exv10w2






Exhibit 10.2




AGREEMENT REGARDING REDEMPTION OF WARRANTS AND EXERCISE

OF STOCK PURCHASE RIGHT




     This Agreement Regarding Redemption of Warrants and Exercise of Stock Purchase Right
(“Agreement”) is dated as of the 1st day of July, 2008 (the “Effective Date”) by and among (i)
MiddleBrook Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and (ii) Deerfield
Private Design Fund, L.P., a Delaware limited partnership (“Deerfield Design”), Deerfield Private
Design International, L.P., a British Virgin Islands limited partnership (“Deerfield Design
International”), Deerfield Special Situations Fund, L.P., a Delaware limited partnership
(“Deerfield Special Situations”), Deerfield Special Situations Fund International Limited, a
British Virgin Islands limited company (“Deerfield Special Situations International” and
collectively with Deerfield Design, Deerfield Design International and Deerfield Special
Situations, the “Deerfield Entities”), Kef Pharmaceuticals, Inc., a Delaware corporation (“Kef”),
Lex Pharmaceuticals, Inc., a Delaware corporation (“Lex”), and Deerfield Management, L.P., a
Delaware limited partnership (“Deerfield Management”).



     WHEREAS, the Company has entered into (i) the Asset Purchase Agreement, dated November 7,
2007, by and between the Company and Kef, (ii) the Asset Purchase Agreement, dated November 7,
2007, by and between the Company and Lex, (iii) the Stock Purchase Agreement, dated November 7,
2007, among the Company, Kef, the Deerfield Entities and Deerfield Management (the “Kef SPA”), (iv)
the Stock Purchase Agreement, dated November 7, 2007, among the Company, Lex, the Deerfield
Entities and Deerfield Management (the “Lex SPA”), (v) the Inventory Consignment Agreement, dated
November 7, 2007, by and between the Company and Kef, (vi) the Registration and Trademark License
Agreement, dated November 7, 2007, by and between the Company and Lex, (vii) the Regulatory
Responsibility Agreement, dated November 7, 2007, by and between the Company and Lex, (viii) the
Keflex Products Transition Agreement, dated November 7, 2007, by and between the Company and Kef,
(ix) the Contingent Manufacturing Assignment, dated November 7, 2007, between the Company and Lex,
and (x) the Registration Rights Agreement, dated November 7, 2007, by and among the Company and the
Deerfield Entities (collectively with the Deerfield Warrants (as defined below), the “Deerfield
Agreements”); and



     WHEREAS, on November 7, 2007, the Company issued to the Deerfield Entities warrants (the
“Deerfield Warrants”) to purchase an aggregate of 3,000,000 shares of common stock, $0.01 par value
per share, of the Company (the “Common Stock”) at an exercise price of $1.34 per Warrant Share; and



     WHEREAS, pursuant to the terms of the Deerfield Warrants, in the event of a Major Transaction
(as defined in the Deerfield Warrants), the Deerfield Entities have the right to require the
Company to redeem all of the outstanding Deerfield Warrants;



     WHEREAS, pursuant to a Securities Purchase Agreement (the “EGI SPA”) to be entered into
contemporaneously with the execution of this Agreement, and as may be amended from time to time, by
and between the Company and EGI-MBRK,



 









 







L.L.C., a Delaware limited liability company (“EGI”), the Company proposes to issue and sell
to EGI, and EGI proposes to purchase from the Company, for an aggregate purchase price of
$99,999,999 (the “EGI Financing”), (i) 30,303,030 shares of Common Stock and (ii) a warrant to
purchase an aggregate of 12,121,212 shares of Common Stock.



     NOW, THEREFORE, in order to induce the Company and EGI to enter into the EGI SPA, the parties
hereto agree as follows:




	1.	 	Purchase of Kef and Lex. On or prior to the consummation of the EGI Financing
pursuant to the terms of the EGI SPA (the “EGI Closing”), the Company shall exercise the Stock
Purchase Right (in each case as Stock Purchase Right is defined in Section 2.1 of the Kef SPA
and the Lex SPA, respectively) pursuant to the terms of the Kef SPA and the Lex SPA,
respectively.






	2.	 	Deerfield Warrants. The Deerfield Entities and the Company agree, notwithstanding
anything to the contrary set forth in the Deerfield Warrants and to the extent the provisions
of this Agreement are inconsistent with any provision of the Deerfield Warrants, such
provision shall be deemed to be amended by the provisions of this Section 2, that:






	 	2.1	 	The EGI Financing shall constitute a “Major Transaction” pursuant to Section
5(c)(i)(D) of the Deerfield Warrants and the execution of this Agreement shall
constitute notice of such proposed Major Transaction as contemplated by Section
5(c)(iii) of the Deerfield Warrants.






	 	2.2	 	Except as hereinafter provided, each of the Deerfield Entities hereby
irrevocably exercises its option pursuant to Section 5(c)(i) of the Deerfield Warrants
to require the Company to redeem, upon the occurrence of the EGI Closing, all the
outstanding Deerfield Warrants for an aggregate redemption price equal to $8,814,000
(the “Aggregate Redemption Price”), and the execution of this Agreement by the
Deerfield Entities shall constitute the redemption notice contemplated by Section
5(c)(iii) of the Deerfield Warrants; provided, however, that the Deerfield Entities
shall be entitled to revoke such exercise upon the earlier of (i) the termination of
the EGI SPA and (ii) December 31, 2008. The Deerfield Entities hereby represent and
warrant to the Company that they hold all of the issued and outstanding Deerfield
Warrants and that, immediately following the EGI Closing, all of the issued and
outstanding Deerfield Warrants will have been redeemed by the Company pursuant to the
terms of this Agreement.




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	 	2.3	 	Upon the occurrence of the EGI Closing, the Company shall cause EGI to pay to
the Deerfield Entities (i) the Aggregate Redemption Price and (ii) to the extent not
previously paid by the Company, the Purchase Price (in each case as Purchase Price is
defined in Section 2.3(a) of the Kef SPA and Lex SPA, respectively) due to the
Deerfield Entities upon the Closing of the Kef SPA and the Lex SPA (in each case as
Closing is defined in Section 2.6 of the Kef SPA and Lex SPA, respectively), and the
Deerfield Entities shall accept such payments from EGI as if paid by the Company.
	 
	 	2.4	 	Notwithstanding the provisions of Section 5(c)(iv) of the Deerfield Warrants,
the Company shall not be required to place the Aggregate Redemption Price in an escrow
account with an independent escrow agent three Business Days prior to the EGI Closing.






	3.	 	Deerfield Voting Agreement. Simultaneously with the execution of this Agreement,
each of the Deerfield Entities (other than Deerfield Management, L.P.) as well as Deerfield
Partners, L.P. and Deerfield International Limited shall enter into the Voting Agreement in
the form attached hereto as Exhibit A.






	4.	 	Termination of this Agreement. This Agreement shall automatically terminate on the
earlier of (a) the termination of the EGI SPA pursuant to its terms or (b) the agreement of
the parties hereto to terminate this Agreement; provided, however, that
termination of this Agreement shall not prevent any party hereunder from seeking any remedies
(at law or in equity) against the other party hereto for such party’s breach of any of the
terms of this Agreement. Deerfield Management may terminate this Agreement upon written
notice to the Company if there shall have occurred a material breach by the Company of any of
the Deerfield Agreements, which breach is not cured prior to the EGI Closing.






	5.	 	Termination of Deerfield Agreements. The parties hereby acknowledge and agree that,
following the latest of (i) the receipt by the Deerfield Entities of the Aggregate Redemption
Price, (ii) the Closing (as defined in the Kef SPA) and (iii) the Closing (as defined in the
Lex SPA), each of the Deerfield Agreements shall terminate and there shall be no further
rights or obligations of any party to any Deerfield Agreement with respect thereto.






	6.	 	Miscellaneous.






	 	6.1	 	Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein (i) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the




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	 	 	 	parties with respect to the subject matter hereof and (ii) are not intended to
confer upon any other person any rights or remedies hereunder other than EGI, which
shall be a third party beneficiary hereof.






	 	6.2	 	Successors and Assigns. This Agreement shall not be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Without relieving any party hereto of any
obligation hereunder, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
	 
	 	6.3	 	Amendment and Modification. This Agreement may not be amended,
altered, supplemented or otherwise modified or terminated except upon the execution
and delivery of a written agreement executed by the parties hereto.
	 
	 	6.4	 	Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial delivery
service, or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers for a
party as shall be specified by like notice):




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	 	 	(i)	 	if to the Company:
	 
	 	 	 	 	 	 
	 	 	 	 	20425 Seneca Meadows Parkway
	 	 	 	 	Germantown, Maryland 20876
	 

	 	 	 	Attention:
	 	 Edward M. Rudnic, Ph.D.
	 

	 	 	 	 	 	President and Chief Executive Officer
	 

	 	 	 	Facsimile:
	 	 (301) 944-6700
	 
	 	 	 	 	 	 
	 	 	 	 	with a copy to
	 
	 	 	 	 	 	 
	 	 	 	 	Dewey & LeBoeuf LLP
	 	 	 	 	1301 Avenue of the Americas
	 	 	 	 	New York, New York
	 

	 	 	 	Attention:
	 	 Frederick W. Kanner, Esq.
	 

	 	 	 	Facsimile:
	 	 (212) 259-6333
	 
	 	 	 	 	 	 
		 	(ii)	 	if to the Deerfield Entities:
	 
	 	 	 	 	 	 
	 	 	 	 	Deerfield Management L.P.
	 	 	 	 	780 3rd Avenue, 37th Floor
	 	 	 	 	New York, New York 10017
	 	 	 	 	Attention: James E. Flynn
	 	 	 	 	Facsimile: (212) 599-1248
	 
	 	 	 	 	 	 
	 	 	 	 	with a copy to:
	 
	 	 	 	 	 	 
	 	 	 	 	Robinson, Bradshaw & Hinson, P.A.
	 	 	 	 	101 North Tryon Street, Suite 1900
	 	 	 	 	Charlotte, North Carolina 28246
	 	 	 	 	Attention: David J. Clark
	 	 	 	 	Facsimile: (704) 373-3990







	 	6.5	 	Severability. In the event that any provision of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction to
be illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such
void or unenforceable provision.




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	 	6.6	 	Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by law
or equity upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled to
seek an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
	 
	 	6.7	 	No Waiver; Remedies Cumulative. No failure or delay on the part of any
party hereto in the exercise of any right hereunder will impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor will any single or partial exercise of any such
right preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive to,
and not exclusive of, any rights or remedies otherwise available.
	 
	 	6.8	 	Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
	 
	 	 	 	This Agreement shall be governed by and construed in accordance with the internal
and substantive laws of the State of Delaware, without regard to any conflicts of
laws concepts which would apply the substantive law of some other jurisdiction.
	 
	 	 	 	Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the
Court of Chancery in the State of Delaware and the Federal courts of the United
States of America located in the State of Delaware for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the world
by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue in
such court. Each party hereto irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT
AND REPRESENTS THAT




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	 	 	 	COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
	 
	 	6.9	 	Descriptive Heading. The descriptive headings used herein are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
	 
	 	6.10	 	Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
	 
	 	6.11	 	Counterparts. This Agreement may be executed in two or more
counterparts, and by facsimile, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party, it being understood that
all parties need not sign the same counterpart.
	 
	 	6.12	 	Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.





[Signature page follows.]





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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day
and year first written above.




	 	 	 	 	 
	 	MIDDLEBROOK PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Edward M. Rudnic
 	 
	 	 	Name:  	Edward M.  Rudnic, Ph.D. 	 
	 	 	Title:  	President & Chief Executive Officer 	 
	 


[Signature
Page to Deerfield Agreement]


 









 





	 	 	 	 	 	 	 
	 	 	DEERFIELD PRIVATE DESIGN FUND, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Capital, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	J.E. Flynn Capital LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Capital, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	J.E. Flynn Capital LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	DEERFIELD SPECIAL SITUATIONS FUND, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Capital, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	J.E. Flynn Capital LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 




[Signature
Page to Deerfield Agreement]








 









 












	 	 	 	 	 	 	 
	 	 	DEERFIELD SPECIAL SITUATIONS FUND INTERNATIONAL LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Management Company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Flynn Management LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	LEX PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeff Kaplan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeff Kaplan

Title: Treasurer/Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	KEF PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeff Kaplan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeff Kaplan	 	 
	 

	 	 	 	Title: Treasurer/Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	DEERFIELD MANAGEMENT, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: James Flynn	 	 
	 

	 	 	 	Title: General Partner	 	 





[Signature
Page to Deerfield Agreement]