CYTOKINETICS,
INCORPORATED
PLACEMENT AGENT
AGREEMENT
Lazard Capital
Markets LLC
JMP Securities LLC
Rodman & Renshaw, LLC
c/o Lazard Capital Markets LLC
30 Rockefeller Plaza
New York, New York 10020
1.
Introduction .
Cytokinetics, Incorporated, a Delaware corporation (the “
Company ”), proposes to issue and sell to the
purchasers, pursuant to the terms of this Placement Agent Agreement
(this “ Agreement ”) and the Subscription
Agreements in the form of Exhibit A attached hereto
(the “ Subscription Agreements ”) entered into
with the purchasers identified therein (each a “
Purchaser ” and collectively, the “
Purchasers ”), up to an aggregate of 5,285,715 shares
of common stock, $0.001 par value per share (the “ Common
Stock ”) of the Company. The aggregate of 5,285,715
shares so proposed to be sold is hereinafter referred to as the
“ Stock .” The Company hereby confirms its
agreement with Lazard Capital Markets LLC (“ LCM
”), JMP Securities LLC (“ JMP ”) and
Rodman & Renshaw, LLC (“ Rodman, ” and
together with LCM and JMP, the “ Placement Agents
”) to act as Placement Agents in accordance with the terms
and conditions hereof. LCM is acting as the representative of the
Placement Agents and in such capacity is hereinafter referred to as
the “ Representative .”
2.
Agreement to Act as
Placement Agents; Placement of Securities. On the basis
of the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of
this Agreement:
2.1 The Company
hereby authorizes the Placement Agents to act as its exclusive
agents to solicit offers for the purchase of all or part of the
Stock from the Company in connection with the proposed offering of
the Stock (the “ Offering ”). Until the Closing
Date (as defined in Section 4 hereof), the Company
shall not, without the prior written consent of the Representative,
solicit or accept offers to purchase Stock otherwise than through
the Placement Agents. LCM may utilize the expertise of Lazard
Frères & Co. LLC in connection with LCM’s placement
agent activities.
2.2 The Placement
Agents agree, as agents of the Company, to use their best efforts
to solicit offers to purchase the Stock from the Company on the
terms and subject to the conditions set forth in the Prospectus (as
defined below). The Placement Agents shall use commercially
reasonable efforts to assist the Company in obtaining performance
by each Purchaser whose offer to purchase Stock has been solicited
by the Placement Agents and accepted by the Company, but
the
Placement
Agents shall not, except as otherwise provided in this Agreement,
be obligated to disclose the identity of any potential purchaser or
have any liability to the Company in the event any such purchase is
not consummated for any reason. Under no circumstances will the
Placement Agents be obligated to underwrite or purchase any Stock
for their own accounts and, in soliciting purchases of Stock, the
Placement Agents shall act solely as the Company’s agents and
not as principals. Notwithstanding the foregoing and except as
otherwise provided in Section 2.3 , it is understood
and agreed that the Placement Agents (or their affiliates) may,
solely at their discretion and without any obligation to do so,
purchase Stock as principals.
2.3 Subject to the
provisions of this Section 2 , offers for the purchase
of Stock may be solicited by the Placement Agents as agents for the
Company at such times and in such amounts as the Placement Agents
deem advisable. Each Placement Agent shall communicate to the
Company, orally or in writing, each reasonable offer to purchase
Stock received by it as agent of the Company. The Company shall
have the sole right to accept offers to purchase the Stock and may
reject any such offer, in whole or in part. Each Placement Agent
shall have the right, in its discretion reasonably exercised, with
notice to the Company, to reject any offer to purchase Stock
received by it, in whole or in part, and any such rejection shall
not be deemed a breach of its agreement contained
herein.
2.4 The Stock is
being sold to the Purchasers at a price of $7.00 per share. The
purchases of the Stock by the Purchasers shall be evidenced by the
execution of Subscription Agreements by each of the Purchasers and
the Company.
2.5 As
compensation for services rendered, on the Closing Date (as defined
in Section 4 hereof) the Company shall pay to the Placement
Agents by wire transfer of immediately available funds to an
account or accounts designated by the Representative, an amount
equal to five percent (5%) of the gross proceeds received by the
Company from the sale of the Stock on such Closing Date.
2.6 No Stock which
the Company has agreed to sell pursuant to this Agreement shall be
deemed to have been purchased and paid for, or sold by the Company,
until such Stock shall have been delivered to the Purchaser thereof
against payment by such Purchaser. If the Company shall default in
its obligations to deliver Stock to a Purchaser whose offer it has
accepted, the Company shall indemnify and hold the Placement Agents
harmless against any loss, claim, damage or expense arising from or
as a result of such default by the Company in accordance with the
procedures set forth in Section 8(c) herein.
3.
Representations and
Warranties of the Company. The Company represents and
warrants to, and agrees with, the Placement Agents and the
Purchasers that:
(a) The Company
has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “ Securities
Act ”), and published rules and regulations thereunder
(the “ Rules and Regulations ”) adopted by the
Securities and Exchange Commission (the “ Commission
”) a “shelf” Registration Statement (as
hereinafter defined) on Form S-3 (File No. 333-125786), which
became effective as of July 15, 2005 (the “ Effective
Date ”), including a base prospectus relating to the
Stock (the “ Base Prospectus ”), and such
amendments and supplements thereto as may have been required to the
date of this Agreement. The term “ Registration
Statement ” as used in this Agreement means the
registration statement (including all exhibits, financial schedules
and all documents and information deemed to be a part of the
Registration Statement pursuant to Rule 430A under the
Securities Act), as amended and as consolidated with the
Registration Statement on Form S-3 (No. 333-138306) or
supplemented to the date of this Agreement, including the Base
Prospectus. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been to the
best knowledge of the Company instituted or are threatened by the
Commission. The Company, if required by the Rules
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and Regulations
of the Commission, will file the Prospectus (as defined below),
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. The term “ Prospectus ” as used in
this Agreement means the Prospectus, in the form in which it is to
be filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations, or, if the Prospectus is not to be filed with the
Commission pursuant to Rule 424(b), the Prospectus in the form
included as part of the Registration Statement as of the Effective
Date, except that if any revised prospectus or prospectus
supplement shall be provided to the Representative by the Company
for use in connection with the offering and sale of the Stock which
differs from the Prospectus (whether or not such revised prospectus
or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b) of the Rules and Regulations), the term
“ Prospectus ” shall refer to such revised
prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Representative for such
use. Any preliminary prospectus or prospectus subject to completion
included in the Registration Statement or filed with the Commission
pursuant to Rule 424 under the Securities Act is hereafter
called a “ Preliminary Prospectus .” Any
reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), on or before the last to occur of the Effective Date, the
date of the Preliminary Prospectus, or the date of the Prospectus,
and any reference herein to the terms “amend,”
“amendment,” or “supplement” with respect
to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include (i) the
filing of any document under the Exchange Act after the Effective
Date, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated by reference
and (ii) any such document so filed. If the Company has filed
an abbreviated registration statement to register additional Stock
pursuant to Rule 462(b) under the Rules (the “ 462(b)
Registration Statement ”), then any reference herein to
the Registration Statement shall also be deemed to include such
462(b) Registration Statement.
(b) As of the
Applicable Time (as defined below) and as of the Closing Date,
neither (i) any General Use Free Writing Prospectus (as
defined below) issued at or prior to the Applicable Time, and the
Pricing Prospectus (as defined below) and the information included
on Schedule A hereto, all considered together
(collectively, the “ General Disclosure Package
”), nor (ii) any individual Limited Use Free Writing
Prospectus (as defined below), if any, issued prior to the
Effective Time, when considered together with the General
Disclosure Package, included or will include, any untrue statement
of a material fact or omitted or as of the Closing Date will omit,
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however , that the Company
makes no representations or warranties as to information contained
in or omitted from any Issuer Free Writing Prospectus, in reliance
upon, and in conformity with, written information furnished to the
Company through the Representative by or on behalf of any Placement
Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 18 ). As used in
this paragraph (b) and elsewhere in this
Agreement:
“
Applicable Time ” means 8:00 P.M., New York time, on
the date of this Agreement.
“
Pricing Prospectus ” means the Preliminary Prospectus,
if any, and the Base Prospectus, each as amended and supplemented
immediately prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement
deemed to be a part thereof.
“
Issuer Free Writing Prospectus ” means any
“issuer free writing prospectus,” as defined in
Rule 433 under the Securities Act relating to the Stock in the
form filed or required to be filed with the
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Commission or,
if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) under the
Securities Act.
“
General Use Free Writing Prospectus ” means any Issuer
Free Writing Prospectus that is identified on
Schedule A to this Agreement.
“
Limited Use Free Writing Prospectuses ” means any
Issuer Free Writing Prospectus that is not a General Use Free
Writing Prospectus.
(c) No order
preventing or suspending the use of any Preliminary Prospectus, any
Issuer Free Writing Prospectus or the Prospectus relating to the
Offering has been issued by the Commission, and no proceeding for
that purpose or pursuant to Section 8A of the Securities Act
has been to the best knowledge of the Company instituted or
threatened by the Commission, and each Preliminary Prospectus, if
any, at the time of filing thereof, conformed in all material
respects to the requirements of the Securities Act and the Rules
and Regulations, and unless otherwise corrected, modified or
supplemented did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however , that the Company makes no
representations or warranties as to information contained in or
omitted from any Preliminary Prospectus, in reliance upon, and in
conformity with, written information furnished to the Company
through the Representative by or on behalf of any Placement Agent
specifically for inclusion therein, which information the parties
hereto agree is limited to the Placement Agents’ Information
(as defined in Section 18 ).
(d) At the time
the Registration Statement became effective, at the date of this
Agreement and at the Closing Date, the Registration Statement
conformed and will conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations
and did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects
to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided ,
however , that the foregoing representations and warranties
in this paragraph (d) shall not apply 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 Representative by
or on behalf of any Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to
the Placement Agents’ Information (as defined in
Section 18 ).
(e) Each Issuer
Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and
sale of the Stock or until any earlier date that the Company
notified or notifies the Representative as described in
Section 5(e) , did not, does not and will not include
any information that conflicted, conflicts or will conflict with
the information contained in the Registration Statement, Pricing
Prospectus or the Prospectus, including any document incorporated
by reference therein and any prospectus supplement deemed to be a
part thereof that has not been superseded or modified, or includes
an untrue statement of a material fact or omitted or would omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company
through the Representative by
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or on behalf of
any Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement
Agents’ Information (as defined in Section 18
).
(f) The documents
incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein in light of the
circumstances under which they were made not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.
(g) The Company
has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering
other than any Preliminary Prospectus, the Prospectus, the
documents incorporated by reference therein and other materials, if
any, permitted under the Securities Act and consistent with
Section 5(b) below. The Company will file with the
Commission all Issuer Free Writing Prospectuses, if any, in the
time and manner required under Rules 163(b)(2) and 433(d)
under the Securities Act.
(h) The Company
has been duly organized and is validly existing as a corporation in
good standing (or the foreign equivalent thereof) under the laws of
its jurisdiction of organization. The Company 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
power and authority necessary to own or hold its properties and to
conduct the business in which it is engaged, except where the
failure to so qualify or have such power or authority
(i) would not have, singularly or in the aggregate, a material
adverse effect on the condition (financial or otherwise), results
of operations, assets, business or prospects of the Company, or
(ii) impair in any material respect the ability of the Company to
perform its obligations under this Agreement or to consummate any
transactions contemplated by the Agreement, the General Disclosure
Package or the Prospectus (any such effect as described in clauses
(i) or (ii), a “ Material Adverse Effect
”). The Company has no subsidiaries and does not own more
than 5% of the equity interest or control, directly or indirectly,
any corporate, association or other entity.
(i) The Company
has the full right, power and authority to enter into this
Agreement, each of the Subscription Agreements and that certain
Escrow Agreement (the “ Escrow Agreement ”)
dated as of the date hereof by and among the Company, the Placement
Agents and the escrow agent named therein, and to perform and to
discharge its obligations hereunder and thereunder; and each of
this Agreement and each of the Subscription Agreements has been
duly authorized, executed and delivered by the Company, and
constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except (i) as
limited by laws of general application relating to bankruptcy,
insolvency and the relief of debtors; (ii) as limited by rules
of law governing specific performance, injunctive relief or other
equitable remedies and by general principles of equity; and
(iii) to the extent any indemnification provisions contained
therein may further be limited by applicable laws and principles of
public policy.
(j) The Stock to
be issued and sold by the Company to the Purchasers hereunder and
under the Subscription Agreements has been duly and validly
authorized and, when issued and
5
delivered
against payment therefor as provided herein and the Subscription
Agreements, will be duly and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will
conform to the description thereof contained in the General
Disclosure Package and the Prospectus.
(k) The Company
has an authorized capitalization as set forth in the Pricing
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, have been issued in compliance with
federal and state securities laws, and conform to the description
thereof contained in the General Disclosure Package and the
Prospectus. As of September 30, 2006, there were 37,793,573
shares of Common Stock issued and outstanding and no shares of
Preferred Stock, par value $0.001 of the Company issued and
outstanding and 4,427,980 shares of Common Stock were issuable upon
the exercise of all options, warrants and convertible securities
outstanding as of such date. Since such date, the Company has not
issued any securities, other than Common Stock of the Company
issued pursuant to the exercise of stock options previously
outstanding under the Company’s stock option plans or the
issuance of restricted Common Stock pursuant to employee stock
purchase plans. None of the outstanding
shares
of Common Stock was issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or
outstanding shares of capital stock, options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any of its
subsidiaries other than those described above or accurately
described in the General Disclosure Package. The description of the
Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder,
as described in the General Disclosure Package and the Prospectus,
accurately and fairly present the information required to be shown
with respect to such plans, arrangements, options and rights in all
material respects.
(m) The execution,
delivery and performance of this Agreement, the Subscription
Agreements and the Escrow Agreement by the Company, the issue and
sale of the Stock by the Company and the consummation of the
transactions contemplated hereby and thereby will not (with or
without notice or lapse of time or both) conflict with or result in
a breach or violation of any of the terms or provisions of,
constitute a default under, give rise to any right of termination
or other right or the cancellation or acceleration of any right or
obligation or loss of a benefit under, or give rise to the creation
or imposition of any lien, encumbrance, security interest, claim or
charge upon any property or assets of the Company pursuant to,
(i) 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, (ii) result in any violation
of the provisions of the charter or by-laws (or analogous governing
instruments, as applicable) of the Company or (iii) result in
any violation of any law, statute, rule, regulation, judgment,
order or decree of any court or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of
its properties or assets, except with respect to clauses
(i) and (iii) where, any such conflict, breach,
violation, default or right would not reasonably be expected to
have a Material Adverse Effect.
(n) 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 or foreign securities laws, the National
Association of Securities Dealers, Inc. and the Nasdaq Global
Market (“ Nasdaq GM ”) in connection with the
offering and sale of the Stock by the Company, no consent,
approval, authorization or order of, or filing, qualification or
registration with, any court or governmental agency or body,
foreign or domestic, which has not been made, obtained or taken and
is not in full force and effect, is
6
required for
the execution, delivery and performance of this Agreement, the
Subscription Agreements and the Escrow Agreement by the Company,
the offer or sale of the Stock or the consummation of the
transactions contemplated hereby or thereby.
(o) To the
Company’s knowledge, PricewaterhouseCoopers LLP, who have
certified certain financial statements and related schedules
included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus, and
have audited the Company’s internal control over financial
reporting and management’s assessment thereof, is an
independent registered public accounting firm as required by the
Securities Act and the Rules and Regulations and the Public Company
Accounting Oversight Board (United States) (the “
PCAOB ”). Except as disclosed in the Registration
Statement and as pre-approved in accordance with the requirements
set forth in Section 10A of the Exchange Act,
PricewaterhouseCoopers LLP have not been engaged by the Company to
perform any “prohibited activities” (as defined in
Section 10A of the Exchange Act).
(p) The financial
statements, together with the related notes and schedules, included
or incorporated by reference in the General Disclosure Package, the
Prospectus and in the Registration Statement fairly present in all
material respects the financial position and the results of
operations and changes in financial position of the Company at the
respective dates or for the respective periods therein specified.
Such statements and related notes and schedules have been prepared
in accordance with the generally accepted accounting principles in
the United States (“ GAAP ”) applied on a
consistent basis throughout the periods involved except as may be
set forth in the related notes included or incorporated by
reference in the General Disclosure Package (provided that
non-year-end financial statements are subject to normal recurring
year-end audit adjustments and do not contain all footnotes
required by GAAP). The financial statements, together with the
related notes and schedules, included or incorporated by reference
in the General Disclosure Package and the Prospectus comply in all
material respects with the Securities Act, the Exchange Act, and
the Rules and Regulations and the rules and regulations under the
Exchange Act. No other financial statements or supporting schedules
or exhibits are required by the Securities Act or the Rules and
Regulations to be described, or included or incorporated by
reference in the Registration Statement, the General Disclosure
Package or the Prospectus. There is no pro forma or as adjusted
financial information which is required to be included in the
Registration Statement, the General Disclosure Package, or and the
Prospectus or a document incorporated by reference therein in
accordance with the Securities Act and the Rules and Regulations
which has not been included or incorporated as so
required.
(q) The Company
has not sustained, since the date of the latest unaudited financial
statements included or incorporated by reference in the General
Disclosure Package, 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, otherwise than as set forth
or contemplated in the General Disclosure Package; and, since such
date, there has not been any change in the capital stock (other
than as a result of the grant or exercise of stock options or the
offer to sell shares of Common Stock and award shares of restricted
Common Stock pursuant to the Company stock plans in the ordinary
course) or long-term debt of the Company or any Material Adverse
Effect.
(r) Except as set
forth in the General Disclosure Package, there is no legal or
governmental action, suit, claim or proceeding pending to which the
Company is a party or of which any property or assets of the
Company is the subject which is required to be described in the
Registration Statement, the General Disclosure Package or the
Prospectus or a document incorporated by reference therein and is
not described therein, or which, singularly or in the aggregate, if
determined adversely to the Company would reasonably be expected to
have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby;
7
and to the
Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(s) The Company is
not in (i) violation of its charter or by-laws (or analogous
governing instrument, as applicable), (ii) default in any
respect, 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 material indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or
assets is subject or (iii) violation in any respect of any
law, ordinance, governmental rule, regulation or court order,
decree or judgment to which it or its property or assets may be
subject except, in the case of clauses (ii) and (iii) of
this paragraph (s), for any violations or defaults which,
singularly or in the aggregate, would not have a Material Adverse
Effect.
(t) The Company
possesses all licenses, certificates, authorizations and permits
issued by, and has made all declarations and filings with, the
appropriate local, state, federal or foreign regulatory agencies or
bodies which are necessary or desirable for the ownership of its
properties or the conduct of its business as described in the
General Disclosure Package and the Prospectus (collectively, the
“ Governmental Permits ”) except where any
failures to possess or make the same, singularly or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. The Company is in compliance with all such
Governmental Permits and all such Governmental Permits are valid
and in full force and effect, except where the lack of compliance
or validity or the failure to be in full force and effect would
not, singularly or in the aggregate, reasonably be expected to have
a Material Adverse Effect. All such Governmental Permits are free
and clear of any material restriction or condition that are in
addition to, or materially different from those normally applicable
to similar licenses, certificates, authorizations and permits. The
Company has not received notification of any revocation or
modification (or proceedings related thereto) of any such
Governmental Permit except as would not reasonably be expected to
have a Material Adverse Effect.
(u) The Company is
not or, after giving effect to the offering of the Stock and the
application of the proceeds thereof as described in the General
Disclosure Package and the Prospectus, will become an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(v) Neither the
Company nor, to the Company’s knowledge, any of the
Company’s officers, directors or affiliates has taken or will
take, directly or indirectly, any action designed or intended to
stabilize or manipulate the price of any security of the Company,
or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the
Company.
(w) Except as
disclosed in the Registration Statement and Prospectus, the Company
owns, possesses, licenses or has other rights to use the patents
and patent applications, copyrights, trademarks, service marks,
trade names, technology, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary rights) and other
intellectual property (or could acquire such intellectual property
upon commercially reasonable terms) necessary to conduct its
business in the manner in which it is being conducted and in the
manner in which it is contemplated to be conducted as set forth in
the Prospectus (collectively, the “ Company Intellectual
Property ”); except as disclosed in the Registration
Statement and Prospectus, to the Company’s knowledge, none of
the patents owned or licensed by the Company is unenforceable or
invalid, and, to the Company’s knowledge, none of the patent
applications owned or licensed by the Company would be
unenforceable or invalid if issued as patents; each of the
compounds currently in clinical studies, i.e., the compounds
designated SB-743921, CK-1827452 and SB-715992, falls within the
scope of at least one claim in the patents and/or applications
assigned to
8
the Company;
the Company is not obligated to pay a royalty, grant a license, or
provide other consideration to any third party in connection with
the Company Intellectual Property other than as disclosed in the
Prospectus; except as disclosed in the Registration Statement and
Prospectus, the Company has not received any written notice of
violation or conflict with rights of others with respect to the
Company Intellectual Property; except as disclosed in the
Registration Statement and Prospectus, there are no pending or to
the Company’s knowledge, threatened actions, suits,
proceedings or claims by others that the Company is infringing any
patent, trade secret, trade mark, service mark, copyright or other
intellectual property or proprietary right; and except as disclosed
in the Registration Statement and Prospectus, the products or
processes of the Company referenced in the Prospectus do not, to
the knowledge of the Company, violate or conflict with any
intellectual property or proprietary right of any third person, or
any discovery, invention, product or process that is the subject of
a patent application filed by any third person.
(x) The
preclinical and clinical trials conducted by or on behalf of the
Company that are described in the Prospectus were and, if still
pending, are being conducted in all material respects in accordance
with procedures and controls pursuant to accepted professional
scientific standards and all applicable local, state and federal
and foreign laws, rules, regulations and published guidance,
including, but not limited to, the Federal Food, Drug and Cosmetic
Act and implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58
and 312; the descriptions of the results of such studies, tests and
trials contained in the Prospectus are accurate and complete in all
material respects; the Company is not aware of any studies, tests
or trials the results of which reasonably call into question the
clinical trial results described or referred to in the Prospectus
when viewed in the context in which such results are described and
the clinical state of development; and the Company has not received
any written notices or correspondence from the U.S. Food and Drug
Administration or any foreign, state or local governmental body
exercising comparable authority requiring the termination or
suspension of any preclinical or clinical trials conducted by or on
behalf of the Company.
(y) Other than
liens on personal or other property securing indebtedness of the
Company in the ordinary course and as described in the Prospectus,
the Company has good and marketable title in fee simple to, or has
valid rights to lease or otherwise use, all items of real or
personal property which are material to the business of the
Company, free and clear of all liens, encumbrances, security
interests, claims and defects that do not, singularly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and all of the leases and subleases
material to the business of the Company and under which the Company
holds properties described in the General Disclosure Package and
the Prospectus, are in full force and effect, and the Company has
not received any written notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the
Company under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company to the continued
possession of the leased or subleased premises under any such lease
or sublease.
(z) No labor
dispute with the employees of the Company exists or, to the
Company’s knowledge, is imminent, and the Company has not
received written notice of any existing or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers, customers or contractors, that would reasonably be
expected, singularly or in the aggregate, to have a Material
Adverse Effect. The Company is not aware that any key employee or
significant group of employees of the Company plans to terminate
employment with the Company.
(aa) No
“prohibited transaction” (as defined in
Section 406 of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder (“ ERISA ”), or
Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time (the “ Code ”)) or
“accumulated funding deficiency” (as defined in
Section 302 of ERISA) or any of the events set forth in
Section 4043(b) of ERISA (other than
9
events with
respect to which the thirty (30)-day notice requirement under
Section 4043 of ERISA has been waived) has occurred or would
reasonably be expected to occur with respect to any employee
benefit plan of the Company that would, singularly or in the
aggregate, be reasonably expected to have a Material Adverse
Effect. Each employee benefit plan of the Company is in compliance
in all material respects with applicable law, including ERISA and
the Code. The Company has not incurred and would not reasonably be
expected to incur liability under Title IV of ERISA with respect to
the termination of, or withdrawal from, any pension plan (as
defined in ERISA). 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, and nothing has occurred,
whether by action or by failure to act, that would, singularly or
in the aggregate, be reasonably expected to cause the loss of such
qualification.
(bb) The Company
is in compliance with all foreign, federal, state and local rules,
laws and regulations relating to the use, treatment, storage and
disposal of hazardous or toxic substances or waste and protection
of health and safety or the environment which are applicable to its
business, except where the failure to comply would not, singularly
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other
hazardous substances by, due to, or caused by the Company (or, to
the Company’s knowledge, any other entity for whose acts or
omissions the Company is or may otherwise be liable) upon any of
the property now or previously leased by the Company in violation
of any law, statute, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation which would not have,
singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge, except for any such
disposal, discharge, emission, or other release of any kind which
would not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse
Effect.
(cc) The Company
(i) has timely filed all necessary federal, state, local and
foreign tax returns, and all such returns were true, complete and
correct, (ii) has paid all federal, state, local and foreign
taxes, assessments, governmental or other charges due and payable
for which it is liable, including, without limitation, all sales
and use taxes and all taxes which the Company is obligated to
withhold from amounts owing to employees, creditors and third
parties, and (iii) does not have any tax deficiency or claims
outstanding or assessed or, to the best of its knowledge, proposed
against any of them, except those, in each of the cases described
in clauses (i), (ii) and (iii) of this paragraph
(cc) , that would not, singularly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The
Company has not engaged in any transaction which to the
Company’s knowledge a corporate tax shelter or could be
characterized as such by the Internal Revenue Service or any other
taxing authority. The accruals and reserves on the books and
records of the Company in respect of tax liabilities for any
taxable period not yet finally determined are adequate to meet any
assessments and related liabilities for any such period, and since
September 30, 2006 the Company has not incurred any liability
for taxes other than in the ordinary course.
(dd) The Company
carries, or is covered by, insurance policies in such amounts and
covering such risks as, to the Company’s knowledge, are
adequate for the conduct of its business and the value of its
properties and to the knowledge of the Company is customary for
companies engaged in similar businesses in similar industries. The
Company has no reason to believe that it will not be able
(i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage as may
be necessary or appropriate to conduct its business as
10
now conducted.
The Company has not been denied any insurance coverage that it has
sought or for which it has applied.
(ee) The Company
maintains a system of internal controls over financial reporting
(as such term is defined in Rule 13a 15(f) under the Exchange
Act) that complies with the requirements of the Exchange Act and
has been designed by the Company’s principal executive
officer and principal financial officer, or under his supervision,
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements in
accordance with generally accepted accounting principles. Except as
described in the General Disclosure Package, since the end of the
Company’s most recent audited fiscal year, there as been
(A) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and
(B) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting.
(ff) The minute
books of the Company have been made available to the Placement
Agents and counsel for the Placement Agents, and such books contain
a complete and accurate summary of all meetings and actions of the
board of directors (including each board committee) and
shareholders of the Company (or analogous governing bodies and
interest holders, as applicable), since April 29, 2004 through
the date of the latest meeting and action.
(gg) There is no
franchise, lease, contract, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in
the General Disclosure Package and in the Prospectus or a document
incorporated by reference therein or to be filed as an exhibit to
the Registration Statement or a document incorporated by reference
therein which is not described or filed therein as required; and
all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statement or
in a document incorporated by reference therein are accurate
descriptions of such documents in all material respects. Other than
as described in the General Disclosure Package, no such franchise,
lease, contract or agreement has been suspended or terminated for
convenience or default by the Company or any of the other parties
thereto, and the Company has not received notice nor does the
Company have any other knowledge of any such pending or threatened
suspension or termination, except for such pending or threatened
suspensions or terminations that would not reasonably be expected
to, singularly or in the aggregate, have a Material Adverse
Effect.
(hh) No
relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders
(or analogous interest holders), customers or suppliers of the
Company or any of its affiliates on the other hand, which is
required to be described in the General Disclosure Package and the
Prospectus or a document incorporated by reference therein and
which is not so described.
(ii) No person or
entity has the right to require registration of shares of Common
Stock or other securities of the Company because of the filing or
effectiveness of the Registration Statement or the sale of the
Stock, except for persons and entities who have expressly waived
such right in writing or who have been given timely and proper
written notice and have failed to exercise such right within the
time or times required under the terms and conditions of such
right. Except as described in the General Disclosure Package, there
are no persons with registration rights or similar rights to have
any securities registered by the Company under the Securities
Act.
(jj) The Company
does not own any “margin securities” as that term is
defined in Regulation U of the Board of Governors of the
Federal Reserve System (the “ Federal Reserve Board
”), and none of the proceeds of the sale of the Stock will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for
11
any other
purpose which might cause any of the Stock to be considered a
“purpose credit” within the meanings of
Regulation T, U or X of the Federal Reserve Board.
(kk) Except for
payments contemplated by this Agreement, the Registration
Statement, the General Disclosure Package or the Prospectus, the
Company is not a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the
Company or the Placement Agents for a brokerage commission,
finder’s fee or like payment in connection with the offering
and sale of the Stock.
(ll) No
forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act)
contained in either the General Disclosure Package or the
Prospectus has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(mm) The Company
is subject to and in compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the
Exchange Act. The Common Stock is registered pursuant to Section
12(g) of the Exchange Act and is listed on the Nasdaq GM, and the
Company has taken no action designed to, or reasonably likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act or delisting the Common Stock from the
Nasdaq GM, nor has the Company received any notification that the
Commission or the National Association of Securities Dealers, Inc.
(“ NASD ”) is contemplating terminating such
registration or listing. No consent, approval, authorization or
order of, or filing, notification or registration with, the Nasdaq
GM is required for the listing and trading of the Stock on the
Nasdaq GM.
(nn) The Company
is in material compliance with all applicable provisions of the
Sarbanes-Oxley Act of 2002 and all rules and regulations
promulgated thereunder or implementing the provisions thereof (the
“ Sarbanes-Oxley Act ”) that are currently in
effect.
(oo) The Company
is in compliance in all material respects with all applicable
corporate governance requirements set forth in the Nasdaq Global
Marketplace Rules that are currently in effect.
(pp) There are no
transactions, arrangements or other relationships between and/or
among the Company, any of its affiliates (as such term is defined
in Rule 405 of the Securities Act) and any unconsolidated
entity, including, but not limited to, any structure finance,
special purpose or limited purpose entity that would reasonably be
expected to materially affect the Company’s liquidity or the
availability of or requirements for its capital resources required
to be described in the General Disclosure Package and the
Prospectus or a document incorporated by reference therein which
have not been described as required.
(qq) There are no
outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company, or any of their respective
family members, except as disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus.
(rr) The
statistical and market related data included in the Registration
Statement, the General Disclosure Package and the Prospectus are
based on or derived from sources that the Company believes to be
reliable and accurate, and such data agree with the sources from
which they are derived.
(ss) To the
Company’s knowledge, neither the Company nor any of its
affiliates (within the meaning of NASD Conduct
Rule 2720(b)(1)(a)) directly or indirectly controls, is
controlled by, or is under common control with, or is an associated
person (within the meaning of Article I, Section 1(ee) of
the By-laws of the NASD) of, any member firm of the
NASD.
12
(tt) No approval
of the shareholders of the Company under the rules and regulations
of Nasdaq (including Rule 4350 of the Nasdaq Global
Marketplace Rules) is required for the Company to issue and deliver
to the Purchasers the Stock.
Any certificate
signed by or on behalf of the Company and delivered to any
Placement Agent or to counsel for the Placement Agents shall be
deemed to be a representation and warranty by the Company to the
Placement Agents and the Purchasers as to the matters covered
thereby.
4.
The Closing .
The time and date of closing and delivery of the documents required
to be delivered to the Placement Agents pursuant to
Sections 5 and 7 hereof shall be at
10:00 A.M., New York time, on December 12, 2006 (the
“ Closing Date ”) at the office of Wilson
Sonsini Goodrich & Rosati PC, 650 Page Mill Road, Palo Alto, CA
94304.
5.
FURTHER AGREEMENTS
OF THE COMPANY. The Company agrees with the Placement Agents
and the Purchasers:
(a) To prepare the
Prospectus in a form approved by the Representative containing
information previously omitted at the time of effectiveness of the
Registration Statement in reliance on rules 430A, 430B and 430C and
to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the second business (2nd) day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A
of the Rules and Regulations; to notify the Representative promptly
of the Company’s intention to file or prepare any supplement
or amendment to any Registration Statement or to the Prospectus in
connection with this Offering and to provide a draft of any such
amendment or supplement to the Registration Statement, the General
Disclosure Package or to the Prospectus to the Representative
within an amount of time that is reasonably practical to review
under the circumstances and prior to filing; to advise the
Representative, promptly after it receives notice thereof, of the
time when any amendment to any Registration Statement has been
filed in connection with the Offering or becomes effective or any
supplement to the General Disclosure Package or the Prospectus or
any amended Prospectus has been filed in connection with the
Offering and to furnish the Representative copies thereof; to file
promptly all material required to be filed by the Company with the
Commission pursuant to Rule 433(d) or 163(b)(2), as the case may
be; to file within the time periods prescribed by the Exchange Act,
including any extension thereof, all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities
Act) is required in connection with the Offering; to advise the
Representative, 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, any
Issuer Free Writing 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, the
General Disclosure Package 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, any Issuer Free Writing Prospectus or the Prospectus or
suspending any such qualification, and promptly to use its best
efforts to obtain the withdrawal of such order.
(b) The Company
represents and agrees that, unless it obtains the prior consent of
the Representative, and each Placement Agent represents and agrees
that, unless it obtains the prior consent of the Representative and
the Company, it has not made and will not, make any offer relating
to the Stock that would constitute a “free writing
prospectus” as defined in Rule 405 under the Securities
Act unless the prior written consent of the Representative has been
received (each, a “ Permitted Free Writing Prospectus
”); provided that the prior written consent of
the
13
Representative
hereto shall be deemed to have been given in respect of the Issuer
Free Writing Prospectus included in Schedule A hereto.
The Company represents that it has treated and agrees that it will
treat each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus, comply with the requirements of Rules 164
and 433 under the Securities Act applicable to any Issuer Free
Writing Prospectus, including the requirements relating to timely
filing with the Commission, legending and record keeping and will
not take any action that would result in any Placement Agent or the
Company being required to file with the Commission pursuant to Rule
433(d) under the Securities Act a free writing prospectus prepared
by or on behalf of such Placement Agent that such Placement Agent
otherwise would not have been required to file
thereunder.
(c) If at any time
when a Prospectus relating to the Stock is required to be delivered
under the Securities Act, any event occurs or condition exists as a
result of which the Prospectus, as then amended or supplemented,
would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading, or the Registration Statement, as then amended or
supplemented, would include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein not misleading, or if for any other reason it is necessary
at any time to amend or supplement any Registration Statement or
the Prospectus to comply with the Securities Act or the Exchange
Act, the Company will promptly notify the Representative, and upon
the Representative’s request, the Company will promptly
prepare and file with the Commission, at the Company’s
expense, an amendment to the Registration Statement or an amendment
or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and will deliver to the
Placement Agents, without charge, such number of copies thereof as
the Placement Agents may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto
by the Placement Agents.
(d) If the General
Disclosure Package is being used to solicit offers to buy the Stock
at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the
Representative, it becomes necessary to amend or supplement the
General Disclosure Package in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or to make the statements therein not conflict with the
information contained or incorporated by reference in the
Registration Statement then on file and not superseded or modified,
or if it is necessary at any time to amend or supplement the
General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if
required) and furnish to the Placement Agents and any dealers an
appropriate amendment or supplement to the General Disclosure
Package or (ii) prepare and file with the Commission an
appropriate filing under the Exchange Act which shall be
incorporated by reference in the General Disclosure Package so that
the General Disclosure Package as so amended or supplemented will
not, in the light of the circumstances under which they were
ma
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