Exhibit 3
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);
(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.
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 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]
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 By: Claudius, L.L.C., General Partner
L.L.C., 000 Xxxxx Xxxxxx, 0xx Xx.
General Partner Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxxxx Xxxxxx
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.
Crimson Building #2
Rockford, Ill. 61107
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
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
----------------------------------
