UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): January 19, 2011
NEKTAR
THERAPEUTICS
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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0-24006
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94-3134940
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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455
Mission Bay Boulevard South
San
Francisco, California 94158
(Address
of Principal Executive Offices and Zip Code)
Registrant’s
telephone number, including area code: (415) 482-5300
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive
Agreement.
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On
January 19, 2011, Nektar Therapeutics, a Delaware corporation (“Nektar”), entered
into an underwriting agreement (the “Underwriting
Agreement”) with Jefferies & Company, Inc. (“Jefferies” or the
“Underwriter”),
relating to the issuance and sale of 19,000,000 shares (the “Firm Shares”) of
common stock, par value $0.0001 per share, of Nektar. The price to the public in
this offering is $11.85 per share, and the Underwriter has agreed to purchase
the Firm Shares from Nektar pursuant to the Underwriting Agreement at a price of
$11.60 per share. The net proceeds to Nektar from this offering are expected to
be approximately $219.8 million, after deducting underwriting discounts and
commissions and other estimated offering expenses payable by
Nektar.
In
addition, under the terms of the Underwriting Agreement, Nektar has granted the
Underwriter an option, exercisable for 30 days after January 19, 2011, to
purchase up to an additional 2,850,000 shares of common stock to cover
over-allotments, if any.
The
offering is expected to close on or about January 24, 2011, subject to customary
closing conditions set forth in the Underwriting Agreement. Jeffries
is acting as sole book-running manager. The offering is being made pursuant to
the effective registration statement on Form S-3ASR (File No. 333-171747)
filed by Nektar with the Securities and Exchange Commission on January 18, 2011
and a prospectus supplement dated January 19, 2011 thereunder.
The
Underwriting Agreement contains customary representations, warranties and
covenants of Nektar, customary conditions to closing, indemnification
obligations of Nektar and the Underwriter (including for liabilities under the
Securities Act of 1933, as amended) and termination and other provisions
customary for transactions of this nature. The representations, warranties and
covenants of Nektar contained in the Underwriting Agreement were made only for
purposes of such agreement and as of specific dates, are solely for the benefit
of the parties to such agreement and may be subject to limitations agreed upon
by the contracting parties. Investors are not third-party
beneficiaries under the Underwriting Agreement and should not rely on the
representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or conditions of
Nektar.
The
foregoing summary of the Underwriting Agreement is qualified in its entirety by
reference to the Underwriting Agreement, a copy of which is filed herewith as
Exhibit 1.1 to this Current Report on Form 8-K. A copy of the opinion of
O’Melveny & Myers LLP relating to the legality of the issuance and sale of
the shares in the offering is attached as Exhibit 5.1 hereto.
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Item 8.01
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Other
Events.
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We are
filing the following information with the Securities and Exchange Commission for
the purpose of updating certain aspects of our publicly disclosed descriptions
of our risk factors. All references below to
“Nektar,” “NKTR,” “we,” “us,” “our” or similar references refer to Nektar
Therapeutics, a Delaware corporation, and its subsidiaries, except where the
context otherwise requires or as otherwise indicated.
Risks Related to Our
Business
Drug
development is an inherently uncertain process with a high risk of failure at
every stage of development.
We have a
number of proprietary product candidates and partnered product candidates in
research and development ranging from the early discovery research phase through
preclinical testing and clinical trials. Preclinical testing and clinical trials
are long, expensive and highly uncertain processes. It will take us, or our
collaborative partners, several years to complete clinical trials. Drug
development is an uncertain scientific and medical endeavor, and failure can
unexpectedly occur at any stage of clinical development even after early
preclinical or mid-stage clinical results suggest that the drug candidate has
potential as a new therapy that may benefit patients and that health authority
approval would be anticipated. Typically, there is a high rate of attrition for
product candidates in preclinical and clinical trials due to scientific
feasibility, safety, efficacy, changing standards of medical care and other
variables. We or our partners have a number of important product candidates in
mid- to late-stage development, such as Bayer’s Amikacin Inhale, Oral NKTR-118
(oral PEGylated naloxol) and NKTR-119, which we partnered with AstraZeneca, and
NKTR-102 (PEGylated irinotecan). We also have an ongoing Phase 1 clinical trial
for NKTR-105 (PEGylated docetaxel) for patients with refractory solid tumors.
Any one of these trials could fail at any time, as clinical development of drug
candidates presents numerous unpredictable and significant risks and is very
uncertain at all times prior to regulatory approval by one or more health
authorities in major markets.
Even
with success in preclinical testing and clinical trials, the risk of clinical
failure remains high prior to regulatory approval.
A number
of companies in the pharmaceutical and biotechnology industries have suffered
significant unforeseen setbacks in later stage clinical trials (i.e., Phase 2 or
Phase 3 trials) due to factors such as inconclusive efficacy results and adverse
medical events, even after achieving positive results in earlier trials that
were satisfactory both to them and to reviewing regulatory agencies. Although we
announced positive preliminary Phase 2 clinical results for Oral NKTR-118 (oral
PEGylated naloxol) in 2009, there are still substantial risks and uncertainties
associated with the future commencement and outcome of a Phase 3 clinical trial
and the regulatory review process even following our partnership with
AstraZeneca. While NKTR-102 (PEGylated irinotecan) continues in Phase 2 clinical
development for multiple cancer indications, it is possible this product
candidate could fail in one or all of the cancer indications in which it is
currently being studied due to efficacy, safety or other commercial or
regulatory factors. In 2010 and in January 2011, we announced preliminary
positive results from our Phase 2 trials for NKTR-102 in ovarian and breast
cancer. These results were based on preliminary data only, and such results
could change based on final audit and verification procedures. In addition, the
preliminary results from the NKTR-102 clinical studies for ovarian and breast
cancer are not necessarily indicative or predictive of the future results from
the completed ovarian or breast cancer trials, anticipated Phase 3 trials in
these indications or clinical trials in the other cancer indications for which
we are studying NKTR-102. There remains a significant uncertainty as to the
success or failure of NKTR-102 and whether this drug candidate will eventually
receive regulatory approval or be a commercial success even if approved by one
or more health authorities in any of the cancer indications for which it is
being studied. The risk of failure is increased for our product candidates that
are based on new technologies, such as the application of our advanced polymer
conjugate technology to small molecules, including Oral NKTR-118, Oral NKTR-119,
NKTR-102, NKTR-105 and other drug candidates currently in the discovery research
or preclinical development phases.
1
The
results from the expanded Phase 2 clinical trial for NKTR-102 in women with
platinum-resistant/refractory ovarian cancer are unlikely to result in
submission of an NDA, and the future results from this trial are difficult to
predict.
In 2010,
we expanded the NKTR-102 Phase 2 study in women with
platinum-resistant/refractory ovarian cancer with the potential for us to
consider an NDA submission after we evaluate these expanded study results. The
FDA almost always requires a sponsor to conduct Phase 3 clinical trials prior to
consideration and approval of an NDA, and, as a result, review or approval of an
NDA by the FDA based on the expanded Phase 2 study prior to completion of
successful Phase 3 clinical studies, if such NDA is submitted, would be unusual
and is highly unlikely. Further, this expansion study will necessarily change
the final efficacy (e.g., overall response rates, progression-free survival,
overall survival) and safety (i.e., frequency and severity of serious adverse
events) results, and, accordingly, the final results in this study remain
subject to substantial change and could be materially and adversely different
from previously announced results. If the clinical studies for NKTR-102 in women
with platinum-resistant/refractory ovarian cancer are not successful, it could
significantly harm our business, results of operations and financial
condition.
We
may not be able to obtain intellectual property licenses related to the
development of our technology on a commercially reasonable basis, if at
all.
Numerous
pending and issued U.S. and foreign patent rights and other proprietary rights
owned by third parties relate to pharmaceutical compositions, medical devices
and equipment and methods for preparation, packaging and delivery of
pharmaceutical compositions. We cannot predict with any certainty which, if any,
patent references will be considered relevant to our or our collaborative
partners’ technology or drug candidates by authorities in the various
jurisdictions where such rights exist, nor can we predict with certainty which,
if any, of these rights will or may be asserted against us by third parties. In
certain cases, we have existing licenses or cross-licenses with third parties,
however the scope and adequacy of these licenses is very uncertain and can
change substantially during long development and commercialization cycles for
biotechnology and pharmaceutical products. There can be no assurance that we can
obtain a license to any technology that we determine we need on reasonable
terms, if at all, or that we could develop or otherwise obtain alternate
technology. If we are required to enter into a license with a third party, our
potential economic benefit for the products subject to the license will be
diminished. If a license is not available on commercially reasonable terms or at
all, our business, results of operation, and financial condition could be
significantly harmed and we may be prevented from developing and selling the
product.
If
any of our pending patent applications do not issue, or are deemed invalid
following issuance, we may lose valuable intellectual property
protection.
The
patent positions of pharmaceutical, medical device and biotechnology companies,
such as ours, are uncertain and involve complex legal and factual issues. We own
greater than 100 U.S. and 380 foreign patents and a number of pending patent
applications that cover various aspects of our technologies. We have filed
patent applications, and plan to file additional patent applications, covering
various aspects of our PEGylation and advanced polymer conjugate technologies
and our proprietary product candidates. There can be no assurance that patents
that have issued will be valid and enforceable or that patents for which we
apply will issue with broad coverage, if at all. The coverage claimed in a
patent application can be significantly reduced before the patent is issued and,
as a consequence, our patent applications may result in patents with narrow
coverage that may not prevent competition from similar products or generics.
Since publication of discoveries in scientific or patent literature often lags
behind the date of such discoveries, we cannot be certain that we were the first
inventor of inventions covered by our patents or patent applications. As part of
the patent application process, we may have to participate in interference
proceedings declared by the U.S. Patent and Trademark Office, which could result
in substantial cost to us, even if the eventual outcome is favorable. Further,
an issued patent may undergo further proceedings to limit its scope so as not to
provide meaningful protection and any claims that have issued, or that
eventually issue, may be circumvented or otherwise invalidated. Any attempt to
enforce our patents or patent application rights could be time consuming and
costly. An adverse outcome could subject us to significant liabilities to third
parties, require disputed rights to be licensed from or to third parties or
require us to cease using the technology in dispute. Even if a patent is issued
and enforceable, because development and commercialization of pharmaceutical
products can be subject to substantial delays, patents may expire early and
provide only a short period of protection, if any, following commercialization
of related products.
There are
many laws, regulations and judicial decisions that dictate and otherwise
influence the manner in which patent applications are filed and prosecuted and
in which patents are granted and enforced. Changes to these laws, regulations
and judicial decisions are subject to influences outside of our control and may
negatively affect our business, including our ability to obtain meaningful
patent coverage or enforcement rights to any of our issued patents. New laws,
regulations and judicial decisions may be retroactive in effect, potentially
reducing or eliminating our ability to implement our patent-related strategies.
Changes to laws, regulations and judicial decisions that affect our business are
often difficult or impossible to foresee, which limits our ability to adequately
adapt our patent strategies to these changes.
2
If
we or our partners are not able to manufacture drugs or drug substances in
quantities and at costs that are commercially feasible, we may fail to meet our
contractual obligations or our proprietary and partnered product candidates may
experience clinical delays or constrained commercial supply which could
significantly harm our business.
If we are
not able to scale-up manufacturing to meet the drug quantities required to
support large clinical trials or commercial manufacturing in a timely manner or
at a commercially reasonable cost, we risk delaying our clinical trials or those
of our partners and may breach contractual obligations and incur associated
damages and costs, and reduce or even eliminate associated revenues. In some
cases, we may subcontract manufacturing or other services. Pharmaceutical
manufacturing involves significant risks and uncertainties related to the
demonstration of adequate stability, sufficient purification of the drug
substance and drug product, the identification and elimination of impurities,
optimal formulations, process validation, and challenges in controlling for all
of these factors during manufacturing scale-up for large clinical trials and
commercial manufacturing and supply. In addition, we have faced and may in the
future face significant difficulties, delays and unexpected expenses as we
validate third party contract manufacturers required for scale-up to clinical or
commercial quantities. Failure to manufacture products in quantities or at costs
that are commercially feasible could cause us not to meet our supply
requirements, contractual obligations or other requirements for our proprietary
product candidates and, as a result, would significantly harm our business,
results of operations and financial condition.
For
instance, we entered a service agreement with Novartis pursuant to which we
subcontract to Novartis certain important services to be performed in relation
to our partnered program for Amikacin Inhale with Bayer Healthcare LLC. If our
subcontractors do not dedicate adequate resources to our programs, we risk
breach of our obligations to our partners. Building and validating large scale
clinical or commercial-scale manufacturing facilities and processes, recruiting
and training qualified personnel and obtaining necessary regulatory approvals is
complex, expensive and time consuming. In the past we have encountered
challenges in scaling up manufacturing to meet the requirements of large scale
clinical trials without making modifications to the drug formulation, which may
cause significant delays in clinical development. Further, our drug and device
combination products, such as Amikacin Inhale and the Cipro Inhale program,
require significant device design, formulation development work and
manufacturing scale-up activities. Further, we have experienced significant
delays in starting the Phase 3 clinical development program for Amikacin Inhale
as we seek to finalize the device design with a demonstrated capability to be
manufactured at commercial scale. This work is ongoing and there remains
significant risk in finalizing the device until those activities are completed.
Drug/device combination products are particularly complex, expensive and
time-consuming to develop due to the number of variables involved in the final
product design, including ease of patient/doctor use, maintenance of clinical
efficacy, reliability and cost of manufacturing, regulatory approval
requirements and standards and other important factors. There continues to be
substantial and unpredictable risk and uncertainty related to manufacturing and
supply until such time as the commercial supply chain is validated and
proven.
We
will need to restructure our convertible notes or raise substantial additional
capital to repay the notes and fund operations, and we may be unable to
restructure the notes or raise such capital when needed and on acceptable
terms.
We have
$215.0 million in outstanding convertible subordinated notes due September 2012.
We do not have sufficient resources to fund the development of the drug
candidates in our current research and development pipeline, complete planned
clinical development of NKTR-102 and NKTR-105 and repay these convertible notes.
We have no material credit facility or other material committed sources of
capital. We expect the Phase 3 clinical trials of NKTR-102 to require
particularly significant resources because we anticipate bearing a majority or
all of the development costs for that drug candidate. Prior to the maturity of
the notes, we plan to explore a number of alternatives to provide for the
repayment of the notes, including restructuring the notes. Despite these
efforts, we may be unable to find a commercially acceptable alternative or any
alternative to repaying the notes by September 2012. Our future capital
requirements will depend upon numerous factors, including:
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the progress, timing, cost and
results of our clinical development programs, including our planned
further clinical development of
NKTR-102;
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patient enrollment in our current
and future clinical studies, including in particular our expected Phase 3
clinical development plans for
NKTR-102;
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whether and when we receive
potential milestone payments and royalties, particularly from the product
candidates that are subject to our collaboration agreements with
AstraZeneca for NKTR-118 and Bayer for Amikacin
Inhale;
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the success, progress, timing and
costs of our business development efforts to implement new business
collaborations, licenses and other strategic
transactions;
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the cost, timing and outcomes of
regulatory reviews of our product candidates (e.g., NKTR-102) and those of
our collaboration partners (e.g., NKTR-118, Amikacin
Inhale);
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our general and administrative
expenses, capital expenditures and other uses of
cash;
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disputes concerning patents,
proprietary rights, or license and collaboration
agreements;
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the availability and scope of
coverage from government and private insurance payment or reimbursement
for our drug candidates partnered with collaboration partners and any
future drug candidates that may receive regulatory approval in the future;
and
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the size, design (i.e., primary
and secondary endpoints) and number of clinical studies required by the
government health authorities in order to consider for approval our
product candidates and those of our collaboration
partners.
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Although
we believe that our cash, cash equivalents and short-term investments in
marketable securities of $303.3 million as of September 30, 2010 will be
sufficient to meet our liquidity requirements through at least the next 12
months, we will need by September 2012 to restructure our notes or obtain
additional funds through one or more financing or collaboration partnership
transactions. If adequate funds are not available or are not available on
acceptable terms when we need them, we may need to delay or reduce our Phase 3
clinical trials of NKTR-102 or otherwise make changes to our operations to cut
costs.
If
we are unable either to create sales, marketing and distribution capabilities or
to enter into agreements with third parties to perform these functions, we will
be unable to commercialize our products successfully.
We
currently have no sales, marketing or distribution capabilities. To
commercialize any of our products that receive regulatory approval for
commercialization, we must either develop internal sales, marketing and
distribution capabilities, which will be expensive and time consuming, or enter
into collaboration arrangements with third parties to perform these services. If
we decide to market our products directly, we must commit significant financial
and managerial resources to develop a marketing and sales force with technical
expertise and with supporting distribution, administration and compliance
capabilities. Factors that may inhibit our efforts to commercialize our products
directly or indirectly with our partners include:
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our inability to recruit and
retain adequate numbers of effective sales and marketing
personnel;
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the inability of sales personnel
to obtain access to or persuade adequate numbers of physicians to use or
prescribe our products;
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the lack of complementary
products or multiple product pricing arrangements may put us at a
competitive disadvantage relative to companies with more extensive product
lines; and
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unforeseen costs and expenses
associated with creating and sustaining an independent sales and marketing
organization.
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If we, or
our partners through our collaboration, are not successful in recruiting sales
and marketing personnel or in building a sales and marketing infrastructure, we
will have difficulty commercializing our products, which would adversely affect
our business, results of operations and financial condition. To the extent we
rely on other pharmaceutical or biotechnology companies with established sales,
marketing and distribution systems to market our products, we will need to
establish and maintain partnership arrangements, and we may not be able to enter
into these arrangements on acceptable terms or at all. To the extent that we
enter into co-promotion or other arrangements, any revenues we receive will
depend upon the efforts of third parties, which may not be successful and are
only partially in our control. In that event, our product revenues would likely
be lower than if we marketed and sold our products directly.
If
we are unable to establish and maintain collaboration partnerships on attractive
commercial terms, our business, results of operations and financial condition
could suffer.
We intend
to continue to seek partnerships with pharmaceutical and biotechnology partners
to fund a portion of our research and development expenses and develop and
commercialize our product candidates. In September 2009, we entered into a
license agreement with AstraZeneca for NKTR-118 and NKTR-119 which included an
upfront payment of $125.0 million. The completion of the AstraZeneca
transaction was critical to our financial results and financial condition for
the year ended December 31, 2009. The timing of new collaboration
partnerships is difficult to predict due to availability of clinical data, the
number of potential partners that need to complete due diligence and approval
processes, the definitive agreement negotiation process and numerous other
unpredictable factors that can delay, impede or prevent significant
transactions. If we are unable to find suitable partners or to negotiate
collaborative arrangements with favorable commercial terms with respect to our
existing and future product candidates or the licensing of our technology, or if
any arrangements we negotiate, or have negotiated, are terminated, our business,
results of operations and financial condition could suffer.
4
The
commercial potential of a drug candidate in development is difficult to predict
and if the market size for a new drug is significantly smaller than we
anticipated, it could significantly and negatively impact our revenue, results
of operations and financial condition.
It is
very difficult to estimate the commercial potential of product candidates due to
factors such as safety and efficacy compared to other available treatments,
including potential generic drug alternatives with similar efficacy profiles,
changing standards of care, third party payer reimbursement, patient and
physician preferences, the availability of competitive alternatives that may
emerge either during the long drug development process or after commercial
introduction, and the availability of generic versions of our successful product
candidates following approval by health authorities based on the expiration of
regulatory exclusivity or our inability to prevent generic versions from coming
to market in one or more geographies by the assertion of one or more patents
covering such approved drug. If due to one or more of these risks the market
potential for a product candidate is lower than we anticipated, it could
significantly and negatively impact the commercial terms of any collaboration
partnership potential for such product candidate or, if we have already entered
into a collaboration for such drug candidate, the revenue potential from royalty
and milestone payments could be significantly diminished and would negatively
impact our revenue, results of operations and financial condition.
Our
revenue is exclusively derived from our collaboration agreements, which can
result in significant fluctuation in our revenue from period to period, and our
past revenue is therefore not necessarily indicative of our future
revenue.
Our
revenue is derived from our collaboration agreements with partners, under which
we may receive contract research payments, milestone payments based on clinical
progress, regulatory progress or net sales achievements, royalties or
manufacturing revenue. Significant variations in the timing of receipt of cash
payments and our recognition of revenue can result from the nature of
significant milestone payments based on the execution of new collaboration
agreements, the timing of clinical, regulatory or sales events which result in
single milestone payments and the timing and success of the commercial launch of
new drugs by our collaboration partners. The amount of our revenue derived from
collaboration agreements in any given period will depend on a number of
unpredictable factors, including our ability to find and maintain suitable
collaboration partners, the timing of the negotiation and conclusion of
collaboration agreements with such partners, whether and when we or our partner
achieve clinical and sales milestones, whether the partnership is exclusive or
whether we can seek other partners, the timing of regulatory approvals in one or
more major markets and the market introduction of new drugs or generic versions
of the approved drug, as well as other factors.
If
our partners, on which we depend to obtain regulatory approvals for and to
commercialize our partnered products, are not successful, or if such
collaborations fail, the development or commercialization of our partnered
products may be delayed or unsuccessful.
When we
sign a collaborative development agreement or license agreement to develop a
product candidate with a pharmaceutical or biotechnology company, the
pharmaceutical or biotechnology company is generally expected to:
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design and conduct large scale
clinical studies;
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prepare and file documents
necessary to obtain government approvals to sell a given product
candidate; and/or
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market and sell our products when
and if they are approved.
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Our
reliance on collaboration partners poses a number of risks to our business,
including risks that:
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we may be unable to control
whether, and the extent to which, our partners devote sufficient resources
to the development programs or commercial marketing and sales
efforts;
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disputes may arise or escalate in
the future with respect to the ownership of rights to technology or
intellectual property developed with
partners;
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disagreements with partners could
lead to delays in, or termination of, the research, development or
commercialization of product candidates or to litigation or arbitration
proceedings;
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contracts with our partners may
fail to provide us with significant protection, or to be effectively
enforced, in the event one of our partners fails to
perform;
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partners have considerable
discretion in electing whether to pursue the development of any additional
product candidates and may pursue alternative technologies or products
either on their own or in collaboration with our
competitors;
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partners with marketing rights
may choose to devote fewer resources to the marketing of our partnered
products than they do to products of their own development or products
in-licensed from other third
parties;
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the timing and level of resources
that our partners dedicate to the development program will affect the
timing and amount of revenue we
receive;
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we do not have the ability to
unilaterally terminate agreements (or partners may have extension or
renewal rights) that we believe are not on commercially reasonable terms
or consistent with our current business
strategy;
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partners may be unable to pay us
as expected; and
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partners may terminate their
agreements with us unilaterally for any or no reason, in some cases with
the payment of a termination fee penalty and in other cases with no
termination fee penalty.
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Given
these risks, the success of our current and future partnerships is highly
unpredictable and can have a substantial negative or positive impact on our
business. We have entered into collaborations in the past that have been
subsequently terminated, such as our collaboration with Pfizer for the
development and commercialization of inhaled insulin that was terminated by
Pfizer in November 2007. If other collaborations are suspended or
terminated, our ability to commercialize certain other proposed product
candidates could also be negatively impacted. If our collaborations fail, our
product development or commercialization of product candidates could be delayed
or cancelled, which would negatively impact our business, results of operations
and financial condition.
If
we or our partners do not obtain regulatory approval for our product candidates
on a timely basis, or at all, or if the terms of any approval impose significant
restrictions or limitations on use, our business, results of operations and
financial condition will be negatively affected.
We or our
partners may not obtain regulatory approval for product candidates on a timely
basis, or at all, or the terms of any approval (which in some countries includes
pricing approval) may impose significant restrictions or limitations on use.
Product candidates must undergo rigorous animal and human testing and an
extensive FDA mandated or equivalent foreign authorities’ review process for
safety and efficacy. This process generally takes a number of years and requires
the expenditure of substantial resources. The time required for completing
testing and obtaining approvals is uncertain, and the FDA and other U.S. and
foreign regulatory agencies have substantial discretion to terminate clinical
trials, require additional clinical development or other testing at any phase of
development, delay or withhold registration and marketing approval and mandate
product withdrawals, including recalls. In addition, undesirable side effects
caused by our product candidates could cause us or regulatory authorities to
interrupt, delay or halt clinical trials and could result in a more restricted
label or the delay or denial of regulatory approval by regulatory
authorities.
Even if
we or our partners receive regulatory approval of a product, the approval may
limit the indicated uses for which the product may be marketed. Our partnered
products that have obtained regulatory approval, and the manufacturing processes
for these products, are subject to continued review and periodic inspections by
the FDA and other regulatory authorities. Discovery from such review and
inspection of previously unknown problems may result in restrictions on marketed
products or on us, including withdrawal or recall of such products from the
market, suspension of related manufacturing operations or a more restricted
label. The failure to obtain timely regulatory approval of product candidates,
any product marketing limitations or a product withdrawal would negatively
impact our business, results of operations and financial condition.
We
are a party to numerous collaboration agreements and other significant
agreements which contain complex commercial terms that could result in disputes,
litigation or indemnification liability that could adversely affect our
business, results of operations and financial condition.
We
currently derive, and expect to derive in the foreseeable future, all of our
revenue from collaboration agreements with biotechnology and pharmaceutical
companies. These collaboration agreements contain complex commercial terms,
including:
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clinical development and
commercialization obligations that are based on certain commercial
reasonableness performance standards that can often be difficult to
enforce if disputes arise as to adequacy of
performance;
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research and development
performance and reimbursement obligations for our personnel and other
resources allocated to partnered product development
programs;
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clinical and commercial
manufacturing agreements, some of which are priced on an actual cost basis
for products supplied by us to our partners with complicated cost
allocation formulas and
methodologies;
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intellectual property ownership
allocation between us and our partners for improvements and new inventions
developed during the course of the
partnership;
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royalties on end product sales
based on a number of complex variables, including net sales calculations,
geography, patent life, generic competitors, and other factors;
and
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indemnity obligations for
third-party intellectual property infringement, product liability and
certain other claims.
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6
On
September 20, 2009, we entered into a worldwide exclusive license agreement
with AstraZeneca for the further development and commercialization of NKTR-118
and NKTR-119. In addition, we have also entered into complex commercial
agreements with Novartis in connection with the sale of certain assets related
to our pulmonary business, associated technology and intellectual property to
Novartis (the Novartis Pulmonary Asset Sale), which was completed on
December 31, 2008. Our agreements with AstraZeneca and Novartis contain
complex representations and warranties, covenants and indemnification
obligations that could result in substantial future liability and harm our
financial condition if we breach any of our agreements with AstraZeneca or
Novartis or any third party agreements impacted by these complex transactions.
As part of the Novartis Pulmonary Asset Sale, we entered an exclusive license
agreement with Novartis Pharma pursuant to which Novartis Pharma grants back to
us an exclusive, irrevocable, perpetual, royalty-free and worldwide license
under certain specific patent rights and other related intellectual property
rights necessary for us to satisfy certain continuing contractual obligations to
third parties, including in connection with development, manufacture, sale and
commercialization activities related to our partnered program for Amikacin
Inhale with Bayer Healthcare LLC. We also entered into a service agreement
pursuant to which we have subcontracted to Novartis certain services to be
performed related to our partner program for Amikacin Inhale.
From time
to time, we have informal dispute resolution discussions with third parties
regarding the appropriate interpretation of the complex commercial terms
contained in our agreements. One or more disputes may arise or escalate in the
future regarding our collaboration agreements, transaction documents, or
third-party license agreements that may ultimately result in costly litigation
and unfavorable interpretation of contract terms, which would have a material
adverse impact on our business, results of operations or financial
condition.
We
purchase some of the starting material for drugs and drug candidates from a
single source or a limited number of suppliers, and the partial or complete loss
of one of these suppliers could cause production delays, clinical trial delays,
substantial loss of revenue and contract liability to third
parties.
We often
face very limited supply of a critical raw material that can only be obtained
from a single, or a limited number of, suppliers, which could cause production
delays, clinical trial delays, substantial lost revenue opportunity or contract
liability to third parties. For example, there are only a limited number of
qualified suppliers, and in some cases single source suppliers, for the raw
materials included in our PEGylation and advanced polymer conjugate drug
formulations, and any interruption in supply or failure to procure such raw
materials on commercially feasible terms could harm our business by delaying our
clinical trials, impeding commercialization of approved drugs or increasing
operating loss to the extent we cannot pass on increased costs to a
manufacturing customer.
We
rely on trade secret protection and other unpatented proprietary rights for
important proprietary technologies, and any loss of such rights could harm our
business, results of operations and financial condition.
We rely
on trade secret protection for our confidential and proprietary information. No
assurance can be given that others will not independently develop substantially
equivalent confidential and proprietary information or otherwise gain access to
our trade secrets or disclose such technology, or that we can meaningfully
protect our trade secrets. In addition, unpatented proprietary rights, including
trade secrets and know-how, can be difficult to protect and may lose their value
if they are independently developed by a third party or if their secrecy is
lost. Any loss of trade secret protection or other unpatented proprietary rights
could harm our business, results of operations and financial
condition.
We
expect to continue to incur substantial losses and negative cash flow from
operations and may not achieve or sustain profitability in the
future.
For the
three and nine months ended September 30, 2010, we reported a net loss of
$8.7 million and $15.4 million, respectively. If and when
we achieve profitability depends upon a number of factors, including the timing
and recognition of milestone payments and royalties received, the timing of
revenue under our collaboration agreements, the amount of investments we make in
our proprietary product candidates and the regulatory approval and market
success of our product candidates. We may not be able to achieve and sustain
profitability.
Other
factors that will affect whether we achieve and sustain profitability include
our ability, alone or together with our partners, to:
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develop products utilizing our
technologies, either independently or in collaboration with other
pharmaceutical or biotech
companies;
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effectively estimate and manage
clinical development costs, particularly the cost of NKTR-102 since we
expect to bear a majority or all of such
costs;
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receive necessary regulatory and
marketing approvals;
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maintain or expand manufacturing
at necessary levels;
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achieve market acceptance of our
partnered products;
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receive royalties on products
that have been approved, marketed or submitted for marketing approval with
regulatory authorities;
and
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7
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maintain sufficient funds to
finance our activities.
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If
we do not generate sufficient cash through restructuring our convertible notes
or raising additional capital, we may be unable to meet our substantial debt
obligations.
As of
September 30, 2010, we had cash, cash equivalents, and short-term
investments in marketable securities valued at approximately $303.3 million
and approximately $240.0 million of indebtedness, including approximately
$215.0 million in convertible subordinated notes due September 2012,
$19.2 million in capital lease obligations, and $5.8 million of other
liabilities.
Our
substantial indebtedness has and will continue to impact us by:
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making it more difficult to
obtain additional financing;
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constraining our ability to react
quickly in an unfavorable economic
climate;
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constraining our stock price;
and
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constraining our ability to
invest in our proprietary product development
programs.
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Currently,
we are not generating positive cash flow. If we are unable to satisfy our debt
service requirements, substantial liquidity problems could result. In relation
to our convertible notes, since the market price of our common stock is
significantly below the conversion price, the holders of our outstanding
convertible notes are unlikely to convert the notes to common stock in
accordance with the existing terms of the notes. If we do not generate
sufficient cash from operations to repay principal or interest on our remaining
convertible notes, or satisfy any of our other debt obligations, when due, we
may have to raise additional funds from the issuance of equity or debt
securities or entry into collaboration partnerships or otherwise restructure our
obligations. Any such financing or restructuring may not be available to us on
commercially acceptable terms, if at all.
If
government and private insurance programs do not provide payment or
reimbursement for our partnered products or proprietary products, those products
will not be widely accepted, which would have a negative impact on our business,
results of operations and financial condition.
In both
domestic and foreign markets, sales of our partnered and proprietary products
that have received regulatory approval will depend in part on market acceptance
among physicians and patients, pricing approvals by government authorities and
the availability of payment or reimbursement from third-party payers, such as
government health administration authorities, managed care providers, private
health insurers and other organizations. Such third-party payers are
increasingly challenging the price and cost effectiveness of medical products
and services. Therefore, significant uncertainty exists as to the pricing
approvals for, and the payment or reimbursement status of, newly approved
healthcare products. Moreover, legislation and regulations affecting the pricing
of pharmaceuticals may change before regulatory agencies approve our proposed
products for marketing and could further limit pricing approvals for, and
reimbursement of, our products from government authorities and third-party
payers. A government or third-party payer decision not to approve pricing for,
or provide adequate coverage and reimbursements of, our products would limit
market acceptance of such products.
We
depend on third parties to conduct the clinical trials for our proprietary
product candidates and any failure of those parties to fulfill their obligations
could harm our development and commercialization plans.
We depend
on independent clinical investigators, contract research organizations and other
third-party service providers to conduct clinical trials for our proprietary
product candidates. Though we rely heavily on these parties for successful
execution of our clinical trials and are ultimately responsible for the results
of their activities, many aspects of their activities are beyond our control.
For example, we are responsible for ensuring that each of our clinical trials is
conducted in accordance with the general investigational plan and protocols for
the trial, but the independent clinical investigators may prioritize other
projects over ours or communicate issues regarding our products to us in an
untimely manner. Third parties may not complete activities on schedule or may
not conduct our clinical trials in accordance with regulatory requirements or
our stated protocols. The early termination of any of our clinical trial
arrangements, the failure of third parties to comply with the regulations and
requirements governing clinical trials or our reliance on results of trials that
we have not directly conducted or monitored could hinder or delay the
development, approval and commercialization of our product candidates and would
adversely affect our business, results of operations and financial
condition.
8
Our
manufacturing operations and those of our contract manufacturers are subject to
governmental regulatory requirements, which, if not met, would have a material
adverse effect on our business, results of operations and financial
condition.
We and
our contract manufacturers are required in certain cases to maintain compliance
with current good manufacturing practices (cGMP), including cGMP guidelines
applicable to active pharmaceutical ingredients, and are subject to inspections
by the FDA or comparable agencies in other jurisdictions to confirm such
compliance. We anticipate periodic regulatory inspections of our drug
manufacturing facilities and the manufacturing facilities of our contract
manufacturers for compliance with applicable regulatory requirements. Any
failure to follow and document our or our contract manufacturers’ adherence to
such cGMP regulations or satisfy other manufacturing and product release
regulatory requirements may disrupt our ability to meet our manufacturing
obligations to our customers, lead to significant delays in the availability of
products for commercial use or clinical study, result in the termination or hold
on a clinical study or delay or prevent filing or approval of marketing
applications for our products. Failure to comply with applicable regulations may
also result in sanctions being imposed on us, including fines, injunctions,
civil penalties, failure of regulatory authorities to grant marketing approval
of our products, delays, suspension or withdrawal of approvals, license
revocation, seizures or recalls of products, operating restrictions and criminal
prosecutions, any of which could harm our business. The results of these
inspections could result in costly manufacturing changes or facility or capital
equipment upgrades to satisfy the FDA that our manufacturing and quality control
procedures are in substantial compliance with cGMP. Manufacturing delays, for us
or our contract manufacturers, pending resolution of regulatory deficiencies or
suspensions would have a material adverse effect on our business, results of
operations and financial condition.
Significant
competition for our polymer conjugate chemistry technology platforms and our
partnered and proprietary products and product candidates could make our
technologies, products or product candidates obsolete or uncompetitive, which
would negatively impact our business, results of operations and financial
condition.
Our
PEGylation and advanced polymer conjugate chemistry platforms and our partnered
and proprietary products and product candidates compete with various
pharmaceutical and biotechnology companies. Competitors of our PEGylation and
polymer conjugate chemistry technologies include The Dow Chemical Company, Enzon
Pharmaceuticals, Inc., SunBio Corporation, Mountain View Pharmaceuticals, Inc.,
Novo Nordisk A/S (formerly assets held by Neose Technologies, Inc.), and NOF
Corporation. Several other chemical, biotechnology and pharmaceutical companies
may also be developing PEGylation technologies or technologies that have similar
impact on target drug molecules. Some of these companies license or provide the
technology to other companies, while others are developing the technology for
internal use.
There are
several competitors for our proprietary product candidates currently in
development. For Amikacin Inhale, the current standard of care includes several
approved intravenous antibiotics for the treatment of either hospital-acquired
pneumonia or ventilator-associated pneumonia in patients on mechanical
ventilators. For Oral NKTR-118 (oral PEGylated naloxol), there are currently
several alternative therapies used to address opioid-induced constipation
(OIC) and opioid-induced bowel dysfunction (OBD), including subcutaneous
Relistor® (methylnaltrexone bromide) and oral and rectal over-the-counter
laxatives and stool softeners such as docusate sodium, senna and milk of
magnesia. In addition, there are a number of companies developing potential
products which are in various stages of clinical development and are being
evaluated for the treatment of OIC and OBD in different patient populations,
including Adolor Corporation, GlaxoSmithKline plc, Progenics Pharmaceuticals,
Inc., Pfizer (via Wyeth acquisition completed in 2009), Mundipharma Int.
Limited, Sucampo Pharmaceuticals and Takeda Pharmaceutical Company Limited. For
NKTR-102 (PEGylated-irinotecan), there are a number of chemotherapies and cancer
therapies approved today and in various stages of clinical development for
ovarian and breast cancers including but not limited to: Avastin ®
(bevacizumab), Camptosar ® (irinotecan), Doxil ® (doxorubicin HCl ), Ellence ®
(epirubicin), Gemzar ® (gemcitabine), Herceptin ® (trastuzumab), Hycamtin ®
(topotecan), Iniparib, Paraplatin ® (carboplatin), and Taxol ® (paclitaxel).
Major pharmaceutical or biotechnology companies with approved drugs or drugs in
development for these cancers include Bristol-Meyers Squibb, Eli Lilly &
Co., Genentech, Inc., GlaxoSmithKline plc, Johnson and Johnson, Pfizer, Inc.,
Sanofi Aventis, and many others. There are also approved therapies
for the treatment of colorectal cancer, including Eloxatin, Camptosar, Avastin,
Erbitux, Vectibux, Xeloda, Adrucil and Wellcovorin. In addition, there are a
number of drugs in various stages of preclinical and clinical development from
companies exploring cancer therapies or improved chemotherapeutic agents to
potentially treat colorectal cancer, including, but not limited to, products in
development from Bristol-Myers Squibb Company, Pfizer, Inc., GlaxoSmithKline
plc, Antigenics, Inc., F. Hoffmann-La Roche Ltd, Novartis AG, Cell Therapeutics,
Inc., Neopharm Inc., Meditech Research Ltd, Alchemia Limited, Enzon
Pharmaceuticals, Inc. and others.
There can
be no assurance that we or our partners will successfully develop, obtain
regulatory approvals for and commercialize next-generation or new products that
will successfully compete with those of our competitors. Many of our competitors
have greater financial, research and development, marketing and sales,
manufacturing and managerial capabilities. We face competition from these
companies not just in product development but also in areas such as recruiting
employees, acquiring technologies that might enhance our ability to
commercialize products, establishing relationships with certain research and
academic institutions, enrolling patients in clinical trials and seeking program
partnerships and collaborations with larger pharmaceutical companies. As a
result, our competitors may succeed in developing competing technologies,
obtaining regulatory approval or gaining market acceptance for products before
we do. These developments could make our products or technologies uncompetitive
or obsolete.
We
could be involved in legal proceedings and may incur substantial litigation
costs and liabilities that will adversely affect our business, results of
operations and financial condition.
From time
to time, third parties have asserted, and may in the future assert, that we or
our partners infringe their proprietary rights, such as patents and trade
secrets, or have otherwise breached our obligations to them. The third party
often bases its assertions on a claim that its patents cover our technology or
that we have misappropriated its confidential or proprietary information.
Similar assertions of infringement could be based on future patents that may
issue to third parties. In certain of our agreements with our partners, we are
obligated to indemnify and hold harmless our partners from intellectual property
infringement, product liability and certain other claims, which could cause us
to incur substantial costs if we are called upon to defend ourselves and our
partners against any claims. If a third party obtains injunctive or other
equitable relief against us or our partners, they could effectively prevent us,
or our partners, from developing or commercializing, or deriving revenue from,
certain products or product candidates in the U.S. and abroad. For instance, F.
Hoffmann-La Roche Ltd, to which we license our proprietary PEGylation reagent
for use in the MIRCERA product, was a party to a significant patent infringement
lawsuit brought by Amgen Inc. related to Roche’s proposed marketing and sale of
MIRCERA to treat chemotherapy anemia in the U.S. In October 2008, a federal
court ruled in favor of Amgen, issuing a permanent injunction preventing Roche
from marketing or selling MIRCERA in the U.S. In December 2009, the U.S.
District court for the District of Massachusetts entered a final judgment and
permanent injunction, and Roche and Amgen entered into a settlement and limited
license agreement which allows Roche to begin selling MIRCERA in the U.S. in
July 2014.
9
Third-party
claims involving proprietary rights or other matters could also result in the
award of substantial damages to be paid by us or a settlement resulting in
significant payments to be made by us. For instance, a settlement might require
us to enter a license agreement under which we pay substantial royalties or
other compensation to a third party, diminishing our future economic returns
from the related product. In 2006, we entered into a litigation settlement
related to an intellectual property dispute with the University of Alabama in
Huntsville pursuant to which we paid $11.0 million and agreed to pay an
additional $10.0 million in equal $1.0 million installments over ten
years ending with the last payment due on July 1, 2016. We cannot predict
with certainty the eventual outcome of any pending or future litigation. Costs
associated with such litigation, substantial damage claims, indemnification
claims or royalties paid for licenses from third parties could have a material
adverse effect on our business, results of operations and financial
condition.
If
product liability lawsuits are brought against us, we may incur substantial
liabilities.
The
manufacture, clinical testing, marketing and sale of medical products involve
inherent product liability risks. If product liability costs exceed our product
liability insurance coverage, we may incur substantial liabilities that could
have a severe negative impact on our financial position. Whether or not we are
ultimately successful in any product liability litigation, such litigation would
consume substantial amounts of our financial and managerial resources and might
result in adverse publicity, all of which would impair our business.
Additionally, we may not be able to maintain our clinical trial insurance or
product liability insurance at an acceptable cost, if at all, and this insurance
may not provide adequate coverage against potential claims or
losses.
Our
future depends on the proper management of our current and future business
operations and their associated expenses.
Our
business strategy requires us to manage our business to provide for the
continued development and potential commercialization of our proprietary and
partnered product candidates. Our strategy also calls for us to undertake
increased research and development activities and to manage an increasing number
of relationships with partners and other third parties, while simultaneously
managing the expenses generated by these activities. Our decision to bring
NKTR-102 into Phase 3 trials and to bear a majority or all of the clinical
development costs substantially increases our expenses. If we are unable to
manage effectively our current operations and any growth we may experience, our
business, financial condition and results of operations may be adversely
affected. If we are unable to effectively manage our expenses, we may find it
necessary to reduce our personnel-related costs through further reductions in
our workforce, which could harm our operations, employee morale and impair our
ability to retain and recruit talent. Furthermore, if adequate funds are not
available, we may be required to obtain funds through arrangements with partners
or other sources that may require us to relinquish rights to certain of our
technologies, products or future economic rights that we would not otherwise
relinquish or require us to enter into other financing arrangements on
unfavorable terms.
We
are dependent on our management team and key technical personnel, and the loss
of any key manager or employee may impair our ability to develop our products
effectively and may harm our business, operating results and financial
condition.
Our
success largely depends on the continued services of our executive officers and
other key personnel. The loss of one or more members of our management team or
other key employees could seriously harm our business, operating results and
financial condition. The relationships that our key managers have cultivated
within our industry make us particularly dependent upon their continued
employment with us. We are also dependent on the continued services of our
technical personnel because of the highly technical nature of our products and
the regulatory approval process. Because our executive officers and key
employees are not obligated to provide us with continued services, they could
terminate their employment with us at any time without penalty. We do not have
any post-employment noncompetition agreements with any of our employees and do
not maintain key person life insurance policies on any of our executive officers
or key employees.
Because
competition for highly qualified technical personnel is intense, we may not be
able to attract and retain the personnel we need to support our operations and
growth.
We must
attract and retain experts in the areas of clinical testing, manufacturing,
regulatory, finance, marketing and distribution and develop additional expertise
in our existing personnel. In particular, as we plan to advance NKTR-102 into
late stage development, additional highly qualified personnel will be required.
We face intense competition from other biopharmaceutical companies, research and
academic institutions and other organizations for qualified personnel. Many of
the organizations with which we compete for qualified personnel have greater
resources than we have. Because competition for skilled personnel in our
industry is intense, companies such as ours sometimes experience high attrition
rates with regard to their skilled employees. Further, in making employment
decisions, job candidates often consider the value of the stock options they are
to receive in connection with their employment. Our equity incentive plan and
employee benefit plans may not be effective in motivating or retaining our
employees or attracting new employees, and significant volatility in the price
of our stock may adversely affect our ability to attract or retain qualified
personnel. If we fail to attract new personnel or to retain and motivate our
current personnel, our business and future growth prospects could be severely
harmed.
10
If
earthquakes and other catastrophic events strike, our business may be
harmed.
Our
corporate headquarters, including a substantial portion of our research and
development operations, are located in the San Francisco Bay Area, a region
known for seismic activity and a potential terrorist target. In addition, we own
facilities for the manufacture of products using our PEGylation and advanced
polymer conjugate technologies in Huntsville, Alabama and own and lease offices
in Hyderabad, India. There are no backup facilities for our manufacturing
operations located in Huntsville, Alabama. In the event of an earthquake or
other natural disaster, political instability, or terrorist event in any of
these locations, our ability to manufacture and supply materials for drug
candidates in development and our ability to meet our manufacturing obligations
to our customers would be significantly disrupted and our business, results of
operations and financial condition would be harmed. Our collaborative partners
may also be subject to catastrophic events, such as hurricanes and tornadoes,
any of which could harm our business, results of operations and financial
condition. We have not undertaken a systematic analysis of the potential
consequences to our business, results of operations and financial condition from
a major earthquake or other catastrophic event, such as a fire, sustained loss
of power, terrorist activity or other disaster, and do not have a recovery plan
for such disasters. In addition, our insurance coverage may not be sufficient to
compensate us for actual losses from any interruption of our business that may
occur.
We
have implemented certain anti-takeover measures, which make it more difficult to
acquire us, even though such acquisitions may be beneficial to our
stockholders.
Provisions
of our certificate of incorporation and bylaws, as well as provisions of
Delaware law, could make it more difficult for a third party to acquire us, even
though such acquisitions may be beneficial to our stockholders. These
anti-takeover provisions include:
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establishment of a classified
board of directors such that not all members of the board may be elected
at one time;
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lack of a provision for
cumulative voting in the election of directors, which would otherwise
allow less than a majority of stockholders to elect director
candidates;
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the ability of our board to
authorize the issuance of “blank check” preferred stock to increase the
number of outstanding shares and thwart a takeover
attempt;
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prohibition on stockholder action
by written consent, thereby requiring all stockholder actions to be taken
at a meeting of
stockholders;
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establishment of advance notice
requirements for nominations for election to the board of directors or for
proposing matters that can be acted upon by stockholders at stockholder
meetings; and
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limitations on who may call a
special meeting of
stockholders.
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Further,
we have in place a preferred share purchase rights plan, commonly known as a
“poison pill.” The provisions described above, our “poison pill” and provisions
of Delaware law relating to business combinations with interested stockholders
may discourage, delay or prevent a third party from acquiring us. These
provisions may also discourage, delay or prevent a third party from acquiring a
large portion of our securities or initiating a tender offer or proxy contest,
even if our stockholders might receive a premium for their shares in the
acquisition over the then current market prices. We also have a change of
control severance benefits plan which provides for certain cash severance, stock
award acceleration and other benefits in the event our employees are terminated
(or, in some cases, resign for specified reasons) following an acquisition. This
severance plan could discourage a third party from acquiring us.
Risks
Related to Our Securities
The
price of our common stock and convertible debt are expected to remain
volatile.
Our stock
price is volatile. During the year ended December 31, 2010, based on
closing bid prices on the NASDAQ Global Select Market, our stock price ranged
from $9.39 to $15.88 per share. We expect our stock price to remain volatile. In
addition, as our convertible notes are convertible into shares of our common
stock, volatility or depressed prices of our common stock could have a similar
effect on the trading price of our notes. Also, interest rate fluctuations can
affect the price of our convertible notes. A variety of factors may have a
significant effect on the market price of our common stock or notes,
including:
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announcements of data from, or
material developments in, our clinical trials or those of our competitors,
including delays in clinical development, approval or
launch;
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announcements by collaboration
partners as to their plans or expectations related to products using our
technologies;
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announcements or terminations of
collaboration agreements by us or our
competitors;
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fluctuations in our results of
operations;
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developments in patent or other
proprietary rights, including intellectual property litigation or entering
into intellectual property license agreements and the costs associated
with those arrangements;
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announcements of technological
innovations or new therapeutic products that may compete with our approved
products or products under
development;
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announcements of changes in
governmental regulation affecting us or our
competitors;
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hedging activities by purchasers
of our convertible notes;
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litigation brought against us or
third parties to whom we have indemnification
obligations;
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public concern as to the safety
of drug formulations developed by us or others;
and
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general market
conditions.
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Our
stockholders may be diluted, and the price of our common stock may decrease, as
a result of the exercise of outstanding stock options and warrants, the
restructuring of our convertible notes, or the future issuances of
securities.
We may
restructure our convertible notes or issue additional common stock, preferred
stock, restricted stock units or securities convertible into or exchangeable for
our common stock. Furthermore, substantially all shares of common stock for
which our outstanding stock options or warrants are exercisable are, once they
have been purchased, eligible for immediate sale in the public market. The
issuance of additional common stock, preferred stock, restricted stock units or
securities convertible into or exchangeable for our common stock or the exercise
of stock options or warrants would dilute existing investors and could lower the
price of our common stock.
Restructuring
of our convertible notes or raising additional funds by issuing equity
securities could cause significant dilution to existing stockholders;
restructured or additional debt financing may restrict our
operations.
If we
raise additional funds through the restructuring of our convertible notes or
issuance of equity or convertible debt securities, the percentage ownership of
our stockholders could be diluted significantly, and these restructured or newly
issued securities may have rights, preferences or privileges senior to those of
our existing stockholders. If we restructure our notes or incur additional debt
financing, the payment of principal and interest on such indebtedness may limit
funds available for our business activities, and we could be subject to
covenants that restrict our ability to operate our business and make
distributions to our stockholders. These restrictive covenants may include
limitations on additional borrowing and specific restrictions on the use of our
assets, as well as prohibitions on the ability of us to create liens, pay
dividends, redeem our stock or make investments.
12
Safe
Harbor Statement
This
Current Report on Form 8-K contains forward-looking statements, including
statements related to the public offering of shares of common stock by Nektar
and the completion of the public offering, and other statements that are based
on current expectations, estimates, forecasts and projections about us, our
future performance, our business or the business of others on our behalf, our
beliefs and our management’s assumptions. Actual results and the timing of
events could differ materially from those anticipated in such forward-looking
statements as a result of risks and uncertainties, which include, without
limitation, risks and uncertainties associated with market conditions and the
satisfaction of customary closing conditions related to the public offering and
other risks detailed in this Current Report on Form 8-K and other Nektar’s
filings with the Securities and Exchange Commission. In addition, we, or others
on our behalf, may make forward-looking statements in press releases or written
statements, or in our communications and discussions with investors and analysts
in the normal course of business through meetings, webcasts, phone calls and
conference calls. Words such as “expect,” “anticipate,” “outlook,” “could,”
“will,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,”
“should,” “may,” “assume,” or “continue,” and variations of such words and
similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult to
predict. We have based our forward-looking statements on our management’s
beliefs and assumptions based on information available to our management at the
time the statements are made. We caution you that actual outcomes and results
may differ materially from what is expressed, implied or forecast by our
forward-looking statements. Reference is made in particular to forward-looking
statements regarding product sales, regulatory activities, clinical trial
results, reimbursement, expenses, earnings per share, liquidity and capital
resources, and trends.
You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Current Report on Form 8-K. All
forward-looking statements are qualified in their entirety by this cautionary
statement, and Nektar undertakes no obligation to revise or update any
forward-looking statements to reflect events or circumstances after the date of
this Current Report on Form 8-K.
|
Item 9.01
|
Financial Statements and
Exhibits.
|
(d)
Exhibits
|
Exhibit
No.
|
|
Description
|
|
1.1
|
|
Underwriting
Agreement dated as of January 19, 2011
|
|
5.1
|
Opinion
of O’Melveny & Myers LLP
|
|
|
23.1
|
Consent
of O’Melveny & Myers LLP (included in Exhibit
5.1)
|
13
SIGNATURES
Pursuant
to the requirement of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
By:
|
/s/ Gil M. Labrucherie
|
|
|
Gil
M. Labrucherie
|
||
|
General
Counsel and Secretary
|
||
|
|
Date: |
January
21, 2011
|
14
EXHIBIT
INDEX
|
Exhibit
No.
|
|
Description
|
|
1.1
|
|
Underwriting
Agreement dated as of January 19, 2011
|
|
5.1
|
Opinion
of O’Melveny & Myers LLP
|
|
|
23.1
|
Consent
of O’Melveny & Myers LLP (included in Exhibit
5.1)
|
Exhibit
1.1
19,000,000
Shares
NEKTAR
THERAPEUTICS
Common
Stock
($0.0001
par value per Share)
UNDERWRITING
AGREEMENT
January
19, 2011
JEFFERIES
& COMPANY, INC.
520
Madison Avenue
New York,
New York 10022
Ladies
and Gentlemen:
Introductory. Nektar
Therapeutics, a Delaware corporation (the “Company”), proposes to issue
and sell to Jefferies & Company, Inc. (“Jefferies” or the “Underwriter”) an aggregate of
19,000,000 shares of its common stock, par value $0.0001 per share (the “Shares”). The
19,000,000 Shares to be sold by the Company are collectively called the “Firm Shares.” In
addition, the Company has granted to the Underwriter an option to purchase up to
an additional 2,850,000 Shares. The additional
2,850,000 Shares to be sold by the Company pursuant to such option
are collectively called the “Optional
Shares.” The Firm Shares and, if and to the extent such option
is exercised, the Optional Shares are collectively called the “Offered Shares.”
The
Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a shelf
registration statement on Form S-3 (File No. 333-171747) and has
prepared a base prospectus (the “Base Prospectus”) to be used
in connection with the public offering and sale of the Offered
Shares. Such registration statement, as amended, including the
financial statements, exhibits and schedules thereto, in the form in which it
became effective under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the “Securities Act”), including
all documents incorporated or deemed to be incorporated by reference therein and
any information deemed to be a part thereof at the time of effectiveness
pursuant to Rule 430B under the Securities Act or the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the “Exchange
Act”), is called the “Registration
Statement.” As used herein, the term “Prospectus” shall mean
the final prospectus supplement to the Base Prospectus that describes the
Offered Shares and the offering thereof (the
“Final Prospectus
Supplement”), together with the Base Prospectus, in the form
first used by the Underwriter to confirm sales of the Offered Shares or in the form first
made available to the Underwriter by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act. As used herein, “Applicable Time” is 8:00 a.m. (New
York time) on January 19, 2011. As used herein, “free writing prospectus” has
the meaning set forth in Rule 405 under the Securities Act, and “Time of Sale Prospectus” means
the Base Prospectus, as amended or supplemented immediately prior to the
Applicable Time, together with the free writing prospectuses, if any, identified
in Schedule B
hereto, each “road show” (as defined in Rule 433 under the Securities Act), if
any, related to the offering of the Shares contemplated hereby that is a
“written communication” (as defined in Rule 405 under the Securities Act), and
the pricing information set forth in Schedule C
hereto. As used herein, the terms “Registration
Statement,” “Base Prospectus,” “Time of Sale Prospectus” and “Prospectus”
shall include the documents incorporated and deemed to be incorporated by
reference therein. All references in this Agreement to financial
statements and schedules and other information which are “contained,” “included”
or “stated” in the Registration Statement, the Base Prospectus, the Time of Sale
Prospectus or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, the Base Prospectus,
the Time of Sale Prospectus or the Prospectus, as the case may be, and all
references in this Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, the Time of Sale Prospectus or the Prospectus
shall be deemed to mean and include the filing of any document under the
Exchange Act which is or is deemed to be incorporated by reference in the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus or the
Prospectus, as the case may be. All references in this Agreement to (i) the
Registration Statement, the Base Prospectus or the Prospectus, or any amendments
or supplements to any of the foregoing, shall include any copy thereof filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System (“EDGAR”) and (ii) the
Prospectus shall be deemed to include the “electronic Prospectus”
provided for use in connection with the offering of the Offered Shares as
contemplated by Section 3(o) of this Agreement.
In the
event that the Company has only one subsidiary, then all references herein to
“subsidiaries” of the Company shall be deemed to refer to such single
subsidiary, mutatis mutandis.
The
Company hereby confirms its agreements with the Underwriter as
follows:
Section 1. Representations and Warranties of the
Company. The Company hereby represents, warrants and covenants
to the Underwriter, as of the date of this Agreement, as of the First Closing
Date (as hereinafter defined) and as of each Option Closing Date (as hereafter
defined), if any, and covenants with the Underwriter, as follows:
(a) Compliance with Registration
Requirements. (i) At the time of filing the Registration
Statement, (ii) at the time of the most recent amendment to the Registration
Statement for purposes of complying with Section 10(a)(3) of the Securities Act
(whether such amendment was by post-effective amendment, incorporated report
filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus)
and (iii) at the time the Company or any person acting on its behalf (within the
meaning, for this clause only, of Rule 163(c) under the Securities Act) made any
offer relating to the Offered Shares in reliance on the exemption of Rule 163
under the Securities Act, the Company was a “well-known seasoned issuer” as
defined in Rule 405 under the Securities Act, including not having been an
“ineligible issuer” as defined in Rule 405 under the Securities
Act.
The Registration Statement is an
“automatic shelf registration statement,” as defined in Rule 405, which became
effective on January 18, 2011. The Company has not received from the Commission
any notice pursuant to Rule 401(g)(2) under the Securities Act objecting to the
Company’s use of the automatic shelf registration form. No stop order suspending
the effectiveness of the Registration Statement is in effect and no proceedings
for such purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated or threatened by the Commission.
2.
The Base
Prospectus and the Prospectus when filed complied or will comply in all material
respects with the Securities Act and, if filed by electronic transmission
pursuant to EDGAR (except as may be permitted by Regulation S-T under the
Securities Act), was identical to the copy thereof delivered to the Underwriter
for use in connection with the offer and sale of the Offered
Shares. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, at each deemed effective
date with respect to the Underwriter pursuant to Rule 430B(f)(2) of the
Securities Act and the First Closing Date (as defined in Section 2) (and,
if any Optional Shares are purchased, at the Option Closing Date (as defined in
Section 2)), 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 to make the statements therein not misleading. As of the
Applicable Time, the Time of Sale Prospectus (including any prospectus wrapper)
did not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
Prospectus (including any Prospectus wrapper), as amended or supplemented, as of its date and
at the First Closing Date (and, if any Optional Shares are purchased, at the
Option Closing Date), did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in
the three immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement or any post-effective amendment
thereto, or the Base Prospectus, the Prospectus or the Time of Sale Prospectus,
or any amendments or supplements thereto, made in reliance upon and in
conformity with information relating to the Underwriter furnished to the Company
in writing by the Underwriter expressly for use therein, it being understood and
agreed that the only such information furnished by the Underwriter to the
Company consists of the information described in Section 9(b)
below. There are no contracts or other documents required to be
described in the Time of Sale Prospectus or the Prospectus or to be filed as
exhibits to the Registration Statement which have not been described or filed as
required.
At the
earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the Securities Act) of the Offered Shares and as of the date of
this Agreement, the Company was not and is not an “ineligible issuer” in
connection with the offering of the Offered Shares pursuant to Rules 164, 405
and 433 under the Securities Act. Any free writing prospectus that
the Company is required to file pursuant to Rule 433(d) under the Securities Act
has been, or will be, filed with the Commission in accordance with the
requirements of the Securities Act. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the
requirements of Rule 433 under the Securities Act including timely filing with
the Commission or retention where required and legending, and each such free
writing prospectus, as of its issue date and at all subsequent times through the
completion of the public offer and sale of the Offered Shares did not, does not
and will not include any information that conflicted, conflicts with or will
conflict with the information contained in the Registration Statement, the Base
Prospectus or the Prospectus, including any document incorporated by reference
therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified. Except for the free writing prospectuses, if any,
identified in Schedule
B hereto, and electronic road shows, if any, furnished to you before
first use, the Company has not prepared, used or referred to, and will not,
without your prior consent, prepare, use or refer to, any free writing
prospectus.
3.
(b) Offering Materials Furnished to
Underwriter. The Company has delivered or made available to the
Underwriter one complete copy of the Registration Statement and each amendment
thereto (including exhibits thereto) and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the Registration
Statement and each amendment thereto (without exhibits) and the Base Prospectus,
the Time of Sale Prospectus, the Prospectus, as amended or supplemented, and any
free writing prospectus reviewed and consented to by the Underwriter, in such
quantities and at such places as the Underwriter has reasonably
requested.
(c) Distribution of Offering Material By
the Company. The Company has not distributed and will not
distribute, prior to the later of (i) the expiration or termination of the
option granted to the Underwriter in Section 2 and (ii) the completion of the
Underwriter’s distribution of the Offered Shares, any offering material in
connection with the offering and sale of the Offered Shares other than the Base
Prospectus, the Time of Sale Prospectus, the Prospectus, any free writing
prospectus reviewed and consented to by the Underwriter pursuant to the terms
and conditions set forth in Section 3(d), or the Registration
Statement.
(d) The Underwriting
Agreement. This Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Offered Shares.
The Offered Shares have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and the issuance and sale of the Offered Shares is not subject to
any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase the Offered Shares.
(f) No Applicable Registration or Other
Similar Rights. There are no persons with registration or
other similar rights to have any equity or debt securities registered for sale
under the Registration Statement or included in the offering contemplated by
this Agreement, except for such rights as have been duly waived.
(g) No Material Adverse Change.
Except as otherwise disclosed in the Prospectus, subsequent to the date
of the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a “Material Adverse Change”);
(ii) the Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or contingent,
not in the ordinary course of business nor entered into any material transaction
or agreement not in the ordinary course of business, other than the transactions
contemplated pursuant to this Agreement; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
4.
(h) Independent
Accountants. Ernst & Young LLP, who have expressed their
opinion with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) and supporting schedules filed
with the Commission as a part of the Registration Statement and incorporated by
reference in the Base Prospectus, the Prospectus and Time of Sale Prospectus
(each, an “Applicable
Prospectus” and collectively, the “Applicable Prospectuses”), are
(i) independent public or certified public accountants as required by the
Securities Act and the Exchange Act, (ii) in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X and (iii) a registered public accounting firm as defined by the
Public Company Accounting Oversight Board (the “PCAOB”) whose registration has
not been suspended or revoked and, to the Company’s knowledge, who has not
requested such registration to be withdrawn.
(i) Preparation of the Financial
Statements. The financial statements filed with the Commission
as a part of the Registration Statement and included in the Base Prospectus, the
Time of Sale Prospectus and the Prospectus present fairly the consolidated
financial position of the Company and its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for the periods
specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules have been
prepared in conformity with generally accepted accounting principles as applied
in the United States applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes thereto. No
other financial statements or supporting schedules are required to be included
in the Registration Statement or any Applicable Prospectus. The
financial data set forth or incorporated by reference in each Applicable
Prospectus fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement and each Applicable Prospectus. The Company’s
ratios of earnings to fixed charges set forth in the Base Prospectus under the
caption “Ratio of Earnings to Fixed Charges” and in Exhibit 12.1 to the
Registration Statement have been calculated in compliance with Item 503(d) of
Regulation S-K under the Securities Act. No person who has been
suspended or barred from being associated with a registered public accounting
firm, or who has failed to comply with any sanction pursuant to Rule 5300
promulgated by the PCAOB, has participated in or otherwise aided the preparation
of, or audited, the financial statements, supporting schedules or other
financial data filed with the Commission as a part of the Registration Statement
and included in any Applicable Prospectus.
(j) Company’s Accounting
System. The Company and each of its subsidiaries make and keep
accurate books and records and maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
as applied in the United States and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. There has not been and is no
material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and since December 31, 2009, there has been no
change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
5.
(k) Incorporation and Good Standing of
the Company and its Subsidiaries. Each of the Company and its
subsidiaries has been duly incorporated or organized, as the case may be, and is
validly existing as a corporation, partnership or limited liability company, as
applicable, in good standing under the laws of the jurisdiction of its
incorporation or organization and has the power and authority (corporate or
other) to own, lease and operate its properties and to conduct its business as
described in each Applicable Prospectus and, in the case of the Company, to
enter into and perform its obligations under this Agreement, except where the
failure to be in good standing would not reasonably be expected to result in a
Material Adverse Change. Each of the Company and each subsidiary is
duly qualified as a foreign corporation, partnership or limited liability
company, as applicable, to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to be so qualified or in good standing would not reasonably be expected
to result in a Material Adverse Change. All of the issued and
outstanding capital stock or other equity or ownership interests of each
subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
adverse claim, except as set forth in each Applicable Prospectus. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than (i) the subsidiaries listed in
Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2009 and (ii) such other entities omitted from
Exhibit 21.1 as, when such omitted entities are considered in the aggregate
as a single subsidiary, would not constitute a “significant subsidiary” within
the meaning of Rule 1-02(w) of Regulation S-X.
(l) Capitalization and Other Capital
Stock Matters. The authorized, issued and outstanding capital
stock of the Company is as set forth in each Applicable Prospectus (other than
for subsequent issuances, if any, pursuant to employee benefit plans described
in each Applicable Prospectus or upon the exercise of outstanding options or
warrants described in each Applicable Prospectus). The Shares
(including the Offered Shares) conform in all material respects to the
description thereof contained in the Time of Sale Prospectus. All of
the issued and outstanding Shares have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding Shares was issued
in violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There
are no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in each
Applicable Prospectus. The description of the Company’s stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in each Applicable Prospectus accurately
and fairly presents the information required to be disclosed under the
Securities Act or the Exchange Act, as applicable, with respect to such plans,
arrangements, options and rights. All grants of options to acquire
Shares (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.
Except as described in the Time of Sale Prospectus and the Prospectus, the
Company has not sold or issued any Shares during the six-month period preceding
the date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than Shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
6.
(m) Stock Exchange
Listing. The Shares are registered pursuant to
Section 12(b) of the Exchange Act and are listed on the Nasdaq Global
Select Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Shares under the
Exchange Act or delisting the Shares from the Nasdaq Global Select Market, nor
has the Company received any notification that the Commission or the Nasdaq
Global Select Market is contemplating terminating such registration or
listing.
(n) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is
in violation of its charter or by-laws, partnership agreement or operating
agreement or similar organizational document, as applicable, or is in default
(or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound (including, without limitation, any credit
agreement, indenture, pledge agreement, security agreement or other instrument
or agreement evidencing, guaranteeing, securing or relating to indebtedness of
the Company or any of its subsidiaries ), or to which any of the property
or assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument”), except
for such Defaults as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Change. The Company’s
execution, delivery and performance of this Agreement, consummation of the
transactions contemplated hereby and by the Prospectus and the issuance and sale
of the Offered Shares (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the provisions of the
charter or by-laws, partnership agreement or operating agreement or similar
organizational document of the Company or any subsidiary, as applicable,
(ii) will not conflict with or constitute a breach of, or Default or a Debt
Repayment Triggering Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, or require the consent of
any other party to, any Existing Instrument, except for such breaches, Defaults
or results, or failure to obtain such consent, as would not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Change and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary, except for such violations as would not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Change. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby and by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws and from the Financial Industry Regulatory
Authority (“FINRA”). As used
herein, a “Debt Repayment
Triggering Event” means any event or condition which gives, or with the
giving of notice or lapse of time would give, the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(o) No Material Actions or
Proceedings. There are no legal or governmental actions, suits
or proceedings pending or, to the best of the Company’s knowledge, threatened
(i) against or directly affecting the Company or any of its subsidiaries,
(ii) which have as the subject thereof any officer or director (in their
capacity as such) of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters,
where in any such case (A) to the Company’s knowledge, there is a
substantial likelihood that such action, suit or proceeding will be determined
adversely to the Company, such subsidiary or such officer or director,
(B) any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or adversely
affect the consummation of the transactions contemplated by this Agreement or
(C) any such action, suit or proceeding is or would be material in the context
of the sale of Shares. No material labor dispute with the employees
of the Company or any of its subsidiaries, or to the Company’s knowledge, with
the employees of any principal supplier, manufacturer, customer or contractor of
the Company, exists or, to the Company’s knowledge, is threatened or
imminent.
7.
(p) Intellectual Property
Rights. The Company and its subsidiaries own or possess, or can acquire or
license on reasonable terms, sufficient trademarks, trade names, patent rights,
copyrights, domain names, licenses, approvals, trade secrets and other similar
rights (collectively, “Intellectual Property Rights”)
reasonably necessary to conduct their businesses as now conducted, except as such failure
to own, possess, license, or acquire such rights would not reasonably be
expected to result in a Material Adverse Change; and the expected expiration of
any of such Intellectual Property Rights would not reasonably be expected to
result in a Material Adverse Change. Except as would not reasonably
be expected to result in a Material Adverse Change, neither the Company nor any
of its subsidiaries has received, or has any reason to believe that it will
receive, any notice of infringement or conflict with asserted Intellectual
Property Rights of others. Except as would not reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Change, (A)
to the Company’s knowledge, there is no infringement, misappropriation or
violation by third parties of any of the Intellectual Property Rights owned by
the Company; (B) there is no pending or, to the knowledge of the Company and its
subsidiaries, threatened action, suit, proceeding or claim by others challenging
the rights of the Company and its subsidiaries in or to any such Intellectual
Property Rights, and the Company is unaware of any facts which would form a
reasonable basis for any such claim, that would individually, or in the
aggregate, together with any other claims in this subsection (p), reasonably be
expected to result in a Material Adverse Change; (C) the Intellectual Property
Rights owned by the Company and its subsidiaries and, to the Company’s
knowledge, the Intellectual Property Rights licensed to the Company and its
subsidiaries have not been adjudged by a court of competent jurisdiction invalid
or unenforceable, in whole or in part, and 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 such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable basis for any
such claim that would individually, or in the aggregate, together with any other
claims in this subsection (p), reasonably be expected to result in a Material
Adverse Change; (D) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company or its
subsidiaries infringe, misappropriate or otherwise violate any Intellectual
Property Rights or other proprietary rights of others, the Company and its
subsidiaries have not received any written notice of such claim and the Company
is unaware of any other facts which would form a reasonable basis for any such
claim that would individually, or in the aggregate, together with any other
claims in this subsection (p) reasonably be expected to result in a Material
Adverse Change; (E) the Company is not aware of any prior art that could
reasonably be expected to render any patent held by or licensed to the Company
or any subsidiary invalid or any U.S. patent application held by or licensed to
the Company or any subsidiary unpatentable which prior art was required to be
disclosed to the U.S. Patent and Trademark Office during the prosecution of the
applicable patent application and which was not so disclosed to the U.S. Patent
and Trademark Office, the failure of which to so disclose would individually, or
in the aggregate, reasonably be expected to result in a Material Adverse Change;
(F) to the Company’s knowledge, all prior art references relevant to the
patentability of any pending claim of any patent applications comprising or that
have resulted in Intellectual Property Rights known to the Company, applicable
inventor(s) or licensors, or any of their counsel during the prosecution of such
patent applications that were required to be disclosed to the relevant patent
authority were so disclosed by the required time, except where the failure to so
disclose would not individually, or in the aggregate, reasonably be expected to
result in a Material Adverse Change, and, to the best of the Company’s
knowledge, neither the Company nor any such inventor, licensor or counsel made
any misrepresentation to, or omitted any material fact from, the relevant patent
authority during such prosecution, which would individually, or in the
aggregate, reasonably be expected to result in a Material Adverse Change; and
(G) to the Company’s knowledge, no employee of the Company or a subsidiary of
the Company is in or has ever been in violation in any material respect of any
term of any employment contract, patent disclosure agreement, invention
assignment agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a former employer
where the basis of such violation relates to such employee’s employment with the
Company or a subsidiary of the Company, or actions undertaken by the employee
while employed with the Company or a subsidiary of the Company and would
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Change. To the Company’s knowledge, all material
technical information developed by and belonging to the Company and its
subsidiaries for which they have not sought, and do not intend to seek to patent
or otherwise protect pursuant to applicable intellectual property laws has been
kept confidential or has been disclosed only under obligations of
confidentiality. The Company is not a party to or bound by any
options, licenses or agreements with respect to the Intellectual Property Rights
of any other person or entity that are required to be set forth in the
Prospectus and are not described therein. The Time of Sale Prospectus
contains in all material respects the same description of the matters set forth
in the preceding sentence contained in the Prospectus. None of the
technology employed by the Company or any of its subsidiaries has been obtained
or is being used by the Company or any of its subsidiaries in violation of any
contractual obligation binding on the Company or any of its subsidiaries or, to
the Company’s knowledge, any of its or its subsidiaries’ officers, directors or
employees or otherwise in violation of the rights of any persons, except in each
case for such violations that would not reasonably be expected to result in a
Material Adverse Change.
8.
(q) All Necessary Permits,
etc. The Company and each subsidiary possess such valid and
current certificates, authorizations or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct their
respective businesses, and neither the Company nor any subsidiary has received,
or has any reason to believe that it will receive, any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Change.
(r) Title to Properties. The
Company and each of its subsidiaries has or had as of the date indicated good
and marketable title to all of the real and personal property and other assets
reflected as owned in the financial statements referred to in Section 1(i)
above (or elsewhere in any Applicable Prospectus), in each case free and clear
of any security interests, mortgages, liens, encumbrances, equities, adverse
claims and other defects, except as set forth in each Applicable Prospectus or
as do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. To the Company’s knowledge, the
real property, improvements, equipment and personal property held under lease by
the Company or any subsidiary are held under valid and enforceable leases, with
such exceptions as are not material and do not materially interfere with the use
made or proposed to be made of such real property, improvements, equipment or
personal property by the Company or such subsidiary.
9.
(s) Tax Law
Compliance. The Company and its consolidated subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
or have properly requested extensions thereof and have paid all taxes required
to be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them except as may be being
contested in good faith and by appropriate proceedings. The Company
has made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(i) above in respect of all federal,
state and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its consolidated subsidiaries has not been
finally determined.
(t) Company Not an “Investment
Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the
“Investment Company
Act”). The Company is not, and will not be, either after
receipt of payment for the Offered Shares or after the application of the
proceeds therefrom as described under “Use of Proceeds” in each Applicable
Prospectus, an “investment
company” within the meaning of Investment Company Act and will conduct
its business in a manner so that it will not become subject to the Investment
Company Act.
(u) Insurance. Each of
the Company and its subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and policies covering the
Company and its subsidiaries for product liability claims and clinical trial
liability claims. The Company has no reason to believe that it or any
subsidiary will not be able (i) to renew its existing insurance coverage as
and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not reasonably be expected to result
in a Material Adverse Change. During the past three years, neither
the Company nor any subsidiary has been denied any insurance coverage which it
has sought or for which it has applied.
(v) No Price Stabilization or
Manipulation; Compliance with Regulation M. The Company has
not taken, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Shares or any other “reference security” (as
defined in Rule 100 of Regulation M under the 1934 Act (“Regulation M”)) whether to
facilitate the sale or resale of the Offered Shares or otherwise, and has taken
no action which would directly or indirectly violate Regulation
M. The Company acknowledges that the Underwriter may engage in
passive market making transactions in the Offered Shares on the Nasdaq Global
Select Market in accordance with Regulation M.
(w) Related Party
Transactions. There are no business relationships or
related-party transactions involving the Company or any of its subsidiaries or
any other person required to be described in each Applicable Prospectus which
have not been described as required. The Time of Sale Prospectus
contains in all material respects the same description of the matters set forth
in the preceding sentence contained in the Prospectus.
(x) S-3
Eligibility. At the time the Registration Statement originally
became effective and at the time the Company’s Annual Report on Form 10-K for
the year ended December 31, 2009 was filed with the Commission, the Company met
the then applicable requirements for use of Form S-3 under the Securities Act.
The Company meets the requirements for use of Form S-3 under the Securities Act
specified in FINRA Rule 5110(b)(7)(C)(i).
10.
(y) Exchange Act
Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time the Registration Statement and
any amendments thereto become effective and at the First Closing Date and the
applicable Option Closing Date, as the case may be, 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 the light of the
circumstances under which they were made, not misleading.
(z) FINRA Matters. All
of the information provided to the Underwriter or to counsel for the Underwriter
by the Company, its officers and directors and the holders of any securities
(debt or equity) or options to acquire any securities of the Company in
connection with letters, filings or other supplemental information provided to
FINRA pursuant to FINRA Rule 5110 or NASD Conduct Rule 2720 is true,
complete and correct.
(aa) Parties to Lock-Up
Agreements. Each of the Company’s directors and executive
officers listed on Exhibit A hereto has
executed and delivered to Jefferies a lock-up agreement in the form of Exhibit B
hereto. Exhibit A hereto
contains a true, complete and correct list of all directors and executive
officers of the Company. If any additional persons shall become directors or
executive officers of the Company prior to the end of the Company Lock-up Period
(as defined below), the Company shall cause each such person, prior to or
contemporaneously with their appointment or election as a director or executive
officer of the Company, to execute and deliver to Jefferies an agreement in the
form attached hereto as Exhibit
B.
(bb) Statistical and Market-Related
Data. The statistical, demographic and market-related data
included in the Registration Statement and each Applicable Prospectus are based
on or derived from sources that the Company believes to be reliable and accurate
or represent the Company’s good faith estimates that are made on the basis of
data derived from such sources.
(cc) No Unlawful Contributions or Other
Payments. Neither the Company nor any of its subsidiaries nor,
to the Company’s knowledge, any employee or agent of the Company or any
subsidiary, has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any law or
of the character required to be disclosed in the Registration Statement and each
Applicable Prospectus.
(dd) Disclosure Controls and Procedures;
Deficiencies in or Changes to Internal Control Over Financial
Reporting. The Company has established and maintains
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)), which (i) are designed to ensure that material information
relating to the Company, including its consolidated subsidiaries, is made known
to the Company’s principal executive officer and its principal financial officer
by others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared; (ii) have
been evaluated by management of the Company for effectiveness as of the end of
the Company’s most recent fiscal quarter; and (iii) are effective in all
material respects to perform the functions for which they were
established. Based on the most recent evaluation of its internal
control over financial reporting, the Company is not aware of (i) any
significant deficiencies or material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting. The Company is not aware
of any change in its internal control over financial reporting that has occurred
during its most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
11.
(ee) Compliance with Environmental
Laws. Except as described in each Applicable Prospectus and
except as would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Change, (i) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, “Hazardous
Materials”) or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, “Environmental
Laws”), (ii) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (iii) there are no pending
or threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (iv) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental
Laws.
(ff) ERISA
Compliance. The Company and its subsidiaries and any “employee benefit plan” (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
“ERISA”)) established or
maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA. “ERISA Affiliate” means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the “Code”) of which
the Company or such subsidiary is a member. No “reportable event” (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to any
“employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates. No “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such “employee
benefit plan” were terminated, would have any “amount of unfunded benefit
liabilities” (as defined under ERISA). Neither the Company,
its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “employee benefit plan” or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
“employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
12.
(gg) Brokers. There is
no broker, finder or other party that is entitled to receive from the Company
any brokerage or finder’s fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(hh) No Outstanding Loans or Other
Extensions of Credit. Since the adoption of Section 13(k) of
the Exchange Act, neither the Company nor any of its subsidiaries has extended
or maintained credit, arranged for the extension of credit, or renewed any
extension of credit, in the form of a personal loan, to or for any director or
executive officer (or equivalent thereof) of the Company and/or such subsidiary
except for such extensions of credit as are expressly permitted by Section 13(k)
of the Exchange Act.
(ii) Compliance with
Laws. The Company has not been advised, and has no reason to
believe, that it and each of its subsidiaries are not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, except where failure to be so in compliance
would not reasonably be expected to result in a Material Adverse Change. The
Company has not received any FDA Form 483, notice of adverse finding, warning
letter, untitled letter or other correspondence or notice from the U.S. Food and
Drug Administration or any other governmental authority alleging or asserting
noncompliance with any laws applicable to the Company.
(jj) Clinical
Trials. The studies, tests and preclinical and clinical trials
conducted by or on behalf of the Company and its subsidiaries were and, if still
pending, are being conducted in compliance with experimental protocols,
procedures and controls pursuant to accepted professional scientific standards
and all applicable laws and authorizations, including, without limitation, the
Federal Food, Drug and Cosmetic Act and the rules and regulations promulgated
thereunder, except where the failure to be in compliance has not resulted and
would not reasonably be expected to result in a Material Adverse Change; the
descriptions of the results of such studies, tests and trials contained in any
Applicable Prospectus are accurate and complete in all material respects and
fairly present the data derived from such studies, tests and trials; the Company
is not aware of any studies, tests or trials, the results of which the Company
believes reasonably call into question the study, test, or trial results
described or referred to in any Applicable Prospectus when viewed in the context
in which such results are described and the clinical state of development; and
the Company and its subsidiaries have not received any notices or correspondence
from any applicable governmental authority requiring the termination, suspension
or material modification of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company or its subsidiaries.
(kk) Dividend
Restrictions. No subsidiary of the Company is prohibited or
restricted, directly or indirectly, from paying dividends to the Company, or
from making any other distribution with respect to such subsidiary’s equity
securities or from repaying to the Company or any other subsidiary of the
Company any amounts that may from time to time become due under any loans or
advances to such subsidiary from the Company or from transferring any property
or assets to the Company or to any other subsidiary.
13.
(ll) Foreign Corrupt Practices
Act. Neither the Company nor any of its subsidiaries nor, to
the Company’s knowledge, any director, officer, agent, employee, affiliate or
other person acting on behalf of the Company or any of its subsidiaries is aware
of or has taken any action, directly or indirectly, that has resulted or would
result in a violation of the Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (the “FCPA”), including, without
limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA; and the Company and its subsidiaries and,
to the Company’s knowledge, the Company’s affiliates have conducted their
respective businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.
(mm) 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 applicable jurisdictions, the rules and regulations thereunder and any
related or similar applicable 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.
(nn) OFAC. Neither the
Company nor any of its subsidiaries nor, to the Company’s knowledge, any
director, officer, agent, employee, affiliate or person acting on behalf 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. Treasury
Department (“OFAC”); and
the Company will not directly or indirectly use the proceeds of this offering,
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.
(oo) FINRA Filing
Exemption. To enable the Underwriter to rely on FINRA Rule
5110(b)(7)(C)(i), (i) the Company was subject to the requirements of Section 12
or 15(d) of the Exchange Act and filed all the material required to be filed
pursuant to Sections 13, 14 or 15(d) for a period of at least thirty-six
calendar months immediately preceding the date of this Agreement; (ii) the
Company filed in a timely manner all reports required to be filed pursuant to
Section 13, 14 or 15(d) of the Exchange Act during the twelve calendar months
and any portion of a month immediately preceding the date of this Agreement;
(iii) the last reported sale price of the Company’s common stock on the Nasdaq
Global Select Market on January 18, 2011 was $12.34; (iv) as of such date, there
were greater than 90,000,000 shares of the Company’s common stock outstanding
and held by non-affiliates of the Company; and (v) the Company has annual
trading volume of 3 million shares or more.
Any
certificate signed by any officer of the Company or any of its subsidiaries and
delivered to the Underwriter or to counsel for the
Underwriter shall be deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
The
Company acknowledges that the Underwriter and, for purposes of the opinions to
be delivered pursuant to Section 6 hereof, counsel to the Company and counsel to
the Underwriter, will rely upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.
14.
Section
2. Purchase, Sale and Delivery of the Offered
Shares.
(a) The Firm
Shares. Upon the terms herein set forth, the Company agrees to
issue and sell to the Underwriter an aggregate of 19,000,000 Firm
Shares. On the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Underwriter agrees to purchase from the Company the
respective number of Firm Shares set forth on Schedule A
hereto. The purchase price per Firm Share to be paid by the
Underwriter to the Company shall be $11.60 per share.
(b) The First Closing
Date. Delivery of certificates for the Firm Shares to be
purchased by the Underwriter and payment therefor shall be made at the offices
of Jefferies, 520 Madison Avenue, New York, New York (or such other place
as may be agreed to by the Company and the Underwriter) at 9:00 a.m. New York
time, on January 24, 2011, or such other time and date not later than
1:30 p.m. New York time, on February 7, 2011 as the Underwriter shall
designate by notice to the Company (the time and date of such closing are called
the “First Closing
Date”).
(c) The Optional Shares; Option Closing
Date. In addition, on the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Company hereby grants an option to the
Underwriter to purchase up to an aggregate of 2,850,000 Optional Shares from the
Company at the purchase price per share to be paid by the Underwriter for the
Firm Shares. The option granted hereunder is for use by the
Underwriter solely in covering any over-allotments in connection with the sale
and distribution of the Firm Shares. The option granted hereunder may
be exercised at any time and from time to time in whole or in part upon written
notice by the Underwriter to the Company, which notice may be given at any time
within 30 days from the date of this Agreement. Such notice
shall set forth (i) the aggregate number of Optional Shares as to which the
Underwriter is exercising the option, (ii) the names and denominations in
which the certificates for the Optional Shares are to be registered and
(iii) the time, date and place at which such certificates will be delivered
(which time and date may be simultaneous with, but not earlier than, the First
Closing Date; and in the event that such time and date are simultaneous with the
First Closing Date, the term “First Closing Date” shall
refer to the time and date of delivery of certificates for the Firm Shares and
such Optional Shares). Any such time and date of delivery, if
subsequent to the First Closing Date, is called an “Option Closing Date” and shall
be determined by the Underwriter and shall not be earlier than three nor later
than five full business days after delivery of such notice of
exercise. The Underwriter may cancel the option at any time prior to
its expiration by giving written notice of such cancellation to the
Company.
(d) Public Offering of the Offered
Shares. The Underwriter hereby advises the Company that the
Underwriter intends to offer for sale to the public, initially on the terms set
forth in the Time of Sale Prospectus and the Prospectus, the Offered Shares as
soon after this Agreement has been executed as the Underwriter, in its sole
judgment, has determined is advisable and practicable.
(e) Payment for the Offered
Shares. Payment for the Offered Shares shall be made at the
First Closing Date (and, if applicable, at each Option Closing Date) by wire
transfer of immediately available funds to the order of the
Company.
15.
(f) Delivery of the Offered
Shares. The Company shall deliver, or cause to be delivered,
to the Underwriter certificates for the Firm Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company
shall also deliver, or cause to be delivered, to the Underwriter, certificates
for the Optional Shares the Underwriter has agreed to purchase at the First
Closing Date or the applicable Option Closing Date, as the case may be, against
the irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The certificates for the
Offered Shares shall be in definitive form and registered in such names and
denominations as the Underwriter shall have requested at least two full business
days prior to the First Closing Date (or the applicable Option Closing Date, as
the case may be) and shall be made available for inspection on the business day
preceding the First Closing Date (or the applicable Option Closing Date, as the
case may be) at a location in New York City as the Underwriter may
designate. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriter.
Section 3. Additional Covenants of the
Company. The Company further covenants and agrees with the
Underwriter as follows:
(a) Commission Filing Fees. The
Company agrees to pay the required Commission filing fees relating to the
Offered Shares within the time required by Rule 456(b)(1) under the Securities
Act without regard to the proviso therein and otherwise in accordance with the
Rules 456(b) and 457(r) under the Securities Act.
(b) Delivery of Registration Statement,
Time of Sale Prospectus and Prospectus. The Company shall
furnish to you, without charge, one signed copy of the Registration Statement
and any amendments thereto (including exhibits thereto) and shall furnish to you
in New York City, without charge, prior to 10:00 a.m. New York City time on the
business day next succeeding the date of this Agreement and otherwise during the
period beginning on the date of the Prospectus until the end of the period
during which a prospectus is required by the Securities Act to be delivered
(whether physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of the Offered Shares (the “Prospectus Delivery Period”),
as many copies of the Time of Sale Prospectus, the Prospectus and any
supplements and amendments thereto or to the Registration Statement as you may
reasonably request, provided that copies of the Prospectus may be furnished to
you on the business day next succeeding the filing of the Prospectus with the
Commission and otherwise during the Prospectus Delivery Period.
(c) Underwriter’s Review of Proposed
Amendments and Supplements. During the Prospectus Delivery
Period, prior to amending or supplementing the Registration Statement, the Base
Prospectus, the Time of Sale Prospectus or the Prospectus (including any
amendment or supplement through incorporation of any report filed under the
Exchange Act), the Company: (i) shall furnish to the Underwriter for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a
copy of each such proposed amendment or supplement, (ii) shall not file or use
any such proposed amendment or supplement without the Underwriter’s consent
unless such document is required to be filed within such period pursuant to the
Securities Act or the Exchange Act, and (iii) shall file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
16.
(d) Free Writing
Prospectuses. During the Prospectus Delivery Period, the
Company shall furnish to the Underwriter for review, a reasonable amount of time
prior to the proposed time of filing or use thereof, a copy of each proposed
free writing prospectus or any amendment or supplement thereto to be prepared by
or on behalf of, used by, or referred to by the Company and the Company shall
not file, use or refer to any proposed free writing prospectus or any amendment
or supplement thereto without the Underwriter’s consent unless such document is
required to be filed within such period pursuant to the Securities Act or the
Exchange Act. The Company shall furnish to the Underwriter, without
charge, as many copies of any such free writing prospectus prepared by or on
behalf of, or used by the Company, as the Underwriter may reasonably
request. If, during the Prospectus Delivery Period, there occurred or
occurs an event or development as a result of which any free writing prospectus
prepared by or on behalf of, used by, or referred to by the Company conflicted
or would conflict with the information contained in the Registration Statement
or included or would include an untrue statement of a material fact or omitted
or would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company shall promptly amend or supplement such free writing
prospectus to eliminate or correct such conflict or so that the statements in
such free writing prospectus as so amended or supplemented will not include an
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, as the case may be; provided, however,
that prior to amending or supplementing any such free writing prospectus, the
Company shall furnish to the Underwriter for review, a reasonable amount of time
prior to the proposed time of filing or use thereof, a copy of such proposed
amended or supplemented free writing prospectus and the Company shall not file,
use or refer to any such amended or supplemented free writing prospectus without
the Underwriter’s consent unless such document is required to be filed within
such period pursuant to the Securities Act or the Exchange Act.
(e) Filing of Underwriter Free Writing
Prospectuses. The Company shall not take any action that would
result in the Underwriter or the Company being required to file with the
Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that the Underwriter
otherwise would not have been required to file thereunder.
(f) Amendments and Supplements to Time
of Sale Prospectus. If the Time of
Sale Prospectus is being used to solicit offers to buy the Shares at a time when
the Prospectus is not yet available to prospective purchasers and any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Time of Sale Prospectus so that the Time of Sale Prospectus does
not include an 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 when delivered to a prospective purchaser, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement, or if, in the opinion of the Company, counsel for the Company, the
Underwriter or counsel for the Underwriter, it is necessary to amend or
supplement the Time of Sale Prospectus to comply with applicable law, including
the Securities Act, the Company shall (subject to Sections 3(b) and 3(c))
promptly prepare, file with the Commission and furnish, at its own expense, to
the Underwriter and to any dealer upon request, amendments or supplements to the
Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as
so amended or supplemented will not include an 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 when delivered to a prospective
purchaser, not misleading or so that the Time of Sale Prospectus, as amended or
supplemented, will no longer conflict with the Registration Statement, or so
that the Time of Sale Prospectus, as amended or supplemented, will comply with
applicable law including the Securities Act.
17.
(g) Securities Act
Compliance. After the date of this Agreement and until the
First Closing Date (or, if any Optional Shares are purchased, through the Option
Closing Date), the Company shall promptly advise the Underwriter in writing (i)
of the receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment or
supplement to the Base Prospectus, the Time of Sale Prospectus, any free writing
prospectus or the Prospectus, (iii) of the time and date that any post-effective
amendment to the Registration Statement becomes effective and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any amendment
or supplement to the Base Prospectus, the Time of Sale Prospectus or the
Prospectus or of any order preventing or suspending the use of the Base
Prospectus, the Time of Sale Prospectus, any free writing prospectus or the
Prospectus, or of any proceedings to remove, suspend or terminate from listing
or quotation the Shares from any securities exchange upon which they are listed
for trading or included or designated for quotation, or of the threatening or
initiation of any proceedings for any of such purposes. If the
Commission shall enter any such stop order during such time, the Company will
use its best efforts to obtain the lifting of such order at the earliest
possible moment. Additionally, the Company agrees that, during such
time, it shall comply with the provisions of Rule 424(b) or Rule 433, as
applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b) or Rule 433
were received in a timely manner by the Commission. If, after the date of this
Agreement and until the First Closing Date (or, if any Optional Shares are
purchased, through the Option Closing Date), the Company receives notice
pursuant to Rule 401(g)(2) under the Securities Act from the Commission or
otherwise ceases to be eligible to use the automatic shelf registration form,
the Company shall promptly advise the Underwriter in writing of such notice or
ineligibility, and, if Offered Shares remain unsold by the Underwriter, the
Company will (i) promptly filed a new registration statement or post-effective
amendment on the proper form relating to the Offered Shares, (ii) use its best
efforts to cause such registration statement or post-effective amendment to be
declared effective by the Commission as soon as practicable and (iii) promptly
notify the Underwriter in writing of such effectiveness.
(h) Amendments and Supplements to the
Prospectus and Other Securities Act Matters. If any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus so that the Prospectus does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or if in the opinion of the Company, counsel for the
Company, the Underwriter or counsel for the Underwriter, it is otherwise
necessary to amend or supplement the Prospectus to comply with applicable law,
including the Securities Act, the Company agrees (subject to Section 3(b)
and 3(c)) to promptly prepare, file with the Commission and furnish at its own
expense to the Underwriter and to dealers, amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or so that
the Prospectus, as amended or supplemented, will comply with applicable law
including the Securities Act. Neither the Underwriter’s consent to,
or delivery of, any such amendment or supplement shall constitute a waiver of
any of the Company’s obligations under Sections 3(b) or (c).
18.
(i) Blue Sky
Compliance. The Company shall cooperate with the Underwriter
and counsel for the Underwriter to qualify or register the Offered Shares for
sale under (or obtain exemptions from the application of) the state securities
or blue sky laws or Canadian provincial securities laws of those jurisdictions
designated by the Underwriter, shall comply with such laws and shall continue
such qualifications, registrations and exemptions in effect so long as required
for the distribution of the Offered Shares; provided, however, that the Company
shall not be required to qualify as a foreign corporation or to take any action
that would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to taxation as
a foreign corporation. The Company will advise the Underwriter
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Offered Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
(j) Use of
Proceeds. The Company shall apply the net proceeds from the
sale of the Offered Shares sold by it in the manner described under the caption
“Use of Proceeds” in the Final Prospectus Supplement.
(k) Transfer
Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Shares.
(l) Earnings
Statement. As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning at the end of the
fiscal quarter of the Company during which the most recent effective date of the
Registration Statement occurs (or 90 days after the end of such 12-month period
if such 12-month period coincides with the Company’s fiscal year), the Company
will make generally available to its security holders and to the Underwriter an
earnings statement (which need not be audited) covering such 12-month period if
necessary to satisfy the provisions of Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder.
(m) Exchange Act
Compliance. During the Prospectus Delivery Period, the Company
shall file all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act in the manner and within the time
periods required by the Exchange Act.
(n) Listing. The
Company will use its best efforts to list, subject to notice of issuance, the
Offered Shares on the Nasdaq Global Select Market and to
maintain the listing of the Shares on the Nasdaq Global Select
Market.
(o) Company to Provide Copy of the
Prospectus in Form That May be Downloaded from the
Internet. The Company shall cause to be prepared and
delivered, at its expense, within two business days from the effective date of
this Agreement, to Jefferies an “electronic Prospectus” to be
used in connection with the offering and sale of the Offered
Shares. As used herein, the term “electronic Prospectus” means a
form of Prospectus, and any amendment or supplement thereto, that meets each of
the following conditions: (i) it shall be encoded in an electronic format,
satisfactory to Jefferies, that may be transmitted electronically by Jefferies
to offerees and purchasers of the Offered Shares; (ii) it shall disclose
the same information as the paper Prospectus, except to the extent that graphic
and image material cannot be disseminated electronically, in which case such
graphic and image material shall be replaced in the electronic Prospectus with a
fair and accurate narrative description or tabular representation of such
material, as appropriate; and (iii) it shall be in or convertible into a
paper format or an electronic format, satisfactory to Jefferies, that will allow
investors to store and have continuously ready access to the Prospectus at any
future time, without charge to investors (other than any fee charged for
subscription to the Internet as a whole and for on-line time). The
Company hereby confirms that it has included or will include in the Prospectus
filed pursuant to EDGAR or otherwise with the Commission and in the Registration
Statement at the time it became effective an undertaking that, upon receipt of a
request by an investor or his or her representative, the Company shall transmit
or cause to be transmitted promptly, without charge, a paper copy of the
Prospectus.
19.
(p) Agreement
Not to Offer or Sell Additional Shares. During the period commencing
on and including the date hereof and ending on and including the 90th day
following the date of the Prospectus (as the same may be extended as described
below, the “Lock-up
Period”), the Company will not, without the prior written consent of
Jefferies (which consent may be withheld at the sole discretion of Jefferies),
directly or indirectly, sell (including, without limitation, any short sale),
offer, contract or grant any option to sell, pledge, transfer or establish an
open “put equivalent position” within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of or transfer, or announce the offering of,
or file any registration statement under the Securities Act in respect of, any
Shares, options, rights or warrants to acquire Shares or securities exchangeable
or exercisable for or convertible into Shares (other than as contemplated by
this Agreement with respect to the Offered Shares) or publicly announce the
intention to do any of the foregoing; provided, however, that the Company may
issue Shares (i) pursuant to transactions relating to any director or
employee stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the date of the Prospectus and described in the
Prospectus (including the issuance of securities thereunder and the issuance of
Shares upon the exercise of options issued pursuant thereto) and
(ii) pursuant to the conversion of securities or the exercise of warrants
outstanding at the date of the Prospectus and described in the Prospectus. Notwithstanding the
foregoing, if (i) during the last 17 days of the Lock-up Period, the Company
issues an earnings release or material news or a material event relating to the
Company occurs or (ii) prior to the expiration of the Lock-up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-up Period, then in each case the Lock-up
Period will be extended until the expiration of the 18-day period beginning on
the date of the issuance of the earnings release or the occurrence of the
material news or material event, as applicable, unless Jefferies waives, in
writing, such extension (which waiver may be withheld at the sole discretion of
Jefferies), except that such extension will not apply if, (i) within three
business days prior to the 15th calendar day before the last day of the Lock-up
Period, the Company delivers a certificate, signed by the Chief Financial
Officer or Chief Executive Officer of the Company, certifying on behalf of the
Company that (i) the Shares are “actively traded securities” (as defined in
Regulation M), (ii) the Company meets the applicable requirements of
paragraph (a)(1) of Rule 139 under the Securities Act in the manner
contemplated by NASD Conduct Rule 2711(f)(4), and (iii) the provisions of
NASD Conduct Rule 2711(f)(4) do not restrict the publishing or distribution
of any research reports relating to the Company published or distributed by the
Underwriter during the 15 days before or after the last day of the Lock-up
Period (before giving effect to such extension). The Company will
provide the Underwriter with prior notice of any such announcement that gives
rise to an extension of the Lock-up Period.
(q) Future Reports to the
Underwriter. During the period of five years hereafter the
Company will furnish or make available to Jefferies at 520 Madison Avenue, New
York, New York Attention: Capital Markets: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders’ equity and cash flows for the year then
ended and the opinion thereon of the Company’s independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, FINRA or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company furnished or made available
generally to holders of its capital stock; provided however, that all
requirements of this subsection (q) shall be satisfied to the extent the
reports, communications, financial statements or other documents referenced
herein are available on EDGAR.
20.
(r) Investment
Limitation. The Company shall not invest, or otherwise use,
the proceeds received by the Company from its sale of the Offered Shares in such
a manner as would require the Company or any of its subsidiaries to register as
an investment company under the Investment Company Act.
(s) No
Stabilization or Manipulation; Compliance with Regulation M. The
Company will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or manipulation
of the price of the Shares or any other reference security, whether to
facilitate the sale or resale of the Offered Shares or otherwise, and the
Company will, and shall cause each of its affiliates to, comply with all
applicable provisions of Regulation M. If the limitations of Rule 102
of Regulation M (“Rule
102”) do not apply with respect to the Offered Shares or any other
reference security pursuant to any exception set forth in Section (d) of Rule
102, then promptly upon notice from the Underwriter (or, if later, at the time
stated in the notice), the Company will, and shall cause each of its affiliates
to, comply with Rule 102 as though such exception were not available but the
other provisions of Rule 102 (as interpreted by the Commission) did
apply.
(t) Existing Lock-Up
Agreements. During the Lock-up Period, the Company will
enforce all existing agreements between the Company and any of its security
holders that prohibit the sale, transfer, assignment, pledge or hypothecation of
any of the Company’s securities. In addition, the Company will direct
the transfer agent to place stop transfer restrictions upon any such securities
of the Company that are bound by such existing “lock-up” agreements for the
duration of the periods contemplated in such agreements, including, without
limitation, “lock-up” agreements entered into by the Company’s officers and
directors pursuant to Section 6(j).
Section 4. Payment of
Expenses. The Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the
Offered Shares (including all printing and engraving costs), (ii) all fees
and expenses of the registrar and transfer agent of the Shares, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Offered Shares to the Underwriter, (iv) all fees and
expenses of the Company’s counsel, independent public or certified public
accountants and other advisors to the Company, (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Time of Sale
Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf
of, used by, or referred to by the Company, and the Base Prospectus, and all
amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys’ fees and expenses incurred by the Company or the Underwriter in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Offered Shares for
offer and sale under the state securities or blue sky laws or the provincial
securities laws of Canada, and, if requested by the Underwriter, preparing and
printing a “Blue Sky
Survey” or memorandum and a “Canadian wrapper”, and any supplements
thereto, advising the Underwriter of such qualifications, registrations,
determinations and exemptions, provided such fees and disbursements related to
distribution in Canada do not exceed $10,000 in the aggregate, (vii) the
filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriter in connection with, FINRA’s review, if any, and approval of the
Underwriter’s participation in the offering and distribution of the Offered
Shares; provided such fees and expenses of counsel do not exceed $10,000 in the
aggregate, (viii) the costs and expenses of the Company relating to
investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the preparation or dissemination of any electronic road show,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives, employees and officers of the Company and of
the Underwriter and any such consultants, (ix) the fees and expenses
associated with listing the Offered Shares on the Nasdaq Global Select Market,
and (ix) all other fees, costs and expenses of the nature referred to in
Item 14 of Part II of the Registration Statement. Except as
provided in this Section 4, Section 7, Section 9 and
Section 10 hereof, the Underwriter shall pay its own expenses, including
the fees and disbursements of its counsel.
21.
Section 5. Covenant of the
Underwriter. The Underwriter covenants with the Company not to
take any action that would result in the Company being required to file with the
Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that otherwise would not
be required to be filed by the Company thereunder, but for the action of the
Underwriter.
Section 6. Conditions of the Obligations of the
Underwriter. The obligations of the Underwriter to purchase
and pay for the Offered Shares as provided herein on the First Closing Date and,
with respect to the Optional Shares, each Option Closing Date, shall be subject
to the accuracy of the representations and warranties on the part of the Company
set forth in Section 1 hereof as of the date hereof and as of the First
Closing Date as though then made and, with respect to the Optional Shares, as of
each Option Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants’ Comfort
Letter. On the date hereof, the Underwriter shall have
received from Ernst & Young LLP, independent public or certified public
accountants for the Company, (i) a letter dated the date hereof addressed
to the Underwriter, in form and substance satisfactory to the Underwriter,
containing statements and information of the type ordinarily included in
accountant’s “comfort letters” to Underwriter, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements of the Company and certain financial
information contained in the Registration Statement and the Base Prospectus,
and, with respect to each letter dated the date hereof only, the Prospectus, and
(ii) confirming that they are (A) independent public or certified public
accountants as required by the Securities Act and the Exchange Act and (B) in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X.
(b) Compliance with Registration Requirements; No
Stop Order; No Objection from FINRA. For the period from and
after effectiveness of this Agreement and prior to the First Closing Date and,
with respect to the Optional Shares, each Option Closing Date:
(i) the
Company shall have filed the Prospectus with the Commission (including the
information previously omitted from the Registration Statement pursuant to Rule
430B under the Securities Act) in the manner and within the time period required
by Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information previously omitted pursuant to such Rule 430B, and such
post-effective amendment shall have become effective;
22.
(ii) no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission; and
(iii) FINRA
shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) No Material Adverse
Change. For the period from and after the date of this
Agreement and through and including the First Closing Date and, with respect to
the Optional Shares, each Option Closing Date, there shall not have occurred any
Material Adverse Change.
(d) Opinion of Counsel for the
Company. On each of the First Closing Date and each Option
Closing Date the Underwriter shall have received the opinion and negative
assurance letter of O’Melveny & Myers LLP, counsel for the Company, dated as
of the Closing Date, covering the matters set forth in Exhibit C
hereto.
(e) Opinion of Intellectual Property
Counsel for the Company. On each of the First Closing Date and
each Option Closing Date the Underwriter shall have received the opinion of Mark
A. Wilson, Esq., Vice President, Intellectual Property of the Company, dated as
of such Closing Date, with respect to certain intellectual property matters, the
form of which is attached as Exhibit D
hereto.
(f) Regulatory Officer’s
Certificate. On each of the First Closing Date and each Option
Closing Date the Underwriter shall have received an officer’s certificate of
Carlo Di Fonzo, Vice President, Drug Development and Regulatory Affairs of the
Company, dated as of such Closing Date, with respect to certain regulatory
matters, the form of which is attached as Exhibit E
hereto.
(g) Opinion of Counsel for the
Underwriter. On each of the First Closing Date and each Option Closing Date the
Underwriter shall have received the opinion of Cooley LLP, counsel for the
Underwriter, in form and substance satisfactory to the Underwriter, dated as of
such Closing Date.
(h) Officers’
Certificate. On each of the First Closing Date and each Option
Closing Date, the Underwriter shall have received a written certificate executed
by the Chief Executive Officer or President of the Company and
the Chief Financial Officer of the Company, dated as of such Closing Date, to
the effect set forth in subsection (b)(ii) of this Section 6 and further to the
effect that:
(i) for
the period from and including the date of this Agreement through and including
such Closing Date, there has not occurred any Material Adverse
Change;
(ii) the
representations, warranties and covenants of the Company set forth in this
Agreement are true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and
23.
(iii) the
Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date.
(i) Bring-down Comfort
Letter. On each of the First Closing Date and each Option
Closing Date the Underwriter shall have received from Ernst & Young LLP,
independent public or certified public accountants for the Company, a letter
dated such date, in form and substance satisfactory to the
Underwriter, to the effect that they reaffirm the statements made in the letter
furnished by them pursuant to subsection (a) of this Section 6, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date or the
applicable Option Closing Date, as the case may be.
(j) Lock-Up
Agreements. On or prior to the date hereof, the Company shall
have furnished to the Underwriter an agreement in the form of Exhibit B hereto
from each of the persons listed on Exhibit A hereto, and
each such agreement shall be in full force and effect on each of the First
Closing Date and each Option Closing Date.
(k) Nasdaq. The
Offered Shares shall have been approved for listing on the Nasdaq Global Select
Market, subject only to official notice of issuance.
(l) Additional
Documents. On or before each of the First Closing Date and
each Option Closing Date, the Underwriter and counsel for the Underwriter shall
have received such information, documents and opinions as they may reasonably
request for the purposes of enabling them to pass upon the issuance and sale of
the Offered Shares as contemplated herein, or in order to evidence the accuracy
of any of the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Offered Shares as
contemplated herein and in connection with the other transactions contemplated
by this Agreement shall be reasonably satisfactory in form and substance to the
Underwriter and counsel for the Underwriter.
If any
condition specified in this Section 6 is not satisfied when and as required to
be satisfied, this Agreement may be terminated by the Underwriter by notice to the
Company at any time on or prior to the First Closing Date and, with respect to
the Optional Shares, at any time on or prior to the applicable Option Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 7, Section 9 and
Section 10 shall at all times be effective and shall survive such
termination.
Section 7. Reimbursement of Underwriter’s
Expenses. If this Agreement is terminated by the
Underwriter pursuant to
Section 6 as a result of the failure of any of the conditions of Section 6
(other than (f)) to be satisfied when and as required to be satisfied, or
pursuant to Section 12 prior to the First Closing Date, or if the sale to the
Underwriter of the Offered Shares on the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, the Company
agrees to reimburse the Underwriter upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Underwriter in
connection with the proposed purchase and the offering and sale of the Offered
Shares, including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone
charges.
Section 8. Effectiveness of this
Agreement. This Agreement shall become effective upon the
execution of this Agreement by the parties hereto.
24.
Section
9. Indemnification.
(a) Indemnification of the
Underwriter. The Company agrees to indemnify and hold harmless
the Underwriter, its officers and employees, and each person, if any, who
controls the Underwriter within the meaning of the Securities Act or the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which the Underwriter or such officer, employee or controlling person may
become subject, under the Securities Act, the Exchange Act, other federal or
state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Offered Shares have been offered or sold or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected in accordance with Section 9(d) below), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430B under the Securities Act, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (ii) any untrue statement
or alleged untrue statement of a material fact contained in the Base Prospectus,
the Time of Sale Prospectus, any free writing prospectus that the Company has
used, referred to or filed, or is required to file, pursuant to Rule 433(d) of
the Securities Act or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and to reimburse the Underwriter and each
such officer, employee and controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by Jefferies) as such
expenses are reasonably incurred by the Underwriter or such officer, employee or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
expressly for use in the Registration Statement, the Base Prospectus, the Time
of Sale Prospectus, any such free writing prospectus or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the only
such information furnished by the Underwriter to the Company consists of the
information described in subsection (b) below. The indemnity
agreement set forth in this Section 9(a) shall be in addition to any
liabilities that the Company may otherwise have.
25.
(b) Indemnification of the Company, its
Directors and Officers. The Underwriter agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, against
any loss, claim, damage, liability or expense, as incurred, to which the
Company, or any such director, officer or controlling person may become subject,
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, the Base Prospectus the Time of Sale Prospectus, any free writing prospectus
that the Company has used, referred to or filed, or is required to file,
pursuant to Rule 433(d) of the Securities Act or the Prospectus (or such
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, the Base Prospectus, the Time of Sale
Prospectus, such free writing prospectus that the Company has used, referred to
or filed, or is required to file, pursuant to Rule 433(d) of the Securities
Act, the Prospectus (or such amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use therein; and to reimburse the
Company, or any such director, officer or controlling person for any legal and
other expense reasonably incurred by the Company, or any such director, officer
or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The Company hereby acknowledges that the only information
that the Underwriter has furnished to the Company expressly for use in the
Registration Statement, the Base Prospectus, the
Time of Sale Prospectus, any free writing prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) of the Securities Act or
the Prospectus (or any amendment or supplement thereto) are the statements set
forth in the first sentence of the paragraph under the section entitled
“Commissions and Expenses” and the first, sixth and ninth sentences of the
paragraph under the section entitled “Stabilization” under the caption
“Underwriting” in the Company’s final prospectus supplement dated January 19,
2011 relating to the offering of the Offered Shares. The indemnity agreement set
forth in this Section 9(b) shall be in addition to any liabilities that the
Underwriter may otherwise have.
(c) Notifications and Other
Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 9 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 9, notify the indemnifying
party in writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for indemnity, contribution or otherwise under the
indemnity agreement contained in this Section 9, except to the extent such
indemnifying party has been materially prejudiced by such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such
indemnified party of such indemnifying party’s election so to assume the defense
of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than
one separate counsel (together with local counsel), representing the indemnified
parties who are parties to such action), which counsel (together with any local
counsel) for the indemnified parties shall be selected by Jefferies (in the case
of counsel for the indemnified parties referred to in Section 9(a) above)
or by the Company (in the case of counsel for the indemnified parties referred
to in Section 9(b) above)) (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized in writing the employment
of counsel for the indemnified party at the expense of the indemnifying party,
in each of which cases the fees and expenses of counsel shall be at the expense
of the indemnifying party and shall be paid as they are
incurred.
26.
(d) Settlements. The
indemnifying party under this Section 9 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 party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 9(c) hereof, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 60 days after receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
Section 10. Contribution. If
the indemnification provided for in Section 9 is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriter, on the other hand, from the
offering of the Offered Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and the Underwriter, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the
one hand, and the Underwriter, on the other hand, in connection with the
offering of the Offered Shares pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Offered Shares pursuant to this Agreement (before deducting expenses)
received by the Company, and the total underwriting discounts and commissions
received by the Underwriter, in each case as set forth on the front cover page
of the Prospectus bear to the aggregate initial public offering price of the
Offered Shares as set forth on such cover. The relative fault of the
Company, on the one hand, and the Underwriter, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, on the one
hand, or the Underwriter, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
27.
The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 9(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in
Section 9(c) with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 10;
provided, however, that
no additional notice shall be required with respect to any action for which
notice has been given under Section 9(c) for purposes of
indemnification.
The
Company and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this Section 10 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 10.
Notwithstanding
the provisions of this Section 10, the Underwriter shall not be required to
contribute any amount in excess of the underwriting discounts and commissions
received by the Underwriter in connection with the Offered Shares underwritten
by it and distributed to the public. 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. For purposes of this
Section 10, each officer and employee of the Underwriter and each person,
if any, who controls the Underwriter within the meaning of the Securities Act or
the Exchange Act shall have the same rights to contribution as the Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company with
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.
Section 11. [Reserved.]
Section 12. Termination of this
Agreement. Prior to the
purchase of the Firm Shares by the Underwriter on the First Closing Date this
Agreement may be terminated by the Underwriter by notice given to the Company if
at any time (i) trading or quotation in any of the Company’s securities
shall have been suspended or limited by the Commission or by the Nasdaq Global
Select Market, or trading in securities generally on either the Nasdaq Stock
Market or the New York Stock Exchange shall have been suspended or limited, or
minimum or maximum prices shall have been generally established on any of such
stock exchanges by the Commission or FINRA; (ii) a general banking
moratorium shall have been declared by any of federal, New York, Delaware or
California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States’ or international political, financial or economic conditions, as
in the judgment of the Underwriter is material and adverse and makes it
impracticable to market the Offered Shares in the manner and on the terms
described in the Time of Sale Prospectus or the Prospectus or to enforce
contracts for the sale of securities; or (iv) there shall have occurred any
Material Adverse Change. Any termination pursuant to this
Section 12 shall be without liability on the part of (a) the Company
to the Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Underwriter pursuant to Sections 4 and 7 hereof,
(b) the Underwriter to the Company, or (c) of any party hereto to any
other party except that the provisions of Section 9 and Section 10
shall at all times be effective and shall survive such
termination.
28.
Section 13. No Advisory or Fiduciary
Relationship. The Company acknowledges and agrees that (a) the purchase
and sale of the Offered Shares pursuant to this Agreement, including the
determination of the public offering price of the Offered Shares and any related
discounts and commissions, is an arm’s-length commercial transaction between the
Company, on the one hand, and the Underwriter, on the other hand, (b) in
connection with the offering contemplated hereby and the process leading to such
transaction the Underwriter is and has been acting solely as a principal and is
not the agent or fiduciary of the Company, or its stockholders, creditors,
employees or any other party, (c) the Underwriter has not assumed and will not
assume an advisory or fiduciary responsibility in favor of the Company with
respect to the offering contemplated hereby or the process leading thereto
(irrespective of whether the Underwriter has advised or is currently advising
the Company on other matters) and the Underwriter has no obligation to the
Company with respect to the offering contemplated hereby except the obligations
expressly set forth in this Agreement, (d) the Underwriter and its affiliates
may be engaged in a broad range of transactions that involve interests that
differ from those of the Company, and (e) the Underwriter has not provided
any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal, accounting,
regulatory and tax advisors to the extent it deemed appropriate
Section 14. Representations and Indemnities to
Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, as the
case may be, and, anything herein to the contrary notwithstanding, will survive
delivery of and payment for the Offered Shares sold hereunder and any
termination of this Agreement.
Section 15. Notices. All
communications hereunder shall be in writing and shall be mailed, hand delivered
or telecopied and confirmed to the parties hereto as follows:
If to the
Underwriter:
Jefferies
& Company, Inc.
520
Madison Avenue
New York,
New York 10022
Facsimile: (212)
284-2280
Attention: General
Counsel
If to the
Company:
Nektar
Therapeutics
201
Industrial Road
San
Carlos, California 94070
Facsimile: (650)
339-5391
Attention: General
Counsel
Any party
hereto may change the address for receipt of communications by giving written
notice to the others.
Section 16. Successors. This Agreement
will inure to the benefit of and be binding upon the parties hereto, and to the
benefit of the employees, officers and directors and controlling persons
referred to in Section 9 and Section 10, and in each case their
respective successors, and no other person will have any right or obligation
hereunder. The term “successors” shall not include
any purchaser of the Offered Shares as such from the Underwriter merely by
reason of such purchase.
29.
Section 17. Partial
Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 18. Governing Law Provisions. This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in such
state. Any legal suit, action or proceeding arising out of or based
upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be
instituted in the federal courts of the United States of America located in the
Borough of Manhattan in the City of New York or the courts of the State of New
York in each case located in the Borough of Manhattan in the City of New York
(collectively, the “Specified
Courts”), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a “Related Judgment”), as to
which such jurisdiction is non-exclusive) of such courts in any such suit,
action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient
forum.
With
respect to any Related Proceeding, each party irrevocably waives, to the fullest
extent permitted by applicable law, all immunity (whether on the basis of
sovereignty or otherwise) from jurisdiction, service of process, attachment
(both before and after judgment) and execution to which it might otherwise be
entitled in the Specified Courts, and with respect to any Related Judgment, each
party waives any such immunity in the Specified Courts or any other court of
competent jurisdiction, and will not raise or claim or cause to be pleaded any
such immunity at or in respect of any such Related Proceeding or Related
Judgment, including, without limitation, any immunity pursuant to the United
States Foreign Sovereign Immunities Act of 1976, as amended.
Section 19. General
Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit. The Table of Contents and the Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
30.
Each of
the parties hereto acknowledges that it is a sophisticated business person who
was adequately represented by counsel during negotiations regarding the
provisions hereof, including, without limitation, the indemnification provisions
of Section 9 and the contribution provisions of Section 10, and is
fully informed regarding said provisions. Each of the parties hereto
further acknowledges that the provisions of Sections 9 and 10 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, the Base Prospectus, the
Time of Sale Prospectus, each free writing prospectus and the Prospectus (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
[Remainder
of this page intentionally left blank]
31.
If the
foregoing is in accordance with your understanding of our agreement, kindly sign
and return to the Company the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.
|
Very
truly yours,
|
||
|
NEKTAR
THERAPEUTICS
|
||
|
By:
|
/s/ John Nicholson
|
|
|
Name:
John Nicholson
|
||
|
Title:
Chief Financial Officer
|
||
The
foregoing Underwriting Agreement is hereby confirmed and accepted by the
Underwriter in New York, New York as of the date first above
written.
|
JEFFERIES
& COMPANY, INC.
|
||
|
By:
|
/s/ Sage Kelly
|
|
|
Name:
Sage Kelly
|
||
|
Title: Managing
Director
|
||
32.
SCHEDULE
A
|
Underwriter
|
Number of
Firm Shares
to be Purchased
|
|
|
Jefferies
& Company, Inc.
|
19,000,000
|
SCHEDULE
B
Schedule
of Free Writing Prospectuses included in the Time of Sale
Prospectus
None
SCHEDULE
C
Schedule
of Pricing Information Included in the Time of Sale Prospectus
Price per
share to the public: $11.85
Number of
shares being sold: 19,000,000
Number of
shares potentially issuable pursuant to the overallotment
option: 2,850,000
EXHIBIT
A
LIST OF
PERSONS EXECUTING LOCK-UPS
Executive
Officers
Howard W.
Robin
Stephen
K. Doberstein
Rinko
Ghosh
Gil M.
Labrucherie
Lorianne
Masuoka
John
Nicholson
Jillian
B. Thomsen
Directors
Robert B.
Chess
R. Scott
Greer
Joseph J.
Krivulka
Christopher
A. Kuebler
Lutz
Lingnau
Susan
Wang
Roy A.
Whitfield
Dennis
Winger
EXHIBIT
B
FORM OF
LOCK-UP AGREEMENT
January
[__], 2011
Jefferies
& Company, Inc.
520
Madison Avenue
New York,
New York 10022
RE: Nektar
Therapeutics (the “Company”)
Ladies
& Gentlemen:
The undersigned is an owner of record
or beneficially of certain shares of common stock, par value $0.0001 per share,
of the Company (“Shares”) or securities convertible into or exchangeable or
exercisable for Shares. The Company proposes to carry out a public
offering of Shares (the “Offering”) for which you will act as the
underwriter. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned
acknowledges that you and any other underwriter are relying on the
representations and agreements of the undersigned contained in this letter
agreement in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the
undersigned hereby agrees that the undersigned will not, and will cause any
spouse or immediate family member of the spouse or the undersigned living in the
undersigned’s household not to, without the prior written consent of Jefferies
& Company, Inc. (which consent may be withheld in its sole discretion),
directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open “put equivalent position” within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
dispose of any Shares, options or warrants to acquire Shares, or securities
exchangeable or exercisable for or convertible into Shares currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under
the Exchange Act) by the undersigned (or such spouse or family member), or
publicly announce an intention to do any of the foregoing, for a period
commencing on the date hereof and continuing through the close of trading on the
date 90 days after the date of the Final Prospectus Supplement (as defined in
the Underwriting Agreement relating to the Offering to which the Company is a
party) (the “Lock-up Period”); provided, that if (i) during the last 17 days of
the Lock-up Period, the Company issues an earnings release or material news or a
material event relating to the Company occurs or (ii) prior to the expiration of
the Lock-up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Lock-up Period, then
in each case the Lock-up Period will be extended until the expiration of the
18-day period beginning on the date of the issuance of the earnings release or
the occurrence of the material news or material event, as applicable, unless
Jefferies & Company, Inc. waives, in writing, such extension, except that
such extension will not apply if, within three business days prior to the 15th
calendar day before the last day of the Lock-up Period, the Company delivers a
certificate, signed by the Chief Financial Officer or Chief Executive Officer of
the Company, certifying on behalf of the Company that (a) the Shares are
“actively traded securities” (as defined in Regulation M), (b) the Company meets
the applicable requirements of paragraph (a)(1) of Rule 139 under the
Securities Act of 1933, as amended (the “Securities Act”) in the manner
contemplated by NASD Conduct Rule 2711(f)(4), and (c) the provisions of
NASD Conduct Rule 2711(f)(4) do not restrict the publishing or distribution
of any research reports relating to the Company published or distributed by any
underwriter during the 15 days before or after the last day of the Lock-up
Period (before giving effect to such extension). The foregoing
restrictions shall not apply to: (1) the transfer of any or all of the Shares
owned by the undersigned, either during his or her lifetime or on death, (A) by
bona fide gift, or (B) by will or intestate succession to a member of the
immediate family of the undersigned or to a trust the beneficiaries of which are
exclusively the undersigned and/or a member or members of his or her immediate
family; or (2) any transfer of Shares by the undersigned to the Company (A)
deemed to occur upon the cashless exercise by the undersigned of options to
acquire Shares, which options are granted to the undersigned pursuant to the
Company’s employee benefit plans existing as of the date of this letter
agreement or (B) for the primary purpose of paying the exercise price of options
to acquire Shares; provided, however, that in the case of any transfer or
distribution pursuant to clause (1) above, it shall be a condition to such
transfer that (I) the donee, beneficiary or transferee executes and delivers to
Jefferies & Company, Inc. an agreement stating that he, she or it is
receiving and holding the Shares subject to the provisions of this letter
agreement, and there shall be no further transfer of such Shares, except in
accordance with this letter agreement, and (II) no filing by any party under the
Exchange Act shall be required or shall be voluntarily made in connection with
such transfer (other than a filing made after the expiration of the Lock-up
Period (as such may have been extended pursuant to the terms of this letter
agreement)). [The
foregoing restrictions shall also not apply to the transfer or sale of up to
23,000 Shares pursuant to a contract, instruction or plan meeting the
requirements of Rule 10b5-1 under the Exchange Act that has been entered into by
the undersigned prior to the date hereof.]1
For the
purposes of this paragraph, “immediate family” shall mean the spouse, domestic
partner, lineal descendant (including adopted children), father, mother, brother
or sister of the transferor. The undersigned hereby acknowledges and agrees that
written notice of any extension of the Lock-up Period pursuant to the terms and
conditions set forth in this paragraph will be delivered by Jefferies &
Company, Inc. to the Company and that any such notice properly delivered will be
deemed to have been given to, and received by, the undersigned.
1
To be included in the agreement of Robert B. Chess
only.
The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company’s transfer
agent and registrar against the transfer of Shares or securities convertible
into or exchangeable or exercisable for Shares held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the
undersigned waives any registration rights relating to registration under the
Securities Act of any Shares owned either of record or beneficially by the
undersigned, including any rights to receive notice of the
Offering.
The undersigned hereby represents and
warrants that the undersigned has full power and authority to enter into this
letter agreement. This letter agreement is irrevocable and all
authority herein conferred or agreed to be conferred shall survive the death or
incapacity or dissolution of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
This letter agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the conflict of laws principles thereof.
|
Very
truly yours,
|
||
|
|
||
|
Name
of Security Holder (Print exact
name)
|
||
|
By:
|
|
|
|
Signature
|
||
Exhibit
5.1
[Letterhead
of O’Melveny & Myers LLP]
January
21, 2011
Nektar
Therapeutics
455
Mission Bay Boulevard South
San
Francisco, California 94158
|
|
Re:
|
Issuance of Shares of
Common Stock under Registration Statement on Form S-3 (File No.
333-171747)
|
Ladies
and Gentlemen:
We have
acted as special counsel to Nektar Therapeutics, a Delaware corporation (the
“Company”), in
connection with the issuance and sale of (i) 19,000,000 shares (the “Firm Shares”) of common stock,
par value $0.0001 per share, of the Company (“Common Stock”), and (ii) up to
2,850,000 shares of Common Stock (the “Optional Shares” and together
with the Firm Shares, the “Offered Shares”) that may be
sold by the Company pursuant to the exercise of an overallotment option granted
to Jefferies & Company, Inc. (the “Underwriter”), pursuant to an
effective registration statement on Form S-3 (File No. 333-171747) (the “Registration Statement”) filed
on January 18, 2011 with the Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “Securities Act”), the related
prospectus that forms a part of the Registration Statement (the “Base Prospectus”), as
supplemented by a prospectus supplement dated January 19, 2011 (the “Prospectus Supplement” and
collectively with the Base Prospectus, the “Prospectus”), and that certain
Underwriting Agreement dated as of January 19, 2011, by and between the Company
and the Underwriter.
This
opinion is being furnished in accordance with the requirements of Item 601(b)(5)
of Regulation S-K under the Securities Act, and no opinion is expressed herein
as to any matter pertaining to the contents of the Registration Statement or the
Prospectus, other than as expressly stated herein with respect to the issuance
of the Offered Shares.
In our
capacity as such counsel, we have examined originals or copies of those
corporate and other records, documents and agreements we considered
appropriate. As to relevant factual matters, we have relied upon,
among other things, factual representations we have received from the
Company. In addition, we have obtained and relied upon those
certificates of public officials we considered appropriate.
We have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with originals of all documents
submitted to us as copies.
On the
basis of such examination, our reliance upon the assumptions in this opinion and
our consideration of those questions of law we considered relevant, and subject
to the limitations and qualifications in this opinion, we are of the opinion
that the Offered Shares, when issued and sold in accordance with the
Registration Statement and the Prospectus, will be validly issued, fully paid
and non-assessable.
The law
covered by this opinion is limited to the present Delaware General Corporation
Law and the present federal law of the United States. We express no
opinion as to the laws of any other jurisdiction and no opinion regarding the
statutes, administrative decisions, rules, regulations or requirements of any
county, municipality, subdivision or local authority of any
jurisdiction.
We hereby
consent to the use of this opinion as an exhibit to a Current Report on Form 8-K
to be filed by the Company as of the date hereof and to the reference to this
firm under the heading “Legal Matters” in the Prospectus
Supplement. This opinion is expressly limited to the matters set
forth above, and we render no opinion, whether by implication or otherwise, as
to any other matters. This letter speaks only as of the date hereof
and we assume no obligation to update or supplement this opinion to reflect any
facts or circumstances that arise after the date of this opinion and come to our
attention, or any future changes in laws.
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Respectfully
submitted,
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/s/
O’Melveny & Myers
LLP
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