EXHIBIT 10.16
BOARD OBSERVER AND VISITATION RIGHTS AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of March 20,
1997 by and between SENSUS DRUG DEVELOPMENT CORPORATION, a Delaware corporation
(the "Company"), and THE XXXXXXX XXXXX GROUP, L.P., a Delaware limited
partnership (the "GS Group").
WHEREAS, the Company is offering 625,000 shares of its Series B Preferred
Stock (the "Shares") to the GS Group as set forth in certain agreements and
instruments separate from this Agreement; and
WHEREAS, the Company, to induce the GS Group to purchase the Shares, has
offered the GS Group the right to an observer on the Company's Board of
Directors and certain inspection rights as provided in this Agreement, and the
GS Group desires to accept such offer.
NOW, THEREFORE, in consideration of the foregoing recitals, the GS Group's
purchase of the Shares, and other good and valuable consideration, the receipt
of which is hereby acknowledged, and in order to induce the GS Group to purchase
the Shares, the parties hereto agree as follows:
SECTION 1. INSPECTION RIGHTS. The GS Group or its authorized
representative shall have the right to visit and inspect any of the properties
of the Company or any of its subsidiaries, including its books and records (and
to make copies thereof and to take extracts therefrom), and to discuss the
affairs, finances and accounts of the Company or any of its subsidiaries with
its officers and its independent public accountants, and to review such
information as is reasonably requested all at such reasonable times and as often
as may be reasonably requested; provided, however, that the Company shall not be
obligated under this Section 1 with respect to a competitor of the Company or
with respect to information which the Board of Directors determines in good
faith is confidential and should not, therefore, be disclosed.
SECTION 2. VISITATION RIGHTS. The Company shall allow one representative
designated by the GS Group to attend all meetings of the Company's Board of
Directors in a nonvoting capacity, and in connection therewith, the Company
shall give such representative copies of all notices, minutes, consents and
other materials, financial or otherwise, which the Company provides to its Board
of Directors.
SECTION 3. CONFIDENTIALITY OF RECORDS. The GS Group agrees to use, and to
use all commercially reasonable efforts to insure that its authorized
representatives use, the same degree of care as the GS Group uses to protect its
own confidential information to keep confidential any information furnished to
it which the Company identifies as being confidential or proprietary (so long as
such information is not in the public domain), except that the GS Group may
disclose such proprietary or confidential information (i) to any partner,
employee, subsidiary or parent of the GS Group for the purpose of evaluating its
investment in the Company as long as such
1.
partner, employee, subsidiary or parent is advised of the confidentiality
provisions of this Section 3, (ii) as is required to be disclosed by order of a
court of competent jurisdiction, administrative agency or governmental body, or
by law, rule or regulation or (iii) with the prior written consent of the
Company, which shall not be unreasonably withheld, to any bona fide prospective
purchaser of its capital stock in the Company.
SECTION 4. DISCLOSURE OF INVESTMENT. The Company shall not (i) use in
advertising or publicity the name of the GS Group or any of its affiliates, or
any stockholder, partner or employee of the GS Group or any of its affiliates,
or any trade name, trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation thereof owned by the GS Group or any of
its affiliates, in any case without the prior written consent of such party,
which consent shall not be unreasonably withheld or delayed or (ii) represent
that any product or service provided by the Company has been approved or
endorsed by the GS Group or any of its affiliates without the prior written
consent of the GS Group, which consent shall not be unreasonably withheld or
delayed; provided, however, that the Company may disclose: (i) that the GS Group
is a stockholder of the Company, (ii) the aggregate purchase price paid by GS
Group in connection with its investment in the Company and (iii) the percentage
of the outstanding shares of capital stock of the Company held by the GS Group.
SECTION 5. INVESTMENT BANKING SERVICES. So long as the GS Group (together
with its affiliates) shall own 300,000 or more shares of Series B Preferred
Stock (or Common Stock issued upon conversion of such shares), as adjusted for
stock splits, combinations and the like, the Company agrees that it shall not
grant to another investment bank the first right of refusal, the first right of
negotiation or similar right to act as the Company's investment banker or to
otherwise provide investment banking services to the Company with respect to any
matter (including, without limitation, with respect to the sale of the Company
or any of its subsidiaries) or to act as the lead managing underwriter for the
initial public offering of the Company's equity securities (the "IPO"). This
covenant shall terminate on the effective date of the registration statement
pertaining to the Company's IPO.
SECTION 6. GRANT OF REGISTRATION RIGHTS TO HOLDERS OF COMMON STOCK. So
long as the GS Group (together with its affiliates) shall own 300,000 or more
shares of Series B Preferred Stock (or Common Stock issued upon conversion of
such shares), as adjusted for stock splits, combinations and the like, the
Company agrees that it shall not grant any registration rights to the holders of
Company Common Stock unless the Company has first obtained the consent of the
holders of 58% of the outstanding Registrable Securities (as defined in that
certain Amended and Restated Investor Rights Agreement of even date herewith).
SECTION 7. TERMINATION OF COVENANTS. Except for the covenants contained
in Sections 5 and 6 (which shall terminate as set forth therein), all covenants
of the Company contained in this Agreement shall expire and terminate on the
earlier of (i) the effective date of the registration statement pertaining to
the Company's IPO or (ii) the date on which the GS Group no longer holds the
Shares.
2.
SECTION 8. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
B. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto.
C. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein.
D. SEVERABILITY. In case any provision of the Agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
E. ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
F. TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
G. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of
the date set forth in the first paragraph hereof.
SENSUS DRUG DEVELOPMENT CORPORATION THE XXXXXXX XXXXX GROUP,L.P.
By: THE XXXXXXX SACHS CORPORATION
By:__________________________________ _________________________________
J. Xxxxx Xxxxxx
Name:________________________________ Executive Vice President
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Title:______________________________
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