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EXHIBIT 10.1
$115,000,000 Principal Amount
ENCYSIVE PHARMACEUTICALS INC.
2-1/2% Convertible Senior Notes
due 2012
PURCHASE AGREEMENT
March 11, 2005
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PURCHASE AGREEMENT
March 11, 2005
J.P. MORGAN SECURITIES INC.
277 Park Avenue
New York, NY 10172
UBS SECURITIES LLC
299 Park Avenue
New York, New York 10171
SG COWEN & CO., LLC
1221 Avenue of the Americas
New York, NY 10020
as Initial
Purchasers
Dear Sirs and Mesdames:
Encysive Pharmaceuticals Inc., a Delaware corporation (the
"Company"),
proposes to issue and sell to the initial
purchasers named in Schedule A hereto
(the "Initial Purchasers") $115,000,000
aggregate principal amount of its 2-1/2%
Convertible Senior Notes due 2012 (the
"Firm Bonds"). In addition, the Company
proposes to grant to the Initial Purchasers
the option to purchase from the
Company up to an additional $15,000,000
aggregate principal amount of the
Company's 2-1/2% Convertible Senior Notes
due 2012 (the "Additional Bonds"). The
Firm Bonds and the Additional Bonds are
hereinafter collectively sometimes
referred to as the "Bonds."
The Bonds are to be issued pursuant to an indenture (the
"Indenture")
to be dated as of March 16, 2005, between
the Company and The Bank of New York
Trust Company, N.A., as trustee (the
"Trustee"). The Bonds will be convertible
in accordance with their terms and the
terms of the Indenture into shares of the
common stock (the "Common Stock") of the
Company, par value $.005 per share (the
"Shares").
The Bonds and the Shares will be offered without being
registered
under the Securities Act of 1933, as
amended (the "Securities Act"), to
"qualified institutional buyers" in
compliance with the exemption from
registration provided by Rule 144A under
the Securities Act ("Rule 144A").
The Initial Purchasers and their direct and indirect transferees
will
be entitled to the benefits of a
Registration Rights Agreement to be entered
into at or prior to the time of
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purchase (as defined herein) between the
Company and the Initial Purchasers (the
"Registration Rights Agreement").
In connection with the sale of the Bonds, the Company has prepared
a
preliminary offering memorandum (the
"Preliminary Memorandum") and will prepare
a final offering memorandum including or
incorporating by reference a
description of the terms of the Bonds and
the Common Stock, the terms of the
offering and a description of the Company
(the "Final Memorandum" and, with the
Preliminary Memorandum, each a
"Memorandum"). As used herein, the term
"Memorandum" shall include in each case the
documents incorporated by reference
therein, if any. The terms "supplement,"
"amendment" and "amend" as used herein
with respect to a Memorandum shall include
all documents deemed to be
incorporated by reference in such
Memorandum, if any, that are filed subsequent
to the date of such Memorandum with the
Securities and Exchange Commission (the
"Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the
"Exchange Act").
The Company and the Initial Purchasers agree as follows:
1. Sale and Purchase: Upon the basis of the warranties and
representations and subject to the other
terms and conditions herein set forth,
the Company agrees to sell to the Initial
Purchasers, and each of the Initial
Purchasers, severally and not jointly,
agrees to purchase from the Company, the
aggregate principal amount of Firm Bonds
set forth opposite the name of such
Initial Purchaser in Schedule A hereto at a
purchase price of 96.75% of the
principal amount thereof.
In addition, the Company hereby grants to the several Initial
Purchasers the option to purchase from time
to time, and upon the basis of the
representations and warranties and subject
to the other terms and conditions
herein set forth, each Initial Purchaser
shall have the right to purchase from
time to time from the Company, at a
purchase price of 96.75% of the principal
amount thereof, plus accrued interest, if
any, from the time of purchase (as
hereinafter defined) to the additional time
of purchase (as hereinafter
defined), Additional Bonds in an aggregate
principal amount proportional to the
aggregate principal amount of Firm Bonds
set forth opposite such Initial
Purchaser's name on Schedule A hereto. This
option may be exercised by J.P.
Morgan Securities Inc. and UBS Securities
LLC, as representatives for the
Initial Purchasers (collectively, the
"Representatives") at any time on or
before the thirtieth day following the date
the Firm Bonds are issued, by
written notice to the Company. Such notice
shall set forth the aggregate initial
principal amount of Additional Bonds as to
which the option is being exercised,
and the date and time when the Additional
Bonds are to be delivered (such date
and time being herein referred to as the
"additional time of purchase");
provided, however, that the additional time
of purchase shall not be earlier
than (i) the time of purchase or (ii) the
second business day after the date on
which the option shall have been exercised
nor later than the tenth business day
after the date on which the option shall
have been exercised. As used herein,
"business day" shall mean a day on which
the New York Stock Exchange, Inc. is
open for trading.
2. Payment and Delivery: Payment of the purchase price for the
Firm
Bonds shall be made to the Company by
Federal (same day) funds, against delivery
of the Firm Bonds
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to the Initial Purchasers, at the offices
of Porter & Hedges, L.L.P. in Houston,
Texas or at such other place as may be
agreed upon by the parties hereto, for
the respective accounts of the Initial
Purchasers. Such payment and delivery
shall be made at 10:00 A.M., New York City
time, on March 16, 2005 (unless
another time shall be agreed to by you and
the Company). The time at which such
payment and delivery are actually made is
herein sometimes called the "time of
purchase."
Payment of the purchase price for the Additional Bonds shall be
made
at the additional time of purchase in the
same manner and at the same office and
time of day as the payment for the Firm
Bonds.
One or more global securities representing the Bonds shall be
registered by the Trustee in the name of
the nominee of The Depository Trust
Company ("DTC"), Cede & Co., credited
to the accounts of such of its
participants as the Initial Purchasers
shall request, upon notice to the Company
at least 48 hours prior to the time of
purchase, with any transfer taxes payable
in connection with the transfer of the
Bonds to the Initial Purchasers duly
paid, and deposited with the Trustee as
custodian for DTC at the time of
purchase, against payment by or on behalf
of the Initial Purchasers of the
aggregate purchase price therefore.
3. Representations and Warranties of the Company: The Company
represents and warrants to each of the
Initial Purchasers that:
(a) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act
and incorporated by reference in any Memorandum complied
or will comply
when so filed in all material respects with the Exchange Act
and the
applicable rules and regulations of the Commission thereunder
and
(ii) the
Preliminary Memorandum, as of its date did not and as of the
time
of execution of
this Agreement does not, and the Final Memorandum, as
amended or
supplemented, prior to the time of purchase will not, contain
any untrue
statement of a material fact or omit to state a material fact
necessary to
make the statements therein, in the light of the circumstances
under which they
were made, not misleading; provided, however, that any
representations
and warranties set forth in this paragraph do not apply to
statements or
omissions in any Memorandum based upon information relating
to any Initial
Purchaser furnished to the Company in writing by or on
behalf of such
Initial Purchaser expressly for use therein, which
information the
parties hereto agree is limited to the Initial Purchasers'
Information (as
defined in Section 11);
(b) As of the date of this Agreement, the Company's authorized
and outstanding
capitalization is the same it as was as of December 31,
2004, as set
forth under the column heading entitled "Actual" in the
section of the
Final Memorandum entitled "Capitalization" and, as adjusted
to give effect
to the offering of the Firm Bonds and the application of the
net proceeds
therefrom as described in the "Use of Proceeds" section of the
Final
Memorandum, the Company would, as of December 31, 2004 have had
an
authorized and
outstanding capitalization as set forth under the column
heading entitled
"As Adjusted" in the section of the Final Memorandum
entitled
"Capitalization"; all of the issued and outstanding shares of
capital stock,
including the Common Stock, of
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the Company have
been duly authorized and validly issued and are fully paid
and
non-assessable, have been issued in compliance with all federal
and
state securities
laws and were not issued in violation of any statutory or
contractual
preemptive rights, resale rights, rights of first refusal or
similar
rights;
(c) The descriptions of the Company's stock option, stock bonus
and other stock
plans or arrangements, and the options or other rights
granted
thereunder, as described in the Memorandum accurately and
fairly
present, in all
material respects, the information required to be shown
with respect to
such plans, arrangements, options and rights;
(d) The Company has been duly incorporated and is validly
existing as a
corporation in good standing under the laws of the State of
Delaware, with
full corporate power and authority to own, lease and operate
its properties
and to conduct its business as described in the Memorandum,
except where the
failure to have such power and authority would not,
individually or
in the aggregate, have a material adverse effect on the
business,
properties, financial condition, results of operation or
prospects of the
Company and the Subsidiaries (as hereinafter defined)
taken as a whole
(a "Material Adverse Effect");
(e) The Company is duly qualified to do business as a foreign
corporation and
is in good standing (or the foreign equivalent thereof, if
any) in each
jurisdiction where the ownership or leasing of its properties
or the conduct
of its business requires such qualification, except where
the failure to
be so qualified and in good standing would not, individually
or in the
aggregate, have a Material Adverse Effect and the Company is in
compliance in
all respects with the laws, orders, rules, regulations and
directives
issued or administered by such jurisdictions, except where the
failure to be in compliance
would not have a Material Adverse Effect;
(f) The subsidiaries of the Company, other than (i)
ImmunoPharmaceutics, Inc., a California corporation and wholly
owned
subsidiary of
the Company, (ii) EP-ET, LLC, a Delaware limited liability
company and
wholly owned subsidiary of the Company, (iii) Encysive, L.P., a
Delaware limited
partnership, of which the Company is the sole limited
partner and
EP-ET, LLC is the sole general partner, (iv) Revotar
Biopharmaceuticals, AG, a German corporation and majority-owned
subsidiary
of the Company,
and (v) Encysive (UK) Limited, a United Kingdom private
limited company
and wholly owned subsidiary of the Company (collectively,
the
"Subsidiaries"), would not, individually, or in the aggregate be
a
"significant
subsidiary" of the Company as defined by Rule 1-02 of
Regulation S-X;
each Subsidiary has been duly organized and is validly
existing as a
corporation or other legal entity in good standing (or the
foreign
equivalent thereof, if any) under the laws of the jurisdiction
of
its
organization, with full power and authority to own, lease and
operate
its properties
and to conduct its business as described in the Memorandum
except where the
failure to have such power and authority would not,
individually or
in the aggregate, have a Material Adverse Effect; each
Subsidiary is
duly qualified to do business as a foreign corporation or
other legal
entity and is in good standing (or the foreign equivalent
thereof, if any)
under the laws of each
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jurisdiction
where the ownership or leasing of its properties or the
conduct of its
business requires such qualification, except where the
failure to be so
qualified and in good standing would not, individually or
in the
aggregate, have a Material Adverse Effect; each of the
Subsidiaries
are in
compliance in all respects with the laws, orders, rules,
regulations
and directives
issued or administered by such jurisdictions, except where
the failure to
be in compliance would not have a Material Adverse Effect;
all of the
issued and outstanding shares of capital stock of the
Subsidiaries
have been duly and validly authorized and issued, are fully
paid and
non-assessable and, except to the extent set forth in the
Memorandum, are
owned directly or indirectly by the Company, free and clear
of all liens,
encumbrances, equities or claims;
(g) Neither the Company nor any of the Subsidiaries is in
breach
or violation of,
or in default under (nor has any event occurred which with
notice, lapse of
time, or both would result in any breach or violation of,
constitute a
default under or give the holder of any indebtedness (or
person acting on
such holder's behalf), the right to require the
repurchase,
redemption or repayment of all or part of such indebtedness
under) (i) its
respective charter or by-laws (or analogous governing
instruments, as
applicable), (ii) any indenture, mortgage, deed of trust,
bank loan or
credit agreement or other evidence of indebtedness, or any
license, lease,
contract or other agreement or instrument to which the
Company or any
of the Subsidiaries is a party or by which any of them or
their respective
properties may be bound or affected, or (iii) under any
federal, state,
local or foreign law, regulation or rule or any decree,
judgment or
order applicable to the Company or any of the Subsidiaries,
except, in the
cases of clauses (ii) and (iii), any breaches, violations or
defaults, which,
singularly or in the aggregate, would not have a Material
Adverse Effect;
and, the execution, delivery and performance of this
Agreement, the
Registration Rights Agreement, the Indenture and the Bonds
and consummation
of the transactions contemplated hereby and thereby,
including the
issuance of the Bonds and the issuance of the Shares upon
conversion of
the Bonds, will not conflict with, result in any breach or
violation of, or
constitute a default under (nor constitute any event which
with notice,
lapse of time or both would result in any breach or violation
of or constitute
a default under), the charter or by-laws (or analogous
governing
instruments, as applicable) of the Company or any of the
Subsidiaries or
any indenture, mortgage, deed of trust, bank loan or credit
agreement or
other evidence of indebtedness, or any license, lease,
contract or
other agreement or instrument to which the Company or any of
the Subsidiaries
is a party or by which any of them or their respective
properties may
be bound or affected, or any federal, state, local or
foreign law,
regulation or rule or any decree, judgment or order applicable
to the Company
or any of the Subsidiaries;
(h) The Indenture has been duly authorized by the Company and
when duly executed and
delivered by the Company and duly authorized,
executed and
delivered by the Trustee will be a legal, valid and binding
agreement of the
Company, enforceable in accordance with its terms, except
as the
enforceability thereof may be limited by bankruptcy,
insolvency,
reorganization,
moratorium, fraudulent transfer or similar laws affecting
creditors'
rights generally and general principles of equity;
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(i) The Registration Rights Agreement has been duly authorized
by
the Company and
when executed and delivered by the Company and duly
authorized,
executed and delivered by the Initial Purchasers will be a
legal, valid and
binding agreement of the Company, enforceable in
accordance with
its terms, except as the enforceability thereof may be
limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or
similar laws affecting creditors' rights generally and general
principles of
equity;
(j) The Bonds have been duly authorized by all necessary
corporate action
on the part of the Company and when executed and delivered
by the Company
and duly authenticated by the Trustee in accordance with the
terms of the
Indenture and delivered to and paid for by the Initial
Purchasers in
accordance with the terms hereof will constitute legal, valid
and binding
obligations of the Company, enforceable in accordance with
their terms, except as the
enforceability thereof may be limited by
bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
similar laws
affecting creditors' rights generally and general principles
of equity, and
will be entitled to the benefits of the Indenture and the
Registration
Rights Agreement; the Shares initially issuable upon
conversion of
the Bonds have been duly authorized and validly reserved for
issuance upon
conversion of the Bonds, and upon conversion of the Bonds in
accordance with
their terms and the terms of the Indenture will be issued
free of
statutory and contractual preemptive rights and are sufficient
in
number to meet
the current conversion requirements, and such Shares, when
so issued upon
such conversion in accordance with the terms of the
Indenture, will
be duly and validly issued and fully paid and
non-assessable;
(k) This Agreement has been duly authorized, executed and
delivered by the
Company;
(l) The terms of the Bonds, the Registration Rights Agreement,
the Indenture
and the capital stock of the Company, including the Shares,
conform in all
material respects to the description thereof contained or
incorporated by
reference in the Final Memorandum;
(m) No approval, authorization, consent or order of or filing
with any
federal, state, local or foreign governmental or regulatory
commission,
board, body, authority or agency or Nasdaq National Market
("Nasdaq"), or
approval of stockholders of the Company, is required in
connection with
the issuance and sale by the Company of the Bonds or the
issuance of
Shares upon conversion of the Bonds or the consummation of the
transactions as
contemplated hereby and by the Indenture, the Registration
Rights Agreement
and the Bonds other than (i) as may be required under the
securities or
blue sky laws of the various jurisdictions in which the Bonds
and the Shares
are being offered by the Initial Purchasers, (ii) as may be
required by
federal and state securities laws with respect to the Company's
obligations
under the Registration Rights Agreement and the listing of the
Shares on the
Nasdaq in connection therewith, (iii) those required in
connection with
the qualification of the Indenture under the Trust
Indenture Act of
1939, as amended (the "1939 Act"), (iv) those required in
connection with
arranging for the
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Bonds to be
designated eligible for trading in PORTAL or for the Bonds to
be eligible for
clearance and settlement through the DTC and (v) such as
have already
been obtained;
(n) The Company has obtained for the benefit of the Initial
Purchasers the
agreement (a "Lock-Up Agreement"), substantially in the form
set forth as
Exhibit B hereto, of each of its executive officers and
directors named
in Exhibit B-1 hereto;
(o) Except as
described in the Memorandum, (i) no person has any
preemptive
rights or similar rights to purchase any shares of Common Stock
or shares of any
other capital stock or other equity interests of the
Company and (ii)
no person has the right to act as an initial purchaser or
as a financial
advisor to the Company in connection with the offer and sale
of the Bonds, in
the case of each of the foregoing clauses (i) and (ii),
whether as a
result of the sale of the Bonds as contemplated hereby or
otherwise; and
except as described in the Memorandum, no person has the
right,
contractual or otherwise, to cause the Company to include any
shares
of Common Stock
or shares of any other capital stock or other securities of
the Company in
the registration statement to be filed with the Commission
pursuant to the
Registration Rights Agreement, whether as a result of the
sale of the
Bonds as contemplated hereby or otherwise;
(p) Neither the Company nor any of its Subsidiaries is a party
to
any contract,
agreement or understanding with any person that would give
rise to a valid
claim against the Company or the Initial Purchasers for a
brokerage
commission, finder's fee or like payment in connection with the
offering and
sale of the Bonds;
(q) KPMG LLP, whose reports on the consolidated financial
statements of
the Company and the Subsidiaries are incorporated by
reference in the
Memorandum, are independent public accountants with
respect to the
Company as required by the Securities Act, and the
applicable
published rules and regulations thereunder;
(r) Each of the Company and the Subsidiaries has all licenses,
certificates,
authorizations, permits, consents and approvals
(collectively,
"Consents") and has made all necessary declarations and
filings required
under any federal, state, local or foreign law, regulation
or rule and has
obtained all Consents from other persons, which are
necessary or
desirable for the ownership of their respective properties or
the conduct of
their respective businesses as described in the Memorandum
including
without limitation all such Consents required by the United
States Food and
Drug Administration (the "FDA") or any other federal, state
or foreign
agencies or bodies engaged in the regulation of pharmaceuticals
or biohazardous
materials, except where any failures to possess or make the
same, singularly
or in the aggregate, would not have a Material Adverse
Effect; all of
such Consents are valid and in full force and effect, except
where the
invalidity of such Consents or the failure of such Consents to
be
in full force
and effect would not, singularly or in the aggregate, have a
Material Adverse
Effect; all such Consents are free and clear of any
restrictions or
conditions that are in addition to, or materially different
from, those
normally applicable to similar Consents; and neither the
Company nor any
of the Subsidiaries is in violation of, or in default
under, nor has
the
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Company nor any
of the Subsidiaries received notification of any
proceedings
relating to revocation or modification of any such Consent or
any federal,
state, local or foreign law, regulation or rule or any decree,
order or
judgment applicable to the Company or any of the Subsidiaries
and
has no reason to
believe that any such Consent will not be renewed, except
where such
revocation or modification would not, individually or in the
aggregate, have
a Material Adverse Effect;
(s) Except as described in the Memorandum, there are no
actions,
suits, claims,
investigations or proceedings pending, to the knowledge of
the Company,
threatened or contemplated to which the Company or any of the
Subsidiaries is
or would be a party or of which any of their respective
properties is or
would be subject at law or in equity, or before or by any
federal, state,
local or foreign governmental or regulatory commission,
board, body,
authority or agency, except any such action suit, claim,
investigation or
proceeding which would not result in a judgment, decree or
order either (A)
having, individually or in the aggregate, a Material
Adverse Effect
or (B) preventing the consummation of the transactions
contemplated
hereby and by the Indenture, the Registration Rights Agreement
and the
Bonds;
(t) All tax returns required to be filed by the Company and
each
of the
Subsidiaries have been filed, and all taxes and other assessments
of
a similar nature
(whether imposed directly or through withholding)
including any
interest, additions to tax or penalties applicable thereto
due or claimed
to be due from such entities have been paid, other than
those being
contested in good faith and for which adequate reserves have
been provided
and those currently payable without penalty or interest or
the nonpayment
of which would not have a Material Adverse Effect;
(u) The Company and each of the Subsidiaries maintains
insurance
covering its
properties, operations, personnel and businesses as the
Company deems
adequate; such insurance insures against such losses and
risks to an
extent which is adequate in accordance with customary industry
practice to
protect the Company and the Subsidiaries and their respective
businesses; all
such insurance is fully in force on the date hereof and
will be fully in
force at the time of purchase and any additional time of
purchase;
(v) Neither the Company nor any of the Subsidiaries have
sustained since
the date of the last audited financial statements included
or incorporated
by reference in the Memorandum any loss or interference
with its
respective business from fire, explosion, flood or other
calamity,
whether or not
covered by insurance, or from any labor dispute or court or
governmental
action, order or decree;
(w) The Company has not sent or received any communication
regarding
termination of, or intent not to renew, any of the contracts or
agreements
referred to, described in or incorporated by reference in the
Memorandum, and
no such termination or non-renewal has been threatened by
the Company or,
to the Company's knowledge after due inquiry, any other
party to any
such contract or agreement; the Company is not aware that any
key employee or
significant group of employees of the
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Company or any
Subsidiary plans to terminate employment with the Company or
any such
Subsidiary;
(x) Neither the Company nor the Subsidiaries are engaged in any
unfair labor
practice; except for matters which would not, individually or
in the
aggregate, have a Material Adverse Effect, (i) there is (A) no
unfair labor
practice complaint pending or, to the Company's knowledge,
threatened
against the Company or any of the Subsidiaries before the
National Labor
Relations Board, and no grievance or arbitration proceeding
arising out of
or under collective bargaining agreements is pending or to
the Company's
knowledge, threatened, (B) no strike, labor dispute, slowdown
or stoppage
pending or, to the Company's knowledge, threatened against the
Company or any
of the Subsidiaries and (C) no union representation dispute
currently
existing concerning the employees of the Company or any of the
Subsidiaries and
(ii) to the Company's knowledge, (A) no union organizing
activities are
currently taking place concerning the employees of the
Company or any
of the Subsidiaries and (B) there has been no violation of
any federal,
state, local or foreign law relating to discrimination in the
hiring,
promotion or pay of employees, any applicable wage or hour laws
or
any provision of
the Employee Retirement Income Security Act of 1974
("ERISA") or the
rules and regulations promulgated thereunder concerning
the employees of
the Company or any of the Subsidiaries;
(y) No "prohibited transaction" (as defined in Section 406 of
the
ERISA, or
Section 4975 of the Internal Revenue Code of 1986, as amended
from time to
time (the "Code")) or "accumulated funding deficiency" (as
defined in
Section 302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA
(other than events with respect to which the 30-day notice
requirement
under Section 4043 of ERISA has been waived) has occurred with
respect to any
employee benefit plan which could, singularly or in the
aggregate, have
a Material Adverse Effect; each employee benefit plan of
the Company and
its Subsidiaries is in compliance in all material respects
with applicable
law, including ERISA and the Code; the Company has not
incurred and
does not expect to incur liability under Title IV of ERISA
with respect to
the termination of, or withdrawal from, any "pension plan";
and each
"pension plan" (as defined in ERISA) for which the Company
would
have any
liability that is intended to be qualified under Section 401(a)
of
the Code is so
qualified in all material respects and nothing has occurred,
whether by
action or by failure to act, which could cause the loss of such
qualification;
(z) Neither the Company nor any of its Subsidiaries own any
"margin
securities" as that term is defined in Regulation U of the Board
of
Governors of the
Federal Reserve System (the "Federal Reserve Board"), and
none of the
proceeds of the sale of the Bonds will be used, directly or
indirectly, for
the purpose of purchasing or carrying any margin security,
for the purpose
of reducing or retiring any indebtedness which was
originally
incurred to purchase or carry any margin security or for any
other purpose
which might cause any of the Securities to be considered a
"purpose credit"
within the meanings of Regulation T, U or X of the Federal
Reserve
Board;
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(aa) Each of the Company and the Subsidiaries own, or have
obtained valid
and enforceable licenses for, or other rights to use, the
inventions,
patent applications, patents, trademarks (both registered and
unregistered),
tradenames, copyrights, trade secrets and other proprietary
information
described or incorporated by reference in the Memorandum as
being owned or
licensed by or to them or that are necessary for the conduct
of their
respective businesses, except where the failure to own, license
or
have such rights
would not, individually or in the aggregate, have a
Material Adverse
Effect (collectively, "Intellectual Property"); (i) there
are no third
parties who have or, to the Company's knowledge, will be able
to establish
rights to any Intellectual Property, except for the ownership
rights of the
owners of the Intellectual Property which is licensed to the
Company; (ii) to
the best of the Company's knowledge there is no
infringement by
third parties of any Intellectual Property; (iii) there is
no pending or,
to the best of the Company's knowledge, threatened action,
suit, proceeding
or claim by others challenging the Company's rights in or
to any
Intellectual Property, and the Company is unaware of any facts
which
could form a
reasonable basis for any such claim; (iv) there is no pending
or, to the best
of the Company's knowledge, threatened action, suit,
proceeding or
claim by others challenging the validity or scope of any
Intellectual
Property, and the Company is unaware of any facts which could
form a
reasonable basis for any such claim; (v) there is no pending or,
to
the best of the
Company's knowledge, threatened action, suit, proceeding or
claim by others
that the Company infringes or otherwise violates any
patent,
trademark, copyright, trade secret or other proprietary rights
of
others, and the
Company is unaware of any facts which could form a
reasonable basis
for any such claim; (vi) to the best of the Company's
knowledge, there
is no patent or patent application that contains claims
that interfere
with the issued or pending claims of any of the Intellectual
Property; and
(vii) to the best of the Company's knowledge there is no
prior art that
may render any patent application owned by the Company of
the Intellectual
Property unpatentable that has not been disclosed to the
U.S. Patent and
Trademark Office;
(bb) The Company and its Subsidiaries are in compliance with
all
applicable
federal, state, local and foreign laws, regulations, orders and
decrees
governing their business as prescribed by the FDA, or any other
federal, state
or foreign agencies or bodies, including those bodies and
agencies engaged
in the regulation of pharmaceuticals or biohazardous
substances or
materials, except where noncompliance would not, singly or in
the aggregate,
have a Material Adverse Effect; all preclinical and clinical
studies
undertaken to support approval of products for
commercialization
have been
conducted in compliance with all applicable federal, state or
foreign laws,
rules, orders or regulations, including current Good
Laboratory and
Good Clinical Practices in all material respects; no filing
or submission to
the FDA or any other federal, state or foreign regulatory
body, that is
intended to be the basis for any approval, contains any
material
omission or material false information;
(cc) The audited financial statements included or incorporated
by
reference in the
Memorandum, together with the related notes and schedules,
present fairly
the consolidated financial position of the Company and the
Subsidiaries as
of the dates indicated and the consolidated results of
operations and
cash flows of the Company
10
<PAGE>
and the
Subsidiaries for the periods specified and have been prepared
in
compliance in
all material respects with the requirements of the Exchange
Act and in
compliance with the requirements of generally accepted
accounting
principles applied on a consistent basis during the periods
involved; any
pro forma financial statement or data included or
incorporated by
reference in the Memorandum comply with the requirements of
Regulation S-X
under the Securities Act, including without limitation
Article 11
thereof, and the assumptions used in the preparation of such
pro
forma financial statements
or data included or incorporated by reference in
the Memorandum
are reasonable, the pro forma adjustments used therein are
appropriate to
give effect to the transactions or circumstances described
therein and the
pro forma adjustments have been properly applied to the
historical
amounts in the compilation of those statements and data; the
other financial
and statistical data set forth or incorporated by reference
in the
Memorandum are accurately presented and prepared on a basis
consistent with
the financial statements and books and records of the
Company; and
neither the Company nor the Subsidiaries have any material
liabilities or
obligations, direct or contingent (including any off-balance
sheet
obligations), and there are no transactions, arrangements or
other
relationships
between and/or among the Company, any of its affiliates (as
such term is
defined in Rule 405 of the Securities Act) and any
unconsolidated
entity, including, but not limited to, any structured
finance, special
purpose or limited purpose entity that could reasonably be
expected to
materially affect the Company's liquidity or the availability
of or
requirements for its capital resources that are not disclosed in
the
Memorandum;
(dd) Subsequent to the respective dates as of which information
is given in the
Memorandum, and except as may be otherwise stated or
incorporated by
reference in the Memorandum, there has not been (A) any
material adverse
change, or any development involving a prospective
material adverse
change, in the business, properties, prospects, regulatory
environment,
management, financial condition or results of operations of
the Company and
the Subsidiaries, taken as a whole, (B) any transaction
which is
material to the Company and the Subsidiaries, taken as a whole,
(C) any
obligation, direct or contingent (including any off-balance
sheet
obligations),
incurred by the Company or any of the Subsidiaries, which is
material to the
Company and the Subsidiaries, taken as a whole, (D) any
change in the
capital stock or outstanding indebtedness of the Company or
the Subsidiaries
or (E) any dividend or distribution of any kind declared,
paid or made on
the capital stock of the Company;
(ee) The Company and the Subsidiaries and their properties,
assets and
operations are in compliance with, and hold all permits,
authorizations
and approvals required under, Environmental Laws (as defined
below), except
to the extent that failure to so comply or to hold such
permits,
authorizations or approvals would not, individually or in the
aggregate, have
a Material Adverse Effect; there are no past, present or,
to the Company's
knowledge after due inquiry, reasonably anticipated future
events,
conditions, circumstances, activities, practices, actions,
omissions or
plans that could reasonably be expected to give rise to any
material costs
or liabilities to the Company or the Subsidiaries under, or
to interfere
with or prevent compliance by the Company or the Subsidiaries
with,
Environmental Laws; except as would not, individually or in the
11
<PAGE>
aggregate, have
a Material Adverse Effect, the Company and each of the
Subsidiaries (i)
to the Company's knowledge, is not the subject of any
investigation,
(ii) has not received any notice or claim, (iii) is not a
party to or
affected by any pending or, to the Company's knowledge,
threatened
action, suit or proceeding, (iv) is not bound by any judgment,
decree or order
or (v) has not entered into any agreement, in each case
relating to any
alleged violation of any Environmental Law or any actual or
alleged release
or threatened release or cleanup at any location of any
Hazardous
Materials (as defined below) (as used herein, "Environmental
Law"
means any
federal, state, local or foreign law, statute, ordinance, rule,
regulation,
order, decree, judgment, injunction, permit, license,
authorization or
other binding requirement, or common law, relating to
health, safety
or the protection, cleanup or restoration of the environment
or natural
resources, including those relating to the distribution,
processing,
generation, treatment, storage, disposal, transportation, other
handling or
release or threatened release of Hazardous Materials, and
"Hazardous
Materials" means any material (including, without limitation,
pollutants,
contaminants, hazardous or toxic substances or wastes) that is
regulated by or
may give rise to liability under any Environmental Law);
(ff) In the ordinary
course of its business, the Company and each
of the
Subsidiaries conducts a periodic review of the effect of the
Environmental
Laws on its business, operations and properties, in the
course of which
it identifies and evaluates associated costs and
liabilities
(including, without limitation, any capital or operating
expenditures
required for cleanup, closure of properties or compliance with
the
Environmental Laws or any permit, license or approval, any
related
constraints on
operating activities and any potential liabilities to third
parties);
(gg) When the Bonds are issued pursuant to this Agreement, the
Bonds will not
be of the same class (within the meaning of Rule 144A) as
securities that
are listed on a national securities exchange registered
pursuant to
Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer
quotation system;
(hh) Neither the Company nor any Affiliate (as defined in Rule
501(b) of
Regulation D under the Securities Act) (i) sold, offered for
sale, solicited
offers to buy or otherwise negotiated in respect of, any
security (as
defined in the Securities Act) which is or would be integrated
with the sale of
the Bonds in a manner that would require the registration
under the
Securities Act of the Bonds or (ii) offered, solicited offers
to
buy or sold the
Bonds by any form of general solicitation or general
advertising (as
those terms are used in Regulation D under the Securities
Act) or in any
manner involving a public offering within the meaning of
Section 4(2) of
the Securities Act;
(ii) Assuming the accuracy of the representations and
warranties
of the Initial
Purchasers in Section 4 hereof, it is not necessary in
connection with
the offer, sale and delivery of the Bonds to the Initial
Purchasers
pursuant to this Agreement to register the Bonds or the Shares
deliverable upon
conversion of the Bonds under the Securities Act or to
qualify the
Indenture under the 1939 Act;
12
<PAGE>
(jj) Neither the Company nor any of the Subsidiaries is, nor
after giving
effect to the offering and sale of the Bonds and the
application of
the proceeds thereof as described in the Final Memorandum
will any of them
be, required to register as an "investment company" as
defined in the
Investment Company Act of 1940, as amended;
(kk) Except as described in the Memorandum, the Company and
each
of the
Subsidiaries has good and marketable title to all property (real
and
personal)
described or incorporated by reference in the Memorandum as
being
owned by each of
them, free and clear of all liens, claims, security
interests or
other encumbrances; all the property described in the
Memorandum as
being held under lease by the Company or a Subsidiary is held
thereby under
valid, subsisting and enforceable leases;
(ll) Except for the Registration Rights Agreement, there are no
contracts,
agreements or understandings between the Company and any person
granting such
person the right to require the Company to register any
securities with
the SEC;
(mm) At the time of purchase there are no securities of or
guaranteed by
the Company or any Subsidiary of the Company that are rated
by a "nationally
recognized statistical rating organization", as that term
is defined in
Rule 436(g)(2) promulgated under the Securities Act;
(nn) The Company and each of the Subsidiaries maintains a
system
of internal
accounting controls sufficient to provide reasonable assurance
that (i)
transactions are executed in accordance with management's
general
or specific
authorization; (ii) transactions are recorded as necessary to
permit
preparation of financial statements in conformity with
generally
accepted
accounting principles and to maintain accountability for
assets;
(iii) access to
assets is permitted only in accordance with management's
general or
specific authorization; and (iv) the recorded accountability
for
assets is
compared with existing assets at reasonable intervals and
appropriate
action is taken with respect to any differences;
(oo) The minute books of the Company and each of its domestic
subsidiaries
have been made available to the Initial Purchaser and counsel
for the Initial
Purchaser, and such books (i) contain minutes (or written
consents) of all
meetings and actions of the board of directors (including
each board
committee) and shareholders (or analogous governing bodies and
interest
holders, as applicable) of the Company and each of its domestic
subsidiaries
since the time of its respective organization through the date
of the latest
meeting and action, and (ii) accurately in all material
respects reflect
all transactions referred to in such minutes;
(pp) The Company has established and maintains disclosure
controls and
procedures (as such term is defined in Rule 13a-14 and 15d-14
under the
Exchange Act); such disclosure controls and procedures are
designed to
ensure that material information relating to the Company,
including its
consolidated subsidiaries, is made known to the Company's
Chief Executive
Officer and its Vice President, Finance and Administration
by others within
those entities, and as of the period covered by the
13
<PAGE>
Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
2004, such
disclosure controls and procedures were effective to perform
the
functions for
which they were established; the Company's auditors and the
Audit Committee
of the Board of Directors have been advised, based on the
Company's
assessment of internal control over financial reporting, as of
the fiscal year
ended December 31, 2004, of: (i) any significant
deficiencies in
the design or operation of internal controls which could
adversely affect
the Company's ability to record, process, summarize, and
report financial
data; and (ii) any fraud, whether or not material, that
involves
management or other employees who have a role in the Company's
internal
controls; any material weaknesses in internal controls as of
December 31,
2004 have been identified for the Company's auditors; and in
connection with
the Company's assessment of internal control described
above, there
were no significant changes in internal controls or in other
factors that
have materially affected internal control over financial
reporting;
(qq) Any statistical and market-related data included or
incorporated by
reference in the Memorandum are based on or derived from
sources that the
Company believes to be reliable and accurate, and the
Company has
obtained the written consent to the use of such data from such
sources to the
extent required;
(rr) Neither the Company nor any of its Subsidiaries nor, to
the
best of the
Company's knowledge, any employee or agent of the Company or
any subsidiary,
has made any contribution or other payment to any official
of, or candidate
for, any federal, state or foreign office in violation of
any law
necessary to be disclosed in the Memorandum in order to make
the
statements
therein not misleading.
(ss) Neither the Company nor any of the Subsidiaries nor any of
their respective
directors, officers, affiliates or controlling persons has
taken, directly
or indirectly, any action designed, or which has
constituted or
might reasonably be expected to cause or result in, under
the Exchange Act
or otherwise, the stabilization or manipulation of the
price of any
security of the Company to facilitate the sale or resale of
the Bonds or the
Shares issued upon conversion thereof;
(tt) The Company and the Subsidiaries are in compliance in all
material
respects with the applicable provisions of the Sarbanes-Oxley
Act
of 2002
