1
EXHIBIT 9
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of September 9,
1997, among EUROBIOTECH GROUP, INC., a Delaware corporation ("Eurobiotech"),
ELECTROPHARMACOLOGY, INC., a Delaware corporation ("EPi"), and the undersigned
Stockholders (each a "Stockholder," and together, the "Stockholders") who are
either stockholders of EPi or Eurobiotech.
RECITALS
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A. Each Stockholder owns or has the power to vote the number of shares of
the common stock, $.01 par value, of EPi ("EPi Common Stock"); and/or Series A
preferred stock, $.01 par value, of EPi ("EPi Preferred Stock"); or common
stock, $.001 par value, of Eurobiotech ("Eurobiotech Common Stock"), set forth
next to his, her or its name on the signature page of this Agreement (together
with all shares of such stock which the Stockholder subsequently acquires or
obtains the power to vote, the "Shares").
B. EPi has entered into a certain Agreement and Plan of Merger and
Reorganization with Eurobiotech, dated September 9, 1997 (the "Merger
Agreement"), pursuant to which Eurobiotech will be merged with and into EPi (the
"Merger"), pursuant to which the stockholders of Eurobiotech will exchange their
shares of Eurobiotech Common Stock for shares of EPI Common Stock in accordance
with the terms and conditions of the Merger Agreement. EPi will be the surviving
corporation (the "Surviving Corporation") of the Merger, and the separate
corporate existence of Eurobiotech will cease.
C. Under the terms of the Merger Agreement, EPi and Eurobiotech have each
agreed to call a meeting of its stockholders for the purpose of voting upon the
approval of the Merger and the adoption of the Merger Agreement (together with
any adjournments thereof, the "Stockholders' Meeting").
D. It is a condition to the obligations of Eurobiotech and EPi under the
Merger Agreement that the Stockholders shall have agreed to vote their shares of
EPi Common Stock, EPi Preferred Stock, and Eurobiotech Common Stock,
respectively, in favor of the Merger and the adoption of the Merger Agreement.
AGREEMENT
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Accordingly, the parties agree as follows:
1. AGREEMENT TO VOTE REGARDING BUSINESS COMBINATION. Each Stockholder
irrevocably agrees to vote the Shares as follows:
Exhibit 9-1
2
(a) in favor of the adoption of the Merger Agreement (including all
schedules and exhibits thereto as finalized pursuant to the provisions thereof)
and the approval of the Merger at the Stockholders' Meeting, including without
limitation, the amendment and restatement of EPi's Certificate of Incorporation
and By-Laws as contemplated by the Merger Agreement, respectively, attached
thereto;
(b) against the approval of any proposal relating to a competing merger or
business combination involving the acquisition of EPi or Eurobiotech or the
purchase of all or a substantial portion of the assets of EPi or Eurobiotech
other than as contemplated by the Merger Agreement; and
(c) against any other transaction which is inconsistent with the
obligations of EPi and Eurobiotech to consummate the Merger in accordance with
the Merger Agreement.
2. AGREEMENT TO VOTE REGARDING BOARD OF DIRECTORS.
(a) As of the effective date of the Merger, the Board of Directors of the
Surviving Corporation shall be comprised of seven members. Of such directors,
two directors shall be nominated (the "EPi Nominees") by supermajority of 75%
vote of Messrs. Levine, Feldman, Saloff and Xxxxxxx, based on the number of
shares of the Surviving Corporation held by each (the "EPi Representatives"),
and five directors shall be nominated (the "Eurobiotech Nominees") by majority
vote of Xxxxxxxxxxx Xxxx, Xxxxx Xxxx and Xxxxxx Investments Ltd., based on the
number of shares of the Surviving Corporation held by each (the "Eurobiotech
Representatives"). If the number of members of the Board of Directors of the
Surviving Corporation shall be fixed by the board as a number other than seven,
the number of EPi Nominees and the number of Eurobiotech Nominees shall be
adjusted accordingly to maintain the same 2:5 ratio.
(b) Subject to the provisions of Subsection 2(c) below, each Stockholder
(or the Stockholder's successors, assigns, designees or transferees) agrees at
all times in any election of directors of the Surviving Corporation, whether at
a meeting of directors or stockholders, by consent or otherwise, and in any
election or action to replace any director or fill vacancies occurring between
annual meetings, to vote the shares of the Surviving Corporation, whether common
or preferred stock, now or hereafter owned by him or it for the EPi Nominees and
Eurobiotech Nominees.
(c) Prior to each nomination of directors, the EPi Representatives and the
Eurobiotech Representatives shall disclose to the Surviving Corporation the
identity of the EPi Nominees and the Eurobiotech Nominees. In the event that the
election of any EPi Nominee or any Eurobiotech Nominee to the Board of Directors
would reasonably be expected to have a material adverse effect on the operation,
financial condition, properties or business of the Surviving Corporation in the
good faith judgment of the EPi Representatives or the Eurobiotech
Representatives, as the case may be, the Surviving Corporation and the
Stockholders shall not be required to comply with their respective obligations
under this Agreement with respect to such EPi Nominee or Eurobiotech Nominee, as
the case may be, and the respective representatives nominating the EPi Nominee
and Eurobiotech Nominee shall be entitled to name a replacement for such
nominee.
Xxxxxxx 0-0
0
(x) Xxx XXx Representatives may at any time and for any reason (or for no
reason) designate any EPi Nominee that is elected as a director of the Surviving
Corporation (an "EPi Director") for removal. Likewise, the Eurobiotech
Representatives may at any time and for any reason (or for no reason) designate
any Eurobiotech Nominee that is elected as a director of the Surviving
Corporation (a "Eurobiotech Director") for removal. If at any time a vacancy is
created on the Board of Directors by reason of the death, removal or resignation
of an EPi Director, the EPi Representatives shall be entitled to nominate an
individual to fill such vacancy until his or her successor is elected or
qualified, and the Stockholders shall, as soon as practicable after the date
such vacancy first occurs and in any event prior to the transaction of any other
business by the Board of Directors, take action to elect such nominee to fill
such vacancy. Likewise, if at any time a vacancy is created on the Board of
Directors by reason of the death, removal or resignation of a Eurobiotech
Director, the Eurobiotech Representatives shall be entitled to nominate an
individual to fill such vacancy until his or her successor is elected or
qualified, and the Stockholders shall, as soon as practicable after the date
such vacancy first occurs and in any event prior to the transaction of any other
business by the Board of Directors, take action to elect such nominee to fill
such vacancy.
(e) In order to effectuate the provisions of this Section 2, the
Stockholders hereby agree that when any action or vote is required to be taken
by the EPi Representatives or the Eurobiotech Representatives pursuant to this
Section 2, the Stockholders shall each use their best efforts to call, or cause
the appropriate officers and directors of the Surviving Corporation to call, a
stockholders' meeting or to execute or cause to be executed a written consent
pursuant to Section 228(a) of the Delaware General Corporation Law to effectuate
such stockholder action.
(f) Notwithstanding anything in this Agreement to the contrary, from and
after the date that any of Messrs. Levine, Feldman, Saloff, or Xxxxxxx
beneficially holds individually less than one percent (1%) of the outstanding
shares of common stock and/or preferred stock of the Surviving Corporation, such
individual shall no longer be an EPi Representative entitled to participate in
the selection and nomination of the EPi Nominees and shall no longer be bound to
vote his or its Shares in accordance with this Section 2. Likewise,
notwithstanding anything in this Agreement to the contrary, from and after the
date that any of Xxxxxxxxxxx Xxxx, Xxxxx Xxxx or Warrant Capital beneficially
holds less than one percent (1%) of the outstanding shares of common stock
and/or preferred stock of the Surviving Corporation, such individual or entity
shall no longer be a Eurobiotech Representative entitled to participate in the
selection and nomination of the Eurobiotech Nominees and shall no longer be
bound to vote his, her or its Shares in accordance with this Section 2.
3. LIMITATION ON VOTING POWER. It is expressly understood and acknowledged
that nothing contained herein is intended to restrict any Stockholder from
voting on any matter, or otherwise from acting, in the Stockholder's capacity as
a director or officer of EPi, Eurobiotech, or the Surviving Corporation with
respect to any matter, including but not limited to, the management or operation
of EPi, Eurobiotech or the Surviving Corporation.
Exhibit 9-3
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4. CERTAIN AGREEMENTS WITH XXXXXX XXXXXXX.
(a) As of the effective time of the Merger, that certain Stockholders
Agreement, dated as of November 13, 1995, among EPi, Xxxxxx Xxxxxxx and Xxxxx
Xxxxxx shall be terminated and of no further force and effect.
(b) EPi and Xx. Xxxxxxx hereby agree to (i) the redemption of all of
the issued and outstanding shares of EPi Preferred Stock owned of record by Xx.
Xxxxxxx, and (ii) the redemption and cancellation of all warrants to purchase
shares of EPi Common Stock issued and outstanding to Xx. Xxxxxxx and which are
more fully described on Schedule A attached hereto (the "Xxxxxxx EPi Warrants"),
in exchange for the issuance by EPi of 1,575,000 shares of EPi Common Stock to
Xx. Xxxxxxx (collectively, the "Xxxxxxx Redemption"). The Xxxxxxx Redemption
shall be effective at the effective time of the Merger (the "Xxxxxxx Redemption
Effective Time") on the effective date of the Merger. At the Xxxxxxx Redemption
Effective Time, the shares of EPi Preferred Stock and any and all of the Xxxxxxx
EPi Warrants issued and outstanding shall be automatically redeemed and
converted without further action on the part of the holder thereof into an
aggregate of 1,575,000 shares of EPi Common Stock. Each outstanding certificate
evidencing EPi Preferred Stock and the Xxxxxxx EPi Warrants not surrendered on
the effective date of the Xxxxxxx Redemption, will as of the effective date of
the Xxxxxxx Redemption be deemed for all purposes to be canceled and no longer
represent shares of EPi Preferred Stock or warrants to purchase EPi Common
Stock, but instead will represent the right to receive that number of whole
shares of EPi Common Stock into or for which the shares of EPi Preferred Stock
and the Xxxxxxx EPi Warrants will be converted pursuant to this Section 4(b).
5. CERTAIN AGREEMENTS WITH XXXXXX XXXXXXX. EPi and Xx. Xxxxxxx hereby agree
to the redemption and cancellation of all warrants to purchase shares of EPi
Common Stock issued and outstanding to Xx. Xxxxxxx and which are more fully
described on Schedule A attached hereto (the "Xxxxxxx EPi Warrants"), in
exchange for the issuance by EPi of 160,000 shares of EPi Common Stock to Xx.
Xxxxxxx (collectively, the "Xxxxxxx Redemption"). The Xxxxxxx Redemption shall
be effective at the effective time of the Merger (the "Xxxxxxx Redemption
Effective Time") on the effective date of the Merger. At the Xxxxxxx Redemption
Effective Time, any and all of the Xxxxxxx EPi Warrants issued and outstanding
shall be automatically redeemed and converted without further action on the part
of the holder thereof into an aggregate of 160,000 shares of EPi Common Stock.
Each outstanding certificate evidencing the Xxxxxxx EPi Warrants not surrendered
on the effective date of the Xxxxxxx Redemption will as of the effective date of
the Xxxxxxx Redemption be deemed for all purposes to be canceled and no longer
represent warrants to purchase EPi Common Stock, but instead will represent the
right to receive that number of whole shares of EPi Common Stock into or for
which the Xxxxxxx EPi Warrants will be converted pursuant to this Section 5.
6. CERTAIN AGREEMENTS WITH XXXXXX XXXXXX AND PARAGON CAPITAL CORP. AT
SPEAR, LEEDS & XXXXXXX ("PARAGON CAPITAL"). EPi, Xxxxxx Xxxxxx, and Paragon
Capital hereby agree to the redemption and cancellation of all warrants to
purchase shares of EPi Common Stock issued and outstanding to Xx. Xxxxxx and/or
Paragon Capital and which are more fully described on Schedule A attached hereto
(collectively, the "Paragon EPi Warrants"), in exchange for the issuance by EPi
of an aggregate 90,000 shares of EPi Common Stock to Xxxxxx Xxxxxx and Paragon
Capital (collectively, the
Exhibit 9-4
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"Paragon Redemption"). The Paragon Redemption shall be effective at the
effective time of the Merger (the "Paragon Redemption Effective Time") on the
effective date of the Merger. At the Paragon Redemption Effective Time, any and
all of the Paragon EPi Warrants issued and outstanding shall be automatically
redeemed and converted without further action on the part of the holder thereof
into an aggregate of 90,000 shares of EPi Common Stock. Each outstanding
certificate evidencing the Paragon EPi Warrants not surrendered on the effective
date of the Paragon Redemption will as of the effective date of the Paragon
Redemption be deemed for all purposes to be canceled and no longer represent
warrants to purchase EPi Common Stock, but instead will represent the right to
receive that number of whole shares of EPi Common Stock into or for which the
Paragon EPi Warrants will be converted pursuant to this Section 6.
7. TERMINATION.
(a) Prior to and until the effective time of the Merger, this Agreement
shall only terminate on the earliest of (w) December 31, 1997, or (x) the date
on which the Merger Agreement is terminated in accordance with Article X of the
Merger Agreement. In the event of the termination of this Agreement pursuant to
this Section 7(a), Sections 4, 5 and 6 of this Agreement shall likewise be of no
force and effect.
(b) From and after the effective time of the Merger, the provisions of this
Agreement (other than Section 1 which shall have expired pursuant to its terms),
shall terminate on the earlier of (a) two years from the effective date of the
Merger Agreement, or (b) the date on which the market capitalization of the
Surviving Corporation equals or exceeds Forty Million Dollars ($40,000,000);
PROVIDED, HOWEVER, the provisions of Sections 4, 5 and 6 of this Agreement shall
survive the termination of this Agreement pursuant to this Section 7(b).
8. REPRESENTATIONS, WARRANTIES, AND ADDITIONAL COVENANTS OF THE
STOCKHOLDER. Each Stockholder hereby represents and warrants that the
Stockholder has the capacity and all necessary power and authority to vote the
Shares and that this Agreement constitutes a legal, valid, and binding
obligation of the Stockholder, enforceable in accordance with its terms, except
as may be limited by bankruptcy, insolvency, or similar laws affecting
enforcement of creditors rights generally. Each Stockholder further agrees that
from the date hereof until the effective date of the Merger or until the earlier
termination of this Agreement pursuant to Section 7(a) of this Agreement, the
Stockholder will not sell or otherwise voluntarily dispose of any of the Shares
which are owned by the Stockholder or take any other voluntary action which
would have the effect of removing the Stockholder's power to vote the Shares or
which would be inconsistent with this Agreement; PROVIDED, HOWEVER, that this
last sentence of Section 8 shall not apply to Paragon Capital.
9. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS OF EPI AND THE
SURVIVING CORPORATION. The shares of EPi Common Stock to be issued pursuant to
Sections 4, 5 and 6 above, when issued, will be duly authorized, validly issued,
fully paid and non-assessable. The Surviving Corporation shall use its
reasonable best efforts to register as promptly as practicable the shares of EPi
Common Stock to be issued in the Xxxxxxx Redemption, Xxxxxxx Redemption, and
Paragon
Exhibit 9-5
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Redemption with the present intention to do so by means of a Rule 424(b)(3)
Prospectus Supplement to the Prospectus contained in EPi's Registration
Statement on Form S-3 (SEC File No. 333-03887). If the registration of the
shares of EPi Common Stock issued in the Xxxxxxx Redemption, Xxxxxxx Redemption
and Paragon Redemption may be registered by use of a Rule 424(b)(3) Prospectus
Supplement, the Surviving Corporation shall file the Rule 424(b)(3) Prospectus
Supplement within fifteen (15) days of the effective date of the Merger, and if
the registration of such shares may not be so accomplished, the Surviving
Corporation shall register the shares of EPi Common Stock as promptly as
practicable in accordance with that certain Registration Rights Agreement
between EPi and Xx. Xxxxxxx, dated November 13, 1995. Notwithstanding anything
to the contrary contained in this Section 9, no shares of EPi Common Stock
covered by Section 10 of this Agreement may be offered, sold or otherwise
disposed of in contravention of that Section.
10. LOCK-UP OF SALE OF SHARES OF EPI COMMON STOCK. Each of the Stockholders
hereby irrevocably agree that it will not, directly or indirectly, without the
prior written consent of each of the other parties hereto other than Paragon
Capital for a period of 365 days after the effective date of the Merger, sell,
offer to sell, contract to sell, pledge, grant any option for the sale of or
otherwise transfer or dispose of, or cause the disposition of, any shares of EPi
Common Stock received in the Merger, the Xxxxxxx Redemption, the Xxxxxxx
Redemption, or the Paragon Redemption which are issued to Xx. Xxxxxx, other than
any pledge of such shares in connection with a bona fide loan transaction which
does not permit the pledgee, directly or indirectly, to offer, sell, contract to
sell or otherwise transfer or dispose of any interest in such shares during such
365-day period, except that such shares of EPi Common Stock may be sold for the
account of the Stockholder if the amount of all shares of EPi Common Stock sold
for the account of such Stockholder within the preceding three months shall not
exceed the greater of
(i) One percent of the shares of EPi Common Stock outstanding as
shown by the most recent report or statement published by the
Surviving Corporation; or
(ii) The average weekly reported volume of trading in such
securities reported through the automated quotation system of a
registered securities association during the four calendar weeks
preceding the date of receipt of the order to execute the
transaction by the broker or the date of execution of the
transaction directly with a market maker, or
(iii) The average weekly volume of trading in such securities
reported through the consolidated transaction reporting system
contemplated by Rule 11Aa3-1 under the Securities Exchange Act of
1934 (ss. 240.11A3-1) during the four-week period specified in
paragraph (ii) of this Section.
Prior to the expiration of such 365-day period, the undersigned will not
announce or disclose any intention to do anything after the expiration of such
period which the undersigned is prohibited, as provided in the preceding
sentence, from doing during such period except as required by applicable law.
Exhibit 9-6
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11. SPECIFIC PERFORMANCE. Each of the undersigned acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this Agreement
and agrees that the obligations of the Stockholder hereunder shall be
specifically enforceable and that each party hereto shall be entitled to
injunctive or other equitable relief upon such a breach by any other party
hereto. Each Stockholder further agrees to waive any bond in connection with the
obtaining of any such injunctive or equitable relief. This provision is without
prejudice to any other rights that each party hereto may have against another
party hereto for any failure to perform his, her or its obligations under this
Agreement.
12. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to its
conflicts of laws principles. Each Stockholder agrees that the provisions of
this Agreement shall be binding also upon the successors, assigns, heirs and
personal representatives of the undersigned Stockholder.
13. COUNTERPART AND FACSIMILE SIGNATURES. This Agreement may be executed in
multiple counterparts, each of which will be deemed to be an original, and all
such counterparts will constitute but one instrument. This Agreement may be
executed by any party hereto by facsimile, and each such executed counterpart
shall be deemed to be validly executed and enforceable against each such party
in accordance with its terms.
[INTENTIONALLY LEFT BLANK]
Exhibit 9-7
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IN WITNESS WHEREOF, the undersigned have executed this Stockholder
Agreement as of the day and year first above written.
ELECTROPHARMACOLOGY, INC. EUROBIOTECH GROUP, INC.
By: /s/ Xxxx Xxx By: /s/ Xxxxxxxxxxx Xxxx
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ITS: PRESIDENT AND CHIEF ITS: PRESIDENT AND CHIEF
EXECUTIVE OFFICER EXECUTIVE OFFICER
EPI STOCKHOLDERS:
/s/ Xxxxx Xxxxxx /s/ Xxxxxx Xxxxxx
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XXXXX XXXXXX XXXXXX XXXXXX
(259,199 shares of (25,000 shares of EPi Common Stock)
EPi Common Stock)
PARAGON CAPITAL AT
SPEAR, LEEDS & XXXXXXX
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Its:
(604,104 shares of EPi Common Stock)
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxx Xxxxxxx
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XXXXXX XXXXXXX XXXXXX XXXXXXX
(318,950 shares of (692,361 shares of EPi Common Stock)
EPi Common Stock)
(242,950 shares of
EPi Preferred Stock)
EUROBIOTECH STOCKHOLDERS:
/s/ Xxxxxxxxxxx Xxxx /s/ Xxxxx Xxxx
-------------------------------- ---------------------------------------
XXXXXXXXXXX XXXX XXXXX XXXX
(______ shares of (______ shares of
Eurobiotech Common Stock) Eurobiotech Common Stock)
XXXXXX INVESTMENTS LTD.
By: /s/
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Its:
(_______ shares of
Eurobiotech Common Stock)
Exhibit 9-8
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SCHEDULE A
OUTSTANDING EPI WARRANTS TO BE REDEEMED AND CANCELED
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Original Number of
Issue Shares (Post- Exercise Expiration
Date Issued To split) Price Date Registration Rights/Other Terms
========================================================================================================================
08/04/93 X. Xxxxxxx 11,622 5.03 08/04/98 Yes (in pre-split agreement only)
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05/25/94 X. Xxxxxxx 38,741 5.03 05/25/99 Yes (in pre-split agreement only)
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09/20/94 X. Xxxxxxx 23,244 5.03 09/20/99 Yes (in pre-split agreement only)
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05/19/95 Paragon Capital 125,000 7.00 05/12/00 Yes; ss.3.2 - cashless exercise
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05/19/95 Paragon Capital 62,500 6.00 05/12/00 Yes; ss.3.2 - cashless exercise
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11/21/95 X. Xxxxxxx 300,000 6.25 11/21/00 Yes
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11/13/95 X. Xxxxxxx 800,000 6.00 11/13/05 Yes
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11/13/95 X. Xxxxxxx 250,000 7.50 11/13/05 Yes
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11/13/95 X. Xxxxxxx 250,000 9.00 11/13/05 Yes
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Exhibit 9-9
