EXHIBIT 1.1
VANDA PHARMACEUTICALS INC.
5,750,000 Shares of Common Stock
Underwriting Agreement
__________, 2006
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Banc of America Securities LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Vanda Pharmaceuticals Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters listed in Schedule 1
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), an aggregate of 5,750,000 shares of Common Stock, par value
$0.001 per share, of the Company (the "Underwritten Shares" and, at the option
of the Underwriters, up to an additional 862,500 shares of Common Stock of the
Company (the "Option Shares"). The Underwritten Shares and the Option Shares are
herein referred to as the "Shares"). The shares of Common Stock of the Company
to be outstanding after giving effect to the sale of the Shares are herein
referred to as the "Stock".
The Company hereby confirms its agreement with the several Underwriters
concerning the purchase and sale of the Shares, as follows:
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Securities Act"), a registration statement (File No.
333-130759) including a prospectus, relating to the Shares. Such registration
statement, as amended at the time it becomes effective, including the
information, if any, deemed pursuant to Rule 430A under the Securities Act to be
part of the registration statement at the time of its effectiveness ("Rule 430A
Information"), is referred to herein as the "Registration Statement"; and as
used herein, the term "Preliminary Prospectus" means each prospectus filed with
the Commission pursuant to Rule 424(a) under the Securities Act (including
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the prospectus included in the Registration Statement at the time of its
effectiveness that omits Rule 430A Information (the "Pricing Prospectus")), and
the term "Prospectus" means the prospectus in the form first used (or made
available upon request of purchasers pursuant to Rule 173 under the Securities
Act) in connection with confirmation of sales of the Shares. If the Company has
filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Registration Statement and the
Prospectus.
At or prior to the time when sales of the Shares were first made (the
"Time of Sale"), the Company had prepared the following information
(collectively with the pricing information set forth on Annex B, the "Time of
Sale Information"): the Pricing Prospectus and each "free-writing prospectus"
(as defined pursuant to Rule 405 under the Securities Act) listed on Annex B
hereto (including any and all documents incorporated by reference therein, by
hyperlink, legend or otherwise, in each case in accordance with the applicable
rules of the Commission). If, subsequent to the date of this Agreement, the
Company and the Underwriters have determined that such information included an
untrue statement of material fact or omitted a statement of material fact
necessary to make the information therein, in the light of the circumstances
under which it was made, not misleading and have agreed to provide an
opportunity to purchasers of the Shares to terminate their old purchase
contracts and enter into new purchase contracts, then "Time of Sale Information"
will refer to the information available to purchasers at the time of entry into
the first such new purchase contract.
2. Purchase of the Shares by the Underwriters. (a) The Company agrees to
issue and sell the Shares to the several Underwriters as provided in this
Agreement, and each Underwriter, on the basis of the representations, warranties
and agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
number of Underwritten Shares set forth opposite such Underwriter's name in
Schedule 1 hereto at a price per share the "Purchase Price" of $ .
In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as provided in this Agreement, and the Underwriters, on the
basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, shall have the option to purchase,
severally and not jointly, from the Company the Option Shares at the Purchase
Price.
If any Option Shares are to be purchased, the number of Option Shares to
be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule 1 hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
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The Underwriters may exercise the option to purchase the Option Shares at
any time in whole, or from time to time in part, on or before the thirtieth day
following the date of this Agreement, by written notice from the Representatives
to the Company. Such notice shall set forth the aggregate number of Option
Shares as to which the option is being exercised and the date and time when the
Option Shares are to be delivered and paid for which may be the same date and
time as the Closing Date (as hereinafter defined) but shall not be earlier than
the Closing Date nor later than the tenth full business day (as hereinafter
defined) after the date of such notice (unless such time and date are postponed
in accordance with the provisions of Section 9 hereof). Any such notice shall be
given at least two Business Days prior to the date and time of delivery
specified therein.
(b) The Company understands that the Underwriters intend to make a public
offering of the Shares as soon after the effectiveness of this Agreement as in
the judgment of the Representatives is advisable, and initially to offer the
Shares on the terms set forth in the Prospectus. The Company acknowledges and
agrees that the Underwriters may offer and sell Shares to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through any Underwriter.
(c) Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives
in the case of the Underwritten Shares, at the offices of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
at 10:00 A.M. New York City time on _____, 2006 or at such other time or place
on the same or such other date, not later than the fifth business day
thereafter, as the Representatives and the Company may agree upon in writing or,
in the case of the Option Shares, on the date and at the time and place
specified by the Representatives in the written notice of the Underwriters'
election to purchase such Option Shares. The time and date of such payment for
the Underwritten Shares is referred to herein as the "Closing Date" and the time
and date for such payment for the Option Shares, if other than the Closing Date,
are herein referred to as the "Additional Closing Date".
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date in definitive form registered in such
names and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be, with any transfer taxes payable in
connection with the sale of the Shares duly paid by the Company. The
certificates for the Shares will be made available for inspection and packaging
by the Representatives at the office of ▇.▇. ▇▇▇▇▇▇ Securities Inc. set forth
above not later than 1:00 P.M., New York City time, on the business day prior to
the Closing Date or the Additional Closing Date, as the case may be.
(d) The Company acknowledges and agrees that the Underwriters are acting
solely in the capacity of an arm's length contractual counterparty to the
Company with respect to the offering of Shares contemplated hereby (including in
connection with determining the terms of the offering) and not as a financial
advisor or a fiduciary to, or an agent of, the Company or any other person.
Additionally, neither the Representatives nor any other Underwriter is advising
the
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Company or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated hereby,
and the Underwriters shall have no responsibility or liability to the Company
with respect thereto. Any review by the Underwriters of the Company, the
transactions contemplated hereby or other matters relating to such transactions
will be performed solely for the benefit of the Underwriters and shall not be on
behalf of the Company.
3. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, complied in all material
respects with the Securities Act and did 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, in the light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use in any Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of
Sale did not, and at the Closing Date 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; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in such Time of Sale Information. No statement of material fact included in
the Prospectus has been omitted from the Time of Sale Information and no
statement of material fact included in the Time of Sale Information that is
required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. Other than any Preliminary Prospectus
and the Prospectus, the Company (including its agents and representatives, other
than the Underwriters in their capacity as such) has not made, used, prepared,
authorized, approved or referred to and will not prepare, make, use, authorize,
approve or refer to any "written communication" (as defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or solicitation of an
offer to buy the Shares (each such written communication by the Company or its
agents and representatives (other than a communication referred to in clause (i)
below) an "Issuer Free Writing Prospectus") other than (i) any written
communication not constituting a prospectus pursuant to the Securities Act or
any rule under the Securities Act (including without limitation Rule 134 under
the Securities Act) or (ii) the documents listed on Annex B hereto and other
written communications approved in writing in advance by the Representatives.
Each Issuer Free Writing Prospectus complied in all material respects with the
Securities Act, has been filed in
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accordance with the Securities Act (to the extent required thereby) and, when
taken together with the Preliminary Prospectus accompanying, or delivered prior
to delivery of, such Issuer Free Writing Prospectus, did not, and at the Closing
Date 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; provided that
the Company makes no representation and warranty with respect to any statements
or omissions made in each such Issuer Free Writing Prospectus in reliance upon
and in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in any Issuer Free Writing Prospectus.
(d) Registration Statement and Prospectus. The Registration Statement has
been declared effective by the Commission. No order suspending the effectiveness
of the Registration Statement has been issued by the Commission and no
proceeding for that purpose or pursuant to Section 8A of the Securities Act
against the Company or related to the offering has been initiated or threatened
by the Commission; as of the applicable effective date of the Registration
Statement and any amendment thereto, the Registration Statement (as amended or
supplemented as of such date) 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; and
as of the date of the Prospectus and any amendment or supplement thereto and as
of the Closing Date and as of the Additional Closing Date, as the case may be,
the Prospectus (as amended or supplemented as of such date) 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, in the
light of the circumstances under which they were made, not misleading; provided
that the Company makes no representation and warranty with respect to any
statements or omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use in the Registration
Statement and the Prospectus and any amendment or supplement thereto.
(e) Financial Statements. The financial statements and the related notes
thereto of the Company and its consolidated subsidiaries included in the
Registration Statement, the Time of Sale Information and the Prospectus comply
in all material respects with the applicable requirements of the Securities Act
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange Act"), as
applicable, and present fairly the financial position of the Company and its
subsidiaries as of the dates indicated and the results of their operations and
the changes in their cash flows for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby,
and the supporting schedules included in the Registration Statement present
fairly the information required to be stated therein; and the other financial
information included in the Registration Statement, the Time of Sale Information
and the Prospectus has been derived from the accounting records of the Company
and its subsidiaries and presents fairly the information shown thereby; and the
pro forma financial information and the related notes thereto included in the
Registration Statement, the Time of Sale Information and the Prospectus have
been prepared
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in accordance with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and the assumptions underlying such pro forma
financial information are reasonable and are set forth in the Registration
Statement, the Time of Sale Information and the Prospectus.
(f) No Material Adverse Change. Since the date of the most recent
financial statements of the Company included in the Registration Statement, the
Time of Sale Information and the Prospectus, and except, in the case of clauses
(i) and (ii) below, for issuances of options to purchase the Company's Common
Stock, and issuances of Common Stock made upon the exercise of options, pursuant
to its Second Amended and Restated Management Equity Plan (i) there has not been
any change in the capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared, set aside
for payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, management, financial
position, stockholders' equity, results of operations or prospects of the
Company and its subsidiaries taken as a whole; (ii) neither the Company nor any
of its subsidiaries has entered into any transaction or agreement that is
material to the Company and its subsidiaries taken as a whole or incurred any
liability or obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the Company nor any of
its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement, the
Time of Sale Information and the Prospectus.
(g) Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
management, financial position, stockholders' equity, results of operations or
prospects of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"). The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the subsidiaries listed
in Exhibit 21 to the Registration Statement.
(h) Capitalization. The Company has an authorized capitalization as set
forth in the Registration Statement, the Time of Sale Information and the
Prospectus under the heading "Capitalization"; all the outstanding shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable and are not subject to any pre-emptive or
similar rights; except as described in or expressly contemplated by the Time of
Sale Information and the Prospectus, there are no outstanding rights (including,
without limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital stock or
other equity interest in the Company or any of its subsidiaries, or any
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contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company or any such
subsidiary, any such convertible or exchangeable securities or any such rights,
warrants or options; the capital stock of the Company conforms in all material
respects to the descriptions thereof contained in the Registration Statement,
the Time of Sale Information and the Prospectus; and all the outstanding shares
of capital stock or other equity interests of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and except as otherwise described in the Registration Statement,
the Time of Sale Information and the Prospectus are owned directly or indirectly
by the Company, free and clear of any lien, charge, encumbrance, security
interest, restriction on voting or transfer or any other claim of any third
party.
(i) Due Authorization. The Company has full right, power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
thereunder; and all action required to be taken for the due and proper
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated thereby has been duly and validly taken.
(j) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(k) The Shares. The Shares to be issued and sold by the Company hereunder
have been duly authorized by the Company and, when issued and delivered and paid
for as provided herein, will be duly and validly issued and will be fully paid
and nonassessable and will conform to the descriptions thereof in the Time of
Sale Information and the Prospectus; and the issuance of the Shares is not
subject to any preemptive or similar rights.
(l) No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, 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 contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(m) No Conflicts. The execution, delivery and performance by the Company
of each of the Transaction Documents, the issuance and sale of the Shares and
the consummation of the transactions contemplated by the Transaction Documents
will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property
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or assets of the Company or any of its subsidiaries is subject, (ii) result in
any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries or (iii)
result in the violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority
having jurisdiction over the Company or any of its subsidiaries, except, in the
case of clauses (i) and (iii) above, for any such conflict, breach or violation
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(n) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of each of the Transaction Documents, the issuance and sale of
the Shares and the consummation of the transactions contemplated by the
Transaction Documents, except for the registration of the Shares under the
Securities Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable state
securities laws or applicable rules and regulations of the Nasdaq National
Market in connection with the purchase and distribution of the Shares by the
Underwriters.
(o) Legal Proceedings. Except as described in the Registration Statement,
the Time of Sale Information and the Prospectus, there are no legal,
governmental or regulatory investigations, actions, suits or proceedings pending
to which the Company or any of its subsidiaries is or may be a party or to which
any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, where there is a reasonable possibility
that such action might be determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect or
materially and adversely affect the ability of the Company to perform its
obligations under the Transaction Documents; no such investigations, actions,
suits or proceedings are threatened or, to the knowledge of the Company,
contemplated by any governmental or regulatory authority or threatened by
others; and (i) there are no current or pending legal, governmental or
regulatory actions, suits or proceedings that are required under the Securities
Act to be described in the Registration Statement that are not so described in
the Registration Statement, the Time of Sale Information and the Prospectus and
(ii) there are no statutes, regulations or contracts or other documents that are
required under the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus that are
not so filed as exhibits to the Registration Statement or described in the
Registration Statement, the Time of Sale Information and the Prospectus.
(p) Independent Accountants. PricewaterhouseCoopers LLP, who have
certified certain financial statements of the Company and its subsidiaries are
an independent registered public accounting firm with respect to the Company and
its subsidiaries within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board (United States) and
as required by the Securities Act.
(q) Title to Real and Personal Property. The Company and its subsidiaries
have good and marketable title in fee simple to, or have valid rights to lease
or otherwise use, all items of
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real and personal property that are material to the respective businesses of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except those that
(i) do not materially interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries or (ii) could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(r) Title to Intellectual Property. The Company and its subsidiaries own
or possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) (collectively, "Intellectual Property") that is used in
the conduct of their business (as now conducted and as proposed to be conducted
in the Time of Sale Information) and except where the failure to own, license or
possess such rights would not, individually or in the aggregate, have a Material
Adverse Effect; and to the knowledge of the Company, without having conducted
any special investigation or patent search, the conduct of their respective
businesses (as now conducted and as proposed to be conducted in the Time of Sale
Information) does not conflict in any material respect with any such rights of
others. The Company and its subsidiary have not received any written notice of
any claim of infringement or conflict with any intellectual property of others.
Except as described in the Time of Sale Information, (i) to the Company's
knowledge, without having conducted any special investigation or patent search,
there are no third parties who have or will be able to establish rights to any
Intellectual Property of the Company, except for the retained rights of the
owners of the Intellectual Property which is licensed to the Company and except
to the extent not reasonably expected, individually or in the aggregate, to have
a Material Adverse Effect; (ii) 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 Intellectual Property, (iii) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any Intellectual Property,
(iv) there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes or
misappropriates any patent, trademark, trade name, service name, copyright,
trade secret or other proprietary rights of others (v) the Company is unaware of
any facts which could form a reasonable basis for any such action, suit,
proceeding or claim as described in items (ii), (iii) and (iv), except to the
extent not reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect, and (vi) to the Company's knowledge, without having
conducted any special investigation or patent search, there is no patent or
patent application that contains claims that interfere, as such term is
described in 35 U.S.C. Section 135 and 37 C.F.R. 41.100 to 41.208 with the
issued or pending claims of any of the Intellectual Property.
(s) Preclinical and Clinical Trials. The preclinical and clinical trials
described in the Time of Sale Information were and, if still pending, are being
conducted (to the Company's knowledge, after due inquiry, with respect to such
studies conducted by third parties) in accordance in all material respects with
standard medical and scientific research procedures and all applicable rules,
regulations and policies of the Food and Drug Administration, including current
Good Clinical Practices and Good Laboratory Practices, and all applicable
foreign regulatory requirements and standards.
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(t) No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the one hand,
and the directors, officers, stockholders, customers or suppliers of the Company
or any of its subsidiaries, on the other, that is required by the Securities Act
to be described in the Registration Statement and the Prospectus and that is not
so described in such documents and in the Time of Sale Information.
(u) Investment Company Act. The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the proceeds thereof
as described in the Registration Statement, the Time of Sale Information and the
Prospectus, will not be required to register as an "investment company" or an
entity "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder (collectively, "Investment Company Act").
(v) Taxes. The Company and its subsidiaries have paid all federal, state,
local and foreign taxes and filed all tax returns required to be paid or filed
through the date hereof; and except as otherwise disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, there is no tax
deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its subsidiaries or any of their respective
properties or assets, in each case, except as would not have a Material Adverse
Effect.
(w) Licenses and Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Registration Statement, the Time of
Sale Information and the Prospectus, except where the failure to possess or make
the same would not, individually or in the aggregate, have a Material Adverse
Effect; and except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, neither the Company nor any of its subsidiaries
has received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in the
ordinary course.
(x) No Labor Disputes. No labor disturbance by or dispute with employees
of the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is contemplated or threatened and the Company is not aware of any
existing or imminent labor disturbance by, or dispute with, the employees of any
of its or its subsidiaries' principal suppliers, contractors or customers,
except as would not have a Material Adverse Effect.
(y) Compliance With Environmental Laws. (i) The Company and its
subsidiaries (x) are in compliance with any and all applicable federal, state,
local and foreign laws, rules, regulations, requirements, decisions and orders
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"); (y) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals
required of them under applicable
10
Environmental Laws to conduct their respective businesses; and (z) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, and (ii) there are no costs or liabilities
associated with Environmental Laws of or relating to the Company or its
subsidiaries, except in the case of each of (aa)(i) and (aa)(ii) above, for any
such failure to comply, or failure to receive required permits, licenses or
approvals, or cost or liability, as would not, individually or in the aggregate,
have a Material Adverse Effect.
(z) Compliance With ERISA. Each employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of the
Company and its affiliates has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"); no prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975 of the Code, has occurred with respect to any such
plan excluding transactions effected pursuant to a statutory or administrative
exemption; and for each such plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred, whether or
not waived, and the fair market value of the assets of each such plan (excluding
for these purposes accrued but unpaid contributions) exceeds the present value
of all benefits accrued under such plan determined using reasonable actuarial
assumptions.
(aa) Disclosure Controls. The Company and its subsidiaries maintain an
effective system of "disclosure controls and procedures" (as defined in Rule
13a-15(e) of the Exchange Act) that is designed to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure.
(bb) Accounting Controls. The Company and its subsidiaries maintain
systems of "internal control over financial reporting" (as defined in Rule
13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange
Act and have been designed by, or under the supervision of, their respective
principal executive and principal financial officers, or persons performing
similar functions, 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, including,
but not limited to 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 asset accountability; (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
11
respect to any differences. Except as disclosed in the Registration Statement,
the Time of Sale Information and the Prospectus, there are no material
weaknesses in the Company's internal controls.
(cc) Insurance. The Company and its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, including
business interruption insurance, which insurance is in amounts and insures
against such losses and risks as, to the Company's knowledge, are customary
within the industry and are, to the Company's knowledge, adequate to protect the
Company and its subsidiaries and their respective businesses; and neither the
Company nor any of its subsidiaries has (i) received notice from any insurer or
agent of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance or (ii) any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage at
reasonable cost from similar insurers as may be necessary to continue its
business.
(dd) No Unlawful Payments. Neither the Company nor any of its subsidiaries
nor, to the best knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company or
any of its subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(ee) Compliance with Money Laundering Laws. The operations of the Company
and its subsidiaries are and have been conducted at all times 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 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 any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.
(ff) Compliance with OFAC. None of the Company, any of its subsidiaries
or, to the knowledge of the Company, any director, officer, agent, employee or
Affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury ("OFAC"); and the Company will not directly or
indirectly use the proceeds of the offering of the Shares hereunder, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
(gg) No Restrictions on Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or
12
is subject, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's properties or assets to the Company or any other
subsidiary of the Company.
(hh) No Broker's Fees. Neither the Company nor any of its subsidiaries is
a party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or any
of its subsidiaries or any Underwriter for a brokerage commission, finder's fee
or like payment in connection with the offering and sale of the Shares.
(ii) No Registration Rights. No person has the right to require the
Company or any of its subsidiaries to register any securities for sale under the
Securities Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Shares except as otherwise disclosed
in the Registration Statement, the Time of Sale Information and the Prospectus.
(jj) No Stabilization. The Company has not taken, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(kk) Business With Cuba. The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to
doing business with the Government of Cuba or with any person or affiliate
located in Cuba.
(ll) Margin Rules. Neither the issuance, sale and delivery of the Shares
nor the application of the proceeds thereof by the Company as described in the
Registration Statement, the Time of Sale Information and the Prospectus will
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board of Governors.
(mm) Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Registration Statement, the Time of Sale Information and
the Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(nn) Statistical and Market 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 the Registration Statement, the Time of Sale
Information and the Prospectus is not based on or derived from sources that are
reliable and accurate in all material respects.
(oo) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part of
the Company or any of the Company's directors or officers, in their capacities
as such, to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules and regulations promulgated in connection therewith (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act"), including Section 402 related to loans.
13
(pp) Status under the Securities Act. The Company is not an ineligible
issuer as defined under the Securities Act, in each case at the times specified
in the Securities Act in connection with the offering of the Shares.
4. Further Agreements of the Company. The Company covenants and agrees
with each Underwriter that:
(a) Effectiveness of the Registration Statement. The Company will use its
reasonable best efforts to cause the Registration Statement to become effective
at the earliest possible time. The Company will file the final Prospectus with
the Commission within the time periods specified by Rule 424(b) and Rule 430A
under the Securities Act and will file any Issuer Free Writing Prospectus to the
extent required by Rule 433 under the Securities Act; and the Company will
furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the
extent not previously delivered) to the Underwriters in New York City prior to
10:00 A.M., New York City time, on the business day next succeeding the date of
this Agreement in such quantities as the Representatives may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to
the Representatives, four signed copies of the Registration Statement as
originally filed and each amendment thereto, in each case including all exhibits
and consents filed therewith; and (ii) to each Underwriter (A) a conformed copy
of the Registration Statement as originally filed and each amendment thereto
(without exhibits) and (B) during the Prospectus Delivery Period (as defined
below), as many copies of the Prospectus (including all amendments and
supplements thereto) and each Issuer Free Writing Prospectus as the
Representatives may reasonably request. As used herein, the term "Prospectus
Delivery Period" means such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered (or
required to be delivered but for Rule 172 under the Securities Act) in
connection with sales of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before
preparing, using, authorizing, approving, referring to or filing any Issuer Free
Writing Prospectus, and before filing any amendment or supplement to the
Registration Statement or the Prospectus, the Company will furnish to the
Representatives and counsel for the Underwriters a copy of the proposed Issuer
Free Writing Prospectus, amendment or supplement for review and will not
prepare, use, authorize, approve, refer to or file any such Issuer Free Writing
Prospectus or file any such proposed amendment or supplement to which the
Representatives reasonably object.
(d) Notice to the Representatives. The Company will advise the
Representatives promptly, and confirm such advice in writing, (i) when the
Registration Statement has become effective; (ii) when any amendment to the
Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus, the Time of Sale Information or any Issuer Free
Writing Prospectus or any amendment to the Prospectus has been filed; (iv) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or
14
supplement to the Prospectus or the receipt of any comments from the Commission
relating to the Registration Statement or any other request by the Commission
for any additional information; (v) of the issuance by the Commission of any
order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or the
initiation or threatening of any proceeding for that purpose or pursuant to
Section 8A of the Securities Act; (vi) of the occurrence of any event within the
Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended or
supplemented would include 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, in the light of the circumstances existing when the
Prospectus, the Time of Sale Information or any such Issuer Free Writing
Prospectus is delivered to a purchaser, not misleading; and (vii) of the receipt
by the Company of any notice with respect to any suspension of the qualification
of the Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
best efforts to prevent the issuance of any such order suspending the
effectiveness of the Registration Statement, preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or suspending any such
qualification of the Shares and, if any such order is issued, will obtain as
soon as possible the withdrawal thereof.
(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i)
any event shall occur or condition shall exist as a result of which the
Prospectus as then amended or supplemented would include 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 existing when the Prospectus is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Prospectus to
comply with law, the Company will immediately notify the Underwriters thereof
and forthwith prepare and, subject to paragraph (c) above, file with the
Commission and furnish to the Underwriters and to such dealers as the
Representatives may designate, such amendments or supplements to the Prospectus
as may be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with law and (2) if at any time prior to the Closing Date (i) any
event shall occur or condition shall exist as a result of which the Time of Sale
Information as then amended or supplemented would include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances, not misleading or
(ii) it is necessary to amend or supplement the Time of Sale Information to
comply with law, the Company will immediately notify the Underwriters thereof
and forthwith prepare and, subject to paragraph (c) above, file with the
Commission and furnish to the Underwriters and to such dealers as the
Representatives may designate, such amendments or supplements to the Time of
Sale Information as may be necessary so that the statements in the Time of Sale
Information as so amended or supplemented will not, in the light of the
circumstances, be misleading or so that the Time of Sale Information will comply
with law.
(f) Blue Sky Compliance. The Company will qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and will continue such qualifications
in effect so long as required for distribution of the
15
Shares; provided that the Company shall not be required to (i) qualify as a
foreign corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file
any general consent to service of process in any such jurisdiction or (iii)
subject itself to taxation in any jurisdiction if it is not otherwise so
subject.
(g) Earning Statement. The Company will make generally available to its
security holders and the Representatives as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder covering a period of at
least twelve months beginning with the first fiscal quarter of the Company
occurring after the "effective date" (as defined in Rule 158) of the
Registration Statement.
(h) Clear Market. For a period of 180 days after the date of the initial
public offering of the Shares, the Company will not (i) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Stock or any securities convertible into or exercisable or
exchangeable for Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Stock, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Stock or such other securities, in cash or
otherwise, without the prior written consent of the Representatives, other than
(A) the Shares to be sold hereunder (B) grants of restricted Stock and options
under existing employee plans and (C) any shares of Stock of the Company issued
upon the exercise of options granted under such existing employee plans.
Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day
restricted period, the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the 180-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
180-day period, the restrictions imposed by this Agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Shares as described in the Registration Statement, the Time of Sale
Information and the Prospectus under the heading "Use of Proceeds".
(j) No Stabilization. The Company will not take, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(k) Exchange Listing. The Company will use its best efforts to list for
quotation the Shares on the National Association of Securities Dealers Automated
Quotations National Market (the "Nasdaq National Market").
(l) Reports. So long as the Shares are outstanding (but in no event for
more than three years after the date hereof), the Company will make available to
the Representatives, as
16
soon as they are available, copies of all Exchange Act reports or other
communications (financial or other) furnished to holders of the Shares solely in
their capacity as such, and copies of any Exchange Act reports (and related
financial statements) furnished to or filed with the Commission or any national
securities exchange or automatic quotation system.
(m) Record Retention. The Company will, pursuant to reasonable procedures
developed in good faith, retain copies of each Issuer Free Writing Prospectus
that is not filed with the Commission in accordance with Rule 433 under the
Securities Act.
(n) Filings. The Company will file with the Commission such reports as may
be required by Rule 463 under the Securities Act.
5. Conditions of Underwriters' Obligations. The obligation of each
Underwriter to purchase the Underwritten Shares on the Closing Date or the
Option Shares on the Additional Closing Date, as the case may be as provided
herein is subject to the performance by the Company of its covenants and other
obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. The Registration Statement (or
if a post-effective amendment thereto is required to be filed under the
Securities Act, such post-effective amendment) shall have become effective, and
the Representatives shall have received notice thereof, not later than 5:00
P.M., New York City time, on the date hereof; no order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose or pursuant to Section 8A under the Securities Act
shall be pending before or threatened by the Commission; the Prospectus and each
Issuer Free Writing Prospectus shall have been timely filed with the Commission
under the Securities Act (in the case of an Issuer Free Writing Prospectus, to
the extent required by Rule 433 under the Securities Act) and in accordance with
Section 4(a) hereof; and all requests by the Commission for additional
information shall have been complied with to the reasonable satisfaction of the
Representatives.
(b) Representations and Warranties. The representations and warranties of
the Company contained herein shall be true and correct on the date hereof and on
and as of the Closing Date or the Additional Closing Date, as the case may be;
and the statements of the Company and its officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be.
(c) No Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded any
securities or preferred stock of or guaranteed by the Company or any of its
subsidiaries by any "nationally recognized statistical rating organization", as
such term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, or has changed its outlook with respect to,
its rating of any securities or preferred stock of or guaranteed by the Company
or any of its subsidiaries (other than an announcement with positive
implications of a possible upgrading).
17
(d) No Material Adverse Change. No event or condition of a type described
in Section 3(f) hereof shall have occurred or shall exist, which event or
condition is not described in the Time of Sale Information and the Prospectus
(excluding any amendment or supplement thereto) and the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the offering, sale or delivery of the Shares on the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Prospectus.
(e) Officer's Certificate. The Representatives shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, a
certificate of the chief financial officer or chief accounting officer of the
Company and the Chief Executive Officer of the Company (i) confirming that such
officers have carefully reviewed the Registration Statement, the Time of Sale
Information and the Prospectus and, to the knowledge of such officers, the
representations set forth in Sections 3(b) or 3(d) hereof are true and correct,
(ii) confirming that the other representations and warranties of the Company in
this Agreement are true and correct and that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date and (iii) to the effect set forth in
paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date
or the Additional Closing Date, as the case may be, PricewaterhouseCoopers shall
have furnished to the Representatives, at the request of the Company, letters,
dated the respective dates of delivery thereof and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type customarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement, the Time of Sale Information and the Prospectus;
provided, that the letter delivered on the Closing Date or the Additional
Closing Date, as the case may be shall use a "cut-off" date no more than three
business days prior to such Closing Date or such Additional Closing Date, as the
case may be.
(g) Opinion of Counsel for the Company. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel for the Company, shall have
furnished to the Representatives, at the request of the Company, their written
opinion, dated the Closing Date or the Additional Closing Date, as the case may
be, and addressed to the Underwriters, in the form set forth as Annex A hereto.
(h) Opinion of Counsel for the Underwriters. The Representatives shall
have received on and as of the Closing Date or the Additional Closing Date, as
the case may be, an opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Underwriters, with respect to such matters as the Representatives may reasonably
request, and such counsel shall have received such documents and information as
they may reasonably request to enable them to pass upon such matters.
18
(i) No Legal Impediment to Issuance. No action shall have been taken and
no statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state or foreign governmental or regulatory authority that
would, as of the Closing Date or the Additional Closing Date, as the case may
be, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the
Closing Date or the Additional Closing Date, as the case may be, prevent the
issuance or sale of the Shares.
(j) Good Standing. The Representatives shall have received on and as of
the Closing Date or the Additional Closing Date, as the case may be,
satisfactory evidence of the good standing of the Company and its subsidiaries
in their respective jurisdictions of organization and their good standing as
foreign entities in such other jurisdictions as the Representatives may
reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate Governmental Authorities of such
jurisdictions.
(k) Exchange Listing. The Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved for
quotation on the Nasdaq National Market, subject to official notice of issuance.
(l) Lock-up Agreements. The "lock-up" agreements, each substantially in
the form of Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions of
shares of Stock or certain other securities, delivered to you on or before the
date hereof, shall be full force and effect on the Closing Date or Additional
Closing Date, as the case may be.
(m) Additional Documents. On or prior to the Closing Date or the
Additional Closing Date, as the case may be, the Company shall have furnished to
the Representatives such further certificates and documents as the
Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
6. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter, its affiliates, directors and officers and
each person, if any, who controls such Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
reasonable legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, not misleading, (ii) or any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement
19
thereto), any Issuer Free Writing Prospectus or any Time of Sale Information, or
caused by any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, in each case except insofar as such
losses, claims, damages or liabilities arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly 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 subsection (b) below.
(b) Indemnification of the Company. Each Underwriter agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or
liabilities that arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus (or any amendment or
supplement thereto), any Issuer Free Writing Prospectus or any Time of Sale
Information, it being understood and agreed upon that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the third paragraph under the heading
"Underwriters," the fifth paragraph under the heading "Underwriters" in the
Prospectus related to discretionary accounts and the eleventh paragraph under
the heading "Underwriters" in the Prospectus related to stabilization.
(c) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnification may
be sought (the "Indemnifying Person") in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 6 except to the extent that it has been materially
prejudiced by such failure; and provided, further, that the failure to notify
the Indemnifying Person shall not relieve it from any liability that it may have
to an Indemnified Person otherwise than under this Section 6. If any such
proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably
20
satisfactory to the Indemnified Person (who shall not, without the consent of
the Indemnified Person, be counsel to the Indemnifying Person) to represent the
Indemnified Person in such proceeding and shall pay the fees and expenses of
such counsel related to such proceeding, as incurred. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary or (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person. It is understood and agreed that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be paid or reimbursed as they are incurred. Any
such separate firm for any Underwriter, its affiliates, directors and officers
and any control persons of such Underwriter shall be designated in writing by
▇.▇. ▇▇▇▇▇▇ Securities Inc. and any such separate firm for the Company, its
directors, its officers who signed the Registration Statement and any control
persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested that an Indemnifying
Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the Indemnifying
Person of such request and (ii) the Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a)
and (b) above is unavailable to an Indemnified Person or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Shares or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received
by the Company from the sale of the Shares and the total underwriting discounts
and commissions received by the Underwriters in connection therewith, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Shares. The relative fault of the Company on the
one hand and the Underwriters on the other shall be determined by reference to,
among other things, whether
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the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) Limitation on Liability. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 6
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with any such
action or claim. Notwithstanding the provisions of this Section 6, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
such Underwriter with respect to the offering of the Shares exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 6 are several
in proportion to their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 6
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any Indemnified Person at law or in equity.
7. Effectiveness of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.
8. Termination. This Agreement may be terminated in the absolute
discretion of the Representatives, by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing Date or, in
the case of the Option Shares, prior to the Additional Closing Date (i) trading
generally shall have been suspended or materially limited on or by any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade; (ii) trading of any
securities issued or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York
State authorities; (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis, either
within or outside the United States, that, in the judgment of the
Representatives, is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner
22
contemplated by this Agreement, the Time of Sale Information and the Prospectus;
or (v) the representation in Section 3(b) is incorrect in any respect.
9. Defaulting Underwriter. (a) If, on the Closing Date or the Additional
Closing Date, as the case may be, any Underwriter defaults on its obligation to
purchase the Shares that it has agreed to purchase hereunder on such date, the
non-defaulting Underwriters may in their discretion arrange for the purchase of
such Shares by other persons satisfactory to the Company on the terms contained
in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting
Underwriters to purchase such Shares on such terms. If other persons become
obligated or agree to purchase the Shares of a defaulting Underwriter, either
the non-defaulting Underwriters or the Company may postpone the Closing Date or
the Additional Closing Date, as the case may be, for up to five full business
days in order to effect any changes that in the opinion of counsel for the
Company or counsel for the Underwriters may be necessary in the Registration
Statement and the Prospectus or in any other document or arrangement, and the
Company agrees to promptly prepare any amendment or supplement to the
Registration Statement and the Prospectus that effects any such changes. As used
in this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in
Schedule 1 hereto that, pursuant to this Section 9, purchases Shares that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the number of
Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter's pro rata share (based on the number of Shares that such
Underwriter agreed to purchase on such date) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount
of Shares to be purchased on such date, or if the Company shall not exercise the
right described in paragraph (b) above, then this Agreement or, with respect to
any Additional Closing Date, the obligation of the Underwriters to purchase
Shares on the Additional Closing Date, as the case may be, shall terminate
without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 9 shall be without
liability on the part of the Company, except that the Company will continue to
be liable for the payment of expenses as set forth in Section 10 hereof and
except that the provisions of Section 6 hereof shall not terminate and shall
remain in effect.
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(d) Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or any non-defaulting Underwriter for
damages caused by its default.
10. Payment of Expenses. (a) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, the Company
will pay or cause to be paid all costs and expenses incident to the performance
of its obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Shares and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any
Time of Sale Information and the Prospectus (including all exhibits, amendments
and supplements thereto) and the distribution thereof; (iii) the costs of
reproducing and distributing each of the Transaction Documents; (iv) the fees
and expenses of the Company's counsel and independent accountants; (v) the fees
and expenses incurred in connection with the registration or qualification and
determination of eligibility for investment of the Shares under the laws of such
jurisdictions as the Representatives may designate and the preparation, printing
and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Underwriters) not exceeding $10,000 in the
aggregate; (vi) the cost of preparing stock certificates; (vii) the costs and
charges of any transfer agent and any registrar; (viii) all application fees and
reasonable expenses incurred in connection with any filing with, and clearance
of the offering by, the National Association of Securities Dealers, Inc.; (ix)
all expenses incurred by the Company in connection with any "road show"
presentation to potential investors (provided that the costs of the private air
transportation, if any, used in connection with any "road show" presentation
shall be borne one-half by the Company and one-half by the Underwriters); and
(x) all expenses and application fees related to the quotation of the Shares on
the Nasdaq National Market.
(b) If (i) this Agreement is terminated pursuant to clause (ii) or clause
(v) of Section 8, (ii) the Company for any reason fails to tender the Shares for
delivery to the Underwriters or (iii) the Underwriters decline to purchase the
Shares for any reason permitted under this Agreement, the Company agrees to
reimburse the Underwriters for all out-of-pocket costs and expenses (including
the fees and expenses of their counsel) reasonably incurred by the Underwriters
in connection with this Agreement and the offering contemplated hereby.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons referred
to in Section 6 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor
merely by reason of such purchase.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of the Company or the
Underwriters pursuant to this Agreement or any
24
certificate delivered pursuant hereto shall survive the delivery of and payment
for the Shares and shall remain in full force and effect, regardless of any
termination of this Agreement or any investigation made by or on behalf of the
Company or the Underwriters.
13. Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term "affiliate" has the meaning set
forth in Rule 405 under the Securities Act; (b) the term "business day" means
any day other than a day on which banks are permitted or required to be closed
in New York City; and (c) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act.
14. Miscellaneous. (a) Authority of the Representatives. Any action by the
Underwriters hereunder may be taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. on behalf of
the Underwriters, and any such action taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. shall
be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Underwriters
shall be given to the Representatives c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: Equity
Syndicate Desk. Notices to the Company shall be given to it at Vanda
Pharmaceuticals Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ (fax: ▇▇▇-▇▇▇-▇▇▇▇);
Attention: Chief Financial Officer.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing is in accordance with your understanding, please indicate
your acceptance of this Agreement by signing in the space provided below.
Very truly yours,
VANDA PHARMACEUTICALS INC.
By_______________________
Title:
Accepted: __________, 2006
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
By___________________________
Authorized Signatory
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