Feinberg
is the managing member of Strategic Capital.
(d) None of the Reporting Persons nor, to the best of their knowledge, any
of their directors, executive officers, general partners or members has, during
the last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the Reporting Persons nor, to the best of their knowledge, any
of their directors, executive officers, general partners or members has, during
the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) Strategic Partners is organized under the laws of the Cayman Islands.
Strategic Capital is organized under the laws of the State of Delaware. Mr.
Feinberg is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other
Consideration.
A series of transactions involving the Company were described in the
Company's Current Report on Form 8-K, filed on December 27, 2002 (the "Form
8-K"). In connection with these transactions, Strategic Partners received
additional securities of the Company by operation of certain anti-dilution
adjustments with respect to warrants to purchase Common Stock ("Warrants") that
it directly owned. Specifically, Warrants theretofore entitling Strategic
Partners to purchase 1,010,100 shares of Common Stock, at an exercise price of
$1.404, were adjusted to represent Warrants for 2,393,478 shares of Common Stock
with an exercise price of $0.59. In addition, Warrants theretofore entitling
Strategic Partners to purchase 1,010,100 shares of Common Stock, at an exercise
price of $2.285, were adjusted to represent Warrants for 2,393,478 shares of
Common Stock with an exercise price of $0.96. These two sets of Warrants were
then exchanged, in a cashless exercise (as valued pursuant to a Black-Scholes
model), for 1,895,824 and 1,753,637 shares of
6
Common Stock, respectively, or 3,649,461 shares in the aggregate.
In connection with the transactions described in the Form 8-K, existing 5%
convertible senior secured debentures ("Debentures") held by Strategic Partners
were amended to extend their maturity date to March 31, 2006 and their
applicable conversion prices for conversion into Common Stock were revised in
accordance with their anti-dilution provisions. Strategic Partners holds
Debentures in the principal amounts of: $10,000,000; $125,000; $126,562;
$128,144; $129,746; $131,368; $133,010; $134,672; $136,356; $138,060; $139,786;
$141,534; and $143,302. The conversion prices for such Debentures per share of
Common Stock are, respectively, $0.6135, $0.7525, $0.4862, $0.3964, $0.2735,
$0.4501; $0.9701, $0.9701; $0.8128; $0.8827; $0.7516; $0.7667; and $1.0200. The
Debentures are therefore convertible, respectively, into the following amounts
of Common Stock: 16,298,644; 166,110, 260,238; 323,268; 474,436; 291,858;
137,104; 138,818; 167,756; 156,400; 185,974; 184,598; and 140,492. The foregoing
Debentures, except for the $10,000,000 initial Debenture, were received by
Strategic Partners as interest payments. Interest on all the Debentures held by
Strategic Partners is paid quarterly on each January 1, April 1, July 1 and
October 1. The Debentures are convertible at any time, at the option of their
holder, into Common Stock.
Strategic Partners also has acquired options exercisable for 30,000 shares
of Common Stock (the "Options") at no additional cost as compensation for the
services of Mr. Joel Liffmann ("Mr. Liffmann") as a member of the board of
directors of the Company. Mr. Liffmann is a general partner of an affiliate of
Strategic Partners.
Strategic Partners, Strategic Capital and Mr. Feinberg may be deemed to
beneficially own the Common Stock received in exchange for the Warrants
previously held by Strategic Partners, and also the underlying Common Stock
which may be acquired upon conversion or exercise of the foregoing Debentures
and Options owned by Strategic Partners. The source of the initial amounts paid
for these securities, all of which were acquired in privately negotiated
transactions, was the working capital of Strategic Partners. Strategic Partners
contributed no additional funds to the Company in connection with the events
described in the Form 8-K, but did surrender certain documents which reflect the
previously held
7
Debentures for new documents representing the revised conversion prices and
maturity dates, as set forth above. Strategic Partners initially paid to the
Company $10,000,000 to acquire the Debentures and Warrants it held.
Item 4. Purpose of Transaction.
The shares of Common Stock deemed to be beneficially owned by Strategic
Partners, Strategic Capital and Mr. Feinberg were acquired for, and are being
held for, investment purposes. The securities which are convertible into or
exchangeable for shares of Common Stock were acquired in the ordinary course of
business and not for the purpose of acquiring control of the Company.
The Reporting Persons may in the future directly acquire shares of Common
Stock in open market or private transactions, block purchases or otherwise. The
Reporting Persons may continue to hold or dispose of all or some of the
securities reported herein from time to time, in each case in open market or
private transactions, block sales or purchases or otherwise, subject to
compliance with applicable law. In that regard, pursuant to that certain
Registration Rights Agreement incorporated herein by reference as Exhibit 8, the
Reporting Persons are entitled to certain registration rights with respect to
the Common Stock to permit the public sale thereof in accordance with the
Securities Act of 1933, as amended, and applicable state securities laws. Other
than as set forth herein, none of the Reporting Persons has any plans or
proposals which relate to, or could result in, any of the matters referred to in
paragraphs (b) through (j), inclusive, of Item 4 of Schedule 13D. Each of the
Reporting Persons may, at any time and from time to time, review or reconsider
his or its position and formulate plans or proposals with respect thereto, but
has no present intention of doing so.
Item 5. Interest in Securities of the Issuer.
(a) As of the close of business on February 25, 2003, the Reporting Persons
were the beneficial owners, within the meaning of Rule 13d-3 under the Exchange
Act, of 22,605,245 shares of Common Stock. As of that date, these shares
represented 56.5% of the sum of (i) the 21,035,323 total shares of Common Stock
outstanding as reported to Strategic Partners by the Company's chief financial
officer and (ii) the 18,955,784 shares of Common Stock which would
8
be received by Strategic Partners upon conversion or exercise of the Debentures
and Options which it holds.
(b) The sole or shared power to vote or dispose of, or to direct the vote
or disposition of the Common Stock with respect to each Reporting Person noted
in paragraph (a) of this Item 5 is as set forth on the cover sheets of this
Amendment No. 1.
Strategic Capital does not directly own any Common Stock. Strategic Capital
may be deemed to beneficially own 22,605,245 shares of Common Stock by virtue of
the investment discretion it exercises over Strategic Partners as general
partner.
Mr. Feinberg does not directly own any Common Stock. Mr. Feinberg may be
deemed to beneficially own 22,605,245 shares of Common Stock by virtue of his
control over the business activities of Strategic Capital as managing member.
(c) The holdings of the Reporting Persons with respect to securities of the
Company consist solely of the shares of Common Stock, Debentures and Options
described above. Except as disclosed above, there have been no transactions
involving the shares of Common Stock of the Company engaged in during the period
beginning 60 days prior to December 20, 2002 and ending on the date hereof.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or proceeds from the sale of, the
securities reported herein, other than the partners of Strategic Partners, none
of whom individually has such right or power with respect to in excess of 5% of
the total outstanding Common Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
Strategic Partners is a party to that certain Debenture and Warrant
Purchase Agreement dated May 26, 1999 (the "Oracle Purchase Agreement") by and
among the Company, Strategic Partners and the other investors listed therein,
and is also a party to the amendment of the Oracle Purchase Agreement, dated
December 20, 2002. The Oracle Purchase
9
Agreement and its amendment are incorporated herein by reference as Exhibits 2
and 3.
The Debentures held by Strategic Partners are also governed by the terms
and provisions set forth in the documents or instruments constituting such
debentures. A Form of Debenture is incorporated herein by reference as Exhibit
4. The Debentures provide that Interest thereon shall be paid in the form of
additional Debentures, to be paid quarterly on each January 1, April 1, July 1
and October 1.
The Options are governed by the terms of the Halsey Drug Co., Inc. 1998
Stock Option Plan, incorporated herein by reference as Exhibit 5, and are
evidenced by option agreements substantially similar to the Form of Option
Agreement attached hereto as Exhibit 6.
The Warrants held by Strategic Partners were exchanged for Common Stock, as
described herein, in accordance with the Warrant Recapitalization Agreement,
dated December 20, 2002, incorporated herein by reference as Exhibit 7.
Associated with the Debentures held by Strategic Partners are certain
registration rights, as set forth in the Registration Rights Agreement, dated
December 20, 2002, incorporated herein by reference as Exhibit 8. This
Registration Rights Agreement sets forth registration rights which supercede
rights that Strategic Partners held through prior agreements with the Company.
Under the Registration Rights Agreement, holders of 20% of the registrable
securities may request two demand registrations on Form S-1 and unlimited demand
registrations on Form S-3. In addition to other customary provisions, the
Registration Rights Agreement provides holders of registrable securities
"piggyback" rights on Company registrations.
Strategic Partners had previously entered into a Voting Agreement, dated
December 20, 2002, in order to effectuate certain of the contemplated
transactions set forth in the Form 8-K. Under this agreement, Strategic Partners
agreed to vote in favor of an amendment to the Company's certificate of
incorporation to, among other things, increase the Company's authorized common
stock. This Voting Agreement is incorporated herein by reference as Exhibit 9.
10
In addition, the Reporting Persons have entered into a Joint Acquisition
Statement, as required by Rule 13d-1(k) under the Exchange Act, and incorporated
herein by reference as an Exhibit 1.
Other than as set forth herein, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Persons
named in Item 2 of this statement or between such Reporting Persons and any
person with respect to any securities of the Company, including but not limited
to transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement, dated as of August 10, 2001, by and among the
Reporting Persons --- incorporated herein by reference to Exhibit 1 of the
Schedule 13D.
2. Oracle Purchase Agreement --- incorporated herein by reference to
Exhibit 10.72 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
3. Amendment to Oracle Purchase Agreement, dated as of December 20, 2002
--- incorporated herein by reference to Exhibit 10.9 of the Form 8-K.
4. Form of Amended and Restated 5% Convertible Senior Secured Debenture ---
incorporated herein by reference to Exhibit 10.10 of the Form 8-K.
5. Halsey Drug Co., Inc. 1998 Stock Option Plan, as amended ---
incorporated herein by reference to Exhibit 5 of the Schedule 13D.
6. Form of Option Agreement.
7. Warrant Recapitalization Agreement, dated December 20, 2002 ---
incorporated herein by reference to Exhibit 10.17 of the Form 8-K.
8. Registration Rights Agreement, dated December 20, 2002 --- incorporated
herein by reference to Exhibit 10.16 of the Form 8-K.
11
9. Voting Agreement, dated December 20, 2002 --- incorporated herein by
reference to Exhibit 10.6 of the Form 8-K.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
12
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
/s/ Larry N. Feinberg
-------------------------------
Dated: March 10, 2003 Larry N. Feinberg
Dated: March 10, 2003 ORACLE STRATEGIC CAPIAL, L.L.C.
By: /s/ Larry N. Feinberg
---------------------------
Name: Larry N. Feinberg
Title: Managing Member
Dated: March 10, 2003 ORACLE STRATEGIC PARTNERS, L.P.
By: ORACLE STRATEGIC CAPIAL,
L.L.C., General Partner
By: /s/ Larry N. Feinberg
---------------------------
Name: Larry N. Feinberg
Title: Managing Member