PLACEMENT AGENT AGREEMENT

 

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                                                                    Exhibit 10.1

 

 

                                7,350,000 SHARES

 

                                 SANTARUS, INC.

 

                             SHARES OF COMMON STOCK

                                ($0.0001 PAR VALUE)

 

                            PLACEMENT AGENT AGREEMENT

 

                                                                 August 16, 2005

 

 

SG COWEN & CO., LLC

RBC CAPITAL MARKETS CORPORATION

c/o SG Cowen & Co., LLC

1221 Avenue of the Americas

New York, New York 10020

 

Dear Sirs:

 

         Santarus, Inc., a Delaware corporation (the "COMPANY"), proposes to

sell to the Purchasers, pursuant to the terms of this Placement Agent Agreement

(this "AGREEMENT") and the Subscription Agreements in the form of Exhibit A

attached hereto (the "SUBSCRIPTION AGREEMENTS") entered into with the Purchasers

identified therein (each a "PURCHASER" and, collectively, the "PURCHASERS"), an

aggregate of 7,350,000 shares of Common Stock, $0.0001 par value (the "COMMON

STOCK"), of the Company. The aggregate of 7,350,000 shares of Common Stock so

proposed to be sold is hereinafter referred to as the "STOCK." The Company

hereby confirms its agreement with the placement agents named on Schedule I

attached hereto (the "PLACEMENT AGENTS"), as set forth below. SG Cowen & Co.,

LLC is acting as the representative of the Placement Agents and in such capacity

is hereinafter referred to as the "REPRESENTATIVE." Certain terms used herein

are defined in Section 13 hereof.

 

1. AGREEMENT TO ACT AS PLACEMENT AGENTS; PLACEMENT OF SECURITIES. On the basis

of the representations, warranties and agreements of the Company herein

contained, and subject to all the terms and conditions of this Agreement:

 

         (a) The Company hereby authorizes the Placement Agents to act as its

         exclusive agents to solicit offers for the purchase of all or part of

         the Stock from the Company in connection with the proposed offering of

         the Stock (the "OFFERING"). Until the Closing Date (as defined in

         Section 3 hereof), the Company shall not, without the prior consent of

         the Representative, solicit or accept offers to purchase the Stock

         otherwise than through the Placement Agents.

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          (b) The Placement Agents agree, as agents of the Company, to use their

         reasonable best efforts to solicit offers to purchase the Stock from

         the Company on the terms and subject to the conditions set forth in the

         Base Prospectus (as defined below) and the Prospectus Supplement (as

         defined below). The Placement Agents shall make commercially reasonable

         efforts to assist the Company in obtaining performance by each

         Purchaser whose offer to purchase Stock has been solicited by the

         Placement Agents and accepted by the Company, but the Placement Agents

         shall not, except as otherwise provided in this Agreement, be obligated

         to disclose the identity of any potential purchaser or have any

         liability to the Company in the event any such purchase is not

         consummated for any reason. Under no circumstances will the Placement

         Agents be obligated to purchase any Stock for their own account and, in

         soliciting purchases of Stock, the Placement Agents shall act solely as

         the Company's agents and not as principals. Notwithstanding the

         foregoing and except as otherwise provided in Section 1(c), it is

         understood and agreed that the Placement Agents (or their affiliates)

         may, solely at their discretion and without any obligation to do so,

         purchase Stock as principals; provided, however, that any such offers

         to purchase by the Placement Agents (or their affiliates) shall be

         fully disclosed to the Company (including the identity of the

         Purchaser) and accepted by the Company in accordance with Section 1(c)

         below.

 

         (c) Subject to the provisions of this Section 1, offers for the

          purchase of Stock may be solicited by the Placement Agents as agents

         for the Company at such times and in such amounts as the Placement

         Agents deem advisable. Each Placement Agent shall communicate to the

         Company, orally or in writing, each reasonable offer to purchase Stock

         received by it as agent of the Company. The Company shall have the sole

         right to accept offers to purchase the Stock and may reject any such

         offer, in whole or in part. Each Placement Agent shall have the right,

         in its discretion reasonably exercised, subject to providing reasonable

         prior notice to the Company, to reject any offer to purchase Stock

         received by it, in whole or in part, and any such rejection shall not

         be deemed a breach of its agreement contained herein.

 

         (d) The purchases of the Stock by the Purchasers shall be evidenced by

         the execution of the Subscription Agreements by each of the parties

         thereto.

 

         (e) As compensation for services rendered, on the Closing Date the

         Company shall pay to the Placement Agents by wire transfer of

         immediately available funds to an account or accounts designated by the

         Representative, an amount equal to six percent (6.0%) of the gross

         proceeds received by the Company from the sale of the Stock on such

         Closing Date.

 

         (f) No Stock which the Company has agreed to sell pursuant to this

         Agreement shall be deemed to have been purchased and paid for, or sold

         by the Company, until such Stock shall have been delivered to the

         Purchaser thereof against payment by such Purchaser. If the Company

         shall default in its obligations to deliver Stock to a Purchaser whose

         offer it has accepted and who has delivered the requisite payment for

         the Stock, the Company shall indemnify and hold the Placement Agent

         harmless against any loss, claim or damage arising from or as a result

         of such default by the Company.

 

 

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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and

warrants to, and agrees with, the several Placement Agents and, as provided in

the Subscription Agreements, the Purchasers that:

 

         (a) The Company meets the requirements for use of Form S-3 under the

         Securities Act of 1933, as amended (the "SECURITIES ACT"), and has

         filed with the Securities and Exchange Commission (the "COMMISSION") a

         registration statement on such form (Registration File No. 333-124830),

         which became effective as of June 16, 2005, for the registration under

         the Securities Act of the Stock and certain other securities as

         described therein. Such registration statement meets the requirements

         set forth in Rule 415(a)(1)(x) under the Securities Act and complies

         with said Rule. The Company will file with the Commission pursuant to

         Rule 424(b) under the Securities Act, and the rules and regulations

         (the "RULES AND REGULATIONS") of the Commission promulgated thereunder,

         a supplement to the form of prospectus included in such registration

         statement relating to the placement of the Stock and the plan of

         distribution thereof and has advised the Representative of all further

         information (financial and other) with respect to the Company required

         to be set forth therein. Such registration statement, including the

         exhibits thereto, as amended at the date of this Agreement, is

         hereinafter called the "REGISTRATION STATEMENT;" such prospectus in the

         form in which it appears in the Registration Statement is hereinafter

          called the "BASE PROSPECTUS;" and the supplemented form of prospectus,

         in the form in which it will be filed with the Commission pursuant to

         Rule 424(b) (including the Base Prospectus as so supplemented) is

         hereinafter called the "PROSPECTUS SUPPLEMENT." Any reference herein to

         the Registration Statement, the Base Prospectus or the Prospectus

         Supplement shall be deemed to refer to and include the documents

         incorporated by reference therein (the "INCORPORATED DOCUMENTS")

         pursuant to Item 12 of Form S-3 which were filed under the Securities

         Exchange Act of 1934, as amended (the "EXCHANGE ACT"), on or before the

         date of this Agreement, or the issue date of the Base Prospectus or the

         Prospectus Supplement, as the case may be; and any reference herein to

         the terms "amend," "amendment" or "supplement" with respect to the

         Registration Statement, the Base Prospectus or the Prospectus

         Supplement shall be deemed to refer to and include the filing of any

         document under the Exchange Act after the date of this Agreement, or

         the issue date of the Base Prospectus or the Prospectus Supplement, as

         the case may be, deemed to be incorporated therein by reference. All

         references in this Agreement to financial statements and schedules and

         other information which is "contained," "included," "described," "set

         forth" or "stated" in the Registration Statement, the Base Prospectus

         or the Prospectus Supplement (and all other references of like import)

         shall be deemed to mean and include all such financial statements and

         schedules and other information which is or is deemed to be

         incorporated by reference in the Registration Statement, the Base

         Prospectus or the Prospectus Supplement, as the case may be. No stop

         order suspending the effectiveness of the Registration Statement or the

         use of the Base Prospectus or the Prospectus Supplement has been

         issued, and no proceeding for any such purpose is pending or, to the

         best of the Company's knowledge, has been initiated or threatened by

         the Commission.

 

 

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         (b) The Registration Statement (and any further documents to be filed

         with the Commission) contains all exhibits and schedules as required by

         the Securities Act. Each of the Registration Statement and any

          post-effective amendment thereto, at the time it became effective,

         complied in all material respects with the Securities Act and the

         Exchange Act and the applicable Rules and Regulations and did not and,

         as amended or supplemented, if applicable, will not, contain any untrue

         statement of a material fact or omit to state a material fact required

         to be stated therein or necessary to make the statements therein not

         misleading. The Base Prospectus and the Prospectus Supplement, each as

         of its respective date, comply in all material respects with the

         Securities Act and the Exchange Act and the applicable Rules and

         Regulations. Each of the Base Prospectus and the Prospectus Supplement,

         as amended or supplemented, did not and will not contain as of the date

         thereof any untrue statement of a material fact or omit to state a

         material fact necessary in order to make the statements therein, in

         light of the circumstances under which they were made, not misleading.

         The Incorporated Documents, when they were filed with the Commission,

         conformed in all material respects to the requirements of the Exchange

         Act and the applicable Rules and Regulations, and none of such

         documents, when they were filed with the Commission, contained any

         untrue statement of a material fact or omitted to state a material fact

         necessary to make the statements therein not misleading; and any

         further documents so filed and incorporated by reference in the Base

         Prospectus or Prospectus Supplement, when such documents are filed with

         the Commission, will conform in all material respects to the

         requirements of the Exchange Act and the applicable Rules and

         Regulations, as applicable, and will not contain any untrue statement

         of a material fact or omit to state a material fact necessary to make

         the statements therein not misleading. Notwithstanding the foregoing,

         the Company makes no representations or warranties as to information,

         if any, contained in or omitted from the Prospectus Supplement or any

         amendment thereof or supplement thereto in reliance upon and in

         conformity with information furnished in writing to the Company by or

         on behalf of any Placement Agent specifically for use in the

         Registration Statement or the Prospectus Supplement, which information

         the parties hereto agree is limited to the Placement Agents'

         Information as defined in Section 15. No post-effective amendment to

         the Registration Statement reflecting any facts or events arising after

         the date thereof which represent, individually or in the aggregate, a

         fundamental change in the information set forth therein is required to

         be filed with the Commission. There are no documents required to be

         filed with the Commission in connection with the transaction

         contemplated hereby that (x) have not been filed as required pursuant

         to the Securities Act or (y) will not be filed within the requisite

         time period. There are no contracts or other documents required to be

         described in the Base Prospectus or Prospectus Supplement, or to be

         filed as exhibits or schedules to the Registration Statement, which

         have not been described or filed as required.

 

         (c) The Company has delivered, or will as promptly as practicable

         deliver, to the Representative complete conformed copies of the

         Registration Statement and of each consent and certificate of experts

         filed as a part thereof, and conformed copies of the Registration

         Statement (without exhibits) and the Base Prospectus and the Prospectus

         Supplement, as amended or supplemented, in such quantities and at such

         places as the Representative reasonably requests. Neither the Company

         nor any of its directors and

 

 

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         officers has distributed and none of them will distribute, prior to the

         completion of the distribution of Stock, any offering material in

         connection with the offering and sale of the Stock other than the Base

         Prospectus, the Prospectus Supplement, the Registration Statement,

         copies of the documents incorporated by reference therein and any other

         materials permitted by the Securities Act.

 

          (d) The Company has been duly incorporated and is validly existing as a

         corporation under the laws of the State of Delaware, is duly qualified

         to do business and is in good standing (or the equivalent thereof, if

         any) as a foreign corporation in each jurisdiction in which its

         ownership or lease of property or the conduct of its business requires

         such qualification, and has all power and authority necessary to own or

         hold its properties and to conduct the businesses in which it is

         engaged, except where the failure to be so qualified and in good

         standing or have such power or authority would not have, singularly or

         in the aggregate, a material adverse effect on the condition (financial

         or otherwise), results of operations, business, properties or prospects

         of the Company taken as a whole (a "MATERIAL ADVERSE EFFECT").

 

         (e) The Stock to be issued and sold by the Company hereunder and under

         the Subscription Agreements has been duly and validly authorized and,

         when issued and delivered against payment therefor as provided herein

         and therein, will be duly and validly issued, fully paid and

         nonassessable and free of any preemptive or similar rights. The Stock

         conforms to the description thereof contained in, or incorporated by

         reference in, the Base Prospectus and the Prospectus Supplement.

 

         (f) The Company has an authorized capitalization as set forth in, or

         incorporated by reference in, the Base Prospectus and the Prospectus

         Supplement; all of the issued and outstanding shares of capital stock

         of the Company have been duly and validly authorized and issued, are

         fully paid and non-assessable, have been issued in compliance with

         federal and state securities laws, and conform to the description

         thereof contained in, or incorporated by reference in, the Base

         Prospectus and the Prospectus Supplement. None of the outstanding

         shares of Common Stock was issued in violation of any preemptive

         rights, rights of first refusal or other similar rights to subscribe

         for or purchase securities of the Company, other than such rights that

         have been waived. Other than options granted by the Company in the

         ordinary course of business since June 30, 2005, 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 that have been granted by the Company

         other than those accurately described in, or incorporated by reference

         in, the Base Prospectus and the Prospectus Supplement.

 

         (g) The Company has the full right, power and authority to enter into

         this Agreement and each of the Subscription Agreements and to perform

          and to discharge its obligations hereunder and thereunder; and each of

         this Agreement and each of the Subscription Agreements has been duly

         authorized, executed and delivered by the Company, and constitutes a

         valid and binding obligation of the Company enforceable in accordance

         with its terms, except as limited by applicable bankruptcy, insolvency,

         reorganization, moratorium or similar laws affecting creditors' and

         contracting parties' rights generally

 

 

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         and except as enforceability may be subject to general principles of

         equity (regardless of whether such enforceability is considered in a

         proceeding in equity or at law) and except as the indemnification

         agreements of the Company herein may be legally unenforceable.

 

         (h) The execution, delivery and performance of this Agreement and the

         Subscription Agreements by the Company and the consummation of the

         transactions contemplated hereby and thereby will not conflict with or

         result in a breach or violation of any of the terms or provisions of,

         or constitute a default under, any indenture, mortgage, deed of trust,

         loan agreement or other agreement or instrument to which the Company is

         a party or by which the Company is bound or to which any of the

         property or assets of the Company is subject, except any such

         conflicts, breaches or violations which would not reasonably be

         expected to have a Material Adverse Effect, nor will such actions

         result in any violation of the provisions of the charter or by-laws of

         the Company or any statute, law, rule or regulation or any judgment,

         order or decree of any court or governmental agency or body having

         jurisdiction over the Company or any of its properties or assets.

 

         (i) There is no franchise, contract, lease, instrument or other

         document of a character required by the Securities Act or the Rules and

         Regulations to be described in the Base Prospectus and the Prospectus

         Supplement, or to be filed as an exhibit to the Registration Statement,

         which is not described or filed as required, including, but not limited

         to, exhibit filings with the Incorporated Documents; and all statements

         summarizing any such franchises, contracts, leases, instruments or

         other documents or legal matters contained in the Registration

         Statement are accurate and complete in all material respects. Other

         than as described in, or incorporated by reference in, the Base

         Prospectus and the Prospectus Supplement, no such franchise, contract,

         lease, instrument or other document has been suspended or terminated

         for convenience or default by the Company or any of the other parties

         thereto, the Company has not sent or received any communication

         regarding intent not to renew any such franchise, contract, lease,

         instrument or other document, and the Company has not received notice

         or any other knowledge of any such pending or threatened suspension,

         termination or non-renewal, except for such pending or threatened

         suspensions, terminations or non-renewals that would not reasonably be

         expected to, singularly or in the aggregate, have a Material Adverse

         Effect.

 

         (j) The Company possesses all licenses, certificates, authorizations

         and permits issued by, and has made all declarations and filings with,

         the appropriate state, federal or foreign regulatory agencies or bodies

         which are necessary or desirable for the ownership of its properties or

          the conduct of its business as described in the Base Prospectus and the

         Prospectus Supplement (including those that may be required by the U.S.

         Food and Drug Administration (the "FDA") and any state, federal or

         foreign agencies or bodies engaged in the regulation of

         pharmaceuticals) except where any failures to possess or make the same,

         singularly or in the aggregate, would not have a Material Adverse

         Effect, and the Company has not received notification of any revocation

         or modification of any such license, authorization or permit and has no

         reason to believe that any such license, certificate, authorization or

         permit will not be renewed.

 

 

                                        6

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         (k) The minute books of the Company have been made available to the

         Placement Agents and counsel for the Placement Agents, and such books

         (i) contain a complete summary of all meetings and actions of the board

          of directors (including each board committee) and stockholders of the

         Company since the time of its incorporation through the date of the

         latest meeting and action, subject to formal approval by the board or

         applicable board committee of minutes marked as "drafts," and (ii)

         accurately in all material respects reflect all transactions referred

         to in such minutes.

 

         (l) No consent, approval, authorization, filing with or order of or

         registration with, any court or governmental agency or body is required

         in connection with the transactions contemplated herein or in the

         Subscription Agreements, except such as (i) have been obtained or made

         under the Securities Act or the Exchange Act, (ii) may be required from

         the National Association of Securities Dealers and the Nasdaq National

         Market in connection with the purchase and sale of the Stock, and (iii)

         may be required under the securities, or blue sky, laws of any

         jurisdiction in connection with the offer and sale of the Stock by the

         Company in the manner contemplated herein and in the Base Prospectus

         and the Prospectus Supplement.

 

         (m) Except as provided herein, no person has the right to act as an

         underwriter, placement agent or financial advisor to the Company in

         connection with and as a result of the offer and sale of the Shares,

         whether as a result of the filing or effectiveness of the Registration

         Statement or the sale of the Shares as contemplated thereby or

         otherwise; except as described in, or incorporated by reference in, the

         Base Prospectus and the Prospectus Supplement, no person has the right,

          contractual or otherwise, to cause the Company to register under the

         Securities Act any shares of Common Stock or shares of any other

         capital stock or other securities of the Company, or to include any

         such shares or interests in the Registration Statement or the offering

         contemplated thereby, whether as a result of the filing or

         effectiveness of the Registration Statement or the sale of the Stock as

         contemplated hereby or otherwise, except for persons and entities who

         have expressly waived such right or had such right waived on their

         behalf or who have been given timely and proper notice and have failed

         to exercise such right within the time or times required under the

          terms and conditions of such right, and the Company is not required to

         file any registration statement for the registration of any securities

         of any person or register any such securities pursuant to any other

         registration statement filed by the Company under the Securities Act

         for a period of at least 90 days after the date hereof, subject to the

         determination of the Board of Directors of the Company set forth in

         Sections 2.2(c) and 2.4(d) of that certain Amended and Restated

         Investors' Rights Agreement, dated as of April 30, 2003, as amended.

 

         (n) The financial statements, together with the related notes and

         schedules, of the Company included in the Base Prospectus, the

         Prospectus Supplement or the Registration Statement, or incorporated by

         reference therein, as the case may be, fairly present the financial

         condition and results of operations of the Company as of the dates and

         for the periods indicated, comply in all material respects with the

         Securities Act and the Rules and Regulations thereunder, and have been

         prepared in accordance with generally accepted accounting principles

         applied on a consistent basis throughout the periods involved except as

         may be set forth in the Base Prospectus, the Prospectus Supplement or

         the Registration Statement; provided, however, that statements that are

         unaudited are

 

 

                                        7

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         subject to year-end adjustments and do not contain footnotes required

         under generally accepted accounting principles. No other financial

         statements or supporting schedules or exhibits are required by the

          Securities Act or the Rules and Regulations thereunder to be included

         in the Base Prospectus, the Prospectus Supplement or the Registration

         Statement, or incorporated by reference therein, as the case may be.

 

         (o) Except as set forth in, or incorporated by reference in, the Base

         Prospectus and the Prospectus Supplement, there is no legal or

         governmental proceeding pending to which the Company is a party or of

         which any property or assets of the Company is the subject which

         singularly or in the aggregate, if determined adversely to the Company,

         might have a Material Adverse Effect or would prevent or adversely

         affect the ability of the Company to perform its obligations under this

         Agreement; and to the best of the Company's knowledge, no such

         proceedings are threatened or contemplated by governmental authorities

         or threatened by others.

 

         (p) Except as described in, or incorporated by reference in, the Base

         Prospectus and the Prospectus Supplement, the Company has good and

         marketable title in fee simple to, or have valid rights to lease or

         otherwise use, all items of real or personal property which are

         material to its business, in each case free and clear of all liens,

         encumbrances, claims and defects that may result in a Material Adverse

         Effect.

 

         (q) The Company is not (i) in violation of its charter or bylaws, (ii)

         in default in any respect, and no event has occurred which, with notice

         or lapse of time or both, would constitute such a default, in the due

         performance or observance of any term, covenant, or condition of any

         indenture, contract, lease, mortgage, deed of trust, note agreement,

         loan agreement or other agreement, obligation, condition, covenant or

         instrument to which it is a party or by which it is bound or to which

         any of its property or assets is subject, or (iii) in violation in any

         respect of any law, ordinance, governmental rule, regulation, or court

         decree to which it or its properties or assets may be subject, except

         any violations or defaults which, singularly or in the aggregate, would

         not have a Material Adverse Effect.

 

         (r) No labor disturbance by the employees of the Company exists or, to

         the best of the Company's knowledge, is imminent, which might be

         expected to have a Material Adverse Effect. The Company is not aware

         that any key employee or significant group of employees of the Company

         plans to terminate employment with the Company, which might be expected

         to have a Material Adverse Effect.

 

         (s) No "prohibited transaction" (as defined in Section 406 of the

         Employee Retirement Income Security Act of 1974, as amended, including

         the regulations and published interpretations thereunder ("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 have a

         Material Adverse Effect; each employee benefit plan 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

 

 

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<PAGE>

         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.

 

         (t) The Company carries, or is covered by, insurance in such amounts

         and covering such risks as is adequate for the conduct of its business

         and the value of its properties and as is customary for companies

         engaged in similar businesses in similar industries.

 

         (u) There is no pending or threatened action, suit, claim or proceeding

         which may cause any such Permit to be limited, revoked, cancelled,

         suspended, modified or not renewed and the Company has not received any

         notice of proceedings relating to the limitation, revocation,

         cancellation, suspension, modification or non-renewal of any such

         Permit which, singularly or in the aggregate, if the subject of an

         unfavorable decision, ruling or finding, would have a Material Adverse

         Effect, whether or not arising from transactions in the ordinary course

         of business, except as set forth in or contemplated by the Base

         Prospectus or the Prospectus Supplement.

 

         (v) Ernst & Young LLP, who have expressed their opinions on certain

         audited financial statements of the Company included in the Base

         Prospectus, the Prospectus Supplement or the Registration Statement, or

         incorporated by reference therein, as the case may be, are independent

         registered public accountants with respect to the Company within the

         meaning of the Securities Act and the Rules and Regulations.

 

         (v) The Company (i) has filed all necessary federal, state and foreign

         income and franchise tax returns, except where the failure to do so

         would not have a Material Adverse Effect, (ii) has paid all federal,

         state, local and foreign taxes due and payable for which it is liable,

         except to the extent such taxes are being contested in good faith, and

         (iii) does not have any tax deficiency or claims outstanding or

         assessed or, to the best of the Company's knowledge, proposed against

         it which could reasonably be expected to have a Material Adverse

         Effect.

 

         (w) The principal executive officer and principal financial officer of

         the Company have made all certifications required by the Sarbanes-Oxley

         Act of 2002 and the rules and regulations promulgated in connection

         therewith (the "SARBANES-OXLEY ACT"), and the statements contained in

         any such certification are complete and correct. The Company maintains

         "disclosure controls and procedures" (as defined in Rule 13a-14(c)

         under the Exchange Act), and such controls and procedures are

         reasonably designed to ensure that information required to be disclosed

         by the Company in the reports that it files or submits under the

         Exchange Act is (i) recorded, processed, summarized and reported,

         within the time periods specified in the Commission's rules and forms

         and (ii) accumulated and communicated to the Company's management,

         including its principal executive officer and principal financial

         officer, as appropriate to allow timely decisions regarding required

         disclosure. The Company does not have any material weaknesses in

         internal controls, and there has been no reported fraud, whether or not

         material, that involves management or other employees who have a

         significant role in the Company's

 

 

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<PAGE>

         internal controls. The Company is otherwise in compliance in all

         respects with all applicable effective provisions of the Sarbanes-Oxley

         Act and the rules and regulations promulgated by the Commission (and

         intends to comply with all applicable provisions that are not yet

         effective upon effectiveness).

 

         (x) The Company 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

         authorizations; (ii) transactions are recorded as necessary to permit

         preparation of financial statements in conformity with generally

         accepted accounting principles and to maintain accountability of

         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 the existing assets at

         reasonable intervals and appropriate action is taken with respect to

         any differences.

 

         (y) There has been no storage, generation, transportation, handling,

         treatment, disposal, discharge, emission, or other release of any kind

         of toxic or other wastes or other hazardous substances by, due to, or

         caused by the Company (or, to the best of the Company's knowledge, any

         other entity for whose acts or omissions the Company is or may be

         liable) upon any of the property now or previously owned or leased by

         the Company, or upon any other property, in violation of any statute or

         any ordinance, rule, regulation, order, judgment, decree or permit or

         which would, under any statute or any ordinance, rule (including rule

         of common law), regulation, order, judgment, decree or permit, give

         rise to any liability, except for any violation or liability which

         would not have, singularly or in the aggregate with all such violations

         and liabilities, a Material Adverse Effect; there has been no disposal,

         discharge, emission or other release of any kind onto such property or

         into the environment surrounding such property of any toxic or other

         wastes or other hazardous substances with respect to which the Company

         has knowledge, except for any such disposal, discharge, emission or

         other release of any kind which would not have, singularly or in the

         aggregate with all such discharges and other releases, a Material

         Adverse Effect.

 

         (z) The Company owns or possesses the right to use all patents,

         trademarks, trademark registrations, service marks, service mark

         registrations, trade names, copyrights, licenses, inventions, trade

         secrets and rights described in the Prospectus as being owned by it for

         the conduct of its business as now conducted and as proposed to be

         conducted or otherwise necessary or used in connection with the

         commercialization of the Company's existing marketed product and the

         Company's products specifically described in the Base Prospectus and

         the Prospectus Supplement as being under development (collectively, the

         "COMPANY INTELLECTUAL PROPERTY"), and, except as described in, or

         incorporated by reference in, the Base Prospectus and the Prospectus

         Supplement, the Company is not aware of any claim to the contrary or

         any challenge by any other person to the rights of the Company with

         respect to the foregoing. To the best of the Company's knowledge, none

         of the patents owned or licensed by the Company is unenforceable or

         invalid, and none of the patent applications owned or licensed by the

         Company would be unenforceable or invalid if issued as patents. The

         Company is not obligated to pay a royalty, grant a license or provide

         other consideration to any third

 

 

                                       10

<PAGE>

         person in connection with the Company Intellectual Property other than

         as described in, or incorporated by reference in, the Base Prospectus

         and the Prospectus Supplement. To the best of the Company's knowledge,

         the Company's business as now conducted and as proposed to be conducted

         does not and will not infringe or conflict with any valid intellectual

         property or franchise right, including patents, trademarks, service

         marks, trade names, copyrights, trade secrets or licenses of any

         person, except as described in the Prospectus or as would not have a

         Material Adverse Effect. Except as described in the Prospectus and for

         claims relating to trademarks that are not material to the business of

         the Company, no written claim has been made against the Company

         alleging the infringement by the Company of any patent, trademark,

         service mark, trade name, copyright, trade secret, license in or other

         intellectual property right or franchise right of any person.

 

         (aa) The studies, tests and preclinical and clinical trials conducted

         by or on behalf of the Company that are described or referred to in the

         Base Prospectus or Prospectus Supplement were and, if still pending,

         are being conducted in material compliance with applicable regulatory

         requirements. The descriptions of the results of such studies, tests

         and trials contained or referred to in the Base Prospectus or

         Prospectus Supplement are accurate and complete in all material

         respects. The Company is not aware of any studies, tests or trials the

         results of which the Company believes reasonably call into question in

         any material respect the clinical trial results described or referred

         to in the Base Prospectus or Prospectus Supplement when viewed in the

         context in which such results are described and the clinical state of

         development. The Company has not received any notices or correspondence

          from the FDA or any foreign, state or local governmental body

         exercising comparable authority requiring the termination, suspension

         or material modification of any studies, tests or preclinical or

         clinical trials conducted by or on behalf of the Company. For the

         avoidance of doubt, the Company makes no representation or warranty

         that the results of any studies, tests or preclinical or clinical

         trials conducted by or on behalf of the Company will be sufficient to

         obtain governmental approval from the FDA or any foreign, state or

         local governmental body exercising comparable authority.

 

         (bb) The Company does not 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 Stock 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.

 

         (cc) No relationship, direct or indirect, exists between or among the

         Company on the one hand and the directors, officers, stockholders,

         customers or suppliers of the Company on the other hand which is

         req