Exhibit 5
DEBENTUREHOLDERS AGREEMENT
THIS DEBENTUREHOLDERS AGREEMENT (this "Debentureholders Agreement") is
entered into as of December 20, 2002 by and among XXXXXX DRUG CO., INC., a
corporation organized and existing under the laws of the State of New York
("Xxxxxx" or the "Company"), and each of the holders of the Company's 5%
Convertible Senior Secured Debentures due March 31, 2006 listed on the signature
page hereto.
WHEREAS, Xxxxxx is a party to a certain Debenture and Warrant Purchase
Agreement dated as of March 10, 1998, as amended (the "1998 Purchase
Agreement"), with the persons listed on the signature pages thereto and pursuant
to which the Company issued certain 5% Convertible Senior Secured Debentures due
March 31, 2006 (the "1998 Debentures"); and
WHEREAS, Xxxxxx entered into a certain Debenture and Warrant Purchase
Agreement dated as of May 26, 1999, as amended (the "1999 Purchase Agreement"),
with the persons listed on the signature pages thereto and pursuant to which the
Company issued certain 5% Convertible Senior Secured Debentures due March 31,
2006 (the "1999 Debentures" and together with the 1998 Debentures, the "Existing
Debentures"); and
WHEREAS, the Company has concurrently herewith entered into a certain
Debenture Purchase Agreement dated as of December 20, 2002 (the "2002 Purchase
Agreement"; capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in the 2002 Purchase Agreement) with Care
Capital, LLC, Essex Woodlands Health Ventures Fund V and those other persons
listed on the signature pages thereto and pursuant to which the Company proposes
to issue certain 5% Convertible Senior Secured Debentures due March 31, 2006
(the "2002 Debentures" and together with the Existing Debentures, the
"Debentures"); and
WHEREAS, it is a condition to the completion of the transactions
contemplated pursuant to the 2002 Purchase Agreement that the Company shall have
executed this Debentureholders Agreement providing that the approval of the
holders of the Debentures shall be required as a condition to the Company's
completion of certain material transactions; and
WHEREAS, the Company and the holders of the Debentures desire to enter into
this Agreement to provide for the approval rights of the holders of the
Debentures as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. Debentureholder Approval for Material Transactions.
(a) Consent of Holders of 2002 Debentures. The Company hereby covenants and
agrees, that so long as any of the 2002 Debentures remain outstanding, it will
not, directly or indirectly, without the prior written consent of the holders of
at least sixty-six and two-thirds percent (66 2/3%) in the aggregate principal
amount of the 2002 Debentures then outstanding, take, or permit to be taken, any
of the following actions or complete, or permit to be taken, any of the
following transactions:
(i) Any modification of the rights of the holders of the 2002 Debentures;
(ii) Any issuance of securities, or the incurrence of indebtedness, by the
Company or any Guarantor which rank senior or equal in right of payment to the
2002 Debentures;
(iii) Any declaration or payment of any dividends or distributions on, or
redemptions of, any securities ranking junior in priority to the 2002
Debentures, other than dividends or distributions payable in the Company's
capital stock or cash interest paid to individual investors in the Existing
Debentures;
(iv) (A) A merger, reorganization, consolidation or other business
combination involving the Company or any Guarantor, (B) a sale, transfer, lease,
license or other disposition of all or substantially all of the assets of the
Company or any Guarantor or (C) any other similar extraordinary transaction
involving the Company or any Guarantor, in any single transaction or a series of
related transactions (the "Extraordinary Transactions"), other than any such
transaction where the cash, marketable securities and other liquid consideration
received by the holders of the voting stock of the Company in such transaction
is at least equal to four (4) times the then applicable conversion price of the
2002 Debentures;
(v) The liquidation, dissolution, commencement of any bankruptcy or other
proceeding of the type referred to in Section 12.1(j) of the 2002 Purchase
Agreement, recapitalization or reorganization of the Company (in each case
whether or not they constitute transactions of the type referred to in Section
1(a)(vi) below); and
(vi) Without limiting the generality of Section 1(a)(iv) above, the
consummation of a strategic alliance, Extraordinary Transaction, licensing
arrangement or other corporate partnering arrangement involving the issuance by
the Company or any Guarantor of in excess of ten million dollars ($10,000,000)
in equity securities of the Company or any Guarantor.
(b) Consent of Holders of Debentures. Without limiting in any way the
approval rights granted to the holders of the 2002 Debentures in Section 1(a)
above, the Company hereby covenants and agrees, that so long as any of the
Debentures remain outstanding, it will not, directly or indirectly, without the
prior written consent of the holders of at least sixty-six and two-thirds
percent (66 2/3%) in the aggregate principal amount of the Debentures then
outstanding, take, or permit to be taken, any of the following actions or
complete, or permit to be completed, any of the following transactions:
(i) Any amendment to the Company's Certificate of Incorporation;
(ii) Any declaration or payment of any dividends or distributions on, or
redemptions of, the Company's capital stock, other than dividends or
distributions payable in the Company's capital stock or cash interest paid to
individual investors in the 2002 Debentures, the 1999 Debentures and the 1998
Debentures;
(iii) An Extraordinary Transaction; provided, however, that (I) for
purposes of calculating the consent of at least sixty-six and two-thirds percent
(66 2/3%) in the aggregate principal amount of the Debentures where the cash,
marketable securities and other liquid consideration received by the holders of
the voting stock of the Company in such Extraordinary Transaction is at least
equal to four (4) times the then applicable conversion price of (a) the 2002
Debentures, the 2002 Debentures shall be excluded, (b) the 1999 Debentures, the
1999 Debentures shall be excluded, and (c) the 1998 Debentures, the 1998
Debentures shall be excluded; and (II) no prior approval or consent of the
holders of the Debentures shall be required for any Extraordinary Transaction
where the cash, marketable securities and other liquid consideration received by
the holders of the voting stock of the Company in such Extraordinary Transaction
is at least equal to four (4) times the then highest applicable conversion price
of the Debentures;
(iv) The liquidation, dissolution, commencement of any bankruptcy or other
proceeding of the type referred to in Section 12.1(j) of the 2002 Purchase
Agreement, recapitalization or reorganization of the Company (in each case
whether or not they constitute transactions of the type referred to in Section
1(b)(vii) below);
(v) Except as otherwise waived, any issuance of the Company's securities
which rank senior or equal in right of payment to the Existing Debentures;
(vi) Any increase in the number of members comprising the Company's Board
of Directors above eleven (11); and
(vii) Without limiting the generality of Section 1(b)(iii) above, the
consummation of a strategic alliance, Extraordinary Transaction, licensing
arrangement or other corporate partnering arrangement involving the issuance by
the Company of in excess of ten million dollars ($10,000,000) in equity
securities of the Company or any Guarantor.
2. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Debentureholders
Agreement shall be effective against the Company or the holders of the
Debentures unless such modification, amendment or waiver is approved in writing
by the Company and the holders of not less than fifty-one percent (51%) of the
aggregate principal amount of the Debentures then outstanding; provided that
notwithstanding the foregoing, (a) the prior written consent of each holder of
the 2002 Debentures will be required to amend any payment terms of the 2002
Debentures, (b) the prior written consent of the holders of at least sixty-six
and two-thirds percent (66 2/3%) in the aggregate principal amount of the 2002
Debentures will be required to modify, amend or waive any provision of Sections
1(a), 2(a), 2(b) and 3 of this Debentureholders Agreement and (c) the prior
written consent of the holders of at least sixty-six and two-thirds percent
(66 2/3%) in the aggregate principal amount of the Debentures then outstanding
will be required to modify, amend or waive any provision of Section 1(b) of this
Debentureholders Agreement. The failure of any party to enforce any of the
provisions of this Debentureholders Agreement shall in no way be construed as a
waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Debentureholders
Agreement in accordance with its terms.
3. Termination. This Debentureholders Agreement shall terminate on the
earliest to occur of (a) mutual written agreement of the parties hereto and (b)
the conversion of Debentures into the Company's Common Stock, or repayment of
the Debentures with accrued and unpaid interest, or combination of the
foregoing, such that the aggregate outstanding principal amount of the
Debentures then outstanding is less than five million dollars ($5,000,000).
4. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Debentureholders Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Debentureholders
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
5. Entire Agreement. Except as otherwise expressly set forth herein, this
document, the 2002 Purchase Agreement, the 1998 Purchase Agreement, as amended
pursuant to the Amendment to Debenture and Warrant Purchase Agreement dated of
even date, and the 1999 Purchase Agreement, as amended pursuant to the Amendment
to Debenture and Warrant Purchase Agreement dated of even date embody the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
6. Successors and Assigns. Except as otherwise provided herein, this
Debentureholders Agreement shall bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns, and the holders of
the Debentures and any subsequent holders of the Debentures and the respective
successors and assigns of each of them, so long as they hold the Debentures.
7. Counterparts. This Debentureholders Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
8. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Debentureholders
Agreement will be in writing and will be deemed to have been given when
delivered personally, mailed by certified or registered mail, return receipt
requested and postage prepaid, or sent via a nationally recognized overnight
courier, or sent via facsimile to the recipient accompanied by a certified or
registered mailing. Such notices, demands or other communications will be sent
to the address indicated below:
To the Company:
Xxxxxx Drug Co., Inc.
000 X. Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
Fax: 000-000-0000
If to the holders of the Debentures:
To the address provided
on the signature pages to
the 1998 Purchase Agreement,
1999 Purchase Agreement and
2002 Purchase Agreement
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any such notice, demand or communication shall be deemed to have been
given (a) on the date of delivery, if delivered personally, (a) 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.
9. Governing Law. This Debentureholders Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York wherein the
terms of this Debentureholder 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.
10. Jurisdiction. (a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or United States Federal court sitting
in New York City, and any appellate court from any thereof, in any action or
proceeding arising our of or relating to this Debentureholders Agreement to
which it is a party, or for recognition or enforcement of any judgment, and each
of the parties hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the fullest extent permitted by law, in such United
States Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the right that any party may otherwise have to bring
any action or proceeding relating to this Debentureholders Agreement in the
courts of any other jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or in relation to this Debentureholders Agreement to
which it is a party in any such New York State or United States Federal court
sitting in New York City. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
11. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS DEBENTUREHOLDERS AGREEMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have executed this Debentureholders
Agreement as of the date first above written.
Xxxxxx Drug Co., Inc.
By:
---------------------------------------------
Name:
Title:
0000 XXXXXXXXXXXXXXXX
XXXXX PARTNERS III, L.P. GALEN PARTNERS INTERNATIONAL, III, L.P.
By: Claudius, L.L.C., By: Claudius, L.L.C., General Partner
General Partner 000 Xxxxx Xxxxxx, 0xx Xxxxx
000 Xxxxx Xxxxxx, 0xx Xx. Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
By: Xxxxx Xxxxxxxxxxx By: Xxxxx Xxxxxxxxxxx
Its: General Partner Its: General Partner
XXXXX EMPLOYEE FUND III, L.P. ESSEX WOODLANDS HEALTH VENTURES V, L.P.
By: Wesson Enterprises, Inc. By: Essex Woodlands Health Ventures ,
610 Fifth Avenue, 5th Floor V, L.L.C.
Xxx Xxxx, Xxx Xxxx 00000 its General Partner
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
By: Xxxxx X. Xxxxxx By: Xxxxxxxx Xxxxxxxxx
Its: General Partner Its: Managing Director
CARE CAPITAL INVESTMENTS II, LP XXXXXXX XXXX
By: Care Capital II, L.L.C., c/o Xxxxxx Xxxx
General Partner 000 Xxxx Xxxxxx
Xxxxxxxxx Xxxxxxxx Xxx Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
By:
Its:
XXXXXXX XXXXXXXX XXXXX XXXXXXXX
0000 Xxxx Xxxxx Xxxx 0000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxx, Xxxxxxxxxxxx 00000
XXXXXX X. XXXX XXXXXX X. XXXX
00 Xxxxxxx Xxxxx 00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000 Xxxxxx, Xxx Xxxxxx 00000
XXXX XXXX XXXXX XXXXXX
c/o D.R. International c/o Xxx Xxxxxxxx
0000 Xx. Xxxxxxxx Xxxxxx 0000 Xxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000 Xxxxx 000
Xxxxxxxx, XX 00000
XXXXXX X. XXXXXXXX
000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
EXISTING DEBENTUREHOLDERS
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: By:
Xxxx Xxxxxxxx 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: By:
Xxxxx X. Xxxxxx Xxxxx Xxxxxxxxxxx
Its: General Partner Its: General Partner
XXXX XXXXX XXXXXXX XXXXX
00 Xxxxxx Xxxxxx 000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxx 00000 Xxxxxxxx, XX 00000
XXXXXXX XXXXXXXX XXXXX XXXXXXXX
0000 Xxxx Xxxxx Xxxx 0000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxx, Xxxxxxxxxxxx 00000
XXXX XXXX XXXXXX XXXXX
c/o D.R. International 000 Xxxxxx Xxxx
0000 Xx. Xxxxxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
XXXXXXX XXXX XXXXXX X. XXXXX & CO., INC., TTEE
c/o Xxxxxx Xxxx FBO Xxxxxxx X. Xxxxxxx XXX
000 Xxxx Xxxxxx c/x Xxxxxx Drug Co., Inc.
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2
Rockford, Ill. 61107
By:
Xxxxxxx X. Xxxxxxx
Its: Trustee
XXXXXXX XXXXXXX XXXXX XXXXXXX
c/x Xxxxxx Drug Co., Inc. c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx. 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2 Crimson Building #2
Rockford, Ill. 61107 Rockford, Ill. 61107
XXXXXX XXXXXXX TRUST XXXXXXXXX XXXXXXXXX
c/x Xxxxxx Drug Co., Inc. 00000 Xxxx, Xxxxx 00
000 Xxxxx Xxxxxxxxxx Xx. Xx. Xxxxxxxx, Xxxx 00000
Xxxxxxx Xxxxxxxx #0
Xxxxxxxx, Xxx. 00000
By: XXXXXX X. XXXX
00 Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxxx, New Jersey 07059
Its: Trustee
XXXXXX X. XXXX XXXXXX X. XXXX AS CUSTODIAN
00 Xxxxxxx Xxxxx FOR XXXXXX X. XXXX
Xxxxxx, Xxx Xxxxxx 00000 00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
By:
Varshah X. Xxxx
Its: Custodian
XXXXXX X. XXXX AS CUSTODIAN
FOR XXXXXX X. XXXX
00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
By: Varshah X. Xxxx
Its: Custodian
XXXXXXX XXXXXXXX XXXXX XXXXXXXX
c/o Xxxxx Xxxxxxxx c/o Xxxxx Xxxxxxxx
00 Xxxxxxxxxxxxx Xxxx 00 Xxxxxxxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxx Xxxxxx 00000
XXXXXXX XXXXXX, XXX ACCOUNT XXXXXXX XXXXXX
FBO XXXXXXX XXXXXX 0000 Xxxxxxxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxx Xxxxxxxx Xxxx, Xxx. 00000
Xxxxxxxx Xxxx, Xxx. 00000
By:
Its: Trustee
XXXXXXX X. XXXXXXX XXXX X. XXXXXXX
c/x Xxxxxx Drug Co., Inc. c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx. 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2 Crimson Building #2
Rockford, Ill. 61107 Rockford, Ill. 61107
BROOKE XXXXX XXXXXXX ALEC XXXX XXXXXXX
c/x Xxxxxx Drug Co., Inc. c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx. 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2 Crimson Building #2
Rockford, Ill. 61107 Rockford, Ill. 61107
XXXXXXXX XXXXX XXXXXXX XXXXX XXXXXXX
c/x Xxxxxx Drug Co., Inc. c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx. 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2 Crimson Building #2
Rockford, Ill. 61107 Rockford, Ill. 61107
XXXXXXX X. XXXXXXX XX XXXX XXXXX XXXXXXX
c/x Xxxxxx Drug Co., Inc. c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx. 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2 Crimson Building #2
Rockford, Ill. 61107 Rockford, Ill. 61107
XXXXXX X. XXXXX & CO., INC., TTEE XXXXXX X. XXXXX & CO., INC., TTEE
FBO Xxxxxxx Xxxxxxx XXX FBO Xxxxxx Xxxxxxx XXX
c/x Xxxxxx Drug Co., Inc. c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx. 000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2 Crimson Building #2
Rockford, Illinois 61107 Xxxxxxxx, Xxxxxxxx 00000
By: By:
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxx
Its: Trustee Its: Trustee
XXXXXXX XXXXXXX TRUST
c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx.
Crimson Building #2
Xxxxxxxx, Xxxxxxxx 00000
By:
Xxxxxxx X. Xxxxxxx
Its: Trustee
