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EXHIBIT 4.2.1
STOCK AND WARRANT PURCHASE AGREEMENT
This Stock and Warrant Purchase Agreement (the "Agreement") is made as
of April ___, 2001 between Questcor Pharmaceuticals, Inc., a California
corporation (the "Company"), and the purchasers who are signatories hereto (the
"Purchasers").
WHEREAS, the Company wishes to sell and the Purchasers desire to
purchase securities (the "Units"), each Unit consisting of one hundred (100)
shares (the "Shares") of the Company's Common Stock, no par value per share (the
"Common Stock"), and one (1) warrant to purchase fifty (50) Shares of Common
Stock (the "Warrants").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Purchase and Sale of Shares and Warrants.
1.1. Sale to the Purchasers. Subject to the terms and
conditions hereof, the Company will issue and sell to each Purchaser the number
of Shares and Warrants set forth opposite such Purchaser's name on the signature
page hereto for the purchase price indicated on the signature page hereto (the
"Purchase Price"). The obligations of each Purchaser hereunder are several and
not joint and no Purchaser shall be obligated to purchase any number of Shares
or Warrants in excess of the number set forth opposite such Purchaser's name on
the signature page hereto.
1.2. Aggregate Sale. Pursuant to this Agreement, the Company
shall sell a minimum of $200,000 (the "Minimum Investment Amount") and a maximum
of $2,000,000 of its Units. The purchase price of the Units will be the market
price (the "Market Price"), which shall be calculated based on the five day
trailing average closing price of the Common Stock as quoted on the American
Stock Exchange ("AMEX") for the five days up to and including the close of
business on the date immediately prior to the closing of this transaction plus
$.0625, multiplied by 100. Each Warrant issued shall have an exercise price
equal to 135% of the Market Price and shall be exercisable for a term of five
years from the date of issuance and shall be subject to the other terms and
conditions set forth in the Warrant.
1.3. Payment of Purchase Price. On or prior to the Closing
Date (as hereinafter defined), each Purchaser will deliver to Computershare
Trust Co. (the "Escrow Agent") the estimated amount of the aggregate Purchase
Price for the Units purchased by such Purchaser hereunder, by wire transfer of
funds to the Escrow Agent. The estimated purchase price is $71.25 per Unit based
upon an average closing price of the Common Stock estimated to be $0.65 per
share. The Purchase Price shall be maintained in a segregated account until the
Closing Date and shall be released either (a) upon the consummation of the
transaction contemplated hereunder; or (b) upon the termination of this
Agreement in accordance with Section 7.
2. Closing Date and Delivery.
2.1. Closing Date. The closing of the purchase and sale of the
Units hereunder (the "Closing") will be held at such time (the "Closing Date")
as shall be agreed upon by the Company and the Escrow Agent and shall occur at
the offices of the Company, 00000 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000. The Closing
Date shall occur upon receipt of subscriptions for all of the Units offered by
the Company (or such lesser amount as determined by the Company, but not less
than the Minimum Investment Amount), but in no event shall the Closing Date be
later than April 30, 2001.
2.2. Deliveries at Closing. At the Closing, the Company shall
deliver the following to each Purchaser: (a) a stock certificate registered in
such Purchaser's name, or in such nominee name(s) as designated by the Purchaser
in writing, representing the Shares purchased by such Purchaser; (b) a Warrant
in such Purchaser's name, or in such nominee name(s) as designated by the
Purchaser in writing; and (c) a certificate, signed by an officer of the
Company, to the effect that (i) the representations and warranties of the
Company contained in this Agreement are true and correct in all material
respects on and as of the Closing Date as though newly made on and as of that
date (except for representations and warranties which speak as of the date of
this Agreement or as of
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another specific date or period, which shall continue to be true and correct in
all material respects as of the respective dates and for the respective periods
covered thereby); and (ii) the Company has performed and complied with, in all
material respects, all of its covenants contained in this Agreement and required
to be performed or complied with on or before the Closing. Each Purchaser's
obligation to purchase the Units shall be subject to the following conditions:
(a) the accuracy of the representations and warranties
made by the Company herein and the fulfillment of
those undertakings of the Company to be fulfilled
prior to Closing;
(b) delivery of the certificates representing the Shares
and the Warrants.
The Company's obligation to sell the Units shall be subject to the following
conditions:
(a) the accuracy of the representations and warranties
made by each Purchaser herein and the fulfillment of
those undertakings of each Purchaser to be fulfilled
prior to the Closing; and
(b) each Purchaser's payment of the Purchase Price to
the Escrow Agent.
Upon satisfaction of all the conditions to Closing set forth
in this Agreement, the Escrow Agent shall be directed to deliver to the Company
the aggregate Purchase Price for the Units, less any expenses that the Company
has agreed to reimburse to its counsel, which the Escrow Agent shall pay
directly to the Company.
3. Representations and Warranties by the Company. The Company
represents and warrants to each Purchaser as of the date hereof and as of the
Closing Date that, except as set forth in the Disclosure Schedule attached
hereto as Schedule II (the "Disclosure Schedule") or in the SEC Reports (as
hereinafter defined):
3.1. Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, and has the requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Company is qualified to do business and is in good standing as a
foreign corporation in every jurisdiction in which the failure to so qualify
would have a material adverse effect on the financial condition or business of
the Company.
3.2. Changes. Except as set forth in the SEC Reports, since
December 31, 2000, the Company has not, to the extent material to the Company:
(a) incurred any debts, obligations or liabilities, absolute, accrued or
contingent, whether due or to become due, other than in the ordinary course of
business; (b) mortgaged, pledged or subjected to lien, charge, security interest
or other encumbrance any of its assets, tangible or intangible, other than in
the ordinary course of business; (c) waived any debt owed to the Company or its
subsidiaries, other than in the ordinary course of business; (d) satisfied or
discharged any lien, claim or encumbrance or paid any obligation other than in
the ordinary course of business; (e) declared or paid any dividends, other than
in the ordinary course of business; or (f) entered into any transaction other
than in the usual and ordinary course of business.
3.3. Litigation. Except as set forth in the Disclosure
Schedule or the SEC Reports, there are no legal actions, suits, arbitrations or
other legal, administrative or governmental proceedings pending or, to the
Company's knowledge, threatened against the Company or its properties, assets or
business, and the Company is not aware of any facts which might result in or
form the basis for any such action, suit or other proceeding, in each case
which, if adversely determined, would individually or in the aggregate have a
material adverse effect on the financial condition or business of the Company.
3.4. Compliance with Other Instruments. Except for such
matters which, either individually or in the aggregate, would not have a
material adverse effect on the financial condition or business of the Company,
the execution and delivery of, and the performance and compliance with, this
Agreement and the Warrants and the transactions contemplated hereby or thereby,
with or without the giving of notice or passage of time, will not (a) result in
any breach of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any
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asset or property of the Company pursuant to any agreement or other instrument
to which the Company is a party or by which it or any of its properties, assets
or rights is bound or affected; (b) violate the Amended and Restated Articles of
Incorporation (the "Articles") or Bylaws (the "Bylaws") of the Company, or any
law, rule, regulation, judgment, order or decree; or (c) except for the
registration of the Shares and the Warrant Shares (as hereinafter defined) under
the Securities Act of 1933, as amended (the "Securities Act"), the listing of
the Shares and the Warrant Shares on the AMEX and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and applicable
state securities laws in connection with the purchase of the Shares and the
Warrants by the Purchasers, require any consent, approval, authorization or
order of or filing with any court or governmental agency or body. The Company is
not in violation of its Articles or Bylaws nor in violation of, or in default
under, any lien, mortgage, lease, agreement or instrument, except for such
defaults which would not, individually or in the aggregate, have a material
adverse effect on the financial condition or business of the Company. The
Company is not subject to any restriction which would prohibit the Company from
entering into or performing its obligations under this Agreement or the
Warrants, except for such restrictions which would not, individually or in the
aggregate, have a material adverse effect on the ability of the Company to
perform its obligations under this Agreement and the Warrants.
3.5. Reports and Financial Statements. As of their respective
filing dates, the Company's Form 10-K for the year ended December 31, 2000, the
Company's Proxy Statement in connection with the 1999 Annual Meeting of
Shareholders and all Forms 10-Q and 8-K filed by the Company with the Securities
and Exchange Commission (the "SEC") after January 1, 2000, in each case without
exhibits thereto (the "SEC Reports") were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such SEC Reports. The SEC Reports, when read as a whole, do not contain any
untrue statements of a material fact and do not omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
the SEC Reports have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present, in all material
respects, the financial position of the Company as at the dates thereof and the
results of its operations and cash flows for the periods then ended subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described in such financial statements.
3.6. Shares. The Shares, the Warrants and the shares of Common
Stock issuable upon the exercise of the Warrants (the "Warrant Shares"), when
issued and paid for pursuant to the terms of this Agreement or the Warrants, as
applicable, will be duly and validly authorized, issued and outstanding, fully
paid, nonassessable and free and clear of all pledges, liens, encumbrances and
restrictions (other than arising under federal or state securities laws). The
issuance of the Shares, the Warrants and the Warrant Shares is not subject to
any preemptive or other similar rights. The Company has duly reserved
________________ shares of its authorized but unissued Common Stock for issuance
upon exercise of the Warrants by the Purchasers, and such shares shall remain so
reserved (subject to reduction from time to time for Common Stock issued upon
the exercise of the Warrants), as long as the Warrants are exercisable.
3.7. Capital Stock. As of December 31, 2000, 25,303,091 shares
of the Common Stock were issued and outstanding, 2,155,715 shares of the
Company's Series A Preferred Stock, no par value per share (the "Preferred
Stock"), were issued and outstanding, which are convertible into 2,155,715
shares of Common Stock, and options and/or warrants to purchase 7,556,630 shares
of Common Stock were issued and outstanding. All of the outstanding shares of
the Company's capital stock are validly issued, fully paid and nonassessable.
Except as set forth in this Section 3.7, as of December 31, 2000, there are no
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, conversion rights or other agreements or arrangements of any
character or nature whatever under which the Company is or may be obligated to
issue its Common Stock, Preferred Stock or warrants or options to purchase the
Common Stock or the Preferred Stock. No holder of any security of the Company is
entitled to any preemptive or similar rights to purchase any securities of the
Company.
3.8. Corporate Acts and Proceedings. This Agreement has been
duly authorized by the requisite corporate action and has been duly executed and
delivered by an authorized officer of the Company, and is a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting
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the enforcement of creditors' rights generally and as to limitations on the
enforcement of the remedy of specific performance and other equitable remedies.
The requisite corporate action necessary for the authorization, reservation,
issuance and delivery of the Shares, the Warrants and the Warrant Shares has
been taken by the Company. Upon execution and delivery thereof by a duly
authorized officer of the Company, the Warrants will be valid and binding
obligations of the Company, enforceable in accordance with their terms except as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and as to limitations on the enforcement of the remedy of
specific performance and other equitable remedies.
3.9. No Implied Representations. All of the Company's
representations and warranties are contained in this Agreement, and no other
representations or warranties by the Company shall be implied.
3.10. Filing of Reports. Since the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, the Company has filed
with the SEC all reports and other material required to be filed by it therewith
pursuant to Section 13, 14 or 15(d) of the Exchange Act and the Company is
eligible to register the offer and resale of the Shares and the Warrant Shares
by the holders thereof on a Registration Statement on Form S-3.
3.11. Compliance with Laws. The business and operations of the
Company have been conducted in accordance with all applicable laws, rules and
regulations of all governmental authorities, except for such violations which
would not, individually or in the aggregate, have a material adverse effect on
the financial condition or business of the Company.
3.12. Proprietary Rights. To the knowledge of the Company, the
Company owns or is licensed to use all patents, patent applications, inventions,
trademarks, trade names, applications for registration of trademarks, service
marks, service xxxx applications, copyrights, trade secrets, licenses and rights
in any thereof and any other intangible property and assets (herein called the
"Proprietary Rights") which are material to the business of the Company. Except
as would not have a material adverse effect on the financial condition or
business of the Company, the Company does not have any knowledge of, and the
Company has not given or received any notice of, any pending conflicts with or
infringement of the rights of others with respect to any Proprietary Rights.
Except as would not have a material adverse effect on the financial condition or
business of the Company, no action, suit, arbitration, or legal, administrative
or other proceeding, or investigation is pending or, to the knowledge of the
Company, threatened, which involves any Proprietary Rights. Except as would not
have a material adverse effect on the financial condition or business of the
Company, to the knowledge of the Company, no Proprietary Rights used by the
Company, and no services or products sold by the Company, conflict with or
infringe upon any proprietary rights owned or licensed by any third party.
Except as would not have a material adverse effect on the financial condition or
business of the Company, no claims have been asserted by any person with respect
to the validity of the Company's ownership or right to use the Proprietary
Rights and, to the knowledge of the Company, there is no reasonable basis for
any such claim to be successful.
3.13. Compliance with Environmental Laws. Except as would not,
singly or in the aggregate, have a material adverse effect on the financial
condition or business of the Company, the Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the Company's knowledge, no expenditures
material to the Company are or will be required to comply with any such existing
statute, law or regulation. To the Company's knowledge, the Company does not
have any liability to any governmental authority or other third party arising
under or as a result of any such past or existing statute, law or regulation,
which liability would be material to the Company.
3.14. Permits, Licenses, Etc. The Company owns, possesses or
has obtained, and is operating in compliance with, all governmental and
administrative licenses, permits, certificates, registrations, approvals,
consents and other authorizations (collectively, "Permits") necessary to own or
lease (as the case may be) and operate its properties, whether tangible or
intangible, and to conduct its businesses or operations as currently conducted,
except such licenses, permits, certificates, registrations, approvals, consents
and authorizations the failure of which to obtain would not have a material
adverse effect on the financial condition or business of the Company. The
Company has not received any notice of proceedings relating to the revocation,
modification or suspension of any Permits or any circumstance which would lead
it to believe that such proceedings are reasonably likely.
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3.15. Insurance. The Company maintains insurance of the type
and in the amount which the Company believes is reasonably adequate for its
business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against
by similarly situated companies, all of which insurance is in full force and
effect.
3.16. Brokers or Finders. No agent, broker, investment banker
or other person (as such term is defined in the Securities Act) is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
from the Company in connection with any of the transactions contemplated hereby.
3.17. Closing Date. All the representations and warranties
made by the Company in this Section 3 shall be true and complete from the date
of this Agreement through the Closing Date and the Company shall provide each
Purchaser, before the Closing, with any documents or information necessary for
such representations and warranties to remain true and complete as of the
Closing Date.
4. Representations and Warranties by the Purchasers; Restrictions on
Transfer. Each Purchaser severally represents and warrants to, and covenants and
agrees with, the Company, as of the Closing Date, as follows:
4.1. Authorization. Purchaser has all requisite legal and
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agreement, to purchase the Shares and
the Warrants to be purchased by it and to carry out and perform all of its
obligations under this Agreement. This Agreement constitutes the legal, valid
and binding obligation of Purchaser, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and as to limitations on the enforcement of the
remedy of specific performance and other equitable remedies.
4.2. Investor Status. Purchaser is an "Accredited Investor" as
defined in Rule 501 of the Securities Act or a "Qualified Institutional Buyer,"
as such term is defined in Rule 144A of the Securities Act. Purchaser is aware
of the Company's business affairs and financial condition and has had access to
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Shares and the Warrants. Purchaser has
such business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Shares and
Warrants and is able to bear the risks of an investment in the Shares and the
Warrants. Purchaser is not itself a "broker" or a "dealer" as defined in the
Exchange Act and is not an "affiliate" of the Company as defined in Rule 405 of
the Securities Act.
4.3. Investment Intent. Purchaser is purchasing the Shares and
the Warrants for its own account as principal, for investment purposes only, and
not with a present view to or for resale, distribution or fractionalization
thereof, in whole or in part, within the meaning of the Securities Act.
Purchaser understands that its acquisition of the Shares and the Warrants has
not been registered under the Securities Act or registered or qualified under
any state securities law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein. Purchaser has, in connection
with its decision to purchase the number of Shares and the Warrants set forth in
this Agreement, relied solely upon the representations and warranties of the
Company contained herein. Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Shares or the
Warrants, except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and all applicable state securities laws.
4.4. Registration or Exemption Requirements. Purchaser further
acknowledges and understands that the Shares, the Warrants and the Warrant
Shares may not be resold or otherwise transferred except in a transaction
registered under the Securities Act and applicable state securities laws unless
counsel to the Company shall advise the Company that such transfer may be
effected without such registration. Purchaser understands that until the Shares,
the Warrants and the Warrant Shares have been registered under the Securities
Act and all applicable state securities laws, the certificates evidencing the
Shares, the Warrants and the Warrant Shares will be imprinted with a legend that
prohibits the transfer of the Shares, the Warrants and the Warrant Shares.
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4.5. Restriction on Sales, Short Sales and Hedging
Transactions. Purchaser represents and agrees that during the period from the
date Purchaser was first contacted with respect to the potential purchase of the
Shares and the Warrants through the date of the execution of this Agreement by
Purchaser, Purchaser did not, directly or indirectly, execute or effect or cause
to be executed or effected any short sale, option or equity swap transaction in
or with respect to the Common Stock or any other derivative security transaction
the purpose or effect of which is to hedge or transfer to a third party all or
any part of the risk of loss associated with the ownership of the Shares and the
Warrants by the Purchaser (collectively, a "Hedging Transaction").
4.6. No Legal, Tax Or Investment Advice. Purchaser understands
that nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares and the Warrants constitutes
legal, tax or investment advice. Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares and the Warrants.
4.7. Brokers or Finders. Upon the consummation of the
transactions contemplated by this Agreement, no agent, broker, investment banker
or other Person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee from the Purchaser in connection with any of the
transactions contemplated hereby.
4.8. Closing Date. All the representations and warranties made
by each Purchaser in this Section 4 shall be true and complete from the date of
this Agreement through the Closing Date and each Purchaser shall provide the
Company, before the Closing, with any documents or information necessary for
such representations and warranties to remain true and complete as of the
Closing Date.
5. Covenants.
5.1. Registration Requirements.
(a) Promptly after, but not later than 30 days after, the
Closing Date, the Company shall prepare and file a registration statement (the
"Registration Statement") with the SEC to register the offer and resale of the
Shares and the Warrant Shares (together, the "Registrable Securities") by the
Purchasers and shall use commercially reasonable efforts to cause such
Registration Statement to become effective within 90 days from the Closing Date
or not more than five days from the date upon which the SEC shall allow the
Company to accelerate effectiveness, whichever is shorter. In the event that the
Company shall fail to file the Registration Statement within the 30-day period
following the Closing Date or shall fail to obtain effectiveness of the
Registration Statement within the 90-day period following the Closing Date, the
Company hereby agrees that it shall issue to each Purchaser Warrants to purchase
such number of shares of Common Stock equal to 2% of the aggregate number of
securities purchased by such Purchaser for each and every thirty (30) day period
with respect to which such Registration Statement shall not be filed or
effective, as the case may be (the "Penalty Warrant"); provided, however, that
if the Placement Agent receives an opinion of counsel to the Company to the
effect that the delay in obtaining effectiveness of the Registration Statement
was not solely attributable to any actions taken or failed to be taken by the
Company, then, such 90-day period shall be extended an additional 90 days
without any Penalty Warrants required to be issued; provided, further, the
Company shall not be obligated to issue any Penalty Warrants if the Registration
Statement is not effective due to the Purchaser's failure to provide any
information about itself that is necessary to be contained in such Registration
Statement. The Penalty Warrants shall have an exercise price per share equal to
135% of the Market Price and shall be exercisable for a period of five years
from the date of issuance and shall be substantially similar to the Warrants.
(b) The Company shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder and each Purchaser shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relating to the
Registrable Securities resold by such Purchaser. "Registration Expenses" shall
mean all expenses, except for Selling Expenses, incurred by the Company in
complying with the registration provisions herein described, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses and the expense of any special audits incident to or required by
any such
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registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Registrable
Securities and all fees and disbursements of counsel for any Purchaser.
(c) If the Registration Statement becomes effective, the
Company will use commercially reasonable efforts to: (i) keep such registration
effective until the third anniversary of the date such Registration Statement is
declared effective; (ii) except as provided in Section 5.1(f), prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the Registration Statement; (iii)
furnish such number of prospectuses and other documents incident thereto,
including any amendment of or supplement to the prospectus, as a Purchaser from
time to time may reasonably request; (iv) cause the Shares and the Warrant
Shares to be listed on the American Stock Exchange or any securities exchange or
quoted on each quotation service on which the Common Stock of the Company is
then listed or quoted; (v) provide a transfer agent and registrar for all
securities registered pursuant to the Registration Statement and a CUSIP number
for all such securities; and (vi) file the documents required of the Company and
otherwise use commercially reasonable efforts to maintain requisite blue sky
clearance in all U.S. jurisdictions in which any of the Shares are originally
sold and all other states specified in writing by a Purchaser, provided,
however, that the Company shall not be required to qualify to do business in any
state in which it is not now so qualified or has not so consented.
(d) The Company shall furnish to each Purchaser upon
request a reasonable number of copies of a supplement to or an amendment of the
prospectus used in connection with the Registration Statement as may be
necessary to facilitate the public sale or other disposition of all or any of
the Registrable Securities held by Purchaser.
(e) With a view to making available to Purchasers the
benefits of Rule 144 of the Securities Act and any other rule or regulation of
the SEC that may at any time permit Purchasers to sell Registrable Securities to
the public without registration, the Company covenants and agrees to use
commercially reasonable efforts to: (i) make and keep public information
available as those terms are understood and defined in Rule 144 of the
Securities Act until the earlier of (A) the date on which the Registrable
Securities may be sold pursuant to Rule 144(k) (or any successor rule); or (B)
such date as all of the Registrable Securities shall have been resold; (ii) file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and Exchange Act; and (iii) furnish to any
Purchaser upon request, as long as the Purchaser owns any Registrable Securities
(A) a written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act; (B) a copy of the most
recent annual or quarterly report of the Company; and (C) such other information
as may be reasonably requested in order to avail any Purchaser of any rule or
regulation of the SEC that permits the selling of any such Registrable
Securities without registration.
(f) Purchaser hereby acknowledges that there may be times
when the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to such Registration
Statement has been filed by the Company and declared effective by the SEC or
until the Company has amended or supplemented such prospectus. The Purchaser
hereby covenants that it will not sell any securities pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchaser notice of the suspension of the use of said prospectus and ending
at the time the Company gives the Purchaser notice that Purchaser may thereafter
effect sales pursuant to said prospectus. Notwithstanding anything herein to the
contrary, the Company shall not suspend use of the Registration Statement by
Purchaser unless such suspension is required by the federal securities laws and
the rules and regulations promulgated thereunder.
(g) As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when: (i) a registration
statement covering such securities shall have become effective under the
Securities Act and such securities have been disposed of in accordance with such
registration statement; (ii) such securities may be sold pursuant to Rule 144(k)
(or any successor rule); or (iii) such securities shall have ceased to be
outstanding.
(h) No Purchaser shall be entitled to any right provided
for in this Section 5.1 after the earlier of (i) three (3) years following the
effective date of the Registration Statement; or (ii) the date on which the
Registrable Securities may be sold pursuant to Rule 144(k) (or any successor
rule).
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5.2. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Purchaser from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which such Purchaser may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon (i) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in the
Registration Statement, on the effective date thereof, or any amendment or
supplements thereto; or (ii) any violation by the Company of any Federal, state
or common law rule or regulation applicable to the Company in connection with
any such registration, and the Company will, as incurred, reimburse such
Purchaser for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend, settling, compromising or paying any such
action, proceeding or claim; provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon (i) an untrue statement or alleged untrue
statement of a material fact or omission or alleged omission in any registration
statement or prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation thereof; (ii) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus delivered by the Purchaser after the Company had
notified the Purchaser in writing that such registration statement or prospectus
contained such untrue statement or alleged untrue statement; (iii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading after the
Company had notified the Purchaser in writing that such registration statement
or prospectus contained such omission or alleged omission; or (iv) the failure
of the Purchaser to deliver any preliminary or final prospectus, or any
amendments or supplements thereto, required under applicable securities laws,
including the Securities Act, to be so delivered, provided that a sufficient
number of copies thereof had been previously provided by the Company to the
Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact in the Registration Statement, or any amendment or
supplements thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Purchaser specifically for use
in preparation of the Registration Statement or (ii) an untrue statement or
alleged untrue statement or omission or alleged omission in any prospectus that
is corrected in any subsequent prospectus or supplement or amendment thereto,
that was delivered to a Purchaser at least 1 day prior to the pertinent sale or
sales by such Purchaser and not delivered by such Purchaser to the entity to
which it made such sale(s) prior to such sale(s), and each Purchaser, severally
and not jointly, will, as incurred, reimburse the Company for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 5.2,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall wish, to assume the defense thereof,
with counsel reasonably satisfactory to the indemnified person. After notice
from the indemnifying person to such indemnified person of the indemnifying
person's election to assume the defense thereof, the indemnifying person shall
not be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof;
provided, however, that if there exists or shall exist a conflict of interest
that would make it inappropriate in the opinion of outside counsel of the
indemnified person for the same counsel to represent both the indemnified person
and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense of
such indemnifying person; provided, further, that the indemnifying person shall
not be obligated to assume the expenses of more than one counsel to represent
all indemnified persons. No indemnifying person shall be liable for any
settlement of any action or proceeding effected without its written consent. No
indemnifying person shall, without the consent of the indemnified person (which
consent shall not be reasonably
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withheld or delayed), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified person of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section
5.2 is unavailable to or insufficient to hold harmless an indemnified person
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and each Purchaser
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a Purchaser on the other. The Company and the Purchasers agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified person as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified person in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Purchaser's obligations in this
subsection (d) to contribute are several in proportion to their sales of Shares
or Warrant Shares, as the case may be, to which such loss relates and not joint.
(e) The obligations of the Company and the Purchasers
under this Section 5.2 shall be in addition to any liability which the Company
and the respective Purchasers may otherwise have and the indemnification
obligations hereunder shall extend, as applicable, upon the same terms and
conditions, to directors, officers, employees and agents of the Company and the
Purchasers and to each person, if any, who controls the Company or any Purchaser
within the meaning of the Securities Act and the Exchange Act.
6. Restrictions on Transferability of Shares and Warrants; Compliance
with Securities Act.
6.1. Restrictions on Transferability. The Shares, the Warrants
and the Warrant Shares shall not be resold or otherwise transferred except in a
transaction registered under the Securities Act and applicable state securities
laws unless counsel to the Company shall advise the Company that such transfer
may be effected without such registration.
6.2. Restrictive Legend. Until and unless the Shares and the
Warrant Shares are registered under the Securities Act, each certificate
representing the Shares and the Warrant Shares and each Warrant shall bear
substantially the following legend (in addition to any legends required under
applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT (A)(1) TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN
ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) TO AN
ACCREDITED INVESTOR (AS DEFINED IN RULE 501(A) OF REGULATION D
UNDER THE SECURITIES ACT) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE
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SECURITIES ACT (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
AND (B) IN ACCORDANCE WILL ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
6.3 Transfer of Shares and Warrants. Each Purchaser hereby
covenants with the Company not to make any sale of the Shares or Warrants except
either (a) a sale of Shares or Warrant Shares in accordance with the
Registration Statement, in which case the Purchaser covenants to comply with the
requirement of delivering a current prospectus, (b) a sale of Shares or Warrant
Shares in accordance with Rule 144, in which case the Purchaser covenants to
comply with Rule 144 and to deliver such additional certificates and documents
as the Company may reasonably request, or (c) in accordance with another
exemption from the registration requirements of the Securities Act. The legend
set forth in Section 6.2 will be removed from a certificate representing Shares
or the Warrant Shares, as the case may be, following and in connection with any
sale of Shares or Warrant Shares pursuant to subsection (a) or (b) hereof but
not in connection with any sale of Shares or Warrant Shares pursuant to
subsection (c) hereof. The Company will substitute one or more replacement
certificates without the legend at the request of the Purchaser promptly after
such time as the Registration Statement becomes effective.
7. Termination.
7.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written agreement of the Company and the
Purchasers;
(b) by the Company if the Closing shall not have been
consummated on or before April 30, 2001;
(c) by either the Purchasers or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling or
taken any other action having the effect of permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement;
(d) by either the Purchasers or the Company (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a material breach by the other party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach; or
(e) by either the Purchasers or the Company (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a material breach by the other party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach.
(f) by the Purchasers if the Company shall cease
conducting business in the normal course; become insolvent or become unable to
meet its obligations as they become due; make a general assignment for the
benefit of creditors; petition, apply for, suffer or permit with or without its
consent the appointment of custodian, receiver, trustee in bankruptcy or similar
officer for all or any substantial part of its business or assets; avail itself
or become subject to any proceeding under the Federal Bankruptcy Code or any
similar state, federal or foreign statute relating to bankruptcy, insolvency,
reorganization, receivership, arrangement, adjustment of debts, dissolutions or
liquidation.
7.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party
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hereto (or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such party) provided that nothing contained in
this Agreement shall relieve any party from liability for any breach of this
Agreement.
8. Miscellaneous.
8.1 Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by or on behalf
of the Purchaser, and the sale and purchase of the Shares and the Warrants and
payment therefor.
8.2. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous arrangements or understandings with
respect thereto.
8.3. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and do not constitute a
part of this Agreement.
8.4. Choice of Law. It is the intention of the parties that
the internal laws of the State of California, without regard to the body of law
controlling conflicts of law, shall govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties set forth herein.
8.5. Counterparts. This Agreement may be executed concurrently
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.6. Assignment; Parties in Interest. This Agreement may not
be pledged, assigned or otherwise transferred by the Purchasers except by
operation of law but all the terms and provision of this Agreement shall be
binding upon and inure to the benefit of and be enforced by the successors in
interest of the parties hereto. Each successive transferee of the Purchasers
shall be deemed to be a Purchaser for the purpose of Section 5 of this
Agreement.
8.7. Amendments. No amendment, modification, waiver, discharge
or termination of any provision of this Agreement nor consent to any departure
by the Purchasers or the Company therefrom shall in any event be effective
unless the same shall be in writing and signed by the party to be charged with
enforcement, and then shall be effective only in the specific instance and for
the purpose for which given. No course of dealing between the parties hereto
shall operate as an amendment of, or a waiver of any right under, this
Agreement.
8.8. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
8.9. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other party:
If to the Company, to:
Questcor Pharmaceuticals, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
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With a copy to:
Xxxxxx & Xxxxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
If to the Purchaser, to:
the address set forth on the
signature page of this Agreement
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
representatives as of the day and year first above written
Questcor Pharmaceuticals, Inc.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
X-00
00
XXXXXXXXX SIGNATURE PAGE AND QUESTIONNAIRE
The undersigned Purchaser hereby executes the Stock and Warrant
Purchase Agreement with Questcor Pharmaceuticals, Inc. (the "Company") and
hereby authorizes this signature page to be attached to a counterpart of such
document executed by a duly authorized officer of the Company.
No. of Shares to be
Purchased: -----------------------------------------
-------------- Name of Purchaser (PLEASE PRINT OR TYPE)
No. of Shares Underlying
Warrants:
---------------
Aggregate Purchase
Price: $
---------------
By:
--------------------------------------
Title:
-----------------------------------
Purchaser is a qualified institutional buyer OR
-------
________ an accredited investor as defined in Exhibit A
Name in which Shares and Warrants are to
be registered: --------------------------------------
Address of registered holder:
--------------------------------------
Social Security or Tax ID No. of
registered holder: --------------------------------------
Contact name and telephone number
regarding Settlement and registration: --------------------------------------
Name
--------------------------------------
Telephone Number
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