EXHIBIT 10.6
VOTING AGREEMENT
This VOTING AGREEMENT (this "Agreement") dated as of December
20, 2002, among the Parties signatory hereto (the "Parties").
WHEREAS, Xxxxxx Drug Co., Inc., a New York corporation (the
"Company"), has entered into the Debenture Purchase Agreement dated of even date
herewith (the "Purchase Agreement"), by and among the Company, Care Capital
Investments II, LP ("Care Capital"), Essex Woodlands Health Ventures ("Essex")
and other signatories thereto, providing for the issuance by the Company of 5%
Convertible Senior Secured Debentures due March 31, 2006 (the "2002 Debentures")
in the aggregate principal amount of $35,000,000; and
WHEREAS, Care Capital and Essex will purchase $5,000,000 and
$5,000,000, respectively, in principal amount of the 2002 Debentures pursuant to
the terms of the Purchase Agreement; and
WHEREAS, the Company does not have enough authorized and
unreserved shares of its Common Stock, $.01 par value per share (the "Common
Stock") available for issuance upon the conversion of the 2002 Debentures; and
WHEREAS, the Purchase Agreement contemplates that the
purchasers of the 2002 Debentures shall have the right to vote as part of a
single class with all holders of the Company's common stock on an as-converted
basis; provided, however, that for so long as Care Capital holds any 2002
Debentures, such voting rights shall not apply to Care Capital; and
WHEREAS, the Company desires to amend its Certificate of
Incorporation to provide for (a) an increase in the number of shares of its
Common Stock in order to reserve a sufficient number of shares for issuance upon
the conversion of the Debenture; and (b) the as-converted voting rights to the
holders of the 2002 Debentures (including the proviso set forth in the
immediately preceding recital); and
WHEREAS, as additional consideration for the investment by
Care Capital and Essex, the Purchase Agreement provides that so long as Care
Capital and Essex remain a holder of the 2002 Debentures, the Parties desire to
vote their Securities (as defined below) in such a manner so as to elect a Care
Capital nominee and an Essex nominee to the Board of Directors of the Company.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein contained, the Parties hereto agree as follows:
1. Amendment to Company's Certificate of Incorporation.
At the Company's next upcoming Annual Meeting of Shareholders, each Party hereto
will vote all (x) shares of Common Stock; (y) 5% Convertible Senior Secured
Debentures issued pursuant to that certain
Debenture and Warrant Purchase Agreement dated March 10, 1998 between the
Company and the purchasers listed on the signature page thereto (the "1998
Debentures"), and (z) 5% Convertible Senior Secured Debentures issued pursuant
to that certain Debenture and Warrant Purchase Agreement dated May 26, 1999
between the Company and the purchasers listed on the signature page thereto (the
"1999 Debentures", and together with the 1998 Debentures, the "Existing
Debentures") (collectively with the shares of the Company's Common Stock,
issuable upon conversion of the Existing Debentures, the "Securities") then
owned by such Party in favor of the following proposed amendments to the
Company's Certificate of Incorporation:
(a) Increasing the number of shares of the Company's
Common Stock authorized for issuance from 80,000,000
to such number as shall equal the sum of (i) the
Company's issued and outstanding Common Stock, plus
(ii) the number of shares of Common Stock issuable
upon the conversion and exercise of the Company's
outstanding convertible securities, plus (iii) the
number of shares of Common Stock issuable upon
conversion of the 2002 Debentures and the exercise of
the Xxxxxx Warrant (as such term is defined in the
Purchase Agreement), plus (iv) 50 million shares, as
such sum shall be rounded up to the nearest whole
five million shares; and
(b) Providing that the holders of the 2002 Debentures
shall have the right to vote as part of a single
class with all holders of the Common Stock of the
Company on all matters to be voted on by such
stockholders with each holder having such number of
votes as shall equal the number of votes they would
have had such holders converted the entire
outstanding principal amount of the 2002 Debentures
immediately prior to the record date relating to such
vote.
2. Election of Care Capital Nominee and Essex Nominee.
From the date hereof, each Party and Care Capital and Essex (each of Care
Capital and Essex, and their permitted transferees and assigns, being referred
to herein as a "Designating Party") agree as follows:
(a) Each Party holding Securities shall vote its
Securities, and take or cause to be taken such other
actions, as may be required from time to time to
elect to the Board of Directors of the Company one
person designated by each Designating Party. Without
limiting the generality of the foregoing, at each
annual meeting of the shareholders of the Company,
and at each special meeting of the shareholders and
debentureholders of the Company called for the
purpose of electing directors of the Company, and at
any time at which the shareholders and
debentureholders of the Company have the right to
elect directors of the Company, in each such event,
each Party shall vote all Securities owned by them
(or shall consent in writing in lieu of a meeting of
shareholders and debentureholders of the Company, as
the case may be), or take such other actions as shall
be necessary, to elect the Designating Party's
designee as a director of the Company in accordance
with the preceding provisions of this Section 2(a);
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(b) Each Party shall take all actions necessary to remove
forthwith the director designated by a Designating
Party when such removal is requested for any reason,
with or without cause, by such Designating Party. In
the case of the death, resignation or removal as
herein provided of a Designating Party's designee,
each Party shall vote all Securities held by it to
elect another person designated by such Designating
Party pursuant to Section 2(a);
(c) Each Party hereby agrees that it will not vote any of
its Securities in favor of the removal of any
director that shall have been designated by a
Designating Party, unless the Designating Party that
has designated such director shall have consented to
such removal in writing.
In the event that any Party shall fail to vote the
Securities held by it in accordance with Section 2(a)
and (b), such Party shall, upon such failure to so
vote, be deemed immediately to have granted to each
Designating Party a proxy to vote its Securities
solely for the election of the nominee of such
Designating Party or the removal of such Designating
Party's designated director, as the case may be. Such
Party acknowledges that each such proxy granted
hereby, including any successive proxy, if necessary,
is being given to secure the performance of an
obligation hereunder, is coupled with an interest,
and shall be irrevocable until such obligation is
performed;
(d) No Party shall grant any proxy or enter into or agree
to be bound by any voting trust with respect to the
Securities held by such Party, or enter into any
shareholder agreement or arrangement of any kind with
any person with respect to the Securities held by
such person that is, in either case, inconsistent
with the terms of this Agreement (whether or not such
agreement and arrangement was or is with other
shareholders of the Company that are or are not
parties to this Agreement);
(e) The Company shall take, or cause to be taken, such
actions as may be required from time to time to
establish and maintain executive, audit and
compensation committees of the Board of Directors, as
well as such other committees of the boards of
directors of the Company as the Board of Directors
shall determine, having such duties and
responsibilities as are customary for such
committees. The designees of each Designating Party
shall be, if so requested by such Designating Party
in its sole discretion, a member of each such
committee; and
(f) The rights and obligations provided in this Section 2
shall be applied separately for each Designating
Party, with the rights of a Designating Party
terminating on the date such Designating Party ceases
to be a holder of the 2002 Debentures.
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3. Liability. No Party who shall vote or consent or
withhold consent or make a request with respect to any Securities subject to
this Agreement on, to or from any matter in compliance with the terms hereof
that shall, as a result of any such vote or consent or withholding of consent or
making of a request, have any obligation or liability to any other Party
(whether such other Party shall also vote or consent or withhold consent or make
a request with respect to any Securities, then subject to this Agreement).
4. Certain Remedies. Without intending to limit the
remedies available to any of the Parties, each Party agrees that damages at law
will be an insufficient remedy in the event such Party violates the terms hereof
or the powers granted hereunder and each of the Parties hereto further agrees
that each of the other Parties hereto may apply for and have injunctive or other
equitable relief in any court of competent jurisdiction to restrain the breach
or threatened breach of, or otherwise specifically to enforce, any of such
Party's agreements or the powers granted hereunder set forth herein.
5. Representations. Each Party represents and warrants
to each other Party that this Agreement is its legal, valid and binding
obligation, enforceable against such Party in accordance with its terms, and
will not result in any (a) violation or breach of, or be in conflict with, each
Party's respective organizational documents or material contracts, or (b)
violation of any statutes, laws, rules, regulations, orders or judgments
applicable to such Party.
6. Transfer of Securities. Except as otherwise set forth
in the Transaction Documents (as defined in the Purchase Agreement), nothing
shall prohibit or in any manner restrict any Party's ability to freely transfer,
assign, convey, or otherwise dispose of or convert its Securities; provided,
however, that upon the transfer, assignment, conveyance or disposition of any
Securities by a Party, such transferring Party shall cause the Person to which
the Securities are transferred, assigned, conveyed or otherwise disposed to
agree to be bound by the terms hereof..
7. Term. This Agreement and the Parties' obligations
hereunder shall continue in effect for so long as Care Capital and Essex owns
any 2002 Debentures.
8. Amendment. (a) Any term of this Agreement or the
powers granted hereunder may be amended and the observance of any such term or
power may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of Care Capital
and Essex and the holders of a majority of the Securities then subject to this
Agreement.
(b) This Agreement and the powers granted hereunder may
be terminated only with the written consent of Care Capital, Essex and all
Parties hereto.
9. Binding Effect. (a) This Agreement and the powers
granted hereunder shall be binding upon, and shall inure to the benefit of, Care
Capital, Essex and the Parties.
(b) Nothing in this Agreement or the powers granted
hereunder shall obligate any Party hereto, in his or her capacity as an
employee, officer or director of the Company or any of its subsidiaries, to take
or refrain from taking any action in any such capacity or shall
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otherwise affect the rights or obligations of any such party in any such
capacity.
10. Notices. All notices, demands or other communications
given hereunder shall be in writing and shall be sufficiently given if
transmitted by facsimile or delivered either personally or by a nationally
recognized courier service marked for next business day delivery or sent in a
sealed envelope by first class mail, postage prepaid and either registered or
certified, return receipt requested, to the address for each Party as provided
on the signature pages hereto, or to such other address as any such Party shall
designate in writing at the address hereinabove provided. Any such notice,
demand or communication shall be deemed to have been given (a) on the date of
delivery, if delivered personally, (b) on the date of facsimile transmission,
receipt confirmed, (c) one business day after delivery to a nationally
recognized overnight courier service, if marked for next day delivery or (d)
five business days after the date of mailing, if mailed.
11. Miscellaneous. The section headings herein are
inserted for convenience of reference only and shall not affect the meaning or
interpretation hereof. This Agreement and the powers granted hereunder contain
the entire agreement among the Parties hereto with respect to the matters
contemplated herein. If for any reason any provision hereof shall be invalid,
unenforceable or inoperative, the validity and effect of the other provisions
hereof shall not be affected herein. This Agreement may be executed in one or
more counterparts, and by the Parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement. This
Agreement shall become effective as to each signatory hereto upon the execution
and delivery hereof by such signatory. This Agreement and the powers granted
hereunder shall be governed in all respects by the laws of the State of New York
wherein the terms of this Agreement were negotiated, excluding to the greatest
extent permitted by law any rule of law that would cause the application of the
laws of any jurisdiction other than the State of New York.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, each of the Parties hereto has executed this
Agreement on the date first above written.
ORACLE STRATEGIC PARTNERS, L.P. GALEN PARTNERS III, L.P.
By: Oracle Strategic Capital L.L.C., By: Claudius, L.L.C., General Partner
General Partner 000 Xxxxx Xxxxxx, 0xx Xx.
000 Xxxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
0xx Xxxxx
Xxxxxxxxx, XX 00000
____________________________________ ______________________________________
By: Xxxx Xxxxxxxx By: Xxxxx Xxxxxxxxxxx
Its: Authorized Agent Its: General Partner
XXXXX EMPLOYEE FUND III, L.P. GALEN PARTNERS INTERNATIONAL III, L.P.
By: Wesson Enterprises, Inc. By: Claudius, L.L.C., General Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
____________________________________ ______________________________________
By: Xxxxx X. Xxxxxx By: Xxxxx Xxxxxxxxxxx
Its: General Partner Its: General Partner
XXXXXXX XXXXXXX TRUST XXXXXX X. XXXXX & CO., INC., TTEE
c/x Xxxxxx Drug Co., Inc. FBO Xxxxxxx X. Xxxxxxx XXX
000 Xxxxx Xxxxxxxxxx Xx. c/x Xxxxxx Drug Co., Inc.
Xxxxxxx Xxxxxxxx #0 000 Xxxxx Xxxxxxxxxx Xx.
Rockford, Ill. 00000 Xxxxxxx Xxxxxxxx #0
Xxxxxxxx, Xxx. 00000
____________________________________ ______________________________________
By: Xxxxxxx X. Xxxxxxx By: Xxxxxx X. Xxxxx
Its: Trustee Its: Trustee
XXXXX XXXXXXX
c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx.
Xxxxxxx Xxxxxxxx #0
Xxxxxxxx, Xxx. 00000
____________________________________
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ACKNOWLEDGED AND CONSENTED TO
as of the date set forth above by:
ESSEX WOODLANDS HEATH VENTURES V, L.P.,
By: Essex Woodlands Heath Ventures V, L.L.C.,
its General Partner
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx XX 00000
____________________________________
Name: Xxxxxxxx Xxxxxxxxx
Title: Managing Director
CARE CAPITAL INVESTMENTS II, LP
By: Care Capital II, LLC, General Partner
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
____________________________________
By: Xxxxx X. Xxxxxx
Its: Authorized Signatory
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Consent of Spouse
The undersigned, as the spouse of the Party who is the
signatory to the foregoing Voting Agreement, hereby consents to, confirms and
ratifies the terms of, and powers granted pursuant to, the foregoing Voting
Agreement, and agrees to be bound by all the Party's obligations under the
foregoing Agreement.
_________________________________
Spouse of________________________
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