UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A No. 1
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
Impax Laboratories, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value
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(Title of Class of Securities)
45256B101
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(CUSIP NUMBER)
Sol B. Genauer, Esquire
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 23, 2000
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(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 ss.ss. 240.13d-1(e), 240.13d-1(f), or 240.13d-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 ss. 240.13d-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).
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CUSIP No. 45256B101
1. NAME OF REPORTING PERSON
China Development Industrial Bank Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
00, WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
Not applicable
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Taiwan
NUMBER OF 7. SOLE VOTING POWER
SHARES 4,269,357
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH 9. SOLE DISPOSITIVE POWER
REPORTING 4,269,357
PERSON 10. SHARED DISPOSITIVE POWER
WITH 0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,269,357
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.68%**
14. TYPE OF REPORTING PERSON
CO
**Consists of shares of Series 1-B Convertible Preferred Stock
("Series 1-B Preferred Stock") immediately convertible into 3,669,357
shares of Common Stock and shares of Series 2 Convertible Preferred
Stock ("Series 2 Preferred Stock") immediately convertible into 600,000
shares of Common Stock.
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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 Amendment No. 1
to Schedule 13D is to report that, as a result of the merger and the purchase of
the Issuer's Series 2 Convertible Preferred Stock, the "Reporting Person" owns
14.68% percent 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 statement relates to shares of Common Stock, $0.01 par value of the
Issuer. The Issuer's principal executive offices are located at 30831 Hayward
Avenue, Haywood, California 94544.
Item 2. Identity and Background.
This statement is being filed by China Development Industrial Bank Inc.
("CDC" or the "Reporting Person").
The information required by this Item for the Reporting Person 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 the Reporting
Person is set forth in Appendix 2 hereto.
During the last five years prior to the date of this filing, neither the
Reporting Person or any person identified in 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 Issuer Common
Stock;
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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 the Issuer's Common Stock; and
Each outstanding share of Global Series D Preferred Stock was converted
into one share of the Issuer's Series 1-A Preferred Stock.
On March 23, 2000, CDC entered into the Stock Purchase Agreement (the "CDC
Stock Purchase Agreement"), dated as of March 23, 2000, between the Issuer and
CDC (attached as Exhibit 8 hereto and incorporated herein by reference) to
purchase, for a total purchase price of $3,000,000, 30,000 shares of Series 2
Preferred Stock, $.01 par value per share. Such Series 2 Preferred Stock is
convertible into 600,000 shares of Common Stock. CDC purchased the shares of
Series 2 Preferred Stock with its working capital.
Item 4. Purpose of Transaction.
a) The Series 1-B Preferred Stock and Series 2 Preferred Stock of which CDC
is the record and beneficial owner was acquired for, and is being held for,
investment purposes. CDC 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, the Reporting Person does not have 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) Neither the Reporting Person, 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) The Reporting Person has no 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) Pursuant to the Issuer's Certificate of Designations for Series 1-A
Convertible Preferred Stock and Series 1-B Convertible Preferred Stock (attached
hereto as Exhibit 3 and incorporated herein by reference), and subject to
meeting the Minimum Election Holdings, as hereinafter defined, each Director
Holder, as hereinafter defined, or its transferee, as the case may be, is
entitled to elect one (1) director of the Issuer, provided however, that in no
event is any Director Holder and such Director Holder's transferee or
transferees be entitled to elect, in the aggregate, more than one (1) director
of the Issuer. For purposes of this Item 4(d), the following terms have the
meanings hereinafter set forth:
"Director Holder" means (i) Fleming US Discovery Fund III, L.P. and
Fleming US Discovery Offshore Fund III, L.P, and any affiliate officer or
employee of the same (the "Fleming Holders"), (ii) Chemical Company of Malaysia
Berhad, (iii) President (BVI) International Investment Holdings Ltd., and (iv)
CDC.
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"Minimum Election Holdings" means at least 40%, on an aggregate basis, of
the shares of Series 1 Preferred Stock owned or acquired, as the case may be, by
each such Director Holder as of the effective time of the Merger.
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 CDC is a signatory (the "Stockholders'
Agreement"; see Exhibit 6 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 14, 2002.
e) The Reporting Person has no plans or proposals which relate to or would
result in any material change in the present capitalization or dividend policy
of the Issuer;
f) The Reporting Person has no plans or proposals which relate to or would
result in any other material change in the Issuer's business or corporate
structure, including but not limited to, if the Issuer is a registered
closed-end investment company, any plans or proposals to make any changes in its
investment policy for which a vote is required by Section 13 of the Investment
Company Act of 1940;
g) The Reporting Person has no plans or proposals which relate to or would
result in changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
h) The Reporting Person has no plans or proposals which relate to or would
result in 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) The Reporting Person has no plans or proposals which relate to or would
result in a class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
j) The Reporting Person has no plans or proposals which relate to or would
result in any action similar to any of those enumerated above.
CDC retains the right to change its 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 Series 1-B Preferred Stock and Series 2
Preferred Stock beneficially owned by it (or any shares of Common Stock into
which such Series 1-B Preferred Stock are converted) in any manner permitted by
law. In the event of a material change in the present plans or intentions of
CDC, CDC will amend this Schedule 13D and Amendment No. 1 thereto 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, CDC acquired 55,000 shares of Series 1-B
Preferred Stock. The Series 1-B Preferred Stock of the Issuer is currently
convertible into 3,669,557 shares of Common
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Stock, subject to certain antidilution provisions. As a result of entering into
the Stock Purchase Agreement, CDC acquired 30,000 shares of Series 2 Preferred
Stock. The Series 2 Preferred Stock of the Issuer is currently convertible into
600,000 shares of Common Stock, subject to certain antidultion provisions.
As of March 23, 2000, CDC may be deemed to own beneficially 14.68% of the
outstanding Common Stock, which percentage is calculated based upon (i)
24,807,147 shares of Common Stock reported outstanding by the Issuer as of March
23, 2000, (ii) the number of shares of Common Stock (3,669,357) issuable upon
conversion of the Series 1-B Preferred Stock owned by CDC, and (iii) the number
of shares of Common Stock (600,000) issuable upon conversion of the Series 2
Preferred Stock owned by CDC. The percentage is calculated by dividing 4,269,357
(which is the sum of 3,669,557 and 600,000) by 29,076,504 (which is the sum of
24,807,147 and 4,269,357).
b) The information required by this paragraph is reflected on Lines 7-10 of
the 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, CDC has not 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 CDC.
e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
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 5 hereto, which is incorporated herein by reference), which was amended
on March 23, 2000 by Amendment No. 1 (see Exhibit 12, which is incorporated
herein 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 Issuer Common Stock held by such stockholders.
Pursuant to the Registration Rights Agreement, dated as of March 23, 2000,
among the Issuer and each of the Purchasers (see Exhibit 10, which is
incorporated by reference herein), the Issuer has granted certain "demand" and
"piggyback" registration rights to certain holders of Series 2 Preferred Stock
with respect to the shares of Issuer Common Stock held by such stockholders.
The Stockholders' Agreement, (see Exhibit 4 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, which was amended on March 23, 2000 by Amendment No. 1 (see Exhibit 11,
which is incorporated herein by reference) provides that in the event that
Charles Hsiao, Larry Hsu or
6
<PAGE>
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 7 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.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - 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,
1999, under SEC File No. 333-90599).
Exhibit 2 - 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, filed
on November 9, 1999, under SEC File No. 333-90599).
Exhibit 3 - 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 4 - 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") (incorporated
by reference to Exhibit 4 to the Schedule 13D filed by the
Reporting Person on December 27, 1999, under SEC File No.
005-48867).
Exhibit 5 - Amended and Restated Registration Rights Agreement, dated as of
December 14, 1999, among Global and the Series 1 Stockholders
(incorporated by reference to Exhibit 5 to the Schedule 13D filed
by the Reporting Person on December 27, 1999, under SEC File No.
005-48867).
Exhibit 6 - Stockholders' Agreement, dated as of December 14, 1999, among
Global Pharmaceutical Corporation and certain stockholder
signatories thereto (incorporated by reference to
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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 7 - 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).
Exhibit 8 - Stock Purchase Agreement, dated March 23, 2000, by and between
Impax Laboratories, Inc. and China Development Industrial Bank Inc.
Exhibit 9 - The Certificate of Designations for the Series 2 Convertible
Preferred Stock filed with the Secretary of State of Delaware on
March 23, 2000 (incorporated by reference to Exhibit 3.16 to the
Form 10-KSB of Impax Laboratories, Inc. filed on March 30, 2000).
Exhibit 10 - The Registration Rights Agreement, dated as of March 23, 2000,
among the Issuer and the purchasers of Series 2 Preferred Stock
(the "Purchasers").
Exhibit 11 - Amendment No. 1 to the Stockholders' Agreement, dated as of March
23, 2000, among the Issuer and certain other stockholders of the
Issuer, which amends the Stockholders' Agreement, dated as of
December 14, 1999 among the Issuer, the Purchasers and certain
other stockholders of the Issuer (attached hereto as Exhibit 4).
Exhibit 12 Amendment No. 1 to the Amended and Restated Registration Rights
Agreement, dated as of March 23, 2000, among the Issuer, each of
the Purchasers, and the other stockholders of the Issuer named
therein.
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.
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SIGNATURE
After reasonable inquiry and to the best of the Reporting Person's
knowledge and belief, the Reporting Person certifies that the information set
forth in this statement is true, complete and correct.
Dated: May 12, 2000 CHINA DEVELOPMENT INDUSTRIAL BANK, INC.
By:
-----------------------------------
Name: Brian Keng
Title: Senior Vice President
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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
REPORTING PERSON
China Development Industrial Inc.
ADDRESS
11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
PLACE OF ORGANIZATION
Taiwan
PRINCIPAL BUSINESS
Investment Bank
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APPENDIX 2
INFORMATION ABOUT THE REPORTING PERSON
REQUIRED BY ITEM 2
EXECUTIVE OFFICERS AND DIRECTORS OF
CHINA DEVELOPMENT INDUSTRIAL BANK INC.
Name: Tai-Ying Liu, Ph.D.
Citizenship: Taiwan
Business: Taiwan Research Center
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Chairman
Name: Benny T. Hu
Citizenship: Taiwan
Business: China Development Bank
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Managing Director
Name: Chieh-Chien Chao Ph.D.
Citizenship: Taiwan
Business: Chiao Tung Bank
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Managing Director
Name: Hans Hsu
Citizenship: Taiwan
Business: Yin Shu-tien Specialist Clinic of Urology and
Ophthalmology
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Managing Director
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Name: Kuo-Hwa Ho
Citizenship: Taiwan
Business: Bank of Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Managing Director
Name: Wen-Fu Ko
Citizenship: Taiwan
Business: Presidential Office, R.O.C.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Managing Director
Name: Yung-San Lee, Ph.D.
Citizenship: Taiwan
Business: International Commercial Bank of China
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Managing Director
Name: Ching-Jen Chen
Citizenship: Taiwan
Business: AGV Products Corporation
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Ching-Shyong Chou
Citizenship: Taiwan
Business: Shanghai Commercial & Savings Bank Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
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Name: Chung-Chi Tsai
Citizenship: Taiwan
Business: The National Assembly Republic of China
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: C. Y. Wang
Citizenship: Taiwan
Business: China Steel Corporation
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Eric S. H. Ko
Citizenship: Taiwan
Business: Ruentex Construction & Development Co., Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Jimmy Chi
Citizenship: Taiwan
Business: Taiwan Fluorescent Lamp Co., Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Julie S. M. Chen
Citizenship: Taiwan
Business: Aetna Life Insurance Company of America,
Taiwan Branch Office
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
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Name: Kung-Yung Chen
Citizenship: Taiwan
Business: China Development Bank
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Ming H. Chen
Citizenship: Taiwan
Business: Ye Chen Investment Co., Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Min-Hsun Chen
Citizenship: Taiwan
Business: Lead Long Textile Co., Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Shin-I Lin
Citizenship: Taiwan
Business: United Holdings Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Shue-sheng Wang
Citizenship: Taiwan
Business: International Commercial Bank of China
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
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<PAGE>
Name: Ting Wu
Citizenship: Taiwan
Business: Core Pacific Group Head Office
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Director
Name: Wei-Te Liu
Citizenship: Taiwan
Business: Witty Corporation
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Chairman
Name: Han-Ton Lin
Citizenship: Taiwan
Business: Peck's Holding Ltd.
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Resident Supervisor
Name: Chien-Chao Yeh
Citizenship: Taiwan
Business: Yeh Chien-Chao Attorney's-at-Law
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Supervisor
Name: Kuo-Cheng Chen
Citizenship: Taiwan
Business: Chiao Tung Bank
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei 10572
Taiwan
Title: Supervisor
Name: Tai-Ying Liu
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Chairman & Chief Executive Officer
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<PAGE>
Name: Benny T. Hu
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: President
Name: Kung-Yung Chen
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Senior Vice President
Name: Jer-Shyong Shih
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Executive Vice President
Name: Ben C. B. Chang
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Executive Vice President
Name: Bing Shen
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Executive Vice President
Name: Shu-Kuang Jen, Ph.D.
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Executive Vice President
Name: Lai-Tsung Tsai
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Senior Vice President
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<PAGE>
Name: Jack J. L. Chow
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Senior Vice President
Name: Vivien H. Hsieh, Ph.D.
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Senior Vice President
Name: Kate M. Wu
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Senior Vice President
Name: Brian C. Keng
Citizenship: Taiwan
Business Address: 11th Floor, CDC Tower
125 Nanking East Road, Sec. 5
Taipei, 10572, Taiwan
Title: Senior Vice President
17
================================================================================
STOCK PURCHASE AGREEMENT
dated
March 23, 2000
between
IMPAX LABORATORIES, INC.
and
PURCHASER
================================================================================
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SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK.................................................1
SECTION 2. CLOSING..............................................................................2
SECTION 3. DEFINITIONS..........................................................................2
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................15
4.1. Corporate Existence, Power and Authority............................................15
4.2. Capital Stock.......................................................................16
4.3. Subsidiaries........................................................................17
4.4. Business............................................................................17
4.5. No Defaults or Conflicts............................................................17
4.6. Disclosure Materials; Other Information.............................................18
4.7. Litigation..........................................................................19
4.8. Taxes...............................................................................19
4.9. ERISA...............................................................................19
4.10. Legal Compliance....................................................................21
4.11. Outstanding Securities..............................................................22
4.12. Permits, Licenses and Approvals; Intellectual Property and Other Rights.............22
4.13. Key Employees.......................................................................22
4.14. Properties..........................................................................22
4.15. Suppliers and Customers.............................................................23
4.16. Environmental Compliance............................................................23
4.18. Offering of Shares..................................................................24
4.19. SEC Reports.........................................................................24
4.20. Indebtedness........................................................................25
4.21. Use of Proceeds.....................................................................25
4.22. Other Names.........................................................................25
4.23. Brokers.............................................................................25
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................................26
5.1. Corporate Power and Authority.......................................................26
5.2. Investment Intent...................................................................26
5.3. Brokers.............................................................................26
SECTION 6. RESTRICTIONS ON TRANSFER............................................................27
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SECTION 7. INFORMATION AS TO THE COMPANY.......................................................27
7.1. Financial Information...............................................................27
7.2. Communication with Accountants......................................................29
7.3. Inspection..........................................................................29
7.4. Notices.............................................................................30
SECTION 8. AFFIRMATIVE COVENANTS...............................................................31
8.1. Maintenance of Existence, Properties and Franchises; Compliance with Law;
Taxes; Insurance....................................................................31
8.2. Office for Payment, Exchange and Registration; Location of Office; Notice of
Change of Name or Office............................................................32
8.3. Fiscal Year.........................................................................32
8.4. Environmental Matters...............................................................33
8.5. Reservation of Shares...............................................................34
8.6. Securities Exchange Act Registration................................................34
8.7. Delivery of Information for Rule 144A Transactions..................................34
8.8. Senior Securities...................................................................35
8.9. Shelf Registration..................................................................35
8.10. Further Assurances..................................................................35
SECTION 9. NEGATIVE COVENANTS..................................................................36
9.1. No Dilution or Impairment; No Changes in Capital Stock..............................36
9.2. Indebtedness........................................................................37
9.3. Dissolution.........................................................................37
9.4. No Change in Business...............................................................37
9.5. Restricted Payments; Investments....................................................37
9.6. Affiliate Loans and Guaranties......................................................37
9.7. Transactions with Affiliates........................................................38
9.8. Liens...............................................................................38
9.9. Private Placement Status............................................................38
9.10. Maintenance of Public Market........................................................39
9.11. Actions Prior to the Closing Date...................................................39
SECTION 10. CONDITIONS TO PURCHASER'S OBLIGATIONS...............................................39
10.1. Series 2 Certificate of Designations; Series 1 Waiver;
Stockholders' Agreement; Registration Rights Agreement..............................40
10.2. Certificates for Shares.............................................................40
10.3. Senior Status.......................................................................40
10.4. Accuracy of Representations and Warranties..........................................40
10.5. Compliance with Agreements..........................................................40
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10.6. Officers' Certificates..............................................................41
10.7. Proceedings.........................................................................41
10.8. Legality; Governmental and Other Authorization......................................41
10.9. No Material Adverse Change..........................................................41
10.10. Opinion of Counsel..................................................................41
10.11. Acceptance of Agent for Service of Process..........................................42
10.12. Other Documents and Opinions........................................................42
SECTION 11. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS.................................42
SECTION 12. SPECIFIC PERFORMANCE................................................................42
SECTION 13. EXPENSES............................................................................43
SECTION 14. DIRECT PAYMENTS.....................................................................45
SECTION 15. AMENDMENTS AND WAIVERS..............................................................45
SECTION 16. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT.................45
SECTION 17. NOTICES.............................................................................46
SECTION 18. MISCELLANEOUS.......................................................................46
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Schedule 1 Purchasers; Number of Shares; Number of Warrants
Schedule 2 Indebtedness
Schedule 3 Investments
Schedule 4 Disclosure Material
Schedule 5 Liens
Schedule 6 Capital Stock
EXHIBIT A-1 Series 2 Certificate of Designations
EXHIBIT A-2 Series 1 Waiver
EXHIBIT B Disclosure Schedule
EXHIBIT C Stockholders' Agreement Amendment
EXHIBIT D-1 Registration Rights Agreement
EXHIBIT D-2 Registration Rights Amendment
EXHIBIT E Opinion of Counsel for the Company
EXHIBIT F Form of Confidentiality Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of March 23, 2000 between Impax
Laboratories, Inc., a Delaware corporation (the "Company"), and the Purchaser
listed on the signature page of this Agreement (the "Purchaser").
W I T N E S S E T H :
---------------------
WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, shares of the Company's Series 2
Convertible Preferred Stock, par value $.01 per share (the "Series 2 Convertible
Preferred Stock"), upon the terms and provisions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK
(a) The Company agrees to sell to the Purchaser and, subject to the terms
and conditions hereof and in reliance upon the representations and warranties of
the Company contained herein or made pursuant hereto, the Purchaser agrees to
purchase from the Company at the Closing provided for in Section 2 hereof, the
number of shares of Series 2 Convertible Preferred Stock set forth opposite the
Purchaser's name on Schedule 1 hereto. The shares of Series 2 Convertible
Preferred Stock being acquired under this Agreement and by the other Purchasers
under the other Stock Purchase Agreements (as hereinafter defined) are
collectively referred to herein as the "Shares", containing rights and
privileges as more fully set forth in the Series 2 Certificate of Designations
of the Company in the form attached hereto as Exhibit A (the "Series 2
Certificate of Designations").
(b) The aggregate purchase price to be paid to the Company by the Purchaser
for the Shares to be purchased by the Purchaser pursuant to this Agreement shall
be the amount set forth opposite the Purchaser's name on Schedule 1 hereto. No
further payment shall be required from the Purchaser for the Shares. The parties
further acknowledge and agree that the Shares do not constitute "preferred
stock" as that term is used in Section 305(b)(4) of the Code and Treasury
Regulation ss. 1.305-5(a) and agree not to take any position inconsistent with
the
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characterization of the Shares as common stock for purposes of Section 305 of
the Code on any Tax Return or before any Taxing Authority.
(c) The Shares are being sold to the purchasers listed on Schedule 1 hereto
(the "Purchasers") pursuant to this Agreement and the other Series 2 Convertible
Preferred Stock Purchase Agreements (such agreements collectively, as from time
to time assigned, supplemented or amended or as the terms thereof may be waived,
the "Stock Purchase Agreements"). Each Stock Purchase Agreement shall be dated
the date hereof and shall be identical except as to the identities of the
respective Purchasers. The sale of Shares to each Purchaser under each Stock
Purchase Agreement is to be a separate sale, and no Purchaser shall have any
liability under any Stock Purchase Agreement other than the Stock Purchase
Agreement to which it is a party.
(d) The Company will use the proceeds from the sale of the Shares, together
with other funds it will receive on the Closing Date to fund future development
opportunities and for working capital and general corporate purposes.
SECTION 2. CLOSINGS
(a) Subject to the terms and conditions hereof, the closing of the purchase
and sale of the Shares to be purchased by the Purchaser and the other Purchasers
will take place at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue,
New York, New York at 10:00 A.M., New York City time on March 23, 2000, or such
other time and date as shall be mutually agreed to by the Company and the
Purchasers (the "Closing") (such time and date are herein referred to as the
"Closing Date").
(b) Subject to the terms and conditions hereof, at the Closing (i) the
Company will deliver to each Purchaser a certificate registered in the
Purchaser's name (or the name of its nominee, if any, as specified on Schedule 1
hereto) evidencing the number of Shares set forth opposite the Purchaser's name
on Schedule 1 and (ii) upon the Purchaser's receipt thereof, the Purchaser will
deliver to the Company a certified or official bank check (or wire transfer) in
an amount equal to the aggregate purchase price (as specified in Section 1(b)
hereof) for the Shares to be purchased by the Purchaser payable to the order of
the Company in federal or other immediately available funds.
SECTION 3. DEFINITIONS
(a) For purposes of this Agreement, the following definitions shall apply
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):
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"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 any Stock Purchase Agreement or under the Series 2
Certificate of Designations, the Stockholders' Agreement or the Registration
Rights Agreement (or the exercise of any such rights, including, without
limitation, nominating a director to the Board (or a Board committee) of the
Company and or sending an observer to a Board (or Board committee) meetings of
the Company), shall not cause a Purchaser to be deemed to be an "Affiliate" of
the Company.
"Agreement" means this Stock Purchase Agreement (together with exhibits and
schedules) as from time to time assigned, supplemented or amended or as the
terms hereof may be waived.
"Benefit Plan" means any Plan, existing at the Closing, established or to
which contributions have at any time been made by the Company, or any
predecessor of any of the foregoing, or under which any employee, former
employee or director of the Company or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"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.
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"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
17 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:
(i) values of leases required to be capitalized in accordance with
generally accepted accounting principles shall be computed in
accordance with such principles; and
(ii) 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) 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).
"Closing" has the meaning set forth in Section 2(a) hereof.
"Closing Date" has the meaning set forth in Section 2(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and interpretations thereunder.
"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.
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"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 or the Series 2 Convertible Preferred Stock.
"Company" means Impax Laboratories, Inc., a Delaware corporation, its
successors and assigns.
"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 sold 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.
"Disclosure Material" has the meaning specified in Section 4.6(a) hereof.
"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
5
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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" has the meaning set forth in Section 4.16 hereof.
"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 Funds" means Fleming US Discovery Fund III, L.P. and Fleming US
Discovery Offshore Fund III, L.P.
"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,
6
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(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.
"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 Guaranties 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.
"Initial Shelf Registration" has the meaning set forth in Section 8.10
hereof.
"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, (iv) any
transfer or sale of property of such Person to any other Person other than upon
full payment, in cash or other
7
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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 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 on the date hereof and disclosed on Schedule 3 hereto.
"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 or Conversion Shares have been issued by the Company,
(ii) Shares and Conversion Shares theretofore canceled by the Company and
(iii) Shares and
8
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Conversion Shares registered in the name of, as well as 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 "Purchasers" 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 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.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, or whether for the benefit of a single
individual or more than one individual including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
"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,
9
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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 and the Series 2
Convertible Preferred Stock.
"Purchaser" means the person who accepts and agrees to the terms hereof as
indicated by such person's signature (as "the undersigned Purchaser") on the
execution page of this Agreement, together with its successors and assigns.
"Purchaser Holders" means (i) each Purchaser, (ii) any Affiliate, officer
or employee of an Affiliate or investment fund managed by an Affiliate of a
Purchaser to which any Purchaser may transfer record and/or beneficial ownership
of any shares of the Shares or the Conversion Shares and (iii) any transferee of
Shares or Conversion Shares from a Purchaser Holder other than a transferee of
Shares or Conversion Shares sold in either a public offering pursuant to a
registration statement under the Securities Act or pursuant to a Rule 144
Transaction, except that for purposes of Section 9 hereof, such transferee shall
be a Purchaser Holder only if such transferee is reasonably acceptable to the
Company. The transferor and the transferee shall notify the Company in writing
as to the transferee's status as a Purchaser Holder in accordance with this
definition, and shall notify the Company if such transferee ceases to be a
Purchaser Holder.
"Purchasers" has the meaning set forth in Section 1(c) hereof, together
with their respective successors and assigns.
"Registrable Securities" means (i) any shares of Common Stock issued or
issuable upon (x) conversion of the Series 1 Preferred, (y) conversion of the
Series 2 Convertible Preferred Stock or (z) 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 as of the Closing Date, among the Company and each of the Purchasers.
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"Registration Rights Amendment" means Amendment No. 1 to the Amended and
Restated Registration Rights Agreement, dated as of the Closing Date, among the
Company, the Purchaser and the other stockholders of the Company named therein.
"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 the Series 2 Convertible Preferred
Stock or (C) any redemption or repurchase pursuant to the 1995 Stock Incentive
Plan as in effect on the date hereof, (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 Purchasers (or holders
of Shares or the Conversion Shares) under the Stock Purchase Agreements. 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
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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.
"SEC Reports" has the meaning set forth in Section 4.19 hereof.
"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 the Series 1 Preferred.
"Series 1 Preferred" means, collectively, the Series 1-A Convertible
Preferred Stock and the Series 1-B Convertible Preferred Stock.
"Series 1 Waiver" means the Waiver of Certain Rights Under the Series 1
Certificate of Designations.
"Series 1-A Convertible Preferred Stock" means the Company's Series 1-A
Convertible Preferred Stock, par value $.01 per share.
"Series 1-B Convertible Preferred Stock" means the Company's Series 1-B
Convertible Preferred Stock, par value $.01 per share.
"Series 2 Certificate of Designations" has the meaning set forth in Section
1(a) hereof.
"Series 2 Convertible Preferred Stock" means the Company's Series 2
Convertible Preferred Stock, par value $.01 per share, which will have the
rights, powers and privileges on the Closing Date as more fully set forth in the
Series 2 Certificate of Designations.
"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 the Company and each of the Fleming
Funds.
"Shares" has the meaning set forth in Section 1(a) hereof. 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
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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.
"Shelf Registration" has the meaning set forth in Section 8.10 hereof.
"Stock Purchase Agreements" has the meaning set forth in Section 1(c)
hereof.
"Stockholders' Agreement" means the Stockholders' Agreement, dated as of
December 14, 1999, among the Company, the Purchasers and certain other
stockholders of the Company, as amended by the Stockholders' Agreement
Amendment.
"Stockholders' Agreement Amendment" means Amendment No. 1 to the
Stockholders' Agreement, dated as of the Closing Date, among the Company, the
Purchasers and the other stockholders of the Company named therein.
"Subsequent Shelf Registration" has the meaning set forth in Section 8.10
hereof.
"Subsidiary", with respect to any Person, means any corporation,
association or other entity of which more than 50% of the total voting power of
shares of stock or other equity interests (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is, at the time as of which any determination is being made, owned or
controlled, directly or indirectly, by such Person or one or more of its
Subsidiaries, or both. The term "Subsidiary" or "Subsidiaries" when used herein
without reference to any particular Person, means a Subsidiary or Subsidiaries
of the Company.
"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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"Transferees" shall mean any transferee (except for a Purchaser Holder) of
Shares or Conversion Shares from a Purchaser 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.
(b) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(i) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision;
(ii) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP (except as otherwise
provided herein);
(iii) all computations provided for herein, if any, shall be made in
accordance with GAAP (except as otherwise provided herein);
(iv) any uses of the masculine, feminine or neuter gender shall also
be deemed to include any other gender, as appropriate;
(v) all references herein to actions by the Company, such as "create",
"sell", "transfer", "dispose of", etc., mean such action whether voluntary
or involuntary, by operation of law or otherwise;
(vi) the exhibits and schedules to this Agreement shall be deemed a
part of this Agreement;
(vii) each of the representations and warranties of the Company
contained in Section 4 hereof is separate and is not limited, qualified or
modified by the existence, wording or satisfaction of any other
representation or warranty of the Company in Section 4 or otherwise;
(viii) each of the covenants of the Company contained in Sections 7, 8
and 9 hereof or otherwise contained in any Stock Purchase Agreement, the
Series 2 Certificate of Designations, the Stockholders' Agreement or the
Registration Rights Agreement is separate and is not limited or satisfied
by the existence, wording or satisfaction of any other covenant of the
Company in Section 7, 8 or 9 or otherwise; and
(ix) all references herein (in covenants or otherwise) to any
action(s) which are to be taken (or which are prohibited from being taken)
by any Person or the Company shall apply to such Person or the
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Company, as the case may be, whether such action is taken directly or
indirectly.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows as of the
date hereof and as of the Closing Date, except as set forth in the Disclosure
Schedule attached hereto as Exhibit B:
4.1. Corporate Existence, Power and Authority.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation. The Company
is duly qualified, licensed and authorized to do business and is in good
standing in each jurisdiction in which it owns or leases any property or in
which the conduct of its business requires it to so qualify or be so licensed,
except for such jurisdictions where the failure to so qualify or be so licensed
would not have a material adverse effect on the Company's assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects.
(b) No proceeding has been commenced looking toward the dissolution or
merger of the Company or the amendment of its certificate of incorporation
(other than the Series 2 Certificate of Designations). The Company is not in
violation in any respect of its certificate of incorporation or by-laws.
(c) The Company has all requisite power, authority (corporate and other)
and legal right to own or to hold under lease and to operate the properties it
owns or holds and to conduct its business as now being conducted.
(d) The Company has all requisite power, authority (corporate and other)
and legal right to execute, deliver, enter into, consummate the transactions
contemplated by and perform its obligations under (i) the Stock Purchase
Agreements, including, without limitation, the issuance by the Company of the
Shares and the Conversion Shares as contemplated herein and in the Series 2
Certificate of Designations (subject to the proper filing with the Secretary of
State of the State of Delaware of the Series 2 Certificate of Designations),
(ii) the Series 1 Waiver, (iii) the Stockholders' Agreement, (iv) the
Stockholders' Agreement Amendment, (v) the Registration Rights Agreement and
(vi) the Registration Rights Amendment. The execution, delivery and performance
of the Stock Purchase Agreements, the Series 1 Waiver, the Stockholders'
Agreement, the Stockholders' Agreement Amendment, the Registration Rights
Agreement and the Registration Rights Amendment by the Company (including,
without limitation, the issuance by the Company of the Shares and the Conversion
Shares as contemplated herein and in the Series 2 Certificate of Designations)
have been duly authorized by all required corporate and other actions. The
Company has duly executed and delivered the
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Stock Purchase Agreements, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders' Agreement Amendment, the Registration Rights Agreement and the
Registration Rights Amendment. The Stock Purchase Agreements, the Series 1
Waiver, the Stockholders' Agreement, the Stockholders' Agreement Amendment, the
Registration Rights Agreement and Registration Rights Amendment constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to the rights of creditors generally.
4.2. Capital Stock.
(a) Schedule 6(a) hereto correctly and completely lists (i) the authorized
capital stock of the Company (Common Stock and Preferred Stock), (ii) the number
of designated shares of Preferred Stock in each series or class thereof after
giving effect to the Series 2 Certificate of Designations and (iii) on February
29, 2000, after giving effect to the issuance of Shares contemplated by the
Stock Purchase Agreements, the number of shares outstanding in each series or
class thereof. All of such outstanding shares are, or on the Closing Date will
be, duly authorized, validly issued and outstanding, fully paid and
non-assessable. The shares of the Company's Common Stock issuable upon
conversion of the Series 1 Preferred and Series 2 Convertible Preferred Stock
will be, when issued in accordance with the respective terms of the Series 1
Certificate of Designations and Series 2 Certificate of Designations, duly
authorized, validly issued, fully paid and non-assessable. Except as provided in
the Series 2 Certificate of Designations and the Series 1 Certificate of
Designations, none of the shares of the Company's capital stock which will be
outstanding at the Closing (i) were or will be subject to preemptive rights when
issued or (ii) provide the holders thereof with any preemptive rights with
respect to any issuances of capital stock.
(b) Schedule 6(b) hereto correctly and completely lists the number and
purpose for which such shares of the Company's Common Stock are reserved for
issuance by the Company.
(c) Except as referred to in Section 4.2(b), there are no outstanding
options, warrants, subscriptions, rights, convertible securities or other
agreements or plans under which the Company may become obligated to issue, sell
or transfer shares of its capital stock or other securities.
(d) Except as set forth on Schedule 6(c) hereto and except for the
registration rights contained in the Registration Rights Agreement, there are
and will be no outstanding registration rights with respect to any capital stock
of the Company, which (in either case) will be outstanding on the Closing Date,
or any capital stock referred to in Section 4.2(b) or 4.2(c).
(e) There are no voting agreements, voting trusts, proxies or other
agreements or understandings with respect to the voting of any capital stock of
the Company of which the
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Company is a party, except as provided herein, in the Series 2 Certificate of
Designations and the Series 1 Certificate of Designations and Schedule 6(d)
hereto.
(f) Except as set forth in Schedule 6(e) hereto, there are no anti-dilution
protections or other adjustment provisions in existence with respect to any
capital stock of the Company or any capital stock referred to in Section 4.2(b)
or 4.2(c).
(g) The Series 2 Certificate of Designations has been duly adopted by the
Company and is fully effective as an amendment to the Company's certificate of
incorporation. The Shares have all of the rights, priorities and terms set forth
in the Series 2 Certificate of Designations. The Series 1 Preferred have all of
the rights, priorities and terms set forth in the Series 1 Certificate of
Designations.
(h) To the knowledge of the Company, those persons who own, directly or
indirectly, more than 5% (calculated in accordance with Rule 13d-3 of the
Securities Exchange Act) of the Company's outstanding Common Stock are as
follows: (i) Charles Hsiao, (ii) Chemical Company of Malaysia, (iii) Chiin Hsiao
Children Irrevocable Trust, (iv) Larry Hsu, (v) Kingdom Capital Management
Corporation, (vi) Shushen (John) Hsiao, (vi) Bear Stearns Asset Management, Inc.
and (vii) Hsu Children Irrevocable Trust.
4.3. Subsidiaries.
The Company has no Subsidiaries. The Company has no Investments in any
other Person.
4.4. Business.
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. The Company neither currently engages in, nor has any
intention of engaging in, any other business.
4.5. No Defaults or Conflicts.
(a) The Company is not in violation or default in any material respect (and
is not in default in any respect regarding any Indebtedness) under any
indenture, agreement or instrument to which it is a party or by which it or its
properties may be bound. The Company is not in default in any material respect
under any material order, writ, injunction, judgment or decree of any court or
other governmental authority or arbitrator(s).
(b) The execution, delivery and performance by the Company of the Stock
Purchase Agreements, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders'
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Agreement Amendment, the Registration Rights Agreement and the Registration
Rights Amendment and any of the transactions contemplated hereby or thereby
(including, without limitation, the issuance of the Shares and the Conversion
Shares as contemplated herein and therein and in the Series 2 Certificate of
Designations and the adoption of the Series 2 Certificate of Designations as an
amendment to the Company's certificate of incorporation) do not and will not (i)
violate or conflict with, with or without the giving of notice or the passage of
time or both, any provision of (A) the certificate of incorporation or by-laws
of the Company, (B) any law, rule, regulation or order of any federal, state,
county, municipal or other governmental authority, (C) any judgment, writ,
injunction, decree, award or other action of any court or governmental authority
or arbitrator(s), or (D) any agreement, indenture or other instrument applicable
to the Company or any of its respective properties, (ii) result in the creation
of any Lien upon any of the Company's properties, assets or revenues, except as
provided in the Series 2 Certificate of Designations, (iii) require the consent,
waiver, approval, order or authorization of, or declaration, registration,
qualification or filing with, any Person (whether or not a governmental
authority and including, without limitation, any shareholder approval), or (iv)
cause antidilution clauses of any outstanding securities to become operative or
give rise to any preemptive rights. No provision referred to in Sections (A) and
(C) of the preceding clause (i) materially adversely affects 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 obligations under the Stock Purchase
Agreements, the Series 2 Certificate of Designations, the Series 1 Certificate
of Designations, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders' Agreement Amendment, the Registration Rights Agreement, the
Registration Rights Amendment or any of the transactions contemplated hereby or
thereby.
4.6. Disclosure Materials; Other Information.
(a) The Company has previously furnished to the Purchaser the materials
described on Schedule 4.6 hereto (the "Disclosure Material"). The audited and
unaudited financial statements referred to or contained in the materials
referred to on Schedule 4.6 fairly present the consolidated financial condition
of the Company as of the respective dates thereof and the consolidated results
of the operations of the Company for such periods and have been prepared in
accordance with GAAP, except that any such unaudited statements may omit notes
and may be subject to year-end adjustment.
(b) Since December 31, 1999, (i) the business of the Company has been
conducted in the ordinary course and (ii) there has been no material adverse
change in the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company on a
consolidated basis. As of the Closing Date and as of the date hereof, there are
no material liabilities of the Company which would be required to be provided
for in a consolidated balance sheet of the Company as of either such date
prepared in accordance with GAAP, other than liabilities provided for in the
financial statements referred to in Section 4.6(a). Since December 31, 1999, no
amount or property has directly or indirectly been declared,
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ordered, paid, made or set aside for any Restricted Payment nor has any such
action been agreed to.
(c) There are no material liabilities, contingent or otherwise, of the
Company that have not been disclosed in the financial statements referred to in
Section 4.6(a) or otherwise disclosed in the Disclosure Material.
(d) The financial projections included in the Disclosure Material conform
with the internal operating forecasts of the Company and were based on
reasonable assumptions when made and have been prepared in good faith.
(e) There is no fact known to the Company which is not in the Disclosure
Material and which materially and adversely affects, or in the future would be
reasonably likely (as far as the Company currently can reasonably foresee) to
materially and adversely affect, the assets, properties, liabilities, business,
affairs, results of operations, condition (financial or otherwise) or prospects
of the Company on a consolidated basis.
4.7. Litigation.
There is no action, suit, proceeding, investigation or claim pending or, to
the knowledge of the Company, threatened in law, equity or otherwise before any
court, administrative agency or arbitrator which (i) questions the validity of
the Stock Purchase Agreements, the Series 2 Certificate of Designations, the
Series 1 Certificate of Designations, the Series 1 Waiver, the Stockholders'
Agreement, the Stockholders' Agreement Amendment, the Registration Rights
Agreement, the Registration Rights Amendment, the Shares or the Conversion
Shares, or (iii) might result in a material adverse change in the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company on a consolidated basis.
4.8. Taxes.
The Company has duly and timely filed all Tax Returns required to be filed
by it, and each such Tax Return correctly and completely reflects the Tax
liability and all other information required to be reported thereon. The Company
has paid or caused to be paid all Taxes (whether or not reflected on such Tax
Returns) that are due and payable. The provision for Taxes due by the Company in
the most recent financial statement included in the Disclosure Material is
sufficient for all unpaid Taxes, being current Taxes not yet due and payable, of
the Company, as of the end of the period covered by such financial statement,
and as of the Closing Date, such provision, as adjusted for the passage of time
through such date, will be sufficient for the then-accrued and unpaid Taxes not
yet due and payable of the Company. No Tax Returns of the Company have ever been
audited by any Taxing Authority, there is no dispute concerning any Tax
liability of the Company either threatened, claimed or raised by any Taxing
Authority, and the Company does not expect any Taxing Authority to assess
additional Taxes against or in
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respect of it for any past period. The Company has withheld and paid, or, if not
yet due for payment, set aside in accounts for such purposes, all Taxes required
to have been withheld in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party. Other than stamp taxes,
the Company has no liability for Taxes of any Person other than the Company (i)
as a transferee or successor, (ii) by contract, or (iii) otherwise. There are no
applicable Taxes payable by the Company in connection with the execution and
delivery of the Stock Purchase Agreements, the Series 1 Waiver, the
Stockholders' Agreement, the Stockholders' Agreement Amendment, the Registration
Rights Agreement or the Registration Rights Amendment or the issuance by the
Company of the Shares or the Conversion Shares.
4.9. ERISA.
(a) All Benefit Plans are listed in Exhibit B, and copies of all
documentation relating to such Benefit Plans have been delivered to or made
available for review by Purchasers (including copies of written Benefit Plans,
written descriptions of oral Benefit Plans, summary plan descriptions, trust
agreements, the three most recent annual returns, employee communications, and
IRS determination letters).
(b) Each Benefit Plan has at all times been maintained and administered in
all material respects in accordance with its terms and with the requirements of
all applicable law, including ERISA and the Code, and each Benefit Plan intended
to qualify under section 401(a) of the Code has at all times since its adoption
been so qualified, and each trust which forms a part of any such plan has at all
times since its adoption been tax-exempt under section 501(a) of the Code.
(c) No Benefit Plan has incurred any "accumulated funding deficiency"
within the meaning of section 302 of ERISA or section 412 of the Code, and the
"amount of unfunded benefit liabilities" within the meaning of section
4001(a)(18) of ERISA does not exceed zero with respect to any Benefit Plan
subject to Title IV of ERISA.
(d) No "reportable event" (within the meaning of section 4043 of ERISA) has
occurred with respect to any Benefit Plan or any Plan maintained by an ERISA
Affiliate since the effective date of said section 4043 for which notice is not
waived under the regulations issued pursuant to said Section 4043.
(e) No Benefit Plan is a multiemployer plan within the meaning of section
3(37) of ERISA.
(f) No direct, contingent or secondary liability has been incurred or is
expected to be incurred by the Company under Title IV of ERISA to any party with
respect to any Benefit Plan, or with respect to any other Plan presently or
heretofore maintained or contributed to by any ERISA Affiliate.
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(g) Neither the Company nor any ERISA Affiliate has incurred any liability
for any tax imposed under section 4971 through 4980B of the Code or civil
liability under section 502(i) or (l) of ERISA.
(h) No benefit under any Benefit Plan, including, without limitation, any
severance or parachute payment plan or agreement, will be established or become
accelerated, vested or payable by reason of any transaction contemplated under
this Agreement.
(i) No Benefit Plan provides health or death benefit coverage beyond the
termination of an employee's employment, except as required by Part 6 of
Subtitle B of Title I of ERISA or section 4980B of the Code or any State laws
requiring continuation of benefits coverage following termination of employment.
(j) No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of plan activities and any other claim which
could reasonably be expected to result in a material liability or expense to the
Company) has been brought or, to the knowledge of the Company, threatened
against or with respect to any Benefit Plan and there are no facts or
circumstances known to the Company that could reasonably be expected to give
rise to any such suit, action or other litigation.
(k) All contributions to Benefit Plans that were required to be made under
such Benefit Plans have been made, and all benefits accrued under any unfunded
Benefit Plan have been paid, accrued or otherwise adequately reserved in
accordance with generally accepted accounting principles, all of which accruals
under unfunded Benefit Plans are as disclosed in Exhibit B, and the Company has
performed all material obligations required to be performed under all Benefit
Plans.
(l) The execution, delivery and performance of the Stock Purchase
Agreements, the Series 1 Waiver, the Stockholders' Agreement, the Stockholders'
Agreement Amendment, the Registration Rights Agreement and the Registration
Rights Amendment and the consummation of the transactions contemplated hereby
and thereby (including, without limitation, the offer, issue and sale by the
Company, and the purchase by the Purchaser of the Shares and the Conversion
Shares) will not involve any "prohibited transaction" within the meaning of
ERISA or the Code with respect to any Benefit Plan.
4.10. Legal Compliance.
(a) The Company's manufacturing, distribution and marketing practices are
in compliance in all material respects with all applicable laws, rules,
regulations, orders, licenses, judgments, writs, injunctions, decrees or
demands, including, without limitation, laws and regulations administered by the
Food and Drug Administration ("FDA") and the Drug Enforcement Administration
("DEA").
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(b) The Company possesses all material Food and Drug Administration new
drug applications, abbreviated new drug applications, and new animal drug
applications as are necessary for the conduct of its business as now being
conducted, a list of such which will be provided to the Purchaser upon the
Purchaser's request.
(c) Other than the May 25, 1993 "Richlyn Order," there are no adverse
orders, judgments, writs, injunctions, decrees, or demands of any court or
administrative body, domestic or foreign, or of any governmental agency or
instrumentality, domestic or foreign, outstanding against the Company.
(d) The Company has not and will not use the services of any person
debarred under the provisions of the Generic Drug Enforcement Act of 1992, 21
U.S.C. ss. 335(a)(b). None of the Company's officers or employees has been
convicted of a felony under federal law for conduct relating to the development,
approval or regulation of any product subject to the Federal Food, Drug, and
Cosmetic Act or the Controlled Substances Act.
4.11. Outstanding Securities.
All securities (as defined in the Securities Act) of the Company have been
offered, issued, sold and delivered in compliance with, or pursuant to
exemptions from, all applicable federal and state laws, and the rules and
regulations of federal and state regulatory bodies governing the offering,
issuance, sale and delivery of securities.
4.12. Permits, Licenses and Approvals; Intellectual Property and Other
Rights.
The Company owns or possesses and holds free from material conflicts with
the rights of others all franchises, licenses, permits, consents, approvals and
other authority (governmental or otherwise), patents, patent rights, trademarks,
trademark rights, trade names, trade name rights and copyrights (each of which
patent, trademark or copyright is listed on Exhibit B hereto), and all rights
and privileges with respect to any of the foregoing, as are necessary for the
conduct of its business as now being conducted and as currently proposed to be
conducted; provided that, no such representation is made with respect to
government franchises, licenses, permits, consents, approvals or other authority
which may be required with respect to the Company's business as proposed to be
conducted. The Company is not in default in any material respect under any of
such franchises, licenses, permits, consents, approvals or other authority. The
rights of (and use by) the Company with respect to such or any other patents,
patent rights, trademarks, trademark rights, trade names, trade name rights or
copyrights do not conflict with or infringe any rights of others in a manner
which might materially and adversely affect the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company on a consolidated basis, and no such claim of conflict
or infringement has been asserted by any Person.
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4.13. Key Employees.
The Company has good relationships with its employees and has not had and
does not expect any substantial labor problems. The Company has no knowledge as
to any intentions of any key employee or any group of employees to leave the
employ of the Company. The employees of the Company are not and have never been
represented by any labor union, and no collective bargaining agreement is
binding and in force against the Company or currently being negotiated by the
Company.
4.14. Properties.
Other than the Permitted Liens, the Company has good and marketable title
to its real property, all of which is disclosed on Exhibit B hereto, and good
and marketable title to each of its other properties other than leased
properties. Certain real property used by the Company in the conduct of their
respective businesses is held under lease (as identified on Exhibit B hereto),
and the Company is not aware of any pending or threatened claim or action by any
lessor of any such property to terminate any such lease. All such leases are
valid and in full force and effect, and none of such leases is in default. None
of the properties owned or leased by the Company is subject to any Liens which
could materially and adversely affect the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company on a consolidated basis.
4.15. Suppliers and Customers.
(a) The Company has adequate sources of supply for its business as
currently conducted and as proposed to be conducted. The Company has good
relationships with all of its material sources of supply of goods and services
and does not anticipate any material problem with any such material sources of
supply.
(b) The Company has no knowledge that the customer base of the Company
might materially decrease.
4.16. Environmental Compliance.
(a) There is no Hazardous Material on, about, under or in, any property,
real or personal, in which the Company has any interest in an amount or
concentration which could constitute a violation that would result in a
liability in excess of $5,000 or otherwise result in a liability in excess of
$5,000 to the Company under any applicable Environmental Law.
(b) There is no (and has not been any) off-site use, handling, storage or
disposal or on-site use, handling, storage or disposal of Hazardous Material at
or from any locations currently or formerly owned, leased, operated or occupied
by the Company as a result
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of which use, handling, storage or disposal there would exist a risk that the
Company could incur a material liability or obligation under any applicable
Environmental Law.
(c) The Company has not received any verbal or written notice, citation,
subpoena, summons, complaint or other correspondence or communication from any
person with respect to the presence of any non-indigenous Hazardous Material
upon, into, beneath, or emanating from or affecting any of the real property
(including improvements) currently or formerly owned or occupied by the Company
that could result in a liability to the Company in excess of $5,000.
(d) There has been no intentional or unintentional, gradual or sudden,
release, disposal or discharge by the Company or, to the Company's knowledge, by
others, upon, into or beneath the real property (including improvements)
currently or formerly owned or occupied by the Company that has caused or is
causing soil or groundwater contamination which, under applicable Environmental
Laws could require investigation or remediation or could otherwise create a
material liability or obligation on the part of the Company.
(e) The Company is in material compliance with all applicable Environmental
Laws and the terms and conditions of all Environmental Permits.
(f) To the best knowledge of the Company after reasonable inquiry, there
are no Liens arising under or pursuant to any Environmental Law ("Environmental
Liens") relating to any real property (including improvements thereon) currently
owned by the Company.
(g) There are no (i) underground storage tanks, (ii) polychlorinated
biphenyl containing equipment or (iii) asbestos-containing materials at any site
currently owned, operated or leased by the Company, except in compliance with
all applicable Environmental Laws.
4.17. No Burdensome Agreements.
To the best of the knowledge of the Company, other than this Agreement and
the related documents, the Company is not a party to any contract or agreement
with any Affiliate of the Company, the terms of which are less favorable to the
Company than those which might have been obtained, at the time such contract or
agreement was entered into, from a person who was not such an Affiliate.
4.18. Offering of Shares.
None of the Company, any agent or any other person acting on its behalf,
directly or indirectly, (i) offered any of the Shares or any similar security of
the Company (A) by any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) or (B) for sale to
or solicited offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any person other than the Purchasers and
not
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more than twenty-four (24) other institutional investors each of which the
Company reasonably believed was an "accredited investor" within the meaning of
Regulation D under the Securities Act or (ii) has done or caused to be done (or
has omitted 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 within the
provisions of Section 5 of the Securities Act or the filing, notification or
reporting provisions of any state securities laws.
4.19. SEC Reports.
The Company has filed all proxy statements, reports and other documents
required to be filed by it under the Securities Exchange Act. The Company has
furnished the Purchaser with copies of (i) its Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1998, (ii) its Quarterly Reports on Form
10-QSB for the fiscal quarters ended March 31, 1999, June 30, 1999 and September
30, 1999, (iii) its Proxy Statement dated April 12, 1999 and (iv) the Joint
Proxy Statement/Prospectus dated November 9, 1999 filed by the Company and Impax
Pharmaceuticals, Inc. (collectively, the "SEC Reports"). Each SEC Report was in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective dates, contained any untrue statement
of a material fact or omitted to state 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.
4.20. Indebtedness.
Schedule 2 hereto sets forth (i) the amount of all Indebtedness of the
Company outstanding as of February 29, 2000 (and there is no additional material
amount of Indebtedness of the Company outstanding other than that listed as of
February 29, 2000 or as set forth in Exhibit B), (ii) any Lien with respect to
such Indebtedness and (iii) a description of each instrument or agreement
governing such Indebtedness. The Company has made available to the Purchaser a
complete and correct copy of each such instrument or agreement (including all
amendments, supplements or modifications thereto). No material default exists
with respect to or under any such Indebtedness or any instrument or agreement
relating thereto and no event or circumstance exists with respect thereto that
(with notice or the lapse of time or both) could give rise to such a default.
4.21. Use of Proceeds.
The Company will use the proceeds realized from the sale of the Shares to
fund future development opportunities and for working capital and general
corporate purposes. No portion of such proceeds will be used for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying, within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended from time to time, any "margin stock" as defined in said Regulation
U, or any "margin stock" as defined in Regulation G of the Board of Governors of
the
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Federal Reserve System, as amended from time to time, or for the purpose of
purchasing, carrying or trading in securities within the meaning of Regulation T
of the Board of Governors of the Federal Reserve System, as amended from time to
time, or for the purpose of reducing or retiring any indebtedness which both (i)
was originally incurred to purchase any such margin stock or other securities
and (ii) was directly or indirectly secured by such margin stock or other
securities. None of the assets of the Company includes any such "margin stock."
The Company has no present intention of acquiring any such "margin stock."
4.22. Other Names.
Except for "Global Pharmaceutical Corporation" and "Impax Pharmaceuticals,
Inc.", the businesses previously or presently conducted by the Company has not
been conducted under any corporate, trade or fictitious name.
4.23. Brokers.
No broker, finder or investment banker or other party is entitled to any
brokerage, finder's or other similar fee or commission in connection with any
Stock Purchase Agreement, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders' Agreement Amendment, the Registration Rights Agreement, the
Registration Rights Amendment or the Series 2 Certificate of Designations or any
of the transactions contemplated hereby or thereby, based upon arrangements made
by or on behalf of the Company or any of its Affiliates.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
5.1. Corporate Power and Authority.
The Purchaser has all requisite power, authority and legal right to
execute, deliver, enter into, consummate the transactions contemplated by and
perform its obligations under this Agreement, the Series 1 Waiver, the
Stockholders' Agreement, the Stockholders' Agreement Amendment, the Registration
Rights Agreement and the Registration Rights Amendment. The execution, delivery
and performance of this Agreement, the Series 1 Waiver, the Stockholders'
Agreement, the Stockholders' Agreement Amendment, the Registration Rights
Agreement and the Registration Rights Amendment by the Purchaser have been duly
authorized by all required corporate and other actions. The Purchaser has duly
executed and delivered this Agreement, the Series 1 Waiver, the Stockholders'
Agreement, the Stockholders' Agreement Amendment, the Registration Rights
Agreement and the Registration Rights Amendment, and this Agreement, the Series
1 Waiver, the Stockholders' Agreement, the Stockholders' Agreement Amendment,
the Registration Rights Agreement and the Registration Rights Amendment
constitute the legal, valid and binding obligations of the Purchaser enforceable
against the Purchaser in accordance
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with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to the rights of creditors generally.
5.2. Investment Intent.
The Purchaser is capable of evaluating the risk of its investment in the
Shares being purchased by it and is able to bear the economic risk of such
investment. The Purchaser has had the opportunity to request and receive all
information deemed necessary by it to evaluate an investment in the Company. The
Purchaser is purchasing the Shares for its own account for investment and not
with a present view to any distribution thereof in violation of applicable
securities laws; provided, however, that the Purchaser may transfer record
and/or beneficial ownership of the Shares or the Conversion Shares to one or
more Affiliates, officers or employees of Affiliates or investment funds managed
by Affiliates of the Purchaser, in all cases in compliance with federal
securities laws. It is understood that the disposition of the Purchaser's
property shall at all times be within the Purchaser's control. If the Purchaser
should in the future decide to dispose of any of its Shares or Conversion
Shares, it is understood that it may do so only in compliance with the
Securities Act, applicable securities laws and this Agreement. The Purchaser is
an "accredited investor" as defined in Rule 501(a) under the Securities Act. If
domiciled in the United States, Purchaser's domicile is in the state indicated
on Schedule 1 hereto.
5.3. Brokers.
Except as disclosed on Exhibit B hereto, no broker, finder or investment
banker or other party is entitled to any brokerage, finder's or other similar
fee or commission in connection with any Stock Purchase Agreement, the Series 1
Waiver, the Stockholders' Agreement, the Stockholders' Agreement Amendment, the
Registration Rights Agreement, the Registration Rights Amendment or the Series 2
Certificate of Designations or any of the transactions contemplated hereby or
thereby, based upon arrangements made by or on behalf of the Purchaser or any of
its Affiliates.
SECTION 6. RESTRICTIONS ON TRANSFER
The Purchaser 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. The Company may endorse on all Share
certificates a legend stating or referring to such transfer restrictions;
provided, that no such legend shall be endorsed on any Share certificates which,
when issued, are no longer subject to the restrictions of this Section 6.
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SECTION 7. INFORMATION AS TO THE COMPANY
The Company covenants and agrees as follows:
7.1. 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 any holder of Series 2 Convertible Preferred Stock 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 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, (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 9 of this
Agreement; the
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Company's Quarterly Report on Form 10-QSB 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 such holder.
(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;
(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.
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(d) All such financial statements referred to in this Section 7.1 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 7.1, 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 7.1 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 Purchaser and any subsequent holders of Shares acquired directly or
indirectly (through one or more transfers) from such Purchaser, until instructed
otherwise by the then holder of such Shares.
7.2. Communication with Accountants.
The Company hereby authorizes any Purchaser to communicate directly with
the independent certified public accountants for the Company and authorizes such
accountants to disclose to such Purchaser 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 7.2.
7.3. Inspection.
So long as a holder of Series 2 Convertible Preferred Stock 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.
7.4. 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:
(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
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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 obligations under the Stock Purchase Agreements, the Series 1
Waiver, the Stockholders' Agreement, the Stockholders' Agreement Amendment, the
Registration Rights Agreement, the Registration Rights Amendment or the Series 2
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 obligations under the Stock Purchase Agreements, the
Series 1 Waiver, the Stockholders' Agreement, the Stockholders' Agreement
Amendment, the Registration Rights Agreement, the Registration Rights Amendment
or the Series 2 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 Code) in connection with an "employee benefit plan" (as defined in Section
3(3) of ERISA),
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maintained or contributed to (or required to be maintained or contributed to) by
the Company or any ERISA Affiliate.
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.
7.5. Confidentiality Agreement.
The Company's obligation to provide any non-public information under this
Section 7 or otherwise to any person other than members of its Board of
Directors shall be subject to prior execution of a confidentiality agreement
between the Company and the recipient of such information as more fully set
forth in the form attached hereto as Exhibit F (the "Confidentiality
Agreement").
SECTION 8. AFFIRMATIVE COVENANTS
The Company covenants and agrees as follows:
8.1. 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;
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(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.
8.2. 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 17 hereof, subject to Section 8.2(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 8.2.
8.3. Fiscal Year.
The fiscal year of the Company for tax, accounting and any other purposes
shall end on December 31 of each calendar year.
8.4. Environmental Matters.
(a) The Company and 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
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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.
(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 8.4(c) and Section 8.4(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 Stock 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 8.4(c).
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8.5. 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 2 Certificate of Designations.
8.6. Securities Exchange Act Registration.
(a) The Company 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 Common Stock of the Company, and the Company will file on time
such information, documents and 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.
8.7. 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.
8.8. Senior Securities.
The Company shall maintain the senior status of the Series 2 Convertible
Preferred Stock such that it shall rank senior in all respects, including the
payment on limitation and redemption, to all other equity securities of the
Company, except that the Series 1 Preferred shall rank pari passu with the
Series 2 Convertible Preferred Stock.
8.9. Shelf Registration.
On or before June 30, 2000, 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
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Rule 415 of the Securities Act (a "Shelf Registration") registering the resale
from time to time by the Purchaser Holders of all the Registrable Securities
(the "Initial Shelf Registration"). The registration statement shall be on Form
S-3 or another appropriate form permitting registration of such Registrable
Securities for resale by the Purchaser Holders. 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 any Purchaser
Holder'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 Purchaser Holders 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 8.9 shall terminate.
8.10. Further Assurances.
The Company will from time to time, upon the request of any Purchaser
Holder, promptly and duly execute and deliver any and all such further
instruments and documents as such holder may reasonably deem necessary or
desirable to obtain the full benefits of (i) the obligations of the Company
under this Agreement and (ii) the other rights and powers herein granted. Upon
the instructions from time to time of (I) any Purchaser Holder or (II) any
Transferee, provided that such Transferee holds not less than an 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 Purchaser Holder 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.
SECTION 9. NEGATIVE COVENANTS
So long as the Purchaser Holders hold any Shares (except as otherwise
provided in Section 9.2 herein), the Company covenants and agrees that without
the prior written consent of the holders of (A) at least 70% of outstanding
Shares with respect to Sections 9.1, 9.3 and 9.5 to 9.10 herein and (B) at least
50% of the outstanding Shares with respect to Sections 9.2 and 9.4 herein:
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9.1. 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 Stock
Purchase Agreements, the Series 1 Waiver, the Series 2 Certificate of
Designations, the Registration Rights Agreement, the Registration Rights
Amendment, the Stockholders' Agreement or the Stockholders' Agreement Amendment.
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 Stock Purchase Agreements, Series 1 Waiver, the
Series 2 Certificate of Designations, the Registration Rights Agreement, the
Registration Rights Agreement Amendment, the Stockholders' Agreement and the
Stockholders' Agreement Amendment) 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 equity or equity-linked security, which is senior
to, or pari passu with, the Series 2 Convertible Preferred Stock as to dividend
payments or amounts payable in the event of liquidation or winding up of the
Company, (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 Stock Purchase Agreements, the Series 1
Waiver, the Stockholders' Agreement, the Stockholders' Agreement Amendment, the
Registration Rights Agreement, the Registration Rights Amendment or the Series 2
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 2
Convertible Preferred Stock (including, without limitation, changing the Series
2 Certificate of Designations after any Shares have been called for redemption),
(d) except as otherwise provided in the Series 2 Certificate of Designations or
in accordance with Section 6(a) of the Series 1 Certificate of Designations, as
in effect on the date hereof, 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 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 2 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
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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.
9.2. Indebtedness.
So long as the Purchaser Holders hold at least 20% of the aggregate number
of shares of the Series 2 Convertible Preferred Stock purchased pursuant to the
Stock Purchase Agreements, the Company will not (i) incur Indebtedness,
excluding any Indebtedness set forth on Schedule 2 hereto, in excess of $20
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 the Stock Purchase Agreements.
9.3. Dissolution.
The Company will not (or will not agree to) wind up, liquidate or dissolve
its affairs.
9.4. No Change in Business.
The Company will not change substantially the character of its business as
conducted on the Closing Date as represented in Section 4.4 hereof and described
in the Disclosure Material.
9.5. 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.
9.6. 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 or (ii) any other
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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 any other holder of shares of the capital stock of the
Company).
This Section 9.6 shall not apply to (1) any obligations under the Stock Purchase
Agreements 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 Section 3 hereof or (3) Indebtedness identified on Schedule 2
hereto.
9.7. 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 9.7 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; (ii) the payment of reasonable and customary regular
fees to directors of the Company who are not employees of the Company; (iii)
existing arrangements as disclosed on the Disclosure Schedule; and (iv) the
transactions expressly contemplated by this Agreement.
9.8. 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 5 hereto.
9.9. 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 Registration Rights
Agreement).
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9.10. 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 the NASDAQ National Market or 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.
9.11. Actions Prior to the Closing Date.
From the date hereof through the Closing Date, 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
9.11 shall not limit, or be applicable to, (i) the transactions contemplated by
the Stock Purchase Agreements, including any issuance of capital stock in
connection with the transactions contemplated by Sections 9.1 and 9.10 hereof,
(ii) grants of options or issuances of Common Stock to officers, directors or
employees of the Company pursuant to the current terms of the Company's 1995
Stock Incentive Plan and (iii) the conversion of the Series 1 Preferred or the
exercise of existing warrants.
SECTION 10. CONDITIONS TO PURCHASER'S OBLIGATIONS
Purchaser's obligation to purchase Shares hereunder is subject to
satisfaction of the following conditions at the Closing (any of which may be
waived by Purchaser):
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10.1. Series 2 Certificate of Designations; Series 1 Waiver; Stockholders'
Agreement; Registration Rights Agreement.
(a) The certificate of incorporation of the Company shall have been duly
amended by the filing of the Series 2 Certificate of Designations in the form of
Exhibit A-1 hereto.
(b) The Company, the Purchasers and the other stockholders of the Company
named therein shall have entered into the Stockholders' Agreement Amendment
substantially in the form of Exhibit C hereto.
(c) The Company shall have entered into a Registration Rights Agreement
with the Purchasers substantially in the form of Exhibit D-1 hereto, and the
Company, the Purchasers and certain other stockholders of the Company shall have
entered into the Registration Rights Amendment substantially in the form of
Exhibit D-2 hereto.
(d) The Company, the Purchasers and certain other stockholders of the
Company shall have entered into the Series 1 Waiver substantially in the form of
Exhibit A-2 hereto.
10.2. Certificates for Shares.
The Purchaser shall concurrently receive the certificates for Shares
contemplated by Section 2(b) hereof.
10.3. Senior Status.
The Company shall have taken all of the necessary actions, including the
amendment of the appropriate existing agreements, so that, except as provided in
this Section 10.3, the Series 2 Convertible Preferred Stock shall rank senior in
all respects, including the payment on limitation and redemption, to all other
equity securities of the Company, except that the Series 1 Preferred shall rank
pari passu with the Series 2 Convertible Preferred Stock.
10.4. Accuracy of Representations and Warranties.
The representations and warranties of the Company contained in the Stock
Purchase Agreement herein or in any certificate or document delivered pursuant
hereto shall be correct and complete on and as of the Closing Date with the same
effect as though made on and as of such date.
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10.5. Compliance with Agreements.
The Company shall have performed and complied in all material respects with
all agreements, covenants and conditions contained in the Stock Purchase
Agreements and any other document contemplated hereby or thereby which are
required to be performed or complied with by the Company on or before the
Closing Date.
10.6. Officers' Certificates.
The Purchaser shall have received a certificate dated the Closing Date and
signed by the President or Chief Executive Officer and by the Secretary or the
Treasurer of the Company, to the effect that the conditions of Sections 10.4,
10.5, 10.8 (second sentence only) and 10.10 have been satisfied.
10.7. Proceedings.
All corporate and other proceedings in connection with the transactions
contemplated by the Stock Purchase Agreements, and all documents incident
thereto, shall be in form and substance satisfactory to the Purchaser and its
counsel, and the Purchaser shall have received all such originals or certified
or other copies of such documents as the Purchaser or its counsel may reasonably
request.
10.8. Legality; Governmental and Other Authorization.
The purchase of and payment for the Shares shall not be prohibited by any
law or governmental order, rule, ruling, regulation, release, interpretation or
opinion applicable to the Purchaser and shall not subject the Purchaser to any
penalty, tax, liability or other onerous condition. Any necessary consents,
approvals, licenses, permits, orders and authorizations of, and any filings,
registrations or qualifications with, any governmental or administrative agency
or other Person, with respect to the transactions contemplated by the Stock
Purchase Agreements shall have been obtained or made and shall be in full force
and effect. The Company shall have delivered to the Purchaser, upon its
reasonable request setting forth what is required, factual certificates or other
evidence, in form and substance satisfactory to the Purchaser and its counsel,
to enable the Purchaser to establish compliance with this condition.
10.9. No Material Adverse Change.
There shall have been no material adverse change in the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis since
December 31, 1999.
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10.10. Opinion of Counsel.
The Purchaser shall have received an opinion, dated the Closing Date and
addressed to the Purchasers, of Blank Rome Comisky & McCauley LLP, counsel for
the Company, which opinion shall be in form and substance satisfactory to the
Purchaser and its counsel and shall be to the effect set forth in Exhibit E
hereto.
10.11. Acceptance of Agent for Service of Process.
CSC, The United States Corporation Company shall have accepted its
appointment as the Company's agent in New York to receive service of process
pursuant to Section 18(i) hereof.
10.12. Other Documents and Opinions.
The Purchaser shall have received such other documents and opinions, in
form and substance reasonably satisfactory to the Purchaser and its counsel,
relating to matters incident to the transactions contemplated hereby as the
Purchaser may reasonably request.
SECTION 11. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations, warranties, covenants and agreements of the
Company and the Purchaser contained in this Agreement, the Series 1 Waiver, the
Stockholders' Agreement, the Stockholders' Agreement Amendment, the Registration
Rights Agreement, the Registration Rights Amendment or in any document or
certificate delivered pursuant hereto or thereto or in connection herewith shall
survive for a period of two (2) years from the Closing Date, and shall continue
in effect following, the execution and delivery of the Stock Purchase
Agreements, the Series 1 Waiver, the Stockholders' Agreement, the Registration
Rights Agreement, the Registration Rights Amendment, the closings hereunder and
thereunder, any investigation at any time made by the Purchaser 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 Section 9 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 Purchaser harmless from
and against and will pay to the Purchaser the full amount of any loss, damage,
liability or expense (including amounts paid in settlement and reasonable
attorneys' fees and expenses) to the Purchaser resulting either directly or
indirectly from any breach of the representations, warranties, covenants or
agreements of the Company contained in any Stock Purchase Agreement, or in the
Stockholders' Agreement, the Stockholders' Agreement Amendment, the
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Registration Rights Agreement, the Registration Rights Amendment or any other
document or certificate delivered pursuant hereto or thereto or in connection
herewith or therewith.
SECTION 12. SPECIFIC PERFORMANCE
The parties agree that irreparable damage will result in the event that
this Agreement is not specifically enforced, and the parties agree that any
damages available at law for a breach of this Agreement would not be an adequate
remedy. Therefore, the provisions hereof and the obligations of the parties
hereunder shall be enforceable in a court of equity, or other tribunal with
jurisdiction, by a decree of specific performance, and appropriate injunctive
relief may be applied for and granted in connection therewith. Such remedies and
all other remedies provided for in this Agreement shall, however, be cumulative
and not exclusive and shall be in addition to any other remedies which a party
may have under this Agreement or otherwise.
SECTION 13. EXPENSES
(a) Whether or not the transactions herein contemplated are consummated,
the Company shall pay (i) the costs, fees and expenses of the Company and its
counsel in connection with the Stock Purchase Agreements, the Series 2
Certificate of Designations, the Series 1 Waiver, the Stockholders' Agreement,
the Stockholders' Agreement Amendment, the Registration Rights Agreement, and
the Registration Rights Amendment, other related documentation and the issuance
of the Shares and the Conversion Shares and the furnishing of all opinions by
counsel for the Company, (ii) the costs, fees and expenses of Morgan, Lewis &
Bockius LLP in connection with the Stock Purchase Agreements, the Series 2
Certificate of Designations, the Series 1 Waiver, the Stockholders' Agreement,
the Stockholders' Agreement Amendment, the Registration Rights Agreement and the
Registration Rights Amendment, other related documentation and the transactions
contemplated hereby and thereby (whether or not a Closing occurs hereunder);
provided, however, that such fees and expenses shall not exceed $45,000 without
the approval of the Company, (iii) the fees and expenses of counsel to the
Purchasers in connection with any amendments to or modifications or waivers of
any provisions of the Stock Purchase Agreements, the Series 1 Waiver, the Series
2 Certificate of Designations, the Stockholders' Agreement, the Stockholders'
Agreement Amendment, the Registration Rights Agreement or the Registration
Rights Amendment, other related documentation or in connection with any other
agreements between the Purchasers and the Company and (iv) 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 Waiver, Series 2 Certificate of
Designations, the Stockholders' Agreement, the Stockholders' Agreement
Amendment, the Registration Rights Agreement or the Registration Rights
Amendment.
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(b) In addition to all other sums due hereunder or provided for in this
Agreement, the Company shall pay to the Purchaser or its 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 Purchaser or its agents pursuant to
any investigation or proceeding against any or all of the Company, the
Purchasers, or their agents, arising out of or in connection with the Stock
Purchase Agreements, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders' Agreement Amendment, the Registration Rights Agreement, the
Registration Rights Amendment 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 Purchaser or its agents or is
commenced or filed against the Purchaser or its agents because of the Stock
Purchase Agreements, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders' Agreement Amendment, the Registration Rights Agreement, the
Registration Rights Amendment, 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 Purchaser or its
agents, (ii) a material breach by Purchaser of any of its representations or
warranties contained herein, (iii) a material breach by Purchaser of any
provision of any confidentiality agreement between the Company and the
Purchaser, in any case, which was not taken by them in reliance upon any of the
Company's representations, warranties, covenants or agreements in the Stock
Purchase Agreements, the Series 1 Waiver, the Stockholders' Agreement, the
Stockholders' Agreement Amendment, the Registration Rights Agreement, the
Registration Rights Amendment, 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 Purchaser and such agents, in con nection with
investigating, defending or preparing to defend any such action, suit, claim or
proceeding (including any inquiry or investigation); provided, however, that the
Purchaser, 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 the Purchaser, or such agent of the Purchaser 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 the Purchaser 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 Company and such indemnified
person (neither of which shall unreasonably withhold its consent).
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(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 the Purchaser 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 the Stock Purchase
Agreements, the Series 1 Waiver, the Stockholders' Agreement, the Stockholders'
Agreement Amendment, the Registration Rights Agreement, the Registration Rights
Amendment and any other documents or instruments contemplated hereby or thereby
and any modification of the Series 2 Certificate of Designations, the Series 1
Waiver, the Stockholders' Agreement, the Stockholders' Agreement Amendment, the
Registration Rights Agreement, the Registration Rights Amendment or the Stock
Purchase Agreements or any such other documents or instruments and will hold the
Purchaser 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 13 shall survive any
Closing hereunder and any termination of the Stock Purchase Agreements.
SECTION 14. DIRECT PAYMENTS
As long as the Purchaser or any institutional holder which is a direct or
indirect transferee (as a result of one or more transfers) from the Purchaser
shall be the holder of any Shares, the Company will make all redemption
payments, liquidation payments and other distributions by wire transfer to the
Purchaser'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 Purchaser
has provided an address on Schedule 1 hereto for payments by wire transfer, and
such address may be changed for the Purchaser 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.
SECTION 15. AMENDMENTS AND WAIVERS
(a) The terms and provisions of this Agreement may be amended, waived,
modified or terminated only with the written consent of the holders of more than
70% of outstanding Shares; provided, however, that no such amendment, waiver,
modification or termination shall change this Section 15(a) without the written
consent of the holders of all the Shares and Conversion Shares then outstanding.
(b) 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 Shares and
Conversions Shares then
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outstanding, but failure to transmit copies shall not in any way affect the
validity of any such amendment, waiver, modification or termination.
SECTION 16. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT
(a) Subject to Section 6 hereof, at any time at the request of any holder
of Shares to the Company at its address provided under Section 17 hereof, the
Company at its expense (except for any transfer 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.
(b) Any Share certificate which is converted into Conversion Shares in
whole or in part shall be canceled 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.
(c) 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 Purchaser 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.
SECTION 17. NOTICES
All notices, requests, demands, consents and other communications hereunder
shall be in writing and shall be delivered by hand or shall be sent by telex or
telecopy (confirmed by registered, certified or overnight mail or courier,
postage and delivery charges prepaid), (i) if to the Company, to Impax
Laboratories, Inc., 30831 Huntwood Avenue, Hayward, California 94544, Attention:
Barry R. Edwards, Co-Chief Executive, with a copy to Blank Rome Comisky &
McCauley LLP, One Logan Square, Philadelphia, PA 19103-6998, Attention: Sol B.
Genauer or (ii) if to the Purchaser, at the address indicated on Schedule 1
hereto, with a copy to Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York,
NY 10178-0060, Attention: David W. Pollak, Esq., or at such other address as a
party may from time to time designate as its address
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in writing to the other party to this Agreement. Whenever any notice is required
to be given hereunder, such notice shall be deemed given and such requirement
satisfied only when such notice is delivered or, if sent by telex or telecopier,
when received.
SECTION 18. MISCELLANEOUS
(a) The Stock Purchase Agreements, Series 1 Waiver, the Stockholders'
Agreement, the Stockholders' Agreement Amendment, the Registration Rights
Agreement, the Registration Rights Amendment and, upon any closing hereunder and
the Series 2 Certificate of Designations together with any further agreements
entered into by the Purchaser and the Company at any closing hereunder, contain
the entire agreement between the Purchaser and the Company, and supersede any
prior oral or written agreements, commitments, terms or understandings,
regarding the subject matter hereof.
(b) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
(c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, 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 Purchaser's written
consent, and (b) the Purchaser may assign any of its rights, duties or
obligations under this Agreement to a purchaser of its Shares, provided that
such purchaser is reasonably acceptable to the Company.
(d) In addition to any assignment by operation of law, the Purchaser may
assign, in whole or in part, any or all of its rights (and/or obligations) under
this Agreement to any permitted transferee of any or all of its Shares or
Conversion Shares and (unless such assignment expressly provides otherwise) any
such assignment shall not diminish the rights the Purchaser would otherwise have
under this Agreement or with respect to any remaining Shares or Conversion
Shares held by the Purchaser.
(e) No course of dealing and no delay on the part of any party hereto in
exercising any right, power, or remedy conferred by this Agreement shall operate
as a waiver thereof or otherwise prejudice such party's rights, powers and
remedies. No single or partial exercise of any right, power or remedy conferred
by this Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
48
<PAGE>
(f) The headings and captions in this Agreement are for convenience of
reference only and shall not define, limit or otherwise affect any of the terms
or provisions hereof.
(g) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York (other than any conflict of laws rule which
might result in the application of the laws of any other jurisdiction).
(h) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument,
and all signatures need not appear on any one counterpart.
(i) 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 WAIVER, THE SERIES 2 CERTIFICATE OF
DESIGNATIONS, THE STOCKHOLDERS' AGREEMENT, THE STOCKHOLDERS' AGREEMENT
AMENDMENT, THE REGISTRATION RIGHTS AGREEMENT, THE REGISTRATION RIGHTS AMENDMENT,
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
WAIVER, THE SERIES 2 CERTIFICATE OF DESIGNATIONS, THE STOCKHOLDERS' AGREEMENT,
THE STOCKHOLDERS' AGREEMENT AMENDMENT, THE REGISTRATION RIGHTS AGREEMENT, THE
REGISTRATION RIGHTS AMENDMENT, 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
49
<PAGE>
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.
(j) THE COMPANY AND THE PURCHASER 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 WAIVER, THE SERIES 2 CERTIFICATE OF DESIGNATIONS, THE
STOCKHOLDERS' AGREEMENT, THE STOCKHOLDERS' AGREEMENT AMENDMENT, THE REGISTRATION
RIGHTS AGREEMENT, THE REGISTRATION RIGHTS AGREEMENT AMENDMENT, THE SHARES OR THE
CONVERSION SHARES, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS TRANSACTION. THE COMPANY AND THE PURCHASER 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 PURCHASER 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 WAIVER, THE SERIES 2 CERTIFICATE OF DESIGNATIONS, THE STOCKHOLDERS'
AGREEMENT, THE STOCKHOLDERS' AGREEMENT AMENDMENT, THE REGISTRATION RIGHTS
AGREEMENT, THE REGISTRATION RIGHTS AMENDMENT, 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.
[remainder of page intentionally left blank]
50
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
IMPAX LABORATORIES, INC.
By /s/ Barry R. Edwards
--------------------------------
Name: Barry R. Edwards
Title: Co-Chief Executive Officer
Accepted and Agreed to as of the
date first above written by the
undersigned Purchaser:
CHINA DEVELOPMENT INDUSTRIAL BANK, INC.
By: /s/ Brian C. Keng
-----------------
Name: Brian C. Keng
Title: Senior Vice President
================================================================================
REGISTRATION RIGHTS AGREEMENT
among
IMPAX LABORATORIES, INC.
and
THE INVESTORS NAMED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I...................................................................................1
DEMAND REGISTRATIONS...............................................................1
1.1 Requests for Registration......................................1
1.2 Limitations on Demand Registrations............................2
1.3 Effective Registration Statement...............................3
1.4 Priority on Demand Registrations...............................3
1.5 Selection of Underwriters......................................3
1.6 Other Registration Rights......................................4
ARTICLE II..................................................................................4
OTHER REGISTRATIONS................................................................4
2.1 Right to Piggyback.............................................4
2.2 Priority on Primary Registrations..............................4
2.3 Priority on Secondary Registrations............................4
2.4 Other Registrations............................................5
ARTICLE III.................................................................................5
REGISTRATION PROCEDURES............................................................5
ARTICLE IV..................................................................................9
REGISTRATION EXPENSES..............................................................9
4.1 Company's Fees and Expenses....................................9
4.2 Fees of Counsel to Holders.....................................9
ARTICLE V..................................................................................10
UNDERWRITTEN OFFERINGS............................................................10
5.1 Demand Underwritten Offerings.................................10
5.2 Incidental Underwritten Offerings.............................10
ARTICLE VI.................................................................................11
INDEMNIFICATION...................................................................11
6.1 Indemnification by the Company................................11
6.2 Indemnification by Holders....................................12
6.3 Indemnification Procedures....................................12
6.4 Indemnification of Underwriters...............................13
6.5 Contribution..................................................13
6.6 Timing of Indemnification Payments............................14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE VII................................................................................15
RULE 144 .........................................................................15
ARTICLE VIII...............................................................................15
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.......................................15
ARTICLE IX.................................................................................15
MERGERS, ETC......................................................................15
ARTICLE X..................................................................................16
DEFINITIONS.......................................................................16
ARTICLE XI.................................................................................19
MISCELLANEOUS.....................................................................19
11.1 No Inconsistent Agreements....................................19
11.2 Adjustments Affecting Registrable Securities..................19
11.3 Remedies......................................................19
11.4 Amendments and Waivers........................................19
11.5 Successors and Assigns........................................19
11.6 Notices.......................................................20
11.7 Headings......................................................21
11.8 Gender........................................................21
11.9 Invalid Provisions............................................21
11.10 Governing Law.................................................21
11.11 Counterparts..................................................21
</TABLE>
<PAGE>
This Registration Rights Agreement (this "Agreement") dated as of March 23,
2000, is by and among (i) IMPAX LABORATORIES, INC., 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) and CHARLES HSIAO
(collectively, the "Impax Stockholders," and together with the Fleming Funds,
the "Series 2 Stockholders"). The Series 2 Stockholders, any Series 2 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, simultaneously herewith, the Investor Group has purchased an
aggregate of 150,000 shares of Series 2 Preferred pursuant to the terms of the
Stock Purchase Agreements;
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Stock Purchase Agreements that the Company and the Investor
Group enter into this Agreement whereby the Company shall grant, and the
Investors shall obtain, the rights relating to the registration of the
Registrable Securities under the Securities Act, as set forth in this Agreement;
NOW, THEREFORE, in connection with the Stock Purchase Agreements 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 2 Holder that owns
at least 20,000 shares of Series 2 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
<PAGE>
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) On or before June 30, 2000, 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 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 2 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
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<PAGE>
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
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 2 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 2 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 2 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 granted after the
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<PAGE>
date hereof shall be subordinate in all respects to the registration rights held
by the holders of the Registrable Securities; provided, further, that the
registration rights granted by this Agreement will rank pari passu with all such
registration rights granted prior to the date hereof.
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) Series 1 Registrable Securities,
(III) 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 (IV) 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, Series 1 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) 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, Series 1 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
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<PAGE>
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, Series 1 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. The Company hereby agrees that whenever it grants piggyback rights
to any holder of its securities after the date hereof, 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:
(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 2 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
-5-
<PAGE>
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 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 2 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
-6-
<PAGE>
selected by such Series 2 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 2 Holders or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of the Shares;
(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;
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(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 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
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(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 2 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 2 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 2 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 Stock 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 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.
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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 2 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 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.
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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 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
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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
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
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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.
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
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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 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.
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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.
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.
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ARTICLE X
DEFINITIONS
10.1 As used in this Agreement, the following defined terms shall have the
meanings set forth below:
"Agreement" means this Registration Rights Agreement as from time to time
assigned, supplemented or amended or as the terms hereof may be waived.
"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 Asset 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, to such holder at the
address indicated on Schedule 1 to the Stock Purchase Agreements, (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).
"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.
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"Registrable Securities" means (i) any shares of Common Stock issued or
issuable upon conversion of the Series 2 Preferred 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.
"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 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 Series 1 Registrable
Securities, such securities will cease to be Series 1 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.
"Series 2 Holders" means the Fleming Holders and the Impax Holders.
"Series 2 Preferred" means the Company's Series 2 Convertible Preferred
Stock, par value $.01 per share, which Series 2 Preferred Stock is convertible
into shares of Common Stock.
"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.
"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
14, 1999, as amended on the date hereof, between the Series 2 Stockholders and
certain other parties.
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"Stock Purchase Agreements" means, collectively, the separate Stock
Purchase Agreements, dated as of the date hereof, between the Company and each
Investor.
"Transferee" shall mean any transferee (except for a Series 2 Holder) of
Shares or Conversion Shares (as such terms are defined within the definition of
"Series 2 Holders") from a Series 2 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.
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
Consent 11.6(b)
Demand Registrations 1.1(a)
Fleming Funds Preamble
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)
Other Securities 1.6
Piggyback Registration 2.1
Registration Expenses 4.1
SEC 1.2(b)
Shares Recitals
Shelf Registration 1.1(b)
Short-Form Demand Registration 1.1(a)
Subsequent Shelf Registration 1.1(b)
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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.
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 Series 2 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.
-19-
<PAGE>
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) Blank Rome Comisky & McCauley LLP, One Logan Square, Philadelphia, PA
19103-6998 Attention: Sol Genauer or to (ii) any Series 2 Stockholder or any
subsequent holder of shares of Registrable Securities 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 2 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 2 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 2 Holders shall be deemed obtained if any of the
following conditions are satisfied: (i) the Fleming Funds and the Impax
Stockholders are 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 2 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 2
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 2 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
-20-
<PAGE>
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]
-21-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
IMPAX LABORATORIES, INC.
By: /s/ Barry R. Edwards
----------------------------------------
Name: Barry R. Edwards
Title: Co-Chief Executive Officer
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: /s/ Robert L. Burr
-------------------------------
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: /s/ Robert L. Burr
--------------------------------
Robert L. Burr, member
<PAGE>
CHINA DEVELOPMENT INDUSTRIAL BANK, INC.
By: /s/ Brian C. Keng
-----------------------------------------
Name: Brian C. Keng
Title: Senior Vice President
PRESIDENT (BVI) INTERNATIONAL INVESTMENT
HOLDINGS LTD.
By: /s/ Chang Sheng Lin
-----------------------------------------
Name: Chang Sheng Lin
Title: President
CHEMICAL COMPANY OF MALAYSIA BERHAD
By: /s/ Oh Kim Sun
-----------------------------------------
Name: Oh Kim Sun
Title: Director
By: /s/ Charles Hsiao
-----------------------------------------
Charles Hsiao
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT (this "Amendment"), dated as of
March 23, 2000, by and among (i) Impax Laboratories, Inc. (f/k/a Global
Pharmaceutical Corporation), a Delaware corporation (the "Company"), (ii)
Charles Hsiao, Larry Hsu and Barry R. Edwards, (iii) Fleming US Discovery Fund
III, L.P. and Fleming US Discovery Offshore Fund III, L.P. 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.
WHEREAS, the Company and its stockholders are parties to that certain
Stockholders' Agreement, dated as of December 14, 1999 (as such agreement may be
amended, modified or supplemented, the "Stockholders' Agreement"; capitalized
terms used and not otherwise defined herein have the respective meanings
ascribed to them in the Stockholders' Agreement); and
WHEREAS, in connection with the issuance by the Company of shares of Series
2 Convertible Preferred Stock, the parties hereto wish to amend the
Stockholders' Agreement pursuant to Section 9.3 of the Stockholders' Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Amendment.
a. Section 1.1(a) of the Stockholders' Agreement is hereby amended to
add the following defined terms:
"Investor" and "Investor Group" have the respective meanings set forth in
the preliminary paragraph of this Agreement, provided, that for the purposes of
Articles II and III hereof, "Investor" and "Investor Group" shall include
holders of Series 2 Preferred to the same extent and degree as holders of Series
1 Preferred.
"Investor Shares" means, for the purposes of Article III hereof, with
respect to any Investor, all of the shares of Company Stock owned by such
Investor.
"Series 1 Preferred" has the meaning set forth in the recitals hereto,
provided, that for the purposes of Articles II and III hereof "Series 1
Preferred" (including any defined term used in such Articles incorporating the
term "Series 1 Preferred") shall include the Series 2 Preferred to the same
extent and degree as the Series 1 Preferred."
"Series 2 Preferred" means the shares of Series 2 Convertible Preferred
Stock of the Company issued pursuant to the Stock Purchase Agreements dated as
of March 23, 2000 between the Company and the purchasers named therein.
<PAGE>
b. Section 1.1(a) of the Stockholders' Agreement is hereby amended by
adding the following proviso to the first sentence of the defined term "Shares":
provided, that for the purposes of Articles II and III hereof
"Shares" (including any defined term used in such Articles
incorporating the term "Shares") shall include the Series 2 Preferred
to the same extent and degree as the Series 1 Preferred.
c. Section 4.1 of the Stockholders' Agreement is hereby amended by
deleting the words "up to $10 million" in the proviso to clause (a) of the third
sentence thereof and substituting therefor "up to $15 million".
d. (Intentionally Omitted).
e. Section 4.2 of the Stockholders' Agreement is hereby amended by
deleting the words "in excess of $15 million" in clause (i) of the
first sentence thereof and substituting therefor "in excess of $20
million".
f. Section 4.7 of the Stockholders' Agreement is hereby amended by
deleting the word "and" prior to subsection (iii) of the proviso thereto,
replacing it with "," and adding the following words at the end of such
subsection "and (iv) the transactions expressly contemplated by the Stock
Purchase Agreements dated as of March 23, 2000 between the Company and the
purchasers named therein."
g. Section 5.8 of the Stockholders' Agreement is hereby amended by
deleting the first five words of the second sentence thereof and
substituting therefor "on or before June 30, 2000".
2. Effect on the Stockholders' Agreement. Except as expressly amended
hereby, the Stockholders' Agreement shall continue in full force and effect in
accordance with the provisions thereof. All references in the Stockholders'
Agreement to "the Agreement" or similar terms shall be deemed references to the
Stockholders' Agreement as amended hereby.
3. Further Assurances. Each party hereto agrees to execute and deliver any
and all such further instruments and documents as shall be necessary to effect
the purposes of this Amendment.
4. Governing Law. This Amendment shall be governed and construed in
accordance with the 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.
5. Counterparts. This Amendment 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]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
IMPAX LABORATORIES, INC.
By: /s/ Barry R. Edwards
----------------------------------------
Name: Barry R. Edwards
Title: Co-Chief Executive Officer
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: /s/ Robert L. Burr
----------------------------------------
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: /s/ Robert L. Burr
----------------------------------------
Robert L. Burr, member
[Signature Page to Amendment No. 1 to Stockholders' Agreement]
<PAGE>
CHINA DEVELOPMENT INDUSTRIAL BANK, INC.
By: /s/ Brian C. Keng
----------------------------------------
Name: Brian C. Keng
Title: Senior Vice President
PRESIDENT (BVI) INTERNATIONAL INVESTMENT
HOLDINGS LTD.
By: /s/ Chang Sheng Lin
----------------------------------------
Name: Chang Sheng Lin
Title: President
CHEMICAL COMPANY OF MALAYSIA BERHAD
By: /s/ Oh Kim Sun
----------------------------------------
Name: Oh Kim Sun
Title: Director
EUROC II VENTURE CAPITAL CORP.
By: /s/ Kao Yu Jen
----------------------------------------
Name: Kao Yu Jen
Title: Chairman
EUROC III VENTURE CAPITAL CORP.
By: Kao Yu Jen
----------------------------------------
Name: Kao Yu Jen
Title: Chairman
MULTIVENTURE TECHNOLOGIES, INC.
By: /s/ James Mah
----------------------------------------
Name: James Mah
Title: President
[Signature Page to Amendment No. 1 to Stockholders' Agreement]
<PAGE>
TAI-I ELECTRIC WIRE & CABLE CO., LTD.
By: /s/ Tsu Jui Chun
----------------------------------------
Name: Tsu Jui Chun
Title:
/s/ Charles Hsiao
--------------------------------------------
Charles Hsiao
/s/ Larry Hsu
--------------------------------------------
Larry Hsu
/s/ Barry R. Edwards
--------------------------------------------
Barry R. Edwards
[Signature Page to Amendment No. 1 to Stockholders' Agreement]
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
(this "Amendment"), dated as of March 23, 2000, by and among (i) Impax
Laboratories, Inc. (f/k/a 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. 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.
WHEREAS, the Company and certain of its stockholders are parties to that
certain Amended and Restated Registration Rights Agreement, dated as of December
14, 1999 (as such agreement may be amended, modified or supplemented, the
"Registration Rights Agreement"; capitalized terms used and not otherwise
defined herein have the respective meanings ascribed to them in the Registration
Rights Agreement); and
WHEREAS, in connection with the issuance by the Company of shares of Series
2 Convertible Preferred Stock, the parties hereto wish to amend the Registration
Rights Agreement pursuant to Section 11.4 of the Registration Rights Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Amendment.
a. Section 1.1(b) of the Registration Rights Agreement is hereby amended
by deleting the first nine words of the first sentence thereof and substituting
therefor "On or before June 30, 2000,".
b. Section 1.6 of the Registration Rights Agreement is hereby amended by
adding the following proviso thereto:
, except that the registration rights granted pursuant to that certain
Registration Rights Agreement dated as of March 23, 2000 among the
Company and the stockholders of the Company named therein shall rank
pari passu with the registration rights granted herein.
c. Section 2.3(b) of the Registration Rights Agreement is hereby amended
by adding the following proviso thereto:
<PAGE>
, except that the registration rights granted pursuant to that certain
Registration Rights Agreement dated as of March 23, 2000 among the
Company and the stockholders of the Company named therein shall rank
pari passu with the registration rights granted herein.
2. Effect on the Registration Rights Agreement. Except as expressly amended
hereby, the Registration Rights Agreement shall continue in full force and
effect in accordance with the provisions thereof. All references in the
Registration Rights Agreement to "the Agreement" or similar terms shall be
deemed references to the Registration Rights Agreement as amended hereby.
3. Further Assurances. Each party hereto agrees to execute and deliver any
and all such further instruments and documents as shall be necessary to effect
the purposes of this Amendment.
4. Governing Law. This Amendment shall be governed and construed in
accordance with the 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.
5. Counterparts. This Amendment 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]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
IMPAX LABORATORIES, INC.
By: /s/ Barry R. Edwards
----------------------------------------
Name: Barry R. Edwards
Title: Co-Chief Executive Officer
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:
/s/ Robert L. Burr
----------------------------------------
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: /s/ Robert L. Burr
----------------------------------------
Robert L. Burr, member
[Signature Page to Amendment No. 1 to Registration Rights Agreement]
<PAGE>
CHINA DEVELOPMENT INDUSTRIAL BANK, INC.
By: /s/ Brian C. Keng
----------------------------------------
Name: Brian C. Keng
Title: Senior Vice President
PRESIDENT (BVI) INTERNATIONAL INVESTMENT
HOLDINGS LTD.
By: /s/ Chang Sheng Lin
----------------------------------------
Name: Chang Sheng Lin
Title: President
CHEMICAL COMPANY OF MALAYSIA BERHAD
By: /s/ Oh Kim Sun
----------------------------------------
Name: Oh Kim Sun
Title: Director
EUROC II VENTURE CAPITAL CORP.
By: /s/ Kao Yu Jen
----------------------------------------
Name: Kao Yu Jen
Title: Chairman
EUROC III VENTURE CAPITAL CORP.
By: /s/ Kao Yu Jen
----------------------------------------
Name: Kao Yu Jen
Title: Chairman
MULTIVENTURE TECHNOLOGIES, INC.
By: /s/ James Man
----------------------------------------
Name: James Mah
Title: President
[Signature Page to Amendment No. 1 to Registration Rights Agreement]
<PAGE>
TAI-I ELECTRIC WIRE & CABLE CO., LTD.
By: /s/ Tsu Jui Chun
----------------------------------------
Name: Tsu Jui Chun
Title:
[Signature Page to Amendment No. 1 to Registration Rights Agreement]
