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Exhibit 10.18
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT dated as of August 30,
2001 (this "AGREEMENT"), is entered into by and among DOV Pharmaceutical, Inc.,
a Delaware corporation (the "COMPANY"), Arnold Lippa ("LIPPA"), Bernard Beer
("BEER") (Lippa and Beer are referred to herein each as a "FOUNDER" and
collectively as the "FOUNDERS"), the persons and entities identified as Series C
Stockholders on the signature pages hereto (the "SERIES C STOCKHOLDERS"), and
the persons and entities identified as Series D Stockholders on the signature
pages hereto along with such subsequent investors who sign counterpart signature
pages to this Agreement pursuant to Section 5.11 hereof (the "SERIES D
STOCKHOLDERS" who together with the Series C Stockholders are referred to herein
collectively as the "INVESTORS") (the Founders and Investors are collectively
referred to herein as the "STOCKHOLDERS").
WHEREAS, the Founders own in the aggregate 1,950,000 shares of the
Company's common stock, par value $0.0001 per share ("COMMON STOCK");
WHEREAS, the Series C Stockholders own in the aggregate 1,750,000 shares
of the Company's series C convertible preferred stock, par value $1.00 per share
("SERIES C PREFERRED STOCK");
WHEREAS, the Series D Stockholders are purchasing up to an aggregate of
1,400,000 shares of the Company's series D convertible preferred stock, par
value $1.00 per share ("SERIES D PREFERRED STOCK"), pursuant to the Stock
Purchase Agreement (the "STOCK PURCHASE AGREEMENT") by and among the Company and
the Series D Stockholders dated as of the date hereof;
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Stock Purchase Agreement that the Company and
the Series D Stockholders enter into this Agreement to provide the Series D
Stockholders with certain rights as more fully provided for herein; and
WHEREAS, the Company and the Stockholders hereto wish, effective
conditioned upon and simultaneous with the Closing (as that term is defined in
the Stock Purchase Agreement), to amend and restate in its entirety the
Stockholders Agreement by and among the Founders and the Series C Stockholders
dated as of June 20, 2000 to add the Series D Stockholders as parties to such
Stockholders Agreement and to make such other changes set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth and other good and valuable consideration, the parties
hereto agree as follows:
1. DEFINITIONS
"AFFILIATE" and "AFFILIATED" shall have the meaning set forth in Rule 405
of the General Rules and Regulations promulgated under the Securities Act of
1933, as the same may be amended from time to time.
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"PERMITTED TRANSFEREE" means (i) in the case of a Stockholder that is a
natural person, such Stockholder's parent, spouse, sibling, lineal descendant, a
charitable institution, one or more trusts or other legal entities for the
benefit of the Stockholder or any of the foregoing, the estate of the
Stockholder and any other Stockholder and (ii) in the case of a Stockholder that
is not a natural person, any partner, retired partner, Affiliated partnership,
member, former member, Affiliated limited liability company, subsidiary, parent
or Affiliated corporation of such Stockholder or a charitable institution.
"PREFERRED STOCK" means the Series C Preferred Stock and the Series D
Preferred Stock, together with any shares issued or issuable with respect
thereto (whether by way of a stock dividend or stock split or in exchange for or
in replacement of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"SERIES C PRIORITY SHARES" shall mean as to each Series C Stockholder the
number of Shares owned by such Series C Stockholder on the date hereof divided
by three, less the number of Shares Transferred by such Series C Stockholder
pursuant to this Agreement or otherwise subsequent to the date hereof; PROVIDED,
HOWEVER, that the number of Series C Priority Shares shall in no event be
decreased by virtue of Shares Transferred to a Permitted Transferee; PROVIDED
FURTHER, that the definition of the term "Transferred" as used in this paragraph
shall not include the following language: "pledge, encumbrance or other
disposition."
"SHARES" means shares of (i) Common Stock, (ii) Preferred Stock and (iii)
any other equity securities now or hereafter issued by the Company together with
any options thereon and any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend, stock split or in exchange
for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"TRANSFER" means any transfer, donation, sale, assignment, pledge,
encumbrance or other disposition of all or any portion of any Shares.
"TRANSFEROR" means the holder of Shares making a Transfer. "TRANSFERRED" means
the accomplishment of a Transfer. "TRANSFEREE" means the recipient of a
Transfer.
Other capitalized terms used herein and not defined herein shall have the
meaning set forth in the Company's Second Amended and Restated Certificate of
Incorporation.
2. RESTRICTED SECURITIES
Each stock certificate representing Shares held by the Stockholders shall
include the legends substantially in the following forms (in addition to or in
combination with any legend required under applicable federal and state
securities laws or any other agreements or bylaw provisions relating to the
transfer of the Company's securities):
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THE SALES AND OTHER TRANSFERS OF THE SECURITIES REPRESENTED HEREBY
ARE SUBJECT TO THE PROVISIONS OF AN AGREEMENT, AS AMENDED FROM TIME
TO TIME, BY AND AMONG THE REGISTERED OWNER OF THIS CERTIFICATE, THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY, WITH RESPECT TO
TRANSFERS OF SECURITIES, AND NO TRANSFER HEREOF MAY BE MADE EXCEPT
IN ACCORDANCE WITH THE PROVISIONS OF SUCH AGREEMENT.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES OR BLUE
SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT
WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER THE ACT OR
(2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
ACT RELATING TO THE DISPOSITION OF SECURITIES AND (3) IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
3. TRANSFERS.
3.1 RESTRICTIONS ON TRANSFERS.
Neither Founder shall Transfer all or any portion of the Shares now owned
or hereafter acquired by such Founder, except pursuant to Section 3.2 or Section
3.3. No Series D Stockholder shall Transfer all or any portion of the Shares now
owned or hereafter acquired by such Series D Stockholder, except pursuant to
Section 3.2, Section 3.3 or Section 3.4.
3.2 PERMITTED TRANSFERS.
A Founder or Series D Stockholder may Transfer all or any portion of the
Shares now owned or hereafter acquired by such Founder or Series D Stockholder
to a Permitted Transferee, provided that (a) the Founder or Series D
Stockholder, as the case may be, provides the Company, not more than ten days
following such Transfer, with written notification thereof setting forth the
name and address of the Permitted Transferee and the number of Shares
Transferred and (b) each Permitted Transferee executes and delivers to the
Company a properly completed joinder agreement substantially in the form
attached hereto as EXHIBIT A, pursuant to which the Permitted Transferee agrees
to be bound by the terms of this Agreement and further agrees to be considered a
"Founder" or "Series D Stockholder," as the case may be, for all purposes of
this Agreement (including this Section 3.2, Section 3.3, Section 3.4 and Section
3.5).
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3.3 INVESTORS' CO-SALE RIGHTS.
If a Founder entertains a bona fide offer to purchase all or any portion
of the Shares held by such Founder (a "TRANSACTION OFFER") from any other person
or entity (a "BUYER"), such Transfer shall be subject to the following
conditions:
(a) The Founder shall cause the Transaction Offer to be reduced to
writing and shall promptly notify (the "CO-SALE NOTICE") each of the Investors
of their right to participate in the Transaction Offer with the Founder on the
basis set forth in subsection (c) below (the "CO-SALE OPTION"). To the extent
one or more Investors exercise their Co-Sale Option in accordance with this
Section 3.3, the number of Shares that the Founder may transfer in the
Transaction Offer shall be correspondingly reduced.
(b) Each of the Investors shall have the right to exercise its
Co-Sale Option by giving written notice of such intent to participate (the
"CO-SALE ACCEPTANCE NOTICE") to the Transferring Founder within 15 days after
receipt by such Investor of the Co-Sale Notice (the "CO-SALE ELECTION PERIOD").
Each Co-Sale Acceptance Notice shall indicate the maximum number of Shares, and
in the case of the Series C Stockholders the number of Series C Priority Shares,
subject thereto that the Investor wishes to sell, including the number of
Shares, and in the case of the Series C Stockholders the number of Series C
Priority Shares, it would sell if one or more Investors do not elect to exercise
their Co-Sale Option. Any Investor holding Preferred Stock may sell to the Buyer
in exercise of its Co-Sale Option Preferred Stock convertible into the number of
shares of Common Stock it is entitled to sell to the Buyer.
(c) The Shares to be included in a Founder Transfer shall be
allocated among the Founder or Founders, as the case may be, and the Investors
as set forth in this subsection (c).
(i) If any participating Series C Stockholder has requested to
include Series C Priority Shares in such Transfer the aggregate number of Series
C Priority Shares the Series C Stockholders shall be entitled to sell in a
Transaction Offer (the "PREFERENCE AMOUNT") shall be the lesser of (i)
two-thirds of the aggregate number of Shares the Buyer has offered to purchase
from the Founder or Founders, as the case may be, and (ii) the aggregate number
of Series C Priority Shares outstanding as of the date of the Co-Sale Notice.
The number of Shares to be included in such Transaction Offer by the Founder or
Founders, as the case may be, and the Investors shall be as follows:
(A) The number of Series C Priority Shares that each
participating Series C Stockholder shall be entitled to sell shall be the
product obtained by multiplying the Series C Preference Amount by a fraction,
the numerator of which is the total number of Series C Priority Shares owned by
such Series C Stockholder as of the date of the Offer Notice and the denominator
of which is the aggregate number of outstanding Series C Priority Shares as of
the date of the Offer Notice, subject to increase as hereinafter provided. If a
Series C Stockholder elects not to participate in the Co-Sale Option or has
stated in its Co-Sale Acceptance Notice that it wishes to sell a number of
Series C Priority Shares that is less than its full allotment, such Series C
Stockholder's allotment or portion of its allotment that it elects not to sell
shall be available to those Series C Stockholders who have stated in their
Co-Sale Acceptance Notice that they wish to sell a number of Series C Priority
Shares that is greater than
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their allotment as determined on a pro rata basis according to such Investors'
respective Share ownership.
(B) The Founder or Founders, as the case may be, shall
be entitled to include one Share for every two Series C Priority Shares included
by the Series C Stockholders in such Transfer.
(C) If after all Series C Priority Shares requested to
be included in such Transfer and the corresponding number of Founder Shares are
included as set forth in (A) and (B) above there remains any capacity to include
additional Shares then the Founder or Founders, as the case may be, and each
Investor shall be entitled to include in such Transfer the number of Shares
equal to the product obtained by multiplying the total number of such additional
Shares by a fraction, the numerator of which is the total number of Shares owned
by such Investor and the denominator of which is the aggregate number of Shares
owned by the selling Founder or Founders, as the case may be, and Investors as
of the date of the Offer Notice, subject to increase as hereinafter provided. If
an Investor elects not to participate in the Co-Sale Option or has stated in its
Co-Sale Acceptance Notice that it wishes to sell a number of Shares that is less
than its full pro rata allotment, such Investor's pro rata allotment or portion
of its pro rata allotment that it elects not to sell shall be available to those
Investors who have elected to sell a number of Shares that is greater than their
pro rata allotment as determined on a pro rata basis according to such
Investors' respective Share ownership.
(ii) If no Series C Stockholder has requested to include Series C
Priority Shares in such Transfer then the Founder or Founders, as the case may
be, and each Investor shall be entitled to include in such Transfer the number
of Shares equal to the product obtained by multiplying the total number of
Shares available for sale to the Buyer subject to the Transaction Offer by a
fraction, the numerator of which is the total number of Shares owned by such
Investor and the denominator of which is the aggregate number of Shares owned by
the selling Founder or Founders, as the case may be, and Investors as of the
date of the Offer Notice, subject to increase as hereinafter provided. If an
Investor elects not to participate in the Co-Sale Option or has indicated in its
Co-Sale Acceptance Notice that it wishes to sell a number of Shares that is less
than its full pro rata allotment, such Investor's pro rata allotment or portion
of its pro rata allotment that it elected not to sell shall be available to
those Investors who have elected to sell a number of Shares that is greater than
their pro rata allotment on a pro rata basis according to such Investors'
respective Share ownership.
(d) Within ten calendar days after the end of the Co-Sale Election Period,
the Founder shall promptly notify each participating Investor of the number of
Shares held by such Investor, to be included in the sale and the date on which
the Transaction Offer will be consummated, which shall be no later than 30
calendar days after the end of the Co-Sale Election Period. Each participating
Investor may effect its participation in any Transaction Offer hereunder by
delivery to the Buyer, or to the Founder for delivery to the Buyer, one or more
instruments or certificates, properly endorsed for transfer, representing the
Shares it elects to sell pursuant thereto. At the time of consummation of the
Transaction Offer, the Founder shall cause the Buyer to remit directly to each
participating Investor that portion of the sale proceeds to which the
participating Investor is entitled. No Shares may be sold to the Buyer by the
Founder unless the Buyer
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simultaneously purchases from the participating Investors all the Shares that
they have elected to sell pursuant to this Section 3.3.
(e) The Founder and each participating Investor shall execute the same
transfer agreement with the Buyer, which shall provide that each participating
Investor and the Founder shall be liable to the Buyer with respect to
representations and warranties, on a several and not joint basis.
(f) The Shares held by a Founder that are the subject of the Transaction
Offer as to which no Investor elects to participate may be sold to the Buyer
only during the period specified in Section 3.3(d) and only on terms no more
favorable to the Founder than those contained in the Offer Notice. Promptly
after such Transfer, the Founder shall notify the Company, which in turn shall
promptly notify all the Investors of the consummation thereof and shall furnish
to them copies of the transfer agreement or agreements. If the Transaction Offer
is not consummated within the period required by this Section 3.3, it shall be
deemed to have lapsed, and any proposed Transfer of Shares thereafter including
to the same Buyer requires adherence to this Section 3 de novo.
(g) If both Founders propose concurrent Transfers that are subject to this
Section 3.3, then the relevant provisions of this Section 3.3, as applicable,
shall apply separately to each such proposed Transfer; PROVIDED, HOWEVER, that
if both Founders include such concurrent Transfers in the same Co-Sale Notice,
such concurrent Transfers shall be treated as a single Transfer under this
Section 3.3.
(h) The Investors' rights under this Section 3.3 are freely transferable
or assignable to a Permitted Transferee, but cannot otherwise be Transferred to
any other Transferee whether such Transfer is made pursuant to this Agreement or
otherwise.
(i) The exercise or non-exercise of the rights of the Investors hereunder
to participate in one or more sales of Shares made by a selling Founder or
Founders, as the case may be, shall not adversely affect such Investor's right
to participate in any subsequent sale by a Founder or the Founders.
3.4 SERIES C CO-SALE RIGHTS.
If a Series D Stockholder entertains a bona fide offer to purchase all or
any portion of the Shares held by such Series D Stockholder (a "SERIES D
TRANSACTION OFFER") from any other person or entity (a "SERIES D BUYER"), such
Transfer shall be subject to the following conditions:
(a) The Series D Stockholder shall cause the Series D Transaction
Offer to be reduced to writing and shall promptly notify (the "SERIES D CO-SALE
NOTICE") each of the Series C Stockholders of their right to participate in the
Series D Transaction Offer (the "SERIES D CO-SALE OPTION") on the basis set
forth in subsection (c) below. To the extent one or more Series C Stockholders
exercise their Series D Co-Sale Option in accordance with this Section 3.4, the
number of Shares that the Series D Stockholder may transfer in the Series D
Transaction Offer shall be correspondingly reduced.
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(b) Each of the Series C Stockholders shall have the right to
exercise its Series D Co-Sale Option by giving written notice of such intent to
participate (the "SERIES D CO-SALE ACCEPTANCE NOTICE") to the transferring
Series D Stockholder within 15 days after receipt by such Series C Stockholder
of the Series D Co-Sale Notice (the "SERIES D CO-SALE ELECTION PERIOD"). Each
Series D Co-Sale Acceptance Notice shall state the maximum number of Series C
Priority Shares and other Shares subject thereto that such Series C Stockholder
wishes to sell, including the number of Series C Priority Shares and other
Shares it would sell if one or more Series C Stockholders do not elect to
exercise their Series D Co-Sale Option. Any Series C Stockholder holding Series
C Priority Shares or other Shares may sell to the Series D Buyer in exercise of
its Series D Co-Sale Option, the number of Series C Priority Shares and Shares
determined in accordance with subsection (c) below.
(c) The aggregate number of Series C Priority Shares the Series C
Stockholders shall be entitled to sell in a Series D Transaction Offer (the
"Series C Preference Amount") shall be the lesser of (i) the aggregate number of
Shares the Series D Buyer has offered to purchase from the Series D Stockholder
divided by two and (ii) the aggregate number of Series C Priority Shares
outstanding as of the date of the Series D Co-Sale Notice. The number of Series
C Priority Shares that each participating Series C Stockholder shall be entitled
to sell shall be equal to the product obtained by multiplying the Series C
Preference Amount by a fraction, the numerator of which is the total number of
Series C Priority Shares owned by such Series C Stockholder as of the date of
the Series D Offer Notice and the denominator of which is the aggregate number
of outstanding Series C Priority Shares as of the date of the Series D Offer
Notice, subject to increase as hereinafter provided. If a Series C Stockholder
elects not to participate in the Series D Co-Sale Option or has indicated in its
Series D Co-Sale Acceptance Notice that it wishes to sell a number of Series C
Priority Shares that is less than its full allotment, such Series C
Stockholder's allotment or portion of its allotment that it elected not to sell
shall be available to those Series C Stockholders who have elected to sell a
number of Series C Priority Shares that is greater than their allotment on a pro
rata basis according to such Series C Stockholders' respective Series C Priority
Share ownership. If in any Series D Transaction Offer there is an Excess Amount
(as defined below) each Series C Stockholder shall be entitled to include in
such Series D Transaction Offer an additional number of Shares (pro rata among
the participating Series C Stockholders) equal to the Excess Amount divided by
three. The term "Excess Amount" shall mean the total number of Shares included
in the Series D Transaction Offer minus two times the Series C Preference
Amount.
(d) Within ten calendar days after the end of the Series D Co-Sale
Election Period, the Series D Stockholder shall promptly notify each
participating Series C Stockholder of the number of Series C Priority Shares and
Shares held by such Series C Stockholder to be included in the sale and the date
on which the Series D Transaction Offer is expected to be consummated, which
shall be no later than 30 calendar days after the end of the Series D Co-Sale
Election Period. Each participating Series C Stockholder may effect its
permitted participation in any Series D Transaction Offer hereunder by delivery
to the Series D Buyer, or to the Series D Stockholder for delivery to the Series
D Buyer, one or more instruments or certificates, properly endorsed for
transfer, representing the Series C Priority Shares and Shares it elects to sell
pursuant thereto. At the time of consummation of the Series D Transaction Offer,
the Series D Stockholder shall cause the Series D Buyer to remit directly to
each participating Series C Stockholder that portion of the sale proceeds to
which the participating Series C Stockholder is
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entitled. No Shares may be sold to the Series D Buyer by the Series D
Stockholder unless the Series D Buyer simultaneously purchases from the
participating Series C Stockholders all the Series C Priority Shares and Shares
that they are permitted and have elected to sell pursuant to this Section 3.4.
(e) The Series D Stockholder and each participating Series C
Stockholder shall execute the same transfer agreement with the Series D Buyer,
which shall provide that each participating Series C Stockholder and the Series
D Stockholder shall be liable to the Series D Buyer with respect to
representations and warranties, on a several and not joint basis.
(f) The Shares held by a Series D Stockholder that are the subject
of the Series D Transaction Offer as to which no Series C Stockholder elects to
participate may be sold to the Series D Buyer only during the period specified
in Section 3.4(d) and only on terms no more favorable to the Series D
Stockholder than those contained in the Series D Offer Notice. Promptly after
such Transfer, the Series D Stockholder shall notify the Company, which in turn
shall promptly notify all the Series C Stockholders of the consummation thereof
and shall furnish to them copies of the transfer agreement or agreements. If the
Series D Transaction Offer is not consummated within the period required by this
Section 3.4, it shall be deemed to have lapsed, and any proposed Transfer of
Shares thereafter including to the same Series D Buyer shall require adherence
to this Section 3.4 de novo.
(g) If more than one Series D Stockholder proposes to concurrently
Transfer Shares that are subject to this Section 3.4, the provisions of this
Section 3.4 shall apply separately to each such proposed Transfer; PROVIDED,
HOWEVER, that if multiple Series D Stockholders include such concurrent
Transfers in the same Series D Co-Sale Notice, such concurrent Transfers shall
be treated as a single Transfer under this Section 3.4.
(h) The Series C Stockholders' rights under this Section 3.4 are
freely transferable or assignable to a Permitted Transferee, but cannot
otherwise be Transferred to any other Transferee whether such Transfer is made
pursuant to this Agreement or otherwise.
(i) The exercise or non-exercise of the rights of the Series C
Stockholders hereunder to participate in one or more sales of Shares made by a
Series D Stockholder or Series D Stockholders, as the case may be, shall not
adversely affect such Series C Stockholder's right to participate in any
subsequent sale by a Series D Stockholder or Series D Stockholders.
3.5 EFFECT OF PROHIBITED TRANSFERS. If any Transfer is made or attempted
by a Founder or a Series D Stockholder contrary to any provision of this
Agreement (a "PROHIBITED TRANSFER"):
(a) such Prohibited Transfer shall be void ab initio;
(b) the Company and the Investors shall have, in addition to any
other legal or equitable remedies that they may have, the right to enforce the
provisions of this Agreement by actions for specific performance (to the extent
permitted by law);
(c) the Company shall refuse to recognize any Transferee as one of
its stockholders for any purpose; and
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(d) each Series C Stockholder shall have the right to sell to a
Transferring Series D Stockholder or Founder, the type and number of Series C
Priority Shares and Shares equal to the number of Series C Priority Shares and
Shares each Series C Stockholder would have been entitled to transfer to the
prospective Transferee under Section 3.3 and Section 3.4 had the Prohibited
Transfer been effected pursuant to and in compliance with the terms thereof.
Such sale shall be made on the following terms and conditions:
(i) The price per share at which the Series C Priority Shares
and Shares are to be sold to the Series D Stockholder under Section 3.4 or a
Founder under Section 3.3 shall be equal to the price per share paid by the
purchaser to the Series D Stockholder or Founder in such Prohibited Transfer.
The Series D Stockholder or Founder, as the case may be, shall also reimburse
each Series C Stockholder for any and all fees and expenses, including legal
fees and expenses, incurred pursuant to the exercise or the attempted exercise
of such Series C Stockholder's rights under this Section 3.5.
(ii) Within 60 days after the later of the dates on which the
Series C Stockholder (A) received notice of the Prohibited Transfer or (B)
otherwise became aware of the Prohibited Transfer, each Series C Stockholder
shall, if exercising the option created hereby, deliver to the Series D
Stockholder or Founder, as the case may be, the certificate or certificates
representing Series C Priority Shares and Shares to be sold, each certificate to
be properly endorsed for transfer.
(iii) The Series D Stockholder or Founder, as the case may be,
shall, upon receipt of the certificate or certificates for the Series C Priority
Shares and Shares to be sold by a Series C Stockholder pay the aggregate
purchase price therefor and the amount of reimbursable fees and expenses in cash
or by other means acceptable to the Series C Stockholder.
(e) each Series D Stockholder shall have the right to sell to the
Transferring Founder, the type and number of Shares equal to the number of
Shares each Series D Stockholder would have been entitled to transfer to the
prospective Transferee under Section 3.3 had the Prohibited Transfer been
effected pursuant to and in compliance with the terms thereof. Such sale shall
be made on the following terms and conditions:
(i) The price per share at which the Shares are to be sold to
the Founder shall be equal to the price per share paid by the purchaser to the
Founder in the Prohibited Transfer. The Founder shall also reimburse each Series
D Stockholder for any and all fees and expenses, including legal fees and
expenses, incurred pursuant to the exercise or the attempted exercise of such
Series D Stockholder's rights under this Section 3.5.
(ii) Within 60 days after the later of the dates on which the
Series D Stockholders (A) received notice of the Prohibited Transfer or (B)
otherwise became aware of the Prohibited Transfer, each Series D Stockholder
shall, if exercising the option created hereby, deliver to the Founder the
certificate or certificates representing Shares to be sold, each certificate to
be properly endorsed for transfer.
(iii) The Founder shall, upon receipt of the certificate or
certificates for the Shares to be sold by a Series D Stockholder pay the
aggregate purchase price therefor and the
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amount of reimbursable fees and expenses in cash or by other means acceptable to
the Series D Stockholder.
4. INFORMATION RIGHTS.
4.1 So long as an Investor owns at least 15,000 Shares, the Company shall
furnish separately to each such Investor the following reports:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the end of
each fiscal year of the Company, a consolidated balance sheet of the Company and
its subsidiaries, if any, as of the end of such fiscal year and the related
consolidated statements of income, stockholders' equity and cash flows for the
fiscal year then ended, prepared in accordance with generally accepted
accounting principles and certified by a firm of independent public accountants
of recognized national standing selected by the Board of Directors of the
Company; and
(b) QUARTERLY FINANCIAL STATEMENTS. Within 60 days after the end of
each quarter in each fiscal year (other than the last quarter in each fiscal
year), a consolidated balance sheet of the Company and its subsidiaries, if any,
and the related consolidated statements of income, stockholders' equity and cash
flows, unaudited but prepared (except for footnotes) in accordance with
generally accepted accounting principles and certified by the chief financial
officer of the Company, such consolidated balance sheet to be as of the end of
such quarter and such consolidated statements of income, stockholders' equity
and cash flows to be for such quarter and for the period from the beginning of
the fiscal year to the end of such quarter, in each case with comparative
statements for the prior fiscal year.
4.2 So long as an Investor owns at least 15,000 Shares the Company shall
permit and cause each of its subsidiaries, if any, to permit each such Investor
and such persons as each such Investor may designate, at such Investor's
expense, to visit and inspect any of the properties of the Company and its
subsidiaries, examine their books and take copies and extracts therefrom,
discuss the affairs, finances and accounts of the Company and its subsidiaries
with their officers, employees and public accountants (and the Company hereby
authorizes such accountants to discuss with such Investor and such designees
such affairs, finances and accounts), and consult with and advise the management
of the Company and its subsidiaries as to their affairs, finances and accounts,
all at reasonable times and upon reasonable notice during normal business hours
provided that such Investor or designee executes a confidentiality agreement in
substance and form reasonably acceptable to the Company.
5. MISCELLANEOUS.
5.1 HEADINGS.
The Section headings and subsection headings used or contained in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement with counsel sophisticated in
investment transactions. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no
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presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
5.2 COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of which
shall constitute an original but all of which shall constitute but one document.
One or more counterparts of this Agreement may be delivered via telecopier, with
the intention that they shall have the same effect as an original counterpart
hereof.
5.3 REMEDIES; SEVERABILITY.
The parties stipulate that a breach of this Agreement will result in
irreparable injury to the other parties hereto, that the remedy at law alone
will be an inadequate remedy for such breach and that, in addition to any other
legal or equitable remedies that they may have, such other parties may enforce
their respective rights by actions for specific performance (to the extent
permitted by law).
If any one or more of the terms herein, or the application thereof in any
circumstances, is held unenforceable in any respect such holdings shall not
affect the enforceability of the other terms hereof.
5.4 ENTIRE AGREEMENT.
This Agreement is intended by the parties as a final expression of their
agreement and intended to be the complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein.
5.5 LAW GOVERNING.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware (without giving effect to
principles of conflicts of law).
5.6 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the parties hereto as
contemplated herein, and any successor to the Company by way of merger or
otherwise shall specifically agree to be bound by the terms hereof as a
condition of such succession. The rights of the Investors and Founders hereunder
shall only be assignable to Transferees of their Shares as contemplated herein.
5.7 AMENDMENTS.
Unless otherwise expressly provided for herein, this Agreement may only be
amended or modified with the prior written consent of the Company, holders of at
least 65% of the outstanding shares of Series C Preferred Stock, holders of at
least 65% of the outstanding shares of Series D Preferred Stock and the
Founders. No waiver or exception to any term of this Agreement in any one or
more instances shall be deemed to be, or construed as, a further or continuing
waiver of any such term.
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5.8 NOTICES.
Any notice or demand that is required or provided to be given under this
Agreement shall be deemed to have been sufficiently given and received for all
purposes when delivered by hand, telecopy or five days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, or two days after being sent by overnight delivery providing receipt
of delivery, to the following addresses:
If to the Company
Or Founders: DOV Pharmaceutical, Inc.
433 Hackensack Avenue
Hackensack, New Jersey 07601
Facsimile: (201) 968-0986, or at any other address
designated by the Company
With a copy to: Goodwin Procter LLP
599 Lexington Avenue
New York, New York 10022
Attn: J. Robert Horton
Facsimile: 212-255-3333
If to the Investors: To the address and facsimile number set forth in
the books and records of the Company, or at any
other address or facsimile number designated by an
Investor to the Company in writing.
5.9 DISPUTE RESOLUTION.
(a) All disputes, claims or controversies arising out of or relating
to this Agreement or any other agreement executed and delivered pursuant to this
Agreement or the negotiation, validity or performance hereof and thereof or the
transactions contemplated hereby and thereby that are not resolved by mutual
agreement shall be resolved solely and exclusively by binding arbitration before
JAMS/Endispute, Inc., or its successor. The arbitration shall be held in New
York before a single arbitrator and shall be conducted in accordance with the
rules and regulations promulgated by JAMS/Endispute, Inc. unless specifically
modified herein.
The arbitration shall commence within 90 days of the date on which a
written demand for arbitration is filed by any party hereto. In connection with
the arbitration proceeding, the arbitrator shall have the power to order the
production of documents by each party and any third party witnesses. In
addition, each party may take up to three depositions as of right, and the
arbitrator may in his or her discretion allow additional depositions upon good
cause shown by the moving party. However, the arbitrator shall not have the
power to compel answers of interrogatories or a response to requests for
admission. In connection with any arbitration, each party shall provide to the
other, no later than seven business days before the date of the arbitration, the
identity of all persons that may testify at the arbitration and a copy of all
documents that may be introduced at the arbitration or considered or used by a
party's witness or expert. The arbitrator's decision and award shall be made and
delivered within three months of
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the selection of the arbitrator. The arbitrator's decision shall set forth a
reasoned basis for any award of damages, equitable relief or finding of
liability. The arbitrator shall not have the power to award damages in excess of
actual compensatory damages and shall not multiply actual damages or award
punitive damages or any other damages that are specifically excluded under this
Agreement, and each party hereby irrevocably waives any claim to such damages.
The parties covenant and agree that they will participate in the
arbitration in good faith and that they will share equally its costs, except as
otherwise provided herein. The arbitrator may in his or her discretion assess
costs and expenses (including reasonable legal fees and expenses of the
prevailing party) against any party to a proceeding. Any party unsuccessfully
refusing to comply with an order of the arbitrators shall be liable for costs
and expenses, including attorney's fees, incurred by the other party in
enforcing the award. This Section applies to requests for temporary, preliminary
or permanent injunctive relief, except that in the case of temporary or
preliminary injunctive relief any party may proceed in court without prior
arbitration for the limited purpose of avoiding immediate and irreparable harm.
If the moving party secures temporary or preliminary injunctive relief in a
court of competent jurisdiction the parties agree that they will take all
necessary steps to commence arbitration as expeditiously as possible consistent
with court instructions, if any. The provisions of this Section shall be
enforceable in any court of competent jurisdiction.
The parties shall bear their own attorneys' fees, costs and expenses in
connection with the arbitration. The parties shall share equally in the fees and
expenses charges by J.A.M.S.
(b) Each of the parties hereto irrevocably and unconditionally
consents to the exclusive jurisdiction of J.A.M.S./Endispute, Inc. to resolve
all disputes, claims or controversies arising out of or relating to this
Agreement or any other agreement executed and delivered pursuant to this
Agreement or the negotiation, validity or performance hereof and thereof or the
transactions contemplated hereby and thereby and further consents to the
jurisdiction of the courts of New York County, New York for the purposes of
enforcing the arbitration provisions of paragraph (a) above. Each party further
irrevocably waives any objection to proceeding before J.A.M.S./Endispute, Inc.
based upon lack of personal jurisdiction or to the laying of the venue and
further irrevocably and unconditionally waives and agrees not to make a claim in
any court that arbitration before J.A.M.S./Endispute, Inc. has been brought in
an inconvenient forum. Each of the parties hereto hereby consents to service of
process by registered mail at the address to which notices are to be given. Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail is made for the express benefit of
the other parties hereto.
5.10 TERMINATION.
This Agreement shall terminate as to all parties upon the earlier of (i)
the closing of a Public Offering and (ii) the written consent of (A) each
Founder, (B) the holders of at least 65% of the of the outstanding shares of
Series C Preferred Stock and (C) the holders of at least 65% of the outstanding
shares of Series D Preferred Stock; PROVIDED, HOWEVER, that if this Agreement
has not been terminated as provided in (i) or (ii) above prior to the 24-month
anniversary of this Agreement, Section 3.4 and Section 3.5(d) hereof shall
terminate immediately upon such
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anniversary. Notwithstanding the preceding, this Agreement shall terminate with
respect to the Founders on the closing date of a merger or consolidation of the
Company in which the surviving entity has securities registered under the
Securities Act of 1933, as amended, and each Investor, if any, that holds
unregistered Shares is eligible to sell any such Shares pursuant to Rule 144.
5.11 ADDITIONAL PARTIES.
The parties hereto agree that subsequent investors who purchase Series D
Preferred Stock pursuant to the Stock Purchase Agreement shall, upon execution
of a counterpart signature page hereto, be added as a party to this Agreement
and have all rights and privileges of and be subject and bound by all the terms
and conditions hereof and that Schedule 1 hereto may be amended from time to
time to include such subsequent investor or investors, and that each such
subsequent investor shall be deemed for all purposes to be one of the "Series D
Stockholders" as if such subsequent investor was one of the Series D
Stockholders on the date hereof.
[END OF TEXT]
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IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Stockholders Agreement or have caused this Amended and Restated Stockholders
Agreement to be duly executed and delivered by their duly authorized
representatives as of the day and year first written above.
COMPANY: DOV PHARMACEUTICAL, INC., a Delaware
corporation
by: /s/ Arnold Lippa
-----------------------------------
Name: Arnold Lippa
Title: CEO
FOUNDERS: /s/ Arnold Lippa
---------------------------------------
Arnold Lippa
---------------------------------------
Bernard Beer
Stockholders Agreement Signature Page
<Page>
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Stockholders Agreement or have caused this Amended and Restated Stockholders
Agreement to be duly executed and delivered by their duly authorized
representatives as of the day and year first written above.
COMPANY: DOV PHARMACEUTICAL, INC., a Delaware
corporation
by:
-----------------------------------
Name:
Title:
FOUNDERS:
---------------------------------------
Arnold Lippa
/s/ Bernard Beer
---------------------------------------
Bernard Beer
Stockholders Agreement Signature Page
<Page>
SERIES C STOCKHOLDERS: /s/ Matthew Perry
---------------------------------------
MATTHEW PERRY
Stockholders Agreement Signature Page
<Page>
SERIES C STOCKHOLDERS: BIOTECHNOLOGY VALUE FUND, L.P., a
Delaware limited partnership
By: BVF Partners, L.P., its general
partner
By: BVF Inc., its general partner
By: /s/Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES C STOCKHOLDERS: BIOTECHNOLOGY VALUE FUND II,
L.P., a Delaware limited partnership
By: BVF Partners, L.P., its General
Partner
By: BVF Inc., its General Partner
By: /s/ Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES C STOCKHOLDERS: INVESTMENT 10 LLC
By: BVF Partners, L.P., Investment
Advisor
By: BVF Inc., its General Partner
By: /s/ Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES C STOCKHOLDERS: RESERVOIR CAPITAL PARTNERS, L.P.
By: Reservoir Capital Group, L.L.C.,
its general partner
By:/s/ Daniel H. Stern
------------------------------------
Name:
Title:
RESERVOIR CAPITAL MASTER FUND, L.P.
By: Reservoir Capital Group, L.L.C.,
its general partner
By:/s/ Daniel H. Stern
------------------------------------
Name:
Title:
RESERVOIR CAPITAL ASSOCIATES, L.P.
By: Reservoir Capital Group, L.L.C.,
its general partner
By:/s/ Daniel H. Stern
------------------------------------
Name:
Title:
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: MERLIN BIOMED PRIVATE EQUITY FUND, L.P.
by: Merlin BioMed Private Equity, LLC,
its General Partner
by:/s/ Stuart T. Weisbrod
------------------------------------
Name: Stuart T. Weisbrod
Title: its Managing Member
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: OPPENHEIMER DISCOVERY FUND
by:/s/ Jayne Stevlingson
------------------------------------
Name: Jayne Stevlingson
Title: Vice President
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: BIOTECHNOLOGY VALUE FUND, L.P.,
a Delaware limited partnership
by: BVF Partners L.P., its General
Partner
by: BVF Inc., its General Partner
by: /s/ Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: BIOTECHNOLOGY VALUE FUND II, L.P., a
Delaware limited partnership
By: BVF Partners L.P., its General
Partner
By: BVF Inc., its General Partner
By: /s/ Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: INVESTMENT 10 LLC
By: BVF Partners, L.P., its Investment
Advisor
By: BVF Inc., its General Partner
By: /s/ Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: BVF INVESTMENTS LLC
By: BVF Partners L.P., its Investment
Advisor
By: BVF Inc., its General Partner
By: /s/ Mark Lampert
---------------------------
Name: Mark Lampert
Title: President
Stockholders Agreement Signature Page
<Page>
PERCEPTIVE LIFE SCIENCES MASTER FUND LTD.,
a Cayman Islands corporation
by: /s/ Andrew C. Sankin
--------------------------------
Name: Andrew C. Sankin
Title: Director and Chief
Operating Officer
Address: c/o Administrator
International Fund Administration Ltd.
48 Par La Ville Road
Suite 464
Hamilton HM11 Bermuda
Facsimile No. (441) 295-9637
Tax ID Number: 98-0338943
Stockholders Agreement Signature Page
<Page>
INTEGRATED RISK FACILITIES HOLDINGS, INC.
by: /s/ Stuart Farber
-------------------------------------
Name: Stuart Farber
Title: President
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: /s/ Bruce Wainer
---------------------------------------
Bruce Wainer
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: /s/ Aaron Harrison
---------------------------------------
Aaron Harrison
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: /s/ Roger Samet
---------------------------------------
Roger Samet
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: /s/ Joseph Klein
---------------------------------------
Joseph Klein III
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDER: ARDARA US DIRECT INVESTMENT LTD.
By: Ducat Ltd, its Director
By: /s/ [signature illegible]
-------------------------------
Stockholders Agreement Signature Page
<Page>
SERIES D STOCKHOLDERS: DACHA CAPITAL
By: /s/ Jean Guy Lambert
-----------------------------------
Name: Jean Guy Lambert
Title: President
Stockholders Agreement Signature Page
<Page>
EXHIBIT A
FORM OF JOINDER AGREEMENT
The undersigned hereby agrees, effective as of the date hereof, to become
a party to that certain Amended and Restated Stockholders Agreement
("STOCKHOLDERS AGREEMENT") dated as of August ___, 2001 by and among DOV
Pharmaceutical, Inc., a Delaware corporation, and the parties named therein and
for all purposes of the Stockholders Agreement, the undersigned shall be
included within the term [Founder, Series C Stockholder, Series D Stockholder]
(as defined in the Stockholders Agreement). The address and facsimile number to
which notices may be sent to the undersigned is as follows:
_____________________________________
_____________________________________
_____________________________________
Facsimile No._______________________.
________________________________________
Name:
S-1