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EXHIBIT 1
3,200,000 Shares
KOS PHARMACEUTICALS, INC.
Common Stock
UNDERWRITING AGREEMENT
October 20, 1997
XXXXX & COMPANY
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
SALOMON BROTHERS INC
SBC WARBURG DILLON READ INC.
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. Kos Pharmaceuticals, Inc., a Florida corporation (the
"Company") proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), and certain shareholders of the Company (the "Selling
Shareholders") named in Schedule B hereto (the "Selling Shareholders," and
collectively with the Company, the "Sellers") severally propose to sell to the
Underwriters, an aggregate of 3,200,000 shares of Common Stock, $.01 par value
(the "Common Stock") of the Company. The aggregate of 3,200,000 shares so
proposed to be sold, of which 1,000,000 shares are to be sold by the Company and
2,200,000 shares are to be sold by the Selling Shareholders (each Selling
Shareholder selling the amount set forth opposite such Selling Shareholder's
name under "Firm Stock" in Schedule B hereto) is hereinafter referred to as the
"Firm Stock".
The Selling Shareholders also severally propose to sell to the
Underwriters, upon the terms and conditions set forth in Section 3 hereof, up to
an additional 480,000 shares of Common Stock (the "Optional Stock"), the Company
selling up to 140,000 shares of Common Stock and each Selling Shareholder
selling up to the amount set forth opposite such Selling Shareholder's name
under "Optional Stock" in Schedule B hereto. The Firm Stock and the Optional
Stock are hereinafter collectively referred to as the "Stock". Xxxxx & Company
("Cowen"), Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, Salomon Brothers
Inc, and SBC Warburg Dillon Read Inc. are acting as representatives of the
several Underwriters and in such capacity are
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hereinafter referred to as the "Representatives". The Company and the Selling
Shareholders are hereinafter collectively referred to as the "Sellers."
2. (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-35395) in the
form in which it became or becomes effective and also in such form as it
may be when any post-effective amendment thereto shall become effective
with respect to the Stock, including any preeffective prospectuses included
as part of the registration statement as originally filed or as part of any
amendment or supplement thereto, or filed pursuant to Rule 424 under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules
and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, copies of which have
heretofore been delivered to you, has been prepared by the Company in
conformity in all material respects with the requirements of the Securities
Act and the Rules and Regulations and has been filed with the Commission
under the Securities Act. The term Registration Statement as used in this
Agreement means the registration statement in the form in which it becomes
effective by the Commission. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering
of the Stock may commence, the term "Registration Statement" as used in
this Agreement means the registration statement as amended by said
post-effective amendment. The term "Registration Statement" as used in this
Agreement shall also include any registration statement relating to the
Stock that is filed and becomes effective pursuant to Rule 462(b) under the
Securities Act. The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement, or, (A) if
the prospectus included in the Registration Statement omits information in
reliance on Rule 430A under the Securities Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act, the term "Prospectus" as used in this Agreement
means the prospectus in the form included in the
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Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectus filed with the Commission pursuant
to Rule 424(b) and (B) if prospectuses that meet the requirements of
Section 10(a) of the Securities Act are delivered pursuant to Rule 434
under the Securities Act, then (i) the term "Prospectus" as used in this
Agreement means the "prospectus subject to completion" (as such term is
defined in Rule 434(g) under the Securities Act) as supplemented by (a) the
addition of Rule 430A information or other information contained in the
form of prospectus delivered pursuant to Rule 434(b)(2) under the
Securities Act or (b) the information contained in the term sheets
described in Rule 434(b)(3) under the Securities Act, and (ii) the date of
such prospectuses shall be deemed to be the date of the term sheets. The
term "Preeffective Prospectus" as used in this Agreement means the
prospectus subject to completion in the form included in the Registration
Statement at the time of the initial filing of the Registration Statement
with the Commission, and as such prospectus shall have been amended from
time to time prior to the date of the Prospectus.
(ii) The Commission has not issued or threatened to issue any order
preventing or suspending the use of any Preeffective Prospectus, and, at
its date of issue, each Preeffective Prospectus conformed in all material
respects with the requirements of the Securities Act and did not include
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,
in the light of the circumstances under which they were made, not
misleading; and, when the Registration Statement becomes effective and at
all times subsequent thereto up to and including the Closing Date (as
hereinafter defined), the Registration Statement and the Prospectus and any
amendments or supplements thereto conformed and will conform in all
material respects to the requirements of the Securities Act and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, included or will include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were
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made, not misleading; provided, however, that the foregoing
representations, warranties and agreements shall not apply to information
contained in or omitted from any Preeffective Prospectus or the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information relating to any Underwriter (or relating to the distribution)
furnished to the Company by or on behalf of any Underwriter, directly or
through you, specifically for use in the preparation thereof; there is no
franchise, lease, contract, agreement or document required to be described
in the Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed therein as
required; and all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statement are
accurate and complete descriptions of such documents in all material
respects.
(iii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as set forth
or contemplated in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct
or contingent, nor entered into any material transactions not in the
ordinary course of business, and there has not been any material adverse
change in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the capital
stock (except pursuant to the Company's stock option plans), or a material
change in the short-term or long-term debt of the Company and its
subsidiaries considered as a whole.
(iv) The financial statements, together with the related notes and
schedules, set forth in the Prospectus and elsewhere in the Registration
Statement fairly present, on the basis stated in the Registration
Statement, the financial position and the results of operations and changes
in financial position of the Company and its consolidated subsidiaries at
the respective dates or for the respective periods therein specified. Such
statements and related notes and schedules have been prepared in accordance
with generally
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accepted accounting principles applied on a consistent basis except as may
be set forth in the Prospectus. The other financial accounting information
and data of the Company set forth in the Prospectus and elsewhere in the
Registration Statement is accurately presented and has been prepared on a
basis consistent with such financial statements and the books and records
of the Company. All financial and statistical information and data set
forth in the Prospectus and elsewhere in the Registration Statement that
was obtained from third party source materials is, in all material
respects, an accurate presentation of the information or data as presented
in the source from which it was derived.
(v) To the best of the Company's knowledge, Xxxxxx Xxxxxxxx LLP, who
have expressed their opinions on the audited financial statements included
in the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(vi) The Company and each of its subsidiaries has been duly organized
and is validly existing and in good standing as a corporation under the
laws of its jurisdiction of organization; and the Company is and each of
its subsidiaries is duly qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires such
qualification. The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits
of and from all public regulatory or governmental agencies and bodies to
own, lease and operate its properties and conduct its business as now being
conducted and as described in the Registration Statement and the
Prospectus, and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. Aeropharm Technology, Inc., a Delaware
corporation, is owned and controlled by the Company. Except as described in
the Prospectus in the first and second paragraphs under the heading
"Business--Collaborations, the Company does not,
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directly or indirectly, own or control any other corporation, association
or entity.
(vii) The Company's authorized and outstanding capital stock is on the
date hereof, and will be on the Closing Date, as set forth under the
heading "Capitalization" in the Prospectus (without giving effect to the
exercise of stock options or the issuance of 215 shares of Common Stock to
employees of the Company); the outstanding shares of Common Stock of the
Company (including the shares of Common Stock to be sold by the Selling
Shareholders) conform to the description thereof in the Prospectus, have
been duly authorized and validly issued and are fully paid and
nonassessable and have been issued in compliance with all federal and state
securities laws and were not issued in violation of or subject to any
preemptive rights or similar rights to subscribe for or purchase securities
and conform to the description thereof contained in the Prospectus. Except
as disclosed in and or contemplated by the Prospectus and the financial
statements of the Company and related notes thereto included in the
Prospectus, the Company does not have outstanding any options or warrants
to purchase, or any preemptive rights or other rights to subscribe for or
to purchase any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations, except for
options granted subsequent to the date of information provided in the
Prospectus pursuant to the Company's employee and stock option plans as
disclosed in the Prospectus. The description of the Company's stock option
and other stock plans or arrangements, and the options or other rights
granted or exercised thereunder, as set forth in the Prospectus, accurately
and fairly presents in all material respects the information required by
the Rules and Regulations to be shown with respect to such plans,
arrangements, options and rights. All outstanding shares of capital stock
of each of the subsidiaries of the Company have been duly authorized and
validly issued, and are fully paid and nonassessable and are owned directly
by the Company free and clear of any liens, encumbrances, equities or
claims.
(viii) Each of (a) the shares of Stock to be issued and sold by the
Company to the Underwriters hereunder and (b) the shares of Stock to be
issued by the Company to Xxxxxx X. Xxxx and sold by Xxxxxx X. Xxxx to the
Underwriters
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hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof in the
Prospectus.
(ix) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
subsidiary is subject, which, if determined adversely to the Company or any
such subsidiary, might individually or in the aggregate (i) prevent or
adversely affect the transactions contemplated by this Agreement, (ii)
suspend the effectiveness of the Registration Statement, (iii) prevent or
suspend the use of the Preeffective Prospectus in any jurisdiction or (iv)
result in a material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net worth or
results of operations of the Company and, to the Company's knowledge, there
is no valid basis for any such legal or governmental proceeding; and to the
best of the Company's knowledge no such proceedings are threatened or
contemplated against the Company or any subsidiary by governmental
authorities or others. The Company is not a party or subject to the
provisions of any material injunction, judgment, decree or order of any
court, regulatory body or other governmental agency or body. The
description of the Company's litigation under the heading "Business--Legal
Proceedings" in the Prospectus is true and correct and complies with the
Rules and Regulations.
(x) Neither the Company nor any subsidiary of the Company is in
violation of its respective articles or certificate of incorporation or
by-laws or in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material to
the conduct of the business of the Company and its subsidiaries considered
as a whole, to which the Company or any of its subsidiaries or their
respective property is bound.
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(xi) The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of or constitute a
default under any indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Company or any of the
subsidiaries is a party or by which it or any of its properties is or may
be bound, the articles or certificate of incorporation, by-laws or other
organizational documents of the Company or any of its subsidiaries, or any
law, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or result in the creation of a lien on any of the assets
of the Company or its subsidiaries.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated by this Agreement, except such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") or under the Securities Act or the securities or "Blue Sky" laws of
any jurisdiction in connection with the purchase and distribution of the
Stock by the Underwriters.
(xiii) The Company has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder (including to
issue, sell and deliver the Stock to be sold by it hereunder), and this
Agreement has been duly and validly authorized, executed and delivered by
the Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that rights to indemnity and contribution hereunder may be limited
by federal or state securities laws or the public policy underlying such
laws.
(xiv) The Company and its subsidiaries are in all material respects in
compliance with, and conduct their businesses in conformity with, all
applicable federal, state, local and foreign laws, rules and regulations of
any court or governmental agency or body; to the knowledge of the Company,
otherwise than as set forth in the
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Registration Statement and the Prospectus, no prospective change in any of
such federal or state laws, rules or regulations has been adopted which,
when made effective, would have a material adverse effect on the operations
of the Company and its subsidiaries.
(xv) The Company and each of its subsidiaries (A) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (C) are in compliance with
all terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries considered as a whole.
(xvi) The Company and each of its subsidiaries have such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and operate
their respective properties and to conduct their businesses except where
such failure to receive required permits would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries considered as a whole; the Company and each of its
subsidiaries have fulfilled and performed all of their material obligations
with respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the
holder of any such permit; and, except as described in the Prospectus, such
permits contain no restrictions that are materially burdensome to the
Company or any of its subsidiaries.
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(xvii) The clinical trials and the animal studies conducted by or on
behalf of the Company or in which the Company has participated that are
described in the Prospectus were and, if still pending, are being conducted
in all material respects in accordance with standard medical and scientific
research procedures, and the Company has operated and currently is in
compliance in all material respects with all applicable FDA rules,
regulations and policies.
(xviii) The Company and its subsidiaries have filed all federal,
state, local and foreign income, payroll, franchise and other tax returns
which are required to be filed through the date hereof, or has received
extensions thereof, and have paid all taxes shown as due thereon or with
respect to any of their properties to the extent the same are material and
have become due, and there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against the Company or
any of its subsidiaries or any of their respective properties or assets
that would adversely affect the financial position, business or operations
of the Company and its subsidiaries.
(xix) Except as described in the Registration Statement, no person or
entity has the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or effectiveness of
the Registration Statement or otherwise, except for persons and entities
who have expressly waived such right or who have been given proper notice
and have failed to exercise such right within the time or times required
under the terms and conditions of such right.
(xx) Neither the Company nor any of its officers, directors or
affiliates (as that term is defined in Rule 144, promulgated under the
Securities Act) has taken or will take, directly or indirectly, any action
designed or intended to stabilize or manipulate the price of any security
of the Company, or which caused or resulted in, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
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(xxi) The Company has provided you with all annual, audited financial
statements since June 30, 1992 to the date hereof that are available to the
officers of the Company.
(xxii) Except as otherwise described in the Prospectus, the Company
and its subsidiaries own or possess the right to use (i) all patents,
trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by them and (ii) all
other material patents, trademarks, trademark registrations, trade names,
copyrights, licenses, inventions and trade secrets employed by them in the
operation of their respective businesses, and, except as described in the
Prospectus and except with respect to the Nicostatin trademark, the Company
is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and its subsidiaries with respect to
the foregoing. To the Company's knowledge, except as described in the
Prospectus, its business as now conducted and as proposed to be conducted
does not and will not infringe or conflict with in any material respect
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses or other intellectual property or franchise right of any person.
Except as described in the Prospectus, no claim has been made against the
Company alleging the infringement by the Company of any patent trademark,
service xxxx, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person.
(xxiii) The Company and its subsidiaries have performed all material
obligations required to be performed by them under all contracts required
by Item 601 (b)(10) of Regulation S-K under the Securities Act to be filed
as exhibits to the Registration Statement, and neither the Company nor any
of its subsidiaries nor, to the Company's knowledge, any other party to
such contract is in default under or in breach of any such obligations.
Neither the Company nor any of its subsidiaries has received any notice of
such default or breach.
(xxiv) The Company is not involved in any labor dispute nor, to the
Company's knowledge, is any such dispute threatened. The Company is
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not aware that (A) any executive, key employee or significant group of
employees of the Company or any subsidiary plans to terminate employment
with the Company or any such subsidiary or (B) any such executive or key
employee is subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement that would be violated by the
present or proposed business activities of the Company and its
subsidiaries. Neither the Company nor any subsidiary has or expects to have
any liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA<168>), to which the Company
or any subsidiary makes or ever has made a contribution and in which any
employee of the Company or any subsidiary is or has ever been a
participant. With respect to such plans, the Company and each subsidiary is
in compliance in all material respects with all applicable provisions of
ERISA.
(xxv) The Company has obtained the written agreements described in
Section 3 of this Agreement from each person listed in Schedule C hereto.
(xxvi) The Company and its subsidiaries have, and the Company and its
subsidiaries as of the Closing Date will have, good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company or of its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as would not have a material adverse effect on the Company and its
subsidiaries considered as a whole; and any real property and buildings
held under lease by the Company and its subsidiaries or proposed to be held
after giving effect to the transactions described in the Prospectus are, or
will be as of the Closing Date, held by them under valid, subsisting and
enforceable leases with such exceptions as would not have a material
adverse effect on the Company and its subsidiaries considered as a whole in
each case except as described in or contemplated by the Prospectus.
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(xxvii) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in
the Prospectus; and neither the Company nor any subsidiary of the Company
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue their
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations
of the Company and its subsidiaries considered as a whole, except as
described in or contemplated by the Prospectus.
(xxviii) Other than as contemplated by this Agreement, 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
of the transactions contemplated by this Agreement.
(xxix) The Company has complied with all provisions of Section 517.075
Florida Statutes (Chapter 92-198; Laws of Florida).
(xxx) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxxi) To the Company's knowledge, neither the Company nor any of its
subsidiaries nor any employee or agent of the Company or any of its
subsidiaries has made any payment of funds of the Company or any of its
subsidiaries or received
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or retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(xxxii) Neither the Company nor any of its subsidiaries is or, after
application of the net proceeds of this offering as described under the
caption "Use of Proceeds" in the Prospectus, will become an "investment
company" or an entity "controlled" by an " investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
(xxxiii) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company as to the matters covered thereby.
(xxxiv) No executive officer of the Company has received or is aware
of any communication (written or oral) relating to the termination or
modification of any of the agreements described or referred to in the
Prospectus under the caption "Business", the termination or modification of
which would have a material adverse effect on the Company.
(xxxv) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
(b) REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each of the
Selling Shareholders represents and warrants to, and agrees with, the several
Underwriters that:
(i) This Agreement has been duly authorized (if such Selling
Shareholder is a corporation), executed and delivered by or on behalf of
such Selling Shareholder, and is a valid and binding obligation of such
Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its terms, except to the extent that rights to indemnity
and contribution hereunder may be limited by federal or state securities
laws or the public policy underlying such laws.
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(ii) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under this
Agreement and the Power of Attorney of such Selling Shareholder appointing
certain individuals as such Selling Shareholder's attorneys-in-fact to the
extent set forth therein, relating to the transactions contemplated hereby
and by the Registration Statement (the "Power of Attorney" of such Selling
Shareholder) will not contravene any provision of applicable law, or the
articles of incorporation or by-laws of such Selling Shareholder (if such
Selling Shareholder is a corporation), or any agreement or other instrument
binding upon such Selling Shareholder or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under this
Agreement or the Power of Attorney of such Selling Shareholder, except such
as may be required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the shares of Stock.
(iii) Such Selling Shareholder has or has the right to acquire, and on
the Closing Date will have, valid title to the shares of Stock to be sold
by such Selling Shareholder and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement
and the Power of Attorney of such Selling Shareholder and to sell, transfer
and deliver the shares of Stock to be sold by such Selling Shareholder.
(iv) The shares of Stock to be sold by such Selling Shareholder
pursuant to this Agreement have been duly authorized and are, or when
issued will be, validly issued, fully paid and non-assessable.
(v) The Power of Attorney of such Selling Shareholder has been duly
authorized, executed and delivered by such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder.
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(vi) Delivery of the shares of Stock to be sold by such Selling
Shareholder pursuant to this Agreement will pass title to such shares of
Stock free and clear of any security interests, claims, liens, equities and
other encumbrances.
(vii) To the best of each Selling Shareholder's knowledge, at its date
of issue, each Preeffective Prospectus conformed in all material respects
with the requirements of the Securities Act and did not include 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, in the light
of the circumstances under which they were made, not misleading, and when
the Registration Statement becomes effective and at all times subsequent
thereto up to and including the Closing Date (as hereinafter defined), the
Registration Statement and the Prospectus and any amendments or supplements
thereto conformed and will conform in all material respects to the
requirements of the Securities Act and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, included or
will include any untrue statement of a material fact or omit to state any
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; provided, however, that the foregoing
representations, warranties and agreements shall not apply to information
contained in or omitted from any Preeffective Prospectus or the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information relating to any Underwriter (or relating to the distribution)
furnished to the Company by or on behalf of any Underwriter, directly or
through you, specifically for use in the preparation thereof.
3. PURCHASE BY, AND SALE AND DELIVERY TO, UNDERWRITERS--CLOSING DATES. Each
Seller, severally and not jointly, hereby agrees to sell to the Underwriters,
and each Underwriter, on the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, agrees, severally and not jointly, to purchase from such Seller the
number of shares of Firm Stock (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of
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shares of Firm Stock to be sold by such Seller as the number of shares of Firm
Stock set forth in Schedule A hereto opposite the name of such Underwriter bears
to the total number of shares of Firm Stock, subject to adjustment in accordance
with Section 12 hereof.
The purchase price per share to be paid by the Underwriters to the Sellers
will be $ per share (the "Purchase Price").
Payment for the shares of Firm Stock to be sold by each Seller shall be
made to such Seller by wire of federal or other immediately available funds
against delivery of such shares of Firm Stock for the respective accounts of the
several Underwriters, at the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Such shares of Firm Stock shall be in the form
of definitive certificates and registered in such names and in such
denominations as the Representatives may direct by notice in writing to the
Sellers given at or prior to 12:00 Noon, New York Time, on the second full
business day preceding the First Closing Date (as defined below) or, if no such
direction is received, in the names of the respective Underwriters or in such
other names as Cowen may designate (solely for the purpose of administrative
convenience) and in such denominations as Cowen may determine. The time and date
of the delivery and closing shall be at 9:00 A.M., New York Time, on October 23,
1997, in accordance with Rule 15c6-1 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The time and date of such payment and delivery are
herein referred to as the "First Closing Date". The Closing Date and the
location of delivery of, and the form of payment for, the Firm Stock may be
varied by agreement among the Sellers and Cowen. The Closing Date may be
postponed pursuant to the provisions of Section 12.
The Sellers shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters not later than
10:00 A.M., New York Time, on the business day preceding the First Closing Date
at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that Cowen, individually and not as Representative of the
several Underwriters, may (but shall not be obligated to) make payment to the
Sellers on behalf of any Underwriter or Underwriters for the Stock to be
purchased by such Underwriter or Underwriters. Any such payment by Cowen shall
not relieve such Underwriter or Underwriters from any of its or their other
obligations hereunder.
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The several Underwriters agree to make a public offering of the Firm Stock
at the public offering price as soon after the effectiveness of the Registration
Statement as in their judgment is advisable. The Representatives shall promptly
advise the Sellers of the making of the public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, each
Seller, severally and not jointly, hereby grants to the Underwriters an option
to purchase, severally and not jointly, the number of shares of Optional Stock
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the number of shares of Optional
Stock to be sold by such Seller as the number of shares of Firm Stock set forth
in Schedule A hereto opposite the name of such Underwriter bears to the total
number of shares of Firm Stock, subject to adjustment in accordance with Section
12 hereof. The price per share to be paid for the Optional Stock shall be the
Purchase Price. The option granted hereby may be exercised as to all or any part
of the Optional Stock at any time, and from time to time, not more than thirty
(30) days subsequent to the effective date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by the Underwriters to the Sellers.
The option granted hereby may be exercised by the Underwriters by written
notice from Cowen to the Sellers setting forth the number of shares of the
Optional Stock to be purchased by them and the date and time for delivery of and
payment for the Optional Stock. Each date and time for delivery of and payment
for the Optional Stock (which may be the First Closing Date, but not earlier) is
herein called the "Option Closing Date" and shall in no event be earlier than
two (2) business days nor later than ten (10) business days after written notice
is given. (The First Closing Date and the Option Closing Dates, if any, are
herein called the "Closing Dates".) Optional Stock shall be purchased for the
account of each Underwriter in the same proportion as the number of shares of
Firm Stock set forth opposite such Underwriter's name in Schedule A hereto bears
to the total number of shares of Firm Stock (subject to adjustment by the
Underwriters to eliminate odd lots). Upon exercise of the option by the
Underwriters, the Sellers severally and not jointly agree to sell to the
Underwriters the number of shares of Optional Stock set forth in the written
notice of exercise, and the
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Underwriters, upon the basis of the representations herein contained, but
subject to the conditions herein set forth, agree, severally and not jointly, to
purchase the number of such shares determined as aforesaid.
Payment for any shares of Optional Stock to be sold by each Seller shall be
made to such Seller by wire of federal or other immediately available funds
against delivery of such shares of Optional Stock for the respective accounts of
the several Underwriters, at the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Such shares of Optional Stock shall be in the
form of definitive certificates and registered in such names and in such
denominations as the Representatives may direct by notice given at or prior to
12:00 Noon, New York Time, on the second full business day preceding the Option
Closing Date or, if no such direction is received, in the names of the
respective Underwriters or in such other names as Cowen may designate (solely
for the purpose of administrative convenience) and in such denominations as
Cowen may determine. The Option Closing Date and the location of delivery of,
and the form of payment for, the Optional Stock may be varied by agreement among
the Sellers and Cowen. The Option Closing Date may be postponed pursuant to the
provisions of Section 12.
Each Selling Shareholder hereby agrees not to (A) directly or indirectly
offer, sell, assign, transfer, encumber, pledge, contract to sell, grant an
option to purchase or otherwise dispose of, other than by operation of law, any
shares of Common Stock, options, rights or warrants to acquire shares of Common
Stock, or any securities convertible into or exercisable or exchangeable for
shares of Common Stock (whether such shares or any such securities are now owned
or are hereafter acquired) or (B) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of shares of Common Stock, whether any such transaction described in
clauses (A) or (B) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise for a period of 365 days after the date
of the Prospectus without the prior written consent of Cowen. The foregoing
sentence shall not apply to the Stock to be sold hereunder. In addition, each
Selling Shareholder agrees that, without the prior written consent of Cowen on
behalf of the Underwriters, it will not, during the period ending 365 days after
the date of the Prospectus, make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
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Notwithstanding the foregoing, (a) Xxxxxx X. Xxxx may at any time transfer
any or all of his shares of Common Stock to one or more of the following: the
spouse or any sibling or lineal descendant of Xxxxxx X. Xxxx, any corporation or
other entity in which 50% or more of the beneficial ownership of equity
interests and 50% or more of the voting securities is owned by Xxxxxx X. Xxxx or
the spouse or any sibling or lineal descendant of Xxxxxx X. Xxxx, or any trust
for the benefit of Xxxxxx X. Xxxx or the spouse or any sibling or lineal
descendant of Xxxxxx X. Xxxx (each of the foregoing, a "Xxxx Transferee"), and a
Xxxx Transferee may transfer any or all of its shares of Common Stock to another
Xxxx Transferee, in each case so long as such Xxxx Transferee shall have agreed
in a signed writing reasonably acceptable to Cowen to be bound by restrictions
substantially similar to those contained in the preceding paragraph for the
balance of the 365-day period after the date of the Prospectus; and (b) Kos
Holdings, Inc. may at any time transfer any or all of its shares of Common Stock
to one or more of the following: Xxxxxxx Xxxxxxx, the spouse or any sibling or
lineal descendant of Xxxxxxx Xxxxxxx, any corporation or other entity in which
50% or more of the beneficial ownership of equity interests and 50% or more of
the voting securities is owned by Xxxxxxx Xxxxxxx or the spouse or any sibling
or lineal descendant of Xxxxxxx Xxxxxxx, or any trust for the benefit of Xxxxxxx
Xxxxxxx or the spouse or any sibling or lineal descendant of Xxxxxxx Xxxxxxx
(each of the foregoing, a "Holdings Transferee"), and a Holdings Transferee may
transfer any or all of its shares of Common Stock to another Holdings
Transferee, in each case so long as such Holdings Transferee shall have agreed
in a signed writing reasonably acceptable to Cowen to be bound by restrictions
substantially similar to those contained in the preceding paragraph for the
balance of the 365-day period after the date of the Prospectus.
The Company shall, concurrently with the execution of this Agreement,
deliver agreements executed by each person listed on Schedule C hereto, pursuant
to which each such person agrees not to (A) directly or indirectly offer, sell,
assign, transfer, encumber, pledge, contract to sell, grant an option to
purchase or otherwise dispose of, other than by operation of law, any shares of
Common Stock, options, rights or warrants to acquire shares of Common Stock, or
any securities convertible into or exercisable or exchangeable for shares of
Common Stock (whether such shares or any such securities are now owned or are
hereafter acquired) or (B) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of shares of Common Stock, whether any such transaction described in
clauses (A) or (B) above is to be settled by delivery of shares of
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Common Stock or such other securities, in cash or otherwise, for the periods
listed on Schedule C, without the prior written consent of Cowen, PROVIDED that
the agreement executed by X.X. Xxxxxxxxxxx shall allow him to sell up to 25,000
shares without restriction and PROVIDED FURTHER that the agreements executed by
Kos Investments, Inc., Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx may contain such
exceptions as Cowen in its sole discretion approves.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives have
determined not to proceed pursuant to Rule 430A, use its best efforts to
cause the Registration Statement to become effective, (ii) if the Company
and the Representatives have determined to proceed pursuant to Rule 430A,
use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and Rule 424 of
the Rules and Regulations and (iii) if the Company and the Representatives
have determined to deliver Prospectuses pursuant to Rule 434 of the Rules
and Regulations, to use its best efforts to comply with all the applicable
provisions thereof. The Company will advise the Representatives promptly as
to the time at which the Registration Statement becomes effective, will
advise the Representatives promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of the institution of any proceedings for that purpose, and will use its
best efforts to prevent the issuance of any such stop order and to obtain
as soon as possible the lifting thereof, if issued. The Company will advise
the Representatives promptly of the receipt of any comments of the
Commission or any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information and will not at any time file any amendment to the
Registration Statement or supplement to the Prospectus which shall not
previously have been submitted to the Representatives a reasonable time
prior to the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the
Securities Act and the Rules and Regulations.
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(b) The Company will prepare and file with the Commission, promptly
upon the request of the Representatives, any amendments or supplements to
the Registration Statement or the Prospectus which in the opinion of the
Representatives may be necessary to enable the several Underwriters to
continue the distribution of the Stock as contemplated herein and will use
its best efforts to cause the same to become effective as promptly as
possible.
(c) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Stock is required to be
delivered under the Securities Act any event relating to or affecting the
Company or any of its subsidiaries occurs as a result of which the
Prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Securities Act, the Company
will promptly notify the Representatives thereof and will prepare an
amended or supplemented prospectus which will correct such statement or
omission; and in case any Underwriter is required to deliver a prospectus
relating to the Stock nine (9) months or more after the effective date of
the Registration Statement, the Company upon the request of the
Representatives and at the expense of such Underwriter will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Securities Act.
(d) The Company will deliver to the Representatives, at or before the
Closing Date, three (3) copies of the Registration Statement (including
photocopies of the original signatures of the officers and directors who
signed the Registration Statement), as originally filed with the
Commission, and all amendments thereto including all financial statements
and exhibits thereto, and will deliver to the Representatives such number
of copies of the Registration Statement, including such financial
statements but without exhibits, and all amendments thereto, as the
Representatives may reasonably request. The Company will deliver or mail to
or upon the order
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of the Representatives, from time to time until the effective date of the
Registration Statement, as many copies of the Preeffective Prospectus as
the Representatives may reasonably request. The Company will deliver or
mail to or upon the order of the Representatives on the date of the initial
public offering, and thereafter from time to time during the period when
delivery of a prospectus relating to the Stock is required under the
Securities Act, as many copies of the Prospectus, in final form or as
thereafter amended or supplemented as the Representatives may reasonably
request; provided, however, that the expense of the preparation and
delivery of any prospectus required for use nine (9) months or more after
the effective date of the Registration Statement shall be borne by the
Underwriters required to deliver such prospectus.
(e) The Company will make generally available to its stockholders as
soon as practicable, but not later than fifteen (15) months after the
effective date of the Registration Statement, an earnings statement which
will be in reasonable detail (but which need not be audited) and which will
comply with Section 11(a) of the Securities Act, covering a period of at
least twelve (12) months beginning after the "effective date" (as defined
in Rule 158 under the Securities Act) of the Registration Statement.
(f) The Company will cooperate with the Representatives to enable the
Stock to be registered or qualified for offering and sale by the
Underwriters and by dealers under the securities laws of such jurisdictions
as the Representatives may designate and at the request of the
Representatives will make such applications and furnish such consents to
service of process or other documents as may be required of it as the
issuer of the Stock for that purpose; provided, however, that the Company
shall not be required to qualify to do business or to file a general
consent (other than that arising out of the offering or sale of the Stock)
to service of process in any such jurisdiction where it is not now so
subject. The Company will, from time to time, prepare and file such
statements and reports as are or may be required of it as the issuer of the
Stock to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for the distribution of the
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Stock. The Company will advise the Representatives promptly after the
Company becomes aware of the suspension of the qualifications or
registration of (or any such exception relating to) the Common Stock of the
Company for offering, sale or trading in any jurisdiction or of any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any orders suspending such qualifications,
registration or exception, the Company will, with the cooperation of the
Representatives, use its best efforts to obtain the withdrawal thereof.
(g) As and when required by the Rules and Regulations, the Company
will furnish to its stockholders annual reports containing financial
statements certified by independent public accountants. During the period
of five (5) years from the date hereof, the Company will deliver to the
Representatives and, upon request, to each of the other Underwriters, as
soon as they are available, copies of each annual report of the Company and
each other report furnished by the Company to its stockholders and will
deliver to the Representatives, (i) as soon as they are available, copies
of any other reports (financial or other) which the Company shall publish
or otherwise make available to any of its stockholders as such and (ii) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities
exchange or the NASD. So long as the Company has active subsidiaries, such
financial statements will be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally. Separate financial statements
shall be furnished for all subsidiaries whose accounts are not consolidated
but which at the time are significant subsidiaries as defined in the Rules
and Regulations.
(h) The Company will use its best efforts to maintain the inclusion of
the Stock on the Nasdaq National Market (or on a national securities
exchange) for a period of five (5) years after the effective date of the
Registration Statement.
(i) The Company will maintain a transfer agent and registrar for its
Common Stock.
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(j) Without the prior consent of Cowen, the Company will not (i)
directly or indirectly, offer, sell, assign, transfer, encumber, pledge,
contract to sell, grant an option to purchase or otherwise dispose of,
other than by operation of law, any shares of Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clauses (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise during the 90 days following the date on which the price of the
Common Stock to be purchased by the Underwriters is set, other than (A) the
Company's sale of Common Stock hereunder, (B) the issuance by the Company
of shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, and (C) the issuance by the
Company of any option to purchase any shares of Common Stock pursuant to
its Stock Option Plan described in the Prospectus; PROVIDED that the
Company may enter into an agreement to issue shares of Common Stock in
connection with a certain acquisition contemplated by a signed letter of
intent that has been delivered to the Underwriters prior to the date
hereof, but PROVIDED FURTHER that no such shares of Common Stock may be
issued until 90 days following the date on which the price of the Common
Stock to be purchased by the Underwriters is set.
(k) The Company will apply the net proceeds from the sale of the
shares of Stock to be sold by the Company hereunder as set forth in the
description under "Use of Proceeds" in the Prospectus, which description
complies in all respects with the requirements of Item 504 of Regulation
S-K.
(l) The Company will supply you with copies of all correspondence to
and from, and all documents issued to and by, the Commission in connection
with the registration of the Stock under the Securities Act.
(m) Prior to the Closing Date the Company will issue no press release
or other communications directly or indirectly and hold no
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press conference with respect to the Company or any of its subsidiaries,
the financial condition, results of operation, business, prospects, assets
or liabilities of any of them, or the offering of the Stock, without your
prior written consent.
(n) During the period of five (5) years hereafter, the Company will
furnish to the Representatives and, upon request of the Representatives to
each of the Underwriters, as soon as available, copies of any report or
communication of the Company mailed generally to holders of its Common
Stock.
(o) The Company will use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date and to satisfy all conditions precedent
to the delivery of the Firm Stock.
5. PAYMENT OF EXPENSES. (a) The Sellers will pay (directly or by
reimbursement) the following costs, fees and expenses and all other costs, fees
and expenses incident to the performance of their obligations under this
Agreement: (i) all expenses and taxes incident to the issuance and delivery of
the Stock to the Representatives; (ii) all expenses incident to the registration
of the Stock under the Securities Act; (iii) the costs of preparing stock
certificates (including printing and engraving costs); (iv) all fees and
expenses of the registrar and transfer agent of the Stock; (v) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Stock to the Underwriters; (vi) fees and expenses of the Company's
counsel, the Company's independent accountants, and counsel for the Selling
Shareholders; (vii) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement, each Preeffective Prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements provided
for herein and the Blue Sky memoranda and this Agreement; (viii) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with exemptions from the qualifying or registering (or obtaining
qualification or registration of) all or any part of the Stock for offer and
sale under the Blue Sky or other securities laws of such jurisdictions as the
Representatives may designate; (ix) all fees and expenses paid or incurred in
connection with filings made with the NASD; and (x) all other costs and expenses
incident to the performance of the Company's
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obligations hereunder which are not otherwise specifically provided for in this
Section.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of the Securities Act and the respective
officers, directors, partners, employees, representatives and agents of each of
such Underwriter (collectively, the "Underwriter Indemnified Parties" and, each,
an "Underwriter Indemnified Party"), against any losses, claims, damages,
liabilities or expenses (including (i) the reasonable cost of investigating and
(ii) defending against any claims therefor and counsel fees incurred in
connection therewith, unless the Company is entitled and elects to assume the
defense as contemplated in this subsection (a) and the Company has not
authorized the Underwriter Indemnified Party to retain additional counsel as
contemplated in this subsection (a)), joint or several, which may be based upon
the Securities Act, or any other statute or at common law, on the ground or
alleged ground that any Preeffective Prospectus, the Registration Statement or
the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus as from time to time amended or supplemented) includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon, and in conformity with,
written information furnished to the Company by any Underwriter, directly or
through the Representatives, specifically for use in the preparation thereof;
provided, that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any Registration Statement, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter Indemnified Party from whom the person asserting any such losses,
claims, damages or liabilities purchased the shares of Common Stock concerned to
the extent that any such loss, claim, damage or liability of such Underwriter
Indemnified Party results from the fact that a copy of the Prospectus was not
sent or given to such person at or prior to the written confirmation of the sale
of such shares of Common Stock to such person as required by the Securities Act
and if the untrue statement or omission concerned has been corrected in the
Prospectus; provided,
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however, that in no case is the Company to be liable with respect to any claims
made against any Underwriter Indemnified Party against whom the action is
brought unless such Underwriter Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Underwriter Indemnified Party, but failure to notify the Company
of such claim shall not relieve it from any liability which it may have to any
Underwriter Indemnified Party otherwise than on account of its indemnity
agreement contained in this subsection. The Company will be entitled to
participate at its own expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such liability, but if the Company
elects to assume the defense, such defense shall be conducted by counsel chosen
by it. In the event the Company elects to assume the defense of any such suit
and retain such counsel, any Underwriter Indemnified Parties, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include any such Underwriter Indemnified Parties and the Company and such
Underwriter Indemnified Parties at law or in equity have been advised by counsel
to the Underwriters that one or more legal defenses may be available to it or
them which may not be available to the Company, in which case the Company shall
not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of such counsel. It is understood that
the Company shall not, in respect of the legal expenses of any Underwriter
Indemnified Party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Underwriter Indemnified
Parties. Any such separate firm for the Underwriters and such control persons of
any Underwriters shall be designated in writing by Xxxxx. The Company shall not
be liable to indemnify any person for any settlement of any such claim effected
without its consent. This indemnity agreement is not exclusive and will be in
addition to any liability which the Company might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.
(b) The Selling Shareholders, severally, agree to indemnify and hold
harmless each Underwriter Indemnified Party to the same extent as the Company
has agreed to indemnify and hold harmless each Underwriter Indemnified Party in
the preceding subsection
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(a), PROVIDED that the indemnity contained in this subsection (b) shall only
apply to losses, claims, damages, liabilities or expenses relating to, arising
out of, or otherwise in respect of (i) statements or omissions made in reliance
upon, and in conformity with, written information furnished by or on behalf of
such Selling Shareholder specifically for use in any Preeffective Prospectus,
the Registration Statement or the Prospectus (or any Preeffective Prospectus,
the Registration Statement or the Prospectus as from time to time amended or
supplemented) or (ii) any inaccuracy in or breach of any of the representations
and warranties of such Selling Shareholder contained herein or any failure of
such Selling Shareholder to perform any of its obligations hereunder. It is
understood that the indemnification provided by each Selling Shareholder
pursuant to this subsection (b) shall not exceed an amount equal to the total
net proceeds from the Offering (before deducting expenses) received by such
Selling Shareholder. This indemnity agreement is not exclusive and will be in
addition to any liability which either Selling Shareholder might otherwise have
and shall not limit any rights or remedies which may otherwise be available at
law or in equity to each Underwriter Indemnified Party.
(c) The Selling Shareholders, jointly and severally, agree to indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act, (collectively, the "Company
Indemnified Parties"), against any losses, claims, damages, liabilities or
expenses (including (i) the reasonable cost of investigating and (ii) defending
against any claims therefor and counsel fees incurred in connection therewith,
unless the Selling Shareholders are entitled and elect to assume the defense as
contemplated in this subsection (c) and the Selling Shareholders have not
authorized the Company Indemnified Party to retain additional counsel as
contemplated in this subsection (c)), joint or several, which may be based upon
the Securities Act, or any other statute or at common law, on the ground or
alleged ground that any Preeffective Prospectus, the Registration Statement or
the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus as from time to time amended or supplemented) includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but only
with reference to statements or omissions made in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf
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of such Selling Shareholder specifically for use in the preparation thereof;
provided, however, that in no case is either Selling Shareholder to be liable
with respect to any claims made against any Company Indemnified Party against
whom the action is brought unless such Company Indemnified Party shall have
notified the Selling Shareholders in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Company Indemnified Party, but failure to
notify the Selling Shareholders of such claim shall not relieve it from any
liability which it may have to any Company Indemnified Party otherwise than on
account of its indemnity agreement contained in this subsection. The Selling
Shareholders will be entitled to participate at their own expense in the defense
or, if they so elect, to assume the defense of any suit brought to enforce any
such liability, but if the Selling Shareholders elect to assume the defense,
such defense shall be conducted by counsel chosen by them. In the event the
Selling Shareholders elect to assume the defense of any such suit and retain
such counsel, any Company Indemnified Parties, defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) the Selling Shareholders shall have specifically authorized
the retaining of such counsel or (ii) the parties to such suit include any such
Company Indemnified Parties and the Selling Shareholders and such Company
Indemnified Parties at law or in equity have been advised by counsel to the
Underwriters that one or more legal defenses may be available to it or them
which may not be available to the Selling Shareholders, in which case the
Selling Shareholders shall not be entitled to assume the defense of such suit
notwithstanding their obligation to bear the fees and expenses of such counsel.
It is understood that the Selling Shareholders shall not, in respect of the
legal expenses of any Company Indemnified Party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Company Indemnified Parties. Any such separate firm for the
Company Indemnified Parties shall be designated in writing by the Company. The
Selling Shareholders shall not be liable to indemnify any person for any
settlement of any such claim effected without their consent. It is further
understood that the indemnification provided by each Selling Shareholder
pursuant to this subsection (c) shall not exceed an amount equal to the total
net proceeds from the Offering (before deducting offering expenses) received by
such Selling Shareholder; PROVIDED that such indemnification shall apply only to
the extent such losses, claims, damages, liabilities or expenses are not covered
by applicable Company insurance. This indemnity agreement is not
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exclusive and will be in addition to any liability which the Selling
Shareholders might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to each Company Indemnified
Party.
(d) Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act, each Selling Shareholder, each officer
and director of Kos Holdings, Inc., and each person, if any, who controls either
Selling Shareholder within the meaning of the Securities Act (collectively, the
"Indemnified Selling Parties") against any losses, claims, damages, liabilities
or expenses (including, unless the Underwriter or Underwriters elect to assume
the defense, the reasonable cost of investigating and defending against any
claims therefor and counsel fees incurred in connection therewith), joint or
several, which arise out of or are based in whole or in part upon the Securities
Act, the Exchange Act or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any
Preeffective Prospectus, the Registration Statement or the Prospectus (or any
Preeffective Prospectus, the Registration Statement or the Prospectus, as from
time to time amended and supplemented) includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading, but only insofar as any such statement
or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by such Underwriter, directly or through
the Representatives, specifically for use in the preparation thereof; provided,
however, that in no case is such Underwriter to be liable with respect to any
claims made against any Indemnified Selling Party against whom the action is
brought unless such Indemnified Selling Party shall have notified such
Underwriter in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Indemnified Selling Party, but failure to notify such
Underwriter of such claim shall not relieve it from any liability which it may
have to any Indemnified Selling Party otherwise than on account of its indemnity
agreement contained in this subsection (d). Such Underwriter shall be entitled
to participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but, if such
Underwriter elects to assume the defense, such defense shall
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be conducted by counsel chosen by it. In the event that any Underwriter elects
to assume the defense of any such suit and retain such counsel, the Indemnified
Selling Parties and any other Underwriter or Underwriters or controlling person
or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, respectively, unless (i)
the Underwriter shall have specifically authorized in writing the retaining of
such counsel or (ii) the parties to such suit include the Indemnified Selling
Parties and the Underwriters and the Indemnified Selling Parties at law or in
equity have been advised by their counsel that one or more defenses may be
available to them which may not be available to the Underwriters, in which case
the Underwriters shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear fees and expenses of such counsel. It is
understood that the Underwriters shall not, in respect of the legal expenses of
any Indemnified Selling Party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of the Securities Act and
(ii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of the Securities Act. In the case of
any such separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the Company.
In the case of any such separate firm for the Selling Shareholders and such
control persons of any Selling Shareholders, such firm shall be designated in
writing by the Selling Shareholders, or, in their absence, the persons named as
attorneys-in-fact for the Selling Shareholders under the Power of Attorney of
each Selling Shareholder. The Underwriter against whom indemnity may be sought
pursuant to this subsection (d) shall not be liable to indemnify any person for
any settlement of any such claim effected without such Underwriter's consent.
This indemnity agreement is not exclusive and will be in addition to any
liability which such Underwriter might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to any
Indemnified Selling Party.
(e) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b),
(c), or (d) above in respect of any losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to
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herein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Sellers on the one
hand and the Underwriters on the other from the offering of the Stock. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Sellers on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Sellers bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Sellers
or the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Sellers and the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating,
defending, settling or compromising any such claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the shares of the Stock underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission; and no Selling Shareholder shall be
required to contribute an amount in excess of the total net proceeds from the
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offering (before deducting expenses) received by such Selling Shareholder. The
Underwriters' obligations to contribute are several in proportion to their
respective underwriting obligations and not joint. 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.
7. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Sellers and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Sellers or any of their officers or directors or any
person controlling any Seller, and shall survive delivery of and payment for the
Stock.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of
the several Underwriters hereunder shall be subject to the satisfaction of each
of the following conditions:
(a) All the representations and warranties of the Company and each
Selling Shareholder shall be true and correct on the Closing Date with the
same force and effect as if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge
of the Company or the Representatives, shall be threatened by the
Commission, and any request for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the reasonable satisfaction
of the Representatives. Any filings of the Prospectus, or any supplement
thereto, required pursuant to Rule 424(b) or Rule 434 of the Rules and
Regulations, shall have been made in the manner and within the time period
required by Rule 424(b) and Rule 434 of the Rules and Regulations, as the
case may be.
(c) The Representatives shall have been satisfied that there shall not
have occurred any
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change, or any development involving a prospective change, on a
consolidated basis, prior to the Closing Date in the condition (financial
or otherwise), properties, business, management, net worth or results of
operations of the Company and its subsidiaries considered as a whole, or
any change in the capital stock, short-term or long-term debt of the
Company and its subsidiaries considered as a whole, such that (i) the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the opinion of the
Representatives, is material, or omits to state a fact which, in the
opinion of the Representatives, is required to be stated therein or is
necessary to make the statements therein not misleading, or (ii) it is
unpracticable in the reasonable judgment of the Representatives to proceed
with the public offering or purchase the Stock as contemplated hereby.
(d) The Representatives shall be satisfied that no legal or
governmental action, suit or proceeding affecting the Company which is
material and adverse to the Company or which affects or may affect the
Company's ability to perform its respective obligations under this
Agreement shall have been instituted or threatened and there shall have
occurred no material adverse development in any existing such action, suit
or proceeding.
(e) At the time of execution of this Agreement, the Representatives
shall have received from Xxxxxx Xxxxxxxx LLP, independent certified public
accountants, a letter, dated the date hereof, in form and substance
satisfactory to the Underwriters.
(f) The Representatives shall have received from Xxxxxx Xxxxxxxx LLP,
independent certified public accountants, a letter, dated the Closing Date,
to the effect that such accountants reaffirm, as of the Closing Date, and
as though made on the Closing Date, the statements made in the letter
furnished by such accountants pursuant to subsection (e) of this Section 8.
(g) The Representatives shall have received from Holland & Knight LLP,
counsel for the Company, an opinion, dated the Closing Date, to the effect
that:
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(i) the Company and each of its subsidiaries has been duly
incorporated and is validly existing and in active status under the
laws of the state of its incorporation, with power and authority
(corporate and other) to own or lease its properties and conduct its
business as described in the Prospectus;
(ii) the Company and each of its subsidiaries is duly qualified
to do business and in good standing as a foreign corporation in all
other jurisdictions where its ownership or leasing of properties or
the conduct of its business requires such qualification, except where
the failure to so register would not singly or in the aggregate, have
a material adverse effect on the Company's operations;
(iii) all of the outstanding shares of capital stock of, or other
ownership interests in each subsidiary of the Company have been duly
and validly authorized and issued and are fully paid and
nonassessable, and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature;
(iv) the Company has authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus
(without giving effect to the exercise of stock options or the
issuance of 215 shares of Common Stock to employees of the Company);
the outstanding shares of Common Stock of the Company conform to the
description thereof in the Prospectus in all material respects; and
all of the shares of capital stock of the Company (including the
shares to be sold by the Selling Shareholders) outstanding prior to
the issuance of the Shares to be sold by the Company have been duly
authorized and validly issued and fully paid and nonassessable and not
subject to any preemptive or similar rights;
(v) the shares of Common Stock to be issued and sold by the
Company hereunder have been duly authorized, and when issued and
delivered to the Underwriters against payment therefor as provided by
this Agreement, will have been validly issued and
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will be fully paid and nonassessable, and the issuance of such Common
Stock is not subject to any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company;
(vii) based solely on telephonic, verbal confirmation provided to
such counsel by the staff of the Commission, the Registration
Statement has become effective under the Securities Act, and, to such
counsel's knowledge, no stop order suspending its effectiveness has
been issued and no proceedings for this purpose are pending before or
contemplated by the Commission;
(viii) the statements under the captions "Risk Factors" (except
for the statements in the first, second and third paragraphs under the
heading "Risk Factors- Patents and Trademarks; Interference"),
"Business - Collaborations", "Business - Sponsored Research",
"Business - Government Regulation", "Management - Executive
Compensation - Confidentiality and Intellectual Property Agreements",
"Management - Executive Compensation Employee Agreements", "Management
- Employee Benefit Plans", "Certain Relationships and Related
Transactions", "Description of Capital Stock", "Shares Eligible for
Future Sale" in the Prospectus and Items 14 and 15 in the Registration
Statement in each case insofar as such statements constitute summaries
of the legal matters or documents referred to therein, fairly present
in all material respects the information called for with respect to
such legal matters;
(ix) the statements in the Prospectus in the fourth, fifth,
sixth, and seventh paragraphs under the heading "Risk Factors- Patents
and Trademarks; Interference" and in the first, fourth, and sixth
paragraphs under the heading "Business- Patents and Proprietary
Rights" constitute an accurate summary of the matters referred to
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therein and fairly present the information called for with respect to
such matters;
(x) the execution, delivery and performance of this Agreement by
the Company, compliance by the Company with all the provisions hereof
and the consummation of the transactions contemplated hereby will not
require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body (except such as may be required by the NASD or under the
Securities Act or other securities or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the articles or certificate of incorporation
or by-laws of the Company or any of its subsidiaries or, to the best
of such counsel's knowledge, any agreement, indenture or other
instrument to which the Company or any of its subsidiaries or their
respective properties are bound, or violate or conflict with any laws,
administrative regulations or, to the best of such counsel's
knowledge, rulings or court decrees applicable to the Company or any
of its subsidiaries or their respective properties;
(xi) such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property
is subject which is required to be described in the Registration
Statement or the Prospectus and is not so described, or of any
contract or other document which is required to be described in the
Registration Statement or the Prospectus or is required to be filed as
an exhibit to the Registration Statement which is not described or
filed as required;
(xii) neither the Company nor any of its subsidiaries is, nor
will be immediately after receiving the proceeds from the sale of the
shares of Stock sold by the Company, an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended;
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(xiii) such counsel does not know of any holder of any security
of the Company that has any right to require registration of shares of
Common Stock or any other security of the Company except as described
in the Registration Statement;
(xiv) the Registration Statement and the Prospectus and any
amendments or supplements (except for financial statements and
schedules and other financial and statistical data included therein as
to which such counsel does not express any opinion) thereto comply as
to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations;
(xv) the Company has complied with all provisions of Section
517.075 of the Florida Statutes (Chapter 92-198; Laws of Florida);
In addition to the matters set forth above, such opinion shall also include
a statement to the effect that nothing has come to the attention of such
counsel which leads it to believe that the Registration Statement, as of
the time it becomes effective under the Securities Act, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus or any amendment or supplement thereto,
on the date it was filed pursuant to Rule 424(b) and the Registration
Statement and the Prospectus, or any amendment or supplement thereto, as of
the First Closing Date, or any Option Closing Date, as the case may be,
contains an untrue statement of material fact or omits 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 are made, not
misleading. With respect to such statement, counsel may state that their
belief is based upon procedures set forth therein, but is without
independent check and verification.
In rendering such opinion such counsel may assume that the laws of the
State of New York governing this Agreement are the same as the laws of the
State of Florida.
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(h) The Representatives shall have received from Holland & Knight LLP,
counsel for the Selling Shareholders, an opinion, dated the Closing Date,
to the effect that:
(i) this Agreement has been duly authorized (if such Selling
Shareholder is a corporation), executed and delivered by or on behalf
of, and is a valid and binding agreement of, each of the Selling
Shareholders;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by each Selling Shareholder of its obligations
under, this Agreement and the Power of Attorney of such Selling
Shareholder will not contravene any provision of applicable law, or
the certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or, to the
best of such counsel's knowledge, any agreement or other instrument
binding upon such Selling Shareholder or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by such Selling Shareholder of its obligations under
this Agreement or the Power of Attorney of such Selling Shareholder,
except such as may be required by the securities or Blue Sky laws of
the various states in connection with offer and sale of the shares of
Stock;
(iii) each of the Selling Shareholders has valid title to the
shares of Stock to be sold by such Selling Shareholder and the legal
right and power, and all authorization and approval required by law,
to enter into this Agreement and the Power of Attorney of such Selling
Shareholder and to sell, transfer and deliver the shares of Stock to
be sold by such Selling Shareholder;
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(iv) the Power of Attorney of each Selling Shareholder has been
duly authorized, executed and delivered by such Selling Shareholder
and is a valid and binding agreement of such Selling Shareholder;
(v) delivery of the shares of Stock to be sold by each Selling
Shareholder pursuant to this Agreement will pass title to such shares
of Stock free and clear of any security interests, claims, liens,
equities and other encumbrances.
In rendering such opinion such counsel may assume that the laws of the
State of New York governing this Agreement are the same as the laws of the
State of Florida.
(i) The Representatives shall have received from Xxxxx Xxxx &
Xxxxxxxx, counsel for the Underwriters, their opinion dated the
Closing Date with respect to the incorporation of the Company, the
validity of the Stock, the Registration Statement and the Prospectus
and such other related matters as it may reasonably request, and the
Company shall have furnished to such counsel such documents as they
may request for the purpose of enabling them to pass upon such
matters.
(j) The Representatives shall have received on the Closing Date
an opinion of Jenkens & Xxxxxxxxx, P.C., patent counsel for the
Company, dated the Closing Date, to the effect that:
(i) the statements in the Prospectus in the first, second
and third paragraphs under the heading "Risk Factors- Patents and
Trademarks; Interference" and in the second and third paragraphs
under the heading "Business- Patents and Proprietary Rights"
constitute an accurate summary of the matters referred to therein
and fairly present the information called for with respect to
such matters;
(ii) other than as disclosed in the Prospectus, to the best
of such
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counsel's knowledge, there are no legal or governmental
proceedings pending relating to patents or proprietary
information rights relating to Niaspan to which the Company is a
party or to which any patents or proprietary information rights
of the Company is subject, and no such proceedings are threatened
or contemplated by governmental authorities or others;
(iii) other than as disclosed in the Prospectus, such
counsel is unaware of any basis for a finding that the Company
does not have clear title or valid license rights to the patents
or patent applications referenced in the Prospectus relating to
Niaspan, and such counsel has not identified any basis for a
finding of unenforceability or invalidity of any such patents or
proprietary information rights owned by the Company; and
(iv) other than as disclosed in the Prospectus and based
upon a review of the third party rights made known to such
counsel and discussions with Company scientific personnel, such
counsel is not aware of any valid United States or foreign patent
that is or would be infringed by the activities of the Company in
the manufacture, use or sale of Niaspan, as described in the
Prospectus.
(k) The Representatives shall have received a certificate, dated the
Closing Date, signed by Xxxxxx X. Xxxx, in his capacity as the President
and Chief Executive Officer, to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the
knowledge of the signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act;
(ii) Neither any Preeffective Prospectus, as of its date, nor the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as of the time when the Registration
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Statement became effective and at all times subsequent thereto up to
the delivery of such certificate, included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(iii) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as set forth or contemplated in the Prospectus, neither the Company
nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business and there has not
been any material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net worth or
results of operations of the Company and its subsidiaries considered
as a whole, or any change in the capital stock, short-term or
long-term debt of the Company and its subsidiaries considered as a
whole;
(iv) The representations and warranties of the Company in this
Agreement are true and correct at and as of the Closing Date, and the
Company has complied with all the agreements and performed or
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date; and
(v) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as
disclosed in or contemplated by the Prospectus, (i) there has not been
any material adverse change or a development involving a material
adverse change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of
the Company and its subsidiaries considered as a whole;
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(ii) the business and operations conducted by the Company and its
subsidiaries have not sustained a loss by strike, fire, flood,
accident or other calamity (whether or not insured) of such a
character as to interfere materially with the conduct of the business
and operations of the Company and its subsidiaries considered as a
whole; (iii) no legal or governmental action, suit or proceeding is
pending or threatened against the Company which is material to the
Company, whether or not arising from transactions in the ordinary
course of business, or which may materially and adversely affect the
transactions contemplated by this Agreement; (iv) since such dates and
except as so disclosed, the Company has not incurred any material
liability or obligation, direct, contingent or indirect, made any
change in its capital stock (except pursuant to its stock plans), made
any material change in its short-term or funded debt or repurchased or
otherwise acquired any of the Company's capital stock; and (v) the
Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the Closing Date.
(l) The Company shall have furnished to the Representatives such
additional certificates as the Representatives may have reasonably
requested as to the accuracy, at and as of the Closing Date, of the
representations and warranties made herein by it and as to compliance at
and as of the Closing Date by it with its covenants and agreements herein
contained and other provisions hereof to be satisfied at or prior to the
Closing Date, and as to satisfaction of the other conditions to the
obligations of the Underwriters hereunder.
(m) The "lock-up" agreements relating to sales and other dispositions
of shares of Common Stock or certain other securities, delivered to you
pursuant to Section 3 hereof on or before the date hereof, shall be in full
force and effect on the Closing Date.
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The several obligations of the Underwriters to purchase any Optional Stock
hereunder are subject to delivery to the Representatives on the Option Closing
Date of such documents as the Representatives may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of such Optional Stock and other matters related to the issuance of such
Optional Stock.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are satisfactory in form
and substance to the Representatives. The Company will furnish to the
Representatives conformed copies of such opinions, certificates, letters and
other documents as the Representatives shall reasonably request. If any of the
conditions hereinabove provided for in this Section shall not have been
satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such termination
in writing or by telegram at or prior to the Closing Date, but Cowen shall be
entitled to waive any of such conditions.
9. EFFECTIVE DATE. This Agreement shall become effective immediately as to
Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16, and 17 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Stock
for sale to the public. For the purposes of this Section 9, the Stock shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by you of
telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.
10. TERMINATION. This Agreement (except for the provisions of Section 5)
may be terminated by the Company at any time before it becomes effective in
accordance with Section 9 by notice to the Representatives and may be terminated
by the Representatives at any time before it becomes effective in accordance
with Section 9 by notice to the Company. In the event of any termination of this
Agreement under this or any other provision of this Agreement, there shall be no
liability of any party to this Agreement to any other party, other than as
provided in Sections 5, 6 and 11 and other than as provided in Section 12 as to
the liability of defaulting Underwriters.
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This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the Closing Date
trading in securities on any of the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or market, or a
banking moratorium shall have been declared by New York or United States
authorities; (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market; (iii) if at or
prior to the Closing Date there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power or of any other
insurrection or armed conflict involving the United States or (B) any change in
financial markets or any calamity or crisis which, in the judgment of the
Representatives, makes it impractical or inadvisable to offer or sell the Stock
on the terms contemplated by the Prospectus; (iv) if there shall have been any
development or prospective development involving particularly the business or
properties or securities of the Company or any of its subsidiaries or the
transactions contemplated by this Agreement, which, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer or deliver the
Stock on the terms contemplated by the Prospectus; (v) if there shall be any
litigation or proceeding, pending or threatened, which, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer or deliver the
Stock on the terms contemplated by the Prospectus; or (vi) if there shall have
occurred any of the events specified in the immediately preceding clauses
(i)-(v) together with any other such event that makes it, in the judgment of the
Representatives, impractical or inadvisable to offer or deliver the Stock on the
terms contemplated by the Prospectus.
11. REIMBURSEMENT OF UNDERWRITERS. Notwith standing any other provisions
hereof, if this Agreement shall not become effective by reason of any election
of the Company pursuant to the first paragraph of Section 10 or shall be
terminated by the Representatives by reason of any failure or refusal on the
part of the Company to comply with the terms or to fulfill any of the conditions
of this Agreement, the Company will bear and pay the expenses specified in
Section 5 hereof and, in addition to the obligations of the Company pursuant to
Section 6 hereof, the Company will reimburse the reasonable out-of-pocket
expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
Agreement and the proposed purchase of the Stock, and promptly upon demand the
Company will pay such amounts to you as Representatives.
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12. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 12, (i) the Company
shall have the right to postpone the Closing Date for a period of not more than
five (5) full business days in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 12 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except for expenses to be paid or
reimbursed pursuant to Section 5 and except for the provisions of Section 6.
13. NOTICES. All communications hereunder shall be in writing and, if sent
to the Underwriters shall be mailed, delivered or telegraphed and confirmed to
you, as their Representatives, c/o Cowen & Company at Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 except that notices given to an Underwriter pursuant to
Section 6 hereof shall be sent to such Underwriter at the address furnished by
the Representatives; if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed to Kos
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Pharmaceuticals, 0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx, Xxxxx, Xxxxxxx 00000,
Attention: President, copy to: Holland & Knight LLP, 000 Xxxxxxxx Xxxxxx, Xxxxx,
Xxxxxxx 00000, Attn: Xxxxxx Xxxxxxx, Esq.; if sent to Kos Holdings, Inc. shall
be mailed, delivered or telegraphed and confirmed to Kos Holdings, Inc. c/o Kos
Pharmaceuticals, Inc., 0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx, Xxxxx, Xxxxxxx
00000, Attention: Corporate Secretary, copy to: Holland & Knight LLP, 000
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Attn: Xxxxxx Xxxxxxx, Esq.; and if sent
to Xxxxxx X. Xxxx, shall be mailed, delivered or telegraphed and confirmed to
Xxxxxx X. Xxxx, c/o Kos Pharmaceuticals, Inc., 0000 Xxxxxxxx Xxx Xxxxx, 00xx
Xxxxx, Xxxxx, Xxxxxxx 00000, copy to: Holland & Knight LLP, 000 Xxxxxxxx Xxxxxx,
Xxxxx, Xxxxxxx 00000, Attn: Xxxxxx Xxxxxxx, Esq.
14. SUCCESSORS. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters, the Company, the Selling Shareholders and their
respective successors and legal representatives. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person other
than the persons mentioned in the preceding sentence any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Sellers contained in this Agreement
shall also be for the benefit of the person or persons, if any, who control any
Underwriter or Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act; the indemnities of the several
Underwriters shall also be for the benefit of each director of the Company, each
of its officers who has signed the Registration Statement, the person or
persons, if any, who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, the Selling Shareholders, and
the person or persons, if any, who control either Selling Shareholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;
and the indemnities of the Selling Shareholders shall also be for the benefit of
each director of the Company, each of its officers who has signed the
Registration Statement, and the person or persons, if any, who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act.
15. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
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16. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement,
you will act for and on behalf of the several Underwriters.
17. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, subsection, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other Section, subsection, paragraph or
provision hereof. If any Section, subsection, 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.
18. GENERAL. 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.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company.
19. COUNTERPARTS. This Agreement may be signed in several counterparts,
each of which shall be an original or facsimile, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
KOS PHARMACEUTICALS, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxx
Title: President and CEO
KOS HOLDINGS, INC.
By:
--------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chairman of Investment Committee
XXXXXX X. XXXX
-----------------------------------
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Accepted and delivered in
New York, New York as of the
date first above written.
XXXXX & COMPANY
XXXXXXXXX LUFKIN & XXXXXXXX SECURITIES CORPORATION
SALOMON BROTHERS INC
SBC WARBURG DILLON READ, INC.
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: XXXXX & COMPANY
By: Cowen Incorporated,
its general partner
By:
-----------------------
Name:
Title: Managing Director
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SCHEDULE A
NUMBER
OF FIRM
SHARES
TO BE
NAME PURCHASED
---- ---------
Xxxxx & Company 492,500
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation 492,500
Salomon Brothers Inc 492,500
SBC Warburg Dillon Read Inc. 492,500
Bear Xxxxxxx & Company Inc. 75,000
Xxxxxxxxx & Xxxxx, Inc. 75,000
Xxxxxx Brothers 75,000
Xxxxxxx Xxxxx & Co. 75,000
Xxxxxx Xxxxxxx & Co. Incorporated 75,000
Nationsbanc Xxxxxxxxxx Securities 75,000
Xxxxxxxxxxx & Company, Inc. 75,000
Prudential Securities, Inc. 75,000
Xxxxxxxx & Company, Inc. 75,000
UBS Securities 75,000
Xxxxx & Company 30,000
X. X. Xxxxxxxx & Company 30,000
Xxxxx Xxxxxx & Company 30,000
Xxxxxxx, Xxxxxx & Company 30,000
Equitable Securities 30,000
Friedman, Billings, Ramsay & Co., Inc. 30,000
Xxxxxx Xxxx L.L.C. 30,000
Gruntal & Company, Inc. 30,000
Xxxxxx Xxxxx & Company, L.P. 30,000
Xxxxxxx Xxxxx Securities, Inc. 30,000
Xxxxx Xxxxxxx, Inc. 30,000
Xxxxxxx Xxxxx & Associates, Inc. 30,000
Xxxxx & Xxxxxxxxxxxx, Inc. 30,000
Xxxxxx Xxxxxxx, Inc. 30,000
Vector Securities International, Inc. 30,000
Xxxxx Xxxxx Xxxxxx & Company 30,000
---------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200,000
=========
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SCHEDULE B
FIRM STOCK
SELLING SHAREHOLDER NUMBER OF SHARES
------------------- ----------------
Kos Holdings, Inc. 2,150,000
Xxxxxx X. Xxxx 50,000
OPTIONAL STOCK
Kos Holdings, Inc. 240,000
Xxxxxx X. Xxxx 100,000
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SCHEDULE C
REQUIRED LOCK-UPS
-----------------
PERSON PERIOD (beginning on the
date of the Prospectus and
ending on the date below)
Each Director and Officer 30 days after the date
of the Company of the Prospectus
Xxxxxxx Xxxxxxx 365 days after the
date of the Prospectus
Kos Investments, Inc. 365 days after the
date of the Prospectus
Xxxxx X. Xxxx February 15
Xxxxxx X. Xxxxxxx February 15
Xxxxxx Xxxxxxx February 15
X.X. Xxxxxxxxxxx February 15
Xxxxxx Xxxxxxx February 15
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