Exhibit 1.1
S&S Draft
April 20, 2006
QUATRX PHARMACEUTICALS COMPANY
[6,000,000] Shares
Common Stock
UNDERWRITING AGREEMENT
dated [______], 2006
BANC OF AMERICA SECURITIES LLC
XXXXX & CO., LLC
LAZARD CAPITAL MARKETS LLC
PACIFIC GROWTH EQUITIES, LLC
UNDERWRITING AGREEMENT
[Date]
BANC OF AMERICA SECURITIES LLC
XXXXX & CO., LLC
LAZARD CAPITAL MARKETS LLC
PACIFIC GROWTH EQUITIES, LLC
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Introductory. QuatRx Pharmaceuticals Company, a Delaware corporation (the
"Company), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of [6,000,000] shares (the "Firm
Shares") of its Common Stock, par value $0.01 per share (the "Common Stock"). In
addition, the Company has granted to the Underwriters an option to purchase up
to an additional [900,000] shares (the "Optional Shares") of Common Stock, as
provided in Section 2. The Firm Shares and, if and to the extent such option is
exercised, the Optional Shares are collectively called the "Shares". Banc of
America Securities LLC ("BAS"), Xxxxx & Co., LLC, Lazard Capital Markets LLC and
Pacific Growth Equities, LLC have agreed to act as representatives of the
several Underwriters (in such capacity, each, a "Representative" and
collectively, the "Representatives") in connection with the offering and sale of
the Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-131537), which contains a form of prospectus to be used in connection with
the public offering and sale of the Shares. Such registration statement, as
amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any required information deemed
to be a part thereof at the time of effectiveness pursuant to Rule 430A under
the Securities Act, is called the "Registration Statement". Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement", and from and after the date
and time of filing of the Rule 462(b) Registration Statement the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
Any preliminary prospectus included in the Registration Statement is hereinafter
called a "preliminary prospectus." The term "Prospectus" shall mean
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the final prospectus relating to the Shares that is first filed pursuant to Rule
424(b) after the date and time that this Agreement is executed and delivered by
the parties hereto (the "Execution Time") or, if no filing pursuant to Rule
424(b) is required, shall mean the form of final prospectus relating to the
Shares included in the Registration Statement at the effective date of the
Registration Statement. The term "Disclosure Package" shall mean (i) the
preliminary prospectus, if any, as amended or supplemented, (ii) the issuer free
writing prospectuses as defined in Rule 433 of the Securities Act (each, an
"Issuer Free Writing Prospectus"), if any, identified in Schedule B hereto,
(iii) any other free writing prospectus that the parties hereto shall hereafter
expressly agree in writing to treat as part of the Disclosure Package and (iv) a
schedule indicating the number of Shares being sold and the price at which the
Shares will be sold to the public, which shall also be identified in Schedule B
hereto. All references in this Agreement to the Registration Statement, the Rule
462(b) Registration Statement, a preliminary prospectus, the Prospectus or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
SECTION 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to each Underwriter
as of the date hereof as follows:
(a) Compliance with Registration Requirements. The Registration Statement
has been declared effective by the Commission under the Securities Act. The
Company has complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order suspending
the effectiveness of the Registration Statement is in effect and no proceedings
for such purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and the rules thereunder and, if filed
by electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Shares. Each of the Registration Statement and any post-effective amendment
thereto, at the time it became effective and at all subsequent times during the
Prospectus Delivery Period (as defined below), complied and will comply in all
material respects with the Securities Act and did not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. The Prospectus (including any Prospectus wrapper), as amended or
supplemented, as of its date, at the time of any filing pursuant to Rule 424(b),
at the Closing Date (as defined herein) and at any Subsequent Closing Date (as
defined herein), did not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives
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expressly for use therein, it being understood and agreed that the only such
information furnished by the Representatives consists of the information
described as such in Section 9 hereof. There is no contract or other document
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement that has not been described or filed as required.
(b) Disclosure Package. As of [time] (Eastern time) on the date of this
Agreement (the "Applicable Time"), the Disclosure Package did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by or on behalf of any
Underwriter consists of the information described as such in Section 9 hereof.
(c) Company Not Ineligible Issuer. (i) At the time of filing the
Registration Statement and (ii) as of the date of the execution and delivery of
this Agreement (with such date being used as the determination date for purposes
of this clause (ii)), the Company was not and is not an Ineligible Issuer (as
defined in Rule 405 of the Securities Act).
(d) Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus,
as of its issue date and at all subsequent times through the completion of the
offering of the Shares or until any earlier date that the Company notified or
notifies the Representatives as described in the next sentence, did not, does
not and will not include any information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement. If at any
time following issuance of an Issuer Free Writing Prospectus there occurred or
occurs an event or development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information contained in the
Registration Statement, the Company has promptly notified or will promptly
notify the Representatives and has promptly amended or will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict. The foregoing two sentences do not apply to statements
in or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in Section 9 hereof.
(e) Accuracy of Statements in Prospectus. The statements in each of the
Disclosure Package and the Prospectus under the headings "United States Federal
Income Tax Consequences to Non-United States Holders", "Risks Related to Our
Financial Performance and Operations--Our research and development program is
funded in part by Finnish government agencies...," "Risks Related to our
Dependence on Third Parties--We rely on third party manufacturers...," "Risks
Related to Our Intellectual Property--If we are unable to protect our
intellectual property rights, our competitors may develop and market
products...," "Risk Factors Relating to Our Intellectual Property--We also rely
on our licensors to protect our intellectual property rights...," "Risk Factors
Relating to Our Intellectual Property--We are dependent on patents and
proprietary technology licensed...," "Risk Factors Relating to Our Intellectual
Property--Claims that we infringe a third party's intellectual property...,"
"Risks Related to Our
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Industry--Any drugs we develop may become subject to unfavorable third-party
reimbursement practice...," "Risks Related to our Industry--State pharmaceutical
marketing compliance and reporting requirements...," "Business--Regulatory," and
"Shares Eligible for Future Sale" insofar as such statements summarize legal
matters, agreements, documents or proceedings discussed therein, are accurate
and fair summaries of such legal matters, agreements, documents or proceedings
in all material respects.
(f) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the last Subsequent
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than a preliminary prospectus, the
Prospectus, any Issuer Free Writing Prospectus reviewed and consented to by the
Representatives or included in Schedule B hereto or the Registration Statement.
(g) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(h) Authorization of the Shares. The Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company to the
Underwriters pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(i) No Transfer Taxes. There are no transfer taxes or other similar fees or
charges under federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Shares.
(j) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(k) No Material Adverse Change. Except as otherwise disclosed in the
Disclosure Package and the Prospectus, subsequent to the respective dates as of
which information is given in the Disclosure Package and the Prospectus: (i)
there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, properties, operations or
prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiary, Hormos Medical Oy ("Hormos") (any
such change is called a "Material Adverse Change"); (ii) the Company and Hormos,
considered as one entity, have not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company, Hormos on any class of capital stock or
repurchase or redemption by the Company or Hormos of any class of capital stock.
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(l) Independent Accountants. PricewaterhouseCoopers LLP ("PwC"), who have
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) of the Company filed
with the Commission as a part of the Registration Statement and included in the
Disclosure Package and the Prospectus, are independent public accountants with
respect to the Company as required by the Securities Act and the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act") and a registered public accounting firm;
PricewaterhouseCoopers Oy, who have expressed their opinion with respect to the
financial statements of Hormos filed with the Commission as a part of the
Registration Statement and included in the Disclosure Package and the
Prospectus, are independent public accountants with respect to Hormos as
required by the Securities Act and the Exchange Act and the applicable rules and
regulations thereunder.
(m) Preparation of the Financial Statements. The financial statements filed
with the Commission as a part of the Registration Statement and included in the
Disclosure Package and the Prospectus present fairly in all material respects
the consolidated financial position of the Company and of Hormos as of and at
the dates indicated and the results of their respective operations and cash
flows for the periods specified. Such financial statements comply as to form
with the applicable accounting requirements of the Securities Act and the
Exchange Act and have been prepared in conformity with the applicable generally
accepted accounting principles applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are required to
be included in the Registration Statement. The financial data set forth in each
of the preliminary prospectus and the Prospectus under the captions "Prospectus
Summary--Summary Consolidated Financial Data", "Selected Consolidated Financial
Data" and "Capitalization" fairly present the information set forth therein on a
basis consistent with that of the audited financial statements contained in the
Registration Statement. The pro forma financial statements of the Company and
the related notes thereto included in each of the preliminary prospectus and the
Prospectus and in the Registration Statement present fairly the information
contained therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have been
properly presented on the basis described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein.
(n) Incorporation and Good Standing of the Company and Hormos. Each of the
Company and Hormos has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization and has the power and authority to own or lease, as the case may
be, and operate its properties and to conduct its business as described in the
Disclosure Package and in the Prospectus and, in the case of the Company, to
enter into and perform its obligations under this Agreement. The Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a material adverse
effect, on the condition, financial or otherwise, or on the earnings, business
properties, operations or prospects, whether or not arising from transactions in
the ordinary course of business, of the Company and Hormos, considered as one
entity (a "Material Adverse Effect"). Hormos has no operations and
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owns no real property outside of Finland. All of the issued and outstanding
shares of capital stock of Hormos have been duly authorized and validly issued,
are fully paid and nonassessable and are owned by the Company, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or claim. The Company
does not own or control, directly or indirectly, any corporation, association or
other entity other than Hormos.
(o) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in each of the
Disclosure Package and the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit plans
described in the Disclosure Package and the Prospectus or upon exercise of
outstanding options or warrants described in the Disclosure Package and the
Prospectus, as the case may be). The Common Stock (including the Shares)
conforms in all material respects to the description thereof contained in each
of the Disclosure Package and the Prospectus. All of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or
Hormos other than those accurately described in all material respects in the
Disclosure Package and the Prospectus. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in each of the Disclosure Package and
the Prospectus accurately and fairly presents, in all material respects, the
information required to be shown with respect to such plans, arrangements,
options and rights.
(p) Quotation. The Shares have been approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
(q) Non-Contravention of Existing Instruments; No Further Authorizations or
Approvals Required. Neither the Company nor Hormos is (i) in violation or in
default (or, with the giving of notice or lapse of time, would be in default)
("Default") under its charter or by-laws, (ii) in Default under any indenture,
mortgage, loan or credit agreement, deed of trust, note, contract, franchise,
lease or other agreement, obligation, condition, covenant or instrument to which
the Company or Hormos is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or Hormos is subject
(each, an "Existing Instrument"), or (iii) in violation of any statute, law,
rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or Hormos or any of its properties, as applicable,
except with respect to clauses (ii) and (iii) only, for such Defaults as would
not, individually or in the aggregate have a Material Adverse Effect. The
Company's execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby, by the Disclosure Package and by the
Prospectus (i) have been duly authorized by all necessary corporate action and
will not result in any Default under the charter or by-laws of the Company or
Hormos, (ii) will not conflict with or constitute a breach of, or Default or a
Debt Repayment Triggering Event (as defined below) under, or result in the
creation or imposition of any lien,
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charge or encumbrance upon any property or assets of the Company or Hormos
pursuant to, or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, Debt Repayment
Triggering Events (as defined below), liens, charges or encumbrances as would
not, individually or in the aggregate, have a Material Adverse Effect and (iii)
will not result in any violation of any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or Hormos of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or Hormos or any of their
properties. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company's execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby, by the Disclosure Package and by the Prospectus, except such as have
been obtained or made by the Company and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and from the
National Association of Securities Dealers, Inc. (the "NASD") and such consents,
approvals, authorizations, orders, registrations or qualifications that, if not
obtained or made, would not individually or in the aggregate, have a Material
Adverse Effect. As used herein, a "Debt Repayment Triggering Event" means any
event or condition which gives, or with the giving of notice or lapse of time
would give, the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or Hormos.
(r) No Material Actions or Proceedings. There are no legal or governmental
actions, suits or proceedings pending or, to the best of the Company's
knowledge, threatened (i) against or affecting the Company or Hormos, (ii) which
has as the subject thereof any officer or director of, or property owned or
leased by, the Company or Hormos or (iii) relating to environmental or
discrimination matters, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined adversely
to the Company or Hormos and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to have a Material Adverse
Effect or adversely affect the consummation of the transactions contemplated by
this Agreement.
(s) Labor Matters. No material labor problem or dispute with the employees
of the Company or Hormos exists or, to the Company's knowledge, is threatened or
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or Hormos' principal suppliers,
contractors or customers, that could have a Material Adverse Effect.
(t) Intellectual Property Rights. Except as otherwise disclosed in the
Disclosure Package and the Prospectus, the Company or Hormos owns, possesses,
licenses or has other rights to use all patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the "Intellectual Property") reasonably necessary for
the conduct of the Company's business as now conducted or as proposed in each of
the Disclosure Package and the Prospectus to be conducted. Except as set forth
in the Disclosure Package and the Prospectus, (a) no party has been granted an
exclusive license to use any portion of such Intellectual Property owned by the
Company; (b) all Intellectual Property
8
owned but not licensed by the Company has been duly maintained, where
applicable, and is otherwise in full force and effect; (c) to the Company's
knowledge, there is no material infringement by third parties of any such
Intellectual Property owned by or exclusively licensed to the Company and there
have been no other licenses of the Intellectual Property licensed to the Company
pursuant to the License Agreements (as defined below); (d) there is no pending
or, to the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the Company's rights in or to any material Intellectual
Property owned by or licensed to the Company, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (e) to the
Company's knowledge, there is no pending or threatened action, suit, proceeding
or claim by others challenging the validity or scope of any such Intellectual
Property owned by or exclusively licensed to the Company, and the Company is
unaware of any facts which would form a reasonable basis for any such claim; and
(f) except as disclosed in the Disclosure Package and the Prospectus, there is
no pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others that the Company's business as now conducted infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other fact which
would form a reasonable basis for any such claim.
(u) All Necessary Permits, etc. Except as otherwise disclosed in the
Disclosure Package and the Prospectus, the Company and Hormos possess such valid
and current licenses, certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, and neither the Company nor Hormos has
received any notice of proceedings relating to the revocation or modification
of, or non-compliance with, any such license, certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could have a Material Adverse Effect.
(v) Title to Properties. The Company and Hormos have good and marketable
title to all the properties and assets reflected as owned in the financial
statements referred to in Section 1(m) above (or elsewhere in the Disclosure
Package and Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except as
disclosed in the Disclosure Package and the Prospectus and such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or Hormos. The real property, improvements, equipment and personal
property held under lease by the Company or Hormos are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company or Hormos.
(w) Tax Law Compliance. The Company and Hormos have filed all necessary
federal, state, local and foreign income and franchise tax returns and have paid
all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them. The
Company has made appropriate provisions in the applicable financial statements
referred to in Section 1(m) above in respect of all federal, state, local and
foreign income and franchise taxes for all current or prior periods as to which
the tax liability of the Company or Hormos has not been finally determined.
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(x) Company Not an "Investment Company." The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and after receipt of payment
for the Shares and application of the proceeds thereof as contemplated under the
caption "Use of Proceeds" in each of the preliminary prospectus and the
Prospectus will not be, an "investment company" within the meaning of the
Investment Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(y) Insurance. Each of the Company and Hormos are insured by recognized,
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses. All policies of insurance and fidelity or
surety bonds insuring the Company or Hormos or their respective businesses,
assets, employees, officers and directors are in full force and effect; the
Company and Hormos are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the Company or
Hormos under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause. The Company
has no reason to believe that it or Hormos will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate
to conduct its business as now conducted and at a cost that would have a
Material Adverse Effect.
(z) No Restrictions on Dividends. Hormos is not currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on its capital stock, from repaying to the Company any
loans or advances to it from the Company or from transferring any of its
property or assets to the Company, except as required by applicable Finnish law
and as described in or contemplated by the Disclosure Package and the
Prospectus.
(aa) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock or any other security of the Company to facilitate
the sale or resale of the Shares. The Company acknowledges that the Underwriters
may engage in passive market making transactions in the Shares on the Nasdaq
National Market in accordance with Regulation M under the Exchange Act.
(bb) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or Hormos or any other person
required to be described in the preliminary prospectus or the Prospectus that
have not been described as required.
(cc) Internal Controls and Procedures. The Company maintains a system of
internal controls over financial reporting sufficient to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that
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receipts and expenditures are being made only in accordance with authorizations
of management and directors of the Company and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company's assets that could have a material effect on
the financial statements. The Company is not aware of (i) any significant
deficiency in the design or operation of the Company's internal controls over
financial reporting (whether or not remediated) which could adversely affect the
Company's ability to record, process, summarize and report financial data, (ii)
any material weakness in such internal controls or (iii) any fraud, whether or
not material, that involves management or other employees who have a significant
role in the Company's internal controls.
(dd) No Unlawful Contributions or Other Payments. Neither the Company nor
Hormos nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company or Hormos is aware of or has taken any
action, directly or indirectly, that would result in a violation by such Persons
of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder (the "FCPA"), including, without limitation, making use
of the mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any "foreign official" (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate
for foreign political office, in contravention of the FCPA, and the Company and
Hormos have conducted their businesses in compliance with the applicable
provisions of the FCPA.
(ee) No Conflict with Money Laundering Laws. The operations of the Company
and Hormos are and have been conducted at all times in all material respects in
compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes of all applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines issued, administered or enforced by any governmental agency
(collectively, the "Money Laundering Laws") and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or Hormos with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.
(ff) Xxxxxxxx-Xxxxx Compliance. There is and has been no material failure
on the part of the Company, or to the knowledge of the Company, any of the
Company's directors or officers, in their capacities as such, to comply with any
applicable provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated in connection therewith (the "Xxxxxxxx-Xxxxx Act").
(gg) Compliance with Environmental Laws. Except as otherwise disclosed in
the Disclosure Package and the Prospectus (i) neither the Company nor Hormos is
in violation of any federal, state, local or foreign law, regulation, order,
permit or other requirement relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances,
11
petroleum and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Company or Hormos under applicable Environmental Laws, or noncompliance with the
terms and conditions thereof, nor has the Company or Hormos received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company or Hormos is in violation of any
Environmental Law, except as would not, individually or in the aggregate, have a
Material Adverse Effect; (ii) there is no claim, action or cause of action filed
with a court or governmental authority, no investigation with respect to which
the Company has received written notice, and no written notice by any person or
entity alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the Company
or Hormos, now or in the past (collectively, "Environmental Claims"), pending
or, to the best of the Company's knowledge, threatened against the Company or
Hormos or any person or entity whose liability for any Environmental Claim the
Company or Hormos have retained or assumed either contractually or by operation
of law, except as would not, individually or in the aggregate, have a Material
Adverse Effect; (iii) to the best of the Company's knowledge, there are no past,
present or anticipated future actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Material of Environmental Concern, that
reasonably could result in a violation of any Environmental Law, require
expenditures to be incurred pursuant to Environmental Law, or form the basis of
a potential Environmental Claim against the Company or Hormos or against any
person or entity whose liability for any Environmental Claim the Company or
Hormos has retained or assumed either contractually or by operation of law,
except as would not, individually or in the aggregate, have a Material Adverse
Effect, and (iv) neither the Company nor Hormos is subject to any pending or
threatened proceeding under Environmental Law to which a governmental authority
is a party and which is reasonably likely to result in monetary sanctions of
$100,000 or more.
(hh) ERISA Compliance. None of the following events has occurred or exists:
(i) a failure to fulfill the obligations, if any, under the minimum funding
standards of Section 302 of the United States Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the regulations and published
interpretations thereunder with respect to a Plan, determined without regard to
any waiver of such obligations or extension of any amortization period; (ii) an
audit or investigation by the Internal Revenue Service, the U.S. Department of
Labor, the Pension Benefit Guaranty Corporation or any other federal or state
governmental agency or any foreign regulatory agency with respect to any Plan
that could have a Material Adverse Effect; (iii) any breach of any contractual
obligation, or any violation of law or applicable qualification standards, with
respect to the employment or compensation of employees by any member of the
Company that could have a Material Adverse Effect. None of the following events
has occurred or, to the knowledge of the Company, is reasonably likely to occur:
(i) a material increase in the aggregate amount of contributions required to be
made to all Plans in the current fiscal year of the Company compared to the
amount of such contributions made in the Company's most recently completed
fiscal year; (ii) a material increase in the Company's "accumulated
post-
12
retirement benefit obligations" (within the meaning of Statement of Financial
Accounting Standards 106) compared to the amount of such obligations in the
Company's most recently completed fiscal year; (iii) any event or condition
giving rise to a liability under Title IV of ERISA that could have a Material
Adverse Effect; or (iv) the filing of a claim by one or more employees or former
employees of the Company related to their employment that could have a Material
Adverse Effect. For purposes of this paragraph, the term "Plan" means a plan
(within the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA with
respect to which any member of the Company may have any liability.
(ii) Brokers. There is no broker, finder or other party that is entitled to
receive from the Company any brokerage or finder's fee or other fee or
commission as a result of any transactions contemplated by this Agreement.
(jj) No Outstanding Loans or Other Indebtedness. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees or indebtedness by the Company to, or for the
benefit of, any of the officers or directors of the Company, except as disclosed
in the Disclosure Package and the Prospectus.
(kk) License Agreements. Except as otherwise described in the Disclosure
Package and the Prospectus or as would not individually or in the aggregate have
a Material Adverse Effect, each of the license and other agreements described
under the caption "Business--Licenses and Collaborative Relationships" in the
Prospectus (collectively, the "License Agreements") is in full force and effect
and constitutes a valid and binding agreement between the parties thereto,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency and reorganization, and, to the knowledge of the Company,
there has not occurred any default under any such License Agreements or any
event that with the giving of notice or lapse of time would constitute a default
thereunder.
(ll) Statistical and Market Related Data. Nothing has come to the attention
of the Company that has caused the Company to believe that the statistical and
market-related data included in each of the Disclosure Package and the
Prospectus is not based on or derived from sources that are reliable and
accurate.
(mm) Immunity from Jurisdiction. Neither the Company nor Hormos nor any of
its or their properties or assets has any immunity from the jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution or otherwise) under the laws
of Finland.
(nn) Patent Applications. The Company has duly and properly filed or caused
to be filed with the U.S. Patent and Trademark Office (the "PTO") and applicable
foreign and international patent authorities all patent applications owned by
the Company (the "Company Patent Applications"). To the knowledge of the
Company, the Company has complied with the PTO's duty of candor and disclosure
for the Company Patent Applications and has made no material misrepresentation
in the Company Patent Applications. To the Company's knowledge, except as
disclosed in the Disclosure Package and the Prospectus, the Company Patent
Applications disclose patentable subject matters, and the Company has not been
notified of any inventorship challenges nor has any interference been declared
or provoked nor is any material
13
fact known by the Company that would preclude the issuance of patents with
respect to the Company Patent Applications or would render such patents invalid
or unenforceable. To the Company's knowledge, except as disclosed in the
Disclosure Package and the Prospectus, no third party possesses rights to the
Company's Intellectual Property Rights that, if exercised, could enable such
party to develop products competitive to those the Company intends to develop as
described in each of the Disclosure Package and the Prospectus.
(oo) FDA Compliance. Except as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company is in compliance in all material
respects with all applicable rules and regulations of the Food and Drug
Administration (the "FDA"), and all applicable U.S. and foreign laws, statutes,
ordinances, rules or regulations (including, without limitation, the Federal
Food, Drug and Cosmetic Act, as amended, the Biologic Products provisions of the
Public Health Act, as amended, and the Comprehensive Drug Abuse Prevention and
Control Act of 1970, as amended). The Company has not received any notices or
other correspondence from the FDA or any other U.S. or foreign governmental
agency requiring the termination or material suspension of any clinical or
pre-clinical study or test sponsored by the Company or Hormos.
(pp) Proposed FDA or PTO Rules. To the Company's knowledge, there are no
rulemaking or similar proceedings before the FDA or PTO which affect or involve
the Company or any of the processes or drug candidates that the Company has
developed, is developing or proposes to develop or uses or proposes to use
which, if the subject of an action unfavorable to the Company, would have a
Material Adverse Effect.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
The Company acknowledges that the Underwriters and, for purposes of the
opinions to be delivered pursuant to Section 6 hereof, counsel to the Company
and counsel to the Underwriters, will rely upon the accuracy and truthfulness of
the foregoing representations and hereby consents to such reliance.
SECTION 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. The Company agrees to issue and sell to the several
Underwriters the Firm Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company the respective number of
Firm Shares set forth opposite their names on Schedule A. The purchase price per
Firm Share to be paid by the several Underwriters to the Company shall be $[___]
per share.
(b) The Closing Date. Delivery of the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Shearman &
Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or such other place as
may be agreed to by the Company and the Representatives) at 9:00 a.m. New York
time, on April [____], 2006, or such other
14
time and date not later than 1:30 p.m. New York time on such date as the
Representatives shall designate by notice to the Company (the time and date of
such closing are called the "Closing Date").
(c) The Optional Shares; the Subsequent Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to an aggregate of [____] Optional Shares from the Company at
the purchase price per share to be paid by the Underwriters for the Firm Shares.
The option granted hereunder may be exercised at any time and from time to time
upon notice by the Representatives to the Company, which notice may be given at
any time within 30 days from the date of this Agreement. Such notice shall set
forth (i) the aggregate number of Optional Shares as to which the Underwriters
are exercising the option, (ii) the names and denominations in which the
Optional Shares are to be registered and (iii) the time, date and place at which
such shares will be delivered (which time and date may be simultaneous with, but
not earlier than, the Closing Date; and in such case the term "Closing Date"
shall refer to the time and date of delivery of the Firm Shares and the Optional
Shares). Each time and date of delivery, if subsequent to the Closing Date, is
called a "Subsequent Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Shares
are to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Optional Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Optional Shares to be purchased as the number
of Firm Shares set forth on Schedule A opposite the name of such Underwriter
bears to the total number of Firm Shares.
(d) Public Offering of the Shares. The Representatives hereby advise the
Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Shares as soon
after this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, have
determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares to be sold by the
Company shall be made at the Closing Date (and, if applicable, at any Subsequent
Closing Date) by wire transfer of immediately available funds to the order of
the Company.
It is understood that the Representatives have been authorized, for their
own accounts and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Shares and
any Optional Shares the Underwriters have agreed to purchase. BAS, individually
and not as the Representatives of the Underwriters, may (but shall not be
obligated to) make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by the Representatives by the Closing
Date or any Subsequent Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
(f) Delivery of the Shares. Delivery of the Firm Shares and the Optional
Shares shall be made through the facilities of The Depository Trust Company
unless the Representatives shall
15
otherwise instruct. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 10:00 a.m.
on the second business day following the date the Shares are first released by
the Underwriters for sale to the public, the Company shall deliver or cause to
be delivered, copies of the Prospectus in such quantities and at such places as
the Representatives shall request.
SECTION 3. Covenants of the Company.
The Company covenants and agrees with each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and Supplements. During
the period beginning on the Applicable Time and ending on the later of the
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter or dealer, including in circumstances where such
requirement may be satisfied pursuant to Rule 172 (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement, the
Disclosure Package or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) when the
Registration Statement, if not effective at the Execution Time, shall have
become effective, (ii) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (iii) of the time
and date of any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to any preliminary prospectus or the
Prospectus, (iv) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order or notice preventing or suspending the use of the
Registration Statement, any preliminary prospectus or the Prospectus, or of any
proceedings to remove, suspend or terminate from listing or quotation the Common
Stock from any securities exchange upon which it is listed for trading or
included or designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. The Company shall use its best efforts to
prevent the issuance of any such stop order or prevention or suspension of such
use. If the Commission shall enter any such stop order or order or notice of
prevention or suspension at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment, or will file a
new registration statement and use its best efforts to have such new
registration statement declared effective as soon as practicable. Additionally,
the Company agrees that it shall comply with the provisions of Rules 424(b) and
430A, as applicable, under the Securities Act, including with respect to the
timely filing of documents thereunder, and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b) were
received in a timely manner by the Commission.
(c) Periodic Reporting Obligations. During the Prospectus Delivery Period,
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all
16
reports and documents required to be filed under the Exchange Act. Additionally,
the Company shall report the use of proceeds from the issuance of the Shares as
may be required under Rule 463 under the Securities Act.
(d) Amendments and Supplements to the Registration Statement, Prospectus
and Other Securities Act Matters. If, during the Prospectus Delivery Period, any
event or development shall occur or condition exist as a result of which the
Disclosure Package or the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein in the light of the
circumstances under which they were made or then prevailing, as the case may be,
not misleading, or if it shall be necessary to amend or supplement the
Disclosure Package or the Prospectus, or to file under the Exchange Act any
document incorporated by reference in the Disclosure Package or the Prospectus,
in order to make the statements therein, in the light of the circumstances under
which they were made or then prevailing, as the case may be, not misleading (i)
the Company shall notify the Representatives of any such event or condition and
(ii) if in the reasonable opinion of the Representatives it is otherwise
necessary to amend or supplement the Registration Statement, the Disclosure
Package or the Prospectus, or to file a new registration statement containing
the Prospectus, in order to comply with law, including in connection with the
delivery of the Prospectus, the Company agrees to promptly prepare (subject to
Section 3(a) and 3(e) hereof), file with the Commission (and use its best
efforts to have any amendment to the Registration Statement or any new
registration statement to be declared effective) and furnish at its own expense
to the Underwriters and to dealers, amendments or supplements to the
Registration Statement, the Disclosure Package or the Prospectus, or any new
registration statement, necessary in order to make the statements in the
Registration Statement, Disclosure Package or the Prospectus as so amended or
supplemented, in the light of the circumstances under which they were made or
then prevailing, as the case may be, not misleading or so that the Registration
Statement, the Disclosure Package or the Prospectus, as amended or supplemented,
will comply with law.
(e) Permitted Free Writing Prospectuses. The Company represents that it has
not made, and agrees that, unless it obtains the prior written consent of the
Representatives, it will not make any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus or that would otherwise constitute
a "free writing prospectus" (as defined in Rule 405 of the Securities Act)
required to be filed by the Company with the Commission or retained by the
Company under Rule 433 of the Securities Act; provided that the prior written
consent of the Representatives hereto shall be deemed to have been given in
respect of the Free Writing Prospectuses included in Schedule B hereto. Any such
free writing prospectus consented to by the Representatives is hereinafter
referred to as a "Permitted Free Writing Prospectus". The Company agrees that
(i) it has treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied
and will comply, as the case may be, with the requirements of Rules 164 and 433
of the Securities Act applicable to any Permitted Free Writing Prospectus,
including in respect of timely filing with the Commission, legending and record
keeping.
(f) Copies of the Registration Statement and the Prospectus. The Company
will furnish to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement (including exhibits thereto)
and, during the Prospectus Delivery
17
Period, as many copies of each preliminary prospectus and the Prospectus and any
amendment and supplement thereto and the Disclosure Package as the
Representatives may reasonably request.
(g) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Shares for sale under (or obtain exemptions from the application of) the state
securities or blue sky laws or Canadian provincial securities laws or other
foreign laws of those jurisdictions designated by the Representatives, shall
comply with such laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the Shares. The
Company shall not be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the Representatives
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
(h) Use of Proceeds. The Company shall apply the net proceeds from the sale
of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in each of the Disclosure Package and the Prospectus.
(i) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(j) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
beginning with the first fiscal quarter of the Company occurring after the date
of this Agreement that satisfies the provisions of Section 11(a) of the
Securities Act and Rule 158 under the Securities Act.
(k) Company to Provide Interim Financial Statements. Prior to the Closing
Date, the Company will furnish the Underwriters, as soon as they have been
prepared by or are available to the Company, a copy of any unaudited interim
financial statements, if any, of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the
Registration Statement and the Prospectus.
(l) Quotation. The Company will use its reasonable best efforts to include,
subject to notice of issuance, the Shares on the Nasdaq National Market.
(m) Agreement Not to Offer or Sell Additional Securities. During the period
commencing on the date hereof and ending on the 180th day following the date of
the Prospectus, the Company will not, without the prior written consent of BAS
(which consent may be withheld at the sole discretion of BAS), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge, transfer
or establish an open "put equivalent position" or liquidate or decrease a "call
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange
18
Act, or otherwise dispose of or transfer (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition of),
or announce the offering of, or file any registration statement under the
Securities Act in respect of, any shares of Common Stock, options or warrants to
acquire shares of the Common Stock or securities exchangeable or exercisable for
or convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Shares); provided, however, that the Company may
file a registration statement on Form S-8 covering the equity incentive plans
described in the Prospectus and may issue shares of its Common Stock or options
to purchase its Common Stock, or Common Stock upon exercise of options, pursuant
to any stock option, stock bonus or other stock plan or arrangement described in
the Prospectus, but only if the holders of such shares, options, or shares
issued upon exercise of such options, agree in writing not to sell, offer,
dispose of or otherwise transfer any such shares or options during such 180-day
period without the prior written consent of BAS (which consent may be withheld
at the sole discretion of the BAS). Notwithstanding the foregoing, if (x) during
the last 17 days of the 180-day restricted period the Company issues an earnings
release or material news or a material event relating to the Company occurs, or
(y) prior to the expiration of the 180-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 180-day period, the restrictions imposed in
this clause shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The Company will provide the Representatives
and any co-managers and each individual subject to the restricted period
pursuant to the lockup letters described in Section 6(i) with prior notice of
any such announcement that gives rise to an extension of the restricted period.
(n) Compliance with Xxxxxxxx-Xxxxx Act. During the Prospectus Delivery
Period, the Company will comply in all material respects with all applicable
securities and other laws, rules and regulations, including, without limitation,
the Xxxxxxxx-Xxxxx Act, and use its best efforts to cause the Company's
directors and officers, in their capacities as such, to comply in all material
respects with such laws, rules and regulations, including, without limitation,
the provisions of the Xxxxxxxx-Xxxxx Act.
(o) Future Reports to the Representatives. During the period of five years
hereafter, to the extent such information is not available on the Commission's
website or the Company's website, the Company will furnish to the
Representatives at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
(p) Investment Limitation. The Company shall not invest, or otherwise use
the proceeds received by the Company from its sale of the Shares in such a
manner as would require
19
the Company or Hormos to register as an investment company under the Investment
Company Act.
(q) No Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any securities of
the Company to facilitate the sale or resale of the Shares.
(r) Existing Lock Up Agreement. The Company will enforce all existing
agreements between the Company and any of its security holders that prohibit the
sale, transfer, assignment, pledge or hypothecation of any of the Company's
securities in connection with the Company's initial public offering. In
addition, the Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company that are bound by such
existing "lock-up" agreements for the duration of the periods contemplated in
such agreements.
BAS, on behalf of the several Underwriters, may, in its sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance. Notwithstanding
the foregoing, BAS, for the benefit of each of the other Representatives, agrees
not to consent to any action proposed to be taken by the Company or any other
holder of the Company's securities that would otherwise be prohibited by, or to
waive compliance by the Company or any such other security holder with the
provisions of Section 3(m) above or any lock-up agreement delivered pursuant to
Section 6(i) below without giving each of the other Representatives at least 17
days prior notice (or such shorter notice as each other Representatives may deem
acceptable to permit compliance with the applicable provisions of NASD Conduct
Rule 2711(f) restricting publication and distribution of research and public
appearances by research analysts before and after the expiration, wavier or
termination of a lock-up agreement.
SECTION 4. Covenant of the Underwriters. Each Underwriter severally
certifies to and covenants with the Company that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of any "free
writing prospectus", as defined in Rule 405 under the Securities Act (which term
includes use of any written information furnished to the Commission by the
Company and not incorporated by reference into the Registration Statement and
any press release issued by the Company), other than (i) a free writing
prospectus that contains no "issuer information" (as defined in Rule 433(h)(2)
under the Securities Act) that was not included (including through incorporation
by reference) in the preliminary prospectus, (ii) any Issuer Free Writing
Prospectus identified on Schedule B, or (iii) any free writing prospectus
prepared by such Underwriter and approved by the Company in advance in writing.
SECTION 5. Payment of Expenses. The Company agrees to pay all costs, fees
and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Shares to the Underwriters, (iv) all fees and expenses of the Company's
counsel, independent public or certified public accountants and other advisors,
(v) all costs and expenses incurred in
20
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement (including financial statements, exhibits, schedules,
consents and certificates of experts), each Issuer Free Writing Prospectus, each
preliminary prospectus, the Prospectus and any Prospectus wrapper, and all
amendments and supplements thereto, and this Agreement, (vi) all filing fees,
attorneys' fees and expenses incurred by the Company or the Underwriters in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Shares for offer and
sale under the state securities or blue sky laws or the provincial securities
laws of Canada, and, if requested by the Representatives, preparing and printing
a "Blue Sky Survey" or memorandum, and any supplements thereto, advising the
Underwriters of such qualifications, registrations and exemptions, (vii) the
filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, the NASD's review and approval of the
Underwriters' participation in the offering and distribution of the Shares,
(viii) the fees and expenses associated with quotation of the Shares on the
Nasdaq National Market, (ix) all transportation and other expenses incurred by
the Company in connection with presentations to prospective purchasers of the
Shares, except that the Company and the Underwriters will each pay 50% of the
cost of privately chartered airplanes used for such purposes with the Company's
consent and (x) all other fees, costs and expenses referred to in Item 13 of
Part II of the Registration Statement. Except as provided in this Section 5,
Section 7, Section 9 and Section 10 hereof, the Underwriters shall pay their own
expenses, including the fees and disbursements of their counsel.
SECTION 6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein on the Closing Date and, with respect to the Optional Shares,
any Subsequent Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the Closing Date as though then made and,
with respect to the Optional Shares, as of any Subsequent Closing Date as though
then made, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants' Comfort Letters. On the date hereof, the Representatives
shall have received from each of (i) PwC, independent public accountants for the
Company, and (ii) PricewaterhouseCoopers Oy, independent public accountants for
Hormos, a letter dated the date hereof addressed to the Underwriters, in form
and substance satisfactory to the Representatives, containing statements and
information of the type ordinarily included in accountant's "comfort letters" to
underwriters, delivered according to Statement of Auditing Standards No. 72 (or
any successor bulletin), with respect to the audited, unaudited and pro forma
financial statements and certain financial information contained in the
Registration Statement, the Disclosure Package and the Prospectus.
(b) Compliance with Registration Requirements; No Stop Order; No Objection
from NASD. For the period from and after effectiveness of this Agreement and
prior to the Closing Date and, with respect to the Optional Shares, any
Subsequent Closing Date:
(i) the Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act)
in the manner
21
and within the time period required by Rule 424(b) under the Securities
Act; or the Company shall have filed a post-effective amendment to the
Registration Statement containing the information required by such Rule
430A, and such post-effective amendment shall have become effective;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment to the Registration Statement,
shall be in effect and no proceedings for such purpose shall have been
instituted or, to the Company's knowledge, threatened by the Commission;
and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the date of
this Agreement and prior to the Closing Date and, with respect to the Optional
Shares, any Subsequent Closing Date:
(i) in the judgment of the Representatives there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have been any change or decrease in the capital
stock, long-term debt, consolidated net current assets or stockholder's
deficit of the Company, or a change or increase in the total or per-share
amounts of loss before extraordinary items or net loss of the Company,
specified in the letter or letters referred to in paragraph (a) of this
Section 6 which is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Shares as contemplated by the
Registration Statement and the Prospectus.
(d) Opinion of Counsel for the Company. On each of the Closing Date and any
Subsequent Closing Date, the Representatives shall have received the favorable
opinion of Xxxxxx Xxxxxx LLP, counsel for the Company, dated as of such Closing
Date, the form of which is attached hereto as Exhibit A.
(e) Opinions of Special Patent and Special Foreign Counsel for the Company.
On each of the Closing Date and any Subsequent Closing Date the Representatives
shall have received (i) the favorable opinion of Xxxxxxxxxxx, Cella, Xxxxxx &
Xxxxxx, special patent counsel for the Company, dated as of such Closing Date,
the form of which is attached hereto as Exhibit B-1, (ii) the favorable opinion
of XxXxxxxxx Xxxxxxx Xxxxxxx and Xxxxxxxx, LLP, special patent counsel for the
Company, dated as of such Closing Date, the form of which is attached hereto as
Exhibit B-2 and (iii) the favorable opinion of Xx. Xxxx Xxxxx, counsel to
Xxxxxx, as to certain matters relating to Finnish law, dated as of such Closing
Date, the form of which is attached hereto as Exhibit C.
(f) Opinion of Counsel for the Underwriters. On each of the Closing Date
and any Subsequent Closing Date the Representatives shall have received the
favorable opinion of Xxxxxxxx & Sterling LLP, counsel for the Underwriters,
dated as of such Closing Date, in form and substance satisfactory to and
addressed to, the Representatives, with respect to the issuance and sale of the
Shares, the Registration Statement, the Prospectus (together with any supplement
22
thereto), the Disclosure Package and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(g) Officers' Certificate. On each of the Closing Date and any Subsequent
Closing Date the Representatives shall have received a written certificate
executed by the Chairman of the Board, Chief Executive Officer or President of
the Company and the Chief Financial Officer or Chief Accounting Officer of the
Company, dated as of such Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Prospectus
and any amendment or supplement thereto, any Issuer Free Writing Prospectus and
any amendment or supplement thereto and this Agreement, to the effect set forth
in subsection (b) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and prior
to such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set
forth in Section 1 of this Agreement are true and correct on and as of the
Closing Date with the same force and effect as though expressly made on and
as of such Closing Date; and
(iii) the Company has complied with all the agreements hereunder and
satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date.
(h) Bring-down Comfort Letter. On each of the Closing Date and any
Subsequent Closing Date the Representatives shall have received from each of (i)
PwC, independent public accountants for the Company, and (ii)
PricewaterhouseCoopers Oy, independent public accountants for Hormos, a letter
dated such date, in form and substance satisfactory to the Representatives, to
the effect that they reaffirm the statements made in the letter furnished by
them pursuant to subsection (a) of this Section 6, except that the specified
date referred to therein for the carrying out of procedures shall be no more
than three business days prior to the Closing Date or Subsequent Closing Date,
as the case may be.
(i) Lock-Up Agreement from Certain Securityholders of the Company. On or
prior to the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit D hereto from each director
and officer of the Company and each beneficial owner of Common Stock other than
those listed on Schedule C (as defined and determined according to Rule 13d-3
under the Exchange Act, except that a one hundred eighty day period shall be
used rather than the sixty day period set forth therein), and such agreement
shall be in full force and effect on each of the Closing Date and any Subsequent
Closing Date.
(j) Listing of Shares. The Shares shall have been authorized for quotation
on the Nasdaq Stock Market, Inc., and satisfactory evidence of such actions
shall have been provided to the Representatives.
(k) Additional Documents. On or before each of the Closing Date and any
Subsequent Closing Date, the Representatives and counsel for the Underwriters
shall have received such information, certificates, agreements, opinions and
other documents as they may
23
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the Shares as contemplated herein, or in order to evidence the
accuracy of any of the representations and warranties, or the satisfaction of
any of the conditions or agreements, herein contained.
If any condition specified in this Section 6 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Optional Shares, at any time prior to any
applicable Subsequent Closing Date, which termination shall be without liability
on the part of any party to any other party, except that Section 5, Section 7,
Section 9 and Section 10 shall at all times be effective and shall survive such
termination.
SECTION 7. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 6, Section 8 or Section
12, or if the sale to the Underwriters of the Shares on the Closing Date is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any material agreement herein or to comply with any material
provision hereof, the Company agrees to reimburse the Representatives and the
other Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand, for all out-of-pocket expenses
that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale
of the Shares, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 8. Effectiveness of this Agreement. This Agreement shall not become
effective until the later of (i) the execution of this Agreement by the parties
hereto and (ii) notification by the Commission to the Company and the
Representatives of the effectiveness of the Registration Statement under the
Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any party
by notice to each of the other parties hereto, and any such termination shall be
without liability on the part of (a) the Company to any Underwriter, except that
the Company shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 5 and 7 hereof, (b) any Underwriter to
the Company or (c) any party hereto to any other party except that the
provisions of Section 9 and Section 10 hereof shall at all times be effective
and shall survive such termination.
SECTION 9. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter, its directors, officers, employees and
agents, and each person, if any, who controls any Underwriter within the meaning
of the Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such controlling
person may become subject, insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A,
Rule 430B or Rule 430C under the Securities Act, or the omission or
24
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any Issuer
Free Writing Prospectus, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading and to
reimburse each Underwriter, its officers, directors, employees, agents and each
such controlling person for any and all expenses (including the fees and
disbursements of one counsel chosen by BAS) as such expenses are reasonably
incurred by such Underwriter, its officers, directors, employees and agents or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any Issuer Free
Writing Prospectus, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto). The indemnity agreement set forth in this
Section 9(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any Issuer
Free Writing Prospectus, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, and only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Issuer Free Writing Prospectus, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Company
hereby acknowledges that the only information that the Underwriters have
furnished to the Company expressly for use in the Registration Statement, any
Issuer Free Writing Prospectus, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) are the statements set forth in the table
in the first paragraph and in the third and fourteenth paragraphs under the
caption "Underwriting" in the Prospectus. The indemnity agreement set forth in
this Section 9(b) shall be in addition to any liabilities that each Underwriter
may otherwise have.
25
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 9 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 9, notify
the indemnifying party in writing of the commencement thereof, but the failure
to so notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any liability other than the indemnification
obligation provided in paragraph (a) or (b) above. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume sole control over the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel (other than local counsel),
reasonably approved by the indemnifying party (or by BAS in the case of Section
10), representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 9 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
9(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such
26
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld or
delayed, effect any settlement, compromise or consent to the entry of judgment
in any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent (i) includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
SECTION 10. Contribution. If the indemnification provided for in Section 9
is for any reason unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Shares pursuant to this Agreement or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, on the one hand, and the Underwriters, on the other hand, in connection
with the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, in connection with the offering of the Shares pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Shares pursuant to this Agreement (before
deducting expenses) received by the Company, and the total underwriting discount
received by the Underwriters, in each case as set forth on the front cover page
of the Prospectus bear to the aggregate initial public offering price of the
Shares as set forth on such cover. The relative fault of the Company, on the one
hand, and the Underwriters, on the other hand, shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 9(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 9(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 10; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 9(c) for purposes of indemnification.
27
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 10.
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Shares underwritten by it
and distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 10 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule A. For
purposes of this Section 10, each director, officer, employee and agent of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
SECTION 11. Default of One or More of the Several Underwriters. If, on the
Closing Date or any Subsequent Closing Date, as the case may be, any one or more
of the several Underwriters shall fail or refuse to purchase Shares that it or
they have agreed to purchase hereunder on such date, and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase does not exceed 10% of the aggregate number of the Shares to
be purchased on such date, the other Underwriters shall be obligated, severally,
in the proportions that the number of Firm Shares set forth opposite their
respective names on Schedule A bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as may be specified by the Representatives with the consent of
the non-defaulting Underwriters, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, on the Closing Date or any Subsequent Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
and the aggregate number of Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 5, Section 7, Section 9 and Section 10
shall at all times be effective and shall survive such termination. In any such
case either the Representatives or the Company shall have the right to postpone
the Closing Date or any Subsequent Closing Date, as the case may be, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
11. Any action taken under this
28
Section 11 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
SECTION 12. Termination of this Agreement. Prior to the Closing Date this
Agreement may be terminated by the Representatives by notice given to the
Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq National Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by federal or New York authorities
or a material disruption in commercial banking or securities settlement or
clearance services in the United States has occurred; or (iii) there shall have
occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any substantial change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in political, financial or economic
conditions in the United States or internationally, as in the judgment of the
Representatives is material and adverse and makes it impracticable or
inadvisable to market the Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities. Any termination
pursuant to this Section 12 shall be without liability on the part of (a) the
Company to any Underwriter, except that the Company shall be obligated to
reimburse the expenses of the Representatives and the Underwriters pursuant to
Sections 5 and 7 hereof, (b) any Underwriter to the Company or (c) any party
hereto to any other party except that the provisions of Section 9 and Section 10
hereof shall at all times be effective and shall survive such termination.
SECTION 13. No Advisory or Fiduciary Responsibility. The Company
acknowledges and agrees that: (i) the purchase and sale of the Shares pursuant
to this Agreement, including the determination of the public offering price of
the Shares and any related discounts and commissions, is an arm's-length
commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (ii) in connection with each
transaction contemplated hereby and the process leading to such transaction each
Underwriter is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) no Underwriter
has assumed or will assume an advisory, agency or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated hereby
or the process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and no
Underwriter has any obligation to the Company with respect to the offering
contemplated hereby except the obligations expressly set forth in this
Agreement; (iv) the several Underwriters and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Company and that the several Underwriters have no obligation to
disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Underwriters have not provided any legal, accounting,
regulatory or tax advice with respect to the offering contemplated hereby and
the Company has consulted its own legal, accounting, regulatory and tax advisors
to the extent it deemed appropriate.
29
This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Company and the several Underwriters, or any of
them, with respect to the subject matter hereof. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the several Underwriters with respect to any breach or alleged
breach of agency or fiduciary duty.
SECTION 14. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement (A) will remain operative and in
full force and effect, regardless of any (i) investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the officers or
employees of any Underwriter, or the Company, the officers or employees of the
Company, or any person controlling the Company, as the case may be, or (ii)
acceptance of the Shares and payment for them hereunder and (B) will survive
delivery of and payment for the Shares sold hereunder and any termination of
this Agreement.
SECTION 15. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Syndicate Department
with a copy to:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: [(000) 000-0000]
Attention: Legal Department
and
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
30
If to the Company:
QuatRx Pharmaceuticals Company
000 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
with a copy to:
Xxxxxx Xxxxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx XxXxxxx, Esq.
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 16. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 11 hereof, and to the benefit of (i) the Company, its directors, any
person who controls the Company within the meaning of the Securities Act and the
Exchange Act and any officer of the Company who signs the Registration Statement
, (ii) the Underwriters, the officers, directors, employees and agents of the
Underwriters, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act and the Exchange Act and (iii) the respective
successors and assigns, and personal representatives, of any of the above, all
as and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the Shares from
any of the several Underwriters merely because of such purchase.
SECTION 17. Partial Unenforceability. The invalidity or unenforceability of
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
SECTION 18. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(a) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of New York, Borough of
Manhattan, or the courts of the State of New York in each case located in the
City and County of New York, Borough of Manhattan (collectively, the "Specified
31
Courts"), and each party irrevocably submits to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of
any such court (a "Related Judgment"), as to which such jurisdiction is
non-exclusive) of such courts in any such suit, action or proceeding. Service of
any process, summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum. Each party not located in the United States irrevocably
appoints CT Corporation System as its agent to receive service of process or
other legal summons for purposes of any such suit, action or proceeding that may
be instituted in any state or federal court in the City and County of New York.
(b) Waiver of Immunity. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
SECTION 19. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Section headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business
person who was adequately represented by counsel during negotiations regarding
the provisions hereof, including, without limitation, the indemnification
provisions of Section 9 and the contribution provisions of Section 10, and is
fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 9 and 10 fairly allocate the risks
in light of the ability of the parties to investigate the Company, its affairs
and its business in order to assure that adequate disclosure has been made in
the Registration Statement, any preliminary prospectus and the Prospectus (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
32
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.
Very truly yours,
QUATRX PHARMACEUTICALS COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives as of the date first above written.
BANC OF AMERICA SECURITIES LLC
XXXXX & CO., LLC
LAZARD CAPITAL MARKETS LLC
PACIFIC GROWTH EQUITIES, LLC
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By Banc of America Securities LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
33
SCHEDULE A
NUMBER OF FIRM
SHARES TO BE
UNDERWRITERS PURCHASED
------------ --------------
Banc of America Securities LLC .. [___]
Xxxxx & Co., LLC ................ [___]
Lazard Capital Markets LLC ...... [___]
Pacific Growth Equities, LLC .... [___]
Total ........................ [6,000,000]
SCHEDULE B
Schedule of Free Writing Prospectuses included in the Disclosure Package
(including schedule indicating number and price of Shares being sold to the
public)
SCHEDULE C
[List of Holders Not Subject to Lock-Up Agreements]
EXHIBIT A
[Opinion of Xxxxxx Xxxxxx LLP, counsel for the Company]
EXHIBIT B-1
[Opinion of Xxxxxxxxxxx, Xxxxx, Xxxxxx & Xxxxxx, Special Patent Counsel for the
Company]
EXHIBIT B-2
[Opinion of [XxXxxxxxx Xxxxxxx Xxxxxxx and Xxxxxxxx, LLP], Special Patent
Counsel for the Company]
________, 2006
EXHIBIT C
[Opinion of Xx. Xxxx Xxxxx, counsel to Hormos to be delivered pursuant to
Section 6(e)(iv) of the Underwriting Agreement.]
EXHIBIT D
[Form of Lockup Agreement]
