THIS AGREEMENT IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ANY KIND. SUCH AN OFFER OR SOLICITATION WILL BE MADE ONLY IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS RESTRUCTURING SUPPORT AGREEMENT
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
THIS
AGREEMENT IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR
A
SOLICITATION OF ANY KIND. SUCH AN OFFER OR SOLICITATION WILL BE
MADE
ONLY IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS
RESTRUCTURING
SUPPORT AGREEMENT, dated as of January 24, 2007, by and
among
DOV Pharmaceutical, Inc., a Delaware corporation (the "Company"),
and
(i) each
of the
undersigned beneficial
owners of (or investment managers
or
advisors for accounts or funds that beneficially own) Subordinated Debentures
(as defined below), and (ii) each other beneficial owner of (or investment
manager
or
advisor for accounts or funds that beneficially own) Subordinated Debentures
that executes a counterpart signature page to this Agreement after the date
of
this Agreement as provided herein (together with their applicable transferees,
successors and
assigns, each a "Noteholder" and,
collectively, the "Noteholders").
WHEREAS,
the Company has issued and outstanding $70 million aggregate principal amount
of
its 2.5 % Convertible Subordinated Debentures due 2025 (the "Subordinated
Debentures")
issued
under that certain Indenture, dated as of December 22, 2004 by and between
the
Company and Xxxxx Fargo Bank, National Association, as Trustee (the "Indenture")
WHEREAS,
the Company intends to offer to exchange (the "Exchange
Offer")
(i)
a
cash payment of $212.50 (the "Cash
Payment"),
and
(ii) 8 shares of a new series of the Company’s convertible preferred stock, par
value $1.00 per share (the "Convertible
Preferred Stock"),
that
has an initial liquidation preference of $100 per share and is convertible
initially into 191.02612143 shares of the Company’s common stock, par value
$0.0001 (the “Common
Stock”)
for
each $1,000 of aggregate principal amount outstanding of its Subordinated
Debentures;
WHEREAS,
the Company plans to seek the approval (the “Stockholder
Approval”)
of its
common stockholders ("Stockholders")
to,
among other things, approve the increase of shares of Common Stock, authorized
for issuance under the Company’s Fourth Amended and Restated Certificate of
Incorporation (the “Certificate
of Incorporation”)
in
order to provide sufficient shares of Common Stock for the conversion of shares
of Convertible Preferred Stock issued in connection with the Exchange
Offer;
WHEREAS,
the Company and the Noteholders
have engaged in good faith negotiations with the objective of consummating
the
Exchange Offer
and
related transactions, including (i) the issuance of the Convertible Preferred
Stock in the Exchange Offer having the rights, powers and preferences set forth
in a Certificate of Designation in the form set forth in
Exhibit
A
hereto,
(ii) the distribution to holders of the Company’s Common Stock of warrants to
purchase up to an aggregate of 30 million shares of Common Stock (the
“Warrants”)
pursuant to a warrant agreement substantially in the form
set
forth
in
Exhibit
B
hereto,
(iii) the reconstitution of the Company’s Board of Directors in the event the
Exchange Offer is consummated , and (iv) the engagement of a compensation
consultant and adoption of an equity or incentive plan, as each of the foregoing
may be amended in accordance with the terms hereof; and
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
WHEREAS,
the Company and the Noteholders desire that the Company conduct the Exchange
Offer and pursue the Stockholder Approval as soon as reasonably practicable.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set
forth
in
this Agreement, and for other good and
valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the parties signatory
to
this Agreement hereby agrees as follows:
1. Definitions.
Capitalized terms used and not defined in the body of this Agreement have the
meaning ascribed to them in the respective Annex hereto, and the following
terms
shall have the following meanings:
"Agreement" means
this Restructuring Support Agreement, including the Schedules
and Annexes hereto.
"Person"
means
any
individual, partnership, corporation, limited liability company,
association, trust, joint venture, unincorporated organization, governmental
unit
or
other entity.
"Required
Holders" means
the
Noteholders that hold, in the aggregate, at
least
ninety-nine percent (99%)
of the
outstanding principal amount of the Subordinated Debentures, provided that
such
amount may be reduced by the Company with
the
written consent of holders of a majority in aggregate principal amount of the
Subordinated Debentures.
"Securities
Act" means
the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
"Transfer" means
to,
directly or indirectly, (i) sell, assign or transfer, (ii) pledge,
encumber,
create
any participation or
grant
any proxy or option, in each case such as would prevent, preclude, hinder or
delay the ability of the Person engaging in such Transfer from fulfilling any
of
such Person’s obligations under this Agreement, including, without limitation,
Section 3 hereof, or (iii) enter into any agreement, commitment or other
arrangement to do any of the foregoing. Notwithstanding the foregoing, the
parties acknowledge that certain Noteholders may hold the Subordinated
Debentures in margin accounts and may continue to so hold; provided that in
no
event shall this affect such Noteholders obligations under the terms of this
Agreement.
2. Agreements
of the Company.
(a) Subject
to the terms and conditions of this Agreement, the Company agrees as
follows:
(i) Exchange
Offer Commencement:
The
Company shall commence the Exchange Offer on or before January 29, 2007,
pursuant to which Exchange Offer the Company will offer to exchange for each
$1,000 in principal amount of Subordinated Debentures (including all accrued
but
unpaid interest thereon through the consummation of the Exchange Offer) (A)
$212.50 in cash, and (B) 8 shares of Convertible Preferred Stock having an
initial liquidation preference per share of $100, which shares will be issued
in
a transaction exempt from registration pursuant to Section 3(a)(9) of the
Securities Act, which Exchange Offer, assuming that all Subordinated Debentures
are tendered in the Exchange Offer, will result in an aggregate cash payment
by
the Company of $14.875 million (including all accrued and unpaid interest
through the consummation of the Exchange Offer) and the issuance of Convertible
Preferred Stock having an aggregate liquidation preference of $56
million.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(ii) Exchange
Offer Expiration:
The
Company will state that the Exchange Offer will expire on March 5, 2007,
provided that the Company may extend such expiration date with the written
consent of holders of a majority in aggregate principal amount of the
Subordinated Debentures or if and as necessary in order to comply with
applicable law.
(iii) Exchange
Offer Minimum Tender Condition:
The
Company may not consummate the Exchange Offer in the event holders of less
than
ninety-nine percent (99%) of the aggregate principal amount of Subordinated
Debentures validly tender and do not withdraw their Convertible Debentures
in
the Exchange Offer, provided that such condition may be modified by the Company
with the written consent of holders of a majority in aggregate principal amount
of the Subordinated Debentures.
(iv) Affiliates’
Registration Rights Agreement:
In the
event the Exchange Offer is consummated, the Company will enter into a
Registration Rights Agreement substantially in the form of Exhibit
C
attached
hereto with those holders of Subordinated Debentures who may be deemed
affiliates (as defined under the Securities Act) of the Company as a result
of
the consummation of the Exchange Offer.
(v) Board
of Directors Reconstitution:
In the
event the Exchange Offer is consummated, the holders of Convertible Preferred
Stock shall have the right to designate new members of the Company’s Board of
Directors in accordance with the following provisions:
(1) manner
of designation—the
designation shall be made in accordance with applicable law and the Company’s
Fourth Amended and Restated Certificate of Incorporation by the holders of
a
majority of the Convertible Preferred Stock then outstanding, acting by written
notice and consent delivered to the Company at its principal executive
office;
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(2) time
for designation—subject
to clause (3) below, the designation shall be made at any one time no later
than
forty-five (45) days following consummation of the Exchange Offer and, if not
made on or before such time, the right of designation pursuant to this
Section
2(a)(v)
shall
expire;
(3) number
of directors—the
Company intends to have a Board of Directors with eight (8) members following
the reconstitution described herein. The holders of Convertible Preferred Stock
shall have the right to designate five (5) members of the Board of Directors
assuming such eight (8) person Board. In the event the Company elects to have
a
different sized Board, the holders of Convertible Preferred Stock shall have
the
right to designate that number of directors constituting a majority of the
Board, if there is an even number of directors on the Board, and one director
in
excess of the number of directors constituting a majority of the Board, if
there
is an odd number of directors on the Board. The Company shall reconstitute
its
Board, by an increase in the number of the directors, by obtaining the
resignation of one or more directors or both as may be necessary to accommodate
the holders’ right of designation, provided
that in
no event will the Company be required to have a Board of Directors with fewer
than eight (8) members or more than eleven (11) members, and provided further
that if
the number of directors designated by the holders of Convertible Preferred
Stock
would constitute the requisite majority of the Board only with the resignation
of one or more existing directors, and the Company is unable to obtain the
resignation of such directors, the Company shall so inform the holders in
writing, and the holders shall have an additional thirty (30) days, from the
date they are so informed by the Company, to designate by a supplemental written
notice and consent an additional number of directors sufficient to constitute
the requisite majority. If the number of directors designated by the holders
of
Convertible Preferred Stock are insufficient to constitute the requisite
majority of the Board under the constraints of the first preceding proviso,
or
the holders fail to designate additional directors sufficient to constitute
the
requisite majority under the second preceding provision, the directors
designated by the holders shall nonetheless be appointed to the Board
notwithstanding that they do not constitute the requisite majority;
(4) information
regarding designees—the
holders of Convertible Preferred Stock making the designation shall provide
the
Company with the information regarding the designees as required by the Company
in order to comply with the requirements of Rule 14f-1 under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
which
information shall accompany the holders’ notice of designation or supplemental
notice of designation, as the case may be;
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(5) Rule
14f-1 compliance—if
required by Rule 14f-1 under the Exchange Act, then no later than ten (10)
business days after the Company shall receive the notice of designation or
supplemental notice of designation, as the case may be, from the holders of
Convertible Preferred Stock, the Company shall send to each stockholder the
information required to be distributed to stockholders by such rule, which
information may be included with the proxy materials for the special meeting
of
stockholders at which the Stockholder Approval will be sought;
(6) date
of appointment—the
directors designated by the holders of the Convertible Preferred Stock shall
be
appointed one (1) business day after the expiration of the notice period
required under Rule 14f-1, if notice under Rule 14f-1 is required, or if notice
under Rule 14f-1 is not required, no later than three (3) business days after
notice of their designation has been delivered to the Company; and
(7) standstill—without
the consent of holders of a majority of the Convertible Preferred Stock then
outstanding, acting by written notice and consent delivered to the Company
at
its principal executive office, during the period following the consummation
of
the Exchange Offer until the directors designated by the holders of the
Convertible Preferred Stock shall be appointed to their office, if any shall
have been timely designated in accordance with this Section
2(a)(v),
the
Board of Directors of the Company shall take no action (i) to increase the
size
of the Board, except as necessary to comply with this Section
2(a)(v);
(ii)
amend the Certificate of Incorporation of the Company except as necessary to
comply with this Agreement (including the increase in authorized Common Stock)
or to effect a reverse stock split; (iii) amend the By-Laws of the Company
in
any way that adversely affects the rights of the holders of the Convertible
Preferred Stock except as necessary to comply with this Agreement; (iv) issue
any equity securities, except (A) as necessary to comply with this Agreement,
(B) for the Warrant Distribution (as defined in the Certificate of Designation
of the Convertible Preferred Stock), (C) for grants or awards under the
Company’s current equity incentive plans in accordance with the Company’s past
practice, or (D) as required under the terms of any securities outstanding
on
the date of this Agreement; (iv) issue any debt securities; (v) enter into
any
agreement, arrangement or understanding with respect to a merger, sale of
substantially all of the Company’s assets or other business combination
transaction; or (vi) cause the business of the Company to be conducted other
then in the ordinary course consistent with past practice. This provision shall
expire upon the first to occur of (i) the designees of the holders of
Convertible Preferred Stock becoming directors of the Company, and (ii) the
expiration of the time to designate such directors under Section 2(a)(v)(2)
if
no directors have been so designated.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(vi) Stockholder
Approval Matters:
In the
event the Exchange Offer is consummated, the
Company will cause to be submitted to the holders of Common Stock, not later
than the later of (the “Required
Approval Date”)
(A)
April 5, 2007, or (B) forty-five (45)
days
following clearance by the Securities and Exchange Commission of the proxy
statement to be used to solicit proxies for the common stockholders meeting
at
which such proposal will be considered, a
proposal to increase the authorized number of shares of Common Stock in an
amount sufficient to accommodate the conversion of all shares of Convertible
Preferred Stock issued in the Exchange Offer. If the Company fails to obtain
stockholder approval for the increase in the authorized Common Stock of the
Company by the Required Approval Date (A) the conversion ratio of the
Convertible Preferred Stock will change as set forth in the terms thereof,
and
(B) at the request of the holders of a majority of the Convertible Preferred
Stock, the Company’s Board of Directors will approve and will submit to the
Company’s stockholders for approval, authorization of a new class of common
stock into which the Convertible Preferred Stock would then be convertible
on a
one-for-one basis. The Company will use its reasonable best efforts to respond
to comments of the Securities and Exchange Commission on the proxy statement
for
the meeting at which the Stockholder Approval will be sought as promptly as
reasonably practicable. In furtherance of the foregoing, the Company agrees
that
it will not add any additional proposals to the proxy statement with respect
to,
or permit additional matters to be considered at the meeting at which the common
stockholders are asked to consider and vote upon the increase in the Company’s
authorized Common Stock except for (i) proposals with respect to adjournment
and
related matters, and (ii) a proposal with respect to a reverse stock split
unless
(x)
Noteholders party to this Agreement that held a majority of the Subordinated
Debentures held by all Noteholders consent, and (y) a majority of those members
of the Board of Directors who were members of the Board of Directors as of
the
date of this Agreement approve any such matters and recommend them to the common
stockholders for their consideration.
(b) Nothing
in this Agreement shall be deemed to prevent the Company from
taking, or failing to take, any action that it reasonably believes that it
is
obligated to take (or fail to take) in the
fulfillment of any fiduciary or similar duty which the Company or its Board
of
Directors owes to any Person, provided that the Company shall in all events
comply with the provisions of this Agreement.
(c) The
Company may engage a nationally-recognized compensation consultant to assist
it
with evaluating and formulating a new equity or other incentive plan, such
compensation consultant to advise the Board of Directors and the Compensation
Committee thereof, including, in each case, such Board and Committee as may
be
reconstituted as set forth in Section 2(a)(v) hereof; provided, however, that
in
no event shall the Company adopt, or make any grants or awards under, any such
new equity or other incentive plan until such time as the standstill set forth
in Section 2(a)(v)(7) hereof shall have expired.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
3. Agreements
of the Noteholders.
Subject
to the terms and conditions of this Agreement:
(a)
Each
Noteholder agrees with the Company, in connection with the consummation of
the
Exchange Offer and
when
solicited in accordance with applicable securities law, to:
(i) tender
(or cause to be tendered) all of the Subordinated Debentures held by such
Noteholder in exchange for (A) the Cash Payment, and (B) the Convertible
Preferred Stock applicable
to such Subordinated Debentures one business day prior to the date on which
the
Exchange Offer expires, in accordance with the terms thereof; and
(ii) not
withdraw or revoke (or cause not to be withdrawn or revoked) any of
the
foregoing unless
and until
this Agreement is
terminated in accordance with
its
terms.
(b) Each
Noteholder agrees, so long as this Agreement remains in effect, not to Transfer
any of the Subordinated Debentures held by it, in whole or in part, unless
the
transferee agrees in writing to be bound by the terms of this Agreement. In
the
event that any Noteholder Transfers any of the Subordinated Debentures owned
or
beneficially held as of the date hereof, as a condition precedent to such
Transfer, such Noteholder shall notify the Company prior to such transfer and
agrees to cause the transferee to execute and deliver an acknowledgement, in
the
form attached hereto
as
Exhibit D,
whereby
such transferee agrees to be bound by the terms of this Agreement for so long
as
this Agreement shall remain in effect. Such acknowledgement shall be delivered
to the Company prior to the consummation of such Transfer. Any Transfer of
the
Subordinated Debentures to a person not party to this Agreement in violation
of
this Section 3(b) shall be deemed void. Notwithstanding the foregoing, any
Noteholder may Transfer Subordinated Debentures to another Noteholder so long
as
(i) such Subordinated Debentures constitute Additional Debentures pursuant
to
Section 21 hereof and, as a result, become subject to the terms of this
Agreement, and (ii) the transferring Noteholder delivers written notice of
such
Transfer to the Company prior to or within two (2) Business Days following
such
Transfer. Notwithstanding
the foregoing, the parties acknowledge that certain Noteholders may hold the
Subordinated Debentures in margin accounts and may continue to so hold; provided
that in no event shall this affect such Noteholders obligations under the terms
of this Agreement.
(c) Each
Noteholder agrees, so long as this Agreement remains in effect, not to
commit
any act
that
could restrict
or
otherwise affect its legal power, authority
or
right
to
tender or vote all of the Subordinated Debentures then owned of record or
beneficially by it.
So
long as this Agreement remains in effect, no Noteholder will enter into
any voting
agreement with any person
or
entity with respect to any Subordinated Debentures, grant
any person
or
entity any
proxy (revocable
or irrevocable) or power of attorney with
respect to any Subordinated
Debentures,
deposit
any Subordinated Debentures in a voting trust or otherwise enter into any
agreement or arrangement with any person or entity limiting or affecting such
Noteholder's legal power, authority or right to vote the Subordinated Debentures
and agree to the amendments to the terms of the Exchange Offer or this
Agreement.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(d)
Subject
to the provisions of Section 26, each Noteholder agrees that it will permit
public disclosure, including in a press release and in the documents filed
with
the Securities and Exchange Commission for the
Exchange Offer, of this Agreement, including, but not limited to, the
commitments contained in this Section 3.
(e) Each
Noteholder further agrees, so long as the Exchange Offer has not been
consummated or terminated in accordance with the terms of this Agreement that
it
will not—
(i) object
to, or otherwise commence or support any proceeding or action to oppose, the
Exchange Offer or the other actions of the Company contemplated by this
Agreement and shall not take any action or otherwise commence or support any
action or proceeding that is inconsistent with its representations, warranties
and agreements set forth herein or would unreasonably delay the consummation
of
the Exchange Offer including, but not limited to (A) the filing of an
involuntary petition against the Company, or (B) taking any action in connection
with any default or Event of Default under and as defined in the Indenture;
or
(ii) directly
or indirectly seek, solicit, support, or encourage any other plan, sale,
proposal, or offer of winding up, liquidation, reorganization, merger,
amalgamation, consolidation, dissolution or restructuring of the Company (an
“Alternative
Proposal”).
(f) Each
Noteholder agrees that, to the extent such Noteholder beneficially owns any
shares of Common Stock, on the record date for any meeting of the stockholders
of the Company or any adjournment thereof, with respect to the Stockholder
Approval, the Noteholder shall:
(i) appear
at
such meeting or otherwise cause its shares of Common Stock to be counted as
present thereat for purposes of calculating a quorum; and
(ii) vote
(or
cause to be voted) all such shares of Common Stock that such Noteholder shall
be
entitled to so vote in favor of the Stockholder Approval.
(g) In
addition, for so long as this Agreement has not been terminated, each Noteholder
shall refrain from directly or indirectly taking any action, or permitting
any
of its affiliates, representatives or agents from taking any action, that would
materially impede, interfere with, delay, postpone, discourage or materially
and
adversely affect the consummation of the Exchange Offer or the ability of the
Company to obtain the Stockholder Approval.
4. Amendments
to the Exchange Offer.
(a) The
Company shall not:
(i) alter
the
material terms and conditions of the Exchange Offer as described herein in
a
manner adverse to the Noteholders or that would materially impede, interfere
with, delay, postpone, discourage or materially and adversely affect the
consummation of the Exchange Offer;
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(ii) extend
the Exchange Offer except to the extent required by applicable law, without
the
prior written consent of holders of a majority in aggregate principal amount
of
the Subordinated Debentures; or
(iii) modify
the valid tender of the Required Holders in the Exchange Offer, without the
prior written consent of holders of a majority in aggregate principal amount
of
the Subordinated Debentures.
(b) Except
as
provided in Section
4(a),
and to
the extent not requiring extension of the Exchange Offer under applicable law,
the Company may waive any of the conditions to the Exchange Offer.
5. Termination
of Agreement.
(a) Notwithstanding
anything to the contrary set forth in this Agreement, unless the Exchange Offer
has been consummated as provided in this Agreement, this Agreement and all
of
the obligations and undertakings of the parties set forth in this Agreement
shall terminate and expire upon the earliest to occur of:
(i) mutual
written consent of the Company and each Noteholder;
(ii) without
any action by the Company or any Noteholder, if the Exchange Offer is not
consummated on or before March 19, 2007, provided that no party may terminate
this Agreement under this clause (ii) if the failure to consummate the Exchange
Offer is the result of the material breach of this Agreement by such
party;
(iii) by
the
holders of a majority in aggregate principal amount of the Subordinated
Debentures, if the Exchange Offer is not commenced on or before
January 29,
2007;
(iv) by
the
holders of a majority in aggregate principal amount of the Subordinated
Debentures, if the Company breaches the provisions of Section
4;
(v) without
action by the Company or any Noteholder, if an order, judgment or decree shall
be entered adjudicating the Company
bankrupt or insolvent, or any order for relief with respect to the
Company
is entered under the U.S. Bankruptcy Code;
(vi) by
the
Company or any Noteholder, if any proceeding relating to the Company
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction is
filed or commenced against the Company; or
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(vii) without
any action by either the Company or any Noteholder, if the Exchange Offer shall
expire or be terminated without the exchange of Notes.
(b) Notwithstanding
the foregoing or any other provision of this Agreement, neither the termination
of this Agreement nor any other circumstance shall relieve a party from
liability for the willful breach of its obligations hereunder.
6. Representations
and Warranties.
(a) The
Company represents and warrants to each Noteholder, and each Noteholder
represents and warrants to the Company as follows:
(i) if
an
entity, it is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate,
partnership or other power and authority to enter into this Agreement and to
carry out the transactions contemplated by, and perform its respective
obligations under, this Agreement;
(ii) the
execution, delivery and performance by it of this Agreement do not and shall
not
(A) violate any provision of law, order, rule or regulation applicable to it
or
any of its affiliates or its certificate of incorporation or bylaws or other
organizational documents or those of any of its subsidiaries or (B) conflict
with, result in the breach of or constitute (with due notice or lapse of time
or
both) a default under any material contractual obligations to which it or any
of
its affiliates is a party or under its certificate of incorporation, bylaws
or
other governing instruments;
(iii) the
execution, delivery and performance by it of this Agreement do not
and
shall not require any registration or filing with, the consent or approval
of,
notice
to, or any other action with respect to, any Federal, state or other
governmental authority or regulatory body, except for (A) the registration
under
the Securities Act contemplated by the Registration Rights Agreement and such
consents, approvals, authorizations, registrations or qualifications as may
be
required under the state securities or Blue Sky laws in connection with the
issuance of those shares, (B) the filing with the Commission of a Tender Offer
Statement on Schedule TO with respect to the Exchange Offer, including the
exhibits thereto, and (C) such other filings as may be necessary or required
by
the Securities and Exchange Commission;
(iv) this
Agreement has been duly authorized, executed and delivered and, assuming the
due
execution and delivery of this Agreement by each of the other parties hereto,
this Agreement is the legally valid and binding obligation of it, enforceable
against it in accordance with its terms, except as enforceability may be limited
or affected by applicable bankruptcy, insolvency, moratorium, reorganization
or
other laws of general application relating to or affecting creditors’ rights
generally; and
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
(v) it
has
been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement.
(b) Each
of
the Noteholders further represents and warrants to the Company
that:
(i) as
of the
date of this Agreement, such Noteholder (together with its affiliates)
is the beneficial owner of, or the investment adviser or manager for
the
beneficial owners of, the aggregate principal amount of Subordinated Debentures
set forth opposite such Noteholder's name on Schedule
A
hereto,
with the requisite power and authority to vote and dispose of such Subordinated
Debentures, and such Subordinated Debentures are owned free and clear of any
liens, encumbrances, equities or claims;
(ii) as
of the
date of this Agreement and for so long as this Agreement remains in effect,
such
Noteholder has full legal power, authority and right to exchange all of its
Subordinated Debentures then held of record or beneficially owned by it without
the consent, approval of, or any other action on the part of, any other person
or entity; and such Noteholder has not entered into any voting agreement (other
than this Agreement) with any person or entity with respect to any of such
shares, granted to any person or entity any of such shares, deposited any such
shares in a voting trust or entered into any arrangement or agreement with
any
person or entity limiting
or affecting its
legal
power, authority or right to vote such shares on any
matter;
and
(iii) such
Noteholder has reviewed, or has had the opportunity to review, with the
assistance of professional and legal advisors of its choosing, sufficient
information
necessary for such Noteholder to decide to exchange
its Subordinated Debentures pursuant to the Exchange Offer.
(c) The
Company further represents, warrants, covenants and agrees to the Noteholders
as
follows:
(i) the
number of shares of Common Stock, and the number of shares of Common Stock
issuable in respect of all options, warrants and other rights (including
pursuant to convertible securities other than the Subordinated Debentures)
to
acquire Common Stock, whether or not currently exercisable, outstanding as
of
the date of this Agreement is as set forth on Schedule
B;
and
(ii) without
limiting the provisions of Section
2(a)(v)(7),
from
and after the date hereof until the consummation or termination of the Exchange
Offer, the Company shall not issue any additional shares of Common Stock, or
any
options, warrants and other rights (including pursuant to convertible
securities) to acquire Common Stock or shares of any other capital of the
Company or any subsidiary of the Company, except (A) for the Warrant
Distribution, (B) pursuant to options, warrants and other rights (including
pursuant to convertible securities) outstanding on the date of this Agreement,
and (C) for grants or awards under the Company’s existing equity incentive plan
in accordance with the Company’s past practice.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
7. Publicity.
The
Company shall disclose all material non-public information provided to the
Noteholders by the Company or its representatives, pursuant to that certain
Confidentiality Agreement dated November 21, 2006 by and among the Company,
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP and certain of the Noteholders in the
Exchange Offer materials on a current report on Form 8-K which shall be filed
with the Securities and Exchange Commission prior to the commencement of the
Exchange Offer.
8. Exchange
for Series D Preferred Convertible Stock.
The
Company shall provide an opportunity for the Exchange Offer, or otherwise as
permitted by law, for any holder of Subordinated Debentures upon consummation
of
the Exchange Offer, to receive in exchange for its Subordinated Debentures
non-voting Series D Preferred Convertible Stock having the rights, powers and
preferences set forth in a Certificate of Designation in the form set forth
in
Exhibit
E
hereto.
9. Good
Faith.
Each of
the signatories to this Agreement agrees to cooperate in good faith with each
other to facilitate the performance by the parties of their respective
obligations hereunder and the purposes of this Agreement.
10. Amendments
and Modifications.
Except
as otherwise expressly provided in this
Agreement, this Agreement shall not be amended, changed, supplemented, waived
or
otherwise
modified or terminated except by instrument in writing signed by each of the
parties hereto.
11. No
Waiver; Release Upon Consummation of Exchange Offer.
Each of
the signatories to this Agreement expressly acknowledges
and agrees that, except as expressly provided in this Agreement, nothing
in
this
Agreement is intended to, or does, in any manner waive, limit, impair or
restrict the ability of any party to this Agreement to protect and preserve
all
of its rights, remedies and
interests, including, without limitation, with respect to its claims against
and
interests
in the
Company. In connection with the Exchange Offer, and upon consummation thereof,
the holders of Subordinated Debentures who tender their Convertible Debentures
in the Exchange Offer and have such Convertible Debentures so tendered accepted
for payment therefor by the Company shall, at such time, release claims against
the Company and others Persons as and to the extent set forth in the Exchange
Offer materials in respect of their interests as beneficial owners of the
Convertible Debentures. Such release shall not impair any rights that recipients
of Convertible Preferred Stock may thereafter have under the terms thereof,
under the terms of this Agreement, in accordance with applicable law or
otherwise or that signatories to the Registration Rights Agreement may have
under the terms thereof.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
12. Further
Assurances.
Each of
the signatories to this Agreement hereby further covenants and agrees to execute
and deliver all further documents and agreements and take all further action
that may be reasonably necessary or desirable in order to enforce and
effectively implement the terms and conditions of this Agreement and the
Exchange Offer.
13. Complete
Agreement.
This
Agreement, including the Schedules, Annexes and Exhibits hereto, constitutes
the
complete agreement between the signatories to this Agreement with respect to
the
subject matter hereof and supersedes all prior and contemporaneous negotiations,
agreements and understandings with respect to the subject matter hereof.
The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the
intent
of the signatories to this Agreement.
14. Notices.
All
notices, requests, demands, claims and other communications hereunder
shall be in writing and shall be (a) transmitted by hand delivery, (b) mailed
by
first class, registered or certified mail, postage prepaid, (c) transmitted
by
overnight courier,
or (d) transmitted by telecopy, and in each case, if to the Company, at the
address
set
forth below:
DOV
Pharmaceutical, Inc.
000
Xxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
Xxx Xxxxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
with
a
copy to:
Xxxxxxx
|
Procter LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Attention:
Xxxxx X. Brilliant, Esq.
if
to a
Noteholder, to the address set forth on
the
signature pages to
this
Agreement, with
a copy
to the Noteholders' counsel:
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Attention:
Xxxxx X. Xxxxxxx, Esq.
Notices
mailed or transmitted in accordance with the foregoing shall be deemed to
have
been
given upon receipt.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
15. Governing
Law This
Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to its choice of
law
rules
which would require the application of the law of any other
jurisdiction.
16. Jurisdiction;
Waiver of Jury Trial.
By its
execution and delivery of this Agreement, each of the signatories to this
Agreement irrevocably and unconditionally agrees that any legal action, suit
or
proceeding against it with respect to any matter under or arising out of or
in
connection with this Agreement or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding, shall be brought in a federal
or state court of competent jurisdiction in the State of New York in the Borough
of
Manhattan. By its execution and delivery of this Agreement, each of
the signatories
to this
Agreement irrevocably accepts and submits itself to the jurisdiction of a court
of competent jurisdiction in the State of New York, as applicable under the
preceding sentence, with respect to any such action, suit or
proceeding.
Each
of
the signatories to this Agreement waives its right to trial by jury in
any
suit,
action or proceeding with respect to this Agreement and the transactions
contemplated hereby.
17. Consent
to Service of Process.
Each of
the signatories to this Agreement irrevocably consents to service of process
by
mail at the address listed with the signature of each such party on the
signature pages to this Agreement. Each of the signatories to this
Agreement agrees that its submission to jurisdiction and consent to service
of
process by
mail
is made for the express benefit of each of the other signatories to this
Agreement.
18. Specific
Performance.
It is
understood and agreed by each of the signatories to this Agreement that money
damages would not be a sufficient remedy for any breach of this Agreement by
any
party and each non-breaching party shall be entitled to specific performance,
injunctive, recessionary or other equitable relief as remedy for any such
breach.
19. Headings.
The
headings of the sections, paragraphs and subsections of this Agreement are
inserted for convenience only and shall not affect the interpretation
hereof.
20. Successors
and Assigns.
This
Agreement is intended to bind and inure to the benefit of the signatories to
this Agreement and their respective successors, permitted assigns, heirs,
executors, administrators and representatives. The agreements, representations
and obligations of the undersigned parties under this Agreement are, in all
respects, several and not joint.
21. Additional
Subordinated Debentures.
If,
after the date hereof, a Noteholder acquires (including in a transaction with
another Noteholder permitted by Section 3(b) hereof) beneficial or record
ownership of any additional Subordinated Debentures for itself or any account
or
fund managed by such Noteholder (any such Subordinated Debentures, "Additional
Debentures"),
such
Noteholder shall promptly notify the Company of such acquisition and the
provisions of this
Agreement shall be applicable to such Additional Debentures as if such
Additional Debentures
had been
Subordinated Debentures owned by such Noteholder as of the date hereof. The
provisions of the immediately preceding sentence shall be effective with respect
to Additional Debentures without action by any person or entity immediately
upon
the acquisition by such Noteholder of beneficial or record ownership of such
Additional Debentures.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
22. Counterparts.
This
Agreement may be executed in one or more counterparts, each
of
which shall be deemed an original and all of which shall constitute one and
the
same agreement. Delivery of an executed counterpart of a signature page by
facsimile shall be as effective as delivery of a manually executed
counterpart.
23. No
Third-Party Beneficiaries.
This
Agreement shall be solely for the benefit of the signatories to this Agreement,
and no other Person or entity shall be a third-party beneficiary
hereof.
24. Severability.
Any
provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall,
as to
such
jurisdiction, be ineffective to
the
extent of such invalidity, illegality or unenforceability without affecting
the
validity, legality and enforceability of the remaining provisions hereof; and
the invalidity of a particular
provision in
a
particular jurisdiction
shall not invalidate such provision in any
other
jurisdiction.
25. Consideration.
It is
hereby acknowledged by each of the signatories to this Agreement
that no consideration (other than the obligations of the other parties under
this
Agreement) has been paid or shall be due or paid to the parties for their
agreement to support the Exchange Offer and Consent Solicitation in accordance
with the terms and conditions of this Agreement, other than the Company's
agreement to use commercially reasonable efforts to obtain approval of
confirmation of the Exchange Offer and Consent Solicitation in accordance with
the terms and conditions of this Agreement.
26. Disclosure
of Individual Holdings.
Unless
required by applicable law, the Company shall not disclose the face amount
of
Subordinated Debentures held by a Noteholder
without the prior written consent of such Noteholder; provided,
however, that
if
such disclosure is required by law, the Company shall afford such Noteholder
a
reasonable opportunity to review and comment upon any such disclosure prior
to
the release or publication thereof. The foregoing shall not prohibit the Company
from disclosing the aggregate number of shares of the Subordinated Debentures
held by the Noteholders as a group.
Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
27. Independent
Nature of Each Noteholder’s Obligations and Rights.
The
obligations of each Noteholder hereunder are several and not joint with the
obligations of any other Noteholder hereunder, and no Noteholder shall be
responsible in any way for the performance of the obligations of any other
Noteholder hereunder. Nothing contained herein or in any other agreement or
document, and no action taken by any Noteholder pursuant hereto or thereto,
shall be deemed to constitute the Noteholders as a group, a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Noteholders are in any way acting in concert with respect
to such obligations or the transactions contemplated by this Agreement. Each
Noteholder shall be entitled to protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement, and it shall
not
be necessary for any other Noteholder to be joined as an additional party in
any
proceeding for such purpose.
[SIGNATURES
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Confidential
- For Discussion and Settlement Purposes Only
Subject
to Federal Rule of Evidence 408
IN
WITNESS WHEREOF, the parties hereto have caused this Restructuring Support
Agreement to be duly executed as of the date first set forth above.
THE
COMPANY:
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PHARMACEUTICAL, INC.
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[SIGNATURE
PAGES TO RESTRUCTURING SUPPORT AGREEMENT]
