EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is made as of July 1, 2003, by and among
DOV Pharmaceutical, Inc., a Delaware corporation (the "COMPANY"), and each of PW
Juniper Crossover Fund, L.L.C., Caduceus Private Investments, LP and OrbiMed
Associates LLC (each, a "PURCHASER" and together, the "PURCHASERS").
WHEREAS, the Company has authorized the issuance and sale to the Purchasers
(in the amounts set forth next to their respective names on the signature page
hereto), pursuant to this Agreement, of an aggregate of 1,428,571 shares (the
"SHARES") of the Company's Common Stock, par value $0.0001 per share (the
"COMMON STOCK"), at a purchase price per share of $10.50, and warrants to
purchase an aggregate of 27.5% of the Shares (the "WARRANTS"), exercisable for
three years at an exercise price per share of $16.00 and as otherwise set forth
on EXHIBIT A attached hereto; and
WHEREAS, the Purchasers desire to purchase the Shares and the Warrants
(collectively, the "SECURITIES") from the Company on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
SECTION 1. COMMITMENT TO PURCHASE. Upon the basis of the representations
and warranties, but subject to the terms and conditions contained in this
Agreement, the Company agrees to issue and sell to the Purchasers and the
Purchasers agree to purchase from the Company, at the Closing (as defined
below), the Shares and the Warrants (in the amounts set forth next to such
Purchaser's name on the signature page hereto) for an aggregate purchase price
of Fifteen Million Dollars ($15,000,000) (the "PURCHASE PRICE").
SECTION 2. THE CLOSING.
(a) The purchase and sale of the Shares and the Warrants shall
take place at a closing (the "CLOSING") at the offices of Xxxxxxxx Xxxxx &
Deutsch LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx on July 1, 2003, or at such
other location or on such other date as the Company and the Purchasers may
mutually agree. The date and time of the Closing are referred to herein as, the
"CLOSING DATE."
(b) At the Closing, the Purchasers shall deliver to the Company
(i) a portion of the Purchase Price equal to Fourteen Million Dollars
($14,000,000), via wire transfer of immediately available funds to an account
designated by the Company, and the Purchasers unconditionally and irrevocably
agree and promise to pay the remaining portion of the Purchase Price of One
Million Dollars ($1,000,000), via wire transfer in immediately available funds
to an
account designated by the Company, not later than 14 days following the Closing
Date (the "DEFERRED PAYMENT"), and (ii) the documents set forth in Section 6.02
of this Agreement.
(c) The Company shall deliver or cause to be delivered to the
Purchasers, at the Closing (i) or as soon as practicable thereafter,
certificates representing the Shares, in definitive form and registered in the
Purchasers' respective names or such names as the Purchasers shall request,
against payment of the Purchase Price, (ii) or as soon as practicable
thereafter, the Warrants, duly executed by the Company; provided that, with
respect to the foregoing clauses (i) and (ii), the Company, without releasing
the Purchasers' obligation to pay the Deferred Payment, shall not be obligated
to deliver such portions of the Shares and the Warrants as the Deferred Payment
bears to the Purchase Price until the Company receives the Deferred Payment, and
(iii) the documents set forth in Section 6.01 of this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the representations and warranties to the Purchasers contained in
this Section 3. Such representations and warranties are subject to the
qualifications and exceptions set forth in the disclosure schedule delivered to
the Purchasers pursuant to this Agreement (the "DISCLOSURE SCHEDULE").
References to the knowledge or awareness of the Company shall mean the actual
knowledge, after reasonable inquiry, of the officers of the Company.
3.01 ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Except as set forth in SECTION 3.01 OF THE DISCLOSURE
SCHEDULE, the Company does not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or have any
equity interest in any firm, partnership, joint venture, association or other
entity. The Company has the power and authority, corporate or otherwise, as
appropriate, to own, lease and operate its properties and to conduct its
business as now conducted and to enter into and perform its obligations under
this Agreement, the Warrants and the Registration Rights Agreement to be entered
on the date hereof among the Company and the Purchasers (the "REGISTRATION
RIGHTS AGREEMENT," together with this Agreement and the Warrants, the
"TRANSACTION DOCUMENTS"), and the Company is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not, individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), business, properties or results of
operations of the Company (a "MATERIAL ADVERSE EFFECT").
3.02 AUTHORIZED CAPITAL STOCK. Except as set forth in SECTION 3.02
OF THE DISCLOSURE SCHEDULE and except for subsequent issuances, if any, pursuant
to this Agreement or pursuant to agreements, employee or director benefit plans
or the exercise of convertible securities referred to in the 34 Act Reports (as
defined below), the Company has authorized, issued and outstanding capital stock
as set forth in the Company's quarterly report on Form 10-Q for the quarter
ended March 31, 2003 and the Company's annual report on Form 10-K for the year
ended 2002, as applicable (collectively, the "34 ACT REPORTS"), filed by it with
the United States Securities and Exchange Commission (the "COMMISSION") pursuant
to the Securities and
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Exchange Act of 1934, as amended (the "EXCHANGE ACT"). The issued and
outstanding shares of the Company's Series B Preferred Stock, par value $1.00
per share (the "SERIES B PREFERRED") and the Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, were not issued
in violation of or are not otherwise subject to any preemptive or other similar
rights or other rights to subscribe for or purchase securities except for any
such rights as may have been duly waived, and conform in all material respects
to the descriptions thereof contained in the 34 Act Reports. Except as disclosed
in the 34 Act Reports, and except for options issued under the Company's stock
plans after March 31, 2003 and as otherwise set forth in SECTION 3.02 OF THE
DISCLOSURE SCHEDULE, (i) the Company does not have outstanding any options or
warrants to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any shares of
capital stock of any subsidiary, and (ii) there is no commitment, plan or
arrangement to issue, any securities or obligations convertible into any shares
of capital stock of the Company or any such options, rights convertible
securities or obligations. The description of the Company's capital stock, stock
bonus and other stock plans or arrangements and the options or other rights
granted and exercised thereunder, contained in the 34 Act Reports, fairly
presents in all material respects the information required to be shown in such
34 Act Reports with respect to such capital stock, plans, arrangements, options
and rights.
3.03 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares have
been duly authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be validly issued, fully paid and nonassessable.
The shares of Common Stock issuable upon exercise of the Warrants have been duly
authorized and reserved for issuance and, upon issuance in accordance with the
terms of the Warrants, will be validly issued, fully paid and nonassessable. No
preemptive rights or other rights (which have not been waived) to subscribe for
or purchase exist with respect to the issuance and sale of the Securities by the
Company pursuant to this Agreement. Except for rights disclosed in the 34 Act
Reports or as otherwise set forth in SECTION 3.03 OF THE DISCLOSURE SCHEDULE, no
stockholder of the Company has any right to request or require the Company to
register the sale of any shares owned by such stockholder under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"). Subject to the
satisfaction of the conditions set forth in Section 6.02, no further approval or
authority of the stockholders or the board of directors of the Company will be
required for the issuance and sale of the Securities to be sold by the Company
as contemplated herein.
3.04 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT. The
Company has full legal right, corporate power and authority to enter into the
Transaction Documents and to perform the transactions contemplated hereby and
thereby. Each Transaction Document has been duly authorized, executed and
delivered by the Company. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation of the transactions
contemplated hereby and thereby will not (i) violate any provision of the
organizational documents of the Company; (ii) result in the creation of any
lien, charge, security interest or encumbrance upon any assets or property of
the Company that would have a Material Adverse Effect; or (iii) conflict with,
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under (A) any agreement,
mortgage,
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deed of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company is a party or by which the Company or any of its assets or
properties may be bound or affected that would have a Material Adverse Effect;
or (B) to the Company's knowledge, and subject to satisfaction of the conditions
set forth in Section 6.02, any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of its
properties that would have a Material Adverse Effect. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of the Transaction Documents or the consummation of the transactions
contemplated hereby or thereby, except for compliance with Blue Sky laws and
federal securities laws applicable to the offering and issuance of the Shares
and the shares of Common Stock issuable upon exercise of the Warrants and
compliance with the rules and regulations of the securities exchange or trading
market on which the Common Stock is listed. Upon execution and delivery, and
assuming the valid execution of the Transaction Documents by the Purchasers,
each Transaction Document will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification obligations
of the Company in Section 7.02 of this Agreement or Section 2.4 of the
Registration Rights Agreement may be legally unenforceable.
3.05 FINANCIALS. The Company's (i) financial statements for the
years ended December 31, 2002 and 2001, with a report thereon by the independent
certified public accountants of the Company (the "AUDITED FINANCIALS") and (ii)
consolidated unaudited balance sheet dated as of March 31, 2003, and the related
statements of income, retained earnings and cash flows for the three-month
period then ended (the "CURRENT FINANCIALS," together with the Audited
Financials, the "FINANCIAL STATEMENTS"), included in the 34 Act Reports, fairly
present in all material respects the financial position, the results of
operations, the statements of cash flows and the statements of stockholders'
equity and the other information purported to be shown therein of the Company at
the respective dates and for the respective periods to which they apply, except
for the Current Financials that do not contain certain footnotes that would be
included in audited year-end financial statements, and the Financial Statements
have been prepared in conformity with generally accepted accounting principles
of the United States, consistently applied throughout the periods involved,
except as noted in such Financial Statements.
3.06 NO DEFAULTS. Company's is not (i) in violation or default of
any provision of its certificate of incorporation, bylaws or other
organizational documents or (ii) in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its assets or properties are bound, except, in
each such case, for violations, breaches and defaults that, individually or in
the aggregate, would not have a Material Adverse Effect; and, to the Company's
knowledge, there does not exist any state of fact that, with notice or lapse of
time or both, would constitute a violation, breach or default on the part of the
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Company as defined in such documents, except for such violation, breach or
default that, individually or in the aggregate, would not have a Material
Adverse Effect.
3.07 CONTRACTS. The contracts described in the 34 Act Reports as
being in effect on the date hereof and that are material to the Company, are in
full force and effect on the date hereof, and the Company is not, nor to the
Company's knowledge, is any other party in breach of or default under any of
such contracts that would have a Material Adverse Effect, except as otherwise
set forth in SECTION 3.07 OF THE DISCLOSURE SCHEDULE.
3.08 NO ACTIONS. Except as disclosed in the 34 Act Reports, there
are no legal or governmental actions, suits or proceedings pending or, to the
Company's knowledge, threatened to which the Company is or may be a party or of
which property owned or leased by the Company is or may be the subject, or
related to environmental or discrimination matters, which actions, suits or
proceedings, individually or in the aggregate, might prevent or might reasonably
be expected to materially and adversely affect the transactions contemplated by
this Agreement or that would have a Material Adverse Effect; and all pending
legal or governmental proceedings, if any, to which the Company is a party or of
which any of its properties or assets are subject that are not described in the
34 Act Reports, including ordinary routine litigation incidental to the
business, would not, considered in the aggregate, have a Material Adverse
Effect. Except as disclosed in the 34 Act Reports, the Company is not a party to
or subject to the provisions of any material injunction, judgment, decree or
order of any court, regulatory body administrative agency or other governmental
body.
3.09 LABOR. No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent; and, to the Company's
knowledge, no labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors exists or is imminent that would,
individually or in the aggregate, have a Material Adverse Effect.
3.10 PROPERTIES. The Company has valid title to all its properties
reflected on the balance sheet included in the Current Financials and material
to its business (except for properties disposed of since that date in the
ordinary course of business), and such properties are not subject to any lien,
mortgage, pledge, charge or encumbrance of any kind, except (i) those, if any,
reflected therein, or (ii) those that are not material in amount and do not
materially and adversely affect the use made and intended to be made of such
property by the Company. The Company holds its leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company. Except as disclosed in the 34 Act
Reports, the Company owns or leases all such properties as are necessary to its
operations as now conducted.
3.11 NO MATERIAL CHANGE. Except as set forth in SECTION 3.11 OF THE
DISCLOSURE SCHEDULE, the Company's 34 Act Reports or as a result of the
transactions contemplated by this Agreement or any of the other Transaction
Documents, since March 31, 2003, (i) the Company has not incurred any
liabilities or obligations, indirect, or contingent, or entered into any verbal
or written agreement or other transaction that was not in the ordinary course of
business or that
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would have a Material Adverse Effect; (ii) the Company has not sustained any
material loss or interference with its businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by insurance; (iii) the
Company has not paid or declared any dividends or other distributions with
respect to its capital stock and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations; (iv) except as may
also be set forth in SECTION 3.2 OF THE DISCLOSURE SCHEDULE, there has not been
any change in the capital stock of the Company other than shares or options
issued pursuant to exercise of outstanding warrants or employee and director
stock option plans approved by the Company's board of directors or indebtedness
material to the Company (other than in the ordinary course of business); and (v)
there has not been a change that would result in a Material Adverse Effect.
3.12 INTELLECTUAL PROPERTY. Except as otherwise specifically
disclosed in the 34 Act Reports and SECTION 3.12 OF THE DISCLOSURE SCHEDULE, (i)
the Company owns, or has obtained valid licenses or rights to use, the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights and trade secrets necessary for the
conduct of the Company's business as currently conducted (collectively, the
"INTELLECTUAL PROPERTY"); (ii) the Company has not received notice from any
third party who has or claims to have any ownership rights to any Intellectual
Property that is owned by, or has been licensed to, the Company for the product
indications described in the 34 Act Reports that would preclude the Company from
conducting its business as currently conducted; (iii) to the Company's
knowledge, there are currently no sales of any products that would constitute an
infringement by third parties of any material Intellectual Property owned by or
licensed to the Company; (iv) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the rights of the Company in or to any material Intellectual Property owned by
licensed to the Company; (v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by third parties challenging the
validity or scope of any material Intellectual Property owned by or licensed to
the Company; and (vi) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary right of others, as would have a Material Adverse Effect.
3.13 COMPLIANCE. Except as disclosed in the 34 Act Reports, the
Company has not been advised, and has no reason to believe, that it is not
conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business; except
where such failure would not, individually or in the aggregate, have a Material
Adverse Effect.
3.14 ENVIRONMENTAL MATTERS. Except as disclosed in the 34 Act
Reports and except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (i) the Company is in compliance in
all material respects with all applicable Environmental Laws, (ii) the Company
has all permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance with the requirements of such permits,
authorizations and approvals, (iii) there are no pending or, to the knowledge of
the Company, threatened Environmental Claims against the Company and (iv) under
applicable law, there are no circumstances with respect to any property or
operations of the Company that are
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reasonably likely to form the basis of an Environmental Claim against the
Company.
For purposes of this Agreement, the following terms shall have the
following meanings: "ENVIRONMENTAL LAW" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "ENVIRONMENTAL
CLAIMS" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
3.15 TAXES. The Company has filed or obtained filing extensions
with respect to all federal, state, local and foreign income and franchise tax
returns material to the Company, and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency that has been or
might be asserted or threatened against it, which would have a Material Adverse
Effect.
3.16 TRANSFER TAXES. On the Closing Date, all stock transfer or
other taxes (other than income taxes) that are required to be paid in connection
with the sale and transfer of the Securities to be sold to the Purchasers
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.
3.17 INSURANCE. The Company maintains insurance of the type and in
the amount that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect.
3.18 CONTRIBUTIONS. The Company has not directly or indirectly, (i)
made any unlawful contribution to any candidate for public office, or failed to
disclose fully where required by law any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
3.19 INVESTMENT COMPANY. The Company is not an "investment company"
or an "affiliated person" of, or "promoter or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
3.20 RELATED PARTY TRANSACTIONS. No transaction has occurred
between or among the Company and its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that would have been
required to be described in the 34 Act Reports when filed that is not so
described.
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3.21 BOOKS AND RECORDS. The books, records and accounts of the
Company accurately and fairly reflect, in all material respects and in
reasonable detail, the transactions in, and dispositions of, the assets of, and
the results of operations of, the Company, all to the extent required by
generally accepted accounting principles of the United States. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of the Financial Statements in accordance
with generally accepted accounting principles of the United States and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.22 EMPLOYEE AGREEMENTS. To the Company's knowledge, if any
full-time employee identified in the 34 Act Reports has entered into any
non-competition, non-disclosure, confidentiality or other similar agreement with
any party other than the Company, such employee is neither in violation thereof
nor is expected to be in violation thereof as a result of the business conducted
or expected to be conducted by the Company as described in the 34 Act Reports or
such person's performance of his obligations to the Company; and the Company has
not received written notice that any consultant or scientific advisor of the
Company is in violation of any non-competition, non-disclosure, confidentiality
or similar agreement.
3.23 FINDERS' FEES. Except as set forth in SECTION 3.23 OF THE
DISCLOSURE SCHEDULE, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
Company who might be entitled to any fee or commission from the Company or any
of its affiliates upon consummation of the transactions contemplated by this
Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby makes the represents and warrants
to the Company contained in this Section 4.
4.01. EXISTENCE AND POWER. Such Purchaser is an entity duly
organized or formed, validly existing and in good standing under the laws of the
jurisdiction in which it is organized or formed and has all requisite power and
authority to enter into the Transaction Documents and to perform its obligations
hereunder or thereunder.
4.02. AUTHORIZATION. Such Purchaser has the power to execute,
deliver and perform its obligations under the Transaction Documents, and has
taken all necessary action to authorize the execution, delivery and performance
by it of the Transaction Documents. Each Transaction Document has been duly
executed and delivered by such Purchaser and constitutes a legal, valid and
binding agreement of such Purchaser, enforceable against such Purchaser in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency and other
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similar laws affecting creditors' rights generally and by equitable principles
of general applicability.
4.03. GOVERNMENTAL AUTHORIZATION. The execution and delivery by such
Purchaser of the Transaction Documents, and the performance and consummation of
the transactions contemplated hereby and thereby, require no material action by
or in respect of, or material filing with, any governmental body, agency or
official, not otherwise duly taken or effected.
4.04. NON-CONTRAVENTION. The execution, delivery and performance of
the Transaction Documents and the performance and consummation of the
transactions contemplated hereby and thereby, will not result in any violation
under or be in conflict with or constitute, with or without the passage of time
and giving of notice, either a material default under such Purchaser's
organizational documents or any judgment, order, writ, decree or material
contract to which such Purchaser is a party or by which it is bound.
4.05. PRIVATE PLACEMENT.
(a) Such Purchaser acknowledges that the Securities have
not been registered under the Securities Act, or the securities laws of any
state or other jurisdiction and can only be resold pursuant to an effective
Registration Statement (a "Registration Statement") under the Securities Act or
pursuant to an exemption thereunder.
(b) Such Purchaser represents and warrants that it is
acquiring the Securities to be purchased by it pursuant to this Agreement for
investment for such Purchaser's own account and not with a view to the resale or
distribution of such Securities or any interest therein other than in a
transaction that is registered or exempt from registration under the Securities
Act and any applicable state laws.
(c) Such Purchaser represents and warrants to the Company
that (i) it is an "accredited investor" as such term is defined in Regulation D
under the Securities Act; (ii) it has previously invested in securities of
companies in the biotechnology sector and acknowledges that it (either alone or
together with its advisors) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment in the Securities; (iii) it has the ability to bear the economic
risks of the investment therein; (iv) it is able, without materially impairing
its financial condition, to hold the Securities for an indefinite period of time
and to suffer complete loss of its investment; (v) it has fully considered the
risks of this investment and stipulates that (A) this investment is suitable
only for an investor who is able to bear the economic consequences of a total
loss thereof, (2) the Securities represent an investment that involves a
substantial degree of risk of loss and (3) there are substantial restrictions on
the transferability of the Securities and that, accordingly, it may not be
possible for such Purchaser to liquidate its investment; and (vi) there has been
no representation by the Company as to the possible future value of the
Securities as to any anticipated liquidity events other than those certain
registration rights contained in the Registration Rights Agreement.
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(d) Such Purchaser has been given the opportunity to ask
questions of, and receive answers from, the Company regarding the Company, the
terms and conditions of the Securities and related matters, and has been
furnished with or has otherwise had access to the information it deems necessary
or desirable to evaluate the merits and risks of its acquisition of the
Securities.
(e) Such Purchaser understands that the Securities that it
is purchasing are characterized as "restricted securities" under the Securities
Act inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations, such Securities may be resold without registration under the
Securities Act only in certain limited circumstances. It is understood that the
certificates delivered in connection with the Closing evidencing the Securities
will bear a restrictive legend.
(f) Such Purchaser represents that it understands the tax
consequences of this investment and it has consulted its own legal, accounting,
tax, investment and other advisors with respect to the tax treatment of the
investment contained herein by such Purchaser.
(g) Such Purchaser has, in connection with its decision to
purchase the Securities, relied solely upon the 34 Act Reports (as of the date
of filing) and the representations and warranties of the Company contained
herein.
4.06. FINDERS' FEES. Except as set forth in SECTION 4.06 OF THE
DISCLOSURE SCHEDULE, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of such
Purchaser who might be entitled to any fee or commission from such Purchaser or
any of its affiliates upon consummation of the transactions contemplated by this
Agreement.
SECTION 5. COVENANTS OF THE COMPANY AND THE PURCHASERS.
5.01 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, the Company and the Purchasers agree to use commercially
reasonable efforts to: (i) obtain all necessary consents, waivers,
authorizations and approvals necessary or desirable in connection with the
execution, delivery and performance of the Transaction Documents; and (ii) take,
or cause to be taken, all other actions and to do, or cause to be done, all
other things reasonably necessary or desirable under applicable laws to
consummate the transactions contemplated by the Transaction Documents. The
Company and the Purchasers agree to execute and deliver such documents,
certificates, agreements and other writings and to take such other actions as
may be reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by the Transaction Documents.
5.02. CERTAIN FILINGS. The Company and the Purchasers agree to
cooperate with each other: (i) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or authority
is required, or any actions, consents, approvals
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or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by the
Transaction Documents; and (ii) in taking such actions or making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or waivers.
5.03. PUBLIC ANNOUNCEMENTS. No party to this Agreement shall make or
cause to be made any press release in respect of this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed, provided
that the Company shall be permitted to make such disclosures as may be required
by applicable laws, rules or regulations or as may be required under any listing
agreement with, or rule or regulation of, any national securities exchange or
trading market, in which case, the Company shall use commercially reasonable
efforts to provide a draft of any such press release to the Purchasers within a
reasonable period of time prior to the anticipated release of such press release
to enable them to comment thereon.
5.04. BOARD OF DIRECTORS.
(a) Upon approval by the Company's board of directors (which
approval shall not be unreasonably withheld and the reasons for any disapproval
articulated in writing to the Purchasers) of the person nominated by the
Purchasers (such person, the "PURCHASER REPRESENTATIVE"), (i) the Company shall,
within 180 days of the Closing Date, nominate the Purchaser Representative to be
a member of the Company's board of directors and shall thereafter take all
reasonable steps for the Purchaser Representative to be affirmatively voted in
as a member of the Company's board of directors and (ii) until such time as the
Purchaser Representative is elected to the Company's board of directors or the
rights granted under this Section 5.04 otherwise terminate or expire, the
Purchaser Representative shall be entitled to receive the same notice of any
meetings of the Company's board of directors as each member of the board of
directors shall receive, attend meetings of the Company's board of directors as
an observer and shall be provided all information otherwise made available to
the members of the Company's board of directors; provided that, with regard to
the Purchaser Representative's status as an observer, (A) the Company may
exclude the Purchaser Representative from access to any material or board
meeting or any portion thereof, if the Company believes upon the advice of
counsel that such exclusion is reasonably necessary to preserve the attorney
client privilege; (B) the Purchaser Representative shall not be permitted to
vote at any Company board meetings or be counted for purposes of determining
whether there is a sufficient quorum for the board to conduct its business and
(C) the Purchaser Representative shall agree to hold in confidence and trust and
shall execute the Company's standard form nondisclosure and confidentiality
agreement so agreeing not to trade on the basis of material non-public
information acquired form the Company or to disclose to third parties or use for
purposes inimical to the Company's best interests any information provided to or
learned by it in connection with the rights provided under this Section
5.04(a)(ii).
(b) The rights provided under this Section 5.04 are not assignable
and shall terminate and be of no further force or effect upon such time as the
Purchasers, collectively, no
11
longer hold at least 50% of the Shares purchased by them at the Closing (as
adjusted for stock dividends, stock distributions, splits, combinations and
recapitalizations).
(c) The initial nominee by the Purchasers for the purposes of
Section 5.04(a), who has been approved by the Company's board of directors, is
Xxxxxxxx Xxxxxxxxxxx.
Section 6. CLOSING DELIVERIES.
6.01. CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The obligation of
the Purchasers to consummate the transactions contemplated by this Agreement
shall be subject to the delivery of the fulfillment prior to or at the Closing
of the following conditions:
(a) The representations and warranties of the Company
contained in Section 3 shall be true on and as of the Closing in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
(b) The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
(c) All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any securities exchange or trading market on which the Common Stock
is listed that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall have been duly obtained and
effective as of the Closing and all filings with such authorities or regulatory
bodies shall have been made and accepted, to the extent so required to have been
made and accepted as of the Closing Date.
(d) Subject to Section 2(c), the Company shall have
delivered a stock certificate to each of the Purchasers representing the Shares
being purchased by such Purchaser under this Agreement.
(e) Subject to Section 2(c), the Company shall have
executed and delivered the Warrants, in the form attached hereto as EXHIBIT A,
to each of the Purchasers representing the Warrants being purchased by such
Purchaser under this Agreement.
(f) The Company shall have delivered or made available to
the Purchasers, all in form and substance reasonably acceptable to the
Purchasers' counsel, the following:
(i) a certificate of the Secretary of the Company,
dated the Closing Date, as to the incumbency of any officer executing this
Agreement or any document related thereto; and
12
(ii) a certified copy of the resolutions of the
Company's board of directors authorizing (A) the execution, delivery and
consummation of the Transaction Documents and (B) transactions contemplated
thereby.
(g) The Company shall have delivered to the Purchasers an
opinion of counsel as to the existence of the Company and its authority to
consummate the transactions contemplated hereby in form and substance reasonably
satisfactory to the Purchasers.
(h) The Company shall have executed and delivered the
Registration Rights Agreement, substantially in the form attached hereto as
EXHIBIT B.
6.02. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation
of the Company to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment prior to or at the Closing of the following
conditions:
(a) The representations and warranties of each of the
Purchasers contained in Section 4 above shall be true on and as of the Closing
in all material respects with the same effect as though such representations and
warranties had been made on and as of the Closing.
(b) All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any securities exchange or trading market on which the Common Stock
is listed that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall have been duly obtained and
effective as of the Closing and all filings with such authorities or regulatory
bodies shall have been made and accepted, to the extent so required to have been
made and accepted as of the Closing Date.
(c) Each of the Purchasers shall have performed and
complied in all material respects with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.
(d) The Purchasers shall have paid to the Company the
Purchase Price as specified in Section 2.
(e) The Purchasers shall have executed and delivered the
Warrants and the Registration Rights Agreement in the form attached hereto as
EXHIBIT A and EXHIBIT B, respectively.
(f) The Purchasers shall have delivered to the Company such
closing documents as shall be reasonably requested by the Company in form and
substance reasonably acceptable to the Company's counsel.
Section 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
EXCLUSIVE REMEDY.
13
7.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties provided for in this Agreement shall survive for
a period of one (1) year from the Closing Date (the "SURVIVAL PERIOD"); provided
that any representation or warranty in respect of which indemnity may be sought
under this Agreement shall survive the time at which it would otherwise
terminate if notice of the inaccuracy or breach thereof shall have been given to
the party against whom such indemnity may be sought prior to such termination;
and provided, further, that such survival shall be solely with respect to such
inaccuracy or breach claimed.
7.02. INDEMNIFICATION. (a) The Company shall indemnify and hold
harmless each of the Purchasers and their respective officers, directors,
employees and agents from and against any and all direct monetary costs,
expenses, damages, liabilities or losses (including, without limitation,
reasonable counsel's fees and other reasonable out-of-pocket costs incident to
any third party suit, action or proceeding (but excluding special, consequential
or like damages) (collectively, "DAMAGES") to the extent caused by (i) the
breach of any representation or warranty made by the Company in this Agreement
or (ii) the breach by the Company of any covenant or agreement to be performed
by it hereunder.
(b) Each of the Purchasers shall, severally and not
jointly, indemnify and hold harmless the Company, its affiliates and their
respective officers, directors, employees and agents from and against any and
all Damages to the extent caused by (i) the breach of any representation or
warranty made by the Purchasers in this Agreement or (ii) any breach by the
Purchasers of any covenant or agreement to be performed by it hereunder.
(c) The obligations of the Company, on the one hand, and
the Purchasers, on the other hand, to provide any such indemnification under
this Section 7.02 shall expire in accordance with the Survival Period.
(d) Neither the Company nor the Purchasers shall be
obligated to provide any such indemnification to the other under this Section
7.02 in respect of any Damages, unless the total of all such Damages shall
exceed $100,000 in the aggregate, whereupon the full amount of such Damages
shall be recoverable by an Indemnified Party (as defined below) in accordance
with the terms hereof and the maximum amount payable by the Company to each
Purchaser for any such Damage shall not exceed the purchase price received by
the Company from such Purchaser in respect of the Securities.
(e) Any Person providing indemnification pursuant to the
provisions of this Section 7.02 is hereinafter referred to as an "INDEMNIFYING
PARTY" and any Person entitled to be indemnified pursuant to the provisions of
this Section 7.02 is hereinafter referred to as an "INDEMNIFIED PARTY."
7.03. PROCEDURES FOR THIRD PARTY CLAIMS. In the case of any claim
for indemnification arising from a claim of a third party (a "THIRD PARTY
CLAIM"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand that such Indemnified Party has
knowledge and as to which it may request indemnification hereunder. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such
14
Third Party Claim, in its name or in the name of the Indemnified Party, as the
case may be, at the expense of the Indemnifying Party, and with counsel selected
by the Indemnifying Party unless (i) such Third Party Claim seeks an order,
injunction or other equitable relief against the Indemnified Party, or (ii) the
Indemnified Party shall have reasonably concluded that (x) there is a conflict
of interest between the Indemnified Party and the Indemnifying Party in the
conduct of the defense of such Third Party Claim or (y) the Indemnified Party
has one or more defenses not available to the Indemnifying Party.
Notwithstanding anything in this Agreement to the contrary, the Indemnified
Party shall, at the expense of the Indemnifying Party, cooperate with the
Indemnifying Party, and keep the Indemnifying Party fully informed, in the
defense of such Third Party Claim. The Indemnified Party shall have the right to
participate in the defense of any Third Party Claim with counsel employed at its
own expense; PROVIDED, HOWEVER, that, in the case of any Third Party Claim
described in clause (i) or (ii) of the second preceding sentence or as to which
the Indemnifying Party shall not in fact have employed counsel to assume the
defense of such Third Party Claim, the reasonable fees and disbursements of such
counsel shall be at the expense of the Indemnifying Party. The Indemnifying
Party shall have no indemnification obligations with respect to any Third Party
Claim that is settled by the Indemnified Party without the prior written consent
of the Indemnifying Party.
Section 8. MISCELLANEOUS.
8.01. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopier or similar writing)
and shall be given to such party at its address or telecopier number as set
forth below, or such other address or telecopier number as such party may
hereinafter specify for the purpose of giving notice hereunder to the party
giving such notice. Each such notice, request or other communication shall be
effective: (i) if given by telecopier, when such telecopier is transmitted to
the telecopier number specified pursuant to this Section 8.01 and the
appropriate confirmation is received or; (ii) if given by mail, 72 hours after
such communication is deposited in the mails, certified mail, return receipt
requested, postage prepaid, addressed as aforesaid or; (iii) if given by any
other means, when delivered at the address as follows:
If to the Company, to:
DOV Pharmaceutical, Inc.
Continental Plaza
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx XX 00000
Attention: General Counsel
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx Procter LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
15
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Purchasers, to:
c/o OrbiMed Advisors LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxxx Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
8.02. AMENDMENTS AND WAIVERS.
(a) Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and each of the Purchasers. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder the
Securities at the time outstanding, each future holder of such Securities, and
the Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
8.03. EXPENSES; DOCUMENTARY TAXES. Except as expressly set forth in
the Transaction Documents, the Company and each of the Purchasers shall each pay
their own costs and expenses in connection with the transactions contemplated
hereby or thereby. Notwithstanding the foregoing, the Company shall pay the fees
and expenses of legal counsel to the Purchasers in an amount not to exceed
$30,000.
8.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, HOWEVER, that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party, except that, with respect to
the Company, no such consent shall be required from the Purchasers in connection
with any
16
transfers by the Company in connection with the merger or acquisition with, by
or of, or the sale of all or substantially all the assets of, the Company.
8.05. GOVERNING LAW. This Agreement and all matters arising directly
or indirectly herefrom shall be governed by, and construed in accordance with,
the laws of the State of New York without regard to the conflicts of laws
principles thereof.
8.06. CONSENT TO JURISDICTION. The parties hereto agree that any
suit, action or proceeding relating to or arising out of this Agreement or the
transactions contemplated hereby, shall be brought in the United States District
Court for the Southern District of New York, so long as one of such courts shall
have subject matter jurisdiction over such suit, action or proceeding, and that
any cause of action arising out of this Agreement directly or indirectly shall
be deemed to have arisen from a transaction of business in the State of New
York, and each of the parties hereby irrevocably consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or outside the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 8.01 shall
be deemed effective service of process on such party.
8.07. WAIVER OF JURY TRIAL. THE COMPANY AND THE PURCHASERS EACH
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE TRANSACTION
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
8.08 LEGEND ON SECURITIES. The following legend shall be typed on
each certificate evidencing any of the Securities issued hereunder held at any
time by the Purchasers:
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.
17
8.09. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in counterparts, each of which shall be deemed an original agreement,
but all of which together shall constitute one and the same instrument.
Execution and delivery of this Agreement by facsimile transmission shall
constitute execution and delivery of this Agreement for all purposes, with the
same force and effect as execution and delivery of an original manually signed
copy hereof.
8.10. ENTIRE AGREEMENT. This Agreement, together with the Warrants,
the Registration Rights Agreement and all schedules, exhibits or annexes
attached to any of the foregoing, constitutes the entire agreement and
understanding between the parties hereto and supersedes any and all prior
agreements and understandings, written or oral, relating to the subject matter
of the Transaction Documents.
8.11. HEADINGS. The headings in this Agreement are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
8.12. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
8.13. CONSTRUCTION. This Agreement shall not be construed or
interpreted with any presumption against any party hereto by reason of any of
them causing this Agreement to be drafted.
[INTENTIONALLY LEFT BLANK; SIGNATURES ARE ON NEXT PAGE]
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
DOV PHARMACEUTICAL, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
PW JUNIPER CROSSOVER FUND, L.L.C.
By: Orbimed Advisors, LLC
By: /s/ Xxxx X. Xxxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxxx
Title: CFO, OrbiMed Advisors, LLC
Shares: 451,558
Warrants: 124,178
CADUCEUS PRIVATE INVESTMENTS, LP
By: OrbiMed Capital LLC
its general partner
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxxx
Title: CFO, OrbiMed Captial
Shares: 957,091
Warrants: 263,201
ORBIMED ASSOCIATES LLC
By: OrbiMed Advisors, LLC
its managing member
By: /s/ Xxxx X. Xxxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxxx
Title: CFO, OrbiMed Advisors, LLC
Shares: 19,922
Warrants: 5,478
EXHIBIT A
FORM OF WARRANTS
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
