EXHIBIT 4.1
FORM OF WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF
COUNSEL SATISFACTORY TO ISSUER THAT SUCH SALE, TRANSFER OR OTHER DISPOSITION MAY
LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH REGISTRATION.
ORPHAN MEDICAL, INC.
WARRANT
TO PURCHASE
SHARES OF
SERIES C CONVERTIBLE PREFERRED STOCK
OR
SERIES D NON-VOTING PREFERRED STOCK
For value received, UBS Capital II LLC, its successors or assigns
("Holder"), is entitled to purchase from Orphan Medical, Inc., a Minnesota
corporation (the "Company"), up to (i) 2,050 fully paid and nonassessable shares
of the Company's Series C Convertible Preferred Stock, par value $0.01 per share
(the "Series C Preferred Stock"), or such greater or lesser number of shares of
Series C Preferred Stock as may be determined by application of the
anti-dilution provisions of this warrant (the "Warrant"); (ii) up to 315,385
fully paid and nonassessable shares of the Company's Series D Non-Voting
Preferred Stock, $0.01 par value per share (the "Series D Preferred Stock"), or
such greater or lesser number of Series D Preferred Stock as may be determined
by application of the anti-dilution provisions of this Warrant, at the warrant
exercise price set forth in Section 2 hereof; or (iii) any combination of Series
C Preferred Stock and Series D Preferred Stock, provided that the combined
purchase price for the shares does not exceed $2,050,000.
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This Warrant is subject to the following terms and conditions:
1. Exercise. The rights represented by this Warrant may be exercised
by the Holder, in whole or in part, by written election, in the form set forth
below, by the surrender of this Warrant (properly endorsed if required) at the
principal office of the Company, by payment to it by cash, certified check or
bank draft of the applicable warrant exercise price for the shares of Series C
Preferred Stock or Series D Preferred Stock to be purchased and by delivery of
the applicable Warrant Exercise form attached hereto or similar documents
acceptable to the Company demonstrating that the sale of the shares to be
purchased is exempt from registration under the Securities Act of 1933, as
amended, and any state securities law.
The Series C Preferred Stock or Series D Preferred Stock
purchased hereunder shall be deemed to be issued as of the close of business on
the date on which this Warrant has been exercised by payment to the Company of
the applicable warrant exercise price. Certificates for the shares of stock so
purchased, bearing an appropriate restrictive legend, shall be delivered to the
Holder within 15 days after the rights represented by this Warrant shall have
been so exercised, and, unless this Warrant has expired, a new warrant
representing the number of shares, if any, with respect to which this Warrant
has not been exercised shall also be delivered to the Holder hereof within such
time. No fractional shares shall be issued upon the exercise of this Warrant.
This Warrant shall be exercised in accordance with the provisions of Sections
9(b) and 9(c) hereof.
2. Warrant Exercise Price. The per share exercise price for the
shares represented by this Warrant shall be $1,000 for the Series C Preferred
Stock (the "Series C Warrant Exercise Price") and $6.50 for the Series D
Preferred Stock, as adjusted pursuant to Section 5 hereof (the "Series D Warrant
Exercise Price").
3. Expiration Date. The rights represented by this Warrant may be
exercised by holder at any time or from time to time after July 23, 2002 or upon
the liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, whichever is earlier, and prior to August 2, 2006. The Company has
the right to require the Holder to exercise this Warrant, in whole or in part,
any time after July 23, 2002 in the event the last sale price of Company's
common stock is equal to or greater than $13 per share for the ten (10)
consecutive trading days immediately preceding the date the Company gives the
Holder notice of the Company's election to require the exercise of all or a part
of this Warrant (the "Notice Date"). The portion of this Warrant required by the
Company to be exercised will expire on the 30th day following the Notice Date
unless exercised by the Holder on or before such 30th day.
4. Shares. All shares that may be issued upon the exercise of the
rights represented by this Warrant shall, upon issuance, be duly authorized and
issued, fully paid and nonassessable shares. During the period within which the
rights represented by this Warrant may be exercised, the Company shall at all
times have authorized and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant a sufficient
number of shares of its Series C Preferred
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Stock, Series D Preferred Stock, shares of common stock in the case of a
Transfer Conversion (as that term is defined in Section 7(b) hereof), to provide
for the exercise of the rights represented by this Warrant.
5. Adjustment. The Series D Warrant Exercise Price for the Series D
Preferred Stock issuable upon exercise of this Warrant or issuable upon a
Transfer Conversion, shall be subject to adjustment from time to time as
hereinafter provided in this Section 5:
(a) If the Company at any time divides the outstanding
shares of its common stock into a greater number of shares (whether
pursuant to a stock split, stock dividend or otherwise), and
conversely, if the outstanding shares of its common stock are
combined into a smaller number of shares, the Series D Warrant
Exercise Price in effect immediately prior to such division or
combination of the Company's common stock shall be proportionately
adjusted to reflect the reduction or increase in the value of each
such common share.
(b) If any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the
Company with another corporation, the sale of all or substantially
all of its assets to another corporation or a Change of Control
shall be effected in such a way that holders of the Company's common
stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for such common stock, then, as a
condition of such reorganization, reclassification, consolidation,
merger or sale, the Holder shall have the right, at its option, to
(i) purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the shares of
the Series D Preferred Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights
represented hereby, such shares of Series D Preferred Stock or other
securities as would have been issued or delivered to the Holder if
Holder had exercised this Warrant and had received such shares of
Series D Preferred Stock immediately prior to such reorganization,
reclassification, consolidation, merger or sale; or (ii) purchase
and receive upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of the Series D
Preferred Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby,
such assets as would have been issued or delivered to the Holder if
Holder had exercised this Warrant and had received such shares of
Series D Preferred Stock immediately prior to such reorganization,
reclassification, consolidation, merger or sale; or (iii) purchase
and receive upon the basis and upon the terms and conditions
specified in this Warrant, a warrant to purchase shares of stock or
other securities as would have been issued or delivered to the
Holder if Holder had exercised this Warrant and had received shares
of Series D Preferred Stock immediately prior to such
reorganization, reclassification, consolidation, merger or sale.
With respect to (i), (ii) and (iii) above, in the case of a Change
of Control (as defined herein), the Holder shall receive, at its
option, the securities, assets or warrants described above as if it
had not only exercised this Warrant, but had also participated in
the transaction that resulted in the Change of Control. In the event
such a Change of Control resulted from a tender offer or the
issuance
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of additional securities by the Company, the Holder shall receive
from the Company, at its option, an amount equal to the excess of
the aggregate offer price over the aggregate Series D Warrant
Exercise Price, as the case may be. For purposes of the preceding
sentence, the term "aggregate offer price" means the amount that
would be paid to the Holder in connection with the Change of Control
if the Holder had exercised this Warrant for shares of Series D
Preferred Stock. For purposes of this Warrant, the term "Change of
Control" means any sale or issuance or series of related sales or
issuances of the Company's voting securities (or securities
convertible into or exchangeable for voting securities) which
results in any person or group of affiliated persons (i) owning more
than 50% of the Company's voting securities outstanding at the time
of such sale or issuances, or (ii) having the ability to elect a
majority of the Company's Board of Directors.
The Company shall not effect any such consolidation,
merger or sale unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed to the
Holder at the last address of the Holder appearing on the books of
the Company the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to purchase. Further
adjustment to the Series D Warrant Exercise Price shall be made for
successive recapitalizations, reclassifications, consolidations,
mergers, sale of assets or Changes of Control as shall be
appropriate under the circumstances.
(c) If and whenever the Company shall (1) issue or sell
any shares of its common stock for a consideration per share less
than the Series D Warrant Exercise Price in effect immediately prior
to the time of such issuance or sale, (2) issue or sell any
warrants, options or other rights to acquire shares of its common
stock at a purchase price less than the Series D Warrant Purchase
Price in effect immediately prior to the time of such issuance or
sale, (3) amend the terms of any existing warrants, options or other
rights to acquire shares of common stock, or otherwise adjust the
purchase price for shares of common stock issuable upon the exercise
of such warrants, options or other rights to acquire shares of
common stock, such that the purchase price for such shares of common
stock is less than the Series D Warrant Exercise Price in effect
immediately prior to the time of such amendment or adjustment, or
(4) issue or sell any other securities that are convertible into
shares of its common stock for a purchase or exchange price less
than the Series D Warrant Exercise Price in effect immediately prior
to the time of such issuance or sale (except for Permitted Issuances
(as that term is defined in Article I Section 8 of the Company's
Certificate of Designation for Series B Convertible Preferred
Stock)), then, upon such issuance or sale, the Series D Warrant
Exercise Price shall be reduced to the price at which such shares of
common stock are being issued or sold by the Company or the price at
which such other securities are exercisable or convertible into
shares of the Company's common stock. For purposes of this Warrant,
the term "consideration per share" for which common stock is issued
or issuable shall mean (1) with respect to the issuance, grant or
sale of options or warrants to purchase shares of common stock, an
amount determined by dividing (i) the total amount, if any,
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received or receivable by the Corporation as consideration for the
granting or sale of such options or warrants, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon exercise of all such options and warrants, plus in
the case of such options which relate to convertible securities, the
minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance or sale of such
convertible securities and the conversion or exchange thereof, by
(ii) the total maximum number of shares of common stock issuable
upon the exercise of such options and warrants or upon the
conversion or exchange of all such convertible securities issuable
upon the exercise of such options, and (2) with respect to the
issuance, grant or sale of common stock of the Company or securities
directly or indirectly exercisable or convertible into shares of
common stock, an amount determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the
issue or sale of such convertible securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of common stock issuable upon the
conversion or exchange of all such convertible securities.
(d) If the Company takes any other action, or if any
other event occurs, which does not come within the scope of the
provisions of Section 5(a), 5(b) or 5(c), but which should result in
an adjustment in the Series D Warrant Exercise Price and/or the
number of shares subject to this Warrant in order to fairly protect
the purchase rights of the Holder, an appropriate adjustment in such
purchase rights shall be made by the Company.
(e) Upon each adjustment of the Series D Warrant
Exercise Price, the Holder shall thereafter be entitled to purchase,
at the Series D Warrant Exercise Price resulting from such
adjustment, the number of shares of Series D Preferred Stock
obtained by multiplying the Series D Warrant Exercise Price in
effect immediately prior to such adjustment by the number of shares
of Series D Preferred Stock purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the
Series D Warrant Exercise Price resulting from such adjustment.
(f) Upon any adjustment of the Series D Warrant Exercise
Price, the Company shall give written notice thereof to the Holder
stating the Series D Warrant Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of
shares of Series D Preferred Stock purchasable at such price upon
the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based.
6. Rights as Shareholder. This Warrant shall not entitle the Holder
to any voting rights or other rights except as provided in the Stock Purchase
Agreement dated as of August 2, 1999, by and between the Company and UBS Capital
II LLC (the "Stock Purchase Agreement").
7. Transfer.
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(a) This Warrant and all rights hereunder are
transferable, in whole or in part, at the principal office of the
Company by the holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant properly endorsed. The
bearer of this Warrant, when endorsed, may be treated by the Company
and all other persons dealing with this Warrant as the absolute
owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant, or to the transfer hereof on
the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company
may treat the registered owner hereof as the owner for all purposes.
(b) In the event this Warrant and all rights hereunder
are transferred, in whole or in part, to a Permitted Investor, any
rights to purchase shares of Series D Preferred Stock pursuant to
the exercise of this Warrant, or any transferred portion thereof
will automatically be converted into a right to purchase shares of
the Company's common stock (a "Transfer Conversion"). The conversion
rate applicable to a Transfer Conversion shall be one share of
common stock for each share of Series D Preferred Stock.
(c) For purposes of Section 7(b), the following
definitions apply:
(i) "Permitted Investor" means a Person that is
not (a) the Beneficial Owner, directly or indirectly, of
ten percent (10%) or more of the Company's outstanding
stock or other securities entitled to vote, or has or
shares the power to dispose of, or direct the
disposition of, such stock or securities, (b) a Person
that directly or indirectly controls, is controlled by,
or is under common control with, the Company (an
"Affiliate"), or (c) any corporation or organization of
which the Company is an officer or partner, is the
Beneficial Owner, directly or indirectly, of ten percent
(10%) or more of the Company's outstanding stock or
other securities entitled to vote (an "Associate").
(A) A Person shall not be considered a
Beneficial Owner for purposes of Section 7(c)(i)
if such Person was not a Beneficial Owner of ten
percent (10%) or more of the Company's outstanding
stock or other securities entitled to vote, or has
or shares the power to dispose of, or direct the
disposition of, such stock or securities
immediately prior to a repurchase of shares,
recapitalization of the Company or similar action
and became a Beneficial Owner as defined in
Section 7(c)(ii) solely as a result of such share
repurchase, recapitalization or similar action
unless, (i) the repurchase, recapitalization,
conversion, or similar action was proposed by or
on behalf of, or pursuant to, any agreement,
arrangement, relationship, understanding, or
otherwise (whether or not in writing) with, the
Person or is an Affiliate or Associate of the
Person, or (ii) the Person thereafter acquires a
beneficial ownership, directly or indirectly, of
the Company's outstanding shares entitled to vote
and, immediately after such acquisition, is the
Beneficial Owner,
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directly or indirectly, of ten percent (10%) or
more of the Company's outstanding stock or other
shares entitled to vote.
(ii) "Beneficial Owner" means a Person who,
directly or indirectly through any written or oral
agreement, arrangement, relationship, understanding, or
otherwise, has or shares the power to vote, or direct
the voting of, shares or securities of the Company
entitled to vote, or has or shares the power to dispose
of, or direct the disposition of, such shares of
securities; provided, that a Person shall not be deemed
the beneficial owner of shares or securities of the
Company (a) tendered pursuant to a tender offer or
exchange offer made by the Person or any of such
Person's Affiliates or Associates until the tendered
shares or securities are accepted for purchase or
exchange, (b) if such beneficial ownership arises solely
from a revocable proxy given in response to a proxy
solicitation required to be made and made in accordance
with the applicable rules and regulations under the
Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), and is not then reportable
under the Securities Exchange Act, or, if the Company is
not subject to the Securities Exchange Act, would have
been required to be made and would not have been
reportable even if the Company had been subject to the
Securities and Exchange Act.
(iii) "Affiliate" shall have the meaning assigned
to that term in Section 7(c)(i) hereof.
(iv) "Associate" shall have the meaning assigned
to that term in Section 7(c)(i) hereof.
(v) "Person" means any individual, partnership,
limited liability company, association, corporation,
estate, trust or other entity.
(d) In the event this Warrant and all rights hereunder,
are re-acquired, in whole or in part, by Investor (as defined in the
Stock Purchase Agreement") prior to July 23, 2002, the shares of
common stock into which the shares of Series D Preferred Stock were
converted upon a Transfer Conversion shall automatically be
converted into shares of Series D Preferred Stock at a conversion
rate of one share of Series D Preferred Stock for each share of
common stock.
8. Notices. All demands and notices to be given hereunder shall be
delivered or sent by first class mail, postage prepaid; in the case of the
Company, addressed to its corporate headquarters, 00000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxx, 00000, until a new address shall have been substituted by
like notice; and in the case of Holder, addressed to Holder at the address
written below, until a new address shall have been substituted by like notice,
with a copy to:
Xxxxx Xxxxx, Esq.
00
Xxxx, Xxxxxxx, Xxxxxxx, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
9. Additional Right to Convert Warrant.
(a) The holder of this Warrant shall have the right to
require the Company to convert this Warrant (the "Conversion Right")
at any time after it is exercisable, but prior to its expiration,
into shares of Series D Preferred Stock as provided for in this
Section 9. Upon exercise of the Conversion Right, the Company shall
deliver to the Holder (without payment by the Holder of any Series D
Warrant Exercise Price) that number of shares of Company's Series D
Preferred Stock, as the case may be, equal to the result obtained by
multiplying (i) the number of shares with respect to which the
Warrant is being exercised by (ii) the quotient obtained by dividing
(x) the value of the Warrant at the time the Conversion Right is
exercised (determined by subtracting the aggregate Series D Warrant
Exercise Price for the warrant shares in effect immediately prior to
the exercise of the Conversion Right from the aggregate fair market
value for the warrant shares immediately prior to the exercise of
the Conversion Right) by (y) the aggregate fair market value for the
warrant shares immediately prior to the exercise of the Conversion
Right.
(b) The Conversion Right may be exercised by the Holder,
at any time or from time to time, prior to its expiration, on any
business day by delivering written notice to the Company (the
"Conversion Notice") at the offices of the Company exercising the
Conversion Right and specifying (i) the total number of shares with
respect to which the Warrant is being exercised and (ii) a place and
date not less than one or more than 20 business days from the date
of the Conversion Notice for the closing of such purchase.
(c) At any closing under Section 9(b) hereof, (i) Holder
will surrender the Warrant and (ii) the Company will deliver to
Holder a certificate or certificates for the number of shares of the
Company's Series D Preferred Stock (or common stock, as the case may
be under Section 7(b) hereof) issuable upon such conversion,
together with cash, in lieu of any fraction of a share, and (iii)
the Company will deliver to Holder a new warrant representing the
number of shares, if any, with respect to which the Warrant shall
not have been exercised.
(d) Fair market value for a warrant share as of a
particular date (the "Determination Date") shall mean:
(i) The average of the closing bid or last sale
prices of the Company's common stock, respectively,
reported for the ten (10) business days immediately
preceding the Determination Date if the Company's common
stock is reported on the New York Stock Exchange
Composite Tape, or, if the Company's common stock is not
listed or admitted to trading on such exchange, on the
principal national securities
45
exchange on which the Company's 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, on the NASDAQ National Market System.
(ii) If the Company's common stock is not admitted
for quotation on the NASDAQ National Market System, then
the average of the high bid and low asked prices
reported for the ten (10) business days immediately
preceding the Determination Date as recorded by the
National Association of Securities Dealers, Inc. through
NASDAQ, or if the National Association of Securities
Dealers, Inc. through NASDAQ shall not have reported any
bid and asked prices for the Company's common stock for
the ten (10) day period immediately preceding the
Determination Date, the average of the bid and asked
prices for such ten (10) day period as furnished by any
New York Stock Exchange member firm selected from time
to time by the Company for such purpose.
(iii) If no bid and asked prices can be obtained
from any firm identified in Section 9(d)(ii), then the
value of one share of the Company's common stock on such
date as determined by the mutual agreement of the
Company and the holders of the right to purchase a
majority of the shares issuable under this Warrant, or,
if no such agreement can be reached within 30 days from
such date, then as determined by an independent
appraiser mutually acceptable to the parties.
(e) Holder of this Warrant shall have the right to pay
for all or any portion of the Series C Warrant Exercise Price or
Series D Warrant Exercise Price for shares of Series C Preferred
Stock or Series D Preferred Stock purchased hereunder by
cancellation of all or any part of the Company's obligation to
Holder under the terms of that certain Promissory Note dated as of
August 2, 1999, in the face amount of $2,050,000.
(f) Holder of this Warrant shall have the right, at any
time on or after the date of this Warrant, to receive securities,
assets or cash in the event of a liquidation, dissolution or winding
up of the Company (each such event a "Liquidity Event"). The amount
of such securities, assets or cash Holder shall be entitled to
receive under this Section 9(f) shall be an amount equal to the
difference between the Series D Warrant Exercise Price and the
amount of consideration Holder would have received if Holder had
exercised this Warrant for shares of Series D Preferred Stock.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed and delivered by a duly authorized officer.
Dated: August 2, 1999
ORPHAN MEDICAL, INC.
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By /s/ Xxxx Xxxxxx Bullion
--------------------------------------
Xxxx Xxxxxx Bullion
Chief Executive Officer
[Name and Address of Holder]
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WARRANT EXERCISE
(To be signed only upon exercise of this warrant)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, __________ shares of Series C Preferred Stock,
or __________ shares of Series D Preferred Stock of Orphan Medical, Inc., to
which such warrant relates and herewith makes payment of $__________ therefor in
cash, certified check or bank draft and requests that the certificates for such
shares be issued in the name of, and be delivered to ____________________, whose
address is set forth below the signature of the undersigned.
Dated:
---------------------------
Signature
If shares are to be issued other than to Holder: Social Security or other Tax
Identification No.
Please print present name and address
48
WARRANT ASSIGNMENT
(To be signed only upon transfer of this warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________ the right represented by the foregoing Warrant to
purchase the shares of Series C Preferred Stock or Series D Preferred Stock of
Orphan Medical, Inc. and appoints ____________________ attorney to transfer such
right on the books of Orphan Medical, Inc. with full power of substitution in
the premises.
Dated:
---------------------------
Signature
Social Security or other Tax
Identification No.
-----------------------------------------
Please print present name and complete address
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