Exhibit 10.9
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AGREEMENT RE SETTLEMENT OF LAWSUIT,
CONVEYANCE OF ASSETS AND ASSUMPTION OF LIABILITIES
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This Agreement Re Settlement of Lawsuit, Conveyance of Assets and
Assumption of Liabilities (the "Agreement"), entered into as of August 28, 1995
is made by and among DepoMed Systems, Inc. ("DSI"), a California corporation,
DepoMed, Inc. ("DI"), a California corporation, Xx. Xxxx X. Xxxxx ("Shell"), and
M6 Pharmaceuticals, Inc. ("M6"), a Delaware corporation (collectively, the
"Parties").
RECITALS
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A. On or about March 29, 1994, DSI and M6 executed an Agreement and Plan
of Merger Between M6 Pharmaceuticals, Inc. and DepoMed Systems, Inc. (the
"Merger Agreement"), providing for the merger of DSI into M6. A Certificate of
Merger was filed with the California Secretary of State on or about July 26,
1994, merging DSI into M6, the surviving corporation.
B. On or about July 17, 1995, DSI and Shell instituted an action against
M6 and Xxxxx Xxxxx in the United States District Court for the Northern District
of California, DepoMed Systems, Inc., et al. v. M6 Pharmaceuticals, Inc., No.
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C95 2574 VRW (the "Action"), asserting claims for specific performance,
rescission and damages relating to the merger and related events.
C. The Parties now desire to enter into a definitive agreement in
settlement of all claims and disputes between M6, on the one hand, and DSI and
Shell, on the other hand.
AGREEMENT
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In consideration of the mutual covenants, agreements and representations
contained in this Agreement, constituting mutual, valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Definitions. As used in this Agreement the following terms shall have
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the following meanings:
A. "Acquired Assets" is as defined in Paragraph 3.
B. "Assumed Liabilities" is as defined in Paragraph 4.
C. "Closing Date" means the date upon which DI acknowledges receipt
of all documentation and assets necessary to effect fully the transfers
contemplated by this Agreement, and on
which DI executes the Closing Statement, in the form attached hereto as Schedule
1.1, acknowledging such receipt of assets and documentation; in no event shall
the Closing Date be later than August 31, 1995.
D. "Closing Statement" is as defined in Subparagraph 1.C.
E. "DepoMed Business" means the research, development, marketing,
production and sales of oral drug delivery systems and technology developed by
or under the direction of Xx. Xxxx X. Xxxxx.
F. "Furniture, Fixtures and Equipment" is as defined in Subparagraph
3.C.
2. Releases.
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A. Effective as of the Closing Date, Shell, DI and DSI fully and
forever release M6, Xx. Xxxxxx Xxxxx, and M6's officers, directors and employees
of and from any and all claims, demands, duties, obligations, liabilities and
causes of action, relating in any way to claims asserted in the Action or
otherwise relating to the Merger Agreement, excepting those obligations created
by this Agreement. Notwithstanding anything to the contrary contained herein,
this Agreement shall not release or otherwise affect in any way the claims or
rights of Shell, DI and DSI, or any of them, against Xx. Xxxxx Xxxxx.
B. Effective as of the Closing Date, M6 fully and forever releases,
Shell, DSI and DI and their respective past and present officers, directors and
employees, of and from any and all claims, demands, duties, obligations,
liabilities and causes of action relating in any way to claims asserted in the
Action or otherwise relating to the Merger Agreement, excepting those
obligations created by this Agreement.
C. The releases contained in this Paragraph 2 are intended to cover
all existing or prior claims or possible claims relating to the specified
subjects, as between the specified parties, whether the same are known, unknown,
or hereafter discovered or ascertained. Each of the Parties acknowledge that
such Party is familiar with the provisions of Section 1542 of the California
Civil Code, which provides as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
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Each of the Parties expressly, knowingly and intentionally waives and
relinquishes any and all rights which it or he has under the provisions of
Section 1542, as well as any other similar statute or common law principle.
D. DI agrees to indemnify the present officers and directors of M6
against any claims brought by current or former DSI shareholders arising from
the execution of this Agreement. Notwithstanding anything else to the contrary
contained herein, nothing in this Paragraph or in this Agreement shall provide
for any indemnity for Xx. Xxxxx Xxxxx.
3. Conveyance of Assets. M6 hereby agrees to cause to be conveyed,
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transferred, assigned and delivered and hereby does convey, transfer, assign and
deliver to DI all assets and all rights, properties, interests, title and claims
in and to the assets of M6 used in connection with or derived from the DepoMed
Business; all assets and all rights, properties, interests, title and claims in
and to the assets previously belonging to DSI that became the property of M6 by
virtue of the Merger Agreement, including, without limitation, all assets and
all rights, properties, interests, title and claims in and to those assets
described in Subparagraphs 3.A through 3.L below. The Assets described in this
Paragraph 3 are sometimes collectively referred to as the "Acquired Assets."
A. All U.S. patents and patent applications listed and identified on
Schedule 3.1 hereto, and any foreign counterpart thereof, and all patents,
patent applications and unpatented inventions of which Shell is named as either
inventory or co-inventor, together with the right to xxx for past infringement
thereof. M6 further agrees to execute, have notarized and deliver to Shell
prior to the Closing Date, the Patent Assignment attached hereto as Schedule
3.2.
B. All trade secrets and proprietary rights and knowledge of any
kind related to or used in connection with the DepoMed Business.
C. All furniture, fixtures, supplies and equipment (including,
without limitation, computer equipment, computer hardware and software,
leasehold improvements, cabinets, telephones, facsimile equipment, laboratory
equipment, laboratory supplies and materials) and all other physical assets
located on the premises at 0000 X Xxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxxxx 00000
(collectively,"Furniture, Fixtures and Equipment").
D. All of the lessee's interest under the lease of the premises at
0000 X Xxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxxxx 00000.
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E. All rights to xxx, choses in action and claims relating to the
DepoMed Business.
F. All rights and incidents of interest of M6 in and to all
technical documentation used in the DepoMed Business, including, without
limitation, know-how, discoveries, formulae, production outlines, product
designs, drawings, technical data, computerized data and information, computer
software and databases, material specifications, purchasing specifications,
invention records, research records, labor records, manufacturing information,
processes and techniques, testing, inspection and quality control processes and
techniques, equipment lists and other intellectual property; and copies of the
invention file records on the patents, patent applications and inventions
referred to in Subparagraph 3.A, and any file records on the trademarks referred
to in Subparagraph 3.X.
X. All business plans, sales and promotional literature, contact and
customer lists, reports and other records relating to compliance with laws and
regulations, state and federal income tax filings, written instructions,
manuals, data, procedures and other records, relating to or used in the DepoMed
Business.
H. Copies of all employment history records, employment contracts
and other employee records (including without limitation, records reflecting
salary deductions and filings made with the State of California Employment
Development Department) for those employees of DSI and/or M6 who have worked in
California and whose duties have pertained to the DepoMed Business. M6 also
agrees to provide information and assistance to former M6 employees (whose
duties have pertained to the DepoMed Business) in terminating and/or
transferring funds from such employees' M6 401(k) plans.
I. The goodwill and value of the DepoMed Business as a going
concern.
J. All common law, statutory law, or contractual rights in the
trademarks and trade names used in the DepoMed Business, including such rights
to DEPOMED, DEPOMED SYSTEMS, INC. and DEPOMED, INC., and all rights to xxx for
past infringements thereof.
K. All other intangible rights and assets (including, without
limitation, all rights to receive mail and other communications directed to M6
and related to the DepoMed Business and all post office boxes and telephone
listing related to the DepoMed Business) relating to the DepoMed Business. M6
shall promptly forward to DI all mail, telephone and fax messages and other
communications received by M6 which are related to the DepoMed Business.
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L. All documentation and agreements necessary to implement the
transfers set forth in this Agreement, including without limitation, documents
for submission to or filing with the Patent and Trademark Office. M6 agrees to
cooperate reasonably after the Closing Date to provide such documentation and
agreements.
4. Assumed Liabilities. Subject to the terms and conditions set forth
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herein, effective as of the Closing Date, DI fully assumes and agrees to pay,
perform and discharge when due only those debts, obligations, responsibilities,
contracts and liabilities which are specifically described in this Paragraph 4
(collectively, the "Assumed Liabilities"). The Assumed Liabilities shall
include only the following liabilities, responsibilities and obligations:
A. All promissory notes (including interest thereon) executed in
favor of, and all other debt owed to, Shell, Xxxxxx X. Xxxxx and Xxxxxx X.
Xxxxx, a Professional Corporation.
B. All promissory notes executed in favor of, and debt owed to,
XxXxxx Consumer Products Co.
C. All of the lessee's unpaid obligations under the lease of the
premises at 0000 X Xxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxxxx 00000.
D. All unpaid lease or purchase obligations for the Furniture,
Fixtures and Equipment.
E. All obligations arising under the Employment Agreement, Exhibit
"C" to the Merger Agreement, by and between M6 and Shell and under the
Employment Agreement of Xxxxxx Xxxxxxx and all other salary and related interest
obligations to Shell.
F. Any trade payable invoices received by Shell or DSI on or after
July 1, 1995 and not forwarded to M6.
G. For the period commencing October 15, 1994, any unpaid salary, or
vacation accrual obligations as of October 15, 1994, for California employees of
the DepoMed Business.
H. For the period commencing July 1, 1995, taxes or assessments due
with respect to salaries or wages paid to employees of the DepoMed Business.
I. Any obligations relating to the operations of the DepoMed
Business, entered into by Shell on or after July 1, 1995 through the Closing
Date, without the knowledge of M6.
J. Any obligations arising from the operations of the DepoMed
Business prior to March 29, 1994.
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K. All obligations arising from the operations of the DepoMed
Business after the Closing Date.
L. Those specific trade payables related to the DepoMed Business set
forth on Schedule 4.1 hereto.
With the exception of those liabilities and obligations specifically assumed by
DI pursuant to this Paragraph 4, DI shall not assume or be obligated for any of
the liabilities or obligations of M6 or its officers, directors or employees, of
any kind whatsoever, direct or indirect, known or unknown, absolute or
contingent, matured or unmatured, whether or not incurred in connection with or
related to the DepoMed Business or otherwise.
5. M6 Stock and Stock Options. DI shall secure, within sixty (60) days
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after the Closing Date, for submission to M6 for cancellation, certificates
representing all shares of M6 stock (duly endorsed for transfer or accompanied
by duly executed stock powers) issued to the shareholders of DSI as the result
of the merger of DSI and M6. DSI shall secure and deliver to M6 within sixty
(60) days after the Closing Date, from the holders of any options to acquire
stock of M6 issued to former option holders of DSI as the result of such merger,
the agreement of such holders that any such options still outstanding shall be
canceled without payment of additional consideration by M6. To the extent that
DI is unable to secure the cancellation of any such M6 stock or stock options,
DI shall, as an alternative, indemnify M6 for the cash value of such stock or
stock options.
6. Dismissal. Concurrently herewith the Parties are executing a
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Stipulation and Order for Dismissal With Prejudice of M6 Pharmaceuticals, in the
form attached hereto as Schedule 6.1. Within five business days following the
Closing Date, attorneys for Shell shall file said Stipulation and Order in the
Action.
7. Closing. The Closing Date shall be on or before August 31, 1995.
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8. No Third Party Rights. Any assumption by DI of any liabilities shall
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not in any way or at any time create any third party beneficiary rights for or
on behalf of any persons or entities other than the Parties to this Agreement
and the persons specifically released hereunder.
9. Interpretation of the Agreement. This Agreement is the product of
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negotiation by and among the Parties and their respective counsel. The
Agreement shall be interpreted and construed naturally as to all Parties,
without any party being deemed the drafter of the Agreement.
10. Entire Agreement. This Agreement contains the entire agreement
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between the Parties pertaining to the subject matter
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contained in it and supersedes any prior and/or contemporaneous oral or written
negotiations, agreements, representations and understandings of the Parties.
Each Party represents that it has not relied on any inducement, statement,
promise or representation other than those contained in the Agreement. This
Agreement may not be changed or amended except in writing, executed by all
Parties.
11. Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with and governed by the laws of the State of California,
without reference to conflicts of law principles. Any dispute arising from or
relating to this Agreement shall be subject to California law and the exclusive
jurisdiction and venue of the state or federal courts of Santa Xxxxx County or
San Francisco County, California.
12. Attorneys' Fees. Each Party to this Agreement shall bear its own
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attorneys' fees and costs in connection with the Action and the negotiation and
drafting of this Agreement. The Parties further agree that if legal or
equitable action is brought by any Party against another Party to enforce any of
the provisions of this Agreement, the prevailing party in such action will be
entitled to recover from the opposing party, his or its costs, including
attorneys' fees, of such legal action.
13. Warranty of Authorized Signatures. By execution of this Agreement,
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each person signing on behalf of an entity warrants that the consent of all
persons or entities whatsoever necessary for the execution of the Agreement has
been obtained.
14. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall have the same force and effect as an original
and shall constitute an effective, binding agreement on the part of each of the
Parties.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first set forth above.
M6 PHARMACEUTICALS, INC.
By: /s/ Xxxxx xx Xxxxx
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Xxxxx xx Xxxxx,
its President and CEO
DEPOMED SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx,
its President and CEO
XXXX X. XXXXX
/s/ Xxxx X. Xxxxx
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DEPOMED, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx,
its President and CEO
CLOSING STATEMENT Schedule 1.1
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DEPOMED, INC. hereby acknowledges receipt of all documentation and assets
necessary to effect the transfers to it contemplated by the Agreement Re
Settlement of Lawsuit, Conveyance of Assets and Assumption of Liabilities, dated
August ___, 1995.
Dated: ________________ DEPOMED, INC.
By: __________________________
Its: _________________________
SCHEDULE 1.1
Schedule 3.1
PATENTS AND PATENT APPLICATIONS
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United States
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Patent 5,007,790
Sustained-Release Oral Drug Dosage Form
Continuation-in-part of application USSN 07/858,320
originally filed March 5, 1992
Alkyl-Substituted Cellulose-Based-Sustained-Release Oral Drug Dosage
Form
Europe
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Serial Number 90906689.6-2214
Sustained-Release Oral Drug Dosage Form
Application Serial Number 93/02420
Corresponds to C-I-P of patent application USSN 07/858,320
Filing Date: 17 March 1993
SCHEDULE 3.1
Schedule 3.2
PATENT ASSIGNMENT
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WHEREAS, M6 Pharmaceuticals, Inc. (Assignor) of 000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000 (address), a corporation of the state of Delaware, is
the owner by assignment of the following patent properties:
No. Dated Titled
--- ----- ------
USSN 08/316,265 Filed Sept. 30, Alkyl-Substituted
1994 Cellulose-Based Sustained-
Release Oral Drug Dosage
Forms
USSN 08/453,144 Filed May 30, Alkyl-Substituted
1995 Cellulose-Based Sustained-
Release Oral Drug Dosage
Forms
WHEREAS, DepoMed, Inc. (Assignee) of 0000 X Xxxxx Xxxxx, Xxxxxx Xxxx, XX
00000 (address), a corporation of the state of California, wishes to purchase
all rights to and under the patent.
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, Assignor hereby assigns all its right, title and interest in said
patent properties to Assignee for the entire term of the patent(s) and any
reissues, reexaminations or extensions thereof.
Date: Aug. 28, 1995 /s/ Xxxxx xx Xxxxx
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Name: Xxxxx X. XxXxxxx
Title: President & CEO
STATE OF NEW YORK )
) ss.
COUNTY OF )
On August 28, 1995, before me, Xxxxxx X. Xxxxxxxxx , personally
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appeared Xxxxx X. xx Xxxxx , personally known to me (or proved to me on the
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basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument, and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxx X. Xxxxxxxxx
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Notary Public
My commission expires: 11/29/95
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SCHEDULE 3.2
Schedule 4.1
DEPOMED SYSTEMS TRADE/OTHER PAYABLES/ACCRUALS
ON BOOKS OF M6 AT JUNE 30, 1995 AND STILL OUTSTANDING *
(EXCLUDING ALL LEASES)
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Invoice Invoice Invoice
Vendor No. Date Amount
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Alron Heating & Air conditioning 53236 1/4/95 158.46
Altair Gases & Equipment 144919 8/19/95 60.00
Anza Building Maintenance 3192 9/23/94 160.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 10/24/94 160.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 11/23/94 750.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 12/24/94 160.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 1/22/95 185.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 2/21/95 190.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 3/22/95 160.00
Xxxx Xxxxxxxx Xxxxxxxxxxx 00000 4/24/95 160.00
Aqualon Company 893889 2/20/95 270.25
Barlocker Insurance (10/15/93-94) 22088 10/31/94 1,283.00
California Chamber of Commerce B181162 9/18/94 234.41
California Security 130041, 5/28/95 60.00
13081
Xxxxxxx Communications A-7012343 10/24/94 35.47
CRC Press 85813-009 9/12/94 274.07
Employment Development Dept. 12/5/94 42.46
Xxxxxxx Fire & Extin. 4/28/95 39.50
Heller, Ehrman, White & XxXxxxxxx 3,082.21
Xxx Xxxxxxxx 10/4/94 750.00
Xxx Xxxxxxxx 1/5/95 750.00
Xxx Xxxxxxxx 4/3/95 1,437.50
X.X. Xxxxxx & Associates 9/30/94 1,000.00
Pacific Xxxx 4/23/95 142.03
pacific Xxxx 5/23/95 141.90
Xxxxxx X. Xxxxxxx, MD 9/16/94 2,000.00
San Mateo Environmental Health 9/1/94 129.00
Standard Insurance 9/21/94 101.70
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SCHEDULE 4.1
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Invoice Invoice Invoice
Vendor No. Date Amount
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Standard Insurance 10/24/94 101.70
Standard Insurance 11/24/94 101.70
Standard Insurance 12/22/94 101.70
Xxxxxxxx & Xxxxxxxx 5/10/95 25,725.87
University of Arizona 9/16/94 12,000.00
VWR Scientific 19415350 9/22/94 14.75
VWR Scientific 19415340 9/22/94 585.00
VWR Scientific 20379220 10/13/94 31.06
VWR Scientific 19415330 10/25/94 1,458.13
Xxxx X. Xxxxx Expenses 5/2/95 437.57
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Total Invoices Rec'd by 6/30/96 53,844.44
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* Still outstanding as far as we know.
SCHEDULE 4.1
Schedule 6.1
Xxxxxx X. Xxxx (California Bar #118054)
Xxxxx X. Xxxxxx (California Bar #176979)
HELLER, EHRMAN, WHITE & XXXXXXXXX
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx XXxx, Xxxxxxxxxx 00000
(000) 000-0000
Attorneys for Plantiffs
DEPOMED SYSTEMS, INC.
and XXXX X. XXXXX
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
DEPOMED SYSTEMS, INC., a ) Case No. C95-2574 VRW
California Corporation; XXXX ) NOTICE OF DISMISSAL OF
W. SHELL, ) M6 PHARMACEUTICALS, INC.,
) PURSUANT TO FED. R. CIV.
) PROC. 41(a)(1)
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Plaintiffs, )
)
v. )
)
M6 PHARMACEUTICALS, INC., )
a Delaware corporations; )
XXXXX XXXXX, )
)
Defendants )
______________________________ )
Pursuant to Federal Rule of Civil Procedure 41(a)(1), plaintiffs DEPOMED
SYSTEMS, INC. and XXXX X. XXXXX hereby dismiss defandant M6 PHARMACEUTICALS,
INC., with prejudice, from this action.
DATED: August __, 1995 HELLER, EHRMAN, WHITE & XXXXXXXXX
By: ______________________________
Xxxxxx X. Xxxx
Attorneys for Plaintiffs DEPOMED
SYSTEMS, INC. and XXXX X. XXXXX
SCHEDULE 4.1
