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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
COWEN & CO., LLC
LAZARD CAPITAL MARKETS LLC
PACIFIC GROWTH EQUITIES, LLC
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UNDERWRITING
AGREEMENT
[Date]
BANC OF AMERICA SECURITIES LLC
COWEN & CO., LLC
LAZARD CAPITAL MARKETS LLC
PACIFIC GROWTH EQUITIES, LLC
As
Representatives of the several Underwriters
c/o BANC OF
AMERICA SECURITIES LLC
9 West 57th
Street
New York, NY
10019
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"), Cowen & 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 ("EDGAR").
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 EDGAR (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
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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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<PAGE>
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)
Sarbanes-Oxley 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 Sarbanes-Oxley Act of 2002 and the
rules and
regulations promulgated in connection therewith (the
"Sarbanes-Oxley 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,
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<PAGE>
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
<PAGE>
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
<PAGE>
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 Ac
