EXHIBIT 10.16
STANDSTILL AGREEMENT
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This Standstill Agreement (the "Agreement") is made as of April 23, 1999 by
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and between Chemdex Corporation, a Delaware corporation (the "Company") and VWR
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Scientific Products Inc., Pennsylvania corporation ("Purchaser").
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RECITALS
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The Company and Purchaser are parties to that certain Amended Common Stock
Purchase Agreement dated as of April 23, 1999 (which amends in certain respects
and for convenience, restates in its entirety the Common Stock Purchase
Agreement dated as of March 5, 1999) (the "Common Stock Purchase Agreement"),
pursuant to which the Company shall issue shares of its Common Stock to
Purchaser. In connection with such issuance and sale of such stock, Purchaser
desires to make certain covenants to the Company so as to provide limits on
Purchaser's ownership of capital stock of the Company.
In consideration of the foregoing and the mutual promises contained in this
Agreement, the parties agree as follows:
AGREEMENT
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1. Definitions
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For the purposes of this Agreement, the following words and phrases shall
have the following meanings:
(a) "Actual Voting Power" means, as of the date of determination, the
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total number of votes attaching to (i) the outstanding securities entitled to
vote for the election of Directors of the Company, (ii) the number of shares
issuable upon exercise of outstanding options and warrants, (iii) until the
closing of the Company's initial public offering of its capital stock, shares of
the Company's Series C Preferred Stock that are authorized but unissued, and
(iv) until the closing of the Company's initial public offering of its capital
stock, shares reserved for issuance under the Company's stock benefit plans.
(b) "Affiliate" of an entity means, for so long as one of the
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following relationships is maintained, any corporation or other business entity
controlled by, controlling, or under common or indirect beneficial ownership of
more than fifty percent (50%) of the voting stock of such entity (if a
corporation), or more than a fifty percent (50%) interest in the decision-making
authority of such entity (if unincorporated).
(c) "Investor Group" means Purchaser and its Affiliates.
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(d) "13D Group" means any group of persons formed for the purpose of
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acquiring, holding, voting or disposing of Voting Securities which would be
required under the Securities Exchange Act of 1934, as amended (the "Exchange
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Act") and the rules and regulations promulgated thereunder, to file a statement
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on Schedule 13D with the Securities and Exchange
Commission as a "person" within the meaning of Section 13(d)(3) of the Exchange
Act if such group beneficially owned sufficient securities to require such a
filing under the Exchange Act.
(e) "Threshold Percentage" means ten percent (10.0%). The Threshold
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Percentage shall be subject to adjustment as provided below in Section 4(c).
(f) "Total Voting Power" means, as of the date of determination, the
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total number of votes which may be cast in the election of directors of the
Company at any meeting of shareholders of the Company if all Voting Securities
then outstanding are present and voted to the fullest extent possible at such
meeting, assuming the conversion, exchange or exercise of all then outstanding
convertible securities, options, warrants or other rights which are convertible
into or exchangeable or exercisable for securities entitled to vote for the
election of directors.
(g) "Voting Security" means, as of the date of determination, the
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Common Stock of the Company, any other security generally entitled to vote for
the election of directors and any outstanding convertible securities, options,
warrants or other rights which are convertible into or exchangeable or
exercisable for securities entitled to vote for the election of directors.
2. Standstill Obligations
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(a) Limitation. At any time following the date of this Agreement,
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except with the prior written consent of the Company's Chief Executive Officer
and/or Board of Directors (excluding the vote of any director representing,
employed by or otherwise affiliated with any member of the Investor Group), no
member of the Investor Group shall, directly or indirectly, (i) acquire any
Voting Securities (except by way of (A) stock splits, stock dividends or other
distributions or offerings made available to holders of Voting Securities
generally, or (B) stock options, warrants or other rights to purchase Voting
Securities approved by the Board of Directors of the Company (excluding the vote
of any director representing, employed by or otherwise affiliated with any
member of the Investor Group)) or (ii) (other than in connection with an actual
sale of such securities) exercise any stock options, warrants or other rights to
purchase Voting Securities approved by the Board of Directors of the Company if
the effect of such acquisition or exercise would be to increase the percentage
interest of the Investor Group in the Actual Voting Power to more than the
Threshold Percentage.
(b) Recapitalizations, Etc. Notwithstanding Section 2(a), no member
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of the Investor Group shall be obligated to dispose of any Voting Securities if
the aggregate percentage ownership of the Investor Group is increased as a
result of (i) a recapitalization of the Company, (ii) a repurchase of Voting
Securities by the Company, (iii) any other action taken by the Company or its
Affiliates other than the Investor Group.
(c) Participation. Except with the prior written consent of the
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Company's Board of Directors, the Investor Group will not (i) solicit proxies in
respect of any Voting Securities, (ii) become a "participant" or "participant in
a solicitation", as those terms are defined in Rule 14a-l1 under the Exchange
Act, in opposition to a solicitation by the Company, (iii) form or join any
group for the purpose of voting, purchasing or disposing of Voting Securities,
or (iv) deposit any Voting Securities in a voting trust or subject them to a
voting agreement or other
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arrangement of similar effect, except as contemplated by this Agreement;
provided, however, that the Investor Group shall not be deemed to be a
"participant" or to have become engaged in a solicitation hereunder solely by
reason of (I) the membership of an individual representing, employed by or
otherwise affiliated with any member of the Investor Group on the Board of
Directors, (II) the voting of the Investor Group's Voting Securities in any
election of such representative of the Investor Group to the Board of Directors,
or (III) the company's solicitation of proxies in connection with any annual
meeting of the shareholders of the Company.
3. Exception for Certain Third-Party Acquisitions.
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(a) Exception to Standstill Obligation. Notwithstanding Section 2(a),
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the Investor Group may acquire Voting Securities without regard to the
limitations set forth above but in accordance with Section 2(b) if at any time
an entity or person listed on Exhibit A to this Agreement(, any Affiliate of
such entity or person, and/or any 13D Group of which such entity or person
and/or any of such entity's or such person's Affiliates is or becomes a member
(collectively, a "Triggering Person"), directly or indirectly, (i) proposes or
offers to acquire, or (ii) acquires, beneficial ownership of Voting Securities
which, if added to the Voting Securities (if any) already beneficially owned by
such Triggering Person, would represent ownership of Voting Securities greater
than the Threshold Percentage. The Company shall give Purchaser written notice
of the occurrence of any such event promptly after it obtains knowledge of such
event.
(b) Competing Offers. If an event identified in Section 3(a) occurs,
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the Investor Group shall be permitted to take such action and make such offers
as may be considered to be of the same nature and type of action or offer and
for the same resulting number of shares as that which is being taken by the
Triggering Person; provided that the Investor Group may only acquire that number
of shares which when added to the number of shares already owned by the Investor
Group shall not exceed the number of shares acquired or to be acquired (assuming
any offers to purchase have been consummated) by the Triggering Person. In
proceeding with any action or offer permitted under this Section 3(b), the
Investor Group shall be permitted to offer more favorable terms such as price,
cash versus securities or other such terms as may be consistent with an offer of
the same nature and type of consideration as that which is being proposed by the
Triggering Person.
For example (but without limitation):
(i) Tender Offer. If a Triggering Person makes a bona fide
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public tender offer for all of the Company's outstanding shares, the Investor
Group may similarly tender for all of the outstanding shares of the Company.
(ii) Nonpublic Transaction. If a Triggering Person proposes to
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the Board of Directors of the Company to acquire directly from the Company
shares equal to a specified percentage of the Total Voting Power in excess of
the Threshold Percentage, e.g., twenty-five percent (25%), the Investor Group
may make a similar proposal to acquire directly from the Company an additional
number of shares that would, if accepted, increase its percentage
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of the Total Voting Power to be equal to the specified percentage, e.g., an
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aggregate of twenty-five percent (25%) of the Total Voting Power
(c) No Contesting. If the Investor Group shall take any such action
permitted by this Section 3, the Company agrees that it shall not in any way
(whether by active opposition, Board announcement or otherwise) contest such
action, subject in all events to the fiduciary obligations of the Company's
Board of Directors and officers to the Company's stockholders.
4. Option to Purchase Incremental Shares.
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(a) Incremental Shares. If an event identified in Section 3(a) occurs
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and as a result the Investor Group acquires Voting Securities which increase the
Investor Group's percentage interest in the Actual Voting Power to more than the
Threshold Percentage (the "Incremental Shares"), and thereafter the Triggering
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Person holds Voting Securities representing a percentage of the Total Voting
Power less than the Threshold Percentage, then, upon the expiration of the
Investor Group's right to dispose of the Incremental Shares as provided in
Section 4(b) below, the Investor Group hereby grants to the Company, for a
period of ninety (90) days (subject to extension in the event of Investor's
exercise of rights under Section 4(b) below), an option to acquire any
Incremental Shares at a price equal to the price paid by the Investor Group for
such shares, plus such expenses and costs reasonably necessary to acquire the
Incremental Shares and incurred by the Investor Group in acquiring the
Incremental Shares (including the cost of funds of the Investor Group of holding
the incremental Shares until acquired by the Company).
(b) Disposition. In the event that the Investor Group has acquired
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Incremental Shares from a seller or sellers other than the Company, for a period
of sixty (60) days from the date on which the Investor Group holds Incremental
Shares, the Investor Group shall have the right to sell such Incremental Shares
as follows: (i) to an independent third party in a bona fide transaction or
transactions; (ii) if Rule 144 is available, into the public market in
accordance with the terms of Rule 144; or (iii) as provided under both (i) and
(ii). In the event that the Investor Group elects to dispose of the Incremental
Shares as provided in this Section 4(b), Purchaser shall provide written notice
to the Company of such disposition and the purchase option granted to the
Company pursuant to Section 4(a) shall apply only to those Incremental Shares
which have not been so disposed of.
(c) Adjustment for Failure to Exercise Option. In the event that the
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Company fails to exercise its option as provided in Section 4(a), the Threshold
Percentage shall be increased to a percentage equal to the percentage of the
Actual Voting Power held by the Investor Group upon the expiration of the
Company's right to exercise such option.
5. Top-Up Right
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(a) Right. Subject to Section 5(b), if at any time the number of
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outstanding Voting Securities is increased from the number of Voting Securities
outstanding on the later of the date of this Agreement or the closing of the
final tranche of the Series C Offering (as defined in the Common Stock Purchase
Agreement) for any reason and in any manner,
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Purchaser shall have the right (the "Top-Up Right") to purchase in the market,
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such number of additional shares as may then be necessary for Purchaser to
acquire to maintain the Investor Group's ownership of Voting Securities at the
Threshold Percentage.
(b) Limitation. If an event occurs that triggers Purchaser's right to
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increase its holdings of Voting Securities as provided under Section 3(b),
Purchaser shall first exercise or waive its rights under Section 3(b) with
respect to such event prior to the exercise of its Top-Up Right. In the event
that Purchaser shall have so waived its right under Section 3(b) or used good
faith efforts in exercising its rights under the terms of Section 3(b) but shall
have failed to obtain sufficient Voting Securities to maintain its ownership of
securities at the Threshold Percentage, then Purchaser may exercise its Top-Up
Right to maintain its ownership at the Threshold Percentage.
6. No Exercise of Significant Influence
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At any time following the date of this Agreement, no member of the
Investor Group shall, directly or indirectly, exercise significant influence
over the Company, including its operating and financial policies; provided, that
nothing in this Section 6 shall (a) preclude Purchaser from designating a member
of the Company's Board of Directors (the "Purchaser's Designee") or (b) affect
the ability of the Purchaser's Designee to take any action, vote on any matter
or make any recommendation or decision in his or her capacity as a member of the
Company's Board of Directors.
7. Miscellaneous
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(a) Equitable Relief. The Parties acknowledge and agree that
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irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States or any state
thereof having jurisdiction, in addition to any other remedy to which they may
be entitled in law or in equity.
(b) Waiver. The failure of either party to assert a right hereunder
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or to insist upon compliance with any term or condition of this Agreement shall
not constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party. None of the terms,
covenants and conditions of this Agreement can be waived except by the written
consent of the party waiving compliance.
(c) Amendments and Waivers. Any term of this Agreement may be amended
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or waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with
this Section 7(c) shall be binding upon the parties and their respective
successors and assigns.
(d) Assignment. This Agreement may not be assigned by either party
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without the prior written consent of the other, except that the Company may
assign this Agreement to a
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party which acquires all or substantially all of the Company's assets, whether
by merger, sale of assets or otherwise. A merger or consolidation shall be
deemed to constitute an assignment. Subject to the foregoing, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
In the event Purchaser or any member of the Investor Group sells or
otherwise transfers Voting Securities in a transaction other than a "Permitted
Transaction" (as defined below), then any buyer or transferee of such Voting
Securities shall as a precondition to the consummation of the proposed sale or
transfer be required to execute in writing an agreement to be bound by the terms
of this Agreement, which agreement to be bound shall be in form and substance
reasonably satisfactory to the Company. As part of this agreement to be bound,
the Threshold Percentage shall be adjusted downwards as appropriate to reflect
the number of shares being sold or transferred to such buyer or transferee.
A "Permitted Transaction" shall mean a sale or transfer (i) pursuant
to Rule 144 of the Securities Act of 1933, as amended (without giving effect to
subsection (k) of Rule 144); (ii) to any tender or excahnge offer that shall
have been recommended to the stockholders of the Company by the Board of
Directors; (iii) pursuant to any bona fide public offering of Voting Securities,
not including a sale of Voting Securities to any person or related group of
persons who is known by any member of the Investor Group to be acquiring in such
public offering more than 2% of the total combined voting power of all Voting
Securities then outstanding.
(e) Governing Law; Jurisdiction. This Agreement and all acts and
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transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law.
(f) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) Titles and Subtitles. The titles and subtitles used in this
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Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted by this Agreement shall
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be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice.
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(i) Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(j) Attorney's Fees. If any action at law or in equity is necessary
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to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
(k) Entire Agreement. This Agreement is the product of both of the
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parties hereto, and constitutes the entire agreement between such parties
pertaining to the subject matter hereof, and merges all prior negotiations and
drafts of the parties with regard to the transactions contemplated herein. Any
and all other written or oral agreements existing between the parties hereto
regarding such transactions are expressly canceled.
(l) Termination. This Agreement may be terminated at any time by the
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Company upon notice to the Purchaser. The termination shall be effective upon
such notice, and this Agreement shall be of no further force or effect upon
termination.
[Signature Page Follows]
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The parties have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first written
above.
COMPANY:
CHEMDEX CORPORATION
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: President & CEO
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Address: 0000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
PURCHASER:
VWR SCIENTIFIC PRODUCTS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: President and CEO
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Address: 0000 Xxxxxx Xxxxxxx
Xxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
SIGNATURE PAGE FOR STANDSTILL AGREEMENT
EXHIBIT A
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SCHEDULE OF TRIGGERING PERSONS
[........................]
Any other person or entity mutually agreed to by the parties in good faith and
any Affiliate of any Triggering Person.
[....] CONFIDENTIAL TREATMENT REQUESTED
OMITTED PORTIONS FILE SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
