EXHIBIT 10.4
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement ("Agreement") is made as of February 6,
2004 by and among Halsey Drug Co., Inc., a New York corporation ("Company"),
Essex Woodlands Health Ventures V, L.P., a Delaware limited partnership
("Essex"), Care Capital Investments, L.P., a Delaware limited partnership ("Care
Capital"), Galen Partners III, L.P., a Delaware limited partnership ("Galen"
and, together with Essex and Care Capital, "Purchasers"), Oracle Strategic
Partners L.P., a Delaware limited partnership ("Oracle"), and each of the
holders of the Company's securities listed on the signature page attached to
this Agreement.
PRELIMINARY STATEMENTS
A. The Company has concurrently herewith entered into that
certain Debenture and Share Purchase Agreement (the "2004 Purchase Agreement;"
capitalized terms used in this Agreement and not otherwise defined in this
Agreement will have the meanings ascribed such term in the 2004 Purchase
Agreement) with the Purchasers and pursuant to which the Company issued certain
Convertible Senior Secured Debentures.
B. The Company and the holders of the Preferred Stock (and the
Common Stock issuable upon conversion of such Preferred Stock) (the "Investors")
desire to enter into this Agreement to provide for certain agreements and
options with respect to the Preferred Stock (and the Common Stock issuable upon
conversion of such Preferred Stock) all upon the terms, conditions and
provisions set forth in this Agreement.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
BOARD OF DIRECTORS; INVESTOR APPROVAL FOR MATERIAL
TRANSACTIONS
1.1. BOARD MEMBERS AND MEETINGS
The Company hereby covenants and agrees, that so long as the Purchasers
own any Series A Preferred, as follows:
(a) The Board of Directors shall be comprised of directors in full
compliance with the Voting Agreement, so long as such agreement remains in
effect. The Company agrees to hold meetings of its Board of Directors at least
four times a year, at no more than three month intervals. Directors shall be
reimbursed for their reasonable travel and related expenses in attending
meetings of the Board of Directors.
(b) Each of Care Capital and Essex shall have the right to have a
representative join the Company's Scientific Advisory Board, subject to the
approval of the Board of Directors.
(c) The Company shall maintain D&O Insurance mutually acceptable
to the Purchasers and the Company covering those persons who are directors and
officers of the Company, which D&O Insurance shall provide at least a minimum of
$5,000,000 of coverage per director, with financially sound and reputable
insurers insuring the Company's directors and officers from the liability and
expense customarily insured under such "director and officer" insurance
policies.
1.2. CONSENT OF HOLDERS OF SERIES A PREFERRED
The Company hereby covenants and agrees, that so long as any of the
Series A Preferred remains outstanding, it will not, directly or indirectly,
without the prior written consent of the holders of 60% of the issued and
outstanding Series A Preferred, take, or permit to be taken, any of the
following actions or complete, or permit to be taken, any of the following
transactions:
(a) make any amendment to the Company's certificate of incorporate
(other than the Charter Amendment) or by-laws;
(b) make any alteration of the preferences, voting power, special
rights or privileges of the Series A Preferred or the holders thereof;
(c) authorize, create or issue, or incur any obligation to issue,
any securities of the Company having any preference or priority as to dividends
or assets, whether in liquidation or otherwise, superior to, or pari passu with,
any such preference or priority of the Series A Preferred;
(d) take any action that reclassifies any outstanding shares of
any class of stock of the Company into shares having any preference or priority
as to dividends or assets, whether in liquidation or otherwise, superior to, or
pari passu with, any such preference or priority of the Series A Preferred;
(e) declare or pay any dividends or distributions on any
securities of the Company ranking junior in priority to the Series A Preferred,
other than dividends or distributions payable solely in Common Stock or other
securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock;
(f) consummate any redemption or other acquisition of any
securities; provided, however, that this restriction will not apply to the
repurchase of shares of Common Stock (or other securities and rights convertible
into or entitling the holder thereof to receive, directly or indirectly, shares
of Common Stock) held by employees, officers, directors, consultants or other
persons performing services for the Company or any of its Subsidiaries as
approved by the Board;
(g) approve or consummate a merger, reorganization, consolidation
or other business combination involving the Company, or a sale, transfer, lease,
license or other disposition of all
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or substantially all of the assets of the Company;
(h) approve or consummate the liquidation, dissolution,
commencement of any bankruptcy or other proceeding of the type referred to in
Section 12.1(i) of the 2004 Purchase Agreement, recapitalization or
reorganization of the Company (in each case whether or not they constitute
transactions of the type referred to in Section 1.2(i) below);
(i) without limiting the generality of Section 1.2(g) above,
consummate a strategic alliance, licensing arrangement or other corporate
partnering arrangement involving the issuance by the Company of in excess of
$10,000,000 in equity securities of the Company;
(j) enter into any transaction, contract or commitment or take any
action other than at Arm's Length;
(k) enter into or engage, directly or indirectly, in any business
other than the business currently conducted or proposed to be conducted as
disclosed to the Purchasers prior to the date hereof by the Company or any
Subsidiary;
(l) except as otherwise provided in the Transaction Document,
create, incur, assume or permit to exist any mortgage, pledge, lien, security
interest or encumbrance on any part of its properties or assets, or on any
interest it may have therein, now owned or hereafter acquired, nor acquire or
agree to acquire property or assets under any conditional sale agreement or
title retention contract, except that the foregoing restrictions of this Section
1.2(l) shall not apply to:
(i) liens for taxes, assessments and other governmental
charges, if payment thereof shall not at the time be required to be
made, and provided such reserve as shall be required by GAAP
consistently applied shall have been made therefore;
(ii) liens of workmen, materialmen, vendors, suppliers,
mechanics, carriers, warehouseman and landlords or other like liens,
incurred in the ordinary course of business for sums not then due or
that are being contested in good faith and provided that an adverse
decision in such contest would not materially affect the business of
the Company;
(iii) liens securing Indebtedness of the Company or any
Subsidiary which are permitted under Sections 1.2(m)(ii), 1.2(m)(vi) or
1.2(m)(vii);
(iv) statutory liens of landlords, statutory liens of
banks and rights of set-off, and other liens imposed by law, in each
case incurred in the ordinary course of business (A) for amounts not
yet overdue or (B) for amounts that are overdue and that are being
contested in good faith by appropriate proceedings, so long as reserves
or other appropriate provisions, if any, as shall be required by GAAP,
shall have been made for any such contested amounts;
(v) liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, surety and
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appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(vi) easements, rights-of-way, restrictions,
encroachments, and other minor defects or irregularities in title, in
each case which do not and will not interfere with the ordinary conduct
of the business of the Company or any of its Subsidiaries, except where
such interference could not reasonably be expected to have a Material
Adverse Effect;
(vii) any (A) interest or title of a lessor or sublessor
under any lease, (B) restriction or encumbrance that the interest or
title of such lessor or sublessor may be subject to, or (C)
subordination of the interest of the lessee or sublessee under such
lease to any restriction or encumbrance referred to in the preceding
clause (B), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee under such
lease;
(viii) liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(ix) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the
use of any real property;
(x) liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary
course of business of the Company and its Subsidiaries;
(xi) the Permitted Liens; and
(xii) the replacement, extension or renewal of any lien
permitted by this Section 1.2(l) upon or in the same property
theretofore subject or the replacement, extension or renewal (without
increase in the amount or change in any direct or contingent obligor)
of the Indebtedness secured thereby.
(m) Create, incur, assume, suffer, permit to exist, or guarantee,
directly or indirectly, any Indebtedness, excluding:
(i) the endorsement of instruments for the purpose of
deposit or collection in the ordinary course of business;
(ii) Indebtedness which may, from time to time be incurred
or guaranteed by the Company which in the aggregate principal amount
does not exceed $500,000 and is subordinate to the Watson Term Loan;
(iii) Indebtedness existing on the date of the 2004
Purchase Agreement and described in Section 10.4 of such agreement's
Schedule of Exceptions;
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(iv) Indebtedness relating to contingent obligations of
the Company and its Subsidiaries under guaranties in the ordinary
course of business of the obligations of suppliers, customers, and
licensees of the Company and its Subsidiaries;
(v) Indebtedness relating to loans from the Company to
its Subsidiaries or Indebtedness owed to any of the Guarantors;
(vi) Indebtedness relating to capital leases in an amount
not to exceed $500,000;
(vii) Indebtedness relating to a working capital line of
credit in an amount not to exceed $5,000,000;
(viii) accounts or notes payable arising out of the purchase
of merchandise or services in the ordinary course of business; or
(ix) the Watson Term Loan.
(n) issue, or incur any obligation to issue, (i) any Series A
Preferred other than upon conversion of Convertible Senior Secured Debentures
issued pursuant to the 2004 Purchase Agreement, or (ii) any Series B Preferred
or Series C Preferred other than pursuant to the Conversion Agreement.
1.3. CONSENT OF HOLDERS OF SERIES B PREFERRED
The Corporation covenants and agrees that, so long as any of the Series
B Preferred remains outstanding, it will obtain the consent of the holders of at
least a majority of the issued and outstanding Series B Preferred prior to
making any material adverse change to the rights, preferences or privileges of
the Series B Preferred.
1.4. CONSENT OF HOLDERS OF SERIES C PREFERRED
The Corporation covenants and agrees that, so long as any of the Series
C Preferred remains outstanding, it will obtain the consent of the holders of at
least a majority of the issued and outstanding Series C Preferred prior to
making any material adverse change to the rights, preferences or privileges of
the Series C Preferred.
ARTICLE II
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees, so long as any Preferred Stock
remains outstanding, as follows:
2.1. MAINTENANCE OF CORPORATE EXISTENCE; TAXES
(a) The Company shall maintain in full force and effect its
corporate existence, rights and franchises and all terms of licenses and other
rights to use licenses, trademarks, trade names,
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service marks, copyrights, patents, processes or any other Intellectual Property
Rights owned or possessed by it and necessary to the conduct of its business,
except where failure to maintain such rights, franchises and terms of licenses
and other rights to use such Intellectual Property Rights could not reasonably
be expected to have a Material Adverse Effect.
(b) The Company shall (i) promptly pay and discharge, or cause to
be paid and discharged when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, assets,
property or business of the Company, (ii) withhold and promptly pay to the
appropriate tax authorities all amounts required to be withheld from wages,
salaries and other remuneration to employees, and (iii) promptly pay all
Indebtedness incident to the operations of the Company.
2.2. COMPLIANCE WITH AGREEMENTS; COMPLIANCE WITH LAWS
The Company shall comply with the terms and conditions of all material
agreements, commitments or instruments to which the Company or any of its
Subsidiaries is a party or by which it or they may be bound. The Company shall,
and shall cause each of its Subsidiaries to, duly comply with any Legal
Requirements relating to the conduct of their respective businesses, properties
or assets, including, but not limited to, the requirements of the FDA Act, the
Prescription Drug Marketing Act, the CSA, ERISA, the Environmental Protection
Act, the Occupational Safety and Health Act, the Foreign Corrupt Practices Act,
the Sarbanes-Oxley Act of 2002 and the rules and regulations of each of the
agencies administering such acts, in each case except for any such noncompliance
that could not reasonably be expected to have a Material Adverse Effect.
2.3. PROTECTION OF LICENSES
The Company shall, and shall cause its Subsidiaries to, maintain,
defend and protect to the best of their ability licenses and sublicenses (and to
the extent the Company or a Subsidiary is a licensee or sublicensee under any
license or sublicense, as permitted by the license or sublicense agreement),
trademarks, trade names, service marks, patents and applications therefore and
other proprietary information or Intellectual Property Rights owned or used by
it or them and shall keep duplicate copies of any licenses, trademarks, service
marks or patents owned or used by it, if any, at a secure place selected by the
Company.
2.4. ACCOUNTS AND RECORDS; INSPECTIONS
(a) The Company shall keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to the business and affairs of the Company and its
Subsidiaries in accordance with GAAP applied on a consistent basis.
(b) Subject to the holder's execution of a confidentiality
agreement in form and substance reasonably acceptable to the Company, the
Company shall permit each holder of Preferred Stock or any of such Person's
officers, employees or representatives during regular business hours of the
Company, upon reasonable notice and as often as such Person may reasonably
request, to visit and inspect the offices and properties of the Company and its
Subsidiaries and to make extracts or copies of the books, accounts and records
of the Company
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or its Subsidiaries, and to discuss the affairs, finances and accounts of the
Company and its Subsidiaries, with the Company's (or Subsidiary's) directors and
officers, its independent public accountants, consultants and attorneys.
(c) Nothing contained in this Section 2.4 shall be construed to
limit any rights that a holder of Preferred Stock may have with respect to the
books and records of the Company and its Subsidiaries, to inspect its properties
or to discuss its affairs, finances and accounts.
2.5. MAINTENANCE OF OFFICE
The Company will maintain its principal office at the address of the
Company set forth in Section 4.7 of this Agreement where notices in respect of
this Agreement may be made upon the Company, until such time as the Company
shall notify the holders of Preferred Stock in writing, at least 30 days prior
thereto, of any change of location of such office.
2.6. INDEPENDENT COMMITTEE
The review and approval of the Independent Committee shall be required
as a condition to the completion of (a) any transaction between or among the
Company and the Purchasers, and (ii) any Liquidation Event.
ARTICLE III
TRANSFER RESTRICTIONS
3.1. DEFINITIONS
As used in this Article III, the following terms shall have the
following respective meanings:
"Accredited Investor" has the meaning specified in Rule 501(a) of
Regulation D promulgated pursuant to the Securities Act.
"Fully-Diluted Stockholders" means the holders of all Shares.
"Investor's Portion" means for purposes of Section 3.5 below, an amount
determined by multiplying (a) the number of shares of Offered Shares (as herein
defined) subject to the Co-Sale Right (as herein defined) by (b) the ratio
determined by dividing (i) the number of Restricted Shares (as herein defined)
held by a Restricted Investor by (ii) the aggregate number of Restricted Shares
held by all Restricted Investors.
"New Securities" means all shares of capital stock of the Company other
than (a) any convertible securities that may be converted into shares of Common
Stock, as set forth on Schedule 3.1 to this Agreement; (b) the shares of Common
Stock issuable upon conversion of the convertible securities set forth on
Schedule 3.1 to this Agreement; (c) Common Stock or options to purchase Common
Stock issued to any officers, employees or directors of, or consultants to, the
Company pursuant to any agreement, plan or arrangement approved by the Board of
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Directors; (d) the shares of Common Stock issuable upon conversion of those
shares of Preferred Stock that were issued on or before the date hereof; (e) the
shares of any class of capital stock issued on a pro rata basis to all holders
of such class as a stock dividend or upon any stock split or other subdivision
of shares of capital stock; (f) any shares of Common Stock issued as
consideration in any acquisition, approved by the Board of Directors, of all or
substantially all of the capital stock or assets of any other entity; and (g)
any shares of Common Stock issued as consideration for or in connection with a
borrowing, approved by the Board of Directors, from an unaffiliated financial
institution upon customary terms or other strategic transactions approved by the
Board of Directors.
"New Securities Portion" means such number of shares of New Securities,
which, when added to the number of Shares held by the Investors, shall be
sufficient to maintain the aggregate ownership percentage of the Company by the
Investors (on a fully-diluted basis) immediately following the issuance of New
Securities as it was immediately before that issuance.
"Offered Shares" means the number of Shares set forth in a Seller
Notice (as defined in Section 3.3) which a Restricted Investor proposes to
Transfer.
"Pro Rata Amount" means, as of any date with respect to a specified
Investor, the percentage equal to (a) the number of Shares held by such Investor
as of that date, divided by (b) the aggregate number of Shares held by all
Investors as of that date, each determined on an as converted and as if
exercised basis.
"Public Shares" means any Shares that have at some point been sold
pursuant to an effective registration statement under the Securities Act, sold
through a broker pursuant to Rule 144 under the Securities Act or otherwise
acquired in the publicly traded markets.
"Restricted Investor" means each of Essex, Care Capital, Galen, Oracle
(and their respective Permitted Transferees), and each holder of Series A
Preferred.
"Restricted Shares" means (a) with respect to each of Essex, Care
Capital, Galen and Oracle (and their respective Permitted Transferees), all
Shares held by such Restricted Investor other than Public Shares, and (b) with
respect to each other Restricted Investor, all Series A Preferred held by such
Restricted Investor.
"Shares" means and includes all shares of Common Stock and Preferred
Stock of the Company issued and outstanding at the relevant time plus (a) all
shares of Common Stock and Preferred Stock that may be issued upon exercise of
any options, warrants and other rights of any kind that are then exercisable,
and (b) all shares of Common Stock and Preferred Stock that may be issued upon
conversion of (i) any convertible securities, including, without limitation, any
debt securities then outstanding, which are by their terms then convertible into
or exchangeable for Common Stock or Preferred Stock of the Company or (ii) any
such convertible securities issuable upon exercise of options, warrants or other
rights that are then exercisable.
"Transfer" means and includes any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise or
descent, or other transfer or disposition of any kind, including but not limited
to transfers to receivers, levying creditors,
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trustees or receivers in bankruptcy proceedings or general assignees for the
benefit of creditors, whether voluntary or by operation of law, directly or
indirectly, including, without limitation, the following (provided that the
following are "Permitted Transfers"):
(a) any Transfer of Shares by an Investor who is an
individual to such Investor's spouse, lineal descendant or antecedent,
father, mother, brother or sister of such Investor, the adopted child
or adopted grandchild of such Investor, or the spouse of any child,
adopted child, grandchild or adopted grandchild of such Investor, or to
a trust or trusts or other entity (including family limited
partnerships or family limited liability companies) for the exclusive
benefit of or exclusively controlled by such Investor or such
Investor's family members as described in this clause (a), or transfers
of Shares by the Investor by devise or descent so long as such Transfer
complies with Section 3.2 hereof;
(b) any Transfer of Shares by an Investor made pursuant
to (i) a merger or consolidation of the Company with or into another
corporation or corporations, or (ii) the winding up and dissolution of
the Company; and
(c) any Transfer of Shares by an Investor which is an
entity to its Affiliates, partners, limited partners, members or
stockholders or any transfers to a family member or trust as described
in clause (a) above of such partner, limited partner, member or
stockholder so long as such Transfer complies with Section 3.2 hereof;
Transfers described in clauses (a), (b) or (c) of this definition of "Transfer"
and complying with the requirements of Section 3.2 are referred to herein as
"Permitted Transfers," and the transferees of Shares by virtue of such Permitted
Transfers are referred to herein as "Permitted Transferees."
3.2. RESTRICTIONS ON TRANSFER OF PREFERRED STOCK
This Section 3.2 and Section 3.6 shall apply to all Transfers of Shares
by an Investor and the remainder of Article III of this Agreement shall apply
solely to Restricted Investors. Notwithstanding any implication to the contrary
set forth in this Agreement, no Transfer shall have any force or effect unless:
(a) such a Transfer is made in accordance with each of the provisions of this
Agreement, (b) such a Transfer would not result in the violation of applicable
federal or state securities laws, (c) the transferee in any such Transfer is an
Accredited Investor, and (d) the intended transferee of such Transfer executes a
joinder to this Agreement pursuant to which such intended transferee agrees to
be bound by the provisions of this Agreement. Any attempt by an Investor to
transfer any Shares in violation of any provision of this Agreement will be void
and have no force or effect. The Company will not be required (i) to transfer on
its books any Shares that have been sold, gifted or otherwise Transferred in
violation of this Agreement or (ii) to treat as the owner of such Shares, or to
accord the right to vote or pay dividends to, any purchaser, donee or other
transferee to whom such Shares may have been so Transferred in violation of this
Agreement.
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3.3. NOTICE OF PROPOSED TRANSFER
Before any Restricted Investor may effect any Transfer of any Offered
Shares (other than a Permitted Transfer), such Restricted Investor (the
"Proposed Transferor") must give written notice concurrently to the Company and
the other Restricted Investors ("Seller Notice") stating (a) the Proposed
Transferor's bona fide intention to transfer such Offered Shares, (b) the number
of the Offered Shares to be Transferred, (c) the name, address and relationship
to the Proposed Transferor, if any, of each proposed purchaser or other
transferee (the "Proposed Transferee"), (d) the bona fide cash price per Offered
Share (the "Offered Price"); and (e) the anticipated date of the proposed
Transfer, which shall be a date not earlier than 30 days after the date the
Seller Notice is delivered. Upon the request of the Company or a Restricted
Investor, the Proposed Transferor will promptly furnish such information to the
Company and to the Restricted Investor as may be reasonably requested to
establish that the offer and proposed Transfer are bona fide.
3.4. RIGHT OF FIRST REFUSAL
With respect to any Transfer by any Proposed Transferor (other than a
Permitted Transfer), the Company and each Restricted Investor shall have the
right of first refusal ("Right of First Refusal") to purchase the Offered
Shares, exercisable as set forth below:
(a) The Company shall have the right to purchase all, but not less
than all, of the Offered Shares. If the Company desires to purchase all of the
Offered Shares, the Company must, within the 10 day period (the "Company Refusal
Period") commencing on the date of receipt of the Seller Notice, give written
notice to the Proposed Transferor of the Company's election to purchase the
Offered Shares. In the event that the Company elects not to purchase all of the
Offered Shares, the Offered Shares may be purchased by the Restricted Investors
as set forth in Section 3.4(b). On or before the expiration of the Company
Refusal Period, the Company will give written notice (the "Company Waiver
Notice") to the Restricted Investors specifying either (i) that all of the
Offered Shares were subscribed by the Company's exercising its Right of First
Refusal or (ii) that the Company waived its right to purchase the Offered
Shares. Notwithstanding any failure by the Company to deliver a Company Waiver
Notice, a failure by the Company to exercise its Right of First Refusal within
the Company Refusal Period shall be deemed a waiver of such right.
(b) In the event the Company does not purchase all of the Offered
Shares, each Restricted Investor shall have the opportunity to purchase up to
such Restricted Investor's pro rata share of the Offered Shares. For purposes of
this Section 3.4(b), a Restricted Investor's pro rata share shall be determined
by dividing the number of Restricted Shares held by a Restricted Investor by the
total number of Restricted Shares held by all Restricted Investors purchasing
Offered Shares pursuant to this Section 3.4(b). If any Restricted Investor, or
its assignees who are Affiliates of such Restricted Investor, desires to
purchase the Offered Shares, such Restricted Investor must, within a 5 day
period (the "Investor Refusal Period") commencing on the later date of (i) the
Company Waiver Notice or (ii) the 10th day after the Seller Notice, give written
notice ("Investor Notice") to the Proposed Transferor and to the Company of such
Restricted Investor's election to purchase such Restricted Investor's pro rata
share of the remaining Offered Shares, or such lesser number as may be stated in
such Restricted Investor's Investor Notice.
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The participating Restricted Investors also may allocate the right to purchase
the Offered Shares between or among them in any proportion they choose as
reflected in a notice to the Proposed Transferor within the Investor Refusal
Period. In the event that any Restricted Investor elects not to purchase any of
the Offered Shares, such Restricted Investor shall, prior to the expiration of
the Investor Refusal Period, give written notice ("Investor Waiver Notice") to
the Proposed Transferor that the Restricted Investor is waiving such Restricted
Investor's right to purchase all such Offered Shares under this Section 3.4(b).
Notwithstanding any failure by a Restricted Investor to deliver an Investor
Waiver Notice, a failure by a Restricted Investor to exercise such Restricted
Investor's Right of First Refusal within the Investor Refusal Period shall be
deemed a waiver of such right. If any Restricted Investor does not exercise its
right of first refusal in full with respect to the Offered Shares within the
Investor Refusal Period, then each Restricted Investor who requested to purchase
in excess of its pro rata share of such Offered Shares shall be allowed to
purchase such excess. If the total number of shares to be purchased pursuant to
the foregoing sentence exceeds the number of remaining Offered Shares available
for purchase, then such remaining shares shall be allocated among such
Requesting Investors in proportion to the number of Restricted Shares owned by
each of them, or in any other manner to which they agree.
(c) The purchase price for the Offered Shares to be purchased by
the Company or the Restricted Investors exercising their Right of First Refusal
under this Agreement will be the Offered Price, and will be payable within 10
days after the date the Right of First Refusal is first exercised for all of the
Offered Shares. Payment of the purchase price will be made by the exercising
Company or Restricted Investors (as the case may be) by check or wire transfer
of immediately available funds.
(d) If the Company or Restricted Investors exercise their Rights
of First Refusal to purchase all of the Offered Shares, then, upon consummation
of such purchase, the Proposed Transferor will have no further rights as a
holder of the Offered Shares except the right to receive payment for the Offered
Shares in accordance with the terms of this Agreement, and the Proposed
Transferor will promptly cause all certificate(s) evidencing such Offered
Shares, together with such other instruments and documents of transfer as the
Persons acquiring the Offered Shares shall reasonably request, to be surrendered
to the Company for Transfer to the Persons acquiring the Offered Shares (free
and clear of any and all liens, claims and encumbrances whatsoever except those
imposed by this Agreement and securities laws generally).
(e) If the Company or the Restricted Investors have not elected to
purchase all of the Offered Shares, then, subject to the Co-Sale Rights set
forth in Section 3.5, the Proposed Transferor may Transfer the remaining Offered
Shares to the Proposed Transferee, at the Offered Price or at a higher price,
provided that such Transfer (i) is consummated within 90 days after the date of
the Seller Notice and (ii) is in accordance with all the terms of this
Agreement. Any proposed Transfer at a price or on terms and conditions more
favorable than those described in the Seller Notice, as well as any subsequent
proposed Transfer of any of the Offered Shares by the Proposed Transferor, shall
again be subject to this Section 3.4 and shall require full compliance by the
Proposed Transferor with the procedures in this Section 3.4.
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3.5. CO-SALE RIGHTS
Notwithstanding Section 3.4(e), no Proposed Transferor (each, a
"Co-Sale Seller") shall Transfer any of the Offered Shares pursuant to Section
3.4(e) to a Proposed Transferee until such Co-Sale Seller has given written
notice to each of the Restricted Investors of the right (the "Co-Sale Right"),
exercisable either within 5 days after the date of such Person's Investor Waiver
Notice or within 15 business days following receipt of the Seller Notice,
whichever is later, to sell to a Proposed Transferee all or part of such
Investor's Portion of the Offered Shares, on the same terms and conditions as
set forth in the Seller Notice (including the same price per Share), on an
as-converted-to-Common-Stock basis. A Restricted Investor may exercise the Right
of Co-Sale by delivering to the Co-Sale Seller at the closing of the Transfer of
Offered Shares to the Proposed Transferee one or more certificates, properly
endorsed for Transfer, representing such stock to be Transferred by the
Restricted Investor. At the closing of the Transfer of Offered Shares to the
Proposed Transferee, such certificates or other instruments will be Transferred
and delivered to the Proposed Transferee as set forth in the Seller Notice in
consummation of the Transfer of the Offered Shares pursuant to the terms and
conditions specified in such notice, and the Co-Sale Seller will remit, or will
cause the Proposed Transferee to remit, to the participating Restricted Investor
at closing that portion of the proceeds of the Transfer to which the Restricted
Investor is entitled by reason of the Restricted Investor's participation in
such Transfer pursuant to the Co-Sale Right. If the Offered Shares consists of
more than one series or class or type of stock and the Proposed Transferee is
not willing to purchase shares of a class of preferred stock held by the
Restricted Investors, then the Restricted Investors exercising a Right of
Co-Sale will have the opportunity to convert such shares of Preferred Stock into
Common Stock, and the Company will cooperate to effect such conversion.
3.6. PREEMPTIVE RIGHT
For so long as any Preferred Stock remains outstanding, each Investor
holding Preferred Stock shall have the right (the "Participation Right") to
purchase such Investor's Pro Rata Amount of any New Securities Portion that the
Company may from time to time propose to sell and issue after the date hereof,
at the price and upon the general terms specified in the New Issue Notice (as
defined below) regarding such New Securities and otherwise on the following
terms:
(a) Whenever the Company proposes to issue and sell any New
Securities, the Company shall give each Investor written notice (a "New Issue
Notice") describing the type and amount of New Securities proposed to be issued
and the price and general terms upon which the Company proposes to issue such
New Securities, specifying a proposed closing date and specifying in each case
the New Securities Portion and recipient's Pro Rata Amount as of the date of the
New Issue Notice.
(b) Each Investor may exercise its Participation Right with
respect to any proposed New Securities by notice to the Company, given within 15
days after the Investors shall have received the New Issue Notice describing the
New Securities.
(c) If any Investor does not exercise its Participation Right with
respect to any proposed New Securities within the 15 day period, then within 1
business day after the expiration of such 15 day period, the Company shall
notify each Investor who proposed to purchase not less
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than such Investor's Pro Rata Amount of such New Securities of the number of
shares of New Securities which remain available for purchase. Upon receipt of
the notice specified in the preceding sentence, each such Investor shall have
the additional Participation Right to purchase such Investor's Pro Rata Amount
of the remaining New Securities Portion (considering the Shares held by all
Investors who purchased less than their Pro Rata Amount of the New Securities
not to be issued and outstanding for purposes of computing the Pro Rata Amount),
exercisable by written notice delivered to the Company within 2 business days
after receipt of the notice of the availability of the balance of the New
Securities. Such Investors also may allocate the right to purchase the New
Securities between or among them in any proportion they choose as reflected in a
written notice to the Company within such 15 day or 2 business day period, as
the case may be.
(d) The Company may sell the New Securities not committed for by
Investors at a price and upon general terms no more favorable to the purchasers
than those specified in the New Issue Notice with regard to such New Securities,
at any time during (and only during) the 90 days following the expiration of the
last notice period specified in Section 3.6(c).
(e) The sale of any New Securities to Investors pursuant to this
Section 3.6 shall be closed on the same terms, at the same place as, and
simultaneously with, the sale of any such New Securities to any other purchasers
(provided that the closing shall not take place earlier than the proposed
closing date specified in the applicable New Issue Notice without the consent of
all participating Investors).
3.7. RESTRICTIVE LEGEND; STOP TRANSFER INSTRUCTIONS
(a) The Investors understand and agree that the Company will cause
the legend set forth below, or a legend substantially equivalent thereto, to be
placed upon any certificate(s) or other documents or instruments evidencing
ownership of Shares by the Investors (and each Investor agrees to provide each
of its certificates for Shares to the Company so that such legend may be
affixed):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER, CERTAIN RIGHTS OF FIRST REFUSAL AND RESTRICTIONS ON VOTING
RIGHTS, AS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT ENTERED INTO BY
THE HOLDER OF THESE SHARES, THE COMPANY AND CERTAIN STOCKHOLDERS OF THE
COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY. NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
SHALL BE MADE EXCEPT AS PERMITTED BY THE INVESTOR RIGHTS AGREEMENT.
(b) Stop-Transfer Instructions. The Investors agree, to ensure
compliance with the restrictions referred to in this Agreement, that the Company
may issue appropriate "stop transfer" certificates or instructions and that, if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its records.
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3.8. RIGHTS TO COMPEL SALE
(a) If Restricted Investors holding in excess of sixty-six and
two-thirds percent (66 2/3%) of all Restricted Shares then held by all
Restricted Investors (collectively the "Controlling Stockholders") wish to sell
to any Independent Third Party (the "Compelled Sale Purchaser") all Restricted
Shares held by the Controlling Stockholders in the aggregate (the "Compelled
Sale Transfer Offer"), then each and every one of the Restricted Investors other
than the Controlling Stockholders (the "Remaining Stockholders") agrees to sell
all Restricted Shares then held by such Remaining Stockholders to such Compelled
Sale Purchaser at the same time for the same price and on the same terms and
conditions as the Controlling Stockholders.
(b) The Controlling Stockholders shall exercise their rights
hereunder by written notice (the "Compelled Transfer Notice") to the Company,
and the Company shall deliver the Compelled Transfer Notice to the Remaining
Stockholders at least thirty (30) days prior to the expected closing date (the
"Expected Closing Date") of the transactions contemplated by the Compelled Sale
Transfer Offer. The Compelled Transfer Notice shall include the consideration
per share of Restricted Shares to be paid by the Compelled Sale Purchaser and
the other terms and conditions of the Compelled Sale Transfer Offer. On or
before ten (10) days prior to the Expected Closing Date, each of the Remaining
Stockholders shall deliver to a representative of the Controlling Stockholders
designated in the Compelled Sale Transfer Notice certificates representing the
Restricted Shares held by such Remaining Stockholder, free and clear of any and
all liens and encumbrances whatsoever, together with such other documents and
instruments of transfer that the Compelled Sale Purchaser may reasonably
request. The Remaining Stockholders also agree to otherwise cooperate with and
execute and deliver such other documents as may be reasonably requested in
connection with the transactions contemplated by the Compelled Sale Transfer
Offer including, without limitation, documents containing representations and
warranties as to title, power and authority and such other representations and
warranties as are appropriate in transactions of this type.
(c) If within one hundred twenty (120) days after the Expected
Closing Date, the Controlling Stockholders have not completed the sale of all
the relevant Restricted Shares (unless such failure is due to a Remaining
Stockholders' failure to surrender for transfer his or its certificates), the
Controlling Stockholders shall return to each of the Remaining Stockholders all
certificates representing the Restricted Shares previously delivered by the
Remaining Stockholders, and all the restrictions on Transfers contained in this
Agreement with respect to the Shares of the Company shall again be in effect.
Failure to complete the sale of all the Restricted Shares shall not be a breach
of any Controlling Stockholder's obligations under this Agreement and shall not
constitute a waiver of the rights of the Controlling Stockholders to again
exercise their rights under this Section 3.8 at any time thereafter; provided,
that the Controlling Stockholders may not exercise the rights under this Section
3.8 more than once in any 12 month period.
(d) Immediately upon consummation of the sale of Restricted Shares
of the Controlling Stockholders and Remaining Stockholders pursuant to this
Section 3.8, the Controlling Stockholders shall give notice thereof to the
Remaining Stockholders, shall remit to each of the Remaining Stockholders the
net sales proceeds of the Restricted Shares of such
14
Remaining Stockholders sold pursuant thereto (after deduction of a pro rata
amount among all Stockholders of amounts placed in escrow, reasonable fees and
expenses incurred in connection with the transaction and other appropriate
deductions), and shall furnish such other evidence of the completion of such
sale as may be reasonably requested by such Remaining Stockholders.
Notwithstanding anything to the contrary in this Section 3.8,
if the sale of Restricted Shares pursuant to this Section 3.8 would qualify
under the Company's Certificate of Incorporation as a "Liquidation Event" giving
rise to the rights of holders of Preferred Stock to receive liquidation
preferences, then the proceeds of the sale of Restricted Shares pursuant to this
Section 3.8 shall be allocated and remitted among the Restricted Investors
participating in such sale in proportion to the preferential amounts each would
be entitled to receive based on the relative liquidation preferences and
priorities of their respective Restricted Shares (after deduction of a pro rata
amount among all Stockholders of amounts placed in escrow, reasonable fees and
expenses incurred in connection with the transaction and other appropriate
deductions).
ARTICLE IV
MISCELLANEOUS
4.1. REGULATORY FILINGS; BEST EFFORTS
Each of the parties to this Agreement agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including
using its best efforts to accomplish the following: (i) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from governmental entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with governmental entities, if any) and the taking of its best
efforts as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any governmental entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
suits, claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other governmental entity
vacated or reversed, and (iv) the execution, delivery and filing of any
additional documents, instruments and certificates necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, the Company
and its Board of Directors will, if any takeover statute or similar Legal
Requirement is or becomes applicable to this Agreement or the transactions
contemplated by this Agreement, use its best efforts to ensure that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such Legal Requirement on this Agreement and the
transactions contemplated hereby.
15
4.2. AMENDMENT AND WAIVER
Except as otherwise provided herein, no modification, amendment,
termination or waiver of any provision of this Agreement shall be effective
against the Company or the Investors unless such modification, amendment or
waiver is approved in writing by the Company and the holders of sixty-six and
two-thirds percent (66 2/3)% of the issued and outstanding shares of Preferred
Stock; provided, that in addition to the foregoing, the prior written consent of
(a) the holders of at least sixty percent (60%) of the issued and outstanding
shares of Series A Preferred will be required to modify, amend or waive any
provision of Sections 1.1, 1.2 or 4.2(a) of this Agreement, (b) the holders of
at least a majority of the issued and outstanding shares of Series B Preferred
will be required to modify, amend or waive any provision of Sections 1.3 or
4.2(b) of this Agreement, (c) the holders of at least a majority of the issued
and outstanding shares of Series C Preferred will be required to modify, amend
or waive any provision of Sections 1.4 or 4.2(c) of this Agreement, and (d) the
holders of at least sixty percent (60%) of the issued and outstanding Restricted
Shares will be required to modify, amend or waive any provision of Sections 3.1,
3.2, 3.3, 3.4, 3.5, 3.8 or 4.2(d) of this Agreement. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
4.3. SEVERABILITY
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
4.4. ENTIRE AGREEMENT
Except as otherwise expressly set forth in this Agreement, the 2004
Purchase Agreement, the Conversion Agreement and the exhibits and schedules
hereto and thereto embody the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersede and
preempt any prior agreements or understandings by or among the parties, written
or oral, which may have related to the subject matter hereof.
4.5. SUCCESSORS AND ASSIGNS
Except as otherwise provided herein, this Agreement shall bind and
inure to the benefit of, and be enforceable by, (a) the Company and its
successors and assigns and (b) the holders of the Preferred Stock (including any
Common Stock issued upon conversion of such Preferred Stock) and any subsequent
holders of the Preferred Stock (including any Common Stock issued upon
conversion of such Preferred Stock) and the respective successors and assigns of
each of them, so long as they hold the Preferred Stock (including any Common
Stock issued upon conversion of such Preferred Stock).
16
4.6. COUNTERPARTS
This Agreement may be executed in separate counterparts, including by
facsimile copy, each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
4.7. NOTICES
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and
will be deemed to have been given when delivered personally, mailed by certified
or registered mail, return receipt requested and postage prepaid, or sent via a
nationally recognized overnight courier, or sent via facsimile to the recipient
accompanied by a certified or registered mailing. Such notices, demands or other
communications will be sent to the address indicated below:
To the Company:
Halsey Drug Co., Inc.
695 N. Perryville Road
Rockford, Illinois 61107
Attn: President
Fax: 815-399-9710
If to the holders of Preferred Stock:
To the address provided
on the signature pages hereto
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
such notice, demand or communication shall be deemed to have been given (a) on
the date of delivery, if delivered personally, (a) on the date of facsimile
transmission, receipt confirmed, (c) one business day after delivery to a
nationally recognized overnight courier service, if marked for next day
delivery, or (d) five business days after the date of mailing, if mailed.
Copies of any notice, demand or communication given the Company shall
also be delivered to St. John & Wayne, L.L.C., Two Penn Plaza East, Newark, New
Jersey, 07105-2249 Attn.: John P. Reilly, Esq., or such other address as may be
directed.
4.8. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York wherein the terms of this Agreement were
negotiated, excluding to the
17
greatest extent permitted by law any rule of law that would cause the
application of the laws of any jurisdiction other than the State of New York.
4.9. JURISDICTION
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or United States Federal court sitting
in New York City, and any appellate court from any thereof, in any action or
proceeding arising our of or relating to this Agreement to which it is a party,
or for recognition or enforcement of any judgment, and each of the parties
hereto irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the fullest extent permitted by law, in such United States Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the right that any party may otherwise have to bring
any action or proceeding relating to this Agreement in the courts of any other
jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or in relation to this Agreement to which it
is a party in any such New York State or United States Federal court sitting in
New York City. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
4.10. WAIVER OF JURY TRIAL
(a) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.
4.11. AGREEMENT REGARDING MANDATORY CONVERSION
No party hereto shall take any action, including the voting its shares
of the capital stock of the Company or the giving of any written consent, in
furtherance of the mandatory conversion of the Preferred Stock pursuant to
Section 1(d)(1)(ii)(B) of the Charter Amendment unless such mandatory conversion
has been approved by the holders of 75% of the Series A Preferred then held by
Care Capital, Essex and Galen.
18
IN WITNESS WHEREOF, the parties hereto have executed this Investors
Rights Agreement as of the date first written above.
HALSEY DRUG CO., INC.
695 North Perryville Road
Crimson Building #2
Rockford, Illinois 61107
__________________________________________
By: Andrew D. Reddick
Its: President and Chief Executive Officer
19
GALEN PARTNERS III, L.P. ORACLE STRATEGIC PARTNERS, L.P.
By: Claudius, L.L.C., General Partner By: Oracle Strategic Capital L.L.C.,
610 Fifth Avenue, 5th Fl. General Partner
New York, New York 10019 200 Greenwich Avenue
3rd Floor
Greenwich, Connecticut 06830
____________________________________ ____________________________________
By: Srini Conjeevaram By: Joel Liffmann
Its: General Partner Its: Authorized Agent
GALEN PARTNERS INTERNATIONAL, III, L.P. CARE CAPITAL INVESTMENTS II, LP
By: Claudius, L.L.C., General Partner By: Care Capital II, LLC, as general
610 Fifth Avenue, 5th Floor partner
New York, New York 10020 47 Hulfish St., Suite 310
Princeton, NJ 08542
____________________________________
By: Srini Conjeevaram By:_________________________________
Its: General Partner Name: David R. Ramsay
Title: Authorized Signatory
GALEN EMPLOYEE FUND III, L.P. ESSEX WOODLANDS HEALTH
By: Wesson Enterprises, Inc. VENTURES V, L.P.
610 Fifth Avenue, 5th Floor 190 South LaSalle Street, Suite 2800
New York, New York 10020 Chicago, IL 60603
____________________________________ ____________________________________
By: Bruce F. Wesson By: Immanuel Thangaraj
Its: General Partner Its: Managing Director
20
ALAN SMITH PATRICK COYNE
21 Bedlow Avenue 800 Merion Square Road
Newport, Rhode Island 02840 Gladwyne, Pennsylvania 19035
____________________________________ ____________________________________
MICHAEL WEISBROT SUSAN WEISBROT
1136 Rock Creek Road 1136 Rock Creek Road
Gladwyne, Pennsylvania 19035 Gladwyne, Pennsylvania 19035
____________________________________ ____________________________________
GREG WOOD DENNIS ADAMS
1263 East Calavera Street 120 Kynlyn Road
Altadena, CA 91001 Radnor, Pennsylvania 19312
____________________________________ ____________________________________
STEFANIE HEITMEYER BERNARD SELZ
17759 Road, Route 66 600 Fifth Avenue, 25th Floor
Fort Jennings, Ohio 45844 New York, New York 10020
____________________________________ ____________________________________
PETER CLEMENS ROGER GRIGGS
c/o Halsey Drug Co., Inc. c/o Tom Jennings
695 North Perryville Rd. 7300 Turfway Road
Crimson Building #2 Suite 300
Rockford, Illinois 61107 Florence, KY 41042
____________________________________ ____________________________________
VARSHA H. SHAH HEMANT K. SHAH
29 Chrissy Drive 29 Chrissy Drive
Warren, New Jersey 07059 Warren, New Jersey 07059
____________________________________ ____________________________________
21
VARSHA H. SHAH AS CUSTODIAN VARSHA H. SHAH AS CUSTODIAN
FOR SACHIN H. SHAH FOR SUMEET H. SHAH
29 Chrissy Drive 29 Chrissy Drive
Warren, New Jersey 07059 Warren, New Jersey 07059
____________________________________ ____________________________________
By: Varshah H. Shah By: Varshah H. Shah
Its: Custodian Its: Custodian
MICHAEL RAINISCH ILENE RAINISCH
c/o Alvin Rainisch c/o Alvin Rainisch
300 Flower Lane 300 Flower Lane
Morganville, New Jersey 07751 Morganville, New Jersey 07751
____________________________________ ____________________________________
KENNETH GIMBEL, IRA ACCOUNT KENNETH GIMBEL
FBO KENNETH GIMBEL 2455 Montgomery Avenue
2455 Montgomery Avenue Highland Park, Illinois 60035
Highland Park, Illinois 60035
____________________________________ ____________________________________
By: __________________________
Its: Trustee
JESSICA K. CLEMENS JAKE P. CLEMENS
C/o Halsey Drug Co., Inc. c/o Halsey Drug Co., Inc.
695 North Perryville Rd. 695 North Perryville Rd.
Crimson Building #2 Crimson Building #2
Rockford, Illinois 61107 Rockford, Illinois 61107
____________________________________ ____________________________________
MICHAEL REICHER TRUST
c/o Halsey Drug Co., Inc.
695 North Perryville Rd.
Crimson Building #2
Rockford, Illinois 61107
____________________________________
By: Michael K. Reicher
Its: Trustee
22
PETER STIEGLITZ GEORGE E. BOUDREAU
RJ Palmer LLC 222 Elbow Lane
156 West 56th Street, 5th Floor Haverford, PA 19041
New York, New York 10019
____________________________________ ____________________________________
JOHN E. HEPPE, JR.
237 W. Montgomery Avenue
Haverford, Pennsylvania 19041
____________________________________
23
SCHEDULE 3.1
CONVERTIBLE SECURITIES
24