EXHIBIT 10.1
ORPHAN MEDICAL, INC.
STOCK PURCHASE AGREEMENT
Agreement, made and entered into as of the 7th day of
December, 2001, between Orphan Medical, Inc., a Delaware corporation (the
"Company"), and each of the persons listed on Schedule 1 to this agreement (the
"Investors").
For good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Company and the Investors agree as
follows:
1. Authorization of Securities. The Company proposes to
authorize, issue and sell an aggregate of 1,706,999 shares (the "Shares") of
common stock, $.01 par value ("Common Stock"), which shares shall represent in
the aggregate, 19.9% of the Company's outstanding shares of common stock as of
the Closing Date (as that term is defined in Section 3 hereof).
2. Sale and Purchase of Shares. Subject to the terms and
conditions hereof, the Company agrees to sell to each Investor, and each
Investor severally agrees to purchase from the Company on the Closing Date, the
number of Shares set forth opposite its name on Schedule 1. The purchase price
of Shares acquired by the Investors on the Closing Date shall be $8.25 per
share.
3. Closing. The closing of the transaction contemplated by
Section 2 of this agreement shall take place at the offices of Xxxxxx & Xxxxxxx
LLP, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, at 3:30 P.M.,
Minneapolis time, on December 7, 2001 (the "Closing Date") or at such other
place or different time or day as may be mutually acceptable to the Investors
and the Company.
At the closing, the Company will deliver to each Investor a
certificate or other instrument, dated such Closing Date, representing the
Shares purchased by such Investor on such Closing Date, registered in its name
as stated on Schedule 1 (or in the name of its nominee if it so specifies to the
Company at least 48 hours prior to such Closing Date) against payment to the
Company of the purchase price of the Shares being purchased by such Investor.
4. Representations and Warranties by the Company. In order to
induce each Investor to enter into this agreement and to purchase the number of
Shares set forth after its name on Schedule 1, the Company hereby represents and
warrants to each Investor that, except as disclosed in the attached Exhibit A or
in the Company's SEC Documents (as defined in Section 4.5):
4.1 Organization, Standing, etc. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has the requisite corporate power and authority to
own its properties and to carry on its business as it is now being conducted and
as described in the documents filed by the Company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since the end of its most recently
completed fiscal year through the date hereof, including without limitation, its
report on Form 10-K for the year ended December 31, 2000 and its report on Form
10-Q for the quarter ended September 30, 2001.
4.2 Due Authorization and Valid Issuance. The Company
has all requisite power and authority to execute, deliver and perform its
obligations under this agreement, and this agreement has been duly authorized
and validly executed and delivered by the Company and constitutes a legal, valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to judicial
limitations on the enforcement of the remedy of specific performance and other
equitable remedies. All corporate and stockholder action necessary for the
authorization, creation, issuance and delivery of the Shares has been taken by
the Company, or will be taken by the Company on or prior to the Closing Date.
The Shares to be sold pursuant to this agreement have been duly authorized, and
when issued and paid for in accordance with the terms of this agreement will be
duly and validly issued, fully-paid and nonassessable.
4.3 Subsidiaries, Etc. The Company does not have any
direct or indirect ownership interest in any corporation, partnership, joint
venture, association or other business enterprise. If any entity is listed on
Exhibit B and the Company owns a controlling interest in such entity, each of
the representations and warranties set forth in this Article 4 are being hereby
restated with respect to such entity (modified as appropriate to the nature of
such entity).
4.4 Qualification. The Company is duly qualified,
licensed or domesticated as a foreign corporation in good standing in each
jurisdiction wherein the nature of its activities or the properties owned or
leased by it makes such qualification, licensing or domestication necessary and
in which failure to so qualify or be licensed or domesticated would have a
material adverse effect upon the condition (financial or otherwise), earnings,
business or business prospects, properties or operations of the Company (a
"Material Adverse Effect").
4.5 Changes, Dividends, etc. Except for the
transactions contemplated by this agreement, since December 31, 2000, the
Company has not: (i) incurred any debts, obligations or liabilities, absolute,
accrued or contingent and whether due or to become due, except current
liabilities incurred in the ordinary course of business which (individually or
in the aggregate) will not have a Material Adverse Effect; (ii) paid any
obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case in the
ordinary course of business; (iii) except for distributions made to certain
stockholders of the Company as specifically described in the SEC Documents (as
such term is defined in Section 4.6 hereof), declared or made any payment to or
distribution to its stockholders as such, or purchased or redeemed any of its
shares of capital stock, or obligated itself to do so; (iv) mortgaged, pledged
or subjected to lien, charge, security interest or other encumbrance any of its
assets, tangible or intangible, except in the ordinary course of business; (v)
sold, transferred or leased any of its assets except in the ordinary course of
business; (vi) suffered any physical damage, destruction or loss (whether or not
covered by insurance) resulting in a Material Adverse Effect; (vii) entered into
any transaction other than in the ordinary course of business; (viii)
encountered any labor difficulties or labor union organizing activities; (ix)
issued or sold
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any shares of capital stock or other securities (other than shares issued upon
exercise of warrants or options that were outstanding as of December 31, 2000)
or granted any options, warrants, or other purchase rights with respect thereto
other than pursuant to this agreement; (x) made any acquisition or disposition
of any material assets or became involved in any other material transaction,
other than for fair value in the ordinary course of business; (xi) increased the
compensation payable, or to become payable, to any of its directors or
employees, or made any bonus payment or similar arrangement with any of its
directors or employees or increased the scope or nature of any fringe benefits
provided for its employees or directors, other than normal compensation
adjustments and bonuses and adjustments and bonuses made in the ordinary course
of business consistent with industry custom and practices; or (xii) agreed to do
any of the foregoing other than pursuant hereto. There has been no material
adverse change in the financial condition, operations, prospects, results of
operations or business of the Company since December 31, 2000.
4.6 SEC Reports and Financial Statements. The Company
has filed with the Securities and Exchange Commission (the "SEC") all forms,
reports, schedules, statements and other documents required to be filed by it
with the SEC (as such documents have been amended since the time of their
filing, collectively, the "SEC Documents"), and have filed all exhibits required
to be filed with the SEC Documents. As of their respective dates or, if amended,
as of the date of the last such amendment, the SEC Documents, including, without
limitation, any financial statements or schedules included therein, complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act") and the Exchange Act, and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.7 Financial Statements; Accountants. The financial
statements of the Company contained in the SEC Documents (i) are in accordance
with the books and records of the Company, (ii) present fairly the financial
condition of the Company at the balance sheets dates and the results of its
operations for the periods therein specified, and (iii) have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior accounting periods other than as set forth in the
footnotes thereto and, with respect to the interim financial statements, normal
year end adjustments which are immaterial in the aggregate. The other financial
information contained in the SEC Documents has been prepared on a basis
consistent with the financial statements of the Company. Without limiting the
generality of the foregoing, the balance sheets or notes included in the
financial statements set forth in the SEC Documents disclose all of the debts,
liabilities and obligations of any nature (whether absolute, accrued or
contingent and whether due or to become due) of the Company as of the dates set
forth therein which, individually or in the aggregate, are material and which in
accordance with generally accepted accounting principles would be required to be
disclosed in such balance sheets, and include appropriate reserves for all taxes
and other liabilities accrued as of such dates but not yet payable. To the
Company's knowledge, Ernst & Young LLP, who the Company expects will consent to
the inclusion in the S-3 Registration Statement referred to in Section 7.1
hereof of its opinion with respect to the financial statements to be
incorporated by reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 2000 into the S-3 Registration Statement and the
prospectus which forms a part thereof, are independent accountants as required
by the Securities Act and the rules and regulations promulgated thereunder.
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4.8 Tax Returns and Audits. All required federal,
state and local tax returns or appropriate extension requests of the Company
have been filed, and all federal, state and local taxes required to be paid with
respect to such returns have been paid or provision for the payment thereof has
been made. The Company is not delinquent in the payment of any such tax or in
the payment of any assessment or governmental charge. The Company has not
received notice of any tax deficiency proposed or assessed against it, and it
has not executed any waiver of any statute of limitations on the assessment or
collection of any tax. The Company has not received notice that any of the
Company's tax returns has been audited by governmental authorities. The Company
does not have any tax liabilities except those incurred in the ordinary course
of business since December 31, 2000.
4.9 No Violations. The Company is not in violation of
its charter, bylaws, or other organizational document, or in violation of any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to have
a Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in any
material respect in the performance of any bond, debenture, note or any other
evidence of indebtedness in any indenture, mortgage, deed of trust or any other
material agreement or instrument to which the Company is a party or by which the
Company is bound or by which the properties of the Company are bound, which
would be reasonably likely to have a Material Adverse Effect.
4.10 Non-Contravention. The execution and delivery of
this agreement, the issuance and sale of the Shares under this agreement, the
fulfillment of the terms of this agreement and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
material bond, debenture, note or other evidence of indebtedness, lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which the
Company or its properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or its properties, except in the
case of clauses (i) and (iii) for any such conflicts, violations or defaults
which are not reasonably likely to have a Material Adverse Effect, or (B) result
in the creation or imposition of any lien, encumbrance, claim, security interest
or restriction whatsoever upon any of the material properties or assets of the
Company or an acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any material bond, debenture, note or any other
evidence of indebtedness or any material indenture, mortgage, deed of trust or
any other agreement or instrument to which the Company is a party or by which it
is bound or to which any of the material property or assets of the Company is
subject. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States or any other person is required for
the execution and delivery of this agreement and the valid issuance and sale of
the Shares to be sold pursuant to this agreement, other than such as have been
made or obtained, and except for any post-closing securities filings or
notifications required to be made under federal or state securities laws.
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4.11 Intellectual Property. Except as specifically
disclosed in the SEC Documents (i) the Company owns or possesses sufficient
rights to use all material patents, patent rights, trademarks, copyrights,
licenses, inventions, trade secrets, trade names and know-how (collectively,
"Intellectual Property") described or referred to in the SEC Documents as owned
or possessed by it or that are necessary for the conduct of its business as now
conducted or as proposed to be conducted as described in the SEC Documents, (ii)
the Company is not infringing, or has received any notice of, or has any
knowledge of, any asserted infringement by the Company of, any rights of a third
party with respect to any Intellectual Property that, individually or in the
aggregate, would have a Material Adverse Effect and (iii) the Company has not
received any notice of, or has any knowledge of, infringement by a third party
with respect to any Intellectual Property rights of the Company that,
individually or in the aggregate, would have a Material Adverse Effect.
4.12 Capitalization. The capitalization of the
Company as of September 30, 2001 is as set forth in the most recent applicable
SEC Document, increased as set forth in the next sentence. The Company has not
issued any capital stock since that date other than pursuant to (i) employee
benefit plans disclosed in the SEC Documents, or (ii) outstanding warrants,
options or other securities disclosed in the SEC Documents or disclosed in this
agreement. The outstanding shares of capital stock of the Company have been duly
and validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Except as set forth in the SEC Documents or as disclosed in
this agreement, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party or of which the
Company has knowledge and relating to the issuance or sale of any capital stock
of the Company, any such convertible or exchangeable securities or any such
rights, warrants or options. Without limiting the foregoing, except for the
registration rights contemplated in this agreement and as otherwise described on
Exhibit A, no preemptive right, co-sale right, right of first refusal,
registration right, or other similar right exists with respect to the Shares or
the issuance and sale thereof. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Shares. Except as disclosed in the SEC Documents, there
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Common Stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company's stockholders.
The issuance of the Shares will not cause any adjustment of the conversion price
for any series or class of the Company's outstanding capital stock.
4.13 Litigation; Governmental Proceedings. There are
no legal actions, suits, arbitrations or other legal, administrative or
governmental proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company, or its properties or business, and the
Company is not aware of any facts which are likely to result in or form the
basis for any such action, suit or other proceeding. The Company is not in
default with respect to any judgment, order or decree of any court or any
governmental agency or instrumentality. The Company has not been threatened with
any action or proceeding under any business or zoning ordinance, law or
regulation.
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4.14 No Undisclosed Liabilities. Except for
liabilities not in excess of $250,000 individually or $500,000 in the aggregate,
each incurred in the ordinary course of business and consistent with past
practice, and liabilities incurred in connection with the consummation of the
transactions contemplated hereby (none of which, individually or in the
aggregate, could have a Material Adverse Effect) since December 31, 2000, the
Company has not incurred any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be required by generally
accepted accounting principles to be reflected on a consolidated balance sheet
of the Company (including the notes thereto), or which individually or in the
aggregate, could have a Material Adverse Effect.
4.15 Insurance. There is in full force and effect one
or more policies of insurance issued by insurers of recognized responsibility,
insuring the Company and its properties and business against such losses and
risks, and in such amounts, as are customary in the case of corporations of
established reputation engaged in the same or similar businesses and similarly
situated. The Company has not been refused any insurance coverage sought or
applied for, and the Company has no reason to believe that it will be unable to
renew its existing insurance coverage as and when the same shall expire upon the
terms similar to those presently in effect, other than possible increases in
premiums that do not result from any act or omission of the Company. The Company
maintains a Directors and Officers insurance policy issued by an insurer of
recognized responsibility in an amount that is customary in the case of
corporations similarly situated.
4.16 Material Contracts.
(a) The SEC Documents contain a description,
as of the date of this agreement, of all material agreements or instruments to
which the Company is a party or by which the Company is bound (collectively, the
"Material Contracts")
(b) Each of the Material Contracts is in
full force and effect and constitutes a valid and binding obligation of the
Company and, to the Company's knowledge, the other party thereto.
4.17 Transactions with Affiliates. Except as set
forth in the SEC Documents, none of the officers, employees, directors or other
affiliates of the Company are a party to any transactions with the Company.
There have been no assumptions or guarantees by the Company of any obligations
of such persons.
4.18 Completeness and Accuracy of Information. No
representation or warranty of the Company contained in this agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein not misleading in
light of the circumstances in which the same were made.
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4.19 NASDAQ Compliance. The Company's Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on The
Nasdaq National Market of The Nasdaq Stock Market, Inc. (the "Nasdaq National
Market"), and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or de-listing the Common Stock from the Nasdaq National Market, nor has the
Company received any notification that the SEC or the National Association of
Securities Dealers, Inc. ("NASD") is contemplating terminating such registration
or listing.
4.20 Listing. The Company shall comply with all
requirements of NASD with respect to the issuance of the Shares and the listing
thereof on the Nasdaq National Market.
4.21 No Manipulation of Stock. The Company has not
taken and will not, in violation of applicable law, take, any action designed to
or that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
4.22 Company not an "Investment Company". The Company
has been advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not, and
immediately after receipt of payment for the Shares will not be, an "investment
company" or an entity "controlled" by an "investment company" within the meaning
of the Investment Company Act and shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.
4.23 Securities Laws. Based in part upon the
representations of the Investors in Article 5, no consent, authorization,
approval, permit or order of or filing with any governmental or regulatory
authority is required under current laws and regulations in connection with the
execution and delivery of this agreement or the offer, issuance, sale or
delivery of the Shares, other than the qualification thereof, if required, under
applicable state securities laws, which qualification has been or will be
effected as a condition of these sales. The Company has not, directly or through
an agent, offered the Shares or any similar securities for sale to, or solicited
any offers to acquire such securities from, persons other than the Investors and
other accredited investors. Under the circumstances contemplated by this
agreement and assuming the accuracy of the representations of the Investors in
Article 5, the offer, issuance, sale and delivery of the Shares will not, under
current laws and regulations, require compliance with the prospectus delivery or
registration requirements of the Securities Act.
5. Representations of the Investors. Each Investor represents
for itself that:
5.1 Investment Intent. The Shares being acquired by
such Investor are being purchased for investment for such Investor's own account
and not with the view to, or for resale in connection with, any distribution or
public offering thereof. Such Investor understands that the Shares have not been
registered under the Securities Act or any state securities laws by reason of
their contemplated issuance in transactions exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof and
applicable state securities laws, and that the reliance of the Company and
others upon these exemptions is predicated in part upon this representation by
each Investor. Such Investor further understands that the Shares may not be
transferred or resold without (i) registration under the Securities Act and any
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applicable state securities laws, or (ii) an exemption from the requirements of
the Securities Act and applicable state securities laws. Except with the prior
written consent of the Company, the Investor will not, prior to the
effectiveness of the S-3 Registration Statement (as defined in Section 7.1,
directly or indirectly, sell, offer to sell, solicit offers to buy, dispose of,
loan, pledge or grant any right with respect to (collectively, a "Disposition"),
the Common Stock of the Company, nor will Investor engage in any hedging or
other transaction which is designed to or could reasonably be expected to lead
to or result in a Disposition of Common Stock of the Company by the Investor or
any other person or entity or any other derivative security transaction the
purpose or effect of which is to hedge or transfer to a third party all or any
part of the risk of loss associated with the ownership of the Shares by the
Investor. Such prohibited hedging or other transactions would include, without
limitation, effecting any short sale or equity swap transaction or having in
effect any short position (whether or not such sale or position is against the
box and regardless of when such position was entered into) or any purchase, sale
or grant of any right (including, without limitation, any put or call option)
with respect to the Common Stock of the Company.
5.2 Location of Principal Office, Qualification as an
Accredited Investor, Etc. The state in which such Investor's principal office
(or domicile, if such Investor is an individual) is located is the state set
forth in such Investor's address on Schedule 1. Such Investor acknowledges that
the Company has made available to such Investor at a reasonable time prior to
the execution of this agreement the opportunity to ask questions and receive
answers concerning the terms and conditions of the sale of securities
contemplated by this agreement and to obtain any additional information (which
the Company possesses or can acquire without unreasonable effort or expense) as
may be necessary to verify the accuracy of information furnished to such
Investor. Such Investor (a) is able to bear the loss of its entire investment in
the Shares without any material adverse effect on its business, operations or
prospects, and (b) has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
to be made by it pursuant to this agreement.
5.3 Acts and Proceedings. This agreement has been
duly authorized by all necessary action on the part of such Investor, has been
duly executed and delivered by such Investor, and is a valid and binding
agreement of such Investor.
5.4 Exculpation Among Investors. Such Investor
acknowledges that in making its decision to invest in the Company, it is not
relying on any other Investor or upon any person, firm or company, other than
the Company and its officers, employees and/or directors. Such Investor agrees
that no other Investor, nor the partners, employees, officers or controlling
persons of any other Investor shall be liable for any actions taken by such
Investor, or omitted to be taken by such Investor, in connection with such
investment.
5.5 Accredited Investor. Such Investor is an
"Accredited Investor" within the meaning of Rule 501 promulgated under the
Securities Act.
6. Conditions of Each Investor's Obligation. The obligation to
purchase and pay for the Shares that each Investor has agreed to purchase is
subject to the fulfillment prior to or on the Closing Date of the conditions set
forth in this Article 6.
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6.1 Compliance with Agreement. The Company shall have
performed and complied with all agreements or covenants required by this
agreement to be performed and complied with by it prior to or as of the Closing
Date.
6.2 Necessary Consents and Approvals. On or before
the Closing Date, the Company shall have obtained any consents or approvals of
any person or governmental authority or regulatory authority necessary for the
consummation of the transactions contemplated under this agreement including,
without limitation, all necessary consents and approvals of the Nasdaq National
Market and/or NASD, and the Investors shall have received satisfactory evidence
of such consents and approvals.
6.3 Proceedings and Documents. All corporate and
other proceedings and actions taken in connection with the transactions
contemplated hereby and all certificates, opinions, agreements, instruments and
documents mentioned herein or incident to any such transaction shall be
satisfactory in form and substance to legal counsel for the Investors.
6.4 Waiver of Certain Rights of UBS Capital II LLC.
On or before the Closing Date, the Company shall have (i) amended Section 7.1 of
that certain Stock Purchase Agreement, dated July 23, 1998, by and between the
Company and UBS Capital II LLC ("UBS" and the "UBS Agreement"), with certain
limitations, to eliminate any restrictions on the Company's ability to issue
additional equity or debt securities, (ii) amended Section 11 of the UBS
Agreement to eliminate UBS' preemptive rights, (iii) amended Section 9.1 of that
certain Stock Purchase Agreement, dated August 2, 1999, by and between the
Company and UBS to eliminate any restrictions on the Company's ability to issue
shares of the Company's preferred stock having rights and preferences equal to
or senior in rank to the Company's currently outstanding preferred stock, (iv)
obtained a permanent and irrevocable waiver from UBS of its rights as a holder
of shares of the Company's Senior Convertible Preferred Stock under Sections
11(e), (f) and (g) of Article V.B of the Company's Certificate of Incorporation,
(v) cancelled its outstanding promissory note in favor of UBS, dated August 2,
1999, in the face amount of $2,050,000, and (vi) amended the terms of that
certain Warrant (the "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, up to 315,385 shares of the Company's Series D Non-Voting Preferred
Stock, or any combination thereof not to exceed $2,050,000, such that (A) the
Company shall not have the right to compel exercise of the Warrant under the
circumstances described in Section 3 of the Warrant and to permit exercise of
the Warrant at anytime after July 23, 2002, as determined by UBS in its sole
discretion, and (B) include a cashless exercise provision with respect to shares
of Series C Convertible Preferred Stock. Such amendments and waivers shall be in
a form satisfactory to legal counsel of the Investors, and the Company shall
have delivered executed copies of such amendments and waivers to legal counsel
of the Investors before the Closing Date.
6.5 Legal Opinion. The Investors shall have received
an originally executed opinion of Xxxxxx & Xxxxxxx LLP, counsel for the Company,
dated as of the Closing Date, in the form attached as Exhibit C.
6.6 Injunctions, Restraining Order or Adverse
Litigation. No order, judgment or decree of any court, arbitral tribunal,
administrative agency or other governmental or regulatory authority or agency
shall purport to enjoin or restrain the Investors from acquiring the Shares on
the Closing Date.
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6.7 Payment of Fees and Expenses. The Company shall
have paid on or before the Closing Date, or on the date of receipt of invoices
(if later), the reasonable fees, charges and disbursements of the Investors,
including the fees and expenses of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, which shall
not exceed $20,000 in the aggregate.
6.8 Board of Directors. On the Closing Date, the
Company's Board of Directors shall consist of seven members, one of whom shall
be Xxxxx Xxxxxxx.
6.9 Management Rights Letter. The Company shall have
executed and delivered a management rights letter to those Investors who have
made a request to the Company therefor.
7. Registration of the Shares; Compliance with the
Securities Act.
7.1 Registration Procedures and Other Matters. The
Company shall:
(a) subject to receipt of necessary
information from the Investors after prompt request from the Company to the
Investors to provide such information, prepare and file with the SEC, within
sixty (60) days after the Closing Date, (or, if the sixtieth day after the
Closing Date is not a business day, then the first business day thereafter) a
registration statement on Form S-3 (the "S-3 Registration Statement") to enable
the resale of the Shares by the Investors from time to time through the
automated quotation system of the Nasdaq National Market or in
privately-negotiated transactions;
(b) use its best efforts, subject to receipt
of necessary information from the Investors after prompt request from the
Company to the Investors to provide such information, to cause the S-3
Registration Statement to become effective within 60 days after the S-3
Registration Statement is filed by the Company (or, if the sixtieth day is not a
business day, the first business day thereafter), such efforts to include,
without limiting the generality of the foregoing, preparing and filing with the
SEC in such 60-day period any financial statements that are required to be filed
prior to the effectiveness of such S-3 Registration Statement;
(c) use its best efforts to prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary to keep the
Registration Statement current, effective and free from any material
misstatement or omission to state a material fact for a period not exceeding,
with respect to each Investor's Shares purchased hereunder, the earlier of (i)
the third anniversary of the Closing Date (as adjusted to give effect to any
"Suspension" pursuant to Section 7.2(c) hereof), (ii) the date on which the
Investor may sell all Shares then held by the Investor without restriction by
the volume limitations of Rule 144(e) of the Securities Act, or (iii) such time
as all Shares purchased by such Investor pursuant to this agreement have been
sold pursuant to a registration statement;
10
(d) furnish to each Investor with respect to
the Shares registered under the S-3 Registration Statement such number of copies
of the S-3 Registration Statement, prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act and such other documents
as such Investor may reasonably request, in order to facilitate the public sale
or other disposition of all or any of the Shares by such Investor; provided,
however, that the obligation of the Company to deliver copies of prospectuses or
preliminary prospectuses to such Investor shall be subject to the receipt by the
Company of reasonable assurances from such Investor that such Investor will
comply with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such prospectuses or preliminary prospectuses;
(e) file documents required of the Company
for normal blue sky clearance in states specified in writing by the Investors
and use its best efforts to maintain such blue sky qualifications during the
period the Company is required to maintain the effectiveness of the S-3
Registration Statement pursuant to Section 7.1(c); provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented;
(f) bear all expenses in connection with the
procedures in paragraph (a) through (e) of this Section 7.1 and the registration
of the Shares pursuant to the S-3 Registration Statement except with respect to
any legal or attorney fees incurred by any of the Investors in connection with
the S-3 Registration Statement and any amendments thereto; and
(g) advise each Investor, promptly after the
Company shall receive notice or obtain knowledge of the issuance of any stop
order by the SEC delaying or suspending the effectiveness of the S-3
Registration Statement or of the initiation or threat of any proceeding for that
purpose; and it will promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal at the earliest possible moment if
such stop order should be issued.
The Investors acknowledge that the Company may
include on the S-3 Registration Statement shares of Common Stock of the Company
for resale by certain other stockholders of the Company, and that the Company
may file a subsequent registration statement for the resale of shares of Common
Stock by certain other stockholder of the Company. In no other event at any time
before the S-3 Registration Statement becomes effective with respect to the
Shares shall the Company publicly announce or file any other registration
statement, other than registration statements on Form S-8, without the prior
written consent of a majority in interest of the Investors.
7.2 Transfer of Shares After Registration; Suspension.
(a) Each Investor agrees that it will not
effect any disposition of the Shares or their right to purchase the Shares that
would constitute a sale within the meaning of the Securities Act except as
contemplated in the S-3 Registration Statement referred to in Section 7.1 hereof
and as described below or as otherwise permitted by law, and that such Investor
will promptly notify the Company of any changes in the information set forth in
the S-3 Registration Statement regarding such Investor or its plan of
distribution.
11
(b) Except in the event that Section 7.2(c)
applies, the Company shall (i) if deemed necessary by the Company, prepare and
file from time to time with the SEC a post-effective amendment to the S-3
Registration Statement or a supplement to the related prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other
required document so that such S-3 Registration Statement will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and so that, as thereafter delivered to purchasers of the Shares being sold
thereunder, such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (ii) provide each Investor copies of any documents
filed pursuant to Section 7.2(b)(i); and (iii) inform each Investor that the
Company has complied with its obligations in Section 7.2(b)(i) (or that, if the
Company has filed a post-effective amendment to the S-3 Registration Statement
which has not yet been declared effective, the Company will notify each Investor
to that effect, will use its best efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify each
Investor when the amendment has become effective).
(c) Subject to Section 7.2(d), in the event
(i) of any request by the SEC or any other federal or state governmental
authority during the period of effectiveness of the S-3 Registration Statement
for amendments or supplements to the S-3 Registration Statement or related
prospectus or for additional information; (ii) of the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of the S-3 Registration Statement or the initiation of any
proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; or (iv) of any
event or circumstance which, upon the advice of its counsel, necessitates the
making of any changes in the S-3 Registration Statement or prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the S-3 Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the prospectus, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; then the
Company shall deliver a certificate in writing to each Investor (the "Suspension
Notice") to the effect of the foregoing and, upon receipt of such Suspension
Notice, such Investor will refrain from selling any Shares pursuant to the S-3
Registration Statement (a "Suspension") until such Investor's receipt of copies
of a supplemented or amended prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such prospectus. In the
event of any Suspension, the Company will use its best efforts to cause the use
of the prospectus so suspended to be resumed as soon as reasonably practicable
within 20 business days after the delivery of a Suspension Notice to the
Investors. The time periods set forth in Section 7.1(c) hereof for which the
Company is required to maintain the effectiveness of the S-3 Registration
Statement shall be extended by the aggregate number of days of all Suspensions.
In addition to and without limiting any other remedies (including, without
limitation, at law or at equity) available to the Investors, the Investors shall
be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 7.2(c).
12
(d) Notwithstanding the foregoing paragraphs
of this Section 7.2, the Investors shall not be prohibited from selling Shares
under the S-3 Registration Statement as a result of Suspensions on more than two
occasions of not more than 30 days each in any twelve-month period, unless, in
the good faith judgment of the Company's Board of Directors, upon the written
opinion of counsel, the sale of Shares under the S-3 Registration Statement in
reliance on this Section 7.2(d) would be reasonably likely to cause a violation
of the Securities Act or the Exchange Act and result in liability to the
Company.
(e) Provided that a Suspension is not then
in effect, each Investor may sell Shares under the S-3 Registration Statement,
provided that it arranges for delivery of a current prospectus to the transferee
of such Shares. Upon receipt of a request therefor, the Company has agreed to
provide an adequate number of current prospectuses to each Investor and to
supply copies to any other parties requiring such prospectuses.
(f) In the event of a sale of Shares by any
Investor pursuant to the S-3 Registration Statement, such Investor must also
deliver to the Company's transfer agent, with a copy to the Company, a
Certificate of Subsequent Sale substantially in the form attached hereto as
Exhibit D, and its stock certificate, so that the Shares may be properly
transferred.
7.3 Indemnification. For the purpose of this Section
7.3:
(i) the term "Selling Stockholder" shall include
each Investor and any affiliate of such Investor;
(ii) the term "Registration Statement" shall include
the prospectus in the form first filed with the SEC pursuant to Rule 424(b) of
the Securities Act or filed as part of the S-3 Registration Statement at the
time of effectiveness if no Rule 424(b) filing is required, and any exhibit,
supplement or amendment included in or relating to the S-3 Registration
Statement referred to in Section 7.1; and
(iii) the term "untrue statement" shall include any
untrue statement or alleged untrue statement, or any omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(a) The Company agrees to indemnify and hold
harmless each Selling Stockholder (and each person, if any, who controls each
Selling Stockholder within the meaning of Section 15 of the Securities Act) from
and against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any breach of the
representations or warranties of the Company contained herein or failure to
comply with the covenants and agreements of the Company contained herein, (ii)
any untrue statement of a material fact contained in the Registration Statement
as amended at the time of effectiveness or any omission of a material fact
13
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any failure by the Company to fulfill any undertaking
included in the Registration Statement at the time of effectiveness, and the
Company will reimburse such Selling Stockholder for any reasonable and
documented legal expenses and any other actual, accountable out-of-pocket
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim, or preparing to defend any such action,
proceeding or claim, provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue statement made in such Registration
Statement or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the Registration
Statement or the failure of such Selling Stockholder to comply with its
covenants and agreements contained in Section 7.2 hereof respecting the sale of
the Shares or any statement or omission in any prospectus that is corrected in
any subsequent prospectus that was delivered to the Selling Stockholder prior to
the pertinent sale or sales by the Selling Stockholder. The Company shall
reimburse each Selling Stockholder for the amounts provided for herein within a
reasonable period of time after demand thereof.
(b) Each Selling Stockholder agrees to
indemnify and hold harmless the Company (and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, each officer
of the Company who signs the Registration Statement and each director of the
Company) from and against any losses, claims, damages or liabilities to which
the Company (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon (i) any failure to comply with the covenants and
agreements contained in Section 7.2 hereof respecting sale of the Shares, or
(ii) any untrue statement of a material fact contained in the Registration
Statement or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading if such untrue statement
or omission was made in reliance upon and in conformity with written information
furnished by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement, and such Selling Stockholder will
reimburse the Company (or such officer, director or controlling person), as the
case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim. Each Selling Stockholder's indemnity obligations under this Section
7.3(b) shall be limited to the net proceeds received by such Selling Stockholder
in connection with the Registration Statement.
(c) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 7.3, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, but the omission to so notify the indemnifying person will not relieve
it from any liability which it may have to any indemnified person under this
Section 7.3 (except to the extent that such omission materially and adversely
affects the indemnifying person's ability to defend such action) or from any
liability otherwise than under this Section 7.3. Subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered to
14
the indemnified person promptly after receiving the aforesaid notice from such
indemnified person, shall be entitled to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in
this Section 7.3 is unavailable to or insufficient to hold harmless an
indemnified person under subsection (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying person shall contribute to the
amount paid or payable by such indemnified person as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the relative fault of an Investor, as well as any other Selling
Shareholders under such Registration Statement, on the other in connection with
the statements or omissions or other matters which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the one
hand or an Investor or other Selling Shareholder on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement. The Company and the Investors agree that it would
not be just and equitable if contribution pursuant to this Section 7.3(d) were
determined by pro rata allocation (even if the Investors and other Selling
Shareholders were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to above in this Section 7.3(d). The amount paid or payable by an
indemnified person as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this Section 7.3(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7.3(d), each Investor
shall not be required to contribute any amount in excess of the amount by which
the net amount received by such Investor from the sale of the Shares to which
such loss relates exceeds the amount of any damages which such Investor has
otherwise been required to pay by reason of such untrue statement. No person
15
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Each Investor's obligations in
this Section 7.3(d) to contribute shall be in proportion to its sale of Shares
to which such loss relates and shall not be joint with any other Selling
Shareholders.
(e) Each Investor hereby acknowledges that
it is a sophisticated business person who was represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7.3, and is fully informed regarding said provisions.
Each Investor further acknowledges that the provisions of this Section 7.3
fairly allocate the risks involved in the purchase of the Shares. The Investors
and the Company are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 7.3, and the Investors and the Company hereto hereby
expressly waive and relinquish any right or ability to assert such public policy
as a defense to a claim under this Section 7.3 and further agree not to attempt
to assert any such defense.
7.4 Termination of Conditions and Obligations. The
conditions precedent imposed by Articles 5, 7 and 8 upon the transferability of
the Shares shall cease and terminate as to any particular number of the Shares
when such Shares shall have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the S-3 Registration Statement covering such Shares or
at such time as an opinion of counsel reasonably satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
8. Restriction on Transfer of Shares.
8.1 Restrictions. The Shares are only transferable
pursuant to (a) a public offering registered under the Securities Act, or (b)
pursuant to an exemption from the registration requirements of the Securities
Act and applicable state securities or blue sky laws.
8.2 Legend. Each certificate representing Shares
shall be endorsed with the following legend:
"The shares represented by this certificate may not be
transferred without (i) an exemption from the registration
requirements under the Federal Securities Act of 1933 and all
applicable state securities laws or (ii) such registration."
8.3 Removal of Legend. Any legend endorsed on a certificate
evidencing a security pursuant to Section 8.2 hereof shall be removed, and the
Company shall issue a certificate without such legend to the holder of such
security, if such security is being disposed of pursuant to a registration under
the Securities Act or pursuant to Rule 144 or any similar rule then in effect or
if such holder provides the Company with an opinion of counsel satisfactory to
the Company to the effect that a transfer of such security may be made without
registration. In addition, if the holder of such security delivers to the
Company an opinion of such counsel to the effect that no subsequent transfer of
such security will require registration under the Securities Act, the Company
will promptly upon such contemplated transfer deliver new certificates
evidencing such security that do not bear the legend set forth in Section 8.2.
16
9. Covenants of the Company.
9.1 Board of Directors. For as long as Alta BioPharma
Partners II, L.P. ("Alta"), together with its affiliates, owns in the aggregate
at least 25% of the shares of Common Stock purchased by Alta and its affiliates
on the Closing Date, the Company will cause Xxxxx Xxxxxxx, or such other
substitute person as Alta may designate from time to time (any such person so
designated by Alta is referred to as the "Alta Designee"), to be included in the
slate of nominees recommended by the Board of Directors to stockholders for
election as directors at any meeting of stockholders of the Company and shall
not make any recommendation against election of the Alta Designee to the
stockholders.
9.2 Rule 144. The Company covenants that it will
timely file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the
request of any Investor holding Shares purchased hereunder made after the first
anniversary of the Closing Date, make publicly available such information as
necessary to permit sales pursuant to Rule 144 under the Securities Act), and it
will take such further action as any such Investor may reasonably request, all
to the extent required from time to time to enable such Investor to sell Shares
purchased hereunder without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of an Investor, the
Company will deliver to such Investor a written statement as to whether it has
complied with such information and requirements.
10. Miscellaneous.
10.1 No Waivers; Cumulative Remedies. No failure or
delay on the part of the Investors, or any other holder of any Shares in
exercising any right, power or remedy hereunder or thereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or thereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
10.2 Amendments; Waiver and Consents. Except as
otherwise set forth in the following sentence, this agreement may be amended or
modified, and the obligations of the Company and the rights of the holders of
Shares purchased under this agreement may be waived, only by the written consent
of holders of a majority of the Shares that have not been resold in a public
offering or transferred pursuant to Rule 144 promulgated under the Securities
Act. Notwithstanding the foregoing, Section 9.1 hereof may be amended, modified
or waived only upon the written consent of Alta. Any waiver or consent may be
given subject to satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
17
10.3 Changes, Waivers, Etc. Neither this agreement
nor any provision hereof may be changed, waived, discharged or terminated
orally, but only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, except to
the extent provided in Section 10.2.
10.4 Notices. All notices, requests, consents and
other communications required or permitted hereunder shall be in writing and
shall be delivered, or mailed first-class postage prepaid, registered or
certified mail,
(a) if to any holder of any Shares addressed to such
holder at its address as shown on the books of the Company, or
at such other address as such holder may specify by written
notice to the Company.
(b) if to the Company at 00000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000. Attention: Chief Executive
Officer; or at such other address as the Company may specify
by written notice to the Investors.
10.5 Assignment.
(a) This agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
(b) The Investors may freely assign their rights,
interests and obligations attached to the Shares, upon
transfer of the same in accordance with Section 5.1 and
Article 8 hereof.
(c) Neither this agreement nor any of the rights,
interests or obligations hereunder may be assigned by the
Company without the prior written consent of the Investors
hereto.
10.6 Severability. Whenever possible, each provision
of this agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
agreement.
10.7 Complete Agreement. This agreement and other
exhibits and schedules hereto contain the complete agreement between the parties
and supersede any prior understandings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way.
10.8 Governing Law. The internal law, without regard
to conflicts of laws principles, of the State of Delaware will govern all
questions concerning the construction, validity and interpretation of this
agreement and the performance of the obligations imposed by this agreement.
18
10.9 Counterparts. This agreement may be executed
concurrently in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.10 Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
agreement, all covenants, agreements, representations and warranties made by the
Company and the Investor herein shall survive the execution of this agreement,
the delivery to the Investor of the Shares being purchased and the payment
therefor.
Remaining portion of this page intentionally left blank; signature
pages to follow.
19
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed by its duly authorized representative and each of the Investors has
caused this agreement to be executed by signing in counterpart the acceptance
form attached to this agreement.
ORPHAN MEDICAL, INC.
By /s/ Xxxx Xxxxxx Bullion
-------------------------------------
Xxxx Xxxxxx Bullion
Chief Executive Officer
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed by its duly authorized representative and each of the Investors has
caused this agreement to be executed by signing in counterpart the acceptance
form attached to this agreement.
ALTA BIOPHARMA PARTNERS II, L.P.
By: Alta BioPharma Management
Partners II, LLC
By /s/ Xxxxx Xxxxxxx
---------------------------------
Managing Director
ALTA EMBARCADERO BIOPHARMA
PARTNERS II, LLC
By /s/ Xxxxx Xxxxxxx
--------------------------------------
Manager
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed by its duly authorized representative and each of the Investors has
caused this agreement to be executed by signing in counterpart the acceptance
form attached to this agreement.
Medical Biohe@lth-Trends Funds
By: XXXXXXXXX INVESTMENT
MANAGEMENT INTERNATIONAL S.A.
By /s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxxxx,
General Manager
Pharma/wHealth Funds
By: PHARMA/wHEALTH Management
Company S.A.
By /s/ Xxxxx xxx Xxxxxxxx
----------------------------------
Xxxxx xxx Xxxxxxxx,
General Manager
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed by its duly authorized representative and each of the Investors has
caused this agreement to be executed by signing in counterpart the acceptance
form attached to this agreement.
WINCHESTER GLOBAL TRUST COMPANY
LIMITED AS TRUSTEE FOR CADUCEUS CAPITAL
TRUST
By: OrbiMed Advisors LLC
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Managing Partner
CADUCEUS CAPITAL II, L.P.
By: OrbiMed Advisors LLC
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Managing Partner
PW EUCALYPTUS FUND LLC
By: OrbiMed Advisors LLC
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Managing Partner
PW EUCALYPTUS FUND LTD.
By: OrbiMed Advisors LLC
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Managing Partner
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed by its duly authorized representative and each of the Investors has
caused this agreement to be executed by signing in counterpart the acceptance
form attached to this agreement.
/s/ Xxxxxxx Xxxxx
-----------------------------------------
Xxxxxxx Xxxxx
Schedule 1
Name and Address of Investor Number of Shares to be Purchased Purchase Price for Shares
----------------------------------------------------- ------------------------------------- --------------------------
Alta BioPharma Partners II, L.P. 1,169,113 $9,645,182.25
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Alta Embarcadero BioPharma Partners II, LLC 43,008 $354,816.00
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Medical Biohe@lth-Trends Funds 110,061 $908,003.25
Xxxxxxxxx Investment Management
International S.A.
Xx. Xxxxx X. Xxxxxxxxxxx, General Manager
0, xxx Xxxx Xxxxxx
X-0000 Xxxxxxxxx
Pharma/wHealth Funds 27,515 $226,998.75
PHARMA/wHEALTH Management Company S.A.
Xx. Xxxxx xxx Xxxxxxxx, General Manager
0, xxx Xxxx Xxxxxx
X-0000 Xxxxxxxxx
Winchester Global Trust Company Limited as Trustee 137,302 $1,132,741.50
for Caduceus Capital Trust
c/o OrbiMed Advisors LLC
Xxxxxx X. Xxxxx, Managing Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Caduceus Capital II, L.P. 120,000 $990,000.00
c/o OrbiMed Advisors LLC
Xxxxxx X. Xxxxx, Managing Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
PW Eucalyptus Fund LLC 40,000 $330,000.00
c/o OrbiMed Advisors LLC
Xxxxxx X. Xxxxx, Managing Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
PW Eucalyptus Fund Ltd. 40,000 $330,000.00
c/o OrbiMed Advisors LLC
Xxxxxx X. Xxxxx, Managing Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx 20,000 $165,000.00
000 Xxxx 00xx Xx.
Xxx. 0000
Xxx Xxxx, Xxx 00000
--------- --------------
1,706,999 $14,082,741.75
EXHIBIT A
DISCLOSURE SCHEDULE
Section 4.3 - Subsidiaries:
The Company has one subsidiary, Orphan Medical Europe Limited, a United
Kingdom domiciled company. This subsidiary was established to hold
marketing authorizations for the Company's European activities. There are
no employees, inventory or fixed assets related to this entity.
Section 4.5 - Changes, Dividends, etc:
The Company has had the following option activity in 2002.
Additional shares authorized under plan 750,000
(Approved by shareholders 5/24/2001)
Granted during 2001
Officers and Directors 152,400
Other 135,150
Section 4.13 - Litigation; Governmental Proceedings:
The Company has received notice from a vendor demanding payment, plus
interest, for a disputed invoice for services performed by the vendor. The
amount in dispute is approximately $50,000.
Section 4.16 - Material Contracts:
New Material Contracts
The Company entered into a contract with Ventiv Health, Inc., a
contract sales organization. Ventiv Health, Inc. will provide the
contract sales force for Xyrem(R)(sodium oxybate) oral solution. This
product is currently under review by the United States Food and Drug
Administration.
Current Material Contracts
The Company has received notice from a licensor, Research Corporation
Technologies, that it is terminating its license agreement effective
January 28, 2002. This license agreement is for alpha-galactosidase A.
EXHIBIT B
SUBSIDIARIES
Orphan Medical Europe Limited, a United Kingdom domiciled company
EXHIBIT C
FORM OF LEGAL OPINION
December ___, 2001
To the Investors Listed on Schedule 1 to
the Stock Purchase Agreement by and among
Orphan Medical, Inc. and such Investors
Ladies and Gentlemen:
We have acted as counsel for Orphan Medical, Inc., a Delaware
corporation (the "Company"), in connection with the issuance on the Closing Date
of 1,706,999 shares of the Company's common stock, $0.01 par value ("Common
Stock"), pursuant to that certain Stock Purchase Agreement, dated as of December
7, 2001 (the "Agreement"), between the Company and the Investors named therein.
Our opinions expressed below are being delivered to you pursuant to Section 6.5
of the Agreement. Capitalized terms used herein are as defined in the Agreement
unless otherwise specifically provided herein.
We have examined such documents, made such inquiries of
officers of the Company and have reviewed such questions of law as we have
considered necessary or appropriate for the purpose of this opinion.
In rendering our opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures, and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than the Company, that such
parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon the representations made in the Agreement and certificates of officers of
the Company and of public officials.
Our opinions expressed below as to certain factual matters are
qualified as being limited "to our knowledge" or by other words to the same or
similar effect. Such words, as used herein, mean the information known to all
attorneys currently a member of or employed by Xxxxxx & Whitney LLP who have
given substantive legal attention to the Company's affairs.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, with the corporate power to own its
properties and conduct its business as now conducted. The
Company has the corporate power and authority to execute and
deliver the Agreement and issue the Shares and to otherwise
perform its obligations under the Agreement.
2. The execution and delivery of the Agreement and
the performance of the Company's obligations under the
Agreement have been duly authorized by all requisite corporate
and stockholder action. The Agreement has been duly executed
and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the
Company in accordance with its terms.
3. The Shares, upon issuance, delivery and payment
therefor as described in the Agreement, will be validly
issued, fully paid and nonassessable with the rights,
privileges and preferences set forth in the Company's
Certificate of Incorporation.
4. The execution and delivery of the Agreement and
the performance of the Company's obligations under the
Agreement do not violate (i) any provision of the Certificate
of Incorporation or Bylaws of the Company, (ii) any provision
of any applicable federal or state law, rule or regulation,
(iii) any statutory or, to our knowledge, contractual
preemptive right of any securityholder of the Company, (iv)
any provision of the Certificate of Incorporation or Bylaws of
the Company related to preemptive rights of any securityholder
of the Company, or (v) to our knowledge, any order of any
court or other agency of government.
5. Based upon the Investors' representations
contained in the Agreement, the issuance, sale and delivery of
the Shares to the Investors on the Closing Date in conformity
with the terms of the Agreement constitute transactions exempt
from the registration requirements of the Securities Act of
1933, as amended.
6. No approval or consent of any court or
governmental agency, instrumentality or authority of the
United States or the State of Minnesota not duly obtained
(other than any approval or consent required under any state
securities or Blue Sky laws) is required for the execution and
delivery by the Company of the Agreement or the valid
authorization, issuance, sale and delivery of the Shares.
The opinions expressed above are subject to the following
qualifications and exceptions:
(a) Our opinion in paragraph 2 above is subject to
the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general
application affecting creditors' rights and subject to general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
(b) Our opinion in paragraph 2 above, insofar as it
relates to indemnification provisions, is subject to the
effect of federal and state securities laws and public policy
relating thereto.
(c) We express no opinion as to whether the issuance,
sale and delivery of the Shares to the Investors and the
performance of the Company's obligations under the Agreement
constitute a "change of control" as that phrase is defined
under paragraph 4350(i)(1)(B) of the Marketplace Rules
promulgated by the Nasdaq Stock Market or require approval of
the Company's shareholders pursuant to the aforementioned
paragraph 4350(i)(1)(B).
(d) Minnesota Statutes, Section 290.371, Subd. 4,
provides that any corporation required to file a Notice of
Business Activities Report does not have a cause of action
upon which it may bring suit under Minnesota law unless the
corporation has filed a Notice of Business Activities Report
and that the use of the courts of the State of Minnesota for
all contracts executed and all causes of actions that arose
before the end of any period for which a corporation failed to
file a required report is precluded. Insofar as the foregoing
opinion in paragraph 2 above may relate to the enforceability
of any agreement under Minnesota law or in a Minnesota court,
we have assumed that any party seeking to enforce the
agreement has at all times been, and will continue at all
times to be, exempt from the requirement of filing a Notice of
Business Activities Report or, if not exempt, has duly filed,
and will continue to duly file, all Notice of Business
Activities Reports.
Our opinions expressed above are limited to the laws of the
State of Minnesota, the Delaware General Corporation Law and the federal laws of
the United States. We call your attention to the fact that the Agreement states
that it is governed by Delaware law. We have not examined the question of what
law would govern the interpretation or enforcement of the Agreement, and our
opinion in paragraph 2 above is based on the assumption, for purposes of this
opinion, that the internal laws of the State of Minnesota would govern the
provisions of such Agreement and the transactions contemplated thereby.
The foregoing opinions are being furnished to you solely for
your benefit and may not be relied upon by, nor may copies be delivered to, any
other person without our prior written consent.
Very truly yours,
EXHIBIT D
CERTIFICATE OF SUBSEQUENT SALE
[NAME OF TRANSFER AGENT]
[ADDRESS OF TRANSFER AGENT]
RE: Sale of Shares of Common Stock of Orphan Medical, Inc.
(the "Company") pursuant to the Company's prospectus
dated _____________ (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Stockholders in
the Prospectus, that the undersigned has sold the shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all securities laws applicable
to the undersigned, including, without limitation, the Prospectus delivery
requirements of the Securities Act of 1933, as amended.
Selling Stockholder (the beneficial owner):_____________________________________
Record Holder (e.g., if held in name of nominee):_______________________________
Restricted Stock Certificate No.(s):____________________________________________
Number of Shares Sold:__________________________________________________________
Date of Sale:___________________________________________________________________
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
Dated: _________________________ By: _____________________________________
Print Name: _____________________________
Title: __________________________________
cc: Orphan Medical, Inc.
00000 Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxxxxx, XX 00000
