Exhibit 6
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT is dated as of March 2, 1999, among
Global Pharmaceutical Corporation, a Delaware corporation (the "Company"), ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ US Discovery Fund III, L.P. and ▇▇▇▇▇▇▇ US
Discovery Offshore Fund III, L.P. (collectively, the "▇▇▇▇▇▇▇ Funds"). The
▇▇▇▇▇▇▇ Funds, any ▇▇▇▇▇▇▇ Holder and any Transferee are collectively referred
to herein as the "Investor Group" and, individually, an "Investor."
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Stock and Warrant Purchase
Agreements, dated as of March 2, 1999, between the Company and each of the
▇▇▇▇▇▇▇ Funds (the "Stock and Warrant Purchase Agreements"), the ▇▇▇▇▇▇▇ Funds
have purchased 50,000 shares of the Company's Series D Convertible Preferred
Stock, par value $.01 per share (the "Series D Preferred Stock");
WHEREAS, ▇▇▇▇▇▇▇ beneficially owns less than one percent (1%) of the
outstanding shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock") (such shares, along with any shares of Common Stock or other
equity securities of the Company that ▇▇▇▇▇▇▇ may subsequently acquire, the
"▇▇▇▇▇▇▇ Shares");
WHEREAS, it is a condition precedent to the Company's and the
▇▇▇▇▇▇▇ Funds' respective obligations to consummate the transactions
contemplated by the Stock and Warrant Purchase Agreements that the parties
hereto shall have entered into this Agreement; and
WHEREAS, each of ▇▇▇▇▇▇▇, the Company and the ▇▇▇▇▇▇▇ Funds desires
to enter into this Agreement to regulate certain aspects of their relationship;
NOW, THEREFORE, in consideration of the arguments and mutual
covenants contained herein, the parties hereto hereby agree as follows:
1. Rights of Inclusion (Tag-Along Rights).
(a) In the event ▇▇▇▇▇▇▇ proposes to Transfer any ▇▇▇▇▇▇▇ Shares
(the "Transferor Shares") to any Person (the "Buyer"), as a condition to such
Transfer, ▇▇▇▇▇▇▇ shall cause the Buyer to offer (the "Inclusion Offer") to
purchase from each Investor, at each such Investor's option, up to that number
of Investor Shares determined in accordance with Section 1(b) on the same terms
and conditions as are applicable to the Transferor Shares (including any
consideration to be received by ▇▇▇▇▇▇▇ in the form of bonuses, consulting fees,
noncompetition payments, pursuant to employment arrangements or similar
arrangements), except that each Investor shall not be required to provide any
representation, warranty or other undertaking other than with respect to its
ownership of, and authority to Transfer, the Investor Shares owned by it free of
any liens or encumbrances. ▇▇▇▇▇▇▇ shall provide prompt written notice to each
Investor (the "Inclusion Notice") setting forth all the terms and conditions of
the Inclusion Offer, and each Investor may accept the Inclusion Offer in whole
or in part by providing a written notice of acceptance with respect to Investor
Shares owned by it to ▇▇▇▇▇▇▇ within twenty (20) days of delivery of the
Inclusion Notice to it (the "Acceptance Notice").
(b) Each Investor shall have the right to sell, pursuant to the
Inclusion Offer, Investor Shares representing the same percentage of all
Investor Shares owned by it as the Transferor Shares are of all ▇▇▇▇▇▇▇ Shares
(such percentage shall be calculated on the basis that all shares of Series D
Preferred Stock owned by each Investor have been converted into shares of Common
Stock at the current conversion price per share under Section 5 of the
Certificate of Designations); provided, however, that if no Investor elects to
exercise such right, ▇▇▇▇▇▇▇ shall nonetheless be entitled to Transfer all or
any portion of the Transferor Shares described in the Inclusion Notice. In the
event the number of Investor Shares for which the Investor Group elects to
exercise such right, along with the Transferor Shares and any other shares of
the Company to be sold by other stockholders pursuant to any similar rights
granted to such other stockholders, exceed the number of shares which the Buyer
is willing to purchase, the number of shares to be Transferred to the Buyer by
each transferor shall be reduced so that each transferor is entitled to Transfer
the same percentage of its shares included in its Acceptance Notice as each
other transferor. If an Investor elects to exercise such right, such Investor
may, in its sole discretion, determine the composition of the Investor Shares
(i.e., the number of the shares of Series D Preferred Stock and Common Stock to
be included in the Investor Shares) to be Transferred by it to the Buyer
pursuant to the Inclusion Offer. In the event that any Investor chooses to
include any shares of Series D Preferred Stock in the Investor Shares to be
Transferred by it to the Buyer pursuant to the Inclusion Offer, any such
Investor shall, prior to or simultaneously with such Transfer, convert such
shares of Series D Preferred Stock into shares of Common Stock so that each
Investor Transfers only Common Stock to the Buyer.
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(c) ▇▇▇▇▇▇▇ shall have ninety (90) days, commencing on the date of
the Inclusion Notice, in which to Transfer, on behalf of himself and the
Investor Group up to the number of shares covered by the Inclusion Offer
(including the Transferor Shares) to the Buyer. The terms of such Transfer,
including, without limitation, price and form of consideration, shall be as set
forth in the Inclusion Notice. If at the end of such ninety (90) day period
▇▇▇▇▇▇▇ has not completed the Transfer of the Transferor Shares and the Investor
Shares (if any) proposed to be Transferred, ▇▇▇▇▇▇▇ may not proceed with such
Transfer or any other Transfer without first giving a new Inclusion Notice
pursuant to the provisions of this Section 1.
(d) If ▇▇▇▇▇▇▇ is able to complete the Transfer of the Transferor
Shares and the Investor Shares (if any) proposed to be Transferred within such
ninety (90) day period, at the closing thereof, each Investor shall deliver to
the Buyer a certificate or certificates representing the Investor Shares owned
by it to be Transferred pursuant to the Inclusion Offer, free and clear of all
liens and encumbrances, and the Buyer shall pay to each such Investor the
purchase price for the Investor Shares so Transferred pursuant to this Section 1
and shall furnish such other evidence of the completion of such Transfer and the
terms thereof as may be reasonably requested by the Investor Group.
(e) The provisions of this Section 1 shall not apply to any Transfer
or proposed Transfer by ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ Shares which represents twelve and
one-half percent (12.5%) or less of the ▇▇▇▇▇▇▇ Shares held by ▇▇▇▇▇▇▇ on the
date of such Transfer if such Transfer or proposed Transfer by ▇▇▇▇▇▇▇ of
▇▇▇▇▇▇▇ Shares, together with all other Transfers by ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ Shares
on or prior to the date of such Transfer, represent thirty percent (30%) or less
of the ▇▇▇▇▇▇▇ Shares held by ▇▇▇▇▇▇▇ on the date hereof, with ▇▇▇▇▇▇▇ Shares
held by ▇▇▇▇▇▇▇ on the date of such Transfer to be appropriately adjusted to
reflect any stock split, stock dividend, recapitalization or similar event;
provided, however, that each Transfer of ▇▇▇▇▇▇▇ Shares that takes place within
one year of any other Transfer to the same Person or any Affiliate of such
Person shall be aggregated for purposes of such twelve and one-half percent
(12.5%) threshold. In the event that ▇▇▇▇▇▇▇ desires to exercise an option to
purchase shares of Common Stock of the Company, then ▇▇▇▇▇▇▇ may Transfer
▇▇▇▇▇▇▇ Shares to the extent necessary to obtain the funds to exercise such
option and such Transfer shall not be included in the calculation of the
percentages in this Section 1(e); provided that such option must expire within
ninety (90) days of such Transfer.
(f) The provisions of this Section 1 shall only apply to ▇▇▇▇▇▇▇ so
long as ▇▇▇▇▇▇▇ is the Chief Executive Officer or an executive officer of the
Company.
2. Board Observer Rights; Committees.
(a) The Company agrees with the ▇▇▇▇▇▇▇ Funds that so long as any
shares of Series D Preferred Stock are outstanding, the ▇▇▇▇▇▇▇ Holders (or if
no shares of Series D Preferred Stock are held by a ▇▇▇▇▇▇▇ Holder, any
Transferee consented to by the Company
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(which consent shall not be unreasonably withheld) (the "Permitted
Transferee")), shall have the right to have up to three (3) representatives (the
"▇▇▇▇▇▇▇ Observer" or "▇▇▇▇▇▇▇ Observers") (subject to the provisions of Section
2(b) herein) attend and participate in meetings of the Company's Board of
Directors, or any committee thereof, and the Company shall permit any ▇▇▇▇▇▇▇
Observer to attend and participate in all such meetings as an observer. A
▇▇▇▇▇▇▇ Observer shall not have the right to vote on any matter presented to the
Board or any committee thereof. The Company shall give all ▇▇▇▇▇▇▇ Observers
written notice of each meeting of the Board of Directors or any committee
thereof and all written materials and other information given to the Company's
directors and committee members in the same manner and at the same time such
notices, materials and other information are given to the directors and
committee members. The Company shall reimburse any ▇▇▇▇▇▇▇ Observer for travel
and other expenses in connection with such meetings to the same extent that the
Company reimburses its directors and committee members. If the Board of
Directors or any committee thereof proposes to take any action by written
consent in lieu of a meeting, the Company shall give written notice thereof to
all ▇▇▇▇▇▇▇ Observers prior to the effective date of such consent describing the
nature and substance of such action.
(b) During such time that the holders of the Series D Preferred
Stock have elected at least one director to the Company's Board of Directors (or
have waived their right to so elect such director) pursuant to Section 4 of the
Company's Certificate of Designations with respect to the Series D Preferred
Stock (the "Investor Director"), the number of ▇▇▇▇▇▇▇ Observers that the
▇▇▇▇▇▇▇ Holders or the Permitted Transferee, as the case may be, shall be able
to exercise their rights as provided in Section 2(a) shall be modified such that
(x) in the event there is one (1) Investor Director, the ▇▇▇▇▇▇▇ Holders or the
Permitted Transferee, as the case may be, shall have the right to have up to (2)
▇▇▇▇▇▇▇ Observers, (y) in the event there are two (2) Investor Directors, the
▇▇▇▇▇▇▇ Holders or the Permitted Transferee, as the case may be, shall have the
right to have (1) ▇▇▇▇▇▇▇ Observer and (z) in the event there are three (3)
Investor Directors, the ▇▇▇▇▇▇▇ Holders or the Permitted Transferee, as the case
may be, shall not have the right to have any ▇▇▇▇▇▇▇ Observer.
(c) So long as any shares of Series D Preferred Stock are
outstanding, the Company and ▇▇▇▇▇▇▇ acknowledge that the parties to this
Agreement desire that one Investor Director be appointed to the Executive,
Compensation, Stock Option and Audit Committees of the Company's Board of
Directors and at each time the Company's Board of Directors appoints committee
members, agree to use their best efforts and take any other action necessary or
appropriate to ensure such appointment; provided, however, that the agreements
of this paragraph (c) shall terminate with respect to an Investor Director upon
the ▇▇▇▇▇▇▇ Holders' or the Permitted Transferee's delivery of a written notice
to the Company and ▇▇▇▇▇▇▇ to the effect that such Investor Director need not be
appointed to the aforesaid committees.
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3. Definitions.
As used herein, the following terms shall have the respective
meanings set forth below:
"Acceptance Notice" shall have the meaning set forth in Section 1(a)
hereof.
"Affiliate" shall have the meaning given it in Section 3 of the
Stock and Warrant Purchase Agreements.
"Board" or "Board of Directors" shall have the meaning given it in
Section 3 of the Stock and Warrant Purchase Agreements.
"Buyer" shall have the meaning set forth in Section 1(a) hereof.
"Capital Stock" means the Common Stock (including, without
limitation, any Common Stock issuable upon conversion of the Series D Preferred
Stock or upon exercise of the Warrants), Series D Preferred Stock and any other
class of equity security which the Company may issue and any securities or other
rights convertible, exchangeable or exercisable for or into any Capital Stock.
"Certificate of Designations" shall have the meaning given it in
Section 1(a) of the Stock and Warrant Purchase Agreements.
"Common Stock" shall have the meaning set forth in the second
WHEREAS clause hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"▇▇▇▇▇▇▇" shall have the meaning set forth in the first paragraph
hereof.
"▇▇▇▇▇▇▇ Shares" shall have the meaning set forth in the second
WHEREAS clause hereof.
"▇▇▇▇▇▇▇ Funds" shall have the meaning set forth in the first
paragraph hereof.
"▇▇▇▇▇▇▇ Holders" shall have the meaning given it in Section 3 of
the Stock and Warrant Purchase Agreements.
"▇▇▇▇▇▇▇ Observer" shall have the meaning set forth in Section 2(a)
hereof.
"Fully Diluted Basis" means, with respect to the calculation of the
number of shares of Capital Stock, as of each date of determination thereof, (i)
all shares of Capital Stock
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outstanding at the time of determination and (ii) all shares of Capital Stock
issuable upon the exchange, exercise or conversion of any security or other
right (other than any Capital Stock) then outstanding which is exchangeable,
exercisable or convertible into Capital Stock.
"Inclusion Notice" shall have the meaning set forth in Section 1(a)
hereof.
"Inclusion Offer" shall have the meaning set forth in Section 1(a)
hereof.
"Investor" shall have the meaning set forth in the first paragraph
hereof.
"Investor Director" shall have the meaning set forth in Section 2(b)
hereof.
"Investor Group" shall have the meaning set forth in the first
paragraph hereof.
"Investor Shares" means all Series D Preferred Stock and Common
Stock owned by the Investor Group.
"Permitted Transferee" shall have the meaning set forth in Section
2(a) hereof.
"Person" means an individual, corporation, partnership, firm,
association, joint venture, trust, unincorporated organization, governmental
body, agency, political subdivision or other entity.
"Pro Rata" means with respect to a stockholder, in proportion to the
number of shares of Capital Stock on a Fully Diluted Basis owned by such
stockholder.
"Series D Preferred Stock" shall have the meaning set forth in the
first WHEREAS clause hereof.
"Stock and Warrant Purchase Agreements" shall have the meaning set
forth in the first WHEREAS clause hereof.
"Transfer" means, with respect to any security, any direct or
indirect sale, transfer, assignment, hypothecation, pledge or any other
disposition of such security or any interest therein.
"Transferee" shall have the meaning given it in Section 3 of the
Stock and Warrant Purchase Agreements.
"Transferor Shares" shall have the meaning set forth in Section 1(a)
hereof.
"Warrants" shall have the meaning set forth in Section 1 of the
Stock and Warrant Purchase Agreements.
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4. Miscellaneous.
(a) In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party injured by such breach, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
(b) Except as otherwise provided herein, no modification, amendment
or waiver of any provision of this Agreement will be effective against any party
hereto unless such modification, amendment or waiver is approved in writing by
all parties hereto. The failure of any party to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of such provisions and
will not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(c) All covenants and agreements in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
(d) All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or sent by nationally recognized
overnight courier service to the parties at the following addresses or facsimile
numbers:
(i) If to an Investor, to:
the address indicated on Schedule 1 to the Stock and Warrant
Purchase Agreements.
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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(ii) If to the Company, to:
Global Pharmaceutical Corporation
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(iii) If to ▇▇▇▇▇▇▇, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Global Pharmaceutical Corporation
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications will (x) if
delivered personally to the address as provided in this Section 4(d), be deemed
given upon delivery, (y) if delivered by facsimile transmission to the facsimile
number as provided in this Section 4(d), be deemed given upon receipt and (z) if
delivered by nationally recognized overnight courier service in the manner
described above to the address as provided in this Section 4(d), be deemed given
on the business day following the day it was sent (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
4(d)). Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
(e) The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
(f) If any provision of this Agreement is held to be illegal,
invalid or unenforceable, and if the rights or obligations of any party hereto
under this Agreement will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this Agreement will
remain
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in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provi sion as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and
performed in such State without giving effect to the conflicts of laws
principles thereof.
(h) This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this
Stockholders' Agreement as of the date first written above.
GLOBAL PHARMACEUTICAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
With respect to the obligations contained in
Sections 1, 2(c), 3 and 4 hereof only:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ US DISCOVERY FUND III, L.P.
By: ▇▇▇▇▇▇▇ US DISCOVERY
PARTNERS, L.P.,
its general partner
By: ▇▇▇▇▇▇▇ US DISCOVERY, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, member
▇▇▇▇▇▇▇ US DISCOVERY OFFSHORE FUND III, L.P.
By: ▇▇▇▇▇▇▇ US DISCOVERY
PARTNERS, L.P.,
its general partner
By: ▇▇▇▇▇▇▇ US DISCOVERY, LLC,
its general partner
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, member
[Signature page to Stockholders' Agreement]
