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Exhibit 4.2
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as
of
January 15, 2004 between Questcor
Pharmaceuticals, Inc., a California
corporation (the "Company"), and the
purchasers who are signatories hereto (the
"Purchasers").
AGREEMENT
1.
Purchase and Sale of Common Stock.
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 (the "Shares") of Common Stock of
the Company, no par value per share
(the "Common Stock"), set forth opposite
such Purchaser's name on the signature
page hereto at a purchase price of $0.644
per Share (the "Purchase Price"). The
obligations of each Purchaser hereunder are
several and not joint and no
Purchaser shall be obligated to purchase
any Shares in excess of the number set
forth opposite such Purchaser's name on the
signature page hereto.
1.2. Payment of Purchase Price. On or prior to the date hereof
(the "Closing Date"), the Purchase Price
shall be payable by the Purchasers by
delivery to the Company of (i) the cash
consideration ("Cash Consideration")
indicated on the signature page hereto plus
(ii) the value of the warrants to be
surrendered to the Company for cancellation
as indicated on the signature page
hereto (the "Warrant Valuation"), together
as payment of the Purchase Price for
the Shares purchased by such Purchaser
hereunder.
2.
Closing Date and Delivery.
2.1.
Closing Date. The closing of the purchase and sale of
the Shares hereunder (the "Closing") will
be held on the Closing Date and shall
occur at the offices of the Company, 3260
Whipple Road, Union City, CA 94587.
2.2.
Deliveries at Closing. At the Closing, the Company
shall deliver to each Purchaser 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. At the Closing,
each Purchaser shall (i) effect a wire
transfer to the Company in the amount of
the Cash Consideration and (ii) surrender
the warrants set forth opposite such
Purchaser's name on the signature page
hereto to the Company for cancellation,
each as provided in Section 1.2.
3.
Representations and Warranties by the Company. The Company
represents and warrants to each Purchaser
as of the Closing Date that, except as
set forth 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 September 30, 2003, 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 ordinary
course of business.
3.3.
Litigation. Except as set forth in 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,
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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 transactions contemplated
hereby, 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 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 Amended and Restated
Bylaws (the "Bylaws") of the Company, or
any law, rule, regulation, judgment,
order or decree; or (c) except for the
registration of the Shares under the
Securities Act of 1933, as amended (the
"Securities Act"), the listing of the
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
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, 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.
3.5.
Reports and Financial Statements. As of their
respective filing dates, the Company's Form
10-K for the year ended December 31,
2002, the Company's Proxy Statement in
connection with the 2003 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, 2003, 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.
Securities. The Shares are 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 is not subject to
any preemptive or other similar rights.
3.7.
Capital Stock. As of December 17, 2003, 45,355,828
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 "Series A
Preferred Stock"), which are convertible
into 2,155,715 shares of Common Stock,
were issued and outstanding, 9,100 shares
of the Company's Series B Preferred
Stock, no par value per share (the "Series
B Preferred Stock"), which are
convertible into 9,668,506 shares of Common
Stock, were issued and outstanding,
2,531,646 shares of Common Stock issuable
upon conversion of convertible
debentures, and options and/or warrants to
purchase 18,058,076 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 17, 2003, 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, Series A Preferred
Stock, Series B Preferred Stock, or
warrants or options to purchase the Common
Stock or the Series A Preferred Stock
or Series B 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 the enforcement of
creditors' rights generally and as to
limitations on the
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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 has
been taken by the Company.
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, 2002, 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 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 mark
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.
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.
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:
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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 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. 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 is able to bear
the risks of an investment in the
Shares. 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
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 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
