EXHIBIT 10.5
AMENDED AND RESTATED VOTING AGREEMENT
This AMENDED AND RESTATED VOTING AGREEMENT (this "Agreement")
dated as of February 6, 2004, among the Parties signatory hereto (the
"Parties"). Capitalized terms used herein and not otherwise defined shall have
the meaning provided in the Purchase Agreement (as defined below).
WHEREAS, Xxxxxx Drug Co., Inc., a New York corporation (the
"Company"), has entered into the Debenture and Share 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 V,
L.P. ("Essex"), Xxxxx Partners III, LP ("Xxxxx") and other signatories thereto,
providing for the issuance by the Company of Convertible Senior Secured
Debentures (the "2004 Debentures") in the aggregate principal amount of up to
$14 million; and
WHEREAS, the 2004 Debentures are convertible into Series A
Preferred in accordance with the terms of the Purchase Agreement; and
WHEREAS, the Company has entered into the Debenture Conversion
Agreement dated of even date herewith (the "Conversion Agreement") by and among
the Company, Care Capital, Xxxxx, Xxxxx and the other holders of the Company's
5% Convertible Senior Secured Debentures due March 31, 2006 (the "Outstanding
Debentures"), providing for the conversion of all Outstanding Debentures into
classes of Series B Preferred and/or Series C Preferred; and
WHEREAS, the Company's Certificate of Incorporation currently
does not have authorized the Series A Preferred, Series B Preferred or Series C
Preferred (collectively, the "Preferred Shares") for issuance upon conversion of
the 2004 Debentures and the Outstanding Debentures pursuant to the terms of the
Purchase Agreement and the Conversion Agreement, respectively; and
WHEREAS, the Preferred Shares are to be convertible into the
Company's Common Stock, $.01 par value per share, (the "Common Stock") as
provided in the Purchase Agreement and the Conversion Agreement; and
WHEREAS, the Company does not have enough authorized and
unreserved shares of its Common Stock available for issuance upon the conversion
of the Preferred Shares; and
WHEREAS, the Parties contemplate that upon the conversion of
the 2004 Debentures into Series A Preferred and the exchange of the Outstanding
Debentures for Series B Preferred and/or Series C Preferred, the holders of such
Preferred Shares shall have the right to vote as part of the single class with
all holders of the Company's Common Stock and other voting security holders on
an as converted basis; and
WHEREAS, the Company desires to amend and restate its
Certificate of Incorporation to provide for (a) the authorization and creation
of each of the class of Series A
Preferred, Series B Preferred and Series C Preferred having the rights and
preferences provided in the Company's Amended and Restated Certificate of
Incorporation appended as an Exhibit to each of the Purchase Agreement and the
Conversion Agreement and (b) the increase in the number of shares of Common
Stock in order to reserve a sufficient number of shares for issuance upon the
conversion of the Preferred Shares; and
WHEREAS, as additional consideration for the investment by
Care Capital, Essex and Xxxxx in the Debentures, the Parties intend that so long
as each such party shall remain a holder of the Minimum Threshold (as
hereinafter defined) of Series A Preferred, the Parties desire to vote their
Securities (as defined below) in such a manner so as to elect a Care Capital
nominee, an Essex nominee, a Xxxxx nominee and a collective nominee of each of
Care Capital, Essex and Xxxxx, 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 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, as amended (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, as amended (the "1999
Debentures"), 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 650,000,000 shares;
(b) Providing authorization to issue up to 45,000,000
shares of Series A Preferred having the rights and
preferences provided in the Amended and Restated
Certificate of Incorporation attached as Exhibit D to
the Purchase Agreement;
(c) Providing authorization to issue up to 25,000,000
shares of Series B Preferred having the rights and
preferences provided in the Amended and Restated
Certificate of Incorporation attached as Exhibit A to
the Conversion Agreement; and
(d) Providing authorization to issue up to 220,000,000
shares of Series C Preferred (consisting of up to
70,000,000 shares of Series C-1 Preferred, 50,000,000
shares of Series C-2 Preferred and 100,000,000 shares
of Series C-3 Preferred) having the rights and
preferences provided in the Amended and Restated
Certificate of Incorporation attached as Exhibit A to
the Conversion Agreement.
2. Election of Director Nominees. Commencing upon the
Company's next
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upcoming meeting of shareholders, each Party and Care Capital, Essex and Xxxxx
(each of Care Capital, Essex and Xxxxx being referred to herein as a
"Designating Party") agree as follows:
(a) Each Party holding Common Stock, 1998 Debentures,
1999 Debentures, Series A Preferred, Series B
Preferred and Series C Preferred (collectively, the
"Securities") shall vote its Securities, and take or
cause to be taken such other actions, as may be
required from time to time to (i) ensure that the
Board of Directors consists of no more than seven
directors, and (ii) elect to the Board of Directors
of the Company (A) one person designated by each
Designating Party, (B) one person designated
collectively by Care Capital, Essex and Xxxxx by
consent of at least two (2) of such three (3)
entities (the "Group Designating Party") (C) one
person who shall be the Chief Executive Officer of
the Company, and (D) two persons who shall be
independent directors (as defined in Rule 4200(a)(15)
of the National Association of Securities' Dealers
Listing Standards, as may be modified or
supplemented) nominated and elected to the Board of
Directors by the then current directors. 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 and the Group 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 or the Group Designating Party when such
removal is requested for any reason, with or without
cause, by such Designating Party or the Group
Designating Party. In the case of the death,
resignation or removal as herein provided of a
Designating Party's designee or the Group Designating
Party's designee, each Party shall vote all
Securities held by it to elect another person
designated by such Designating Party or the Group
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 or the Group Designating Party,
unless the Designating Party or the Group 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
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to so vote, be deemed immediately to have granted to
each Designating Party or the Group Designating
Party, as applicable, a proxy to vote its Securities
solely for the election of the nominee of such
Designating Party or the Group Designating Party, as
applicable, or the removal of such Designating
Party's or the Group 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
and the Group Designating Party shall be, if so
requested by such Designating Party or the Group
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 and for the Group Designating Party. The rights
of a Designating Party shall terminate on the date
such Designating Party ceases to be a holder of the
Minimum Threshold (but only after the conversion of
the 2004 Debentures). The right of a Designating
Party to be a member of the Group Designating Party
shall terminate on the date such Designating Party
ceases to be a holder of the Minimum Threshold (but
only after the conversion of the 2004 Debentures).
For purposes hereof, "Minimum Threshold" shall mean
at least 50% of the shares of Series A Preferred
issued to such Designating Party upon conversion of
its 2004 Debentures (or at least 50% of the shares of
Common Stock issued upon conversion thereof).
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
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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,
that upon the transfer, assignment, conveyance or disposition of any Securities
by a Party, such transferring Party shall cause the transferee to which the
Securities are transferred, assigned, conveyed or otherwise disposed to agree to
be bound by the terms hereof (unless such transfer is made pursuant to an
effective registration agreement under the Securities Act or through a broker
pursuant to Rule 144).
7. Term. Except as provided in Sections 2(f) and 6
hereof, this Agreement and the Parties' obligations hereunder shall continue in
effect for so long as any of Care Capital, Essex or Xxxxx owns the Minimum
Threshold.
8. Amendment. 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 a majority of
the Securities then subject to this Agreement, which majority must include each
of Care Capital, Essex and Xxxxx so long as it owns the Minimum Threshold.
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 Xxxxx 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,
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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. 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.
12. Board Observers. So long as Xxxxx has the right to
designate a director pursuant to Section 2(a) hereof, the Company will permit
one observer selected by Xxxxx to attend all meetings of the Board of Directors
of the Company, and shall provide such observer with such notice and other
information with respect to such meetings as are delivered to the directors of
the Company; provided, that such observer shall not be permitted to attend any
meeting or portion thereof or have access to such other information if, in the
judgment of the Company under advice of counsel, such observer's presence or
receipt of such information would adversely affect attorney-client privilege
with respect to such meeting or information.
13. Termination of Original Agreement. The Parties
acknowledge and agree that this Agreement is entered into in replacement of that
certain Voting Agreement dated December 20, 2002 between the Company and the
other Parties that are party thereto (the "Original Agreement"), and that upon
effectiveness of this Agreement, the Original Agreement shall be terminated and
no further legal force or effect.
[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.
XXXXXX DRUG CO., INC.
By:____________________________
Name:
Title:
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XXXXX PARTNERS III, L.P. ORACLE STRATEGIC PARTNERS, L.P.
By: Claudius, L.L.C., General Partner By: Oracle Strategic Capital L.L.C.,
000 Xxxxx Xxxxxx, 0xx Xx. General Partner
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
_______________________________________ _____________________________________
By: Xxxxx Xxxxxxxxxxx By: Xxxx Xxxxxxxx
Its: General Partner Its: Authorized Agent
XXXXX PARTNERS INTERNATIONAL, III, L.P. CARE CAPITAL INVESTMENTS II, LP
By: Claudius, L.L.C., General Partner By: Care Capital II, LLC, as general
000 Xxxxx Xxxxxx, 0xx Xxxxx partner
Xxx Xxxx, Xxx Xxxx 00000 00 Xxxxxxx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
_______________________________________ By: ____________________________
By: Xxxxx Xxxxxxxxxxx Name: Xxxxx X. Xxxxxx
Its: General Partner Title: Authorized Signatory
XXXXX EMPLOYEE FUND III, L.P. ESSEX WOODLANDS HEALTH
By: Wesson Enterprises, Inc. VENTURES V, L.P.
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxx, XX 00000
_______________________________________ _____________________________________
By: Xxxxx X. Xxxxxx By: Xxxxxxxx Xxxxxxxxx
Its: General Partner Its: Managing Director
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XXXX XXXXX XXXXXXX XXXXX
00 Xxxxxx Xxxxxx 000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxx 00000 Xxxxxxxx, Xxxxxxxxxxxx 00000
_______________________________________ _____________________________________
XXXXXXX XXXXXXXX XXXXX XXXXXXXX
0000 Xxxx Xxxxx Xxxx 0000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxx, Xxxxxxxxxxxx 00000
_______________________________________ _____________________________________
XXXX XXXX XXXXXX XXXXX
0000 Xxxx Xxxxxxxx Xxxxxx 000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000 Xxxxxx, Xxxxxxxxxxxx 00000
_______________________________________ _____________________________________
XXXXXXXX XXXXXXXXX XXXXXXX XXXX
00000 Road, Route 66 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxx, Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
_______________________________________ _____________________________________
XXXXX XXXXXXX XXXXX XXXXXX
c/x Xxxxxx Drug Co., Inc. c/o Xxx Xxxxxxxx
000 Xxxxx Xxxxxxxxxx Xx. 0000 Xxxxxxx Xxxx
Xxxxxxx Xxxxxxxx #0 Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxx, XX 00000
_______________________________________ _____________________________________
XXXXXX X. XXXX XXXXXX X. XXXX
00 Xxxxxxx Xxxxx 00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000 Xxxxxx, Xxx Xxxxxx 00000
_______________________________________ _____________________________________
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XXXXXX X. XXXX AS CUSTODIAN XXXXXX X. XXXX AS CUSTODIAN
FOR XXXXXX X. XXXX FOR XXXXXX X. XXXX
00 Xxxxxxx Xxxxx 00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000 Xxxxxx, Xxx Xxxxxx 00000
_______________________________________ _____________________________________
By: Varshah X. Xxxx By: Varshah X. Xxxx
Its: Custodian Its: Custodian
XXXXXXX XXXXXXXX XXXXX XXXXXXXX
c/o Xxxxx Xxxxxxxx c/o Xxxxx Xxxxxxxx
000 Xxxxxx Xxxx 000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxxxx, Xxx Xxxxxx 00000
_______________________________________ _____________________________________
XXXXXXX XXXXXX, XXX ACCOUNT XXXXXXX XXXXXX
FBO XXXXXXX XXXXXX 0000 Xxxxxxxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxx Xxxxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 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, Illinois 61107 Xxxxxxxx, Xxxxxxxx 00000
_______________________________________ _____________________________________
XXXXXXX XXXXXXX TRUST
c/x Xxxxxx Drug Co., Inc.
000 Xxxxx Xxxxxxxxxx Xx.
Xxxxxxx Xxxxxxxx #0
Xxxxxxxx, Xxxxxxxx 00000
_______________________________________
By: Xxxxxxx X. Xxxxxxx
Its: Trustee
00
XXXXX XXXXXXXXX XXXXXX X. XXXXXXXX
XX Xxxxxx LLC 000 Xxxxx Xxxx
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx Xxxxxxxxx, XX 00000
Xxx Xxxx, Xxx Xxxx 00000
_______________________________________ _____________________________________
XXXX X. XXXXX, XX.
000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
_______________________________________
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