EXHIBIT 1.1
5,000,000 SHARES
KOSAN BIOSCIENCES INCORPORATED
COMMON STOCK
UNDERWRITING AGREEMENT
October ___, 2000
XXXXXX BROTHERS INC .
CIBC WORLD MARKETS CORP.
XX XXXXX SECURITIES CORPORATION
FIDELITY CAPITAL MARKETS, a division
of NATIONAL FINANCIAL SERVICES LLC
As Representatives of the several
Underwriters named in Schedule 1
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Kosan Biosciences Incorporated, a Delaware corporation (the
"COMPANY"), proposes to sell 5,000,000 shares (the "FIRM STOCK") of the
Company's Common Stock, par value $0.001 per share (the "COMMON STOCK").
It is understood that, subject to the conditions hereinafter
stated, the Firm Stock will be sold to the several Underwriters named in
Schedule 1 hereto (the "UNDERWRITERS") in connection with the offering and sale
of such Firm Stock. Xxxxxx Brothers Inc., CIBC World Markets Corp., XX Xxxxx
Securities Corporation and Fidelity Capital Markets, a division of National
Financial Services Corporation, shall act as representatives (the
"REPRESENTATIVES") of the several Underwriters.
In addition, the Company proposes to grant to the Underwriters
an option to purchase up to an additional 750,000 shares of the Common Stock on
the terms and for the purposes set forth in Section 3 (the "OPTION STOCK"). The
Firm Stock and the Option Stock, if purchased, are hereinafter collectively
called the "STOCK." This is to confirm the agreement concerning the purchase of
the Stock from the Company by the Underwriters.
It is understood and agreed that as of the Closing Date (as
defined below), the Company will issue and sell the Stock pursuant to this
Agreement.
SECTION 1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE COMPANY. The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1, and amendments
thereto, with respect to the Stock has (i) been prepared by the Company in
conformity in all material respects with the requirements of 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, (ii) been filed with the Commission under the
Securities Act and (iii) been declared effective by the Commission under the
Securities Act. Copies of such registration statement and each of the amendments
thereto have been delivered by the Company to you. As used in this Agreement,
"EFFECTIVE TIME" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any, was
declared effective by the Commission; "EFFECTIVE DATE" means the date of the
Effective Time; "PRELIMINARY PROSPECTUS" means the prospectus included in such
registration statement, or amendments thereof, before it became effective under
the Securities Act and any prospectus filed with the Commission by the Company
with the consent of the Representatives pursuant to Rule 424(a) of the Rules and
Regulations; "REGISTRATION STATEMENT" means such registration statement, as
amended at the Effective Time, including all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations and deemed to be a part of the registration statement as of the
Effective Time pursuant to Rule 430A of the Rules and Regulations; and
"PROSPECTUS" means the prospectus in the form first used to confirm sales of
Stock. If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "RULE 462(B) REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462(b) Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and has all
corporate power and authority necessary to own or hold its properties and to
conduct the business in which it is engaged.
(d) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and
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validly authorized and issued, are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus.
(e) The shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor in accordance with this
Agreement, will be duly and validly issued, fully paid and non-assessable; and
the Stock will conform to the description thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby will
not conflict with or 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, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company is subject, nor will such actions result in any violation of the
provisions of the charter or bylaws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or assets; and, except
for the registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby, except for such consents, waivers, approvals,
authorizations, orders, filings or registrations as have been obtained or made.
(h) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act and all such rights to
include such securities in the securities registered pursuant to the
Registration Statement have been expressly waived prior to the date hereof.
(i) Except as described in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the Stock pursuant to the
Company's charter or bylaws or any agreement or other instrument.
(j) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period preceding
the date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act
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other than shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
(k) The Company has not sustained, since the date of the
latest audited financial statements included in the Prospectus, any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, and, since such date there has
not been any change in the capital stock or long-term debt of the Company except
as described in the Prospectus or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company.
(l) The historical, pro forma and pro forma as adjusted
financial statements, together with the related notes set forth in the
Prospectus comply as to form in all material respects with the requirements of
Regulation S-X under the Securities Act applicable to registration statements on
Form S-1 under the Securities Act. The historical financial statements
(including the related notes and supporting schedules) filed as part of the
Registration Statement or included in the Prospectus present fairly in all
material respects the financial condition and results of operations of the
Company, at the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved. The other financial and statistical
information and data included in the Prospectus, historical, pro forma and pro
forma as adjusted, have been derived from the financial records of the Company
and, in all material respects, have been prepared on a basis consistent with
such books and records of the Company and present fairly the historical and
proposed transactions contemplated by the Prospectus and this Agreement.
(m) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who have
delivered the initial letter referred to in Section 7(f) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(n) The Company has good and marketable title in fee simple to
all real property and good and marketable title to all personal property owned
by it free and clear of all liens, encumbrances and defects, except such as are
described in the Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company; and all assets held under lease by the
Company are held by it under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company.
(o) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties and as is customary for a company engaged in a
similar business in a similar industry.
(p) The Company owns, possesses, licenses or has other rights
to use, on reasonable terms, all patents, patent applications, trade and service
marks, trade and service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, know-how
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and other intellectual property (collectively, the "INTELLECTUAL PROPERTY")
reasonably necessary for the conduct of the Company's business as now conducted
or as proposed in the Prospectus to be conducted. Except as set forth in the
Prospectus under the captions "Risk Factors - Any inability to protect our
proprietary technologies could harm our competitive position" and "Litigation or
other proceedings or third party claims of intellectual property infringement
would require us to spend time and money and could prevent us from developing or
commercializing products," "Business - Competition" and "- Intellectual
Property," (a) to the Company's knowledge, there is no material infringement by
third parties of any such Intellectual Property owned by or exclusively licensed
to the Company; (b) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the Company's
rights in or to any such Intellectual Property, and the Company is unaware of
any facts which would form a reasonable basis for any such claim; (c) there is
no pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others challenging the validity or scope of Intellectual Property
owned by or exclusively licensed to the Company, and the Company is unaware of
any facts which would form a reasonable basis for any such claim which would
have a material adverse effect on the financial position, stockholders' equity,
results of operations, business or prospects of the Company; (d) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
concluding that any such claim will be asserted, or if asserted, would be
successful, or if successfully asserted, would not have a material adverse
effect on the financial position, stockholders' equity, results of operations,
business or prospects of the Company; (e) to the Company's knowledge, there is
no U.S. patent which contains claims that interfere with the issued claims of
any Intellectual Property owned by or exclusively licensed to the Company; (f)
to Company's knowledge, there is no art of which the Company is aware that may
render any U.S. patent held by the Company invalid or any utility U.S. patent
application held by the Company unpatentable which has not been disclosed, or
will not be disclosed in the required time period, to the U.S. Patent and
Trademark Office; (g) no security interests have been recorded in the U.S.
Patent and Trademark Office with respect to any Intellectual Property and no
liens have been recorded against the Company with respect to any Intellectual
Property and (h) the Company has paid or will pay all maintenance and issue fees
that are due or will be due, within the required time period, and has claimed
small entity status only as appropriate.
(q) There are no legal or governmental proceedings pending to
which the Company is a party or of which any property or assets of the Company
is the subject which, if determined adversely to the Company, might have a
material adverse effect on the financial position, stockholders' equity, results
of operations, business or prospects of the Company; and to the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(r) The Company has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required under any
federal, state, local or foreign law, regulation or rule, including rules and
regulations promulgated by the Food and Drug Administration (the "FDA") of the
U.S. Department of Health and Human Services and/or any committee thereof, and
has obtained all necessary authorizations, consents and approvals from other
persons, in order to conduct its business except where the failure to have such
licenses,
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authorizations, consents and approvals would not, individually or in the
aggregate, have a material adverse effect on the general affairs, management,
financial position, stockholders' equity, results of operations, business or
prospects of the Company; the Company is not in violation of, or in default
under, any such license, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree, order or
judgement applicable to the Company the effect of which could have a material
adverse effect on the general affairs, management, financial position,
stockholders' equity, results of operations, business or prospects of the
Company.
(s) There are no contracts or other documents which are
required by the Securities Act or by the Rules and Regulations to be described
in the Prospectus or filed as exhibits to the Registration Statement which have
not been described in the Prospectus or filed as exhibits to the Registration
Statement.
(t) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(u) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent, which might be expected
to have a material adverse effect on the general affairs, management, financial
position, stockholders' equity, results of operations, business or prospects of
the Company.
(v) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder (collectively, "ERISA"); no "REPORTABLE EVENT" (as defined in ERISA)
has occurred with respect to any "PENSION PLAN" (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any Pension Plan or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "CODE"); and each Pension Plan for
which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(w) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon, and no tax deficiency has been determined adversely
to the Company which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company, might have) a material
adverse effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company.
(x) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed in
the Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
6
business, (iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(y) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the recorded accountability for its assets is compared
with existing assets at reasonable intervals.
(z) The Company is not (i) in violation of its charter or
by-laws, (ii) in default, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its properties or
assets is subject, except for a default or occurrence which, individually or in
the aggregate, would not have a material adverse effect on the financial
position, stockholders' equity, results of operations, business or prospects of
the Company or (iii) in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject. The Company has not failed to obtain any material
license, permit, certificate, franchise or other governmental authorization or
permit necessary for the ownership of its property or for the conduct of its
business.
(aa) Neither the Company nor any director, officer, agent,
employee or other person associated with or acting on behalf of the Company has
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(bb) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the Company (or, to
the knowledge of the Company, any of its predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company; there has been no spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or with respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would
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not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a material adverse effect on the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company; and the terms "HAZARDOUS WASTES," "TOXIC WASTES," "HAZARDOUS
SUBSTANCES" and "MEDICAL WASTES" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with respect to
environmental protection.
(cc) Except to the extent disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), the
clinical, preclinical and other studies and tests conducted by or on behalf of
or sponsored by the Company or in which the Company or the Company's products or
product candidates under development have participated that are described in the
Prospectus or the results of which are referred to in the Prospectus were and,
if still pending, are being conducted in accordance with standard medical and
scientific research procedures. The descriptions of the results of such studies
and tests are accurate and complete in all material respects and fairly present
the data derived from such studies and tests, and the Company has no knowledge
of any other studies or tests the results of which are inconsistent with or
otherwise call into question the results described or referred to in the
Prospectus. All forward looking statements and estimates relating to the
Company's product candidates conform to the best available information and are
made by the Company with a reasonable basis therefor. The Company has no reason
to believe that the estimates relating to its product candidates are not likely
to be achieved. Except to the extent disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), the Company has
operated and currently is in compliance in all material respects with all
applicable FDA regulatory rules, regulations and policies as applicable. Except
to the extent disclosed in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), the Company has not received any notices or
other correspondence from the FDA or any other governmental agency requiring the
termination, suspension or modification of any clinical or pre-clinical studies
or tests that are described in the Prospectus or the results of which are
referred to in the Prospectus.
(dd) The Company is not, nor, as of the Closing Date, will the
Company be an "investment company" as defined in the Investment Company Act of
1940, as amended.
(ee) Except to four participants in Mexico, one participant in
Norway, one participant in Italy, four participants in Switzerland and three
participants in Japan, none of the Directed Shares (as hereinafter defined)
distributed in connection with the Directed Share Program (as hereinafter
defined) will be offered or sold outside of the United States.
(ff) The Company has no subsidiaries (as defined in
Rule 405 of the Rules and Regulations).
SECTION 2. PURCHASE OF THE STOCK BY THE UNDERWRITERS. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell 5,000,000
shares of the Firm Stock to the several Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase the number of shares
of the Firm Stock set forth opposite that Underwriter's name in Schedule 1
hereto. The respective purchase obligations of the Underwriters with respect to
the Firm Stock
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shall be rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option
to purchase up to 750,000 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set forth opposite the name of such Underwriter in Schedule
1 hereto. The respective purchase obligations of each Underwriter with respect
to the Option Stock shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Stock other than in 100-share
amounts.
The price of the Firm Stock and any Option Stock shall
be $[ ] per share.
The Company shall not be obligated to deliver any of the Stock
to be delivered on any Delivery Date (as hereinafter defined), except upon
payment for all the Stock to be purchased on such Delivery Date as provided
herein.
SECTION 3. OFFERING OF STOCK BY THE UNDERWRITERS. Upon
authorization by the Representatives of the release of the Firm Stock, the
several Underwriters propose to offer the Firm Stock for sale upon the terms
and conditions set forth in the Prospectus.
It is understood that approximately 250,000 shares of the Firm
Stock ("Directed Shares") will initially be reserved by the Underwriters for
offer and sale to employees and persons having business relationships with the
Company ("Directed Share Participants") upon the terms and conditions set forth
in the Prospectus and in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc. Under no circumstances will
Xxxxxx Brothers Inc. or any Underwriter be liable to the Company or to any
Directed Share Participant for any action taken or omitted to be taken in good
faith in connection with such Directed Share Program. To the extent that any
Directed Shares are not affirmatively reconfirmed for purchase by any Directed
Share Participant on or immediately after the date of this Agreement, such
Directed Shares may be offered to the public as part of the public offering
contemplated hereby.
The Company agrees to pay all fees and disbursements incurred
by the Underwriters in connection with the Directed Share Program, including
counsel fees and any stamp duties or other taxes incurred by the Underwriters in
connection with the Directed Share Program.
In connection with the offer and sale of the Directed Shares,
the Company agrees, promptly upon a request in writing, to indemnify and hold
harmless Xxxxxx Brothers Inc. and the other Underwriters from and against any
loss, claim, damage, expense, liability or action which (i) arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the approval of the Company for
distribution to Directed Share Participants in connection with the Directed
Share Program or any omission or alleged omission to state therein a material
fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (ii) arises out of the failure of any
Directed Share Participant to pay for and accept delivery of Directed Shares
that the Directed Share Participant agreed to purchase or (iii) is otherwise
related to the Directed Share Program, other than losses, claims, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted directly from the bad faith or gross negligence of
Xxxxxx Brothers Inc.
SECTION 4. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of
and payment for the Firm Stock shall be made at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, at 7:00 a.m. California time, on the fourth full business day
following the date of this Agreement or at such other date or place as shall be
determined by agreement between the Representatives and the Company. This date
and time are sometimes referred to as the "FIRST DELIVERY DATE." On the First
Delivery Date, the Company shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the purchase
price by wire transfer in immediately available funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
The option granted in Section 2 will expire 30 days after the
date of this Agreement and may be exercised in whole or in part from time to
time by written notice being given to the Company by the Representatives. Such
notice shall set forth the aggregate number of shares of Option Stock as to
which the option is being exercised, the names in which the shares of Option
Stock are to be registered, the denominations in which the shares of Option
Stock are to be issued and the date and time, as determined by the
Representatives, when the shares of Option Stock are to be delivered; provided,
however, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as a "SECOND DELIVERY DATE"
and the First Delivery Date and any Second Delivery Date are sometimes each
referred to as a "DELIVERY DATE."
Delivery of and payment for the Option Stock shall be made at
the place specified in the first sentence of the first paragraph of this Section
4 (or at such other place as shall be determined by agreement between the
Representatives and the Company) at 7:00 A.M., California time, on the Second
Delivery Date. On the Second Delivery Date, the Company shall deliver or cause
to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Stock
10
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to the Second
Delivery Date.
SECTION 5. FURTHER AGREEMENTS OF THE COMPANY.
The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time prior
to the expiration of nine months after the Effective Date in connection with the
offering or sale of the Stock or any other securities relating thereto and if at
such time any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify the Representatives and, upon their request,
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will correct
such
11
statement or omission or effect such compliance; and if the delivery of a
Prospectus is required at any time after the expiration of nine months after the
Effective Date in connection with the offering or sale of the Stock or any other
securities related thereto, then upon the Representatives' request but at the
expense of the Underwriters, to prepare and deliver to each Underwriter and to
any dealer in securities as many copies as the Representatives may from time to
time reasonably request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Securities Act;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date,
to furnish to the Representatives copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; PROVIDED THAT in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus,
not to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Stock and shares issued pursuant
to employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities convertible
12
into or exchangeable for Common Stock (other than (a) the grant of options
pursuant to option plans existing on the date hereof or (b) the issuance of
securities in connection with the establishment of collaborative relationships
or the acquisition of assets, technologies or other entities for the furtherance
of the Company's business; provided, however, that the securities issued in
connection with such collaborative relationships or acquisitions shall be
restricted securities and the holder shall enter into a lock-up letter agreement
with the Underwriters in substantially the form attached hereto as Exhibit A),
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case without the prior written consent
of Xxxxxx Brothers Inc. on behalf of the Underwriters; and to cause each
stockholder, officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters,
substantially in the form of Exhibit A hereto, pursuant to which each such
person shall agree not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
in each case for a period of 180 days from the date of the Prospectus, without
the prior written consent of Xxxxxx Brothers Inc. on behalf of the Underwriters;
(j) To apply for the listing of the Stock on the National
Association of Securities Dealers Automated Quotation National Market System
("NASDAQ"), and to use its best efforts to complete that listing, subject only
to official notice of issuance, prior to the First Delivery Date;
(k) To take such steps as shall be necessary to ensure that
the Company shall not become an "investment company" as defined in the
Investment Company Act of 1940, as amended; and
(l) In connection with the Directed Share Program, to ensure
that the Directed Shares will be restricted to the extent required by the
National Association of Securities Dealers, Inc. or the rules of such
association from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of the
Registration Statement, and Xxxxxx Brothers Inc. will notify the Company as to
which Participants will need to be so restricted. At the request of Xxxxxx
Brothers Inc., the Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
SECTION 6. EXPENSES. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the
13
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement, the
Agreement Between Underwriters, and any other related documents in connection
with the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing the review by the National Association of Securities
Dealers, Inc. of the terms of sale of the Stock; (f) any applicable listing or
other fees; (g) the fees and expenses (not in excess, in the aggregate, of
$10,000) of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, incident
to the Directed Share Program described in Section 3; (i) the costs and expenses
of the Company relating to investor presentations on any "ROAD SHOW" undertaken
in connection with the marketing of the offering of the Stock, including,
without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection with
the road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show and (j) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided that, except as
provided in this Section 6 and in Section 11 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
SECTION 7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
respective obligations of the Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
(c) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, shall have furnished to the Representatives their written opinion,
as counsel to the Company, addressed to the Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the Representatives, to
the effect that:
14
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its business
requires such qualification and has all corporate power and authority
necessary to own or hold its properties and conduct the business in
which it is engaged;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and conform to the description
thereof contained in the Prospectus;
(iii) The shares of the Stock to be issued and sold
by the Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor in
accordance with this Agreement will be duly and validly issued, fully
paid and non-assessable;
(iv) Except as described in the Prospectus, there are
no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of the Stock
pursuant to the Company's charter or bylaws or any agreement or other
instrument known to such counsel;
(v) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company is a party or of which any property or
assets of the Company is the subject which, if determined adversely to
the Company, might have a material adverse effect on the financial
position, stockholders' equity, results of operations, business or
prospects of the Company; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(vi) The Registration Statement was declared
effective under the Securities Act as of the date and time specified in
such opinion, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations specified
in such opinion on the date specified therein and no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(vii) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the Company
prior to such Delivery Date (except for the financial statements and
financial schedules and other financial and statistical data included
therein, as to which such counsel need express no belief) comply as to
form in all material respects with the requirements of the Securities
Act and the Rules and Regulations;
(viii) The statements contained in the Prospectus
under the captions "Management and Directors--Employment Agreements,"
"Management and Directors--
15
Stock Plans," "Related Party Transactions," "Principal Stockholders,"
"Description of Capital Stock" and "Shares Eligible for Future Sale"
constitute a fair summary thereof and the opinion of such counsel filed
as Exhibit 5.1 to the Registration Statement is confirmed and the
Underwriters may rely upon such opinion as if it were addressed to
them;
(ix) To such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration
Statement;
(x) This Agreement has been duly authorized, executed
and delivered by the Company.
(xi) The issue and sale of the shares of Stock being
delivered by the Company pursuant to this Agreement, the execution,
delivery and compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions contemplated
hereby will not conflict with or 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, loan agreement or other agreement
or instrument that is filed as an exhibit to the Registration
Statement, nor will such actions result in any violation of the
provisions of the charter or bylaws of the Company or any statute or
any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any
of its properties or assets; and, except for the registration of the
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby, except for such consents, approvals,
authorizations, orders, filings or registrations as have been obtained
or made;
(xii) Except as described in the Prospectus, to such
counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act
and all such rights to include such securities in the securities
registered pursuant to the Registration Statement have been expressly
waived prior to the date hereof;
(xiii) To such counsel's knowledge, there has been no
storage, disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous wastes
or hazardous substances by the Company (or
16
any of its predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company in violation
of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not
have, or could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a material
adverse effect on the general affairs, management, consolidated
financial position, stockholders' equity or results of operations of
the Company; and to such counsel's knowledge, there has been no spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or with
respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which
would not have or would not be reasonably likely to have, singularly or
in the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material adverse effect
on the general affairs, management, financial position, stockholders'
equity or results of operations of the Company; and
(xiv) The Company is not an "investment company"
as defined in the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of California and the General Corporation Law
of the State of Delaware. Such opinion shall also be to the effect that (x) such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statement and (y) based on the foregoing, no facts have come
to the attention of such counsel which lead them to believe that the
Registration Statement (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to which
such counsel need express no belief) as of the Effective Date, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus contains any 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
under which they were made, not misleading.
(d) Xxxxxxxx & Xxxxxxxx LLP shall have furnished to the
Representatives their written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The statements in the Prospectus relating to U.S.
patent matters, under the captions "Risk Factors -- Any inability to
adequately protect our proprietary technologies could harm our
competitive position" and "-- Litigation or other proceedings or
third-party claims of intellectual property infringement would require
us to spend time and money and could prevent us from developing or
commercializing products" and "Business -- Intellectual Property" and
"-- Collaborative Research and
17
Development Agreements," insofar as such statements constitute matters
of law, legal conclusions, or summaries of legal matters or
proceedings, are correct in all material respects and present fairly
the facts and information set forth therein;
(ii) With respect to the patents and patent
applications referred to in the Registration Statement, and the license
agreements referred to in the Registration Statement which are listed
in SCHEDULES A AND B to such opinion, the sections of the Registration
Statement entitled "Risk Factors -- Any inability to adequately protect
our proprietary technologies could harm our competitive position" and
"-- Litigation or other proceedings or third-party claims of
intellectual property infringement would require us to spend time and
money and could prevent us from developing or commercializing products"
and "Business -- Intellectual Property" and "-- Collaborative Research
and Development Agreements," at the time the Registration Statement
became effective, did not contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading.
(iii) With respect to the patents and patent
applications, and the license agreements referred to in the Prospectus
which are listed in SCHEDULES A AND B to such opinion, the sections of
the Prospectus entitled "Risk Factors -- Any inability to adequately
protect our proprietary technologies could harm our competitive
position" and "-- Litigation or other proceedings or third-party claims
of intellectual property infringement would require us to spend time
and money and could prevent us from developing or commercializing
products" and "Business -- Intellectual Property" and "-- Collaborative
Research and Development Agreements," as of its date and as of the
Closing Date, do not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading;
(iv) To such counsel's knowledge, except as described
in the Prospectus, and with the exception of proceedings before the
U.S. Patent and Trademark Office (the "PTO") that are carried out
during the course of prosecution, there are no pending, or threatened,
legal or governmental proceedings, or any declared interferences,
relating to any of the patents (the "Patents") and patent applications
(the "Patent Applications");
(v) To such counsel's knowledge, the license
agreements listed on SCHEDULE B to such opinion (the "License
Agreements") are validly binding and enforceable under federal and
state law relating to the licensing of intellectual property;
(vi) To such counsel's knowledge, the Company owns
each of the Patents and Patent Applications except as set forth on
Schedule A to such opinion;
(vii) To such counsel's knowledge, no security
interests have been recorded in the PTO with respect to any of the
Patents and Patent Applications;
18
(viii) To such counsel's knowledge and solely with
respect to those jurisdictions for which such counsel has obtained and
reviewed the results of a search of PTO or Uniform Commercial Code
records, no liens have been recorded against the Company with respect
to any of the Patents and Patent Applications;
(ix) To such counsel's knowledge, except as
described in the Prospectus or as set forth on Schedule A to such
opinion, and except for any rights reserved to the United States
Government, no third party has any rights to any of the Patents and
Patent Applications that are referred to in the Prospectus and
listed on SCHEDULE A to such opinion;
(x) To such counsel's knowledge, except as described
in the Prospectus, no interference has been declared or provoked with
respect to any of the Patents and Patent Applications;
(xi) To such counsel's knowledge, the Company has not
received any notice challenging the validity or enforceability of any
of the Patents and Patent Applications;
(xii) Although there can be no guarantee that any
particular patent application will issue as a patent, each of the U.S.
Patent Applications that are referred to in the Prospectus and listed
on SCHEDULE B to such opinion was properly filed, and is being properly
and diligently prosecuted, in the PTO;
(xiii) To our knowledge, for each U.S. Patent
Application listed on SCHEDULE A to such opinion, all information known
to such counsel, to date, to be "material to patentability," as defined
in 37 C.F.R. Section 1.56(b), has been disclosed, or will be disclosed
pursuant to 37 C.F.R. Section 1.97, to the PTO;
(xiv) Without any searches specifically having been
conducted, or having been required to have been conducted, for the
purpose of rendering this opinion, and although there can be no
guarantee that any particular patent application will issue as a
patent, each of the U.S. Patent Applications referred to in the
Prospectus and listed on SCHEDULE A to such opinion, discloses
patentable subject matter;
(xv) To such counsel's knowledge, without any
searches having been conducted for the purpose of rendering this
opinion, no third party is infringing any of the Patents and Patent
Applications; and
(xvi) To such counsel's knowledge, no claim which is
presently pending has been asserted against the Company relating to the
potential infringement of, or conflict with, any patents, of others.
(e) The Representatives shall have received from Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, such opinion or opinions,
dated the applicable Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and other related matters as
the Representatives may reasonably require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
19
(f) At the time of execution of this Agreement, the
Representatives shall have received from Ernst & Young LLP a letter or letters,
in form and substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants' "COMFORT LETTERS" to underwriters in connection with registered
public offerings.
(g) With respect to the letter or letters of Ernst & Young LLP
referred to in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "INITIAL LETTERS"), the
Company shall have furnished to the Representatives a letter (the "BRING-DOWN
LETTER") of such accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter or
letters and (iii) confirming in all material respects the conclusions and
findings set forth in the initial letter or letters.
(h) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such Delivery Date;
the Company has complied with all its agreements contained herein; and
the conditions set forth in Sections 7(a) and 7 (i) have been
fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the
Effective Date, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(i) The Company shall not have sustained, since the date of
the latest audited financial statements included in the Prospectus, (A) any loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
20
contemplated in the Prospectus or (B) since the respective dates as of which
information is given in the Prospectus there shall not have been any change in
the capital stock or long-term debt of the Company or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (A) and (B), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on NASDAQ or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
judgment of the Representatives, impracticable or inadvisable to proceed with
the public offering or delivery of the Stock being delivered on such Delivery
Date on the terms and in the manner contemplated in the Prospectus.
(k) NASDAQ shall have approved the Stock for listing, subject
only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that Underwriter,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in (A) any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (B) in any materials or information provided to investors by, or with
the approval of, the Company in connection with the marketing of the offering of
the Stock (the "MARKETING MATERIALS"), including any road show or investor
presentations made to investors by the
21
Company (whether in person or electronically), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto or in any Marketing
Materials, any material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or relating
in any manner to, the Stock or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse each Underwriter and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein which information consists solely of the
information specified in Section 8(e). The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of that
Underwriter.
The Company agrees to indemnify and hold harmless Xxxxxx
Brothers Inc. (including its officers and employees) and each person, if any,
who controls Xxxxxx Brothers Inc. within the meaning of the Securities Act
("XXXXXX BROTHERS ENTITIES"), from and against any loss, claim, damage or
liability or any action in respect thereof to which any of the Xxxxxx Brothers
Entities may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon
(i) the failure of any Participant to pay for and accept delivery of the
Directed Share sold pursuant to the Directed Share Program which, immediately
following the effectiveness of the Registration Statement, were subject to a
properly confirmed agreement to purchase or (ii) the Directed Share Program,
provided that, the Company shall not be responsible under this subparagraph (ii)
for any loss, claim, damage, liability or action that is finally judicially
determined to have resulted from the gross negligence or willful misconduct of
the Xxxxxx Brothers Entities. The Company shall reimburse the Xxxxxx Brothers
Entities promptly upon demand for any legal or other expenses reasonably
incurred by them in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject, under the
22
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, which information consists solely of the information specified in
Section 8(e), and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. Notwithstanding anything contained herein
to the contrary, if indemnity may be sought pursuant to Section 8(a) hereof in
respect of such claim or action, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the fees and
expenses of not more than one separate firm (in addition to any local counsel)
for the Xxxxxx Brothers Entities for the defense of any loss, claim, damage,
liability or action arising out of the Directed Share Program. No indemnifying
party shall (i) without the
23
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Stock or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting expenses)
received by the Company, on the one hand, and the total underwriting discounts
and commissions received by the Underwriters with respect to the shares of the
Stock purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this Agreement, 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 whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be 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 into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise
24
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the concession and reallowance figures appearing under the
caption "Underwriting" in the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
SECTION 9. DEFAULTING UNDERWRITERS. If, on either Delivery
Date, any Underwriter defaults in the performance of its obligations under
this Agreement, the remaining non-defaulting Underwriters shall be obligated
to purchase the Stock which the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions which the number
of shares of the Firm Stock set forth opposite the name of each remaining
non-defaulting Underwriter in Schedule 1 hereto bears to the total number of
shares of the Firm Stock set forth opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any
of the Stock on such Delivery Date if the total number of shares of the Stock
which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such date exceeds 9.99% of the total number of shares of the
Stock to be purchased on such Delivery Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase more than 110% of the number
of shares of the Stock which it agreed to purchase on such Delivery Date
pursuant to the terms of Section 2. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Stock to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares that the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery
Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 6 and 11. As used in this Agreement, the term "UNDERWRITER"
includes, for all purposes of this Agreement unless the context requires
otherwise, any party not listed in Schedule 1 hereto who, pursuant to this
Section 9, purchases Stock that a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the Stock
of a defaulting or withdrawing Underwriter, either the Representatives or the
Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for
25
the Underwriters may be necessary in the Registration Statement, the Prospectus
or in any other document or arrangement.
SECTION 10. TERMINATION. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 7(h) or 7(i), shall
have occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
SECTION 11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the
Company shall fail to tender the Stock for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled by
the Company is not fulfilled, the Company will reimburse the Underwriters for
all reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this Agreement and the
proposed purchase of the Stock, and upon demand the Company shall pay the full
amount thereof to the Representatives. If this Agreement is terminated pursuant
to Section 9 by reason of the default of one or more Underwriters, the Company
shall not be obligated to reimburse any defaulting Underwriter on account of
those expenses.
SECTION 12. NOTICES, ETC. All statements, requests,
notices and agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Xxxxxx Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 000-000-0000), with a copy, in the case of any notice pursuant to Section
8(c), to the Director of Litigation, Office of the General Counsel, Xxxxxx
Brothers Inc., 0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000;
(b) if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxxxxx Xxxxxxx (Fax: 000-000-0000), with a
copy, in case of any notice pursuant to Section 8(c), to Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000, Attention: Xxxxx X.
Xxxxxxx, Esq. (Fax: 000-000-0000);
Any notice to an Underwriter pursuant to Section 8(c) shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its acceptance telex to the Representatives, which
address will be supplied to any other party hereto by the Representatives upon
request. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Underwriters by Xxxxxx Brothers Inc. on behalf of the Representatives.
SECTION 13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Company, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only
26
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company contained in this Agreement shall also be deemed to be
for the benefit of the person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Securities Act and (B) the indemnity
agreement of the Underwriters contained in Section 8(b) of this Agreement shall
be deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 13, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
SECTION 14. SURVIVAL. The respective indemnities,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
SECTION 15. DEFINITION OF THE TERM "BUSINESS DAY." For
purposes of this Agreement, "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of New York applicable to agreements
to be performed in the State of New York without regard to conflict of laws
provisions.
SECTION 17. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
SECTION 18. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
27
Very truly yours,
KOSAN BIOSCIENCES INCORPORATED
By: ___________________________
Name:_________________________
Title: _________________________
Accepted:
XXXXXX BROTHERS INC.
CIBC WORLD MARKETS CORP.
XX XXXXX SECURITIES CORPORATION
FIDELITY CAPITAL MARKETS, a division
of NATIONAL FINANCIAL SERVICES LLC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: XXXXXX BROTHERS INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
Authorized Representative
29
SCHEDULE 1
NUMBER OF SHARES OF
UNDERWRITERS FIRM STOCK TO BE PURCHASED
------------ --------------------------
Xxxxxx Brothers Inc................................................
CIBC World Markets Corp............................................
XX Xxxxx Securities Corporation....................................
Fidelity Capital Markets, a division of National Financial
Services LLC...................................................
[Names of other Underwriters]
Total..................................................
=============================
EXHIBIT A
---------
LOCK-UP LETTER AGREEMENT
XXXXXX BROTHERS INC.
As Representatives of the several
Underwriters
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that you and certain other firms
propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
providing for the purchase by you and such other firms (the "UNDERWRITERS") of
shares (the "SHARES") of Common Stock, par value $0.001 per share (the "COMMON
STOCK"), of Kosan Biosciences Incorporated, a Delaware corporation (the
"COMPANY"), and that the Underwriters propose to reoffer the Shares to the
public (the "OFFERING").
In consideration of the execution of the Underwriting
Agreement by the Underwriters, and for other good and valuable consideration,
the undersigned hereby irrevocably agrees that, without the prior written
consent of Xxxxxx Brothers Inc., on behalf of the Underwriters, the undersigned
will not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (including, without limitation, shares of
Common Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock (other than the Shares) owned by the undersigned on the date of execution
of this Lock-Up Letter Agreement or on the date of the completion of the
Offering, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 180 days after
the date of the final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer
Agent are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
It is understood that, if the Company notifies you that it
does not intend to proceed with the Offering, if the Underwriting Agreement does
not become effective, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares, we
will be released from our obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the
Underwriters will proceed with the Offering in reliance on this Lock-Up Letter
Agreement.
Whether or not the Offering actually occurs depends on a
number of factors, including market conditions. Any Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Very truly yours,
By:______________________________
Name:
Title:
Dated: _______________
31
