Exhibit 10.1
EXECUTION COPY
QMED, INC.
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of October 21, 2004, by and between QMed, Inc., a
Delaware corporation (the "Company") having an office at 00 Xxxxxxxxxxx Xxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, and Quest Diagnostics Ventures LLC, having an
office at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Investor").
W I T N E S S E T H :
WHEREAS, the Company desires to sell an aggregate of 298,507 shares
(the "Shares") of its Common Stock, $.001 par value, (the "Common Stock") for an
aggregate of $2,000,000 to the Investor, who is an "accredited investor" within
the meaning of Rule 501(a) adopted under the Securities Act of 1933 (the "Act");
and
WHEREAS, the Investor wishes, pursuant to the terms and conditions
hereinafter set forth, to purchase the Shares.
NOW THEREFORE, in consideration of the premises, and the respective
representations and warranties hereinafter set forth, the Company and the
Investor agree as follows:
1. SUBSCRIPTION.
The Investor, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase the Shares.
2. PURCHASE AND CLOSING.
2.1 The Investor delivers herewith the sum of $2,000,000 (the "Purchase
Price") to the Company.
2.2 The Company hereby delivers the following to the Investor:
(a) a certificate, in due and proper form, representing the Shares
purchased upon which a legend substantially in the following
form will be endorsed:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR
AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT"; and
(b) an opinion of the Company's counsel addressed to the Company
which indicates that the Investor may rely upon it as to the
matters set forth in Sections 5.1, 5.2, 5.3, 5.5, 5.6, 5.7 and
5.8 of this Agreement; and
(c) a counterpart of this Agreement executed by the Company; and
(d) a duly executed Registration Rights Agreement in the form
annexed hereto as Exhibit A.
3. INVESTOR REPRESENTATIONS AND WARRANTIES.
The Investor hereby acknowledges, represents and warrants to, and
agrees with, the Company as follows:
3.1 The Investor is acquiring the Shares for its own account as
principal, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
person except the Investor's corporate parent has a direct or indirect
beneficial interest in such Shares;
3.2 The Investor acknowledges its understanding that the offering and
sale of the Shares is intended to be exempt from registration under the Act by
virtue of Section 4(2) of the Act and the provisions of Regulation D thereunder.
In furtherance thereof, the Investor represents and warrants to and agrees with
the Company as follows:
(a) the Investor has the financial ability to bear the economic
risk of its investment, has adequate means for providing for
its current needs and contingencies and has no need for
liquidity with respect to its investment in the Company;
(b) the Investor is a corporation, trust, estate, benefit plan,
partnership other entity, which comes within a category of
"accredited investor" as that term is defined in Rule 501(a)
of Regulation D under the Act (17 C.F.R. 230.501(a));
3.3 The Investor:
(a) has been furnished with the Company's Report on Form 10-K for
the year ended November 30, 2003, including the Company's
Annual Report to Stockholders, the Company's quarterly reports
on Form 10-Q for the quarters ended February 29, 2004, May 31,
2004 and August 31, 2004, the Company's Proxy Statement dated
May 24, 2004, and the Company's Current Reports on Form 8-K
dated February, 25, 2004, April 13, 2004 and June 25, 2004
(which are referred to as the "Documents") and any documents
which may have been made available upon request, and has
carefully read the Documents and understands and has evaluated
the risks of a purchase of Shares, and has relied solely
(except as indicated in subsections (b) and (c) below) on the
information contained in the Documents;
(b) has been provided an opportunity to obtain additional
information concerning the Company and all other information
to the extent the Company possesses such information or can
acquire it without unreasonable effort or expense;
(c) has been given the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions
of this investment, and has been given the opportunity to
obtain such additional information necessary to verify the
accuracy of the information contained in the Documents or that
which was otherwise provided in order for the Investor to
evaluate the merits and risks of purchase of the Shares to the
extent the Company possesses such information or can acquire
it without unreasonable efforts or expense, and has not been
furnished any other offering literature or prospectus except
as mentioned herein;
(d) has not been furnished with any oral representation or oral
information in connection with the offering of the Shares
which is not contained in the Documents; and
(e) has determined that the Shares are a suitable investment and
that at this time the Investor could bear a complete loss of
its investment;
3.4 The Investor represents, warrants and agrees that it will not sell
or otherwise transfer the Shares unless registered under the Act or in reliance
upon an exemption therefrom, and fully understands and agrees that it must bear
the economic risk of its purchase for an indefinite period of time because,
among other reasons, the Shares have not been registered under the Act or under
the securities laws of certain states and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under
the Act and under the applicable securities laws of such states or an exemption
from such registration is available. The Investor also understands that except
as set forth in the Registration Rights Agreement and the Company's independent
obligation to remain current in its filings under the Securities Exchange Act of
1934, as amended, the Company is under no obligation to register the Shares on
its behalf or to assist the Investor in complying with any exemption from
registration under the Act. The Investor further understands that sales or
transfers of the Share are restricted by the provisions of state securities
laws;
3.5 The person signing this Stock Purchase Agreement on behalf of such
entity has been duly authorized by such entity to do so;
3.6 No representation or warranties have been made to the Investor by
the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company herein;
3.7 The execution and delivery by the Investor of, and the performance
by the Investor of its obligations under this Agreement and the Registration
Rights Agreement in accordance with their terms will not contravene any
provision of applicable law or the charter documents of the Investor or any
agreement or other instrument binding upon the Investor, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Investor, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Investor of its obligations under such Agreements in accordance with their
respective terms;
3.8 The Investor has been duly organized, is validly existing and is in
good standing under the laws of the State of Delaware. The Investor has full
power and authority to enter into this Agreement, and this Agreement has been
duly and validly authorized, executed and delivered by the Investor and
constitutes valid and binding obligations of the Investor, enforceable against
the Investor in accordance with its terms, except as such enforcement may be
limited by the United States Bankruptcy Code, laws effecting creditors rights,
generally and general equitable principles.
3.9 The foregoing representations, warranties and agreements shall
survive the Closing.
4. INVESTOR AWARENESS.
The Investor acknowledges, represents, agrees and is aware that:
4.1 No Federal or state agency has passed on the Shares or made any
finding or determination as to the fairness of this investment;
4.2 There are substantial risks incident to the purchase of Shares;
4.3 The investment in the Company is an illiquid investment and the
Investor must bear the economic
risk of investment in the Shares for an indefinite period of time;
4.4 There are substantial restrictions under the Act on transferability
of the Shares;
4.5 The foregoing acknowledgments, representations, warranties and
agreements shall survive the Closing.
5. COMPANY REPRESENTATIONS AND WARRANTIES.
The Company hereby acknowledges, represents and warrants to, and agrees
with the Investor (which representations will be true and correct as of the date
of the Closing as if the Agreement were made on the date of Closing) as follows:
5.1 The Company and each of its subsidiaries has been duly organized,
is validly existing and is in good standing under the laws of their respective
states of incorporation. The Company has full corporate power and authority to
enter into this Agreement and the Registration Rights Agreement, and each of
this Agreement and the Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be limited by the
United States Bankruptcy Code, laws effecting creditors rights, generally and
general equitable principles.
5.2 Subject to the performance by the Investor of its obligations under
this Agreement and the accuracy of the representations and warranties of the
Investor, the offering and sale of the Securities will be exempt from the
registration requirements of the Act.
5.3 The execution and delivery by the Company of, and the performance
by the Company of its obligations under this Agreement and the Registration
Rights Agreement in accordance with their terms will not contravene any
provision of applicable law or the charter documents of the Company or any of
its subsidiaries or any agreement or other instrument binding upon the Company
or any of its subsidiaries, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any of its
subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement and the
Registration Rights Agreement in accordance with their respective terms.
5.4 The Company has filed all forms, reports and documents required to
be filed by it with the SEC since August 31, 2003 (each such report being an
"SEC Report"), including the Documents. Each SEC Report was prepared in
accordance with either the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
promulgated thereunder. The Documents did not, and through the date of the
Closing will not, contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made and at the time of their filing, not
misleading.
5.5 All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
free of preemptive or similar rights. As of September 30, 2004, 40,000,000
shares of Common Stock are authorized, of which 14,789,105 shares of Common
Stock are issued and outstanding, 22,000 shares of Common Stock are held as
treasury shares and approximately 4,500,000 shares are reserved for issuance
under the Company's stock option plans and for the exercise of outstanding
warrants and convertible securities. The Company does not have any class of
authorized stock other than Common Stock. The Shares have been duly authorized
and are validly issued and fully paid and non-assessable, and the Shares are not
subject to any preemptive or similar rights and are free and clear of any liens,
claims and encumbrances other than any restrictions under the Act and applicable
state securities laws.
5.6 The Company and each of its subsidiaries are not in violation of
their respective charter or bylaws and are not in default in the performance of
any bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust, license, contract, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which it is
bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except such as have been waived or which would not
have, singly or in the aggregate, a material adverse effect on the Company and
its subsidiaries, taken as a whole.
5.7 There is no material litigation or governmental proceeding pending,
or to the knowledge of the Company, threatened against, or involving the
property or the business of the Company or any of its subsidiaries which would
adversely affect the condition (financial or otherwise), business, prospects or
results of operations of the Company and its subsidiaries, taken as a whole.
5.8 The Company is not (and has not been) in violation of or has
received notice of any deficiency in or violation of any applicable law, rule,
regulation, license, permit or requirement of any governmental authority, with
such exception as would not have, singly or in the aggregate, a material adverse
effect on the Company and its subsidiaries, taken as a whole
5.9 The consolidated financial statements set forth in the Documents
fairly present the financial position and the results of operations of the
Company, at the dates and periods therein specified. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the respective periods involved and are
complete and accurate and are in accordance with the books and records of the
Company. Since August 31, 2004, the Company and its subsidiaries:
(a) have not entered into any transaction outside of the ordinary
course of business; or
(b) suffered any material adverse change in its financial
condition or results of operations except as disclosed or
contemplated in these Documents.
5.10 The foregoing representations, warranties and agreements shall
survive the Closing.
6. OBSERVER RIGHTS
6.1 The Company shall invite a representative of Investor (the
"Representative"), which Representative must be reasonably acceptable to the
Company, to attend all meetings of the Company's Board of Directors in a
non-voting observer capacity and, in this respect, shall give such
Representative copies of all notices, minutes, consents and other materials that
it provides to all of its directors; provided, however, (i) that the Company
reserves the right to withhold any information and to exclude such
Representative from any meeting, or any portion thereof, as is reasonably
determined by the Chairman of the Board or a majority of the members of the
Board of Directors to be necessary for purposes of confidentiality, competitive
factors, attorney-client privilege or other reasonable purposes; and (ii) that
in no event shall the failure to provide the notice described above invalidate
in any way any action taken at a meeting of the Board of Directors. The Company
shall not compensate Investor nor reimburse Investor for expenses incurred in
exercising its rights under this paragraph 6.1. The Investor and its
Representative shall use commercialy reasonable efforts to maintain the
confidentiality of all financial, confidential and proprietary information of
the Company acquired as a result of the Investor exercising its rights under
this paragraph 6.1 in accordance with the same standard of care that the
Investor applies to protect its own confidential information of like character
(but which in any event shall be not less than a reasonable standard of care).
This obligation shall not apply to any information which (a) at the time of
disclosure or discovery, is in the public domain; or (b) after disclosure,
becomes part of the public domain by publication or otherwise except by breach
of this Agreement; or (c) was in the Investor's possession prior to the time of
disclosure by the Company and was not acquired, directly or indirectly, from the
Company; or (d) the Investor or its Representative receives from a third party;
provided, however, that to the knowledge of the Company, the source of such
information is not bound by a confidentiality agreement or other contractual or
legal obligation of confidentiality to the Company with respect to such
information; or (e) is developed by the Investor subsequent to and independent
of the receipt of information from the Company.
6.2. The Investor agrees to provide the Company, with all information
reasonably requested by the Company, to ascertain whether the Investor's
representative is acceptable to the Company.
6.3 The rights set forth under paragraph 6. l and 6.2 shall expire on
the earlier of: (a) the date on which a Quest designee is elected to the
Company's Board of Directors, and (b) the occurrence of any transaction by which
the Investor ceases to own or have a beneficial interest in at least 142,857
shares of the Company's Common Stock.
7. MISCELLANEOUS.
7.1 Modification. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
7.2 Notices. Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
in each case addressed to the Treasurer of the other party (or such other person
as may be designated) at the address indicated above or at such other address as
may be given herein, or (b) delivered personally at such address.
7.3 Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwithstanding that all parties are not signatories to the same
counterpart.
7.4 Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligation of the Investor shall be
joint and several, and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.
7.5 Entire Agreement. This instrument contains the entire agreement of
the parties, and there are no representations, covenants or other agreements
except as stated or referred to herein.
7.6 Assignability. This Agreement is not transferable or assignable by
the Investor except as may be provided herein.
7.7 Applicable Law. This Agreement shall be governed and construed
under the laws of the State of Delaware.
7.8 Public Announcement. Each party agrees that neither it nor any of
its Affiliates will make any public announcement regarding the transactions
contemplated by this Agreement without the consent of the other party, except to
the extent such announcement may be require by law, in which case each party
shall reasonably consult with the other party prior to the making of any such
annoucment.
8. EXECUTION.
The Investor has executed this Stock Purchase Agreement on this 21st
day of October, 2004.
QUEST DIAGNOSTICS VENTURES LLC
By: Xxx X. Xxxxxxxxxx, Xx.
---------------------------
Name: Xxx X. Xxxxxxxxxx, Xx.
Title: Vice President and
Assistant Secretary
Accepted this 21st day of October, 2004.
QMED, INC.
By: Xxxxxxx X. Xxxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Chief Financial Officer
