VOTING AGREEMENT
This VOTING AGREEMENT (this "Agreement") dated as of December 20, 2002,
among the Parties signatory hereto (the "Parties").
WHEREAS, ▇▇▇▇▇▇ 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 V, L.P. ("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 ▇▇▇▇▇▇ 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 debenture holders of the Company called for the purpose
of electing directors of the Company, and at any time at which the shareholders
and debenture holders 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 debenture
holders 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.
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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
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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
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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]
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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 L.L.C., By: Claudius, L.L.C., General Partner
General Partner ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Its: Authorized Agent Its: General Partner
▇▇▇▇▇ EMPLOYEE FUND III, L.P. GALEN PARTNERS INTERNATIONAL III, L.P.
By: Wesson Enterprises, Inc. By: Claudius, L.L.C., General Partner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ----------------------------
---------------------------- By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Its: General Partner
Its: General Partner
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO., INC., TTEE
c/▇ ▇▇▇▇▇▇ Drug Co., Inc. FBO ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. c/▇ ▇▇▇▇▇▇ Drug Co., Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ #▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
Rockford, III. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ #▇
▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------- ----------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Trustee Its: Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇
c/▇ ▇▇▇▇▇▇ Drug Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ #▇
▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
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ACKNOWLEDGED AND CONSENTED TO
as of the date set forth above by:
ESSEX WOODLANDS HEALTH VENTURES V, L.P.,
By: Essex Woodlands Heath Ventures V, L.L.C.,
its General Partner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
CARE CAPITAL INVESTMENTS II, LP
By: Care Capital II, LLC, General Partner
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Authorized Signatory
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Consent of Spouse
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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.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Spouse of: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
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