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EXHIBIT 10.6
AGREEMENT
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This Agreement (the "Agreement"), made this 13th day of May, 1998 is
entered into by Ascent Pediatrics, Inc., a Delaware corporation (the "Company"),
and Triumph-Connecticut Limited Partnership, a Connecticut limited partnership
("Triumph").
WHEREAS, the Company and Triumph are parties to a Securities Purchase
Agreement dated as of January 31, 1997, as amended March 13, 1997 (the "Triumph
Purchase Agreement"), among the Company, Triumph and the other purchasers listed
on the signature pages thereto (together with Triumph, the "Triumph
Purchasers");
WHEREAS, the Company is negotiating a financing (the "1998 Financing")
pursuant to which it proposes to issue 7,000 shares of Series G Convertible
Exchangeable Preferred Stock (the "Series G Preferred Stock"), 8% Subordinated
Notes in an aggregate principal amount of $9,000,000 and warrants (the "1998
Financing Warrants") to purchase 2,116,958 shares of Common Stock of the Company
pursuant to the terms of a Securities Purchase Agreement (the "1998 Financing
Agreement") with the Purchasers (as defined therein) (the "1998 Financing
Investors");
WHEREAS, in connection with the 1998 Financing, the Company has agreed that
it shall repay the outstanding indebtedness under the Subordinated Secured Notes
(the "Triumph Notes") issued to the Triumph Purchasers pursuant to the Triumph
Purchase Agreement and amend certain other provisions of the Triumph Purchase
Agreement; and
WHEREAS, Triumph is the holder of a majority of the aggregate principal
amount of the Triumph Notes and the holder of a majority of the shares of Common
Stock issuable upon exercise of the warrants (the "Triumph Warrants") to
purchase Common Stock of the Company issued to the Triumph Purchasers pursuant
to the Triumph Purchase Agreement.
NOW THEREFORE, in order to induce the 1998 Financing Investors to
consummate the 1998 Financing and 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:
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I. Redemption of Triumph Notes
1. REDEMPTION. In accordance with Section 6.5 of the Triumph Purchase
Agreement, on the date of the closing of the 1998 Financing (the "Redemption
Date"), the Company shall redeem (the "Redemption") all of the Triumph Notes for
a price (the "Redemption Price") equal to the outstanding principal amount of
the Triumph Notes, plus all accrued and unpaid interest on the Triumph Notes
through the Redemption Date.
2. WAIVER OF NOTICE. The Triumph Purchasers hereby waive the Company's
obligation to provide at least 30 days' notice of the Redemption as otherwise
required by Section 6.5 of the Triumph Purchase Agreement; provided that the
Company provides written notice of the Redemption specifying the matters set
forth in Section 6.5, including without limitation the Redemption Date, promptly
after the closing date of the 1998 Financing has been fixed and agreed to by the
Company and the 1998 Financing Investors and at least three business days prior
to the Redemption Date.
3. REDEMPTION MECHANICS. On or prior to the Redemption Date, each holder
of the Triumph Notes shall surrender such Triumph Notes to the Company, in the
manner and at the place designated in the notice required by Section 6.5 of the
Triumph Purchase Agreement and thereupon the outstanding principal and accrued
interest on such Triumph Notes shall be payable to the order of the person whose
name appears on such Triumph Notes as the owner thereof and each surrendered
Triumph Note shall be cancelled. From and after the Redemption Date, unless
there shall have been a default in the payment of the Redemption Price, all
rights of the holders of the Triumph Notes (except the right to receive the
Redemption Price without interest upon surrender of their Triumph Notes) shall
cease with respect to such Triumph Notes, and such Triumph Notes shall not
thereafter be transferred on the books of the Company or be deemed to be
outstanding for any purpose whatsoever.
4. SECURITY INTEREST. On the Redemption Date, the Triumph Purchasers
shall deliver to the Company such UCC-3 termination statements as are requested
by the Company in order to release the Company's assets from the security
interest established in connection with the Triumph Purchase Agreement.
Following the Redemption Date, the Triumph Purchasers shall take such further
actions as may be requested by the Company in order to release the Company's
assets from such security interest.
II. Triumph Purchase Agreement
1. TERMINATION OF ARTICLE 8 COVENANTS. The Triumph Purchasers hereby
agree that, effective as of the Redemption Date, the covenants of the Company
set
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forth in Article 8 of the Triumph Purchase Agreement (the "Article 8 Covenants")
other than Section 8.3(b) shall terminate and be of no further force or effect.
2. AMENDMENT TO SECTION 8.3(B). Effective as of the Redemption Date, the
Triumph Purchase Agreement is hereby amended by deleting Section 8.3(b) in its
entirety and inserting in lieu thereof the following:
"(b) RESTRICTIONS ON CERTAIN SALES AND MERGERS . The Company shall
not, and shall not permit any of its shareholders or Subsidiaries to,
become a party to any merger or consolidation of the Company with or
into any Person (or any affiliated group of Persons), or sell or enter
into any definitive agreement to sell, in one or more related
transactions, all or substantially all of the property, assets or
Capital Stock of the Company, without the prior written consent of the
holders of a majority of the outstanding Warrants, except that (i) any
Person may merge or consolidate with the Company so long as the
Company is the surviving corporation and such merger is not otherwise
prohibited by this Agreement and (ii) the Company or the shareholders
may sell all or substantially all of the property, assets or Capital
Stock of the Company so long as each holder of Warrants receives cash
in exchange for each Warrant Share (as defined in the Warrants) that
would be issuable to such holder upon the exercise by such holder of
the Warrants held by such holder, in an amount equal to $11.76
(subject to appropriate adjustment in the event of any stock split,
stock dividend, recapitalization or other capital reorganization) less
the applicable Purchase Price (as defined in the Warrants) required to
be paid by such holder for the issuance of such Warrant Share upon
exercise of such Warrant."
3. RESIGNATION OF THOMAS JANES FROM THE BOARD OF DIRECTORS. In connection
with the termination of the Article 8 Covenants, including the termination of
Section 8.3(a) of the Triumph Purchase Agreement, effective as of the Redemption
Date, Thomas W. Janes, the designee of the holders of a majority of the shares
of Common Stock issuable upon exercise of the Triumph Warrants, shall resign
from the Board of Directors of the Company. In connection with such resignation,
Mr. Janes shall provide the Company with a signed letter resigning from the
Board of Directors effective as of the Redemption Date.
4. CONSENT TO FINANCING. The Triumph Purchasers hereby consent, in all
respects under the Triumph Purchase Agreement, including without limitation
Section 8.2(b) thereof, to the 1998 Financing, including without limitation the
incurrence of additional Indebtedness (as defined in the Triumph Purchase
Agreement) by the Company as part of the 1998 Financing.
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5. REGISTRATION RIGHTS.
(a) Effective as of the Redemption Date, the Triumph Purchase
Agreement shall be amended by deleting Sections 12.1(a), (b), (c), (e), (f) and
(g) in their entirety. Following such amendment, such sections shall be of no
further force or effect.
(b) The Triumph Purchasers hereby consent to the grant of
registration rights to the 1998 Financing Investors pursuant to the 1998
Financing Agreement and agree that the Triumph Purchasers' rights under Section
12.2 of the Triumph Purchase Agreement shall not apply to any Registration
Statement (as defined in the Triumph Purchase Agreement) filed by the Company
upon the exercise of demand registration rights by the 1998 Financing Investors
pursuant to the 1998 Financing Agreement.
III. TRIUMPH WARRANTS
1. WAIVER OF ANTI-DILUTION PROTECTION.
The Triumph Purchasers hereby agree that no adjustments shall be made
to the exercise price of the Triumph Warrants pursuant to Section 2(d) of the
Triumph Warrants in connection with the issuance of the Series G Preferred Stock
or the 1998 Financing Warrants, the 8% Convertible Subordinated Notes (the "1998
Financing Convertible Notes") issuable upon exchange of the Series G Preferred
Stock or the shares of Common Stock issuable upon conversion of the Series G
Preferred Stock or the 1998 Financing Convertible Notes or upon exercise of the
1998 Financing Warrants.
2. AMENDMENTS TO "EXCLUDED SECURITIES".
Section 2(e) of each of the Triumph Warrants is hereby amended in the
following manner:
(a) Clause (iii) of Section 2(e) shall be deleted in its entirety and
the following clause shall be inserted in lieu thereof:
"(iii) shares of Common Stock issuable upon exercise of rights,
options or warrants or conversion or exchange of convertible or
exchangeable securities issued or sold under circumstances
causing an adjustment pursuant to Subsection 2(d) and under
circumstances where no adjustment is required pursuant to
Subsection 2(d)"; and
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(b) Clause (vi) of Section 2(e) shall be amended by deleting the
number "850,000" and inserting in lieu thereof the number "1,350,000".
IV. MISCELLANEOUS PROVISIONS
1. The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit, or affect the scope or substance of
any section of this Agreement.
2. This Agreement shall be construed, interpreted, and enforced in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to conflict of laws provisions.
3. This Agreement constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings, whether written or oral,
relating to the amendment or modification of the Triumph Purchase Agreement or
the Triumph Warrants.
4. In all respects other than as specifically provided in this Agreement,
the Triumph Purchase Agreement and the Triumph Warrants are hereby ratified and
affirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
ASCENT PEDIATRICS, INC.
By: /s/ Alan R. Fox
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Title: President and
Chief Executive Officer
TRIUMPH PURCHASERS:
TRIUMPH-CONNECTICUT
LIMITED PARTNERSHIP
By: /s/ Thomas W. Janes
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Title: Managing Director
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