EXHIBIT 4.1
DEPOMED, INC.
COMMON STOCK
PURCHASE AGREEMENT
FEBRUARY 23, 1998
ATTACHMENTS:
Exhibit A - Schedule of Purchasers
Exhibit B - Schedule of Exceptions
Exhibit C - Form of Legal Opinion
Appendix I - Stock Certificate Questionnaire
Appendix II - Purchaser's Certificate of Subsequent Sale
COMMON STOCK
PURCHASE AGREEMENT
This Agreement ("Agreement") is made as of February 23, 1998 (the
"Effective Date"), by and among DepoMed, Inc., a California corporation (the
"Company"), and each of those persons and entities, severally and not jointly,
listed as a Purchaser on the Schedule of Purchasers attached as Exhibit A
hereto. Such persons and entities are hereinafter collectively referred to
herein as "Purchasers" and each individually as a "Purchaser."
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and each Purchaser (severally and not jointly) hereby
agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF SHARES.
Subject to the terms and conditions of this Agreement, the Company has, or
before the Closing (as defined below) will have, authorized the sale and
issuance of up to 1,000,000 shares of its Common Stock (the "Common Stock").
The shares of Common Stock sold hereunder shall be referred to herein as the
"Shares."
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the Company
will sell to each Purchaser, and each Purchaser will purchase from the Company,
at a purchase price of no less than $8.00 per Share, the number of Shares set
forth next to such Purchaser's name on the Schedule of Purchasers attached
hereto as Exhibit A (the "Schedule of Purchasers").
2.2 SEPARATE AGREEMENT. Each Purchaser shall severally, and not jointly,
be liable for only the purchase of the Shares that appear on Exhibit A hereto
and that relate to such Purchaser. The Company's agreement with each of the
Purchasers is a separate agreement, and the sale of Shares to each of the
Purchasers is a separate sale. The obligations of each Purchaser hereunder are
expressly not conditioned on the purchase by any or all of the other Purchasers
of the Shares such other Purchasers have agreed to purchase.
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall be held on February 23, 1998, at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or on such other date and place as may be agreed to by the
Company and the Purchasers.
At or prior to the Closing, each Purchaser shall execute any related
agreements or other documents required to be executed hereunder, dated as of the
date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE SHARES AT THE CLOSING. At the Closing, the Company
shall deliver to each Purchaser stock certificates registered in the name of
such Purchaser, or in such nominee name(s) as designated by such Purchaser,
representing the number of shares of Common Stock to be purchased by such
Purchaser at the Closing as set forth in the Schedule of Purchasers against
payment of the purchase price for such shares. The name(s) in which the stock
certificates are to be issued to each Purchaser are set forth in the Stock
Certificate Questionnaire in the form attached hereto as Appendix I, as
completed by each Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants as of the date hereof to,
and covenants with, the Purchasers as follows:
4.1 ORGANIZATION AND STANDING. The Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
California, has full corporate power and authority to own or lease its
properties and conduct its business as presently conducted, and is duly
qualified as a foreign corporation and in good standing in all jurisdictions in
which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results or operations of the
Company). The Company has no subsidiaries or equity interest in any other
entity.
4.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite
corporate power, and has taken all requisite corporate action, to execute and
deliver this Agreement, sell and issue the Shares and carry out and perform all
of its obligations under this Agreement. This Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
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affecting the enforcement of creditors' rights generally, (ii) as limited by
equitable principles generally, including any specific performance, and (iii) as
to those provisions of Section 8.3 relating to indemnity or contribution. The
execution and delivery of this Agreement does not, and the performance of this
Agreement and the compliance with the provisions hereof and the issuance, sale
and delivery of the Shares by the Company will not conflict with, or result in a
breach or violation of the terms, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of any lien pursuant to
the terms of, the Articles of Incorporation or Bylaws of the Company or any
statute, law, rule applicable to the Company or regulation or any state or
federal order, judgment or decree applicable to the Company or any material
indenture, mortgage, lease or other material agreement or instrument to which
the Company or any of its properties is subject, where such conflict, breach or
violation would have a material adverse effect on the Company.
4.3 ISSUANCE AND DELIVERY OF THE SHARES. The Shares, when issued and paid
for in compliance with the provisions of this Agreement, will be validly issued,
fully paid and nonassessable. The issuance and delivery of the Shares is not
subject to preemptive, co-sale, right of first refusal or any other similar
rights of the shareholders of the Company or any liens or encumbrances.
4.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed in a
timely manner all documents that the Company was required to file with the
Securities and Exchange Commission (the "Commission" or the "SEC") under
Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since becoming subject to the requirements of the Exchange
Act. As of their respective filing dates (or, if amended prior to the date of
this Agreement, when amended), all documents filed by the Company with the SEC
(the "SEC Documents") complied in all material respects with the requirements of
the Exchange Act. None of the SEC Documents as of their respective dates
contained any untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of the Company at
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments).
4.5 INTELLECTUAL PROPERTY. To its knowledge, the Company owns or
possesses adequate rights to use all material patents, patent rights,
inventions, trade secrets and know-how described or referred to in the SEC
Documents as owned or used by it or that are necessary for the conduct of its
business as presently conducted and as described in
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the SEC Documents. Except as set forth in the SEC Documents, the Company has not
received any notice of, nor has any knowledge of, any infringement of or
conflict with asserted rights of others with respect to any material patent,
patent right, invention, trade secret or know-how that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the business, properties, financial condition
or results or operations of the Company.
4.6 CAPITALIZATION. All of the Company's outstanding shares of capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of or subject to any
preemptive right or other rights to subscribe for or purchase securities. The
authorized and outstanding capital stock of the Company as of the date hereof is
as set forth in Section 4.6 of Exhibit B. Except as set forth in Exhibit B,
there are no outstanding options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell
shares of the company's capital stock or any such options, rights, convertible
securities or obligations.
4.7 LITIGATION. There is no pending or, to the Company's knowledge,
threatened, action, suit or other proceeding to which the Company is a party or
to which its property or assets are subject.
4.8 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement except for (a) compliance with the securities and blue sky laws
in the states and other jurisdictions in which shares of Common Stock are
offered and/or sold, which compliance will be effected in accordance with such
laws, and (b) the filing of a registration statement and all amendments thereto
with the SEC as contemplated by Section 8.1 of this Agreement.
4.9 NO MATERIAL ADVERSE CHANGE. Since September 30, 1997, there have not
been any changes in the assets, liabilities, financial condition or operations
of the Company from that reflected in the Financial Statements except changes
which have not been, either individually or in the aggregate, materially
adverse.
4.10 LISTING; MAINTENANCE OF LISTING. The Company's Common Stock is
traded on the Nasdaq SmallCap Market. For so long as the Company is obligated to
keep in effect the Registration Statement provided for in Section 8 hereof, the
Company will use its reasonable efforts to maintain its listing on the Nasdaq
SmallCap Market; provided, however, that nothing herein shall preclude the
Company from having its securities alternatively quoted on the Nasdaq National
Market or listed on a national stock exchange.
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SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
5.1 Each Purchaser, severally and not jointly, represents and warrants to
and covenants with the Company that:
(a) Purchaser, taking into account the personnel and resources it can
practically bring to bear on the purchase of the Shares contemplated hereby, is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company, and has requested, received, reviewed and
considered all information Purchaser deems relevant (including the SEC
Documents) in making an informed decision to purchase the Shares.
(b) Purchaser is acquiring the Shares pursuant to this Agreement in the
ordinary course of its business and for its own account for investment only and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares, except in compliance with Section 5.1(c).
(c) 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 securities purchased hereunder
except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), applicable blue sky laws, and the rules and regulations
promulgated thereunder.
(d) Purchaser has, in connection with its decision to purchase the Shares,
relied with respect to the Company and its affairs solely upon the SEC Documents
and the representations and warranties of the Company contained herein.
(e) Purchaser is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act or a Qualified
Institutional Buyer within the meaning of Rule 144A promulgated under the
Securities Act.
(f) Purchaser has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement. Upon the execution and delivery of this Agreement by
Purchaser, this Agreement shall constitute a valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights generally, (ii) as
limited by equitable principles generally, including any specific performance,
and (iii) as to those provisions of Section 8.3 relating to indemnity or
contribution.
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(g) Purchaser represents and warrants to the Company that Purchaser was
not approached by the Company regarding the offer of the Shares prior to January
20, 1998.
5.2 Purchaser represents and warrants to and covenants with the Company
that Purchaser has not engaged and will not engage in any short sales of the
Company's Common Stock prior to the effectiveness of the Registration Statement,
except to the extent that any such short sale is fully covered by shares of
Common Stock of the Company other than the Shares.
5.3 Purchaser understands that nothing in this Agreement or any other
materials presented to Purchaser in connection with the purchase and sale of the
Shares 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.
5.4 LEGENDS. It is understood that the Shares may bear one or more
legends in substantially the following form and substance:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION OF
CERTAIN CONDITIONS, WHICH ARE SET FORTH IN THAT CERTAIN "COMMON
STOCK PURCHASE AGREEMENT" DATED FEBRUARY 23, 1998, WHICH ALSO
CONTAINS VARIOUS OTHER PROVISIONS AFFECTING THESE SECURITIES,
BINDING UPON TRANSFEREES HEREOF. INFORMATION CONCERNING THESE
RESTRICTIONS AND PROVISIONS MAY BE OBTAINED FROM THE CORPORATION
OR ITS LEGAL COUNSEL."
In addition stock certificates representing the Shares may contain:
(a) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations.
(b) Any legend required by the blue sky laws of any other state to
the extent such laws are applicable to the sale of the Shares hereunder.
5.5 RESTRICTED SECURITIES. Such Purchaser understands that the Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Shares may be resold without registration under the Securities Act only in
certain limited circumstances. In this
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connection, such Purchaser represents that it is familiar with Commission Rule
144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
SECTION 6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING.
The Company's obligation to complete the sale and issuance of the Shares
and deliver shares of Common Stock to each Purchaser, individually, as set forth
in the Schedule of Purchasers shall be subject to the following conditions to
the extent not waived by the Company:
6.1 RECEIPT OF PAYMENT. The Company shall have received payment, by check
or wire transfer of immediately available funds, in the full amount of the
purchase price for the number of Shares being purchased by such Purchaser at the
Closing as set forth in the Schedule of Purchasers.
6.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by such Purchaser in Section 5 hereof shall be true and correct in all
material respects when made, and shall be true and correct in all materials
respects on the Closing Date.
SECTION 7. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING.
Each Purchaser's obligation to accept delivery of the Shares and to pay for
the Shares shall be subject to the following conditions to the extent not waived
by such Purchaser:
7.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects on the Closing Date in all material respects.
7.2 COMPLIANCE CERTIFICATE. Each Purchaser shall have received a
certificate signed by an officer of the Company certifying to the fulfillment of
the conditions set forth in Section 7.
7.3 OPINION OF COUNSEL. The Purchasers shall have received an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, counsel to the Company, substantially in the
form attached hereto as Exhibit C.
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SECTION 8. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
8.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) Not later than November 6, 1998, the Company shall prepare and
endeavor to file with the Commission a registration statement on Form S-3 (if
the Company is eligible to use such form) in order to register with the
Commission the resale by the Purchasers, from time to time, of the Shares
through Nasdaq or the facilities of any national securities exchange on which
the Company's Common Stock is then traded, or in privately-negotiated
transactions (a "Registration Statement"). The Company shall use its reasonable
efforts to cause such Registration Statement to be declared effective as soon
thereafter as reasonably practicable.
(b) If such a Registration Statement has been filed, the Company
shall prepare and file with the Commission (i) such amendments and supplements
to the Registration Statement and the prospectus used in connection therewith,
(ii) such SEC Reports and (iii) such other filings required by the Commission,
in each case as may be necessary to keep the Registration Statement effective
and not misleading until the earliest of (A) the second anniversary date of the
Closing Date, or (B) such time as all of the Shares held by the Purchasers can
be sold within a given three-month period pursuant to Rule 144 under the
Securities Act. Notwithstanding the foregoing, following the effectiveness of
the Registration Statement, the Company may, at any time, suspend the
effectiveness of the Registration Statement for up to 60 days, as appropriate (a
"Suspension Period"), by giving notice to the Purchasers, if the Company shall
have determined that the Company may be required to disclose any material
corporate development. Notwithstanding the foregoing, the Company may not
suspend the effectiveness of the Registration Statement more than twice during
any twelve (12) month period. Each Purchaser agrees that, upon receipt of any
notice from the Company of a Suspension Period, such Purchaser will not sell any
Shares pursuant to the Registration Statement until (i) such Purchaser is
advised in writing by the Company that the use of the applicable prospectus may
be resumed, (ii) such Purchaser has received copies of any additional or
supplemental or amended prospectus, if applicable, and (iii) such Purchaser has
received copies of any additional or supplemental filings which are incorporated
or deemed to be incorporated by reference in such prospectus.
(c) In order to facilitate the public sale or other disposition of
all or any of the Shares by each Purchaser, the Company shall furnish to each
Purchaser with respect to the Shares registered under the Registration Statement
such number of copies of prospectuses, prospectus supplements and preliminary
prospectuses as such Purchaser reasonably requests in conformity with the
requirements of the Securities Act.
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(d) The Company shall file any documents required of the Company for
normal blue sky clearance in states specified in writing by each Purchaser;
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(e) Other than fees and expenses, if any, of counsel or other
advisers to the Purchasers, which fees and expenses shall be borne by the
Purchasers, the Company shall bear all expenses (exclusive of any brokerage
fees, underwriting discounts and commissions) in connection with the procedures
in paragraphs (a) through (d) of this Section 8.1.
(f) With a view to making available to the Purchasers the benefits of
Rule 144 promulgated under the Securities Act ("Rule 144") and any other rule or
regulation of the SEC that may at any time permit a Purchaser to sell Shares to
the public without registration or pursuant to registration, the Company
covenants and agrees to: (i) make and keep public information available, as
those terms are understood and defined in Rule 144, until the earlier of (A) the
second anniversary of the Closing Date or (B) such date as all of the Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Exchange Act; and (iii)
furnish to any Purchaser upon request, as long as the Purchaser owns any Shares,
(A) a written statement by the Company that it has complied with the reporting
requirements of 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 Shares without registration
under the Securities Act.
8.2 TRANSFER OF SHARES AFTER REGISTRATION. Each Purchaser agrees that
such Purchaser will not effect any disposition of the Shares that would
constitute a sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case such
Purchaser shall submit the certificates evidencing the Shares to the Company's
transfer agent, accompanied by a separate "Purchaser's Certificate" (A) in the
form of Appendix II attached hereto, (B) executed by such Purchaser or by an
officer of, or other authorized person designated by, such Purchaser, and (C) to
the effect that (1) the Shares have been sold in accordance with the
Registration Statement and (2) the requirement of delivering a current
prospectus has been satisfied; or
(b) in a transaction exempt from registration under the Securities
Act, in which case such Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
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8.3 INDEMNIFICATION. As used in this Section 8.3 the following terms
shall have the following respective meanings:
(a) "Selling Shareholder" shall mean a Purchaser of Shares under this
Agreement and any transferee of such a Purchaser who is entitled to resell
Shares pursuant to the Registration Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 8.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Shareholder
from and against any losses, claims, damages or liabilities to which such
Selling Shareholder 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, any Untrue
Statement on or after the effective date of the Registration Statement, or on or
after the date of any prospectus or prospectus supplement or the date of any
sale by Purchaser thereunder, or arise out of any failure by the Company to
fulfill any undertaking included in the Registration Statement and the Company
will reimburse such Selling Shareholder for any reasonable legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; provided, however, that the Company shall
not be liable to such Selling Shareholder in any such case to the extent that
such loss, claim, damage or liability arises out of, or is based upon, an Untrue
Statement made in such Registration Statement in reliance upon and in conformity
with information furnished to the Company by or on behalf of such Selling
Shareholder specifically for use in preparation of the Registration Statement,
or the failure of such Selling Shareholder to comply with the covenants and
agreements contained in Section 8.1 or 8.2 hereof respecting sale of the Shares
or any statement or omission in any Prospectus that is corrected in any
subsequent prospectus that was delivered to the Selling Shareholder prior to the
pertinent sale or sales by the Selling Shareholder.
Each Purchaser, severally and not jointly, agrees to indemnify and hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) 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
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out of, or are based upon, any failure to comply with the covenants and
agreements contained in Section 8.1 or 8.2 hereof respecting sale of the Shares,
or any Untrue Statement contained in the Registration Statement on or after the
effective date thereof, or in any prospectus supplement as of its issue date or
date of any sale by Purchaser thereunder, if such Untrue Statement was made in
reliance upon and in conformity with information furnished by or on behalf of
such Purchaser specifically for use in preparation of the Registration
Statement, and such Purchaser will reimburse the Company (or such officer,
director or controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim.
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 8.3, 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 and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
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 counsel
to 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, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
8.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 4, Section 5 or this Section 8 upon the transferability of
the Shares shall cease and terminate as to any particular number of the Shares
when such Shares shall have been sold or otherwise disposed of in accordance
with the intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
8.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchasers, the Company
will furnish to the Purchasers:
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(a) as soon as practicable after available (but in the case of the
Company's Annual Report to Shareholders, within 150 days after the end of each
fiscal year of the Company), one copy of (i) its Annual Report to Shareholders
(which Annual Report shall contain financial statements audited in accordance
with generally accepted auditing standards certified by a national firm of
certified public accountants); (ii) its Annual Report on Form 10-KSB; (iii) its
quarterly reports on Form 10-QSB (the foregoing, in each case, excluding
exhibits); (iv) its Proxy Statement; and (v) its current reports on Form 8-K, if
any;
(b) upon the request of any Purchaser, all exhibits excluded by the
parenthetical to subparagraph (a)(iii) of this Section 8.5, in the form
generally available to the public; and
(c) upon the reasonable request of any Purchaser, an adequate number
of copies of the prospectuses and supplements to supply to any other party
requiring such prospectuses.
8.6 CHANGES IN PURCHASER INFORMATION. Each Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding Purchaser or such Purchaser's plan of
distribution set forth in such Registration Statement.
SECTION 9. BROKER'S FEE.
The Company and each Purchaser (severally and not jointly) hereby represent
that, except for amounts to be paid to the Placement Agent by the Company as
described in Section 11.8 hereof, there are no brokers or finders entitled to
compensation in connection with the sale of the Shares, and shall indemnify each
other for any such fees for which they are responsible.
SECTION 10. NOTICES.
All notices, requests, consents and other communications hereunder shall be
in writing, shall be sent by confirmed facsimile or mailed by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, and shall be deemed given when so sent in the case of
facsimile transmission, or when so received in the case of mail or courier, and
addressed as follows:
(a) if to the Company, to:
DepoMed, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-12-
with a copy so mailed to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person at such other place as the Company shall designate
to the Purchasers in writing; and
(b) if to the Purchasers, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
SECTION 11. MISCELLANEOUS.
11.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
11.2 HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
11.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
11.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
11.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
-13-
11.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
11.8 PAYMENT OF FEES AND EXPENSES. Each of the Company and the Purchasers
shall bear its own expenses and legal fees incurred on its behalf with respect
to this Agreement and the transactions contemplated hereby (the "Offering");
provided, that the Company shall reimburse the placement agent retained in
connection with the Offering (the "Placement Agent") for certain fees and
expenses incurred by the Placement Agent in connection with the Offering.
Purchasers acknowledge that the Placement Agent will receive a commission. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
-14-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
DEPOMED, INC.
By:___________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
PURCHASER
Purchaser Name:_______________________
By:___________________________________
Name:_________________________________
Title:________________________________
Address:___________________________________
___________________________________
___________________________________
Facsimile:_________________________________
-15-
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(TO BE READ IN CONJUNCTION WITH THE ENTIRE
PURCHASE AGREEMENT WHICH FOLLOWS)
A. Complete the following items on the Purchase Agreement, copies of which are
attached hereto for your convenience:
1. Signature Page.
2. Appendix I - Stock Certificate Questionnaire. Provide the information
requested by the Stock Certificate Questionnaire.
3. Return the properly completed and signed Purchase Agreement including
the properly completed and signed Appendix I to:
▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PLEASE RETURN THE COMPLETED AND SIGNED PURCHASE AGREEMENT AND QUESTIONNAIRE
BY FACSIMILE AT (▇▇▇) ▇▇▇-▇▇▇▇ BY FEBRUARY 27, 1998 WITH ALL OF THE
ORIGINAL DOCUMENTS FOLLOWING BY OVERNIGHT COURIER OR MAIL.
B. Please arrange to wire the purchase price on February 27, 1998 as follows:
Name of Account: ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ Trust Account
Bank: ▇▇▇▇▇ Fargo Bank
Address: The ▇▇▇▇▇▇▇ Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: DepoMed, Inc.
Account No._______________________________________________
ABA No.___________________________________________________
Contact:__________________________________________________
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective as described in the Purchase
Agreement, each Purchaser:
(I) must deliver a current prospectus to the buyer; and
A-1
(II) must send a letter in the form of Appendix II to the Company so that
the Shares may be properly transferred.
2
APPENDIX I
DEPOMED, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to _______________________________
be registered in (this is the name
that will appear on your stock
certificate(s)). You may use a nominee
name if appropriate:
2. The relationship between the Purchaser _______________________________
of the Shares and the Registered Holder
listed in response to item 1 above:
3. The mailing address and facsimile number _______________________________
of the Registered Holder listed in response
to item 1 above: _______________________________
_______________________________
Facsimile: ____________________
4. The Social Security Number or Tax _______________________________
Identification Number of the Registered
Holder listed in the response to
item 1 above:
Signature:___________________________
Print Name:__________________________
Title:_______________________________
3
APPENDIX II
PURCHASER'S CERTIFICATE OF RESALE OF THE SHARES
The undersigned, an officer of, or other person duly authorized by
______________________________________ [fill in official name of individual or
institution] hereby certifies that he/she [said institution] is the Purchaser of
the Shares evidenced by the attached stock certificate(s) and as such, sold such
Shares on ________________ [date] in accordance with registration statement
number _________________________________ [fill in the number of or otherwise
identify registration statement] and the requirement of delivering a current
prospectus and current annual, quarterly and reports (Forms 10-KSB, 10-QSB, and
8-K) by the Company has been complied with in connection with such sale.
Print or Type:
Name of Purchaser (Individual or Institution):______________________________
Name of Individual representing Purchaser
(if an Institution): ______________________________
Title of Individual representing Purchaser
(if an Institution): ______________________________
Signature by:
Individual Purchaser or Individual
representing Purchaser: ______________________________
4
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
5
EXHIBIT A
SCHEDULE OF PURCHASERS
NAME AND ADDRESS NUMBER OF AGGREGATE PURCHASE
---------------- --------- ------------------
SHARES PRICE
------ -----
Quantum Partners, LLC 175,000 $1,400,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Caxton International Limited 113,750 910,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
White Rock Capital Partners, L.P. 85,000 680,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Legion Strategies, Ltd. 60,000 480,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
White Rock Capital Offshore, Ltd. 35,000 280,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Capital Diversified Fund, L.P. 20,000 160,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
White Rock Capital Management 11,250 90,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Clearwater Fund IV, LLC 250,000 2,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
6
Aries Trust 167,500 1,340,000
▇▇▇ ▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Aries Domestic Fund, L.P. 82,500 660,000
▇▇▇ ▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Total 1,000,000 $8,000,000
========= ==========
7
EXHIBIT B
SCHEDULE OF EXCEPTIONS
Pursuant to Section 4 of the Common Stock Purchase Agreement, DepoMed, Inc.
(the "Company") is making the following exceptions to the representations and
warranties of the Company contained in Section 4:
SECTION 4.6.
CAPITAL STOCK
Common Stock: 25,000,000 authorized, 5,463,438 issued and outstanding;
Preferred Stock: 5,000,000 authorized, none issued and outstanding
WARRANTS AND OPTIONS TO PURCHASE COMMON STOCK
Publicly traded warrants to purchase Common Stock: 1,200,000 issued and
outstanding
Representative warrants to purchase Common Stock: 235,834 issued and
outstanding
Bridge loan warrants to purchase Common Stock: 83,337 issued and
outstanding
Options to purchase Common Stock: 648,499 issued and outstanding under the
Company's 1995 Stock Option Plan
8
EXHIBIT C
1. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of California. The Company has the
requisite corporate power to own or lease its property and assets and to
conduct its business as currently conducted as described in the SEC
Documents.
2. The Purchase Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered
on behalf of the Company and constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium and other laws of general applicability relating to
or affecting creditors' rights, (ii) as limited by equitable principles
generally, whether such enforceability is considered in a proceeding in
equity or at law, and (iii) as to those provisions of Section 8.3 of the
Purchase Agreement relating to indemnity or contribution.
3. The Shares when issued and paid for in compliance with the Purchase
Agreement, will be duly authorized, validly issued, fully paid, and
nonassessable.
4. The execution and delivery of the Purchase Agreement and the consummation
of the sale of the Shares by the Company as contemplated therein do not
violate any provisions of the Company's Articles of Incorporation or
Bylaws, and do not violate or contravene (a) any law applicable to the
Company or (b) any order, writ, judgment, injunction, decree, determination
or award applicable to the Company and known to us.
5. To our knowledge there is no action proceeding or investigation pending or
threatened in writing against the Company.
6. The offer and sale of the Shares by the Company to the Purchasers should be
exempt from the registration requirements of the Securities Act.
7. No governmental consents, approvals, authorizations, orders, filings,
registrations or qualifications are required for the issuance of the Shares
by the Company under the Purchase Agreement except those that have been
made or obtained.
9