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CUSIP No.  98420P308

1	NAME OF REPORTING PERSONS   OrbiMed Advisors LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) ☐ (b) ☐
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)   AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)			☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER   0
		8	SHARED VOTING POWER   11,614,321 (1)
		9	SOLE DISPOSITIVE POWER   0
		10	SHARED DISPOSITIVE POWER   11,614,321 (1)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   11,614,321 (1)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)			☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   74.6% (2)
14	TYPE OF REPORTING PERSON (See Instructions)   IA

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(1)

Evidenced by (i) 3,316,128 outstanding Shares of the Issuer and (ii) 868,016 Shares issuable upon the exercise of Warrants.

(2)

This percentage is calculated based upon 13,161,762 Shares outstanding of the Issuer, as set forth in the Issuer’s report on Form 10-Q, filed with the Securities and Exchange Commission on April 1, 2019, and includes 868,016 Shares issuable upon exercise of the Warrants.

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OrbiMed ROF, a limited liability company organized under the laws of Delaware, is the general partner of ORO II as more particularly described in Item 6 below.  OrbiMed ROF has its principal offices at 601 Lexington Avenue, 54th Floor, New York, New York 10022.

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Advisors caused ROS Acquisition, and Advisors and OrbiMed ROF caused ORO II, to acquire Shares and other securities of the Issuer for the purpose of making an investment in the Issuer and not with the intention of acquiring control of the Issuer’s business on behalf of ROS Acquisition and ORO II.

In addition, Advisors, pursuant to its authority as investment manager of ROS Acquisition, caused ROS Acquisition to enter into the agreements referred to in Item 6 below.

 

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In addition, OrbiMed Advisors , pursuant to its authority under the limited liability company agreement of OrbiMed ROF, and OrbiMed ROF, pursuant to its authority under the limited partnership agreement of ORO II, caused ORO II to enter into the agreements referred to in Item 6 below.

OrbiMed ROF is the sole general partner of ORO II, pursuant to the terms of the limited partnership agreement of ORO II.  Pursuant to this agreement and relationship, OrbiMed ROF has discretionary investment management authority with respect to the assets of ORO II. Such authority includes the power to vote and otherwise dispose of warrants held by OFO II.  The number of outstanding Shares of the Issuer attributable to ORO II is 4,184,144 (which includes Shares issuable upon the exercise of Warrants). OrbiMed ROF, pursuant to its authority under the limited partnership agreement of ORO II, may be considered to hold indirectly 4,184,144 Shares.

 

 

   Matthew Rizzo (“Rizzo”) and Michael Eggenberg (“Eggenberg”), both of whom are employees of Advisors, are members of the Board, and, accordingly, the Reporting Person may have the ability to affect and influence control of the Issuer.  From time to time, Rizzo and/or Eggenberg may receive stock options or other awards of equity-based compensation pursuant to the Issuer’s compensation arrangements for non-employee directors.  Rizzo and Eggenberg are obligated to transfer any securities issued under any such stock options or other awards, or the economic benefit thereof, to the Reporting Persons, which will in turn ensure that such securities or economic benefit are provided to OrbiMed Purchasers.

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Investor Rights Agreement

As a condition to the closing of the Restructuring Transactions, the Issuer entered into an Investor Rights Agreement (the “Investor Rights Agreement”) with the OrbiMed Purchasers and certain other investors.  Under the Investor Rights Agreement, ROS Acquisition and ORO II are permitted to nominate a majority of the directors and designate the chairperson of the Board at subsequent annual meetings, as long as they maintain an ownership threshold in the Issuer of at least 40% of the then outstanding Shares (the “Ownership Threshold”).  If the OrbiMed Purchasers are unable to maintain the Ownership Threshold, the Investor Rights Agreement contemplates a reduction of nomination rights commensurate with the Issuer ownership interests. At the request of the Reporting Person, the Issuer nominated Rizzo and Eggenberg, both of whom are employees of Advisors.  The Issuer’s stockholders elected both Rizzo and Eggenberg to the Board.

For so long as the Ownership Threshold is met, the Issuer must obtain the approval of a majority of the Shares held by ROS Acquisition and ORO II to proceed with the following actions: (i) issue new securities; (ii) incur over $250,000 of debt in a fiscal year; (iii) sell or transfer over $250,000 of assets or businesses of the Issuer or its subsidiaries in a fiscal year; (iv) acquire over $250,000 of assets or properties in a fiscal year; (v) make capital expenditures over $125,000 individually, or $1.5 million in the aggregate during a fiscal year; (vi) approve the Issuer’s annual budget; (vii) hire or terminate the Issuer’s chief executive officer; (viii) appoint or remove the chairperson of the Board; and (ix) make loans to, investments in, or purchase, or permit any subsidiary to purchase, any stock or other securities in another entity in excess of $250,000 in a fiscal year.  As long as the Ownership Threshold is met, the Issuer may not increase the size of the Board beyond seven directors without the approval of a majority of the directors nominated by the OrbiMed Purchasers.

On March 29, 2019, the Issuer entered into the Credit Agreement, which amended and restated the existing Amended and Restated Credit Agreement among the Issuer, the OrbiMed Purchasers and certain other parties, entered into on July 31, 2015 and last amended on August 1, 2018 (the “Credit Facility”).  The Credit Agreement, among other provisions, increased availability by an additional $10 million via an incremental delayed draw term loan, extended the maturity date to March 31, 2021 and the period during which no interest accrues from December 31, 2018 until March 31, 2020, and replaced the Minimum Consolidated EBITDA and Consolidated Senior Leverage Ratio Covenants with a new Minimum Revenue Covenant, to support the Company’s working capital needs.

 

The foregoing descriptions of the Registration Rights Agreement, the Investor Rights Agreement, the Credit Agreement and the Warrant Agreements do not purport to be complete and are qualified in their entirety by reference to such documents that are attached as exhibits hereto and are incorporated by reference herein.  Other than as described in this Statement, to the best of the Reporting Person’s knowledge, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of the Issuer.

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	OrbiMed Advisors LLC
	By:	/s/ Jonathan T. Silverstein
		Name:	Jonathan T. Silverstein
		Title:	Member of OrbiMed Advisors LLC
	By:	/s/ Sven H. Borho
		Name:	Sven H. Borho
		Title:	Member of OrbiMed Advisors LLC
	By:	/s/ Carl L. Gordon
		Name:	Carl L. Gordon
		Title:	Member of OrbiMed Advisors LLC

 

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Schedule II

The business and operations of OrbiMed ROF II LLC are managed by the executive officers and directors of its managing member, OrbiMed Advisors LLC, set forth on Schedule I.

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