<PAGE> 1
EXHIBIT 1.1
LARGE SCALE BIOLOGY CORPORATION
[ ] Shares of Common Stock
Underwriting Agreement
August [ ], 2000
J.P. Morgan Securities Inc.
Chase Securities Inc.
William Blair & Company, L.L.C.
As Representatives of the several Underwriters
listed in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Large Scale Biology Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell [ ] shares (the "Underwritten Shares") of Common
Stock, par value $[ ] per share (the "Common Stock"), of the Company to the
several Underwriters listed in Schedule I hereto (the "Underwriters"), for whom
you are acting as representatives (the "Representatives"). In addition, for the
sole purpose of covering over-allotments in connection with the sale of the
Underwritten Shares, the Company proposes to issue and sell to the Underwriters,
at the option of the Underwriters, up to an additional [ ] shares (the "Option
Shares") of Common Stock. The Underwritten Shares and the Option Shares are
herein referred to as the "Shares."
As part of the offering contemplated by this Agreement, J.P. Morgan
Securities Inc. (the "Designated Underwriter") has agreed to reserve out of the
Underwritten Shares purchased by it under this Agreement, up to [ ] shares, for
sale to the Company's directors, officers, employees, consultants and family
members of the foregoing (collectively, "Participants"), as set forth in the
Prospectus (as defined herein) under the heading "Underwriting" (the "Directed
Share Program"). The Underwritten Shares to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by a
Participant by the end of the day on which this
<PAGE> 2
-2-
Agreement is executed will be offered to the public by the Underwriters as set
forth in the Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-1, including a prospectus, relating to the Shares. The
registration statement as amended at the time when it became or shall become
effective, including information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is referred to in this Agreement as the "Registration
Statement," and the prospectus in the form first used to confirm sales of
Shares, and filed with the Commission pursuant to Rule 424(b) under the
Securities Act is referred to in this Agreement as the "Prospectus." If the
Company has filed an abbreviated registration statement pursuant to Rule 462(b)
under the Securities Act ("a Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company at a purchase price per share of $[ ] (the "Purchase Price")
the respective number of Underwritten Shares as set forth opposite the name of
such Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof).
In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as hereinafter provided, and the Underwriters, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company at the Purchase Price that portion of the number
of Option Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction, the numerator of which is the
maximum number of Underwritten Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I hereto
(or such number increased as set forth in Section 9 hereof) and the denominator
of which is the maximum number of Underwritten Shares which all of the
Underwriters are entitled to purchase hereunder, for the sole purpose of
covering over-allotments (if any) in the sale of Underwritten Shares by the
several Underwriters.
<PAGE> 3
-3-
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as to
which the option is being exercised and the date and time when the Option Shares
are to be delivered and paid for, which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing
Date nor later than the tenth full Business Day (as hereinafter defined) after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Any such notice shall be given at
least two full Business Days prior to the date and time of delivery specified
therein.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified to the Representatives by the Company,
in the case of the Underwritten Shares, on [ ], 2000, or at such other time on
the same or such other date, not later than the fifth Business Day thereafter,
as the Representatives and the Company may agree upon in writing, or to an
account specified to the Representatives by the Company, in the case of the
Option Shares, on the date and time specified by the Representatives in the
written notice of the Underwriters' election to purchase such Option Shares. The
time and date of such payment for the Underwritten Shares is referred to herein
as the "Closing Date," and the time and date for such payment for the Option
Shares, if other than the Closing Date, are herein referred to as the
"Additional Closing Date." As used herein, the term "Business Day" means any day
other than a day on which banks are permitted or required to be closed in New
York, New York or in San Francisco, California.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than one
full Business Day prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of J.P. Morgan Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
<PAGE> 4
-4-
4. The Company represents and warrants to each of the several
Underwriters that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, that
this representation and warranty shall not apply to any statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date of the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading and the Prospectus, as
amended or supplemented, if applicable, at the Closing Date or Additional
Closing Date, as the case may be, will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that the foregoing representations and
warranties shall not apply to any statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use therein;
(c) the consolidated financial statements, and the related notes
thereto, included in the Registration Statement and the Prospectus present
fairly the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the consolidated
results of its operations and changes in stockholders' equity and cash
flows for the periods specified; such consolidated financial statements
<PAGE> 5
-5-
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included in the Registration Statement present fairly the
information required to be stated therein; and the pro forma financial
information, and the related notes thereto, included in the Registration
Statement and the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act and is based upon good faith
estimates and assumptions believed by the Company to be reasonable;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in
the capital stock or long-term debt of the Company or its subsidiaries, or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, taken as a whole
(a "Material Adverse Change"), otherwise than as set forth or contemplated
in the Prospectus; and except as set forth or contemplated in the
Prospectus, neither the Company nor any of its subsidiaries has entered
into any transaction or agreement (whether or not in the ordinary course
of business) material to the Company and its subsidiaries, taken
as a whole;
(e) the Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have a
material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole
(a "Material Adverse Effect");
(f) the Company, a Delaware corporation, is the surviving corporation of
a valid and effective merger of Large Scale Biology Corporation, a
California corporation (the "Predecessor Company"), with and into the
Company, whereby the Predecessor Company ceased to exist;
(g) each of the Company's subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own
its properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each
<PAGE> 6
-6-
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing would not have a Material Adverse
Effect; and, except as described in the Prospectus, all the outstanding
shares of capital stock of each of the Company's subsidiaries have been
duly authorized and validly issued, are fully-paid and non-assessable, and
are owned by the Company, directly or indirectly, free and clear of all
liens, encumbrances, security interests and claims;
(h) this Agreement has been duly authorized, executed and delivered by
the Company;
(i) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock conforms to the description
thereof set forth in the Prospectus, and all of the outstanding shares of
capital stock of the Company have been duly authorized and validly issued,
are fully paid and non-assessable and are not subject to any pre-emptive or
similar rights; and, except as described in or expressly contemplated by
the Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exercisable or exchangeable for, any shares
of capital stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of
the Company or any such subsidiary, any such convertible or exercisable or
exchangeable securities or any such rights, warrants or options;
(j) the Shares have been duly authorized, and, when issued and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and will
conform in all material respects to the description thereof set forth in
the Prospectus; and, except as described in or expressly contemplated by
the Prospectus, the issuance of such Shares is not subject to any
preemptive or similar rights;
(k) neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation or breach
of or in default under its certificate of incorporation or by-laws or any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, except for violations, breaches and defaults which individually
and in the aggregate would not have a Material Adverse Effect; the issuance
and sale of the Shares and the performance by the Company of its
obligations hereunder and the consummation of the transactions contemplated
herein will not conflict with or result in a viola
<PAGE> 7
-7-
tion or breach 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 or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject, except (other than in case of the issuance and
sale of the Shares) such conflicts, violations, breaches and defaults which
individually and in the aggregate would not have a Material Adverse Effect,
nor will any such action result in any violation of the provisions of the
certificate of incorporation or the by-laws of the Company or any
applicable law or statute or any applicable order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective properties or assets,
except (other than in the case of the certificate of incorporation or the
by-laws of the Company) such violations which individually and in the
aggregate would not have a Material Adverse Effect; and no consent,
approval, authorization, order, license, registration or qualification of
or with any such court or governmental agency or body is required for the
issuance and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as may
be required under state securities or blue sky laws in connection with the
purchase and distribution of the Shares by the Underwriters and except
(other than in case of the issuance and sale of the Shares) such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications which individually and in the aggregate would not have a
Material Adverse Effect;
(l) other than as set forth in the Prospectus, there are no legal or
governmental investigations, actions, suits or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries or any of their respective properties or to
which the Company or any of its subsidiaries is or may be a party or to
which any property or assets of the Company or any of its subsidiaries is
or may be subject which, if determined adversely to the Company or any of
its subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a Material Adverse Effect; and there are no
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed;
(m) the Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, which is material to the business of the
Company, in each case free and clear of all liens, encumbrances security
interests and claims, except such as are
<PAGE> 8
-8-
described in the Prospectus or such as do not materially affect the value
of such property and do not interfere with the use made or proposed to be
made of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries
are held by them under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company or any of
its subsidiaries;
(n) no relationship, direct or indirect, exists between or among the
Company or its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
subsidiaries, on the other hand, which is required by the Securities Act to
be described in the Registration Statement and the Prospectus which is not
so described;
(o) except for rights which have been waived, expired in accordance with
their terms or that are described in the Prospectus, no person has the
right to require the Company to register any securities for offering and
sale under the Securities Act by reason of the filing of the Registration
Statement with the Commission, or the issuance and sale of the Shares;
(p) the Company is not, and after giving effect to the issuance and sale
of the Shares will not be, an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(q) to the knowledge of the Company, Deloitte & Touche LLP ("Deloitte")
and PricewaterhouseCoopers LLP ("PWC"), who have certified certain
consolidated financial statements of the Company, are independent public
accountants as required by the Securities Act;
(r) the Company and its subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have
paid all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being
contested in good faith; and no tax deficiency has been determined
adversely to the Company and there is no tax deficiency which has been or
might reasonably be expected to be asserted or threatened against the
Company or any of its subsidiaries;
(s) the Company has not taken nor will it take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the Common Stock;
<PAGE> 9
-9-
(t) the statistical and market-related data included in the Registration
Statement and the Prospectus are based on or derived from sources which are
believed by the Company to be reliable;
(u) each of the Company and its subsidiaries owns, possesses or has
obtained all licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and has made all declarations and filings
with, all federal, state, local and foreign governmental authorities, all
self-regulatory organizations and all courts and other tribunals, domestic
or foreign, necessary to own or lease, as the case may be, and to operate
its properties and to carry on its business as conducted as of the date
hereof, except where the failure to so own, possess, obtain or make would
not have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice in writing of any proceeding relating
to revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as described in the
Prospectus; and each of the Company and its subsidiaries is in compliance
with all laws and regulations relating to the conduct of its business as
conducted as of the date hereof, except where the failure to so comply
would not have a Material Adverse Effect;
(v) except as described in the Prospectus, each of the Company and its
subsidiaries owns, is licensed to use or otherwise possesses adequate
rights to use the patents, patent rights, licenses, inventions, trademarks,
service marks, trade names, copyrights and know-how, including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems, processes or procedures (collectively,
the "Intellectual Property"), reasonably necessary to carry on the business
conducted by it, except to the extent that the failure to own, be licensed
to use or otherwise possess adequate rights to use such Intellectual
Property would not individually or in the aggregate be reasonably expected
to have a Material Adverse Effect; except as set forth in the Prospectus,
the Company has not received any notice of infringement of or conflict
with, and the Company has no knowledge of any infringement of or conflict
with, asserted rights of others with respect to the Intellectual Property
which could, individually or in the aggregate reasonably be expected to
have a Material Adverse Effect; except as set forth in the Prospectus, the
discoveries, inventions, products or processes of the Company referred to
in the Registration Statement and the Prospectus do not, to the knowledge
of the Company, infringe on or conflict with any right or patent of any
third party, or any discovery, invention, product or process which is the
subject of a patent application filed by any third party (which patent
application has been published or is otherwise known to the Company) which
could, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect; except as set forth in the Prospectus, the
Company is not obligated to pay any royalty, grant any license or provide
other consideration to any third party in connection with
<PAGE> 10
-10-
its patents, patent rights, licenses, inventions, trademarks, service
marks, trade names, copyrights and know-how which could individually or in
the aggregate reasonably be expected to have a Material Adverse Effect; and
no third party, including any academic or governmental organization,
possesses rights to the Intellectual Property which, if exercised, could
reasonably be expected to have a Material Adverse Effect;
(w) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, the studies, tests and
preclinical and clinical trials conducted by or on behalf of the Company
that are described in the Registration Statement and the Prospectus were
and, if still pending, are being conducted in accordance with experimental
protocols, procedures and controls pursuant to, where applicable, accepted
professional scientific standards, except where the failure to so conduct
could not reasonably be expected to have a Material Adverse Effect; the
descriptions of the results of such studies, tests and trials contained in
the Registration Statement and the Prospectus are accurate and complete in
all material respects; and the Company has not received any notices or
correspondence from the U.S. Food and Drug Administration, the U.S.
Department of Agriculture or any state, local or foreign governmental body
exercising comparable authority requiring the termination, suspension or
material modification of any studies, tests or preclinical or clinical
trials conducted by or on behalf of the Company which termination,
suspension or material modification could reasonably be expected to have a
Material Adverse Effect;
(x) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
subsidiaries which could reasonably be expected to have a Material Adverse
Effect;
(y) the Company and its subsidiaries carry, or are covered by, insurance
in such amounts and covering such risks as is adequate for the conduct of
their respective businesses and the value of their respective properties
and as is customary for companies engaged in similar businesses in similar
industries;
(z) the Company and its subsidiaries (i) are in compliance with any and
all applicable federal, state, local and foreign laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits,
<PAGE> 11
-11-
licenses or approvals would not individually or in the aggregate have a
Material Adverse Effect;
(aa) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
that is maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and its
affiliates has been maintained in material compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986,
as amended (the "Code"); no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no
"accumulated funding deficiency," as defined in Section 412 of the Code,
has been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceed the present value of all benefits accrued under such
plan determined using reasonable actuarial assumptions;
(bb) except for compensation to be received by the Underwriters under
this Agreement, to the knowledge of the Company, there are no outstanding
claims for services, either in the nature of a finder's fee or origination
fee, with respect to any of the transactions contemplated hereby;
(cc) the Registration Statement, the Prospectus, any amendments or
supplements thereto and any preliminary prospectus comply, and any further
amendments or supplements thereto will comply, with applicable laws or
regulations of foreign jurisdictions in which the Prospectus, as amended or
supplemented, if applicable, or any preliminary prospectus are distributed
in connection with the Directed Share Program; and no authorization,
approval, consent, license, order, registration or qualification of or with
any government, governmental instrumentality or court, other than such as
have been obtained, is necessary under the securities laws and regulations
of foreign jurisdictions in which the Directed Shares are offered outside
of the United States; and
(dd) the Company has not offered, or caused the Underwriters to offer,
any Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products or
services.
<PAGE> 12
-12-
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) if the Registration Statement is not already effective, to use its
best efforts to cause the Registration Statement to become effective at the
earliest possible time and, if required, to file the final Prospectus with
the Commission within the time periods specified by Rule 424(b) and Rule
430A under the Securities Act and to furnish copies of the Prospectus to
the Underwriters in New York City prior to 10:00 a.m., New York City time,
on the second Business Day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the Representatives
three signed copies of the Registration Statement (as originally filed) and
each amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement (as originally
filed) and each amendment thereto, in each case without exhibits and,
during the period referred to in paragraph (e) below, to each of the
Underwriters as many copies of the Prospectus (including all amendments and
supplements thereto) as the Representatives may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representatives
a copy of the proposed amendment or supplement for review and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(d) to advise the Representatives promptly, and, upon request, to
confirm such advice in writing (i) when the Registration Statement has
become effective, (ii) when any amendment to the Registration Statement has
been filed or becomes effective, (iii) when any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for any additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the Prospectus or the initiation or
threatening of any proceeding for that purpose, (vi) of the occurrence of
any event, within the period referred to in paragraph (e) below, 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 when the Prospectus is delivered to a purchaser,
not misleading, and (vii) of the receipt by the Company of any notification
with respect to any suspension of the registration or qualification of
<PAGE> 13
-13-
the Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and to use its best efforts
to prevent the issuance of any such stop order, or of any order preventing
or suspending the use of any preliminary prospectus or the Prospectus, or
of any order suspending any such qualification of the Shares, or
notification of any such order thereof and, if issued, to obtain as soon as
possible the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary as in the opinion of counsel for
the Underwriters to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if it is necessary as in
the opinion of counsel for the Underwriters to amend or supplement the
Prospectus to comply with law, forthwith to prepare and furnish, at the
expense of the Company, to the Underwriters and to the dealers (whose names
and addresses the Representatives will furnish to the Company) to which
Shares may have been sold by the Representatives on behalf of the
Underwriters and to any other dealers upon request, such amendments or
supplements to the Prospectus as may be necessary so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as the Representatives
shall reasonably request and to continue such qualification in effect so
long as reasonably required for distribution of the Shares; provided that
the Company shall not be required to file a general consent to service of
process in any such jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a
period of at least twelve months beginning with the first fiscal quarter of
the Company occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
<PAGE> 14
-14-
(i) for a period of 180 days after the date of the initial public
offering of the Shares, not to, directly or indirectly, (i) offer, pledge,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of
any shares of Common Stock or any securities of the Company which are
substantially similar to the Common Stock, including but not limited to any
securities convertible into or exercisable or exchangeable for, or that
represent the right to receive, Common Stock or (ii) enter into any swap,
option, future, forward or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock or
any securities of the Company which are substantially similar to the Common
Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise without the prior written consent of J.P. Morgan
Securities Inc., in each case other than (w) the Shares to be sold by the
Company hereunder, (x) any options to be granted or shares of Common Stock
issued upon exercise of options granted or to be granted under the
Company's employee or director stock option plans existing as of the date
of the Prospectus, (y) shares of Common Stock issued upon exercise of
warrants of the Company outstanding on the date of the Prospectus or (z)
shares of Common Stock issued upon conversion of preferred stock of the
Company outstanding on the date of the Prospectus;
(j) to use the net proceeds received by the Company from the sale of the
Shares in a manner consistent with the description of the use of proceeds
in the Prospectus under the caption "Use of Proceeds";
(k) to list, subject to official notice of issuance, the Shares on the
Nasdaq National Market (the "Nasdaq National Market");
(l) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, registration, transfer,
execution, issuance and delivery of the Shares, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus
(including in each case all exhibits, amendments and supplements thereto),
(iii) incurred in connection with the registration or qualification of the
Shares under the securities or blue sky laws of such jurisdictions as the
Representatives may designate (including fees of counsel for the
Underwriters and its disbursements), (iv) in connection with the listing of
the Shares on the Nasdaq National Market, (v) related to the filing with,
and clearance of the offering by, the National Association of Securities
Dealers, Inc., (vi) in connection with
<PAGE> 15
-15-
the printing (including word processing and duplication costs) and delivery
of this Agreement, any blue sky memoranda and the furnishing to the
Underwriters and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided, (vii) any
expenses incurred by the Company in connection with a "road show"
presentation to potential investors, (viii) the cost of preparing stock
certificates and (ix) the cost and charges of any transfer agent and any
registrar;
(m) in connection with the Directed Share Program, to ensure that the
Directed Shares will be restricted to the extent required by the NASD or
the NASD rules from sale, transfer, assignment, pledge or hypothecation for
a period of three months following the date of the effectiveness of the
Registration Statement; and the Company will direct the transfer agent to
place stop transfer restrictions upon such securities for such period of
time;
(n) to pay all reasonable fees and disbursements of counsel incurred by
the Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program; and
(o) to comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company of its obligations hereunder and
to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than
5:00 P.M., New York City time, on the date hereof; no stop order suspending
the effectiveness of the Registration Statement or any post-effective
amendment shall be in effect, and no proceedings for such purpose shall be
pending before or threatened by the Commission; the Prospectus shall have
been filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules and
regulations under the Securities Act and in accordance with Section 5
hereof; and all requests for additional information shall have been
complied with to the satisfaction of the Representatives;
(b) the representations and warranties of the Company contained herein
are true and correct in all material respects (except for such
representations and warranties
<PAGE> 16
-16-
which are qualified by materiality) on and as of the Closing Date or the
Additional Closing Date, as the case may be, as if made on and as of the
Closing Date or the Additional Closing Date, as the case may be, and the
Company shall have complied with all agreements and all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date
or the Additional Closing Date, as the case may be;
(c) 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 Material Adverse Change, otherwise
than as set forth or contemplated in the Prospectus, the effect of which in
the reasonable judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares on the Closing Date or the Additional Closing Date, as the case may
be, on the terms and in the manner contemplated in the Prospectus; and
neither the Company nor any of its subsidiaries has 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, otherwise
than as set forth or contemplated in the Prospectus;
(d) the Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of
the Chief Executive Officer and Chief Financial Officer of the Company,
satisfactory to the Representatives, to the effect set forth in subsections
(a) through (c) of this Section 6;
(e) Brobeck, Phleger & Harrison LLP, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) the Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus; the merger of the Predecessor
Company with and into the Company, with the Company surviving, is
effective under Delaware and California law;
(ii) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a Material Adverse Effect;
<PAGE> 17
-17-
(iii) each of the Company's subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation with corporate power and authority
to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than where the
failure to be so qualified and in good standing would not have a
Material Adverse Effect; and, to the knowledge of such counsel, all of
the outstanding shares of capital stock of each of the Company's
subsidiaries are owned by the Company, directly or indirectly;
(iv) other than as set forth or contemplated in the Prospectus, to
the knowledge of such counsel, there are no legal or governmental
investigations, actions, suits or proceedings pending or threatened
against the Company or any of its subsidiaries or any of their
respective properties or to which the Company or any of its subsidiaries
is or may be a party or to which any property of the Company or any of
its subsidiaries is or may be the subject which, if determined adversely
to the Company or any of its subsidiaries, could individually or in the
aggregate have a Material Adverse Effect; and such counsel does not know
of any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that are not so
described or filed;
(v) this Agreement has been duly authorized, executed and delivered
by the Company;
(vi) the authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof
contained under the heading "Description of Capital Stock" in the
Prospectus;
(vii) the shares of capital stock of the Company outstanding prior
to the issuance of the Shares have been duly authorized and validly
issued and are, to the knowledge of such counsel, fully paid and
non-assessable;
(viii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when issued and delivered to and paid for
by the Underwriters in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable and, other than as
described in the Prospectus, the issuance of the Shares is not subject
to any preemptive rights arising under the Company's certificate of
incorporation or the Delaware General Corporation Law, or to the
knowledge of such counsel, similar rights;
<PAGE> 18
-18-
(ix) the statements in the Prospectus under "United States Tax
Consequences to Non-United States Holders of Common Stock" and
"Description of Capital Stock," insofar as such statements constitute a
summary of the terms of the capital stock of the Company and legal
matters referred to therein, fairly present the terms and legal matters
in all material respects;
(x) such counsel shall state, but not opine, that no facts have come
to their attention to cause them to believe (A) the Registration
Statement and the Prospectus and any supplement or amendment thereto
(other than any financial statements and related notes and schedules
therein and other financial and statistical data included therein as to
which such counsel need express no view) do not comply as of the
respective dates thereof as to form in all material respects with the
requirements of the Securities Act and applicable rules and regulations
thereunder, (B) the Registration Statement (other than any financial
statements and related notes and schedules therein and other financial
and statistical data included therein as to which such counsel need
express no view) as of its effective date contained an untrue statement
of a material fact required to be stated therein or necessary to make
the statements therein not misleading or (C) the Prospectus (other than
any financial statements and related notes and schedules therein and
other financial and statistical data included therein as to which such
counsel need express no view), as of its date and as of the Closing Date
or the Additional Closing Date, as the case may be, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made,
not misleading;
(xi) to the knowledge of such counsel, neither the Company nor any
of its subsidiaries is, or with the giving of notice or lapse of time or
both would be, in violation or breach of or in default under, its
certificate of incorporation or by-laws or any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument that is an
exhibit to the Registration Statement to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject except for violations,
breaches and defaults which individually and in the aggregate would not
have a Material Adverse Effect; the issuance and sale of the Shares
being delivered on the Closing Date or the Additional Closing Date, as
the case may be, and the performance by the Company of its obligations
hereunder and the consummation of the transactions contemplated herein
does not constitute a breach or default under any agreement, indenture,
lease or instrument that is an exhibit to the Registration Statement to
which the Company or any of its subsidiaries is a party or to which any
of the property or assets of the Company or any of its subsidiaries is
subject, nor will any such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of the
Company or any applicable California, Delaware or United States law or
statute (other than applicable state securities and Blue Sky laws, as to
which counsel need express no opinion) or any applicable order, rule or
regulation of any California, Delaware or United States court or
governmental agency or body having jurisdiction over the Company, its
subsidiaries or any of their respective properties or assets, which
conflict, violation or breach could reasonably be expected to have a
Material Ad-
<PAGE> 19
-19-
verse Effect, except that such counsel need express no opinion with
respect to rights of contribution and indemnity under this Agreement;
(xii) no consent, approval, authorization or other order of, or
registration or filing with, any court or governmental agency or body is
required on the part of the Company for the issuance or sale of the
Shares or the consummation by the Company of the other transactions
contemplated by this Agreement, except such consents, approvals,
authorizations, orders, registrations or filings as have been obtained
under the Securities Act and the Exchange Act and as may be required
under state securities or blue sky laws (as to which such counsel need
express no opinion) in connection with the purchase and distribution of
the Shares by the Underwriters;
(xiii) to the knowledge of such counsel, except for rights which
have been waived or expired in accordance with their terms or that are
described in the Prospectus, no person has the right to require the
Company to register any securities for offering and sale under the
Securities Act by reason of the filing of the Registration Statement
with the Commission or the sale of the Shares pursuant hereto; and
(xiv) based upon oral advice from the Commission, the Registration
Statement has been declared effective under the Securities act by the
Commission and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or
threatened by the Commission.
In rendering such opinions and the statements in paragraph (x) above,
such counsel may rely (A) as to matters involving the application of laws
other than the laws of the United States and the States of California and
Delaware, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form
and substance reasonably satisfactory to Underwriters' counsel) of other
counsel reasonably acceptable to the Underwriters' counsel, familiar with
the applicable laws and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the
Company and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company. The opinion of such coun-
<PAGE> 20
-20-
sel for the Company shall state that the opinion of any such other counsel
upon which they relied is in form satisfactory to such counsel and, in such
counsel's opinion, the Underwriters and they are justified in relying
thereon.
The opinion of Brobeck, Phleger & Harrison LLP described above shall be
rendered to the Underwriters at the request of the Company and shall so
state therein;
<PAGE> 21
-21-
(f) Howrey Simon Arnold & White, LLP, patent counsel for the Company,
shall have furnished to the Representatives their written opinion, dated
the Closing Date or the Additional Closing Date, as the case may be,
substantially in the form of Annex A hereto.
The opinion of Howrey Simon Arnold & White, LLP shall be rendered to the
Underwriters at the request of the Company and shall so state therein;
(g) Rader, Fishman & Grauer PLLC, patent counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be,
substantially in the form of Annex B hereto.
The opinion of Rader, Fishman & Grauer PLLC shall be rendered to the
Underwriters at the request of the Company and shall so state therein;
(h) Rothwell, Figg, Ernst & Manbeck, p.c., patent counsel for the
Company, shall have furnished to the Representatives their written opinion,
dated the Closing Date or the Additional Closing Date, as the case may be,
substantially in the form of Annex C hereto.
The opinion of Rothwell, Figg, Ernst & Manbeck, p.c. shall be rendered
to the Underwriters at the request of the Company and shall so state
therein;
(i) Daniel R. Gropper, P.C., trademark counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in the
form of Annex D hereto.
The opinion of Daniel R. Gropper, P.C. shall be rendered to the
Underwriters at the request of the Company and shall so state therein;
<PAGE> 22
-22-
(j) on the date hereof and the effective date of the most recently filed
post-effective amendment filed on or subsequent to the date hereof to the
Registration Statement and also on the Closing Date or Additional Closing
Date, as the case may be, Deloitte shall have furnished to you letters,
dated the date hereof, in form and substance reasonably satisfactory to
you, containing statements and information of the type customarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained or
incorporated by reference in the Registration Statement and the Prospectus;
(k) on the date hereof PWC shall have furnished to you a letter, dated
the date hereof, in form and substance reasonably satisfactory to you,
containing statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
(l) the Representatives shall have received on and as of the Closing
Date or Additional Closing Date, as the case may be, an opinion of Cahill
Gordon & Reindel, counsel to the Underwriters, with respect to the due
authorization and valid issuance of the Shares, the Registration Statement,
the Prospectus and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(m) the Shares to be delivered on the Closing Date or Additional Closing
Date, as the case may be, shall have been approved for listing on the
Nasdaq National Market, subject to official notice of issuance;
(n) on or prior to the Closing Date or Additional Closing Date, as the
case may be, the Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request; and
(o) the lock-up agreements, between you and each of the Company's
executive officers, directors and certain of its stockholders, delivered to
you on or before the date hereof, shall be in full force and effect on the
Closing Date or Additional Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter
and each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Shares, and each of their respective officers, directors,
employees, affiliates and agents, and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and other
ex-
<PAGE> 23
-23-
penses reasonably incurred in connection with any suit, action or proceeding or
any claim asserted) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use
therein; provided, however, that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter (or
affiliate of such Underwriter which assists such Underwriter in the distribution
of Shares) from whom the persons asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability, unless such failure to send or give a copy of the Prospectus is the
result of noncompliance by the Company with Section 5(a) or (b) hereof.
The Company agrees to indemnify and hold harmless the Designated
Underwriter and each person, if any, who controls the Designated Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (the "Designated Entities"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses reasonably incurred in connection with any suit,
action or proceeding or any claim asserted) (i) caused by any untrue statement
or alleged untrue statement of a material fact contained in any material
prepared by or with the consent of the Company for distribution to Participants
in connection with the Directed Share Program or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
the Designated Entities.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and
<PAGE> 24
-24-
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to any of the
three preceding paragraphs of this Section 7, such person (the "Indemnified
Person") shall promptly notify the person or persons against whom such indemnity
may be sought (each an "Indemnifying Person") in writing, and such Indemnifying
Persons, upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Persons may designate in such proceeding and shall
pay the fees and expenses of such counsel related to such proceeding. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person and not the Indemnifying Persons unless (i) the
Indemnifying Persons and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Persons has failed within a reasonable time
to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both an Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that no
Indemnifying Person shall, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Underwriters, each affiliate of any
Underwriter which assists such Underwriter in the distribution of the Shares and
each of their respective officers, directors, employees, affiliates and agents
and such control persons of Underwriters shall be designated in writing by J.P.
Morgan Securities Inc. and any such separate firm for the Company, its
directors, its officers who sign the Registration Statement and such control
persons of the Company shall be designated in writing by the Company. No
Indemnifying Person shall be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, such
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
<PAGE> 25
-25-
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to the second paragraph of this Section 7 in respect of
any action, suit or proceeding (including any governmental or regulatory
investigation), claim or demand, then in addition to such separate firm for the
Indemnified Party, the Indemnifying Parties shall be liable for the fees and
expenses of not more that one separate firm (in addition to any local counsel)
for the Designated Underwriter and all persons, if any, who control the
Designated Underwriter within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act for the defense of any losses, claims,
damages and liabilities arising out of the Directed Share Program.
If the indemnification provided for in the first three paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares 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 hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company and the total underwriting
discounts and the commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
<PAGE> 26
-26-
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange or the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of the Shares shall have
been suspended on the Nasdaq National Market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak
<PAGE> 27
-27-
or escalation of hostilities or any change in financial markets or any calamity
or crisis that, in the judgment of the Representatives, is material and adverse
and which, in the judgment of the Representatives, makes it impracticable to
market the Shares being delivered at the Closing Date or the Additional Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
9. This Agreement shall become effective upon the later of (i) execution
and delivery hereof by the parties hereto and (ii) release of notification of
the effectiveness of the Registration Statement (or, if applicable, any
post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I hereto bears to the
aggregate number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Shares are not made within 36 hours after such
default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Shares, the Additional Closing Date), but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be un-
<PAGE> 28
-28-
able to perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, the Company agrees to reimburse
the Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and expenses of its counsel) reasonably incurred by the Underwriter in
connection with this Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, each affiliate of any Underwriter which assists such
Underwriter in the distribution of the Shares, any controlling persons referred
to herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
J.P. Morgan Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260 (telefax: 212-648-5705), Attention: Syndicate Department, copy to
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005 (telefax:
212-269-5420), Attention: Gerald S. Tanenbaum, Esq. Notices to the Company shall
be given to it at its office, 3333 Vaca Valley Parkway, Suite 1000, Vacaville,
California 95688, (telefax: 707-446-3917), Attention: John Rakitan, Esq., copy
to Brobeck Phleger & Harrison LLP, One Market, Spear Street Tower, San
Francisco, California 94105 (telefax: 415-442-1010), Attention: Ronald D.
Moskovitz, Esq.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
<PAGE> 29
-29-
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
LARGE SCALE BIOLOGY CORPORATION
By:
-----------------------------------
Name:
Title:
<PAGE> 30
-30-
Accepted: [ ], 2000
J.P. MORGAN SECURITIES INC.
CHASE SECURITIES INC.
WILLIAM BLAIR & COMPANY, L.L.C.
Acting severally on behalf of themselves
and the several Underwriters
listed in Schedule I hereto.
By: J.P. MORGAN SECURITIES INC.
By:
-------------------------------
Name:
Title:
<PAGE> 31
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Underwritten Shares
Underwriter To Be Purchased
----------- -------------------
<S> <C>
J.P. Morgan Securities Inc...............................
Chase Securities Inc.....................................
William Blair & Company, L.L.C...........................
-------------------
Total..............................................
===================
</TABLE>
