EXHIBIT 10.61
AGREEMENT
THIS AGREEMENT ("Agreement") is made as of this 7th day of December,
2001, by and between Orphan Medical, Inc., a Delaware corporation (the
"Company") and UBS Capital II, LLC, a Delaware limited liability company
("UBS").
WHEREAS, UBS is the holder of (i) 1,069,533 shares of the Company's
Senior Convertible Preferred Stock, $0.01 par value (the "Senior Preferred
Stock") and (ii) 525,692 shares of the Company's Series B Convertible Preferred
Stock, $0.01 par value (the "Series B Preferred Stock"); and
WHEREAS, as the sole holder of the Company's issued and outstanding
Senior Preferred Stock and Series B Preferred Stock, UBS has certain rights,
preferences and privileges, which are set forth in the Company's Certificate of
Incorporation (the "Certificate") on file with the Delaware Secretary of State's
Office and under that certain Stock Purchase Agreement dated July 23, 1998, by
and between UBS and the Company (the "Senior Stock Purchase Agreement") and that
certain Stock Purchase Agreement dated August 2, 1999 by and between UBS and the
Company (the "Series B Purchase Agreement;" the Senior Stock Purchase Agreement
and the Series B Purchase Agreement are sometimes hereinafter collectively
referred to as the "Stock Purchase Agreements"); and
WHEREAS, the Company desires to raise additional funds by selling
shares of the Company's common stock, $.01 par value (the "Common Stock"), to
new investors at a per share price of $8.25 (the "Financing Transaction"); and
WHEREAS, it is a condition to the consummation of the Financing
Transaction that this Agreement be executed by the parties hereto; and
WHEREAS, the Company and UBS have agreed to amend certain of the terms
of the Stock Purchase Agreements and certain other agreements and instruments
and UBS has further agreed to waive certain of its rights, preferences and
privileges contained in the Certificate, on the terms set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agrees as
follows:
1. Amendment of Stock Purchase Agreements.
(a) Section 7.1 of the Senior Stock Purchase Agreement is hereby
amended in its entirety as follows:
7.1 Limitation of Issuance of Additional Equity Securities.
The Company hereby covenants and agrees that for so long as
any Preferred Shares remain outstanding, the Company shall not
issue shares of Common Stock or options, warrants or other
rights to purchase shares of Common Stock or securities
convertible into shares of Common Stock, unless the Company,
upon the advice of counsel, believes that stockholder approval
is not required under the Nasdaq Marketplace Rules to
effectuate the anti-dilution provisions set forth in Article
V.B. Section 8 of the Company's Certificate of Incorporation
if such provisions would be triggered as a result of such
issuance.
UBS understands and acknowledges that as a result of such
amendment, UBS will forfeit its rights as holder of Senior
Preferred Stock to approve future issuances of the Company's
Common Stock or options, warrants or other rights to purchase
shares of the Company's Common Stock.
(b) Section 11 of the Senior Stock Purchase Agreement is hereby
amended to delete Section 11 in its entirety. UBS understands
and acknowledges that as a result of such amendment, UBS will
forfeit its preemptive rights to purchase equity securities in
the future offered for sale by the Company or any rights,
warrants or options to purchase the Company's equity
securities or any securities convertible into the Company's
equity securities.
(c) Section 9.1 of the Series B Purchase Agreement is hereby
amended to delete Section 9.1 in its entirety. UBS
understands and acknowledges that as a result of such
amendment, UBS will forfeit its right to approve any future
issuances of (i) the Company's Series B Preferred Stock or
Series C Convertible Preferred Stock, $0.01 par value (the
"Series C Preferred Stock"), or warrants, options or other
rights to purchase shares of such preferred stock at a price
per share less than $1,000; or (ii) any shares of the
Company's preferred stock having rights and preferences
equal to or senior in rank to the rights and preferences of
the Series B Preferred Stock, Series C Preferred Stock or
the Company's Series D Non-Voting Convertible Preferred
Stock, $0.01 par value per share.
2. Waiver of Compliance with Certificate. UBS hereby irrevocably waives, now and
at all times in the future, all of its rights as a holder of Senior Preferred
Stock under Sections 11 (e), (f) and (g) of Article V.B. of the Certificate
which provide that the Company shall not, without first obtaining the
affirmative vote or written consent of the holders of a majority of the then
issued and outstanding shares of Senior Preferred Stock voting as a single class
(i) in the case of Section 11(e) of Article V.B. of the Certificate, subject to
certain exceptions, authorize or permit the Company or any subsidiary of the
Company to issue equity securities, (ii) in the case of Section 11(f) of Article
V.B. of the Certificate, unless certain requirements are met, incur any
indebtedness and (iii) in the case of Section 11(g) of Article V.B. of the
Certificate, authorize or effect, in a single transaction or through a series of
transactions, the consolidation of the Company with, or merger of the Company
with or into, another person or sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the Company's assets to any
person, or the consolidation or merger of any other person with or into the
Company. UBS understands and agrees that as a result of this irrevocable waiver,
UBS will not have the right, as sole holder of Senior Preferred Stock, except as
otherwise required by law, to prevent the Company from taking the foregoing
actions.
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3. Cancellation of Promissory Note. UBS hereby agrees to cancel all of the
Company's obligations to UBS under that certain Promissory Note dated August 2,
1999, in the face amount of $2,050,000, and further agrees that the Company
shall have no further obligation to UBS under the Promissory Note whatsoever.
The Company acknowledges and agrees that the rights of UBS under that certain
Warrant dated August 2, 1999, to purchase up to 282,353 shares of the Company's
Series D Non-Voting Preferred Stock issued in connection with the Promissory
Note shall remain in full force and effect.
4. Amendment of Warrant.
(a) Section 3 of that certain Warrant in favor of UBS dated August 2,
1999, to purchase up to 2,050 shares of the Company's Series C Convertible
Preferred Stock or up to 315,385 shares of the Company's Series D Non-Voting
Preferred Stock (the "Warrant") is hereby amended in its entirety as follows:
"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."
(b) Section 9(a) of the Warrant is hereby amended in its entirety as
follows:
"(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 C Preferred Stock or 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 C Warrant Exercise Price or Series D Warrant Exercise
Price) that number of shares of Company's Series C Preferred Stock or
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 C Warrant
Exercise Price or 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."
(c) Section 9(c) of the Warrant is hereby amended in its entirety as
follows:
"(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 C Preferred Stock or 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."
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(d) Section 9(d) of the Warrant is hereby amended in its entirety as
follows:
"(d) Fair market value for a warrant share as of a particular
date (the "Determination Date") shall mean, (1) with respect to a share
of Series D Preferred Stock, the value determined by applying the
following subparagraphs (i), (ii) and (iii), and (2) with respect to a
share of Series C Preferred Stock, the product of (A) the number of
shares of Company common stock then issuable upon conversion of a share
of Series C Preferred Stock and (B) the value determined by applying
the following subparagraphs (i), (ii) and (iii):
(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 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) Section 9(e) of the Warrant is hereby amended to delete Section
9(e) in its entirety and Section 9(f) of the Warrant is hereby renumbered as
Section 9(e) accordingly.
5. UBS Expenses. The Company hereby agrees to pay the reasonable fees and
expenses of Xxxx Xxxxxxx LLP, incurred by UBS in connection with this Agreement.
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6. Miscellaneous.
(a) This Agreement is to be construed, interpreted, applied and
governed in all respects in accordance with the laws of the State of Delaware,
without regard to its conflict of laws provision.
(b) If any provision of this Agreement shall be determined to be
invalid, illegal or unenforceable under any controlling body of law, that
provision shall be reformed, construed and enforced to the maximum extent
permissible; and the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(c) This Agreement constitutes the sole and entire agreement between
the parties hereto with respect to the subject matter hereof and supercedes and
terminates all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement.
(d) This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto. Without limiting the
applicability of the transfer restrictions set forth in the Stock Purchase
Agreements, UBS hereby acknowledges and agrees to give the Company and Alta
BioPharma Partners II, L.P. ("Alta"), or their respective successors or assigns,
prior written notice of any proposed transfer of shares of Senior Preferred
Stock or Series B Preferred Stock beneficially owned or controlled by UBS. UBS
further acknowledges and agrees that any such transfer shall be conditioned upon
the transferee(s) express agreement to be bound by the terms of this Agreement.
UBS' obligations and restrictions under this Section 6(d) shall be applicable
and binding only for so long as Alta or its affiliates own any shares of Common
Stock.
(e) The terms and conditions of this Agreement may be amended, waived
or modified only in writing and signed by each of the parties hereto. The
Company and UBS hereby acknowledge and agree that, for so long as Alta or its
affiliates own any shares of Common Stock, any such amendment, waiver or
modification shall require the prior written consent of Alta or its successor or
assign. The Company and UBS hereby acknowledge and agree that, for so long as
Alta or its affiliates own any shares of Common Stock, the rights described in
Section 1 hereof, or any other rights similar to such rights, shall not be
granted to UBS or any other third party without the prior written consent of the
Company and Alta, or their successors or assigns.
(f) This Agreement may be signed in any number of counterparts, each of
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement may be executed
by any party by facsimile signature.
(g) Within three (3) business days from the date of this Agreement, UBS
shall deliver to the Company all stock certificates representing the Senior
Preferred Stock and Series B Preferred Stock beneficially owned or controlled by
UBS. Immediately upon receipt of such stock certificates, the Company shall
stamp or otherwise imprint on such stock certificates a legend substantially in
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, EXCHANGED,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
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EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND
CONDITIONS OF A CERTAIN AGREEMENT DATED AS OF DECEMBER 6,
2001, AS SUCH AGREEMENT MAY BE AMENDED AND/OR RESTATED FROM
TIME TO TIME. SUCH AGREEMENT ALSO MODIFIES THE RIGHTS RELATING
TO SUCH SHARES GRANTED UNDER CERTAIN OTHER AGREEMENTS AND
PROVIDED UNDER THE COMPANY'S CERTIFICATE OF INCORPORATION. THE
COMPANY WILL FURNISH TO THE HOLDER OF THIS CERTIFICATE A COPY
OF SUCH AGREEMENT UPON REQUEST AND WITHOUT CHARGE."
Until Alta and its affiliates no longer own any shares of Common Stock,
the Company shall be obligated to stamp or otherwise imprint such legend on any
and all certificates representing the Senior Preferred Stock and the Series B
Preferred Stock.
(h) If the Company submits to its stockholders a proposal to amend
and/or restate the Certificate at a time when Alta or its affiliates own any
shares of Common Stock, the Company hereby agrees to include in such amendment
and/or restatement the deletion of Sections 11(e), (f) and (g) of Article V.B.
of the Certificate. UBS hereby agrees, for so long as Alta or its affiliates own
any shares of Common Stock, to cause all capital shares beneficially owned or
controlled by UBS (including without limitation shares of the Senior Preferred
Stock, Series B Preferred Stock and Common Stock) to be voted, or to execute or
cause to be executed a written consent with respect to such shares, for the
approval and adoption of such amendment and/or restatement.
(i) The Company and UBS hereby acknowledge and agree that Alta and its
affiliates are relying upon the execution and delivery of this Agreement as a
condition for their participation in the Financing Transaction. The Company and
UBS hereby xxxx Xxxx and its affiliates third-party beneficiaries of this
Agreement.
IN WITNESS WHEREOF, the Company and UBS have caused this Agreement to be
executed by their duly authorized representatives as of the date set forth
above.
ORPHAN MEDICAL, INC.
/s/ Xxxx Xxxxxx Bullion
--------------------------------
Xxxx Xxxxxx Bullion, Chief Executive Officer
UBS CAPITAL II, LLC
/s/ Xxxxxxx Xxxxxx
---------------------------------
Xxxxxxx Xxxxxx, Attorney In Fact
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