<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be included in Statements filed Pursuant
To Rule 13d-1(a) and Amendments Thereto Filed Pursuant To
Rule 13d-2(a)
IMPAX LABORATORIES INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
(Formerly Global Pharmaceutical Corporation)
COMMON STOCK, $.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
45256B101
- --------------------------------------------------------------------------------
(CUSIP Number)
LAURIE A. MILLER, ESQ.
LAW OFFICE OF LAURIE MILLER
3542 OAK KNOLL DRIVE
REDWOOD CITY, CA 94062
(650) 361-8141
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
DECEMBER 14, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g),
check the following box. [ ]
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
2
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_______________________________________________________________________________
CUSIP No. 45256B 10 1 SCHEDULE 13D
_______________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only).
CHARLES (CHIIN HSIUNG) HSIAO, PH.D.
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS*
SC
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
_______________________________________________________________________________
| |
NUMBER OF | 7 | SOLE VOTING POWER
SHARES | | 5,093,159 shares of Common Stock (See Item 5)
BENEFICIALLY |_____|________________________________________________________
OWNED BY | |
EACH | 8 | SHARED VOTING POWER
REPORTING | | 0 shares of Common Stock (See Item 5)
PERSON WITH |_____|________________________________________________________
| |
| 9 | SOLE DISPOSITIVE POWER
| | 5,093,159 shares of Common Stock (See Item 5)
|_____|________________________________________________________
| |
| 10 | SHARED DISPOSITIVE POWER
| | 0 shares of Common Stock (See Item 5)
_______________|_____|_________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,093,159** shares of Common Stock (See Item 5)
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [x]
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.7%*** of Common Stock (See Item 5)
______________________________________________________________________________
14 TYPE OF REPORTING PERSON* IN
______________________________________________________________________________
* See Instructions before filling out
**Includes 750,555 shares held in the aggregate by the Shu Shen Hsiao
Irrevocable Trust and the Richard Hsiao Children Irrevocable Trust.
***Includes 500,370 shares of common stock held in trust for the benefit of John
Hsiao's children, 250,185 shares of common stock held in trust for the
benefit of Richard Hsiao's children, options to purchase 333,580 shares of
common stock which are immediately exercisable and warrants immediately
convertible into 667,160 shares of common stock. Does not include 2,601,924
shares of common stock held in the Chiin Hsiao Children Irrevocable Trust,
as to which shares Dr. Hsiao does not have voting or dispositive power.
3
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_______________________________________________________________________________
CUSIP No. 45256B 10 1 SCHEDULE 13D
_______________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only).
SHU SHEN HSIAO CHILDREN IRREVOCABLE TRUST (TRUSTEE: CHARLES HSIAO,
PH.D.)
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS*
SC
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA, U.S.A.
_______________________________________________________________________________
| |
NUMBER OF | 7 | SOLE VOTING POWER
SHARES | | 500,370 shares of Common Stock (See Item 5)
BENEFICIALLY |_____|________________________________________________________
OWNED BY | |
EACH | 8 | SHARED VOTING POWER
REPORTING | | 0 shares of Common Stock (See Item 5)
PERSON WITH |_____|________________________________________________________
| |
| 9 | SOLE DISPOSITIVE POWER
| | 500,370 shares of Common Stock (See Item 5)
|_____|________________________________________________________
| |
| 10 | SHARED DISPOSITIVE POWER
| | 0 shares of Common Stock (See Item 5)
_______________|_____|_________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
500,370 shares of Common Stock (See Item 5)
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0% of Common Stock (See Item 5)
______________________________________________________________________________
14 TYPE OF REPORTING PERSON
OO
______________________________________________________________________________
* See Instructions before filling out
4
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_______________________________________________________________________________
CUSIP No. 45256B 10 1 SCHEDULE 13D
_______________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only).
RICHARD HSIAO CHILDREN IRREVOCABLE TRUST (TRUSTEE: CHARLES HSIAO,
PH.D.)
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS*
SC
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA, U.S.A.
_______________________________________________________________________________
| |
NUMBER OF | 7 | SOLE VOTING POWER
SHARES | | 250,185 shares of Common Stock (See Item 5)
BENEFICIALLY |_____|________________________________________________________
OWNED BY | |
EACH | 8 | SHARED VOTING POWER
REPORTING | | 0 shares of Common Stock (See Item 5)
PERSON WITH |_____|________________________________________________________
| |
| 9 | SOLE DISPOSITIVE POWER
| | 250,185 shares of Common Stock (See Item 5)
|_____|________________________________________________________
| |
| 10 | SHARED DISPOSITIVE POWER
| | 0 shares of Common Stock (See Item 5)
_______________|_____|_________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,185 shares of Common Stock (See Item 5)
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0% of Common Stock (See Item 5)
______________________________________________________________________________
14 TYPE OF REPORTING PERSON
OO
______________________________________________________________________________
* See Instructions before filling out
5
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SCHEDULE 13D
FILED PURSUANT TO RULE 13D-1
OF THE GENERAL RULES AND REGULATIONS UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Effective December 14, 1999, Impax Pharmaceuticals, Inc., a California
corporation ("Impax"), merged with and into Global Pharmaceutical Corporation, a
Delaware corporation ("Global"), and in connection therewith, Global changed its
name to Impax Laboratories, Inc. ("Issuer"). The purpose of this Schedule 13D is
to report that, as a result of the Merger, the "Reporting Persons" own 19.7% of
the Common Stock, $.01 par value (the "Common Stock"), of the Issuer.
Responses to each item below are incorporated by reference into each
other item, as applicable.
Item 1. Security and Issuer.
This Schedule 13D relates to Common Stock of the Issuer. The address of
the Issuer's principal executive office is 30831 Huntwood Avenue, Hayward, CA
94544.
Item 2. Identity and Background.
This statement is being filed pursuant to a Joint Filing Agreement
(attached as Exhibit 1 and incorporated herein by reference) by (i) Charles
Hsiao, Ph.D., ("Dr. Hsiao") (ii) Shu Shen Hsiao Children Irrevocable Trust ("Shu
Shen Hsiao Trust"), and (ii) Richard Hsiao Children Irrevocable Trust ("Richard
Hsiao Trust").
The information required by this Item for each of the Reporting Persons
is set forth in Appendix 1 hereto. The information required by this Item for
each officer, director and partner and each controlling person, if any, of such
Reporting Persons is set forth in Appendix 2 hereto.
During the last five years prior to the date of this filing, none of
the Reporting Persons or persons identified in Appendix 1 or Appendix 2 has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction ending in a judgment, decree or
final order enjoining future violations or prohibiting or mandating the
activities subject to, federal or state securities laws or finding a violation
with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Global and Impax entered into an Agreement and Plan of Merger, dated as
of July 26, 1999 ("Merger Agreement"), pursuant to which Impax would merge into
Global, with Global being the surviving corporation. The Merger of Impax into
Global was consummated on December 14, 1999.
The Issuer's corporate existence was not affected by the Merger, but
its certificate of incorporation was amended to increase the number of shares of
Common Stock Issuer is authorized to issue and to change the name of the
combined company to Impax Laboratories, Inc.
Effective with the Merger, the following shares and all rights with
respect to those shares were converted into capital stock of the Issuer as
described below:
Each outstanding share of Impax common stock, Series A preferred stock
and Series B preferred stock was converted into 3.3358 shares of the Issuer
Common Stock;
Each outstanding share of Impax Series C Preferred Stock was converted
into 5.849 shares of the Issuer's Common Stock;
Every 20 outstanding shares of Impax Series D Preferred Stock was
converted into one share of the Issuer's Series 1-B Preferred Stock;
Each outstanding share of Global Series C Preferred Stock was converted
into 50 shares of Issuer Common Stock; and
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Each outstanding share of Global Series D Preferred Stock was converted
into one share of Issuer's Series 1-A Preferred Stock.
The Shu Shen Hsiao Trust was the record and beneficial owner of 150,000
shares of Common Stock of Impax. Consequently, as a result of the Merger, the
Shu Shen Hsiao Trust is the record and beneficial owner of 500,370 shares of
Common Stock of Issuer.
The Richard Hsiao Trust was the record and beneficial owner of 75,000
shares of Common Stock of Impax. Consequently, as a result of the Merger, the
Richard Hsiao Trust is the record and beneficial owner of 250,185 shares of
Common Stock of Issuer.
Dr. Hsiao was the record and beneficial owner of 1,818 shares of Common
Stock of Impax, 1,000,000 shares of Series A Preferred Stock of Impax, a warrant
to purchase 200,000 shares of Common Stock of Impax and an option to purchase
100,000 shares of Common Stock of Impax. Consequently, as a result of the
Merger, Dr. Hsiao is the record and beneficial owner of 3,341,864 shares of
Common Stock of the Issuer and options and warrants to purchase 1,000,740 shares
of Common Stock of the Issuer.
Additionally, Dr. Hsiao is the sole trustee of Shu Shen Hsiao Trust and
the Richard Hsiao Trust and may be deemed to be the beneficial owner of the
750,555 shares of Common Stock of the Issuer held by these Trusts. Dr. Hsiao
disclaims beneficial ownership of these shares held by such Trusts.
Item 4. Purpose of Transaction.
a) The shares of Common Stock of Issuer deemed to be beneficially owned by the
Reporting Persons were acquired for, and are being held for, investment
purposes. Dr. Hsiao may dispose of or acquire securities of the Issuer,
including Common Stock, depending upon the position of the market, the Issuer
and other factors.
Except as set forth above, none of the Reporting Persons nor, to the
best of their knowledge, any person listed in Appendix I hereto, has any plans
or proposals which relate to or would result in any other acquisition by any
person of additional securities of the Issuer, or the disposition of securities
of the Issuer.
b) None of the Reporting Persons, nor to the best of their knowledge, any person
listed in Appendix 1 hereto, has any plans or proposals which relate to or would
result in an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries.
c) None of the Reporting Persons nor, to the best of their knowledge, any person
listed in Appendix 1 hereto, has any plans or proposals which relate to or would
result in a sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries.
d) None of the Reporting Persons nor, to the best of their knowledge, any person
listed in Appendix 1 hereto, has any plans or proposals which relate to or would
result in any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board.
In connection with the merger and as contemplated by the Merger
Agreement, the directors of the Issuer were designated as follows: three
individuals specifically named in the Merger Agreement, two persons selected by
Global's board of directors, three persons selected by Impax's board of
directors and two persons mutually selected by the boards of Global and Impax.
In addition, pursuant to the Merger Agreement and Stockholders' Agreement
(attached as Exhibit G thereto), dated as of December 14, 1999, among Global and
certain stockholder signatories thereto, of which Charles Hsiao and the Shu Shen
Shiao Trust are signatories (the "Stockholders' Agreement"; see Exhibit 7
hereto, which is incorporated herein by reference), certain stockholders have
agreed to vote certain of their shares in favor of the election of certain
directors and the appointment of certain board observers, for a period ending on
December 13, 2002.
Except as set forth above, none of the Reporting Persons nor, to the
best of their knowledge, any person listed in Appendix 1 hereto, has any plans
or proposals which relate to or would result in: (e) any material change in the
present capitalization or dividend policy of the Issuer; (f) any other material
change in the Issuer's business or corporate structure; (g) changes in the
Issuer's charter, By-Laws or instruments corresponding thereto or other actions
which may impede the acquisition of control of the Issuer by any person; (h)
causing a class of securities of the Issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; (i) a class of
equity securities of the Issuer becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action
similar to any of those enumerated above.
7
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The Reporting Persons retain the right to change their investment
intent, to propose one or more possible transactions to the Issuer's board, to
acquire additional shares of Issuer's preferred stock or common stock from time
to time or to sell or otherwise dispose of all or part of the Common Stock
beneficially owned by them in any manner permitted by law. In the event of a
material change in the present plans or intentions of the Reporting Persons, the
Reporting Persons will amend this Schedule 13D to reflect such change, to the
extent required by law.
Item 5. Interest in Securities of the Issuer.
a) As a result of the Merger, the Shu Shen Hsiao Trust acquired 500,370 shares
of Common Stock of Issuer. Accordingly, the Shu Shen Hsiao Trust may be deemed
to beneficially own 2.0% of the outstanding shares of Common Stock of Issuer,
which percentage is calculated based upon 24,807,147 shares of Common Stock
reported outstanding by the Issuer as of December 14, 1999.
As a result of the Merger, the Richard Hsiao Trust acquired 250,185
shares of Common Stock of Issuer. Accordingly, the Richard Hsiao Trust may be
deemed to beneficially own 1.0% of the outstanding shares of Common Stock of
Issuer, which percentage is calculated based upon 24,807,147 shares of Common
Stock reported outstanding by the Issuer as of December 14, 1999.
As a result of the Merger, Dr. Hsiao acquired 3,341,864 shares of
Common Stock of Issuer, a warrant to purchase 667,160 shares of Issuer Common
Stock and an option to purchase 333,580 shares of Common Stock of Issuer.
Additionally, as a result of the Merger, Dr. Hsiao, as trustee of the
Shu Shen Hsiao Trust and Richard Hsiao Trust, has voting and dispositive power
of 750,555 shares of Common Stock of Issuer. Dr. Hsiao disclaims beneficial
ownership of the shares held by the Trusts.
Accordingly, as a result of the Merger, and in light of Dr. Hsiao's
role as a trustee of the Shu Shen Hsiao and Richard Hsiao Trusts, Dr. Hsiao may
be deemed to beneficially own 19.7% of the outstanding shares of Common Stock of
Issuer, which percentage is calculated based upon 24,807,147 shares of Common
Stock reported outstanding by the Issuer as of December 14, 1999. The percentage
is calculated by dividing 5,093,159 shares beneficially owned by 25,807,887
(which is the sum of 24,807,147, 667,160 and 333,580).
b) The information required by this paragraph is reflected on Lines 7-10 of each
Reporting Person's cover page, incorporated herein by reference. The information
required by Items 2 of this Schedule for each person with whom the power to vote
or direct a vote or to dispose or direct the disposition is shared is set forth
in Appendix 1 and Appendix 2 hereto.
c) Except as disclosed in Item 3, none of the Reporting Persons has effected any
transactions in the Common Stock during the last 60 days.
d) No other person is known to have the right to receive or the power to direct
the receipt of dividends from, or any proceeds from the sale of, the shares of
Common Stock beneficially owned by any of the Reporting Persons.
e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to the Securities of the Issuer.
Each of Dr. Hsiao, the Shu Shen Hsiao Trust and the Richard Hsiao Trust
acquired their shares of Common Stock of Issuer pursuant to the Merger
Agreement.
8
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Pursuant to the Merger Agreement and the Stockholders' Agreement,
certain stockholders have agreed to vote certain of their shares in favor of the
election of certain directors and the appointment of certain board observers,
for a period of time ending on December 14, 2002.
Pursuant to the Amended and Restated Registration Rights Agreement,
dated as of December 14, 1999, between Global and the Series 1 Stockholders (see
Exhibit 6 hereto, which is incorporated by reference), Global has granted
certain "demand" and "piggyback" registration rights to certain holders of
Series 1 Preferred Stock, with respect to the shares of Common Stock held by
such stockholders.
The Stockholders' Agreement, (see Exhibit 5 hereto, which is
incorporated herein by reference), dated as of December 14, 1999, (the "Series 1
Stockholders' Agreement") among Global and the holders of Series 1 Preferred
Stock provides that in the event that Charles Hsiao, Larry Hsu or Barry R.
Edwards (each, a "Key Senior Executive") proposes to transfer his shares
("Transferor Shares") to any person (the "Buyer"), as a condition to such
transfer, such Key Senior Executive shall cause the Buyer to offer to purchase
from each Investor (as defined therein) up to that number of shares owned by any
Investor representing the same percentage of all shares owned by it as the
Transferor Shares are of that Key Senior Executive's shares, subject to certain
exceptions. These "Tag-Along" rights are more fully set forth in Section 3 of
the Series 1 Stockholders Agreement.
Pursuant to an Escrow Agreement, dated as of December 14, 1999, between
Global, the former Impax shareholders, Charles Hsiao and Larry Hsu as the Seller
Stockholders' Agent (as defined therein) and Continental Stock Transfer & Trust
Company (the "Escrow Agent") (see Exhibit 8 hereto, which is incorporated herein
by reference), the Impax shareholders agreed to place 10% of the Issuer's stock
they were to receive pursuant to the Merger Agreement into an escrow fund
administered by the Escrow Agent. The escrow fund would be available, if
necessary, to indemnify Global pursuant to the indemnification provisions of the
Merger Agreement. The Escrow Agreement provides for the release of the shares
constituting the escrow fund eighteen months after the date of the agreement.
9
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Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Joint Filing Agreement.
Exhibit 2 - Agreement and Plan of Merger dated as of July 26, 1999 by and
between Global Pharmaceutical Corporation and Impax Pharmaceuticals,
Inc. (incorporated by reference to Annex A to the Joint Proxy
Statement/Prospectus of Global Pharmaceutical Corporation and Impax
Pharmaceuticals, Inc., filed on November 9, 19991999, under SEC File
No. 333-90599).
Exhibit 3 - Certificate of Amendment of Restated Certificate of Incorporation
of Global Pharmaceutical Corporation, as filed with the Delaware
Secretary of State on December 14, 1999 (incorporated by reference to
Annex E to the Joint Proxy Statement/Prospectus of Global
Pharmaceutical Corporation, filed on November 9, 1999, under SEC File
No. 333-90599).
Exhibit 4 - Certificate of Designations of Series 1-A Convertible Preferred
Stock and Series 1-B Convertible Preferred Stock of Global
Pharmaceutical Corporation filed with the Secretary of State of
Delaware on November 8, 1999 (incorporated by reference to Annex F to
the Joint Proxy Statement/Prospectus of Global Pharmaceutical
Corporation, filed on November 9, 1999, under SEC File No. 333-90599).
Exhibit 5 - Stockholders' Agreement, dated as of December 14, 1999, among
Global, Charles Hsiao, Larry Hsu, Barry R. Edwards, Fleming US
Discovery Fund III, L.P., Fleming US Discovery Offshore Fund III, L.P.,
Chemical Company of Malaysia Berhad, President (BVI) International
Investment Holdings Ltd., China Development Industrial Bank Inc., Euroc
Venture Capital, Tai-I Electric Wire and Multiventure Tech. (the
"Series 1 Stockholders").
Exhibit 6 - Amended and Restated Registration Rights Agreement, dated as of
December 14, 1999, among Global and the Series 1 Stockholders.
Exhibit 7 - Stockholders' Agreement, dated as of December 14, 1999, among
Global Pharmaceutical Corporation and certain stockholder signatories
thereto (incorporated by reference to Exhibit 9.1 to the Registration
Statement on Form S-4 filed by Global Pharmaceutical Corporation on
November 9, 1999, under SEC File No. 333-90599).
Exhibit 8 - Escrow Agreement, dated as of December 14, 1999, among Global, the
Impax shareholders, Charles Hsiao and Larry Hsu, in the capacity of the
Seller Stockholders' Agent, and Continental Stock Transfer & Trust
Company, in the capacity of Escrow Agent (incorporated by reference to
Exhibit 99.2 to the Registration Statement on Form S-4 filed by Global
Pharmaceutical Corporation on November 9, 1999, under SEC File No.
333-90599).
Appendix 1 - Address, Organization and Principal Business of Each Reporting
Person Required by Item 2.
Appendix 2 - Information About Each Reporting Person Required by Item 2.
10
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
December 27, 1999
/s/ Charles Hsiao, Ph.D.
-------------------------
Charles Hsiao, Ph.D.
SHU SHEN HSIAO CHILDREN IRREVOCABLE TRUST
By: /s/ Charles Hsiao, Ph.D., Trustee
---------------------------------
Charles Hsiao, Ph.D., Trustee
RICHARD HSIAO CHILDREN IRREVOCABLE TRUST
By: /s/ Charles Hsiao, Ph.D., Trustee
---------------------------------
Charles Hsiao, Ph.D., Trustee
11
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Exhibit 1
JOINT FILING AGREEMENT
Pursuant to and in accordance with Rule 13d-1(k)(1) under the
Securities Exchange Act of 1934, the undersigned hereby agree to jointly file
the Schedule 13D dated December 23, 1999 and any amendments thereto with respect
to the beneficial ownership by each of the undersigned of shares of common stock
of Global Pharmaceutical Corporation. Such joint filings may be executed by one
or more of us on behalf of each of the undersigned.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
Executed this 23rd day of December, 1999.
/s/ Charles Hsiao, Ph.D.
------------------------
Charles Hsiao, Ph.D.
SHU SHEN HSIAO CHILDREN IRREVOCABLE TRUST
By: /s/ Charles Hsiao, Ph.D., Trustee
---------------------------------
Charles Hsiao, Ph.D., Trustee
RICHARD HSIAO CHILDREN IRREVOCABLE TRUST
By: /s/ Charles Hsiao, Ph.D., Trustee
---------------------------------
Charles Hsiao, Ph.D., Trustee
12
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APPENDIX 1
ADDRESS, ORGANIZATION AND PRINCIPAL BUSINESS OF EACH REPORTING PERSON
REQUIRED BY ITEM 2 AND OTHER PERSONS REQUIRED BY ITEM 5
<TABLE>
<CAPTION>
REPORTING PERSON PRINCIPAL BUSINESS PLACE OF PRINCIPAL
AND OFFICE ORGANIZATION/CITIZENSHIP OCCUPATION
<S> <C> <C> <C>
Charles Hsiao, Ph.D. 30831 Huntwood Avenue California, United States Co-Chief Executive
Hayward, CA 94544 Officer, Impax
Laboratories, Inc.
Shu Shen Hsiao Children 30831 Huntwood Avenue California, United States ______
Irrevocable Trust Hayward, CA 94544
Richard Hsiao Children 30831 Huntwood Avenue California, United States ______
Irrevocable Trust Hayward, CA 94544
</TABLE>
Appendix 2
INFORMATION ABOUT REPORTING PERSONS
REQUIRED BY ITEM 2
SHU SHEN HSIAO CHILDREN IRREVOCABLE TRUST
Trustee: Charles Hsiao, Ph.D.
Citizenship: United States
Business Address: 30831 Huntwood Avenue
Hayward, CA 94544 U.S.A.
Beneficiaries:
Name: Isabel A. Hsiao
Guardian: Jean Tsai
Citizenship: United States
Mailing Address: 1857 Elevado Avenue
Arcadia, CA 91006
RICHARD HSIAO CHILDREN IRREVOCABLE TRUST
Trustee: Charles Hsiao, Ph.D.
Citizenship: United States
Business Address: 30831 Huntwood Avenue
Hayward, CA 94544 U.S.A.
Beneficiaries:
Name: Ying-Jen Hsiao
Citizenship: United States
Mailing Address: 4890 S.W. 104 Avenue
Cooper City, FL 33328
Name: Jen-Je Hsiao
Citizenship: United States
Mailing Address: 2330 S.W. Williston Road
Apartment #2824
Gainesville, FL 32608
13
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================================================================================
STOCKHOLDERS' AGREEMENT
by and among
GLOBAL PHARMACEUTICAL CORPORATION
(known as Impax Laboratories, Inc. at the Effective Time)
and
THE INVESTORS NAMED HEREIN
================================================================================
<PAGE>
STOCKHOLDERS' AGREEMENT, dated as of December ___, 1999, by
and among (i) GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation (the
"Company" or "Global"), (ii) CHARLES HSIAO ("Hsiao"), LARRY HSU ("Hsu") and
BARRY R. EDWARDS ("Edwards") (collectively, the "Key Senior Executives"), (iii)
FLEMING US DISCOVERY FUND III, L.P. and FLEMING US DISCOVERY OFFSHORE FUND III,
L.P. (collectively, the "Fleming Funds") and (iv) CHINA DEVELOPMENT INDUSTRIAL
BANK, INC., PRESIDENT (BVI) INTERNATIONAL INVESTMENT HOLDINGS, LTD., CHEMICAL
COMPANY MALAYSIA (BERHAD), EUROC II VENTURE CAPITAL CORP., EUROC III VENTURE
CAPITAL CORP., MULTIVENTURE TECHNOLOGIES, INC. and TAI-I ELECTRIC WIRE & CABLE
CO., LTD. (collectively, the "Impax Stockholders," and together with the Fleming
Funds, the "Series 1 Stockholders"). The Series 1 Stockholders, any Series 1
Holder and any Transferee are collectively referred to herein as the "Investor
Group" and, individually, an "Investor." Capitalized terms used and not
otherwise defined herein have the respective meanings ascribed thereto in
Article I.
RECITALS
WHEREAS, pursuant to the terms of the Agreement and Plan of
Merger, dated as of June 26, 1999 ( the "Merger Agreement"), by and between
Global and Impax Pharmaceuticals, Inc. ("Impax"), at the Effective Time, (i)
Impax will be merged with and into Global (the "Merger"), with Global being the
surviving corporation in the Merger (with the surviving corporation's name
changed to Impax Laboratories, Inc.) (the "Surviving Corporation" or the
"Company"; the term "Global" shall be used herein solely to refer to the entity
prior to the Merger), (ii) each issued and outstanding share of the common
stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock of Impax will be converted into shares of common stock, $.01 par value, of
the Company ("Company Common Stock"), (iii) each issued and outstanding share of
Series D Preferred Stock of Impax will be converted into shares of Series 1-B
Convertible Preferred Stock of the Company, (iv) each issued and outstanding
share of Series C Convertible Preferred Stock of Global will be converted into
shares of Company Common Stock and (v) each issued and outstanding share of
Series D Convertible Preferred Stock of Global will be converted into shares of
Series 1-A Convertible Preferred Stock of the Company. The Series 1-A
Convertible Preferred Stock and the Series 1-B Convertible Preferred Stock are
collectively referred to herein as the "Series 1 Preferred" and the Series 1
Preferred owned at the Effective Time is referred to herein as the "Shares," and
together with the Company Common Stock, "Company Stock";
WHEREAS, at the Effective Time the parties hereto will hold
Shares as set forth on Schedule 1 hereto;
WHEREAS, at the Effective Time, each of the Key Senior
Executives will hold Company Stock as set forth on Schedule 2 hereto (such
shares, along with any shares of
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Company Stock or other equity securities of the Company that such Key Senior
Executive may subsequently acquire, referred to collectively as "Executive
Shares");
WHEREAS, the parties hereto desire to enter into this
Agreement to govern certain of their rights, duties and obligations after
consummation of the transactions contemplated by the Merger Agreement; and
WHEREAS, this Agreement shall be effective as of the Effective
Time.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms.
(a) The following defined terms, when used in this Agreement,
have the respective meanings set forth below (such definitions to be equally
applicable to both singular and plural forms of the terms defined):
"Affiliate", when used with respect to any Person, means (i)
if such Person is a corporation, any officer or director thereof (other
than a director elected pursuant to Section 4(c) of the Series 1
Certificate of Designations) and any Person which is, directly or
indirectly, the beneficial owner (by itself or as part of any group) of
more than five percent (5%) of any class of any equity security (within
the meaning of the Securities Exchange Act) thereof, and, if such
beneficial owner is a partnership, any general partner thereof, or if
such beneficial owner is a corporation, any Person controlling,
controlled by or under common control with such beneficial owner, or
any officer or director of such beneficial owner or of any corporation
occupying any such control relationship, (ii) if such Person is a
partnership, any general or limited partner thereof, and (iii) any
other Person which, directly or indirectly, controls or is controlled
by or is under common control with such Person. For purposes of this
definition, "control" (including the correlative terms "controlling",
"controlled by" and "under common control with"), with respect to any
Person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by
contract or otherwise. The holding of Shares (or of Conversion Shares
obtained upon conversion of Shares) and the rights under the Series D
Purchase Agreement, the Series 1 Certificate of Designations, this
Stockholders' Agreement or the Amended and Restated Registration Rights
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Agreement (or the exercise of any such rights, including, without
limitation, nominating a director to the Board of the Company), shall
not cause an Investor to be deemed an "Affiliate" of the Company.
"Agreement" means this Stockholders' Agreement (together with
exhibits and schedules) as from time to time assigned, supplemented or
amended or as the terms hereof may be waived. This Agreement shall
supersede the Series D Stockholders' Agreement in accordance with
Section 9.2 hereto.
"Amended and Restated Registration Rights Agreement" means the
Registration Rights Agreement, dated as of _________________, among the
Series 1 Stockholders, as the same may be amended, modified or
supplemented from time to time, which supersedes the Registration
Rights Agreement in accordance with Section 9.2 hereto.
"Board" or "Board of Directors" means with respect to any
Person which is a corporation, a business trust or other entity, the
board of directors or other group, however, designated, which is
charged with legal responsibility for the management of such Person, or
any committee of such board of directors or group, however designated,
which is authorized to exercise the power of such board or group in
respect of the matter in question.
"Business Day" means any day other than a Saturday, Sunday or
any day on which banks in the location of the office of the Company
provided for in Section 9.13 hereof are authorized or obligated to
close.
"Capitalized Leases" means any lease to which the Company is
party as lessee, or by which it is bound, under which it leases any
property (real, personal or mixed) from any lessor other than the
Company, and which either is required to be capitalized in accordance
with generally accepted accounting principles consistently applied, or,
even if not so required to be capitalized, shall have (or have had), at
the time first entered into, an initial term of greater than three (3)
years (including leases of shorter duration which are or were
extendible to a total term greater than three (3) years at the option
of the lessor). The value of Capitalized Leases, as of the time of any
determination thereof, shall mean the sum of the then present values,
determined as hereinafter provided, of future obligations of lessees
under then existing Capitalized Leases. To compute the value of any
Capitalized Lease, the following methods shall be used, as applicable:
(a) values of leases required to be capitalized in
accordance with generally accepted accounting
principles shall be computed in accordance with such
principles; and
(b) values of other leases (and values of contracts or
other items which this Agreement provides are to be
valued as if they were Capitalized Leases)
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shall be computed by discounting, to the date of
determination, at an assumed interest rate of eight
percent (8%) per annum, the minimum amount of future
rental payments that will be due under the related
documentation, including rental payments that may be
due during extensions which are at the other party's
option, but excluding any amounts in respect of
insurance on, taxes on and/or maintenance of the
properties subject to such leases (provided that such
amounts are owed and paid only to the extent actually
incurred).
"Commission" means the Securities and Exchange Commission and
any other similar or successor agency of the federal government
administering the Securities Act or the Securities Exchange Act.
"Common Stock" means the Company's Common Stock, par value
$.01 per share, and shall also include any common stock of the Company
hereafter authorized and any capital stock of the Company of any other
class hereafter authorized which is not preferred as to dividends or
assets over any other class of capital stock of the Company or which
has ordinary voting power for the election of directors of the Company;
provided that Common Stock shall not include the Series 1 Preferred.
"Consolidated" or "consolidated", when used with reference to
any financial term in this Agreement, means the aggregate for the
Company of the amounts signified by such term for all such Persons,
with intercompany items eliminated, and, with respect to net worth,
after eliminating the portion of net worth properly attributable to
minority interests, if any, in the capital of any such Person (other
than in the capital of the Company) and otherwise as determined in
accordance with generally accepted accounting principles consistently
applied (except as otherwise expressly provided herein).
"Conversion Share" or "Conversion Shares" means the shares of
the Company's Common Stock obtained or obtainable upon conversion of
Shares and shall also include any capital stock or other securities
into which Conversion Shares are changed and any capital stock or other
securities resulting from or comprising a reclassification, combination
or subdivision of, or a stock dividend on, any Conversion Shares. In
the event that any Conversion Shares are disposed of or transferred
either in a public offering pursuant to a registration statement under
the Securities Act or pursuant to a Rule 144 Transaction, then the
transferees of such Conversion Shares shall not be entitled to any
benefits under this Agreement with respect to such Conversion Shares
and such Conversion Shares shall no longer be considered to be
"Conversion Shares" for purposes of any consent or waiver provision of
this Agreement.
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"Director Holder" shall have the meaning given it in the
Series 1 Certificate of Designation.
"Effective Time" shall have the same meaning herein as set
forth in the Merger Agreement.
"Environmental Laws" means all federal, state, local, foreign,
civil and criminal laws, statutes, ordinances, orders, codes,
Environmental Permits, rules, policies, and regulations and common law
relating to the protection of the environment and human health or
relating to the handling, use, generation, treatment, storage,
transportation or disposal of Hazardous Materials, including but not
limited to the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss. 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C.
ss. 2601 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq.; the
Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801 et seq.; The Occupational Safety
and Health Act, 29 U.S.C. ss. 651; the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. ss. 136y et seq.; and the Oil Pollution
Act of 1990, 33 U.S.C. ss. 2701 et seq., all as may be amended or
superseded from time to time.
"Environmental Lien" means Liens arising under or pursuant to
any Environmental Law.
"Environmental Permits" means all permits, licenses,
approvals, authorizations or consents required by any Governmental
Authority under any applicable Environmental Law and includes any and
all orders, consent orders or binding agreements issued or entered into
by a Governmental Authority under any applicable Environmental Law.
"ERISA" means Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means each "person" (as defined in Section
3(9) of ERISA) which is under "common control" with the Company (within
the meaning of Section 414(b), (c), (m) or (o) of the Code).
"Fleming Holders" means (I) the Fleming Funds and (II) any
Affiliate, officer or employee of an Affiliate or investment fund
managed by an Affiliate of the Fleming Funds to which the Fleming Funds
may transfer record and/or beneficial ownership of the Shares or the
Conversion Shares. The transferor and the transferee shall notify the
Company in writing as to the transferee's status as a Fleming Holder in
accordance with this definition, and shall notify the Company if such
transferee ceases to be a Fleming Holder.
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"GAAP" means U.S. generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any federal, state, or local
governmental agency or authority (including regulatory authority)
having jurisdiction over the Company or any of its respective assets or
businesses.
"Guaranty" means (i) any guaranty or endorsement of the
payment or performance of, or any contingent obligation in respect of,
any indebtedness or other obligation of any other Person, (ii) any
other arrangement whereby credit is extended to one obligor (directly
or indirectly) on the basis of any promise or undertaking of another
Person (a) to pay the indebtedness of such obligor, (b) to purchase an
obligation owed by such obligor, (c) to purchase or lease assets (or to
provide funds, goods or services) under circumstances that would enable
such obligor to discharge one or more of its obligations or (d) to
maintain the capital, working capital, solvency or general financial
condition of such obligor, in each case whether or not such arrangement
is disclosed in the balance sheet of such other Person or is referred
to in a footnote thereto and (iii) any liability as a general partner
of a partnership in respect of indebtedness or other obligations of
such partnership; provided, however, that the term "Guaranty" shall not
include (1) endorsements for collection or deposit in the ordinary
course of business, (2) any guaranty of indebtedness of the Company by
a subsidiary of the Company or (3) obligations of the Company which
would constitute Guaranties solely by virtue of the continuing
liability of a Person which has sold assets subject to liabilities for
the liabilities which were assumed by the Person acquiring the assets,
unless such liability is required to be carried on the consolidated
balance sheet of the Company. The amount of any Guaranty and the amount
of indebtedness resulting from such Guaranty shall be the maximum
amount of the guarantor's potential obligation in respect of such
Guaranty.
"Hazardous Materials" means any petroleum, petroleum
hydrocarbons, petroleum waste or petroleum products, underground
storage tanks, asbestos or asbestos-containing materials, pesticides,
lead and lead-containing materials, urea formaldehyde insulation and
polychlorinated biphenyls (PCBs), ionizing and non-ionizing radiation
including radon and electromagnetic frequency radiation; and any
chemicals, materials, substances or wastes in any amount or
concentration which are now or hereafter "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants" or words of similar import, under any applicable
Environmental Law.
"Impax Holders" means (i) the Impax Stockholders and (ii) any
Affiliate, officer or employee of an Affiliate or investment fund
managed by an Affiliate of the Impax Stockholders to which the Impax
Stockholders may transfer record and/or beneficial ownership of any
shares of the Shares or the Conversion Shares. The transferor and the
transferee shall notify the Company in writing as to the transferee's
status as an Impax
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Holder in accordance with this definition, and shall notify the Company
if such transferee ceases to be an Impax Holder.
"Indebtedness" of any Person means, without duplication, as of
any date as of which the amount thereof is to be determined, (i) all
obligations of such Person to repay money borrowed (including, without
limitation, all notes payable and drafts accepted representing
extensions of credit, all obligations under letters of credit, all
obligations evidenced by bonds, debentures, notes or other similar
instruments and all obligations upon which interest charges are
customarily paid), (ii) all Capitalized Leases in respect of which such
Person is liable as lessee or as the guarantor of the lessee, (iii) all
monetary obligations which are secured by any Lien existing on property
owned by such Person whether or not the obligations secured thereby
have been incurred or assumed by such Person, (iv) all conditional
sales contracts and similar title retention debt instruments under
which such Person is obligated to make payments, (v) all Guarantees by
such Person and (vi) all contractual obligations (whether absolute or
contingent) of such Person to repurchase goods sold and distributed.
"Indebtedness" shall not include, however, any unfunded obligations in
any employee pension benefit plan (as defined in ERISA) of the Company.
"Investment" means, with respect to any Person, (i) any loan,
advance or extension of credit by such Person to, and any contributions
to the capital of, any other Person, (ii) any Guaranty by such Person,
(iii) any interest in any capital stock, equity interest or other
securities of any other Person, other than joint venturers, partnering
entities or other entities with which the Company has a business
relationship or a strategic reliance, up to an aggregate of $1,000,000,
(iv) any transfer or sale of property of such Person to any other
Person other than upon full payment, in cash or other consideration, of
not less than the agreed sale price bargained on an arms-length basis
and (v) any commitment or option to make an Investment if, in the case
of an option, the consideration therefor exceeds $10,000, and any of
the foregoing under clauses (i) through (v) shall be considered an
Investment whether such Investment is acquired by purchase, exchange,
merger or any other method; provided, that the term "Investment" (1)
shall not include an Investment in the Company, (2) shall not include
current trade and customer accounts receivable and allowances, provided
they relate to goods furnished in the ordinary course of business and
are given in accordance with the customary practices of the Company,
(3) shall not include temporary investments of excess cash of the
Company in any of the following: (A) investment grade obligations
maturing within one year of their issuance which as to principal and
interest constitute direct obligations of, or obligations guaranteed
by, the United States of America, (B) negotiable certificates of
deposit of banks or trust companies which are organized under the laws
of the United States of America or any state thereof and which have
capital and surplus of at least $500,000,000, (C) commercial paper
which is rated not less than prime-one or A-1 or their equivalents by
Moody's Investor Service, Inc. or Standard & Poor's Corporation or
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their successors, (D) any repurchase agreement secured by any one or
more of the foregoing and (E) money market funds primarily investing in
any of the foregoing securities and sponsored by or affiliated with
nationally recognized brokerage or investment advisory firms, and (4)
shall not include Investments of the Company existing immediately after
the Effective Time and disclosed on Schedule 3 hereto.
"Joinder Agreement" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, or preference, priority or other
security interest of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same effect as any of the
foregoing, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against the
assignor), any filing of a financing statement as debtor under the
Uniform Commercial Code or any similar statute and any agreement to
give or make any of the foregoing; provided that the term "Lien" shall
not include Permitted Liens.
"Outside Directors" means those directors on the Company's
Board of Directors at any time who are not otherwise Affiliates of or
employed by the Company.
"Outstanding" or "outstanding" means (a) when used with
reference to the Shares or the Conversion Shares as of a particular
time, all Shares or Conversion Shares theretofore duly issued except
(i) Shares and Conversion Shares theretofore reported as lost, stolen,
mutilated or destroyed or surrendered for transfer, exchange or
replacement, in respect of which new or replacement Shares and
Conversion Shares have been issued by the Company, (ii) Shares and
Conversion Shares theretofore cancelled by the Company and (iii) Shares
and Conversion Shares registered in the name of, as well as Shares and
Conversion Shares owned beneficially by, the Company, or any of its
Affiliates. For purposes of the preceding sentence, in no event shall
"Affiliates" include (x) the persons which are identified as "Series 1
Stockholders" on Schedule 1 hereto or (y) any Affiliates of any such
persons.
"Pension Plan" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes, governmental
charges or levies not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (ii) any imperfections of title,
easements, rights of way or similar Liens, zoning laws or land use
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restrictions as normally exist with respect to property similar in
character to the property affected thereby and which individually or in
the aggregate with other such Liens, zoning laws or land use
restrictions do not materially impair the value or marketability of the
property subject to such Liens, zoning laws or land use restrictions or
interfere with the use of such property in the conduct of the business
of the Company and which do not secure obligations for money borrowed,
(iii) Liens imposed by any law, such as mechanic's, materialman's,
landlord's, warehouseman's and carrier's Liens, securing obligations
incurred in the ordinary course of business which are not yet overdue
or which are being diligently contested in good faith by appropriate
proceedings and, with respect to such obligations which are being
contested, for which the Company has set aside adequate reserves, if
appropriate, and (iv) any Lien resulting from purchase by the Company
of goods in the ordinary course of business as to which Liens are not
filed of record.
"Person" or "person" means an individual, corporation,
partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political
subdivision or other entity.
"Preferred Director" shall have the meaning given it in the
Series 1 Certificate of Designation.
"Preferred Stock" means any class of the capital stock of a
corporation (whether or not convertible into any other class of such
capital stock) which has any right, whether absolute or contingent, to
receive dividends or other distributions of the assets of such
corporation (including, without limitation, amounts payable in the
event of the voluntary or involuntary liquidation, dissolution or
winding-up of such corporation), which right is superior to the rights
of another class of the capital stock of such corporation. "Preferred
Stock" includes, without limitation, the Series 1 Preferred.
"Registrable Securities" means (i) any shares of Common Stock
issued or issuable upon conversion of the Series 1 Preferred or
exercise of the Warrants purchased by the Fleming Funds pursuant to the
Series D Purchase Agreements and (ii) any securities issued or issuable
with respect to the Common Stock referred to in clause (i) by way of
stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization
or otherwise. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have (x)
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (y) been
transferred pursuant to a Rule 144 Transaction (or any similar rule
then in force) under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated March 2, 1999, among Global and the Fleming Funds,
which shall be superseded by the
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Amended and Restated Registration Rights Agreement, in accordance with
Section 9.2 hereto.
"Restricted Payment" means (i) every payment in connection
with the redemption, purchase, retirement or other acquisition by or on
behalf of the Company of any shares of the Company's capital stock (as
defined below), whether or not owned by the Company, (ii) any
prepayments or repayments made on Indebtedness of the Company, (iii)
every payment to or on behalf of any Affiliate of the Company on
account of or with respect to any lease arrangements, and (iv) every
payment by or on behalf of the Company (whether as repayment or
prepayment of principal or as interest or otherwise) on or with respect
to (A) any obligation to repay money borrowed owing to any Affiliate of
the Company or (B) any obligation, to any Person, of any Affiliate of
the Company or to any other holder of shares of the Company's capital
stock (as defined below), which obligation is assumed, or is the
subject of a Guaranty, by the Company; provided, however, (a) that the
restrictions of the foregoing clause (i) shall not apply to (A) any
payment in respect of capital stock of the Company to the extent
payable in shares of the capital stock of the Company, (B) any
redemption of the Series 1 Preferred or (C) any redemption or
repurchase pursuant to the 1995 Stock Incentive Plan as in effect on
the date hereof, or other similar equity plan to be adopted by the
Company, (b) that the restrictions of the foregoing clause (ii) shall
not apply to any regularly scheduled prepayment or repayment of
Indebtedness, provided that such Indebtedness being prepaid or repaid
is not at the time of such prepayment or repayment or at any prior time
thereto owing to an Affiliate of the Company, and (c) that none of the
foregoing clauses shall apply to any payments, distributions or other
transfers or actions on or with respect to the Shares or the Conversion
Shares or to the Investors (or holders of Shares or the Conversion
Shares) under this Agreement. For purposes of this definition, "capital
stock" shall also include warrants and other rights and options to
acquire shares of capital stock (whether upon exercise, conversion,
exchange or otherwise).
"Rule 144" means (i) Rule 144 under the Securities Act as such
Rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.
"Rule 144A" means (i) Rule 144A under the Securities Act as
such Rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.
"Rule 144 Transaction" means a transfer of Conversion Shares
(A) complying with Rule 144 as such Rule is in effect on the date of
such transfer (but not including a sale other than pursuant to
"brokers' transactions" as defined in clauses (1) and (2) of paragraph
(g) of such Rule as in effect on the date hereof) and (B) occurring at
a time when Conversion Shares are registered pursuant to Section 12 of
the Securities Exchange Act.
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"Securities Act" means the Securities Act of 1933, as amended,
and the rules, regulations and interpretations thereunder.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules, regulations and interpretations
thereunder.
"Series 1 Certificate of Designations" means the Certificate
of Designations of Series 1-A Convertible Preferred Stock and Series
1-B Convertible Preferred Stock (as the same may be amended from time
to time), in the form attached hereto as Exhibit B.
"Series 1 Holder" means the Fleming Holders and the Impax
Holders.
"Series D Purchase Agreements" means, collectively, the
separate Stock and Warrant Purchase Agreements, dated as of March 2,
1999 (as amended by Amendment No. 1, dated as of May 18, 1999), between
Global and each of the Fleming Funds.
"Series D Stockholders' Agreement" means the Stockholders'
Agreement, dated March 2, 1999, among Global, Edwards and the Fleming
Funds, which is superseded by this Stockholders' Agreement.
"Shares" has the meaning set forth in the recitals hereto. In
the event that any Shares are sold either in a public offering pursuant
to a registration statement under Section 5 of the Securities Act or
pursuant to a Rule 144 Transaction, then the transferees of such Shares
shall not be entitled to any benefits under this Agreement with respect
to such Shares and such Shares shall no longer be considered to be
"Shares" for purposes of any consent or waiver provision of this
Agreement.
"Tax" or "Taxes" means all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad
valorem, value added, franchise, bank shares, withholding, payroll,
employment, excise, property, alternative or add-on minimum,
environmental or other taxes, assessments, duties, fees, levies or
other governmental charges of any nature whatsoever, whether disputed
or not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"Tax Returns" means any returns, reports or statements
(including any information returns) required to be filed for purposes
of a particular Tax.
"Taxing Authority" means any governmental agency, board,
bureau, body, department or authority of any United States federal,
state or local jurisdiction, or any foreign jurisdiction, having or
purporting to exercise jurisdiction with respect to any Tax.
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"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 mean any transferee (except for a Series 1
Holder) of Shares or Conversion Shares from a Series 1 Holder.
Transferees shall not include a transferee of Shares or Conversion
Shares disposed of or transferred in either a public offering pursuant
to a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or pursuant to Rule 144 under the
Securities Act.
(b) Unless otherwise provided herein, all accounting terms
used in this Agreement shall be interpreted in accordance with GAAP as in effect
from time to time, applied on a consistent basis.
(c) The following terms, when used in this Agreement, shall
have the meanings defined for such terms in the Section set forth below (such
definitions to be equally applicable to both singular and plural forms of the
terms defined):
Term Section
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Acceptance Notice 3.1(a)
Buyer 3.1(a)
Company Recitals
Company Common Stock Recitals
Edwards Preamble
Executive Shares Recitals
Fleming Funds Preamble
Fleming Series D Transaction Documents 9.2
Global Preamble
Hsiao Preamble
Hsu Preamble
Impax Recitals
Impax Stockholders Preamble
Inclusion Notice 3.1(a)
Inclusion Offer 3.1(a)
Investor Preamble
Investor Group Preamble
Key Senior Executives Preamble
Merger Recitals
Merger Agreement Recitals
Merger Representations 7.1
Series 1 Preferred Recitals
Series 1 Stockholders Preamble
Shelf Registration 5.8
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Subsequent Shelf Registration 5.8
Surviving Corporation Recitals
Transferor Shares 3.1(a)
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 Transfer Restrictions Generally; Securities Act. Except as
provided pursuant to Article III herein, each Investor agrees that it will not
sell or otherwise dispose of any Shares or Conversion Shares, unless such Shares
or Conversion Shares have been registered under the Securities Act and, to the
extent required, under any applicable state securities laws, or pursuant to an
applicable exemption from such registration requirements.
2.2 Legends. (a) The Company may endorse on all Series 1
Preferred share certificates the following legends and such other legends as may
be required by applicable state securities laws; provided, that no such legend
shall be endorsed on any Share certificates which, when issued, are no longer
subject to the restrictions of this Article II.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS CONTAINED IN A STOCKHOLDERS' AGREEMENT, DATED AS OF
______, 1999, AS SUCH AGREEMENT MAY BE AMENDED, MODIFIED OR RESTATED
FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER HEREOF AND WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE
HOLDER HEREOF UPON WRITTEN REQUEST)."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS OR (ii) AN APPLICABLE EXEMPTION FROM REGISTRATION
THEREUNDER OR UNDER APPLICABLE STATE SECURITIES LAWS."
(b) The certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new certificate
issued upon the completion of a Transfer pursuant to a registered public
offering under the Securities Act and made in accordance with the Securities
Act) shall also bear such legends, unless in the opinion of counsel for the
Company, the Registrable Securities or Shares represented thereby are no longer
subject to the provisions of this Agreement or, in the opinion of the Company
(with advice from counsel to the
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Company, as the Company may deem appropriate), the restrictions imposed under
the Securities Act or state securities laws, in which case the applicable legend
(or legends) may be removed.
2.3 Joinder Agreement.
Each Series 1 Stockholder agrees to cause, upon any Transfer
of Shares or Conversion Shares, in accordance with the terms of this Agreement,
each Person who receives such Shares or Conversion Shares, to execute a Joinder
Agreement and thereby become a party to this Agreement.
ARTICLE III
RIGHTS OF INCLUSION
3.1 Rights of Inclusion (Management Tag-Along) (a) In the
event a Key Senior Executive proposes to Transfer any Executive Shares (the
"Transferor Shares") to any Person (the "Buyer"), as a condition to such
Transfer, such Key Senior Executive 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 3.2 on the same terms and conditions as are applicable to the Transferor
Shares (including any consideration to be received by such Key Senior Executive
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.
Such Key Senior Executive 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 such Key Senior Executive 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 Executive Shares
owned by such Key Senior Executive (such percentage shall be calculated on the
basis that all Shares owned by each Investor have been converted into shares of
Common Stock at the current conversion price per share under Section 5 of the
Series 1 Certificate of Designations); provided, however, that if no Investor
elects to exercise such right, such Key Senior Executive 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 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
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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 and Company 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 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 into Company Common Stock so that each Investor Transfers only Company
Common Stock to the Buyer.
3.2 Procedure. (a) Such Key Senior Executive 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 such Key Senior Executive has not completed the
Transfer of the Transferor Shares and the Investor Shares (if any) proposed to
be Transferred, such Key Senior Executive may not proceed with such Transfer or
any other Transfer without first giving a new Inclusion Notice pursuant to the
provisions of this Article III.
(b) If such Key Senior Executive 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 Article III 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.
3.3 Exceptions. (a) The provisions of this Article III shall
not apply to any Transfer or proposed Transfer by a Key Senior Executive of
Executive Shares which represents twelve and one-half percent (12.5%) or less of
the Executive Shares held by such Key Senior Executive at the Effective Time if
such Transfer or proposed Transfer by such Key Senior Executive of Executive
Shares, together with all other Transfers by such Key Senior Executive of
Executive Shares on or in the three years prior to the date of such Transfer,
represent twenty-five percent (25%) or less of the Executive Shares held by such
Key Senior Executive at the Effective Time, with the Executive Shares held by
such Key Senior Executive at the Effective Time to be appropriately adjusted to
reflect any stock split, stock dividend, recapitalization or similar event;
provided, however, that each Transfer of such Executive Shares that takes place
within three years 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 such Key Senior Executive desires to
exercise an option to purchase Company Common Stock, then such Key Senior
Executive may Transfer Executive Shares to the extent necessary to obtain the
funds
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to exercise such option and such Transfer shall not be included in the
calculation of the percentages in this Section 3.3 or subject to the provisions
of this Article III; provided that such option must expire within ninety (90)
days of such Transfer.
(b) If a Key Senior Executive Transfers Executive Shares which
represents greater than twelve and one-half percent (12.5%) of the Executive
Shares held by such Key Senior Executive at the Effective Time or, together with
all other Transfers by such Key Senior Executive of such Executive Shares on or
within three years prior to the date of such Transfer, represents greater than
twenty-five (25%) of the Executive Shares held by such Key Senior Executive at
the Effective Time, then the provisions of this Article III shall only be
applicable to such Executive Shares held by the Key Senior Executive in excess
of such percentages.
(c) The provisions of this Article III shall not apply to any
Executive Shares the Key Senior Executive Transfers to any trust which is
established solely for the benefit of the spouse or any lineal ancestor or
descendant (including by adoption and stepchildren) of such Key Senior Executive
and whose terms are not inconsistent with the terms of this Agreement.
(d) The provisions of this Article III shall only apply to a
Key Senior Executive so long as such Key Senior Executive is an executive
officer of the Company at the time of any proposed Transfer.
ARTICLE IV
NEGATIVE COVENANTS OF THE COMPANY
So long as the Series 1 Holders hold any Shares (except as
otherwise provided in Section 4.2 herein), the Company covenants and agrees that
without the prior written consent of the holders of (A) at least 80% of
outstanding Shares with respect to Sections 4.1, 4.3 and 4.5 to 4.10 herein and
(B) at least 50% of the outstanding Shares with respect to Sections 4.2 and 4.4
herein:
4.1 No Dilution or Impairment; No Changes in Capital Stock.
The Company will not, by amendment of its certificate of incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Series 1
Certificate of Designations, the Amended and Restated Registration Rights
Agreement, this Agreement or the provisions of Series D Purchase Agreements that
survive pursuant to Section 9.2 herein. The Company will at all times in good
faith assist in the carrying out of all such terms, and in the taking of all
such action, as may be necessary or appropriate in order to protect the rights
of the holders of Shares (as such rights are set forth in the Series D Purchase
Agreements, the Series 1 Certificate of Designations, the Amended and Restated
Registration Rights Agreement and this Agreement) against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not issue any shares or class or series of
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equity or equity-linked security, which is senior to, or pari passu with, the
Series 1 Preferred as to dividend payments or amounts payable in the event of
liquidation or winding up of the Company; except that the Company may issue up
to $10 million of preferred stock which is pari passu with the Series 1
Preferred, (b) will not enter into any agreement or instrument which would
restrict or otherwise materially adversely affect the ability of the Company to
perform its obligations under the Series D Purchase Agreements, this Agreement,
the Amended and Restated Registration Rights Agreement or the Series 1
Certificate of Designations, (c) will not amend its certificate of incorporation
or by-laws in any manner which would impair or reduce the rights of the
Preferred Stock, including, without limitation, an amendment which would alter
or change the powers, privileges or preferences of the holders of the Series 1
Preferred (including, without limitation, changing the Series 1 Certificate of
Designations after any Shares have been called for redemption), (d) except as
otherwise provided in the Series 1 Certificate of Designations, as in effect at
the Effective Time, will not redeem, repurchase or otherwise acquire any shares
of capital stock of the Company or any other rights or options to subscribe for
or purchase any capital stock of the Company or any other securities convertible
into or exchangeable for capital stock of the Company, (e) will not permit the
par value or the determined or stated value of any shares of Common Stock
receivable upon the conversion of the Shares to exceed the amount payable
therefor upon such conversion, (f) will take all such action as may be necessary
or appropriate in order that the Company may at all times validly and legally
issue duly authorized, fully paid and nonassessable shares of the Company Common
Stock free from all taxes, Liens and charges with respect to the issue thereof,
upon the conversion of the Shares from time to time outstanding, (g) will not
take any action which results in any adjustment of the current conversion price
under the Series 1 Certificate of Designations if the total number of shares of
the Common Stock (or other securities) issuable after the action upon the
conversion of all of the then outstanding Shares would exceed the total number
of shares of Common Stock (or other securities) then authorized by the Company's
certificate of incorporation and available for the purpose of issuance upon such
conversion or exercise, (h) will not have any authorized Common Stock (and will
not issue any Common Stock) other than its existing authorized Common Stock,
$.01 par value per share, and (i) will not amend its certificate of
incorporation to change any terms of its Common Stock.
4.2 Indebtedness. So long as the Series 1 Holders hold at
least 20% of the aggregate number of Shares owned at the Effective Time, the
Company will not (i) incur Indebtedness, excluding any Indebtedness set forth on
Schedule 4 hereto, in excess of $15 million in aggregate principal amount; or
(ii) enter into any agreement, amendment or modification with respect to any
Indebtedness, which agreement, amendment or modification under clause (ii)
restricts or prohibits (or was intended primarily to restrict or prohibit) the
Company from making any payments under, or otherwise performing under this
Stockholders' Agreement.
4.3 Dissolution. The Company will not (or will not agree to)
wind up, liquidate or dissolve its affairs.
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4.4 No Change in Business. The Company will not change
substantially the character of its business as conducted as of the date hereof
and as of the Effective Time; the Company is engaged primarily in the business
of manufacturing and distributing immediate release and controlled release solid
oral pharmaceutical products as well as providing product development services
to major pharmaceutical companies.
4.5 Restricted Payments; Investments. The Company will not
declare or make or permit to be declared or made:
(a) any Restricted Payment; or
(b) any Investment.
4.6 Affiliate Loans and Guaranties. The Company may not incur
or permit to exist any of the following:
(a) any obligation of the Company to repay money borrowed
owing to (i) any Affiliate of the Company or (ii) any other holder of shares of
the capital stock of the Company; or
(b) any obligation, to any Person, which obligation is assumed
or guaranteed by the Company and which is an obligation of (i) any Affiliate of
the Company, other than the obligation by the Company to indemnify the directors
and officers of the Company or of a wholly-owned subsidiary of the Company, or
(ii) any other holder of shares of the capital stock of the Company (excluding,
in the case of this clause (b), any obligation of the Company which is not owed
to an Affiliate of the Company or to an Affiliate or to any other holder of
shares of the capital stock of the Company).
This Section 4.6 shall not apply to (1) any surviving obligations under the
Series D Purchase Agreements or this Agreement or with respect to the Shares,
(2) any loans, advances or Guarantees referred to in clause (1) of the proviso
to the definition of "Investment" contained in Article I hereof or (3)
Indebtedness identified on Schedule 4 hereto.
4.7 Transactions with Affiliates. The Company will not,
directly or indirectly, enter into any transaction or agreement (including,
without limitation, the purchase, sale, distribution, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company,
unless such transaction or agreement (a) is approved by a majority of the
Outside Directors on the Board of Directors, and (b) is on terms that are no
less favorable to the Company, as the case may be, than those which might be
obtained at the time of such transaction from a Person who is not such an
Affiliate; provided, however, that this Section 4.7 shall not limit, or be
applicable to, (i) employment arrangements with (and general salary and benefits
compensation for) any individual who is a full-time employee of the Company if
such arrangements are approved by a majority of the Outside Directors on the
Board of Directors; and
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(ii) the payment of reasonable and customary regular fees to directors of the
Company who are not employees of the Company; and (iii) existing arrangements as
disclosed on Schedule 5 hereto.
4.8 Liens. The Company will not create or permit to exist, to
create or suffer to exist, any Lien upon or with respect to any of its assets or
income, other than Permitted Liens and existing liens set forth on Schedule 6
hereto.
4.9 Private Placement Status. Neither the Company nor any
agent nor other Person acting on the Company's behalf will do or cause to be
done (or will omit to do or to cause to be done) any act which act (or which
omission) would result in bringing the issuance or sale of the Shares or the
Conversion Shares within the provisions of Section 5 of the Securities Act or
the filing, notification or reporting requirements of any state securities law
(other than in accordance with a registration and qualification of Conversion
Shares pursuant to the Amended and Restated Registration Rights Agreement).
4.10 Maintenance of Public Market. The Company will not
proceed with a program of acquisition of its Common Stock, initiate a corporate
reorganization or recapitalization or undertake a consolidation or merger or
authorize, consent to or take any action which would have the effect of:
(a) removing the Company from registration with the Commission
under the Securities Exchange Act with respect to the Company's Common Stock;
(b) requiring the Company to make a filing under Section 13(e)
of the Securities Exchange Act;
(c) reducing substantially or eliminating the public market
for shares of Common Stock of the Company;
(d) causing a delisting of the Company's Common Stock as a
Small Cap Market Security on the NASDAQ Stock Market (unless such stock is
delisted as a result of being listed on a national securities exchange); or
(e) if any shares of the Company's Common Stock are at any
time listed on a national exchange, causing a delisting of such stock from such
exchange.
4.11 Actions Prior to the Effective Time. From the date hereof
through the Effective Time, the Company will not, (a) issue or agree to issue
any capital stock or any securities exercisable for, or convertible or
exchangeable into, capital stock or (b) purchase, redeem or otherwise acquire
any of its capital stock; provided, however, that this Section 4.11 shall not
limit, or be applicable to, (i) the transactions contemplated by the Merger
Agreement and this Agreement, (ii) grants of options or issuances of Common
Stock to officers, directors or
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employees of the Company pursuant to the current terms of the Company's 1995
Stock Incentive Plan as in effect on the date hereof or other similar equity
plan to be adopted by the Company and (iii) the exercise of existing warrants.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
5.1 Maintenance of Existence, Properties and Franchises;
Compliance with Law; Taxes; Insurance. The Company will:
(a) maintain its corporate existence, rights and other
franchises in full force and effect;
(b) maintain its tangible assets in good repair, working order
and condition so far as necessary or advantageous to the proper carrying on of
its businesses;
(c) comply with all applicable laws and with all applicable
orders, rules, rulings, certificates, licenses, regulations, demands, judgments,
writs, injunctions and decrees, provided, that such compliance shall not be
necessary so long as (i) the applicability or validity of any such law, order,
rule, ruling, certificate, license, regulation, demand, judgment, writ,
injunction or decree shall be contested in good faith by appropriate proceedings
and (ii) failure to so comply will not have a material adverse effect on the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis;
(d) pay promptly when due all Taxes imposed upon its
properties, assets or income and all claims or indebtedness (including, without
limitation, vendor's, workmen's and like claims) which might become a lien upon
such properties or assets; provided, that payment of any such Tax shall not be
necessary so long as (i) the applicability or validity thereof shall be
contested in good faith by appropriate proceedings and a reserve, if
appropriate, shall have been established with respect thereto and (ii) failure
to make such payment will not have a material adverse effect on the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company on a consolidated basis;
and
(e) keep adequately insured, by financially sound and
reputable insurers of nationally recognized stature, all its properties of a
character customarily insured by entities similarly situated, against loss or
damage of the kinds and in amounts customarily insured against by such entities
and with such deductibles or coinsurance as is customary.
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5.2 Office for Payment, Exchange and Registration; Location of
Office; Notice of Change of Name or Office.
(a) So long as any of the Shares is outstanding, the Company
will maintain an office or agency where Shares may be presented for redemption,
exchange, conversion, exercise or registration of transfer as provided in this
Agreement. Such office or agency initially shall be the office of the Company
specified in Section 9.13 hereof, subject to Section 5.2(b).
(b) The Company shall give each holder of Shares at least
twenty (20) days' prior written notice of any change in (i) the name of the
Company as then in effect or (ii) the location of the office of the Company
required to be maintained under this Section 5.2.
5.3 Fiscal Year. The fiscal year of the Company for tax,
accounting and any other purposes shall end on December 31 of each calendar
year.
5.4 Environmental Matters.
(a) The Company shall keep and maintain any property either
owned leased, operated or occupied by the Company free and clear of any
Environmental Liens, and the Company shall keep all such property free of
Hazardous Material contamination and in compliance with all applicable
Environmental Laws and the terms and conditions of any Environmental Permits;
provided, however, that the Company shall have the right at its cost and
expense, and acting in good faith, to contest, object or appeal by appropriate
legal proceeding the validity of any Environmental Lien. The contest, objection
or appeal with respect to the validity of an Environmental Lien shall suspend
the Company's obligation to eliminate such Environmental Lien under this
paragraph pending a final determination by appropriate administrative or
judicial authority of the legality, enforceability or status of such
Environmental Lien, provided that the following conditions are satisfied: (i)
contemporaneously with the commencement of such proceedings, the Company shall
give written notice thereof to each holder of Shares or Conversion Shares; and
(ii) if under applicable law any real property or improvements thereon are
subject to sale or forfeiture for failure to satisfy the Environmental Lien
prior to a final determination of the legal proceedings, the Company must
successfully move to stay such sale, forfeiture or foreclosure pending final
determination of the Company's action; and (iii) the Company must, if requested,
furnish to the holders of Shares or Conversion Shares, a good and sufficient
bond, surety, letter of credit or other security satisfactory to such holders
equal to the amount (including any interest and penalty) secured by the
Environmental Lien.
(b) The Company will, by administrative or judicial process,
enforce the obligations of any other Person who is potentially liable for
damages, contribution or other relief in connection with any violation of
Environmental Laws, including, but not limited to, asbestos abatement, Hazardous
Material remediation or off-site or on-site disposal.
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(c) The Company will defend, indemnify and hold harmless each
current, former and future holder of Shares or Conversion Shares, its employees,
officers, directors, stockholders, partners, financial and legal representatives
and assigns, from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits and claims, joint or several, and any
costs, disbursements and expenses (including attorneys' fees and expenses and
costs of investigation) of whatever kind or nature, known or unknown, contingent
or otherwise asserted against, imposed on, or sustained by, them, arising out of
or in any way related to (i) the presence, disposal, release, removal,
discharge, storage or transportation by the Company on behalf of any
predecessors thereof of any Hazardous Material upon, into, from or affecting any
real property (including improvements) currently or formerly owned, leased,
operated or occupied by the Company; (ii) any judicial or administrative action,
suit or proceeding, actual or threatened, relating to Hazardous Material upon,
in, from or affecting any real property (including improvements) currently or
formerly owned, leased, operated or occupied by the Company for which the
Company could be liable; (iii) any violation of any Environmental Law, by the
Company or any of their agents, tenants, subtenants or invitees; (iv) the
imposition of any Environmental Lien for the recovery of costs expended in the
investigation, study or remediation of any environmental liability of (or
asserted against) the Company; and (v) any liability arising out of or related
to the off-site shipment, disposal, treatment, handling or disposal of Hazardous
Materials. This Section 5.4(c) and Section 5.4(d) shall survive any payment,
conversion or transfer of Shares and any termination of this Agreement.
(d) To the extent that the Company is strictly liable without
regard to fault under any environmental law, regulation or ordinance, the
Company's obligations to the holders of Shares or Conversion Shares under any of
the indemnification provisions of the Series D Purchase Agreements shall
likewise be strict without regard to fault with respect to the violation of any
environmental law, regulation or ordinance which results in any liability to any
of the indemnified persons referred to in Section 5.4(c).
5.5 Reservation of Shares. There have been reserved, and the
Company shall at all times keep reserved, free from preemptive rights, out of
its authorized Common Stock a number of shares of Common Stock sufficient to
provide for the exercise of the conversion rights provided in Section 5 of the
Series 1 Certificate of Designations.
5.6 Securities Exchange Act Registration.
(a) In accordance with and subject to the provisions of the
Amended and Restated Registration Rights Agreement in the form attached hereto
as Exhibit C, which the Company, the Flemings Funds and the Impax Stockholders
shall execute simultaneously herewith, the Company, the Flemings Funds and the
Impax Stockholders will maintain effective a registration statement (containing
such information and documents as the Commission shall specify and otherwise
complying with the Securities Exchange Act), under Section 12(b) or Section
12(g), whichever is applicable, of the Securities Exchange Act, with respect to
the Company Common Stock, and the Company will file on time such information,
documents and
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reports as the Commission may require or prescribe for companies whose stock has
been registered pursuant to such Section 12(b) or Section 12(g), whichever is
applicable.
(b) The Company will, upon the request of any holder of
Shares, make whatever other filings with the Commission, or otherwise make
generally available to the public such financial and other information, as any
such holder may deem reasonably necessary or desirable in order to enable such
holder to be permitted to sell Shares pursuant to the provisions of Rule 144.
5.7 Delivery of Information for Rule 144A Transactions. If a
holder of Shares proposes to transfer any such Shares pursuant to Rule 144A
under the Securities Act (as in effect from time to time), the Company agrees to
provide (upon the request of such holder or the prospective transferee) to such
holder and (if requested) to the prospective transferee any financial or other
information concerning the Company which is required to be delivered by such
holder to any transferee of such Shares pursuant to such Rule 144A, subject to
confidentiality provisions, if applicable.
5.8 Shelf Registration. On June 29, 1999, the Company filed
with the SEC a registration statement on Form S-3 for an offering to be made on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act (a
"Shelf Registration") registering the resale from time to time by the Investors
of all the Registrable Securities held by such Investors at such time (the
"Initial Shelf Registration"). Promptly following the Effective Time, the
Company shall undertake to file with the SEC a registration statement on Form
S-3 registering for resale from time to time by the Investors of Registrable
Securities not already registered pursuant to the Initial Shelf Registration. If
the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time, the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within thirty (30) days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or to
promptly file an additional Shelf Registration covering all the Registrable
Securities (a "Subsequent Shelf Registration"). All fees and expenses incident
to the Company's or the Investor Group's performance of or compliance with a
Shelf Registration pursuant to this Agreement shall be borne by the Company
whether or not any of the Registration Statements become effective. At such time
that all holders in the Investor Group are able to sell their common stock under
Rule 144 without any restrictions, then the obligation of the Company to
maintain the Shelf Registration pursuant to this Section 5.8 shall terminate.
5.9 Further Assurances. The Company will from time to time,
upon the request of the Series 1 Holders, promptly and duly execute and deliver
any and all such further instruments and documents as the Series 1 Holders may
reasonably deem necessary or desirable to obtain the full benefits of (i) the
obligations under this Agreement and (ii) the other rights and powers herein
granted. Upon the instructions from time to time of (I) the Fleming Funds, (II)
the Impax Stockholders or (III) any Transferee, provided that such Transferee
holds not less than an
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aggregate of 20,000 Shares, the Company shall execute and cause to be filed any
document or filing presented to the Company in proper form for signing or
filing, in each case as the Fleming Funds or the Impax Stockholders or such
Transferee may reasonably deem necessary or desirable in light of the Company's
obligations under this Agreement, and the Company shall pay or cause to be paid
any filing or other fees in connection therewith.
ARTICLE VI
INFORMATION AS TO THE COMPANY
The Company covenants and agrees as follows:
6.1 Financial Information.
(a) The Company will maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with generally accepted
accounting principles consistently applied.
(b) So long as a holder of Series 1 Preferred owns at least
20,000 Shares, the Company will deliver to such holder the following:
(i) as soon as practicable but not later than five
(5) Business Days after their issuance, and in any event within ninety
(90) days after the close of each fiscal year of the Company, (A) a
consolidated balance sheet of the Company as of the end of such fiscal
year and (B) consolidated statements of operations, stockholders'
equity and cash flows of the Company for such fiscal year, in each case
setting forth in comparative form the corresponding figures for the
preceding fiscal year, all such balance sheets and statements to be in
reasonable detail and certified without qualification by Price
Waterhouse Coopers LLC or any "Big Five" independent public accounting
firm selected by the Company, and such statements shall be accompanied
by a management analysis of any material differences between the
results for such fiscal year and the corresponding figures for the
preceding year; the Company's Annual Report on Form 10-KSB or Form 10-K
(if applicable) shall satisfy such requirement provided that it is in
compliance with all applicable requirements of the SEC and is certified
by a "Big Five" accounting firm;
(ii) as soon as practicable, copies (A) of all
financial statements, proxy material or reports sent to the Company's
stockholders, (B) of any public press releases and (C) of all reports
or registration statements filed with the Commission pursuant to the
Securities Act or the Securities Exchange Act;
(iii) as soon as practicable and in any event within
forty-five (45) days after the close of each of the first three (3)
fiscal quarters of the Company, (A) a consolidated balance sheet of the
Company as of the end of such fiscal quarter,
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(B) consolidated statements of operations, stockholders' equity and
cash flows of the Company for the portion of the fiscal year ended with
the end of such quarter, in each case in reasonable detail, certified
by the Chief Financial Officer, Chief Executive Officer or the
President of the Company and setting forth in comparative form the
corresponding figures for the comparable period one year prior thereto
(subject to normal year-end adjustments), together with a management
analysis of any material differences between such results and the
corresponding figures for such prior period and (C) a certificate of
the Chief Financial Officer, Chief Executive Officer or the President
certifying the Company's compliance with the covenants contained in
Section 6 of this Agreement; the Company's Quarterly Report on Form
10-QSB or Form 10-Q (if applicable) shall satisfy such requirement
provided that it is in compliance with all applicable requirements of
the SEC;
(iv) as soon as practicable and without duplication
of any of the above items, any other materials furnished to the
Company's Board of Directors or to holders of the Company's capital
stock or Indebtedness, including, without limitation, any compliance
certificates furnished in respect of such Indebtedness; and
(v) as soon as practicable, such other information as
may reasonably be requested by any holder of at least 20,000 Shares.
(c) The Company will deliver to each member of the Company's
Board of Directors, as soon as practicable (and in the case of (iii), prior to
the end of each fiscal year) and without duplication of any of the items listed
below, the following:
(i) copies of any annual, special or interim audit
reports or management or comment letters with respect to the Company or
their operations submitted to the Company by independent public
accountants;
(ii) copies of summary financial information prepared
on a quarterly basis regarding the Company on a consolidated basis as
presented to the Board and any other summary financial information
otherwise prepared;
(iii) copies of the annual budget and business plan
for the next fiscal year;
(iv) copies of all formal communications, from time
to time, to directors of the Company (including without limitation all
information furnished to such directors in connection with such
communications), and copies of minutes of meetings of the Board of
Directors (and of any executive committees thereof) of the Company;
(v) notice of default under any material agreement,
contract or other instrument to which the Company is a party or by
which it is bound;
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(vi) notice of any action or proceeding which has
been commenced or threatened against the Company and which, if
adversely determined, would have, individually or in the aggregate, a
material adverse effect on the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis; and
(vii) copies of all filings made with the Commission.
(d) All such financial statements referred to in this Section
6.1 shall be prepared in accordance with generally accepted accounting
principles consistently applied (except for any change in accounting principles
specified in the accompanying certificate, in the financial statements
themselves or required by GAAP, and except that any interim financial statements
may omit notes and may be subject to normal year-end adjustments).
(e) Without limiting the foregoing provisions of this Section
6.1, the Company agrees that, if requested in writing by any holder of Shares,
it will not deliver to such holder (until otherwise instructed by such holder)
(x) any non-public information or non-public materials regarding the Company
(whether described in this Section 6.1 or otherwise) and (y) any information
(whether or not included in clause (x)) which such holder specifies that it does
not want to receive. The Company shall comply with any such request with respect
to each such Investor and any subsequent holders of Shares acquired directly or
indirectly (through one or more transfers) from such Investor, until instructed
otherwise by the then holder of such Shares.
6.2 Communication with Accountants. The Company hereby
authorizes any Series 1 Stockholder to communicate directly with the independent
certified public accountants for the Company and authorizes such accountants to
disclose to such Series 1 Stockholder any and all financial statements and any
other information of any kind that they may have with respect to the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company. The Company shall deliver
a letter addressed to such accountants instructing them to comply with the
provisions of this Section 6.2.
6.3 Inspection. So long as a holder of Series 1 Preferred owns
at least 20,000 Shares, the Company will permit such holder and any authorized
representative of such holder to visit and inspect any of the properties of the
Company, to examine their respective books and records and to discuss with their
officers their books and records and the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company, all at such reasonable times, all on reasonable notice
and as often as may be reasonably requested.
6.4 Notices. The Company will give notice to all holders of
Shares promptly after it learns (other than by notice from all of such holders)
of the existence of any of the following:
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(a) any default under any Indebtedness (or under any
indenture, mortgage or other agreement relating to any Indebtedness) which
Indebtedness is in an aggregate principal amount exceeding $250,000 (or the
equivalent thereof in other currencies) in respect of which the Company is
liable;
(b) any action or proceeding which has been commenced or
threatened against the Company and which, if adversely determined, would have,
individually or in the aggregate, a material adverse effect on the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company on a consolidated basis or
the ability of the Company to perform its surviving obligations under the Series
D Purchase Agreements, this Agreement, the Amended and Restated Registration
Rights Agreement or the Series 1 Certificate of Designations;
(c) any dispute which may exist between the Company and any
governmental regulatory body which, in the reasonable opinion of the Company is
reasonably likely to, individually or in the aggregate, materially adversely
affect the normal business operations of the Company or the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis or the ability of
the Company to perform its surviving obligations under the Series D Purchase
Agreements, this Agreement, the Amended and Restated Registration Rights
Agreement or the Series 1 Certificate of Designations; and
(d) if any (i) "reportable event" (as such term is described
in Section 4043(c) of ERISA) has occurred; or (ii) "accumulated funding
deficiency" (within the meaning of Section 412(a) of the Code) has been incurred
with respect to a Pension Plan maintained or contributed to (or required to be
maintained or contributed to) by the Company or any ERISA Affiliate that is
subject to the funding requirements of ERISA and the Code or that an application
may be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code, in each case with respect to such a Pension Plan; or (iii) Pension Plan
maintained or contributed to (or required to be maintained or contributed to) by
the Company or any ERISA Affiliate has been terminated, reorganized, petitioned
or declared insolvent under Title IV of ERISA; or (iv) Pension Plan maintained
or contributed to (or required to be maintained or contributed to) by the
Company or any ERISA Affiliate has an unfunded current liability giving rise to
a lien under ERISA or the Code; or (v) proceeding has been instituted pursuant
to Section 515 of ERISA to collect a delinquent contribution to a Pension Plan
maintained or contributed to (or required to be maintained or contributed to) by
the Company or any ERISA Affiliate; or (vi) of the Company or its ERISA
Affiliates will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination or withdrawal from a
Pension Plan maintained or contributed to (or required to be maintained or
contributed to) by the Company or any ERISA Affiliate; or (vii) "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the
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Code) in connection with an "employee benefit plan" (as defined in Section 3(3)
of ERISA), maintained or contributed to (or required to be maintained or
contributed to) by the Company or any ERISA Affiliate has occurred.
Such notice (i) with respect to (a), shall specify the nature and period of
existence of any such default and what the Company proposes to do with respect
thereto and (ii) with respect to (b), (c) or (d), shall specify the nature of
any such matter referred to in such clause, what action the Company proposes to
take with respect thereto and what action any other relevant Person is taking or
proposes to take with respect thereto.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties. The Company represents and
warrants to the Series 1 Stockholders that the statements contained in Sections
4.01, 4.02, 4.03 and 4.09 of the Merger Agreement ("Merger Representations") are
true and correct as of the date hereof, except as set forth therein in the Buyer
Disclosure Schedules, attached thereto; provided that all references thereto in
Section 4.03 to "Agreement" shall also include this Shareholders' Agreement and
the Amended and Restated Registration Rights Agreement. Capitalized terms used
in this Section 7.1 and in the Merger Representations and not otherwise defined
in this Agreement have the respective meanings ascribed thereto in the Merger
Agreement.
7.2 Breach of Representations, Warranties and Covenants. (a)
The representations, warranties, covenants and agreements of the Company and the
Series 1 Stockholders contained in this Agreement and the Amended and Restated
Registration Rights Agreement or in any document or certificate delivered
pursuant hereto or thereto or in connection herewith shall survive until March
2, 2001, and shall continue in effect following, the execution and delivery of
this Agreement and the Amended and Restated Registration Rights Agreement, the
Merger, any investigation at any time made by any Series 1 Stockholder or on its
behalf or by any other Person, the issuance, sale and delivery of the Shares,
any disposition thereof and any payment, conversion or cancellation of the
Shares; provided that Article IV shall terminate upon conversion of all of the
Shares (or as earlier provided therein). All statements contained in any
certificate or other document delivered by or on behalf of the Company pursuant
hereto shall constitute representations and warranties by the Company hereunder.
(b) The Company agrees to indemnify and hold the Series 1
Stockholders harmless from and against and will pay to the Series 1 Stockholders
the full amount of any loss, damage, liability or expense (including amounts
paid in settlement and reasonable attorneys' fees and expenses) to the Series 1
Stockholders resulting either directly or indirectly from any breach of the
representations, warranties, covenants or agreements of the Company contained in
this Agreement, the Registration Rights Agreement or any other document or
certificate delivered pursuant hereto or thereto or in connection herewith or
therewith.
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ARTICLE VIII
MECHANICS OF SHARE EXCHANGE, CANCELLATION,
REPLACEMENT AND PAYMENT
8.1 Exchange of Shares. Subject to Article II hereof, at any
time at the request of any holder of Shares to the Company at its address
provided under Section 9.13 hereof, the Company at its expense (except for any
documentary, stamp, transfer or other similar tax arising out of the exchange)
will issue and deliver to or upon the order of the holder in exchange therefor a
new certificate or certificates in such amount or amounts as such holder may
request in the aggregate representing the number of Shares represented by such
surrendered certificates, and registered in the name of such holder or as such
holder may direct.
8.2 Cancellation of Surrendered Shares. Any Share certificate
which is converted into Conversion Shares in whole or in part shall be cancelled
by the Company, and no new Share certificates shall be issued in lieu of any
Shares which have been converted into Conversion Shares. The Company shall issue
a new certificate with respect to any Shares which were not converted into
Conversion Shares and were represented by a certificate which was converted in
part.
8.3 Replacement of Shares. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Share certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to the Company (if
requested by the Company and unsecured in the case of the Investor or another
similar institutional holder), or in the case of any such mutilation, upon
surrender of such Share certificate (which surrendered Share certificate shall
be cancelled by the Company), the Company will issue a new Share certificate of
like tenor in lieu of such lost, stolen, destroyed or mutilated Share
certificate, as if the lost, stolen, destroyed or mutilated Share certificate
were then surrendered for exchange.
8.4 Direct Payments. As long as a Series 1 Stockholder or any
institutional holder which is a direct or indirect transferee (as a result of
one or more transfers) from a Series 1 Stockholder shall be the holder of any
Shares, the Company will make all redemption payments, liquidation payments and
other distributions by wire transfer to such Series 1 Stockholders's or such
other holder's (or its nominee's) account at any bank or trust company,
notwithstanding any contrary provision herein or in the Company's certificate of
incorporation with respect to the place of payment. The Series 1 Stockholders
have provided an address on Schedule 1 hereto for payments by wire transfer, and
such address may be changed for the Series 1 Stockholders or any subsequent
holder by notice to the Company. All such payments shall be made in U.S. dollars
and in federal or other immediately available funds.
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ARTICLE IX
MISCELLANEOUS
9.1 Governing Law. This Agreement shall be governed and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
9.2 Entire Agreement. Except as contemplated by the Merger
Agreement, the Series 1 Certificate of Designations and the Amended and Restated
Registration Rights Agreement, this Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
and preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof, including without limitation, the Series D Purchase Agreements, the
Series D Stockholders' Agreement and the Registration Rights Agreement
(collectively the "Fleming Series D Transaction Documents"); provided that
Sections 4, 5, 11, 12 and 13 of the Series D Purchase Agreements shall
specifically survive; and provided that the Fleming Series D Transaction
Documents shall not be superseded until the Effective Time.
9.3 Amendment and Waiver. The terms and provisions of this
Agreement may be amended, modified or supplemented only by a written instrument
duly executed by the holders of at least 80% of the Shares and the Conversion
Shares then outstanding. 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.
Promptly after obtaining the written consent of the holders as herein provided,
the Company shall transmit a copy of any amendment, waiver, modification or
termination which has been adopted to all holders of Series 1 Preferred and
Conversion Shares then outstanding, but failure to transmit copies shall not in
any way affect the validity of any such amendment, waiver, modification or
termination.
9.4 Fees and Expenses. (a) Whether or not the transactions
herein contemplated are consummated, the Company shall pay (i) the costs, fees
and expenses of Morgan, Lewis & Bockius LLP in connection with the Series 1
Certificate of Designations, this Agreement, the Registration Rights Agreement,
other related documentation and the transactions contemplated hereby and
thereby, and if the Merger occurs the Company will make such payment at the
Effective Time; provided, however, that (x) such fees and expenses shall not, in
the aggregate, exceed $25,000 without the approval of the Company and (y) in the
event that the Merger does not occur (other than as a result of a breach by the
Company of its obligations to the Series 1 Stockholders), the Company shall pay
such fees and expenses upon the termination of negotiations between the Company
and Impax, (ii) the fees and expenses of counsel to the Series 1 Stockholders in
connection with any amendments to or modifications or waivers of any provisions
of the Series 1 Certificate of Designations, this Agreement, the Registration
Rights
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Agreement, other related documentation or in connection with any other
agreements between the Series 1 Stockholders and the Company, and (iii) the fees
and expenses (including attorneys' fees and expenses) of any holder of Shares or
Conversion Shares, in enforcing its rights against the Company if the Company
defaults in its obligations hereunder, under the Series 1 Certificate of
Designations, this Agreement or the Registration Rights Agreement.
(b) In addition to all other sums due hereunder or provided
for in this Agreement, the Company shall pay to the Series 1 Stockholders or
their agents, respectively, an amount sufficient to indemnify such persons (net
of any Taxes on any indemnity payments) against all reasonable costs and
expenses (including reasonable attorneys' fees and expenses and reasonable costs
of investigation) and damages and liabilities incurred by the Series 1
Stockholders or their agents pursuant to any investigation or proceeding against
any or all of the Company, the Series 1 Stockholders, or their agents, arising
out of or in connection with this Stockholders' Agreement, the Registration
Rights Agreement, or purchase of the Shares (or any transaction contemplated
hereby or thereby or any other document or instrument executed herewith or
therewith or pursuant hereto or thereto), whether or not the transactions
contemplated by this Agreement are consummated, which investigation or
proceeding requires the participation of the Series 1 Stockholders or their
agents or is commenced or filed against the Series 1 Stockholders or their
agents because of this Agreement, the Registration Rights Agreement, the
purchase of the Shares or any of the transactions contemplated hereby or thereby
(or any other document or instrument executed herewith or therewith or pursuant
hereto or thereto), other than any investigation or proceeding in which it is
finally determined that there was (i) gross negligence or willful misconduct on
the part of the Series 1 Stockholder or their agents, (ii) a material breach by
the Series 1 Stockholder of any of their representations or warranties contained
herein, (iii) a material breach by Series 1 Stockholder of any provision of any
confidentiality agreement between the Company and the Series 1 Stockholders, in
any case, which was not taken by them in reliance upon any of the Company's
representations, warranties, covenants or agreements in this Agreement, the
Registration Rights Agreement or in any other documents or instruments
contemplated hereby or thereby or executed herewith or therewith or pursuant
hereto or thereto. The Company shall assume the defense, and shall have its
counsel represent the Series 1 Stockholder and such agents, in connection with
investigating, defending or preparing to defend any such action, suit, claim or
proceeding (including any inquiry or investigation); provided, however, that
such Series 1 Stockholder, or any such agent, shall have the right (without
releasing the Company from any of its obligations hereunder) to employ its own
counsel and either to direct its own defense or to participate in the Company's
defense, but the fees and expenses of such counsel shall be at the expense of
such person unless (i) the employment of such counsel shall have been authorized
in writing by the Company in connection with such defense, (ii) the Company
shall not have provided its counsel to take charge of such defense or (iii)
there may be defenses available to such Series 1 Stockholder, or such agent of
such Series 1 Stockholder which are different from or additional to those
available to the Company, then in any of such events referred to in clauses (i),
(ii) or (iii) such counsel fees and expenses (but only for one counsel for such
Series 1 Stockholder and its agents) shall be borne by the Company. Any
settlement of any such action, suit, claim or proceeding shall require the
consent of both the
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Company and such indemnified person (neither of which shall unreasonably
withhold its consent).
(c) The Company agrees to pay, or to cause to be paid, all
documentary, stamp and other similar Taxes, other than transfer taxes payable
upon the transfer by any Series 1 Stockholder of Shares to a Transferee, levied
under the laws of the United States of America, any state or local Taxing
Authority thereof or therein or any other applicable jurisdiction in connection
with the issuance and sale of the Shares and the execution and delivery of this
Agreement, the Registration Rights Agreement and any other documents or
instruments contemplated hereby or thereby and any modification of the Series 1
Certificate of Designations, this Agreement, the Registration Rights Agreement
or any such other documents or instruments and will hold the Series 1
Stockholders harmless without limitation as to time against any and all
liabilities with respect to all such Taxes.
(d) The obligations of the Company under this Section 9.4
shall survive the Effective Time hereunder and any termination of this
Agreement.
9.5 Consent to Jurisdiction. The Company hereby consents to
the jurisdiction of any state or federal court located within the County of New
York, State of New York and irrevocably agrees that, subject to the purchaser's
election, all actions or proceedings relating to this Agreement, the Series 1
Certificate of Designations, the Shares or the Conversion Shares may be
litigated in such courts. The Company accepts for itself and in connection with
its properties, generally and unconditionally, the nonexclusive jurisdiction of
the aforesaid courts and waives any defense of forum non conveniens, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Series 1 Certificate of Designations, the Amended and
Restated Registration Rights Agreement, the Shares or the Conversion Shares. The
Company designates and appoints CSC, the United States Corporation Company, and
such other persons as may hereafter be selected by the Company and which
irrevocably agree in writing to so serve as its agent, to receive on its behalf
service of all process in any such proceeding in any such court, such service
being hereby acknowledged by the Company to be effective and binding service in
every respect. A copy of any such process so served shall be mailed by
registered mail to the Company at the address of the Company provided hereunder
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. As an alternative
to service of process on such agent (whether or not any such agent has been
appointed), the Company hereby agrees that service upon it by mail shall
constitute sufficient notice and service of process. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of the purchaser to bring proceedings or obtain or enforce judgments
against the Company in the courts of any other jurisdiction.
9.6 Waiver of Jury Trial. The Company and the Series 1
Stockholders hereby waive their respective rights to a jury trial of any claim
or cause of action based upon or arising out of this Agreement, the Series 1
Certificate of Designations, the Amended and Restated
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Registration Rights Agreement, the Shares or the Conversion Shares, or any
dealings between them relating to the subject matter of this transaction. The
Company and the Series 1 Stockholders also waive any bond or surety or security
upon such bond which might, but for this waiver, be required of the purchaser.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. The
Company and the Series 1 Stockholders further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. This waiver is irrevocable, meaning that it may not be modified either
orally or in writing, and this waiver shall apply to any subsequent amendments,
renewals, supplements or modifications to (or assignments of) this Agreement,
the Series 1 Certificate of Designations, the Amended and Restated Registration
Rights Agreement, the shares or the conversion shares. In the event of
litigation, this agreement may be filed as a written consent to a trial (without
a jury) by the court.
9.7 Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, personal representatives,
successors and assigns and be enforceable by the Series 1 Stockholders and any
permitted transferees of the Company Stock held by the Series 1 Stockholders,
whether so expressed or not; provided, that (a) the Company may not assign any
of its rights, duties or obligations under this Agreement, except with the
applicable Series 1 Stockholder's written consent, and (b) the applicable Series
1 Stockholder may assign, in whole or in part, any or all of its rights, duties
or obligations under this Agreement to a purchaser of any or all of its Shares
or Conversion Shares, provided that such purchaser is reasonably acceptable to
the Company and such transfer is in accordance with Article II hereof, and
(unless such assignment expressly provides otherwise) any such assignment shall
not diminish the rights such Series 1 Stockholder would otherwise have under
this Agreement or with respect to any remaining Shares or Conversion Shares held
by the Series 1 Stockholder.
9.8 Remedies. 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 existing in their
favor, will be entitled to enforce their rights under this Agreement
specifically (without posting a bond or other security), to recover damages and
costs (including attorney's fees) by reason of any breach of any provision of
this Agreement. The parties hereto agree and acknowledge that money damages may
not be an adequate remedy for breach of the provisions and obligations of this
Agreement and that, in addition to the other remedies it may have, any Investor
may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violation of the provisions of this Agreement. If any
party hereto shall institute any action or proceeding to enforce the provisions
hereof, any person (including the Company) against whom such action or
proceeding is brought hereby waives the claim or defense therein
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that such party has an adequate remedy at law, and such person shall not urge in
any such action or proceeding the claim or defense that such remedy at law
exists.
9.9 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) 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 provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
9.10 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
9.11 Gender. Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
9.12 Counterparts. 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.
9.13 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission (with
confirmation thereof) or mailed by prepaid first class mail, return receipt
requested, or mailed by overnight courier prepaid to (i) the Company, at 30831
Huntwood Avenue, Hayward, CA 94544, Facsimile No.: (510) 471-1595, with a copy
to each of (I) the Law Offices of Laurie A. Miller, 1735 East Bayshore Road,
Suite 29A, Redwood City, CA 94063, Attention: Laurie A. Miller, Esq. and (II)
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, NY 10103-3198,
Attention: Sheldon G. Nussbaum, Esq. or to (ii) any Series 1 Stockholder or any
subsequent holder of shares of Company Stock subject to this Agreement, to the
address of such holder as indicated by the Company's records, or at such address
or to the attention of such other person as the recipient party has specified by
prior written notice to the sending party, with such copies to such persons as
specified by the Company or the Series 1 Stockholder. 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.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
GLOBAL PHARMACEUTICAL CORPORATION
By: __________________________________
Name:
Title:
FLEMING US DISCOVERY FUND III, L.P.
By: FLEMING US DISCOVERY PARTNERS, L.P.,
its general partner
By: FLEMING US DISCOVERY, LLC,
its general partner
By:_____________________________
Robert L. Burr, member
FLEMING US DISCOVERY OFFSHORE FUND III, L.P.
By: FLEMING US DISCOVERY PARTNERS, L.P.,
its general partner
By: FLEMING US DISCOVERY, LLC,
its general partner
By:_____________________________
Robert L. Burr, member
[Signature Page to Stockholders' Agreement]
<PAGE>
CHINA DEVELOPMENT INDUSTRIAL
BANK, INC.
By: __________________________
Name:
Title:
PRESIDENT (BVI) INTERNATIONAL
INVESTMENT HOLDINGS, LTD.
By: __________________________
Name:
Title:
CHEMICAL COMPANY MALAYSIA (BERHAD)
By: __________________________
Name:
Title:
EUROC II VENTURE CAPITAL CORP.
By: __________________________
Name:
Title:
EUROC III VENTURE CAPITAL CORP.
By: __________________________
Name:
Title:
MULTIVENTURE TECHNOLOGIES, INC.
By: __________________________
Name:
Title:
TAI-I ELECTRIC WIRE & CABLE CO., LTD.
By: __________________________
Name:
Title:
[Signature Page to Stockholders' Agreement]
<PAGE>
With respect to the obligations
contained in Article III hereof
only:
KEY SENIOR EXECUTIVES
--------------------------------------
Charles Hsiao
--------------------------------------
Larry Hsu
--------------------------------------
Barry R. Edwards
[Signature Page to Stockholders' Agreement]
<PAGE>
Schedule 1
to the Stockholders' Agreement
SERIES 1 STOCKHOLDERS
Number of shares Series 1
Convertible Preferred Stock
Name of Series 1 Stockholder (at the Effective Time)
- ---------------------------- ---------------------------
FLEMING US DISCOVERY FUND III, L.P. 43,093
FLEMING US DISCOVERY OFFSHORE FUND III, L.P. 6,907
CHINA DEVELOPMENT INDUSTRIAL BANK, INC. 55,000
PRESIDENT (BVI) INTERNATIONAL INVESTMENT 55,000
HOLDINGS, LTD.
CHEMICAL COMPANY MALAYSIA (BERHAD) 40,000
EUROC II VENTURE CAPITAL CORP. 4,000
EUROC III VENTURE CAPITAL CORP. 8,000
MULTIVENTURE TECHNOLOGIES, INC. 3,000
TAI-I ELECTRIC WIRE & CABLE CO., LTD. 5,000
<PAGE>
Schedule 2
to the Stockholders' Agreement
HOLDERS OF EXECUTIVE SHARES
Number of Shares of Common Stock
Name of Key Senior Executive (at the Effective Time)
- ---------------------------- --------------------------------
Charles Hsiao 3,341,864
Larry Hsu 1,940,828
Barry R. Edwards 1,000
<PAGE>
Schedule 3
to the Stockholders' Agreement
INVESTMENTS
1. 213,767 shares of Common Stock of Josman Laboratories, Inc.
<PAGE>
Schedule 4
to the Stockholders' Agreement
INDEBTEDNESS
1. $5 million revolving credit facility with General Electric Capital
Corporation ("GECC").
2. Loan from Pennsylvania Industrial Development Authority ("PIDA") commencing
June 1, 1994, paid in monthly installments of $6,602 through May 1, 2009.
3. Loan from Philadelphia Industrial Development Corporation ("PIDC") payable in
monthly installments of $3,672 commencing January 1, 1994, with a balance of
$304,000 due on December 1, 2000.
4. Loan from PIDA payable in 180 monthly installments of $5,513, commencing
September 1, 1997, through August 1, 2012.
5. Loan from the Delaware River Port Authority ("DRPA") payable in 120 monthly
installments of $3,712 commencing September 1, 1997, through August 1, 2007.
6. Indebtedness incurred in connection with the build-out of a commercial scale
manufacturing facility estimated to comprise approximately 20,000 square feet.
<PAGE>
Schedule 5
to the Stockholders' Agreement
TRANSACTIONS WITH AFFILIATES
None.
<PAGE>
Schedule 6
to the Stockholders' Agreement
LIENS
1. Liens against property, inventory, plant, equipment, receivables and other
assets as they relate to Company indebtedness as listed on Schedule 4.
<PAGE>
Exhibit A
Form of Joinder Agreement
[Impax Laboratories, Inc.]
[address]
Ladies and Gentlemen:
In consideration of the [transfer] [issuance ] to the undersigned of
____ shares of Common Stock, $.01 par value per share, [Describe any other
security being transferred or issued] of Impax Laboratories, Inc., a Delaware
corporation (the "Company"), the undersigned, as a Transferee of [insert name of
transferor], agrees that, as of the date written below, [he] [she] [it] shall
become a party to, and a Transferee as defined in, that certain Stockholders'
Agreement dated as of ____, 1999, as such agreement may have been or may be
amended, modified or restated from time to time (the "Agreement"), among the
Company and the persons named therein, and as a Transferee shall be fully bound
by, and subject to, all of the covenants, terms and conditions of the Agreement
that were applicable to the undersigned's transferor, as though an original
party thereto and shall be deemed a [Fleming Holder] [Impax Holder] for purposes
hereof.
Executed as of the ___ day of _____, ____.
TRANSFEREE:_________________
Address:_______________________
<PAGE>
Exhibit B
FORM OF SERIES 1 CERTIFICATE OF DESIGNATIONS
<PAGE>
Exhibit C
FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
<PAGE>
This Amended and Restated Registration Rights Agreement (this
"Agreement") dated as of December ___, 1999, is by and among (i) GLOBAL
PHARMACEUTICAL CORPORATION, a Delaware corporation (the "Company"), (ii) FLEMING
US DISCOVERY FUND III, L.P. and FLEMING US DISCOVERY OFFSHORE FUND III, L.P.
(collectively, the "Fleming Funds"), and (iii) CHINA DEVELOPMENT INDUSTRIAL
BANK, INC., PRESIDENT (BVI) INTERNATIONAL INVESTMENT HOLDINGS, LTD., CHEMICAL
COMPANY MALAYSIA (BERHAD), EUROC II VENTURE CAPITAL CORP., EUROC III VENTURE
CAPITAL CORP., MULTIVENTURE TECHNOLOGIES, INC. and TAI-I ELECTRIC WIRE & CABLE
CO., LTD. (collectively, the "Impax Stockholders," and together with the Fleming
Funds, the "Series 1 Stockholders") and amends and restates the Registration
Rights Agreement, dated March 2, 1999 among Global and the Fleming Funds. The
Series 1 Stockholders, any Series 1 Holder, and any Transferee are collectively
referred to herein as the "Investor Group" and, individually, an "Investor."
Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed thereto in Article X.
W I T N E S S E T H:
WHEREAS, the Global and the Fleming Funds entered into that certain
Registration Rights Agreement dated as of March 2, 1999, upon the terms and
conditions set forth in this Agreement as in effect on such date (the "Series D
Agreement"), in connection with the purchase by the Fleming Funds of an
aggregate of 50,000 shares of Series D Preferred Stock of Global;
WHEREAS, pursuant to the terms of the Agreement and Plan of Merger,
dated as of June 26, 1999 (the "Merger Agreement"), by and between Global and
Impax Pharmaceuticals, Inc. ("Impax"), at the Effective Time, (i) Impax will be
merged with and into Global (the "Merger"), with Global being the surviving
corporation in the Merger (with the surviving corporation's name changed to
Impax Laboratories, Inc.) (the "Surviving Corporation" or the "Company"; the
term "Global" shall be used herein solely to refer to the entity prior to the
Merger), (ii) each issued and outstanding share of the common stock, Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of Impax
will be converted into shares of common stock, $.01 par value of the Company
("Company Common Stock"), (iii) each issued and outstanding share of Series D
Preferred Stock of Impax will be converted into shares of Series 1-B Convertible
Preferred Stock of the Company, (iv) each issued and outstanding share of Series
C Convertible Preferred Stock of Global will be converted into shares of Company
Common Stock and (v) each issued and outstanding share of Series D Convertible
Preferred Stock of Global will be converted into shares of Series 1-A
Convertible Preferred Stock of the Company. The Series 1-A Convertible Preferred
Stock and the Series 1-B Convertible Preferred Stock are collectively referred
to herein as the "Series 1 Preferred" and the Series 1 Preferred owned at the
Effective Time is referred to herein as the "Shares," and together with the
Company Common Stock, "Company Stock";
<PAGE>
WHEREAS, simultaneously herewith, the Company and the Series 1
Stockholders shall execute a Stockholders' Agreement in the form attached hereto
as Exhibit A;
WHEREAS, the Company and the Fleming Funds desire to amend and restate
the terms of the Series D Agreement in accordance with Section 11.4 of the
Series D Agreement, in order that the registration rights of the Company, the
Fleming Funds and the Impax Stockholders be governed by the terms and provisions
of this Agreement as set forth below; and
WHEREAS, this Agreement shall be effective as of the Effective Time.
NOW, THEREFORE, in connection with the Merger Agreement and the
Stockholders' Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEMAND REGISTRATIONS
1.1 Requests for Registration. (a) Subject to Section 1.2, at any time
and from time to time on or after the Effective Time, any Series 1 Holder that
owns at least 20,000 shares of Series 1 Preferred may request registration under
the Securities Act of all or part of their Registrable Securities (i) on Form
S-1 or any similar long-form registration statement (any such registration, a
"Long-Form Demand Registration"), or (ii) on Form S-3 or any similar short-form
registration statement (any such registration, a "Short-Form Demand
Registration") if the Company qualifies to use such form. Thereafter, the
Company will use its best efforts to promptly effect the registration of such
Registrable Securities under the Securities Act on the form requested by the
holder or holders making such registration request. All registrations requested
pursuant to this Section 1.1 are referred to herein as "Demand Registrations."
Upon receipt of a request for a Demand Registration, the Company will give
prompt written notice (in any event within three (3) Business Days after its
receipt of such request) of the request for a Demand Registration to all holders
of Registrable Securities not making such request and will include in such
Demand Registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within ten (10) days after
the receipt of the Company's notice. The holders of the Registrable Securities
making any such registration request may, at any time prior to the effective
date of the registration statement relating to any Demand Registration, revoke
such Demand Registration request by providing written notice to the Company.
(b) No later than sixty (60) days after the Effective Time, the Company
shall prepare and file with the SEC a registration statement for an offering to
be made on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act (a "Shelf Registration") registering the resale from time to time by the
Investors of all the Registrable Securities (the "Initial Shelf
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<PAGE>
Registration"). The registration statement shall be on Form S-3 or another
appropriate form permitting registration of such Registrable Securities for
resale by the Investors. If the Initial Shelf Registration or any Subsequent
Shelf Registration ceases to be effective for any reason at any time, the
Company shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within thirty (30)
days of such cessation of effectiveness amend the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or to promptly file an additional Shelf Registration
covering all the Registrable Securities (a "Subsequent Shelf Registration").
1.2 Limitations on Demand Registrations. (a) Each holder of the
Registrable Securities that owns at least 20,000 shares of Series 1 Preferred
shall be entitled to (i) either one (1) Long-Form Demand Registration or one (1)
Short-Form Demand Registration in accordance with Section 1.1(a) and (ii) any
number of Shelf Registrations.
(b) The Company shall be entitled to postpone for a reasonable period
of time not to exceed forty-five (45) days the declaration of effectiveness by
the Securities and Exchange Commission (the "SEC") of any registration statement
otherwise required to be prepared and filed by it if, at the time it receives a
Demand Registration request or at any time during the process of registration,
prior to being declared effective by the SEC, the Board of Directors of the
Company determines, in its reasonable good faith judgment, that such
registration would materially interfere with a business or financial transaction
of substantial importance to the Company (other than an underwritten public
offering of its securities), including, without limitation, any such transaction
involving a material acquisition, consolidation, merger or corporate
reorganization then pending or proposed by its Board of Directors involving the
Company, and the Company promptly gives the holders of the Registrable
Securities written notice of such determination, containing a general statement
of the reasons for such postponement and an approximation of the anticipated
delay; provided, however, that the Company shall not be entitled to postpone
filing a registration statement in response to a Demand Registration for the
twelve (12) months following the expiration of such forty-five day period. In
the event the effectiveness of any registration statement is postponed pursuant
to this paragraph, the holder or holders of the Registrable Securities making a
registration request shall have the right to withdraw such Demand Registration
request by giving written notice to the Company within thirty (30) days after
receipt of the notice of postponement (and, in the event of such withdrawal, the
right of the holders of the Registrable Securities to such Demand Registration
shall be reinstated).
1.3 Effective Registration Statement. (a) A Demand Registration
requested pursuant to Section 1.1 of this Agreement shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective, (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason, and the
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Registrable Securities covered thereby have not been sold, or (iii) if the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied by
reason of (x) a failure by or inability of the Company to satisfy any thereof,
or (y) the occurrence of an event outside the control of the holders of
Registrable Securities.
(b) A Demand Registration requested pursuant to Section 1.1(a) of this
Agreement shall not be deemed to have been effected if holders of Registrable
Securities are not able to register and sell at least 66-2/3% of the amount of
Registrable Securities requested to be included in such registration; provided
that in no case shall holders of Registrable Securities be permitted to utilize
the provisions of this Section 1.3(b) on more than one occasion.
1.4 Priority on Demand Registrations. The Company will not include in
any Demand Registration any securities which are not Registrable Securities
without the written consent of the Series 1 Holder making such Demand
Registration request. If other securities are permitted to be included in a
Demand Registration which is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the number of
Registrable Securities exceeds the number of Registrable Securities which can be
sold in such offering within a price range acceptable to such Series 1 Holder,
the Company will include in such registration prior to the inclusion of any
securities which are not Registrable Securities the number of Registrable
Securities requested to be included which in the opinion of such underwriters
can be sold, pro rata among the respective holders on the basis of the amount of
Registrable Securities requested to be offered thereby.
1.5 Selection of Underwriters. Any Series 1 Holder requesting a Demand
Registration pursuant to Section 1.1 of this Agreement will have the right to
select the underwriters and the managing underwriters to administer a Demand
Registration and such underwriters and managing underwriters shall be reasonably
acceptable to the Company.
1.6 Other Registration Rights. Except as otherwise provided in this
Agreement, the Company may grant to any Person the right to request the Company
to register any equity securities of the Company, or any securities convertible,
exchangeable or exercisable for or into such securities ("Other Securities");
provided, however, that all such registration rights shall be subordinate in all
respects to the registration rights held by the holders of the Registrable
Securities.
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<PAGE>
ARTICLE II
OTHER REGISTRATIONS
2.1 Right to Piggyback. Whenever the Company proposes to register any
of its securities under the Securities Act (other than pursuant to a Demand
Registration), and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice (in any event within three (3) Business Days
after its receipt of notice of any exercise of other demand registration rights)
to all holders of Registrable Securities of its intention to effect such a
registration and will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within ten (10) days after the receipt of the Company's notice.
2.2 Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company will include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, (I) the Registrable Securities, (II) up to 165,000 shares of Common
Stock issuable upon the exercise of warrants held by employees or officers or
former employees or officers of Keane Securities (the "Keane Securities") and
(III) up to 225,000 shares of Common Stock issuable upon the exercise of
warrants held by Bear Stearns Small Cap Value Portfolio (the "Bear Stearns
Securities"), requested to be included in such registration, provided, that if
the managing underwriters in good faith determine that a lower number of
securities should be included, then the Company shall be required to include in
the underwriting only that lower number of securities, and the holders of
Registrable Securities, Keane Securities and Bear Stearns Securities who have
requested registration shall participate in the underwriting pro rata based upon
their total ownership, on a fully diluted basis, of any such securities
requested to be included in such registration and (iii) third, other securities
requested to be included in such registration.
2.3 Priority on Secondary Registrations. (a) Subject to paragraph (b)
of this Section 2.3, if a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company will include in such
registration (i) first, the securities requested to be included therein by the
holders requesting such registration, (ii) second, the Registrable Securities,
the Keane Securities and the Bear Stearns Securities requested to be included in
such registration, provided, that if the managing underwriters in good faith
determine that a lower number of securities should be included, then the Company
shall be required to include in the underwriting only that lower number of
securities, and the holders of Registrable Securities, Keane Securities and Bear
Stearns Securities
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<PAGE>
who have requested registration shall participate in the underwriting pro rata
based upon their total ownership, on a fully diluted basis, of any such
securities requested to be included in such registration and (iii) third, other
securities requested to be included in such registration.
(b) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company will include in such
registration (i) first, the securities requested to be included therein by the
holders requesting such registration and the Registrable Securities, Keane
Securities and Bear Stearns Securities requested to be included in such
registration, provided, that if the managing underwriters in good faith
determine that a lower number of securities should be included, then the Company
shall be required to include in the underwriting only that lower number of
securities, and the holders requesting such registration, the holders of
Registrable Securities, Keane Securities and Bear Stearns Securities who
requested to be included in such registration shall participate in the
underwriting pro rata based upon their total ownership, on a fully diluted
basis, of any such securities requested to be included in such registration and
(ii) second, other securities requested to be included in such registration
pursuant to piggyback rights. The Company hereby agrees that whenever it grants
piggyback rights to any holder of its securities such holder's piggyback rights
will be expressly subordinated to the piggyback rights granted to the holders of
the Registrable Securities under this Article II.
2.4 Other Registrations. If the Company has previously filed a
registration statement for a Long-Form Demand Registration with respect to
Registrable Securities pursuant to Article I of this Agreement or pursuant to
this Article II, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible,
exchangeable or exercisable for or into its equity securities under the
Securities Act (except on Form S-4 or S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities other
than the holders of the Registrable Securities, until a period of at least six
(6) months elapsed from the effective date of such previous registration.
ARTICLE III
REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
will use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible or,
in the case of clause (q) below, will not:
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<PAGE>
(a) promptly prepare and file with the SEC a registration statement
with respect to such Registrable Securities (such registration statement to
include all information which the holders of the Registrable Securities to be
registered thereby shall reasonably request) and use its best efforts to
promptly cause such registration statement to become effective, provided that at
least five days before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will (i) furnish to counsel
selected by the Series 1 Holder, copies of all such documents proposed to be
filed, and the Company shall not , in the case of a Demand Registration, file
any such documents to which such counsel shall have reasonably objected on the
grounds that such document does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations thereunder,
and (ii) notify each holder of Registrable Securities covered by such
registration statement of (x) any request by the SEC to amend such registration
statement or amend or supplement any prospectus or (y) any stop order issued or
threatened by the SEC, and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
(b) (i) promptly prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary (A) in the case of a Demand Registration, to keep
such registration statement effective for a period of not less than 180 days
(except that such 180-day period shall be (I) shortened to the extent that all
shares are sold thereunder, or (II) extended (x) by the length of any period
that a stop order or similar proceeding is in effect which prohibits the
distribution of the Registrable Securities, and (y) by the number of days during
the period from and including the date on which each seller of Registrable
Securities shall have received a notice delivered pursuant to clause (f) below
until the date when such seller shall have received a copy of the supplemented
or amended prospectus contemplated by clause (f) below), and (B) in the case of
a Shelf Registration, keep such registration statement continually effective,
(ii) comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) as soon as reasonably possible furnish to each seller of
Registrable Securities, without charge, such number of conformed copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus
and prospectus supplement and, in each case, including all exhibits) and such
other documents as such seller may reasonably request, all in conformity with
the requirements of the Securities Act, in order to facilitate the disposition
of the Registrable Securities owned by such seller;
(d) use its best efforts promptly to register or qualify the Shares
under such other securities or blue sky laws of such jurisdictions as any seller
thereof shall reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect and to do
any and all other acts and things which may be reasonably
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<PAGE>
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller, provided,
however, that the Company will not be required to (i) qualify generally to do
business as a foreign corporation in any jurisdiction where it would not
otherwise be required to qualify but for this clause (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction;
(e) in the case of a Demand Registration or a Piggyback Registration to
which the Series 1 Holders are a party, furnish to each seller of Registrable
Securities a signed copy, addressed to such seller (and the underwriters, if
any) of an opinion of counsel for the Company or special counsel to the selling
stockholders, dated the effective date of such registration statement (and, if
such registration statement includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), reasonably satisfactory
in form and substance to counsel selected by such Series 1 Holders, covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) as are customarily covered in opinions of
issuer's counsel delivered to the underwriters in underwritten public offerings,
and such other legal matters as the seller (or the underwriters, if any) may
reasonably request;
(f) promptly notify each seller of Registrable Securities, at a time
when a prospectus relating to the Shares is required to be delivered under the
Securities Act, of the Company's becoming aware that the prospectus included in
such registration statement, as then in effect, contains an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, and, at the request of any such
seller, promptly prepare and furnish such seller a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made;
(g) cause all of the Shares to be listed on each securities exchange on
which similar securities issued by the Company are then listed or, if there
shall then be no such listing, to be accepted for quotation as a Small Cap
Security on The NASDAQ Stock Market;
(h) provide a transfer agent and registrar for all of the Shares not
later than the effective date of such registration statement;
(i) enter into such customary arrangements and take all such other
actions as the Series 1 Holders or the underwriters, if any, reasonably request
in order to expedite or facilitate the disposition of the Shares;
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<PAGE>
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement, in each case
pursuant to confidentiality agreements, as appropriate;
(k) cause the Company's officers to make presentations to potential
purchasers of the Shares, as reasonably requested by any seller of Registrable
Securities or any underwriter participating in any disposition pursuant to such
registration statement in connection with one (1) Long-Form Demand Registration;
(l) subject to other provisions hereof, use its best efforts to cause
the Shares to be registered with or approved by such other governmental agencies
or authorities or self-regulatory organizations as may be necessary to enable
the sellers thereof to consummate the disposition of the Shares;
(m) in connection with a Demand Registration or Piggyback Registration
(if any other participant in such Piggyback Registration receives a "comfort"
letter as described herein), use its best efforts to obtain a "comfort" letter,
dated the effective date of such registration statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements, addressed to each seller,
and to the underwriters, if any, covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) and
with respect to events subsequent to the date of such financial statements, as
are customarily covered in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other financial matters as
such seller (or the underwriters, if any) may reasonably request;
(n) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and make available to its security holders, in each
case as soon as practicable, an earnings statement covering a period of at least
twelve months, beginning after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(o) permit any holder of Registrable Securities, which holder, in the
sole judgment exercised in good faith of such holder, might be deemed to be a
controlling person of the Company (within the meaning of the Securities Act or
the Exchange Act), to participate in the preparation of any registration
statement covering such holder's Registrable Securities and to
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include therein material, furnished to the Company in writing, which in the
reasonable judgment of such holder should be included and which is reasonably
acceptable to the Company;
(p) use every reasonable effort to obtain the lifting at the earliest
possible time of any stop order suspending the effectiveness of any registration
statement or of any order preventing or suspending the use of any preliminary
prospectus;
(q) at any time file or make any amendment to a registration statement,
or any amendment of or supplement to a prospectus (including amendments of the
documents incorporated by reference into the prospectus), of which each seller
of Registrable Securities or the managing underwriters shall not have previously
been advised and furnished a copy or to which the sellers of Registrable
Securities, the managing underwriters, or counsel for such sellers or for the
underwriters shall reasonably object; and
(r) make such representations and warranties (subject to appropriate
disclosure schedule exceptions) to sellers of Registrable Securities and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters and selling holders, as the case may be, in underwritten
public offerings of substantially the same type.
Notwithstanding anything herein to the contrary, the Series 1 Holders shall
cease selling shares under a registration statement if the Company, upon the
advice of counsel to the Company, which counsel shall confirm such advice to the
Series 1 Holders, determines that a registration statement requires an amendment
or supplement and has requested in writing that such holder cease to sell under
such registration statement, provided that any relevant time period contained in
this Agreement shall be tolled until such time as the Series 1 Holders shall
receive notice in writing from the Company showing that such holder may continue
to sell under such registration statement.
ARTICLE IV
REGISTRATION EXPENSES
4.1 Company's Fees and Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation,
all registration and filing fees, fees and expenses incident to the Company's or
the Investors' performance of or compliance with a Shelf Registration pursuant
to this Agreement and to the Series D Purchase Agreements (whether or not any of
the registration statements become effective), fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, fees and expenses for listing or quoting the Shares on each securities
exchange or The NASDAQ Stock Market on which similar securities issued by the
Company are then listed or quoted, and fees and disbursements of counsel for the
Company, any transfer agent and all independent certified public accountants,
underwriters (excluding discounts and selling commissions) and other Persons
retained by the Company in connection with any Demand
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Registration or any Piggyback Registration (all such expenses being herein
called "Registration Expenses"), will be paid by the Company.
4.2 Fees of Counsel to Holders. In connection with any Demand
Registration or any Shelf Registration hereunder, the Company will reimburse the
holders of Registrable Securities covered by such registration for the
reasonable fees and disbursements of (i) one counsel chosen by the Fleming
Holders if the Fleming Holders are registering securities in such registration
and (ii) one counsel chosen by the Impax Holders if the Impax Holders are
registering securities in such registration. In connection with any Piggyback
Registration, the holders of Registrable Securities covered by such registration
shall pay for the fees of their own counsel, if applicable, but such holders
shall not be obligated to pay any portion of the fees of counsel acting on
behalf of any other holder or all holders of securities included in such
registration.
ARTICLE V
UNDERWRITTEN OFFERINGS
5.1 Demand Underwritten Offerings. If requested by the underwriters for
any underwritten offerings of Registrable Securities pursuant to a Demand
Registration, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Series 1 Holders requesting such Demand Registration
and the underwriters, and to contain such representations and warranties by the
Company and such other terms as are generally included in agreements of this
type, including, without limitation, indemnities customarily included in such
agreements. The holders of Registrable Securities to be distributed by such
underwriters may be parties to such underwriting agreement and may, at their
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. The
Company shall cooperate with any such holder of Registrable Securities in order
to limit any representations or warranties to, or agreements with, the Company
or the underwriters to be made by such holder only to those representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by law.
5.2 Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Article II of this Agreement and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by any holder of Registrable Securities as provided in Article II of
this Agreement, arrange for such underwriters to include all the Registrable
Securities to be
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offered and sold by such holder, subject to the limitations set forth in Article
II hereof, among the securities to be distributed by such underwriters. The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters, and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. The Company shall cooperate with any such
holder of Registrable Securities in order to limit any representations or
warranties to, or agreements with, the Company or the underwriters to be made by
such holder only to those representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method of distribution and any other representation required by law.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the extent permitted by law, each of the holders of any
Registrable Securities covered by any registration statement prepared pursuant
to this Agreement, each other Person, if any, who controls such holder within
the meaning of the Securities Act or the Exchange Act, and each of their
respective directors, general partners and officers, as follows:
(i) against any and all loss, liability, claim, damage and expense
arising out of or based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement
(or any amendment or supplement thereto), including all documents
incorporated therein by reference, or in any preliminary prospectus or
prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
to the extent of the aggregate amount paid in settlement of any
litigation, investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission or any such alleged untrue
statement or omission, if such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense incurred by them in connection
with investigating, preparing or defending against any litigation,
investigation or
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proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or (ii)
above;
provided, that this indemnity does not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any holder expressly for use in the preparation of any registration statement
(or any amendment or supplement thereto), including all documents incorporated
therein by reference, or in any preliminary prospectus or prospectus (or any
amendment or supplement thereto); and provided further, that the Company will
not be liable to any holder under the indemnity agreement in this Section 6.1,
with respect to any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, liability, claim, damage or expense of such controlling Person or
holder results from the fact that such holder sold Registrable Securities to a
Person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final prospectus or of the final
prospectus as then amended or supplemented, whichever is most recent, if the
Company has previously and timely furnished copies thereof to such holder and
provided further, that the Company will not be liable to any holder under the
indemnity agreement in this Section 6.1, with respect to a sale by such holder
after such time as the Company, upon the written advice of counsel to the
Company, a copy of which shall be provided to the Fleming Holders and the Impax
Holders, provides notice that a registration statement requires an amendment or
supplement and has requested in writing that such holder cease to sell under
such registration statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such holder or
any such director, officer, general partner, or other controlling person and
shall survive the transfer of such securities by such seller.
6.2 Indemnification by Holders. In connection with any registration
statement in which a holder of Registrable Securities is participating, each
such holder agrees to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 6.1 of this Agreement), to the extent
permitted by law, the Company and its directors, officers and controlling
Persons, and their respective directors, officers and general partners, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of such holder, specifically stating that it is for use in the preparation of
such registration statement, preliminary, final or summary prospectus or
amendment or supplement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, or such
holder, as the case may be, or any of their respective directors, officers,
controlling Persons or general partners and shall survive the transfer of such
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securities by such holder. The obligations of each holder of Registrable
Securities pursuant to this Section 6.2 are to be several and not joint;
provided, that, with respect to each claim pursuant to this Section 6.2, each
such holder's maximum liability under this Section shall be limited to an amount
equal to the net proceeds actually received by such holder (after deducting any
underwriting discount and expenses) from the sale of Registrable Securities
being sold pursuant to such registration statement or prospectus by such holder.
6.3 Indemnification Procedures. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding involving a claim referred to in Section 6.1 or Section 6.2 of
this Agreement, such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under Section 6.1 or Section 6.2 of this Agreement except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified,
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, unless a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, in which case the
indemnifying party shall not be liable for the fees and expenses of (i) more
than two counsel for all holders of Registrable Securities, one of which shall
be selected by the Fleming Holders and one of which shall be selected by the
Impax Holders, or (ii) more than one counsel for the Company in connection with
any one action or separate but similar or related actions. An indemnifying party
who is not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. The indemnifying party will not, without the
prior written consent of each indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such indemnified party or any Person who controls such indemnified party
is a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party from all liability arising out of such claim, action, suit or proceeding.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party will have the right to
retain, at its own expense, counsel with respect to the defense of a claim.
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6.4 Indemnification of Underwriters. The Company and each holder of
Registrable Securities requesting registration shall provide for the foregoing
indemnity in any underwriting agreement with respect to any required
registration or other qualification of securities under any Federal or state law
or regulation of any governmental authority other than the Securities Act.
6.5 Contribution. If the indemnification provided for in Sections 6.1
and 6.2 of this Agreement is unavailable or insufficient to hold harmless an
indemnified party under such Sections, then each indemnifying party shall
contribute to the amount paid or payable to such indemnified party as a result
of the losses, claims, damages or liabilities referred to in Section 6.1 or
Section 6.2 of this Agreement in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand, and the
indemnified party on the other, in connection with statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations, including, without limitation, the
relative benefits received by each party from the offering of the securities
covered by such registration statement, the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted and the opportunity to correct and prevent any statement or omission.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statements or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 6.5
were to be determined by pro rata or per capita allocation (even if the
underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the first sentence of this Section 6.5. The amount paid to an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 6.5 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim (which shall be
limited as provided in Section 6.3 of this Agreement if the indemnifying party
has assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this Section 6.5. Promptly after receipt by an
indemnified party under this Section 6.5 of notice of the commencement of any
action against such party in respect of which a claim for contribution may be
made against an indemnifying party under this Section 6.5, such indemnified
party shall notify the indemnifying party in writing of the commencement thereof
if the notice specified in Section 6.3 of this Agreement has not been given with
respect to such action; provided, that the omission to so notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it may otherwise have to any indemnified party under this Section 6.5,
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. The Company and each holder of Registrable Securities
agrees with each other and the underwriters of the Registrable Securities, if
requested by such underwriters, that (i) the underwriters' portion of such
contribution shall not exceed the underwriting discount
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and (ii) the amount of such contribution shall not exceed an amount equal to the
net proceeds actually received by such indemnifying party from the sale of
Registrable Securities in the offering to which the losses, liabilities, claims,
damages or expenses of the indemnified parties relate. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
6.6 Timing of Indemnification Payments. The indemnification required by
this Article VI shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
ARTICLE VII
RULE 144
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available other information), and it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
shares of Registrable Securities without registration under the Securities Act
within the limitation of the exemption provided by (i) Rule 144 or Rule 144A
under the Securities Act, as such Rules may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of any holder of Registrable Securities, the Company will deliver to
such holder a written statement as to whether it has complied with such
requirements. At such time that all the holders in the Investor Group are able
to sell all of their shares of Registrable Securities pursuant to the exemption
provided by Rule 144 under the Securities Act without any restrictions, then the
Company's obligation pursuant to clause (b) of Article III of this Agreement to
maintain the Shelf Registration shall terminate.
ARTICLE VIII
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements and
consistent with the provisions of this Agreement.
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ARTICLE IX
MERGERS, ETC.
The Company shall not, directly or indirectly, enter into any merger,
consolidation, or reorganization in which the Company shall not be the surviving
corporation unless the proposed surviving corporation shall, prior to such
merger, consolidation, or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to be references to the
securities that the Investors or the holders of Registrable Securities would be
entitled to receive in exchange for Registrable Securities under any such
merger, consolidation, or reorganization.
ARTICLE X
DEFINITIONS
10.1 As used in this Agreement, the following defined terms shall have
the meanings set forth below:
"Agreement" means this Amended and Restated Registration Rights
Agreement as from time to time assigned, supplemented or amended or as the terms
hereof may be waived. This Agreement shall supersede the Registration Rights
Agreement in accordance with Section 11.1 hereto.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks in the State of New York are authorized or obligated to close.
"Common Stock" means the Company's Common Stock, par value $.01 per
share.
"Designated Entity" means (i) as long as any Registrable Securities are
held by any Fleming Holder, Fleming Capital Management, 320 Park Avenue, NY, NY
10022, Attention: Robert L. Burr and David J. Edwards, (ii) as long as any
Registrable Securities are held by any Impax Holder, [Name] [Address], (iii) if
no Registrable Securities are held by any Fleming Holder, the entity designated
by the Fleming Transferee who holds the largest number of Registrable
Securities, and (iv) if no Registrable Securities are held by any Impax Holder,
the entity designated by the Impax Transferee who holds the largest number of
Registrable Securities (in the case of (iii) or (iv), such Transferee shall
provide notice to the Company of such entity in accordance with Section 11.6(a)
hereof).
"Effective Time" shall have the same meaning herein as set forth in the
Merger Agreement.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fleming Holder" shall have the meaning given it in Section 1.1 of the
Stockholders' Agreement.
"Fleming Transferee" means a Transferee of a Fleming Holder.
"Impax Holder" shall have the meaning given it in Section 1.1 of the
Stockholders' Agreement.
"Impax Transferee" means a Transferee of an Impax Holder.
"Person" means any individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Registrable Securities" means (i) any shares of Common Stock issued or
issuable upon conversion of the Series 1 Preferred or exercise of the Warrants
purchased by the Investors pursuant to the Series D Purchase Agreements and (ii)
any securities issued or issuable with respect to the Common Stock referred to
in clause (i) by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have (x) been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (y) been transferred pursuant
to Rule 144 (or any similar rule then in force) under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated March 2, 1999 among Global and the Fleming Funds, which is
superseded by this Amended and Restated Registration Rights Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series 1 Preferred" means the Company's Series 1 Convertible Preferred
Stock, par value $.01 per share, which Series 1 Preferred Stock is convertible
into shares of Common Stock. "Series 1 Holders" means the Fleming Holders and
the Impax Holders.
"Series D Purchase Agreements" means, collectively, the separate Stock
and Warrant Purchase Agreements, dated as of March 2, 1999, between the Company
and each of the Fleming Funds.
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"Shares" means the shares of Registrable Securities registered on the
registration statement filed with the SEC in connection with any Demand
Registration or any Piggyback Registration.
"Stockholders' Agreement" means the Stockholders' Agreement, dated
December ___, 1999, between the Series 1 Stockholders and certain other parties.
"Transferee" shall mean any transferee (except for a Series 1 Holder)
of Shares or Conversion Shares (as such terms are defined within the definition
of "Series 1 Holders") from a Series 1 Holder. Transferees shall not include a
transferee of Shares or Conversion Shares sold in either a public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or pursuant to Rule 144 under the Securities
Act.
"Warrants" shall mean Warrants to purchase shares of Common Stock as
more fully set forth in the Warrant Letter, dated ___________ ___, between the
Company and the Fleming Funds.
10.2 The following terms, when used in this Agreement, shall have the
meanings defined for such terms in the Section set forth below (such definitions
to be equally applicable to both singular and plural forms of the terms
defined):
Term Section
---- -------
Agreement Preamble
Bear Stearns Securities 2.2
Company Preamble
Company Common Stock Recitals
Company Stock Recitals
Consent 11.6(b)
Demand Registrations 1.1(a)
Fleming Funds Preamble
Impax Recitals
Impax Stockholders Preamble
Initial Shelf Registration 1.1(b)
Investor Preamble
Investor Group Preamble
Keane Securities 2.2
Long-Form Demand Registration 1.1(a)
Merger Recitals
Merger Agreement Recitals
Other Securities 1.6
Piggyback Registration 2.1
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Registration Expenses 4.1
Series 1 Preferred Recitals
Series 1 Stockholders Preamble
Series D Agreement Recitals
SEC 1.2(b)
Shares Recitals
Shelf Registration 1.1(b)
Short-Form Demand Registration 1.1(a)
Subsequent Shelf Registration 1.1(b)
Surviving Corporation Recitals
ARTICLE XI
MISCELLANEOUS
11.1 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement. The
Registration Rights Agreement shall not be superseded by this Amended and
Restated Registration Rights Agreement until the Effective Time.
11.2 Adjustments Affecting Registrable Securities. The Company will not
effect or permit to occur any combination, subdivision or reclassification of
any of its securities which would adversely affect the ability of the holders of
Registrable Securities to include Registrable Securities in a registration
undertaken pursuant to this Agreement or which, to the extent within its
control, would adversely affect the marketability of such Registrable Securities
in any such registration (including, without limitation, effecting a stock split
or a combination of shares).
11.3 Remedies. 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.
11.4 Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective against the Company or any holder of Registrable Securities, unless
such modification, amendment or waiver is approved in writing by the Company and
each holder of at least 20,000 shares of the
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Series 1 Preferred. 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.
11.5 Successors and Assigns. 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. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of the
Investors or the holders of Registrable Securities are also for the benefit of,
and enforceable by, any subsequent holder of Registrable Securities.
11.6 Notices. (a) Subject to Section 11.6(b) hereof, 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 (i)
the Company, at 30831 Huntwood Avenue, Hayward, CA 94544, Facsimile No.: (510)
471-1595, with a copy to each of (I) the Law Offices of Laurie A. Miller, 1735
East Bayshore Road, Suite 29A, Redwood City, CA 94063, Attention: Laurie A.
Miller, Esq. and (II) Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York,
NY 10103-3198, Attention: Sheldon G. Nussbaum, Esq. or to (ii) any Series 1
Stockholder or any subsequent holder of shares of Company Stock subject to this
Agreement, to the address of such holder as indicated by the Company's records,
or at such address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party, with such
copies to such persons as specified by the Company or the Series 1 Stockholder.
All such notices, requests and other communications will (x) if delivered
personally to the address as provided in this Section 11.6(a), be deemed given
upon delivery, (y) if delivered by facsimile transmission to the facsimile
number as described in this Section 11.6(a), be deemed given upon receipt and
(z) if delivered by nationally recognized overnight courier service in the
manner described above to the address as described in this Section 11.6(a), 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 11.6(a)). Any party may from time to time 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.
(b) So long as any Series 1 Holder holds any Registrable Securities,
all notices and other communications hereunder shall be deemed given to all
holders of the Registrable Securities when given to the Designated Entity in
accordance with Section 11.6(a) hereof. The consent, selection, request,
acceptance, choice, approval and other similar terms used in this Agreement
(collectively, the "Consent") of the Series 1 Holders shall be deemed obtained
if any of the following conditions are satisfied: (i) the Fleming Funds and the
Impax Stockholders are
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the only holders of the Registrable Securities and the Designated Entity shall
have obtained the Consent of each holder of at least 20,000 shares of the Series
1 Preferred and shall have given notice to the Company to such effect in
accordance with Section 11.6(a) hereof; (ii) the Fleming Funds and the Impax
Stockholders are not the only holders of the Registrable Securities and the
Designated Entity shall have obtained the Consent of the holders of a majority
of the Registrable Securities held by all Series 1 Holders, and shall have given
notice to the Company to such effect in accordance with Section 11.6(a) hereof;
or (iii) no Registrable Securities are held by a Series 1 Holder and the
Designated Entity shall have obtained the Consent of the holders of a majority
of the Registrable Securities held by the Transferees, and shall have given
notice to the Company to such effect in accordance with Section 11.6(a) hereof;
provided, however, that if the Consent relates to a particular Demand
Registration or Piggyback Registration or otherwise only involves or affects
certain holders of the Registrable Securities, only the Registrable Securities
of the holders so participating in such registration or so involved or affected
shall be included in the Consent required by clause (iii) of this paragraph.
11.7 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
11.8 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be construed as though in the singular in
all cases where they would so apply.
11.9 Invalid Provisions. 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 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
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
11.10 Governing Law. 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.
11.11 Counterparts. 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.
[Signature page to follow]
-22-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
GLOBAL PHARMACEUTICAL CORPORATION
By: _______________________________
Name:
Title:
FLEMING US DISCOVERY FUND III, L.P.
By: FLEMING US DISCOVERY
PARTNERS, L.P.,
its general partner
By: FLEMING US DISCOVERY, LLC,
its general partner
By:____________________________
Robert L. Burr, member
FLEMING US DISCOVERY OFFSHORE
FUND III, L.P.
By: FLEMING US DISCOVERY
PARTNERS, L.P.,
its general partner
By: FLEMING US DISCOVERY, LLC,
its general partner
By:________________________________
Robert L. Burr, member
[Signature page to Registration Rights Agreement]
<PAGE>
CHINA DEVELOPMENT INDUSTRIAL
BANK, INC.
By: _________________________________
Name:
Title:
PRESIDENT (BVI) INTERNATIONAL
INVESTMENT HOLDINGS, LTD.
By: _________________________________
Name:
Title:
CHEMICAL COMPANY MALAYSIA (BERHAD)
By: _________________________________
Name:
Title:
EUROC II VENTURE CAPITAL CORP.
By: _________________________________
Name:
Title:
EUROC III VENTURE CAPITAL CORP.
By: _________________________________
Name:
Title:
MULTIVENTURE TECHNOLOGIES, INC.
By: _________________________________
Name:
Title:
TAI-I ELECTRIC WIRE & CABLE CO., LTD.
By: _________________________________
[Signature page to Registration Rights Agreement]
<PAGE>
Name:
Title:
[Signature page to Registration Rights Agreement]
