Exhibit 1.1
EXECUTION COPY
11,500,000 Shares
ARENA PHARMACEUTICALS,
INC.
Common Stock
UNDERWRITING
AGREEMENT
December 8, 2006
CIBC World Markets Corp.
as Representative of the
several
Underwriters named in Schedule I
hereto
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York
10016
Ladies and Gentlemen:
Arena Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), proposes, subject
to the terms and conditions contained herein, to sell to you and
the other underwriters named on Schedule I to this Agreement (the
“Underwriters”), for whom you are acting as
Representative (the “Representative”), an aggregate of
11,500,000 shares (the “Firm Shares”) of the
Company’s common stock, $0.0001 par value per share (the
“Common Stock”). The respective amounts of the
Firm Shares to be purchased by each of the several Underwriters are
set forth opposite their names on Schedule I hereto. In addition,
the Company proposes to grant to the Underwriters an option to
purchase up to an additional 1,725,000 shares (the “Option
Shares”) of Common Stock from the Company for the purpose of
covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are
collectively called the “Shares.”
The Company has prepared and filed
in conformity with the requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules”) adopted
by the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (No.
333-137030), including a related prospectus dated September 12,
2006 (the “Base Prospectus”) relating to Common Stock
that may be sold from time to time by the Company in accordance
with Rule 415 of the Securities Act, and such amendments thereof as
may have been required to the date of this Agreement. Copies
of such Registration Statement (including all amendments thereof
and all documents deemed incorporated by reference therein) and of
the related Base Prospectus have heretofore been delivered by the
Company to you. The term “Registration Statement”
as used in this Agreement means the initial registration statement
(including all exhibits, financial schedules
1
and all documents and information
deemed to be a part of the Registration Statement by incorporation
by reference or otherwise, including pursuant to Rule 430B of the
Rules), as amended at the time it became effective and as
supplemented or amended prior to the execution of this Agreement,
including pursuant to Rule 430B of the Rules. If the Company
has filed an abbreviated registration statement to register
additional Shares pursuant to Rule 462(b) under the Rules (the
“462(b) Registration Statement”), then any reference
herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The term
“Preliminary Prospectus” means the Base Prospectus and
any preliminary prospectus supplement filed with the Commission
pursuant to Rule 424 of the Rules, for use in connection with the
offering of the Shares. The term “Prospectus”
means the Base Prospectus and the final prospectus supplement (the
“Prospectus Supplement”), filed pursuant to and within
the time limits described in Rule 424(b) with the Commission in
connection with the proposed sale of the Shares contemplated by
this Agreement. The term “Effective Date” shall
mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective. Unless otherwise stated herein, any reference herein to
the Registration Statement, any Preliminary Prospectus, the
Statutory Prospectus (as hereinafter defined) and the Prospectus
shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, which were filed under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), on or before
the date hereof or are so filed hereafter. Any reference herein to
the terms “amend,” “amendment” or
“supplement” with respect to the Registration
Statement, any Preliminary Prospectus, the Statutory Prospectus or
the Prospectus shall be deemed to refer to and include any such
document filed or to be filed under the Exchange Act after the date
of the Registration Statement, any Preliminary Prospectus, the
Statutory Prospectus or Prospectus, as the case may be, and deemed
to be incorporated therein by reference.
The Company understands that the
Underwriters propose to make a public offering of the Shares, as
set forth in and pursuant to the Statutory Prospectus (as
hereinafter defined) and the Prospectus, as soon after the
Effective Date and the date of this Agreement as the Representative
deems advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or
cause to be distributed the Preliminary Prospectus and each Issuer
Free Writing Prospectus (as hereinafter defined) in connection with
the offering of the Shares and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the
Underwriters) in connection with the sale of the Shares.
1. Sale,
Purchase, Delivery and Payment for the Shares . On the
basis of the representations, warranties and agreements contained
in, and subject to the terms and conditions of, this
Agreement:
(a)
The Company agrees to issue and sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $12.5165 per
share (the “Initial Price”), the number of Firm Shares
set forth opposite the name of such Underwriter under the column
“Number of Firm Shares to be Purchased” on Schedule I
to this Agreement, subject to adjustment in accordance with Section
9 hereof.
2
(b)
The Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to
be purchased by each Underwriter shall be the same percentage
(adjusted by the Representative to eliminate fractions) of the
total number of Option Shares to be purchased by the Underwriters
as such Underwriter is purchasing of the Firm Shares. Such
option may be exercised only to cover over-allotments in the sales
of the Firm Shares by the Underwriters and may be exercised in
whole or in part at any time on or before 12:00 noon, New York City
time, on the business day before the Firm Shares Closing Date (as
defined below), and from time to time thereafter within 30 days
after the date of this Agreement, in each case upon written,
facsimile or telegraphic notice, or verbal or telephonic notice
confirmed by written, facsimile or telegraphic notice, by the
Representative to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Shares Closing Date
or at least two business days before the Option Shares Closing Date
(as defined below), as the case may be, setting forth the number of
Option Shares to be purchased and the time and date (if other than
the Firm Shares Closing Date) of such purchase.
(c)
Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of CIBC World
Markets Corp., 300 Madison Avenue, New York, New York 10016, at
10:00 a.m., New York City time, on the third business day following
the date of this Agreement or at such time on such other date, not
later than ten (10) business days after the date of this Agreement,
as shall be agreed upon by the Company and the Representative (such
time and date of delivery and payment are called the “Firm
Shares Closing Date”). In addition, in the event that
any or all of the Option Shares are purchased by the Underwriters,
payment of the purchase price, and delivery of the certificates,
for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representative and the Company, on each date of delivery as
specified in the notice from the Representative to the Company
(such time and date of delivery and payment are called the
“Option Shares Closing Date”). The Firm Shares
Closing Date and any Option Shares Closing Date are called,
individually, a “Closing Date” and, together, the
“Closing Dates.”
(d)
Payment shall be made to the Company by wire transfer of
immediately available funds, against delivery of the respective
certificates to the Representative for the respective accounts of
the Underwriters of certificates for the Shares to be purchased by
them.
(e)
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representative
shall request at least two full business days before the Firm
Shares Closing Date or, in the case of Option Shares, on the day of
notice of exercise of the option as described in Section 1(b) and
shall be delivered by or on behalf of the Company to the
Representative through the facilities of the Depository Trust
Company (“DTC”)
3
for the account of such
Underwriter. The Company will cause the certificates
representing the Shares to be made available for checking and
packaging, at such place as is designated by the Representative, on
the full business day before the Firm Shares Closing Date (or the
Option Shares Closing Date in the case of the Option
Shares).
2.
Representations and Warranties of the Company . The
Company represents and warrants to each Underwriter as of the date
hereof, as of the Firm Shares Closing Date and as of each Option
Shares Closing Date (if any), as follows:
(a)
The Company meets the requirements for use of Form S-3 under the
Securities Act and has filed with the Commission the Registration
Statement on such Form, including a Base Prospectus, for
registration under the Securities Act of the offering and sale of
the Shares. When the Registration Statement or any amendment
thereof or supplement thereto was or is declared effective by the
Commission, it (i) complied or will comply, in all material
respects, with the requirements of the Securities Act and the Rules
and the Exchange Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein not misleading. When the Preliminary
Prospectus or the Prospectus was first filed with the Commission
and as of each Closing Date (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule
424 of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission and as of each Closing
Date, such Preliminary Prospectus or Prospectus as amended or
supplemented complied in all material respects with the applicable
provisions of the Securities Act and the Rules. The
Prospectus as of its date and each Closing Date did not or will
not, and the Statutory Prospectus as of its date and, together with
the Pricing Information (as defined below), as of each Closing Date
will not, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
If applicable, each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T. Notwithstanding the
foregoing, none of the representations and warranties in this
paragraph 2(a) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus or any amendment thereof
or supplement thereto made in reliance upon, and in conformity
with, information herein or otherwise furnished in writing by the
Representative on behalf of the several Underwriters expressly for
use in the Registration Statement or the Prospectus. With
respect to the preceding sentence, the Company acknowledges that
the only information furnished in writing by the Representative on
behalf of the several Underwriters expressly for use in the
Registration Statement, the Preliminary Prospectus or the
Prospectus or any amendment thereof or supplement thereto is the
statements contained in the tenth, eleventh and twelfth paragraphs
and the
4
section entitled “Notice to
Non-U.S. Investors” under the caption
“Underwriting” (collectively, the “Underwriter
Information”).
(b)
As of the Applicable Time (as hereinafter defined below), neither
(i) the Issuer Free Writing Prospectus(es) (as defined below)
issued at or prior to the Applicable Time, the Pricing Information
and the Statutory Prospectus (as defined below), all considered
together (collectively, the “General Disclosure
Package”), nor (ii) any individual Issuer Free Writing
Prospectus when considered together with the General Disclosure
Package, included any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to statements in or omissions from any prospectus included in
the General Disclosure Package made in reliance upon and in
conformity with the Underwriter Information.
Each Issuer Free Writing Prospectus,
including any road show (as defined in Rule 433(h)(4) of the Rules)
that is a written communication transmitted by graphic means (each,
a “Road Show”) (i) is identified in Schedule III
hereto, (ii) that the Company is required to file pursuant to Rule
433(d) of the Rules has been, or will be, filed with the Commission
in accordance with the requirements of the Securities Act and the
applicable Rules and (iii) complied when issued, and complies, in
all material respects with Rule 433(c) of the Rules.
As used in this Section and
elsewhere in this Agreement:
“Applicable Time” means
6:30 a.m. (Eastern time) on the date of this Underwriting
Agreement.
“Statutory Prospectus”
as of any time means the Preliminary Prospectus relating to the
Shares that is included in the Registration Statement immediately
prior to the Applicable Time, including any document incorporated
by reference therein and any prospectus supplement deemed to be a
part thereof.
“Issuer Free Writing
Prospectus” means each “free writing prospectus”
(as defined in Rule 405 of the Rules) prepared by or on behalf of
the Company or used or referred to by the Company in connection
with the offering of the Shares, including, without limitation,
each Road Show.
“Pricing Information”
means the information set forth in Schedule IV hereto.
(c)
The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of any
Preliminary Prospectus, or any “free writing
prospectus,” as defined in Rule 405 under the Rules, has been
issued by the Commission and, to the Company’s knowledge, no
proceedings for
5
that purpose have been instituted or
are threatened under the Securities Act. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of
the Rules has been or will be made in the manner and within the
time period required by such Rule 424(b).
(d)
The documents incorporated by reference in the Registration
Statement, any Preliminary Prospectus and the Prospectus, at the
time they became effective or were filed with the Commission, as
the case may be, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and any further documents so filed
and incorporated by reference in the Registration Statement and the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an 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, in light of the
circumstances under which they are made, not misleading.
(e)
Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the Firm Shares Closing Date or until
any earlier date that the Company notified or notifies the
Representative 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, including any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof
that has not been superseded or modified.
If at any time following issuance of
an Issuer Free Writing Prospectus through the Firm Shares Closing
Date there occurred an event or development as a result of which
such Issuer Free Writing Prospectus conflicted with the information
contained in the Registration Statement, including any document
incorporated by reference therein and any prospectus supplement
deemed to be a part thereof that has not been superseded or
modified, or included an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances prevailing at the subsequent time, not
misleading, the Company has promptly notified the Representative
and has promptly amended or supplemented, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission.
(f)
The financial statements of the Company (including all notes and
schedules thereto) included or incorporated by reference in the
Registration
6
Statement, the General Disclosure
Package and the Prospectus, including after giving effect to the
issuance of Company Stock Options (as defined below), present
fairly, in all material respects, the financial position of the
Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders’ equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified; and such financial statements and related
schedules and notes thereto, and the unaudited financial
information filed with the Commission as part of the Registration
Statement, have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods
involved (provided that non-year-end financial statements are
subject to normal recurring year-end audit adjustments that are not
expected to be material in the aggregate and do not contain all
footnotes required by generally accepted accounting
principles). The summary and selected financial data included
in the General Disclosure Package and the Prospectus present
fairly, in all material respects, the information shown therein as
at the respective dates and for the respective periods specified
and have been presented on a basis consistent with the consolidated
financial statements set forth in the Prospectus and other
financial information.
(g)
There has not occurred any material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations or prospects of the Company, from that set forth in the
General Disclosure Package and the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement).
(h)
Ernst & Young LLP, whose reports are filed with the Commission
as a part of the Registration Statement, is and, during the periods
covered by its reports, was an independent registered public
accounting firm as required by the Securities Act and the
Rules.
(i)
The Company and each of its subsidiaries is duly organized, validly
existing and in good standing under the laws of their respective
jurisdictions of incorporation or organization. The Company
and each of its subsidiaries is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted by it or location of
the assets or properties owned, leased or licensed by it requires
such qualification, except for such jurisdictions where the failure
to so qualify or be in good standing, individually or in the
aggregate, would not reasonably be expected to have a material
adverse effect on the assets, properties, condition, financial or
otherwise, or in the results of operations or business affairs or
business prospects of the Company and its subsidiaries considered
as a whole (a “Material Adverse Effect”); and to the
Company’s knowledge, no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or
qualification.
(j)
The Registration Statement initially became effective on September
12, 2006.
7
(k)
(i) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant (within
the meaning of Rule 142 of the Rules) made a bona fide offer
(within the meaning of Rule 164(h)(2) of the Rules) of the
Shares and (ii) at the date hereof, the Company was not and is not
an “ineligible issuer,” as defined in Rule 405 of
the Rules, including (but not limited to) the Company or any
other subsidiary in the preceding three years not having been
convicted of a felony or misdemeanor or having been made the
subject of a judicial or administrative decree or order as
described in Rule 405 of the Rules.
(l)
Except as set forth in the General Disclosure Package, the Company
and each of its subsidiaries has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity
(collectively, the “Permits”), to own, lease and
license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack
of such Permits, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The
Company and each of its subsidiaries has fulfilled and performed in
all material respects all of its material obligations with respect
to such Permits and, to the Company’s knowledge, no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as
may be required under the Securities Act and state and foreign Blue
Sky laws, no other Permits are required to enter into, deliver and
perform this Agreement and to issue and sell the Shares. All
of the descriptions in the Registration Statement, the General
Disclosure Package and the Prospectus of the legal and governmental
procedures and requirements of the United States Food and Drug
Administration (the “FDA”) or any foreign, state or
local governmental body exercising comparable authority are
accurate in all material respects.
(m)
Except as set forth in the General Disclosure Package and the
Prospectus, the Company and each of its subsidiaries owns or
possesses rights to use all material patents, patent rights,
inventions, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge
(collectively, “Intangibles”) necessary for the conduct
of its business as conducted on the date hereof. To the
Company’s knowledge, neither the Company nor any of its
subsidiaries has received any written notice of any infringement of
or conflict with asserted rights of others with respect to any
Intangibles, except as referenced in the General Disclosure Package
and the Prospectus. To the Company’s knowledge, no
action, suit, arbitration or legal, administrative or other
proceeding or investigation to which the Company is a party is
pending or threatened which involves any Intangibles, and the
Company does not believe, based on facts of which it is currently
aware, that any such action, if brought, would be successful on the
merits and result in a Material Adverse Effect. Except as
disclosed in the General Disclosure Package and the Prospectus and
to the Company’s knowledge, the Intangibles of the Company
referred to in the General
8
Disclosure Package and the
Prospectus do not materially infringe or conflict with any right or
valid and enforceable patent of any third party, or any discovery,
invention, product or process which is the subject of a patent
application filed by any third party, known to the Company.
To the Company’s knowledge, it is not subject to any
judgment, order, writ, injunction or decree of any court or any
U.S. federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, except for such orders,
writs, injunctions or decrees that, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect, nor, except as referenced in the General Disclosure
Package and the Prospectus, has it entered into or is a party to
any contract which restricts or impairs the use of any Intangible
in a manner which would reasonably be expected to have a material
adverse effect on the use of any of the Intangibles. The
Company has complied with its respective contractual obligations
relating to the protection of the Intangibles used pursuant to
licenses, except for any such noncompliance that, individually or
in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company is not a party to or
bound by any options, licenses or agreements with respect to the
Intangibles of any other person or entity that are required to be
set forth in the General Disclosure Package and the Prospectus and
that are not set forth therein. To the Company’s knowledge,
none of the Intangibles employed by it has been obtained or is
being used by it in violation of any contractual obligation binding
on the Company or any of its officers, directors or employees in
violation of the contractual rights of any persons. Except as
set forth in the Registration Statement, the General Disclosure
Package and the Prospectus, the Company is not obligated to pay a
royalty, grant a license or provide other consideration to any
third party in connection with its patents, patent rights,
licenses, inventions, trademarks, service marks, trade names,
copyrights and know-how which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect; and, except as set forth in the Registration Statement, the
General Disclosure Package and the Prospectus, no third party,
including any academic or governmental organization, possess rights
to the Intangibles which, if exercised, would reasonably be
expected to have a Material Adverse Effect.
(n)
The Company and each of its subsidiaries has good and marketable
title in fee simple to all real property owned by it, and good and
marketable title to all personal property owned by it, in each case
free and clear of all liens, encumbrances and defects, except as
are described in the General Disclosure Package and the Prospectus
or such as do not materially 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 and its subsidiaries.
All property held under lease by the Company and its subsidiaries
is held by them under valid, existing and enforceable leases, with
only such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such property
by the Company and its subsidiaries. Subsequent to the
respective dates as of which information is given in the
Registration Statement, the General Disclosure Package and the
Prospectus, (i) there has not been any Material Adverse
Effect;
9
(ii) neither the Company nor
any of its subsidiaries has sustained any loss or interference with
its assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which
would reasonably be expected to have a Material Adverse Effect; and
(iii) since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement, the
General Disclosure Package and the Prospectus, except as otherwise
disclosed in the General Disclosure Package and the Prospectus,
neither the Company nor its subsidiaries has (A) incurred any
liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary
course of business, (B) entered into any transaction not in
the ordinary course of business or (C) declared or paid any
dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its capital
stock. As of September 30, 2006, the Company had 47,449,825
shares of common stock issued and outstanding.
(o)
There is no document, contract or other agreement required to be
described in the Registration Statement, the General Disclosure
Package or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required
by the Securities Act or Rules or incorporated therein by reference
as permitted by the Rules. Each description of a contract,
document or other agreement in the Registration Statement, the
General Disclosure Package and the Prospectus accurately reflects
in all material respects the terms of the underlying contract,
document or other agreement. Each contract, document or other
agreement described in the Registration Statement, the General
Disclosure Package or the Prospectus or listed in the Exhibits to
the Registration Statement or incorporated by reference is in full
force and effect and is valid and enforceable by and against the
Company or any of its subsidiaries, as the case may be, in
accordance with its terms. Neither the Company nor any of its
subsidiaries, if a subsidiary is a party, nor to the
Company’s knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed
by it under any such agreement, and no event has occurred which
with notice or lapse of time or both would constitute such a
default, in any such case which default or event, individually or
in the aggregate, would reasonably be expected to have a Material
Adverse Effect. No default exists, and no event has occurred
which with notice or lapse of time or both would constitute a
default, in the due performance and observance of any term,
covenant or condition, by the Company or its subsidiary, if a
subsidiary is a party thereto, of any other agreement or instrument
to which the Company or any of its subsidiaries is a party or by
which the Company or its properties or business of a subsidiary or
its properties or business may be bound or affected which default
or event, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
10
(p)
The scientific (other than the Company’s clinical trial
results), statistical and market related data included in the
Registration Statement, the General Disclosure Package and the
Prospectus are based on or derived from sources that are credible
and which the Company believes to be reliable and
accurate.
(q)
Neither the Company nor any of its subsidiaries is in violation of
any term or provision of (i) its charter or by-laws or (ii) of any
franchise, license, permit, judgment, decree, order, statute, rule
or regulation, except, with respect to subsection (ii), where the
consequences of such violation, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse
Effect.
(r)
This Agreement has been duly and validly authorized, executed and
delivered by the Company.
(s)
Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions
contemplated hereby by the Company (including, without limitation,
the issuance and sale by the Company of the Shares) will give rise
to a right to terminate or accelerate the due date of any payment
due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under,
or require any consent or waiver under, or result in the execution
or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or its subsidiaries pursuant to
the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which either the Company or its
subsidiaries or any of their properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute,
rule or regulation applicable to the Company or any of its
subsidiaries, except where it would not reasonably be expected to
have a Material Adverse Effect, or violate any provisions of the
charter or by-laws of the Company of any of its subsidiaries,
except for such consents or waivers which have already been
obtained and are in full force and effect.
(t)
On the date set forth therein, the Company had the authorized and
outstanding capital stock as set forth under the caption
“Capitalization” in the Statutory Prospectus and the
Prospectus (and any similar sections or information, if any,
contained in any Issuer Free Writing Prospectus). The
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company.
All of the issued and outstanding shares of Common Stock have been
duly and validly issued and are fully paid and nonassessable.
Except for the Rights Agreement, dated October 30, 2002, as
amended, between the Company and Computershare Trust Company, Inc.,
the Securities Purchase Agreement for Series B Convertible
Preferred Stock and warrants dated December 24, 2003, among
the Company and the investor signatories thereto, there are no
statutory preemptive or other similar rights granted by the Company
to subscribe for or to purchase or acquire any shares of
11
Common Stock of the Company or any
of its subsidiaries or any such rights pursuant to its Certificate
of Incorporation or by-laws or any agreement or instrument to or by
which the Company or any of its subsidiaries is a party or
bound. All grants of options to acquire Common Stock (each, a
“Company Stock Option”) were validly issued and
approved by the Board of Directors of the Company, a committee
thereof or an individual with authority duly delegated by the Board
of Directors of the Company or a committee thereof. Grants of
Company Stock Options were (i) made in material compliance with all
applicable laws and (ii) as a whole, made in material compliance
with the terms of the plans under which such Company Stock Options
were issued. There is no and has been no policy or practice
of the Company to coordinate the grant of Company Stock Options
with the release or other public announcement of material
information regarding the Company or its results of operations or
prospects to minimize the exercise price of such Company Stock
Options. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right granted by the Company.
Except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance by the
Company of, and there is no commitment, plan or arrangement by the
Company to issue, any share of stock of the Company or any security
convertible into, or exercisable or exchangeable for, such
stock. The Common Stock and the Shares conform in all
material respects to all statements in relation thereto contained
in the Registration Statement, the General Disclosure Package and
the Prospectus. All outstanding shares of capital stock of
each of the Company’s subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable and are
owned directly by the Company or by another wholly owned subsidiary
of the Company free and clear of any security interests, liens,
encumbrances, equities or claims, other than those described in the
General Disclosure Package and the Prospectus.
(u)
No holder of any security of the Company has any right granted by
the Company, which has not been waived or previously satisfied, to
have any security owned by such holder included in the Registration
Statement or to demand registration of the sale of any security
owned by such holder for a period of 180 days after the date of
this Agreement. Each director and executive officer of the
Company, all of whom are Company listed on Schedule II hereto, has
delivered to the Representative his written lock-up agreement in
the form attached to this Agreement as Exhibit A hereto or
in such form as may be approved by the Representative
(“Lock-Up Agreement”).
(v)
To the knowledge of the Company, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries could individually or in the
aggregate have a Material Adverse
12
Effect; and, to the knowledge of the
Company, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(w)
All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the
Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will
constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its respective
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally
and by general equitable principles.
(x)
Neither the Company nor any of its subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would reasonably be expected to
have a Material Adverse Effect. The Company is not aware of
any existing or imminent labor disturbance by the employees of any
of its principal suppliers or contractors which would reasonably be
expected to have a Material Adverse Effect. The Company is
not aware of any threatened or pending litigation between the
Company or its subsidiaries and any of its executive officers
which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect.
(y)
No transaction has occurred between or among the Company and any of
its officers or directors, stockholders or any affiliate or
affiliates of any such officer or director or stockholder that is
required to be described in and is not described in the
Registration Statement, the General Disclosure Package and the
Prospectus.
(z)
The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the
sale or resale of any of the Shares.
(aa)
The Company and each of its subsidiaries has accurately prepared
and filed all material Federal, state, local and foreign tax
returns which are required to be filed through the date hereof, or
has received timely extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the
extent that the same are material and have become due. To the
Company’s knowledge, there are no tax audits or
investigations pending; nor to the Company’s knowledge are
there any material proposed additional tax assessments against the
Company or any of its subsidiaries.
(bb)
The Shares have been duly authorized for listing on the NASDAQ
Stock Market LLC’s (“Nasdaq”) Global
Market.
13
