Revised Form of Contingent Value Rights Agreement
In connection with the Amendment, AcelRx and Tetraphase also agreed to a revised form of Contingent Value Rights Agreement (the Revised CVR
Agreement) with Computershare, Inc. governing the terms of the CVRs, which will be entered into at or prior to the Effective Time. Pursuant to the Revised CVR Agreement, the CVRs now represent an aggregate right to receive up to
$14.5 million in cash (instead of $12.5 million in stock and cash under the original form of CVR Agreement), without interest and less any applicable withholding taxes, in contingent consideration, conditioned upon the achievement of
specified levels of annual net sales of XERAVA as follows:
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a one-time payment of $2.5 million upon the achievement of
specified annual net sales of XERAVA in 2021;
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a one-time payment of $4.5 million upon the achievement of
specified annual net sales of XERAVA in any calendar year ending on or before December 31, 2024; and
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a one-time payment of $7.5 million upon the achievement of
specified annual net sales of XERAVA in any calendar year ending on or before December 31. 2024.
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The terms of the CVRs described
above reflect the parties agreement over the sharing of potential economic upside benefits from future net sales of XERAVA and do not necessarily reflect anticipated net sales of XERAVA. There can be no assurance that such levels of net sales
will occur or that any or all of the payments in respect of the CVRs will be made.
The right to such contingent consideration as evidenced by the Revised
CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the Revised CVR Agreement. The foregoing description of the Revised CVR Agreement does not purport to be complete and is
qualified in its entirety by reference to the form of Revised CVR Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Amendment to Voting Agreements
Concurrently with
execution of the Amendment, AcelRx and certain stockholders of Tetraphase representing approximately 20% of the voting power of Tetraphase entered into separate amendments to the Voting Agreements dated March 15, 2020 by and between AcelRx,
Merger Sub and each such stockholder (each such amendment, an Amendment to Voting Agreement). Pursuant to the Voting Agreement, as amended by the Amendment to Voting Agreement, each stockholder agreed, among other things, to vote the
shares of Tetraphase common stock beneficially owned by such stockholder in favor of adoption of the Merger Agreement, as amended by the Amendment, and against any acquisition proposal or liquidation or dissolution of Tetraphase, as well as such
other matters set forth in the Voting Agreement, as amended.
Pursuant to the Voting Agreement, as amended, each stockholder that is a party thereto has
also agreed to (i) exchange certain outstanding Tetraphase common stock warrants for a fixed amount of cash consideration and number of shares of AcelRx common stock and (ii) exchange certain outstanding Tetraphase pre-funded common stock warrants
for a specified percentage of the Merger Consideration.
The foregoing description of the Amendment to Voting Agreement does not purport to be complete
and is qualified in its entirety by reference to the form of Amendment to Voting Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference. Other than
as expressly modified pursuant to the Amendment to Voting Agreement, the Voting Agreement, a form of which was filed as Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC by AcelRx on
March 16, 2020, remains unchanged.
On May 27, 2020, AcelRx issued a press release announcing the entry into the Amendment. A copy of the press release is attached as Exhibit 99.1 and is
incorporated by reference herein.