EXHIBIT 10.3

 

EXECUTION VERSION

 

Portions of this Exhibit have been redacted because they are both (i) not
material and (ii) would be competitively harmful if publicly disclosed.
Information that was omitted has been noted in this document with a placeholder
identified by the mark “[***]”

 

AMENDMENT TO SHARED SERVICES AGREEMENTS

 

This Amendment to Shared Services Agreements (the “Amendment”), dated as of
May 20, 2019, is entered into by and between Novelion Therapeutics Inc., a
company incorporated under the laws of British Columbia (“Novelion”), Novelion
Services USA, Inc., a Delaware corporation (“NSU”), and Aegerion
Pharmaceuticals, Inc., a Delaware Corporation (“Aegerion”).

 

WHEREAS, NSU and Aegerion are parties to that certain Master Service Agreement
dated as of December 1, 2016, but effective as of November 29, 2016 (as amended,
amended and restated, supplemented or otherwise modified and in effect, the
“Aegerion/NSU Agreement”);

 

WHEREAS, Novelion and Aegerion are parties to that certain Master Service
Agreement dated as of December 1, 2016, but effective as of November 29, 2016
(as amended, amended and restated, supplemented or otherwise modified and in
effect, the “Novelion/Aegerion Agreement”, and together with the Aegerion/NSU
Agreement, the “Shared Services Agreements” and each a “Shared Services
Agreement”).  Capitalized terms used but not otherwise defined in this Amendment
shall have the meanings ascribed thereto in the applicable Shared Services
Agreement.

 

WHEREAS, on or around the date of this Amendment, Novelion, Aegerion and other
parties anticipate entering into a Restructuring Support Agreement (the “RSA”)
with respect to a transaction that will be consummated pursuant to a plan of
reorganization under Chapter 11 of the United States Bankruptcy Code;

 

WHEREAS, as an integral element of the overall transaction contemplated under
the RSA, each of Novelion, NSU and Aegerion has agreed to make certain
modifications to each of the Shared Services Agreements, as set forth below.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and intending to be legally bound, the parties hereto
agree as follows:

 

1.             Notwithstanding anything to the contrary contained in any Shared
Services Agreement, each of Novelion, NSU, and Aegerion hereby agrees as
follows:

 

(a)           Prior to execution and delivery of the RSA, Aegerion shall pay to
Novelion cash in the amount of $3,123,000 (the “Reimbursement Payment”), which
is comprised of the following:

 

(i)            Fifty percent (50.00%) of the fees, costs and expenses Novelion
incurred in connection with the audit of the consolidated financial statements
of Novelion and its subsidiaries (including Aegerion and its subsidiaries)
(“Audit Costs”) by Deloitte

 

--------------------------------------------------------------------------------

 

& Touche LLP (“Deloitte”) for the period between November 1, 2018 and March 31,
2019 totaling $531,000;

 

(ii)           Forty percent (40.00%) of the costs Novelion incurred  in
connection with the November 2018 renewal of and the subsequent purchase of
“run-off” coverage under the annual directors and officers, employee practices
liability, and fiduciary liability insurance policies for Novelion, Aegerion and
their respective subsidiaries (the “D&O Insurance Costs”) totaling $1,596,000;

 

(iii)          Fifty percent (50.0%) of employee payroll and benefit costs
Novelion and/or NSU incurred with respect to NSU and Novelion employees
(“Novelion Employee Costs”) for the period between November 1, 2018 and
March 31, 2019 totaling $575,000;

 

(iv)          $343,000 of actual payroll and benefit costs incurred of NSU
employees for the period of April 1, 2019 through May 20, 2019 (such amount
derived from the actual payroll and benefit costs incurred by NSU and allocated
by employee pursuant to the percentages included in section 1(c) below); and

 

(v)           The amounts due under sections 1(b) and (c) of this Amendment from
April 1 2019 through May 20, 2019 totaling $78,000.

 

(b)           In addition to the foregoing, Aegerion shall reimburse Novelion
for the following costs:

 

(i)            Fifty percent (50.0%) of the Audit Costs incurred by Novelion
during the period from and including April 1, 2019 through and including the
effective date of the Plan (as defined in the RSA); provided, however, that
Aegerion’s share of such Audit Costs shall not exceed One Hundred Thousand
Dollars ($100,000.00), provided further, however, that for the avoidance of
doubt, other than with respect to the Audit Costs, Novelion shall have no
obligations to pay for any work Deloitte or any other third party advisor
performs for Aegerion with respect to Aegerion’s own financial accounting or the
transactions contemplated  under the RSA; and

 

(ii)           Fifty percent (50.0%) of data room costs incurred by Novelion
during the period from and including April 1, 2019 through and including the
effective date of the Plan; provided, however, that Aegerion’s share of such
costs shall not exceed Three Hundred Thousand Dollars ($300,000.00).

 

(c)           Aegerion shall pay Aegerion’s share of the costs described in
subparagraphs (b)(i) and (b)(ii) above to Novelion, without offset or
recoupment, (x) on or before the seventh (7th) business day following the date
on which Novelion notifies Aegerion in writing (email being sufficient) of
Novelion’s payment of the applicable cost; and (y) with respect to any amounts
outstanding as of the Plan effective date, including those incurred during the
month in which the Plan effective date occurs, on the Plan effective date. 
Aegerion shall reimburse Novelion for a specified portion (as set forth in the
chart below this subparagraph) of the ordinary course compensation as in effect
as of the date hereof or as adjusted with the consent of Aegerion and the
Consenting Bridge Lenders (as defined in the RSA) (including amounts paid under

 

2

--------------------------------------------------------------------------------

 

Novelion’s existing Key Employee Incentive Plan) of the employees identified in
the chart below this subparagraph (the “Specified Employees”) during the period
from and including April 1, 2019 through and including the effective date of the
Plan, and Aegerion shall make such payments to Novelion, without offset or
recoupment, (i) on or before the seventh (7th) business day immediately
following the applicable month(1) in which Novelion compensates any such
Specified Employees, and (ii) with respect to all reimbursement amounts
outstanding as of the Plan effective date, including those incurred during the
month in which the Plan effective date occurs, on the Plan effective date;
provided, however that the aggregate amount of the reimbursement payments
described in this subparagraph (c) shall not exceed $1,870,000 (which is
inclusive of actual payroll and benefit costs of NSU incurred from April 1, 2019
through May 20, 2019 and allocated to Aegerion, which have been reimbursed by
Aegerion).  Novelion shall use commercially reasonable efforts to continue
gainfully employing the Specified Employees through the effective date of the
Plan, and Novelion shall be responsible for any severance costs relating to the
Specified Employees.  For the avoidance of doubt, the parties agree that upon
the making of the payment referred to in the first sentence of
Section 1(a) hereof, Aegerion shall have made the required payments referred to
in subparagraphs (b)(i) and (b)(ii) for the period from April 1, 2019 through
and including May 20, 2019 and shall have made the payments referred to in this
paragraph in respect of the Specified Employees for the period from April 1,
2019 through and including May 20, 2019.

 

Specified Employee

 

Aegerion Share

 

[***]

 

50

%

[***]

 

50

%

[***]

 

100

%

[***]

 

50

%

[***]

 

0

%

[***]

 

50

%

 

(d)           If Aegerion’s share of costs described in Paragraphs 1(b) and
1(c) of this Amendment exceeds, in the aggregate, $1,970,000 (the “Funding
Cap”), then Novelion, Aegerion and the Consenting Bridge Lenders shall discuss
any further shared funding needs, which shall be in Aegerion’s and Consenting
Bridge Lenders’ sole discretion, and any such

 

--------------------------------------------------------------------------------

(1)  For the avoidance of doubt, the word “month” as used in this Amendment
shall mean the month period as reflected on Aegerion’s cash flow statements,
which use a “4-4-5” convention.  Under that convention (i) March means the four
weeks ending March 30, 2019, (ii) April means the 5 weeks ending on May 4, 2019,
(iii) May means the four weeks ending on June 1, 2019, (iv) June means the four
weeks ending on June 29, 2019, (v) July means the five weeks ending on August 3,
2019, (vi) August means the four weeks ending on August 31, 2019, and
(vii) September means the four weeks ending on September 28, 2019.

 

3

--------------------------------------------------------------------------------

 

allowed additional funding shall be deemed to reduce the Aegerion’s debt
obligations to Novelion under the Intercompany Credit Agreement (as defined the
RSA) by One Dollar and Fifty Cents ($1.50) for every One Dollar ($1.00) paid by
Aegerion above the Funding Cap (the amount of such reduction, the “Prepetition
Shared Services Adjustment”), thus ratably reducing the equity Novelion is to
receive on account of the debt obligations under the Intercompany Credit
Agreement under the Plan.

 

2.             Financial Statement Assistance.  Novelion shall provide such
reasonable assistance and access to information and documentation (and shall
direct its auditors and other agents and representatives to provide such
reasonable assistance and access to information and documentation) as Aegerion
may reasonably request in connection with the preparation by Aegerion (or the
Plan Investor (as defined in the RSA)) of any financial statements (including
audited financial statements and pro forma financial statements) as Aegerion or
the Plan Investor (as defined in the RSA) may reasonably request in connection
with the transactions contemplated by the RSA.

 

3.             Insurance.  Novelion shall take such actions as may be reasonably
required to instruct the insurance carriers to make effective not later than the
effective date of the Plan the “run-off” coverage under the annual directors and
officers, employee practices liability, and fiduciary liability insurance
policies for Novelion, Aegerion and their respective subsidiaries in respect of
which the premiums therefor were paid by Novelion and Aegerion on or about the
date hereof, and Novelion shall not take any actions to terminate or seek to
terminate any such insurance or to request a refund of the premiums paid in
respect thereof.  Without limitation of the forgoing, Novelion shall use
commercially reasonable efforts to cooperate with Aegerion in respect of
Aegerion or any subsidiary thereof making any claims under any insurance
policies maintained by Novelion or any subsidiary thereof (other than Aegerion
or any subsidiary thereof) that provides coverage for Aegerion and its
subsidiaries, including by allowing Aegerion and its subsidiaries to make and
pursue claims thereunder.

 

4.             Termination of Shared Services Agreements.  Notwithstanding
anything to the contrary in the Shared Services Agreements, (x) the Shared
Services Agreements (as amended by this Amendment) shall terminate on the
earliest of (a) the date on which both of the following have occurred: (i) the
effective date of the Plan has occurred, and (ii) Aegerion has made all payments
to Novelion required by the Shared Services Agreements (as amended by this
Amendment), (b) December 16, 2019, and (c) such other date agreed among the
parties hereto in writing in their sole discretion.  For the avoidance of doubt,
the parties’ respective payment obligations shall survive any termination or
expiration of the Shared Services Agreements (as amended), and (y) Novelion
shall not exercise any termination right for convenience that is otherwise set
forth in any Shared Service Agreement.

 

5.             CONDITIONS TO EFFECTIVENESS.  This Amendment will be effective
upon the occurrence of all of the following:

 

(a)           receipt by each party hereto of a counterpart to this Amendment,
duly authorized, executed and delivered by each of the parties hereto;

 

4

--------------------------------------------------------------------------------

 

(b)           due execution and delivery of that certain Consent Under the
Amended and Restated Loan and Security Agreement, dated as of the date hereof,
by Aegerion, in its capacity as “Borrower” thereunder and Novelion, in its
capacity as “Lender” thereunder;

 

(c)           due execution and delivery of that certain Consent Under the
Credit Agreement, dated as of the date hereof, by Aegerion, in its capacity as
“Borrower” thereunder, Cantor Fitzgerald Securities, in its capacity as
“Administrative Agent” thereunder, and each “Lender” (as defined therein) party
thereto; and

 

(d)           receipt by Novelion of the Reimbursement Payment.

 

6.             MISCELLANEOUS.

 

(a)           Effect of this Amendment.  Except as set forth expressly herein,
all terms of the Shared Services Agreements shall be and remain in full force
and effect and shall constitute the legal, valid, binding and enforceable
obligations of parties thereto.  This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations or agreements, whether written or oral,
with respect thereto.  The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any party hereto under any Shared Services
Agreement, nor constitute a waiver of any provision of any Shared Services
Agreement (except as expressly set forth herein).

 

(b)           Counterparts.  This Amendment may be executed in counterparts with
the same effect as if all parties had signed the same document.  Each
counterpart will be construed together and will constitute one and the same
Amendment.  This Amendment may be executed by the parties and transmitted by
facsimile or other electronic transmission and if so executed and transmitted
this letter agreement will be for all purposes as effective as if the parties
had delivered an executed original of this Amendment.

 

(c)           Severability.  In the event that any provision of this Amendment
will be held to be indefinite, invalid, illegal or otherwise voidable or
unenforceable, the entire Amendment will not fail on account thereof, and the
balance of this Amendment will continue in full force and effect.

 

(d)           Order of Precedence.  For the avoidance of doubt, in the event of
a conflict between the terms of this  Amendment and the terms of any Shared
Services Agreement (including any applicable Statement of Work in connection
therewith), the terms of this Amendment will govern.

 

[Signature Page Follows]

 

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.

 

 

NOVELION THERAPEUTICS INC.

 

 

By:

/s/ Benjamin Harshbarger

 

Name:

Benjamin Harshbarger

 

Title:

Interim CEO

 

 

 

 

 

NOVELION SERVICES USA, INC.

 

 

 

 

 

 

 

By:

/s/ Benjamin Harshbarger

 

Name:

Benjamin Harshbarger

 

Title:

Director

 

 

 

 

 

AEGERION PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

By:

/s/ John R. Castellano

 

Name:

John R. Castellano

 

Title:

Chief Restructuring Officer

 

 

[Signature Page to Amendment to Shared Services Agreements]

 

6

--------------------------------------------------------------------------------