APHTON CORPORATION
2,500,000 Shares of Common Stock, $0.001 par value per share
PLACEMENT AGENCY AGREEMENT
September 23, 2002
Life Science Group, Inc.
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Dear Sir or Madam:
Aphton Corporation, a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell 2,500,000
shares (the "Shares") of common stock, par value $0.001 per share (the "Common
Stock"), to certain investors (collectively, the "Investors"). The Company
desires to engage you as its placement agent (the "Placement Agent") in
connection with such issuance and sale. The Shares are described more fully in
the Registration Statement (as hereinafter defined).
The Company hereby confirms as follows its agreements with the Placement
Agent.
1. Agreement to Act as Placement Agent. 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, the Placement Agent
agrees to act as the Company's exclusive placement agent in connection with the
issuance and sale, on a best efforts basis, by the Company of the Shares to the
Investors. Upon the occurrence of the Closing (as hereinafter defined), the
Company shall pay to the Placement Agent 6% of the proceeds received by the
Company from the sale of the Shares as set forth on the cover page of the
Prospectus (as hereinafter defined).
2. Delivery and Payment. Concurrently with the execution and delivery of
this Agreement, the Company, the Placement Agent, and Citibank, N.A., as escrow
agent (the "Escrow Agent"), shall enter into an Escrow Agreement substantially
in the form of Exhibit A attached hereto (the "Escrow Agreement"), pursuant to
which an escrow account will be established, at the Company's expense, for the
benefit of the Company and the Investors (the "Escrow Account"). Prior to the
Closing Date (as hereinafter defined), (i) each of the Investors will deposit in
the Escrow Account an amount equal to the price per Share as shown on the cover
page of the Prospectus multiplied by the number of Shares to be purchased by
such Investor, and (ii) the Escrow Agent will notify the Company and the
Placement Agent in writing whether the Investors have deposited in the Escrow
Account funds in the amount equal to the proceeds of the sale of all of the
Shares offered hereby (the "Requisite Funds"). At 10:00 a.m., New York City
time, on September 26, 2002 or at such other time on such other date as may be
agreed upon by the Company and the Placement Agent but in no event prior to the
date
on which the Escrow Agent shall have received all of the Requisite Funds
(such date is hereinafter referred to as the "Closing Date"), the Escrow Agent
will disburse the Requisite Funds from the Escrow Account to the Company and the
Placement Agent as provided in the Escrow Agreement and the Company shall
deliver the Shares to the Investors, which delivery may be made through the
facilities of the Depository Trust Company. The closing of the sale of the
Shares to the Investors (the "Closing") shall take place at the office of
Stroock & Stroock & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. All
actions taken at the Closing shall be deemed to have occurred simultaneously.
Certificates evidencing the Shares shall be in definitive form and shall be
registered in such names and in such denominations as the Placement Agent shall
request by written notice to the Company.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agent that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a "shelf" registration statement on Form S-3 (Registration No.
333-92058), which has become effective, relating to the Common Stock, under the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Commission
promulgated thereunder. The registration statement, as amended at the time it
became effective, including the exhibits and information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A or 434(d) under the Act, is hereinafter referred to as the "Registration
Statement." No stop order suspending the effectiveness of the Registration
Statement has been issued and, to the Company's knowledge, no proceeding for
that purpose has been initiated or threatened by the Commission. The Company, if
required by the Rules and Regulations of the Commission, proposes to file the
Prospectus (as defined below) with the Commission pursuant to Rule 424(b) of the
Rules and Regulations. 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 at the
time the Registration Statement became effective, is hereinafter referred to as
the "Prospectus," except that if any revised prospectus or prospectus supplement
shall be provided to the Placement Agent by the Company for use in connection
with the offering and sale of the Shares 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 Placement Agent 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 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,
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as amended (the "Exchange Act") on or before the last to occur of the effective
date of the Registration Statement, 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
of the Registration Statement, the date of such Preliminary Prospectus or the
date of the Prospectus, as the case may be, which is incorporated therein by
reference and (ii) any such document so filed.
(b) When the Registration Statement became effective, upon the filing or
first delivery to the Investors of the Prospectus, as of the date hereof, and at
the Closing Date, the Registration Statement (and any post-effective amendment
thereto) and the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment or supplement to the Registration
Statement or the Prospectus) contained and will contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, complied and will comply in all material respects with the 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 (in the light of the
circumstances under which they were made, in the case of the Prospectus) not
misleading, each Preliminary Prospectus, as of the date filed with the
Commission, did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; except that no representation or warranty is made in this
Section 3(b) with respect to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company expressly for
inclusion in any Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, as stated in Section 7(a)
hereof. The Company has not distributed any offering material in connection with
the offering and sale of the Shares, other than the Registration Statement, the
Preliminary Prospectus and the Prospectus.
(c) As of the date of this Agreement, the Company has, and at the Closing
Date will have, an authorized capitalization as set forth in the Registration
Statement and the Prospectus; all of the issued and outstanding shares of
capital stock of the Company, including the Common Stock, have been duly and
validly authorized and issued and are fully paid and non-assessable, have been
issued in compliance with all applicable laws (including, but not limited to,
federal and state securities laws) and were not issued in violation of any
preemptive right, resale right, right of first refusal or similar right.
(d) Except as disclosed in the Registration Statement, each of the Company
and each subsidiary of the Company set forth on Schedule I hereto (each a
"Subsidiary" and, collectively, the "Subsidiaries") is, and at the Closing Date
will be, duly incorporated and is, and at the Closing Date will be, validly
existing as a corporation and is, and at the Closing Date will be, in good
standing under the laws of its respective jurisdiction of incorporation with all
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requisite corporate power and authority to own, lease and operate its respective
properties and to conduct its respective business as conducted and as proposed
to be conducted as described in the Registration Statement and Prospectus.
(e) Each of the Company and the Subsidiaries is, and at the Closing Date
will be, duly qualified or registered to do business as a foreign corporation in
good standing in each jurisdiction in which it conducts its respective business
as conducted, and as proposed to be conducted as described in the Registration
Statement and Prospectus, where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to so qualify, individually or in the aggregate, would not have a
material adverse effect on the business, prospects, properties, financial
condition or results of operation of the Company and the Subsidiaries, taken as
a whole (a "Material Adverse Effect").
(f) The Company has no significant subsidiaries (as defined in Rule 1-02 of
Regulation S-X under the Act) other than the Subsidiaries; other than the
Subsidiaries the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity.
(g) Complete and correct copies of the certificates of incorporation and of
the bylaws of the Company and the Subsidiaries and all amendments thereto have
been delivered to you or included in the Registration Statement, and except as
set forth in the Registration Statement no changes therein will be prior to the
Closing Date.
(h) Except as disclosed in the Registration Statement, all of the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and (except as
otherwise described in this Section 3(h)) are owned by the Company subject to no
security interest, other encumbrance or adverse claims; no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(i) Except as disclosed in the Registration Statement, the Company and each
of the Subsidiaries are, and at the Closing Date will be, in compliance in all
material respects with all applicable laws, orders, rules, regulations,
directives, decrees and judgments.
(j) Except as disclosed in the Registration Statement and prior to Closing,
neither the Company nor any of the Subsidiaries is, or will be, in breach of, or
in default (nor has any event occurred which with notice, lapse of time, or both
would result in any breach of, or constitute a default under), under (a) its
respective certificate of incorporation, charter or by-laws or (b) in the
performance or observance of any obligation, agreement, covenant or condition
contained in any license, indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, or any lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them
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or any of their properties is bound, except in the case of clause (b), for such
breaches or defaults as would not reasonably be expected to have a Material
Adverse Effect.
(k) The execution, delivery and performance of this Agreement and the
Escrow Agreement (together, the "Transaction Documents"), the issuance and sale
of the Shares and the consummation of the transactions contemplated by the
Transaction Documents will not conflict with, or result in any breach of or
constitute a default under (nor constitute any event which with notice, lapse of
time, or both would result in any breach of, or constitute a default under) (i)
any provision of the certificate of incorporation, charter or by-laws of the
Company or any of the Subsidiaries, or (ii) any provision of any license,
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
(iii) any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of the Subsidiaries,
except in the case of clause (ii) for such conflicts, breaches, or defaults,
individually or in the aggregate, as would not reasonably be expected to have a
Material Adverse Effect.
(l) The Company has full legal right, power and authority to enter into and
perform the Transaction Documents and to consummate the transactions
contemplated in the Transaction Documents; each Transaction Document has been
duly authorized, executed and delivered by the Company and is a legal, valid and
binding agreement of the Company enforceable in accordance with its terms,
except (i) as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, or (ii) as any
rights to indemnity or contribution hereunder may be limited by federal and
state securities laws and public policy considerations.
(m) The capital stock of the Company, including the Shares, conforms in all
material respects to the description thereof contained in the Registration
Statement and Prospectus.
(n) The issuance and sale of the Shares has been duly authorized by the
Company; when issued and delivered against payment therefor as provided in this
Agreement, the Shares will be validly issued, fully paid and non-assessable and
the issuance of the Shares will not be subject to any preemptive or similar
rights; except as disclosed in the Registration Statement, no person or entity
holds a right to require or participate in the registration under the Act of the
Shares pursuant to the Registration Statement; no person or entity has a right
of participation or first refusal with respect to the sale of the Shares by the
Company.
(o) Except as disclosed in the Registration Statement and the Prospectus,
there are no contracts, agreements or understandings between the Company or its
Subsidiaries and any person or entity granting such person or entity the right,
contractual or otherwise, to cause the Company to issue to it, or register
pursuant to the Act, any securities or shares of capital stock of the Company
upon the issuance and sale of the Shares, or to require the Company to include
such securities with the Shares registered pursuant to the Registration
Statement, nor does any
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person have preemptive rights, co-sale rights, rights of first refusal or other
rights to purchase any of the Shares other than those that have been expressly
waived before the date hereof.
(p) The form of certificates evidencing the Shares (to the extent such
Shares are certificated) complies with all applicable legal requirements and, in
all material respects, with all applicable requirements of the certificate of
incorporation, charter and bylaws of the Company and the requirements of the
NASD.
(q) No approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with (i) the execution, delivery
and performance by the Company of the Transaction Documents and the consummation
of the transactions contemplated by the Transaction Documents or (ii) the sale
and delivery of the Shares, other than (x) such as have been obtained, or will
have been obtained at the time of purchase under the Act or the Exchange Act,
(y) such approvals as have been obtained in connection with the approval of the
listing of the Shares on the Nasdaq National Market System ("NNMS") and (z) any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being distributed by the Placement Agent.
(r) Ernst & Young LLP, whose report on the consolidated financial
statements of the Company and the Subsidiaries is filed with the Commission as
part of the Registration Statement and Prospectus, are and were during the
periods covered by their reports independent public accountants as required by
the Act.
(s) Each of the Company and the Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, in order to conduct its respective business, unless the failure to
possess such licenses, authorizations, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have Material Adverse Effect; neither the Company
nor any of the Subsidiaries is in violation of, in default under or has received
any notice regarding a possible violation, default or revocation of any such
license, authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company or any of the Subsidiaries the effect of which could reasonably be
expected to have a Material Adverse Effect.
(t) The Prospectus in paper format delivered to the Placement Agent for use
in connection with this offering will be identical in all material respects to
the version of the Prospectus created to be transmitted to the Commission for
filing via ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(u) All legal or governmental proceedings, contracts, leases or documents
of a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have been
so described or filed as required.
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(v) Except as disclosed in the Registration Statement, there are no legal
or governmental proceedings pending or threatened to which the Company or any of
the Subsidiaries or any of their respective officers is a party or of which any
of their respective properties is subject at law or in equity, or before or by
any federal, state, local or foreign governmental or regulatory commission,
which, if determined adversely to the Company or any of its Subsidiaries, could
result in a judgment, decree or order which could reasonably be expected to have
a Material Adverse Effect or prevent consummation of the transactions
contemplated hereby.
(w) The consolidated financial statements of the Company and the
Subsidiaries included or incorporated by reference in the Registration Statement
and the Prospectus present fairly in all material respects the consolidated
financial position of the Company and the Subsidiaries as of the dates indicated
and the consolidated results of operations and cash flows of the Company and the
Subsidiaries for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles as applied
in the United States and on a consistent basis during the periods involved and
in accordance with Regulation S-X promulgated by the Commission; the financial
statement schedules included or incorporated by reference in the Registration
Statement and the Prospectus fairly present in all material respects the
information required to be shown therein; no other financial statements or
schedules are required by Form S-3 or otherwise to be included or incorporated
by reference in the Registration Statement or Prospectus; any pro forma
financial statements and other pro forma financial information included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines for pro forma financial statements,
have been properly compiled on the pro forma bases set forth therein and, in the
opinion of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to reflect the
transaction or circumstances referred to therein.
(x) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development involving a prospective material
adverse change, in the business, prospects, properties or assets described or
referred to in the Registration Statement and the Prospectus, or the results of
operations, condition (financial or otherwise), business or operations of the
Company and the Subsidiaries, whether or not arising in the ordinary course of
business, or (ii) any transaction which is material to the Company or the
Subsidiaries, planned or entered into by the Company or any of the Subsidiaries,
or (iii) any obligation, direct or contingent, which is material to the Company
and the Subsidiaries, incurred by the Company or the Subsidiaries, except
obligations incurred in the ordinary course of business, or (iv) any change in
the capital stock or outstanding indebtedness of the Company or the
Subsidiaries, or (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company. Neither the Company nor the
Subsidiaries has any material contingent obligation which is not disclosed in
the Registration Statement and the Prospectus.
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(y) The Company has filed in a timely manner all reports required to be
filed pursuant to Sections 13, 14, 15(d) of the Exchange Act during the
preceding twelve calendar months and if during such period the Company has
relied on Rule 12b-25(b) under the Exchange Act ("Rule 12b-25(b)") with respect
to a report or a portion of a report, that report or portion of a report has
actually been filed within the time period prescribed by Rule 12b-25(b).
(z) The Company is not and, after giving effect to the offering 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").
(aa) Except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company or any of its Subsidiaries convertible
into or exchangeable for any capital stock of the Company or any such
Subsidiary, or (ii) warrants, rights or options to subscribe for or purchase
from the Company or any such Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company or any such Subsidiary to issue any shares of capital stock, any
such convertible or exchangeable securities or obligation, or any such warrants,
rights or options.
(bb) Each of the Company, the Subsidiaries, and each of their respective
officers, directors and controlling persons has not taken, and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(cc) The Company (i) is not required to register as a "broker" or "dealer"
in accordance with the provisions of the Exchange Act or the rules and
regulations thereunder, and (ii) directly, or indirectly through one or more
intermediaries, does not control any member firm of the NASD.
(dd) The Company has not relied upon the Placement Agent or legal counsel
for the Placement Agent for any legal, tax or accounting advice in connection
with the offering and sale of the Shares.
(ee) Any certificate signed by any officer of the Company or any Subsidiary
delivered to the Placement Agent or to counsel for the Placement Agent pursuant
to or in connection with this Agreement shall be deemed a representation and
warranty by the Company to the Placement Agent as to the matters covered
thereby.
(ff) To the Company's knowledge, all agreements between the Company or any
of the Subsidiaries and third parties expressly referenced in the Prospectus are
legal, valid and binding obligations of the Company or one or more of the
Subsidiaries, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general principles of equity.
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(gg) No relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of the
Subsidiaries, on the other hand, which is required by the Act to be described in
the Registration Statement and the Prospectus that is not so described.
(hh) With such exceptions as could not reasonably be expected to have a
Material Adverse Effect on the Company and the Subsidiaries, taken as a whole,
the Company and the Subsidiaries have good and marketable title in fee simple to
all real property, if any, and good title to all personal property owned by
them, in each case free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages and defects, except such as are disclosed in
the Prospectus or such as do not materially and adversely 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 the Subsidiaries; and any real property and
buildings held under lease by the Company or any Subsidiary are held under
valid, existing and enforceable leases, with such exceptions as are disclosed in
the Prospectus or 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 such
Subsidiary.
(ii) The Company and the Subsidiaries have ownership or license or legal
right to use all material patent, copyright, trade secret and trademark rights
known by it to be necessary to the conduct of the business of the Company and
the Subsidiaries as now conducted (collectively, "Intellectual Property") other
than Intellectual Property generally available on commercial terms from other
sources.
(jj) All material licenses or other material agreements under which (i) the
Company and the Subsidiaries are granted rights in Intellectual Property, other
than Intellectual Property generally available on commercial terms from other
sources, and (ii) the Company or any Subsidiary has granted rights to others in
Intellectual Property owned or licensed by the Company or the Subsidiaries, are
in full force and effect and there is no material default by the Company or any
Subsidiary or, to the Company's knowledge, any other party thereto.
(kk) Each of the Company and the Subsidiaries have taken all reasonable
steps required in accordance with sound business practice and business judgment
to establish and preserve its ownership of all material copyright, trade secret
and other proprietary rights with respect to its products and technology.
(ll) To the Company's knowledge, after due inquiry, the present business,
activities and products of the Company and the Subsidiaries do not infringe any
Intellectual Property of any other person, except where such infringement would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Except as described in documents filed with the Commission, to the
Company's knowledge, no proceeding charging the Company or any Subsidiary with
infringement of any adversely held Intellectual Property has been filed; the
Company and the Subsidiaries are not making unauthorized use of any confidential
information or trade secrets obtained by the Company or its Subsidiaries from
any other person; the
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activities of each of the Company or the Subsidiaries or any of its employees on
behalf of the Company or any Subsidiary do not violate any agreements or
arrangements known to the Company or any Subsidiary which any such employees
have with other persons, if any.
(mm) The Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(nn) Each of the Company and the Subsidiaries have filed on a timely basis
all material federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes shown as
due thereon; and no tax deficiency has been asserted against any such entity,
nor does any such entity know of any tax deficiency which is likely to be
asserted against any such entity which if, determined adversely to any such
entity, could have a Material Adverse Effect; all tax liabilities are adequately
provided for on the respective books of such entities.
(oo) Neither the Company nor any of the Subsidiaries nor, to the best of
the Company's knowledge, any agent, officer or director purporting to act on
behalf of the Company or any of the Subsidiaries has at any time; (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contributions, in violation of law, or (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments required
or allowed by applicable law, or (iii) received or retained any funds in
violation of law or of a character required to be disclosed in the Prospectus.
(pp) In connection with this offering, the Company has not offered and will
not offer shares of its Common Stock or any other securities convertible into or
exchangeable or exercisable for shares of Common Stock in a manner in violation
of the Act; the Company has not distributed and will not distribute any offering
material in connection with the offer and sale of the Shares, other than the
Prospectus, Registration Statement and other materials permitted by the Act.
(qq) The Company has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated.
4. Further Agreements of the Company. The Company covenants and agrees with
the Placement Agent that:
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(a) The Registration Statement has become effective, and if Rule 430A is
used or the filing of the Prospectus is otherwise required under Rule 424(b),
the Company will file the Prospectus (properly completed if Rule 430A has been
used) pursuant to Rule 424(b) within the prescribed time period and will provide
a copy of such filing to the Placement Agent promptly following such filing.
(b) The Company will not, during such period as the Prospectus would be
required by law to be delivered in connection with sales of the Shares by an
underwriter or dealer in connection with the offering contemplated by this
Agreement, file any amendment or supplement to the Registration Statement or the
Prospectus, except as required by law, unless a copy thereof shall first have
been submitted to the Placement Agent within a reasonable period of time prior
to the filing thereof and the Placement Agent shall not have reasonably objected
thereto in good faith.
(c) The Company will notify the Placement Agent promptly, and will, if
requested, confirm such notification in writing, (1) when any post-effective
amendment to the Registration Statement becomes effective, but only during the
period mentioned in Section 4(b); (2) of any request by the Commission for any
amendments to the Registration Statement or any amendment or supplements to the
Prospectus or for additional information, but only during the period mentioned
in Section 4(b); (3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, but only during the
period mentioned in Section 4(b); (4) of becoming aware of the occurrence of any
event during the period mentioned in Section 4(b) that in the judgment of the
Company makes any statement made in the Registration Statement or the Prospectus
untrue in any material respect or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading;
and (5) of receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement in connection with the offering
contemplated hereby, the Company will make every reasonable effort to obtain the
withdrawal of any such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
the Placement Agent promptly of all such filings.
(d) If, at any time when a Prospectus relating to the Shares is required to
be delivered under the Act, the Company becomes aware of the occurrence of any
event as a result of which the Prospectus, as then amended or supplemented,
would, in the reasonable judgment of counsel to the Company or counsel to the
Placement Agent, include 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, or the
Registration Statement, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of
11
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,
in the reasonable judgment of counsel to the Company or counsel to the Placement
Agent, at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Act or the Rules and Regulations, the Company will
promptly notify the Placement Agent and, subject to Section 4(b) hereof, 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 Agent, without charge, such number of copies
thereof as the Placement Agent may reasonably request. The Company consents to
the use of the Prospectus or any amendment or supplement thereto by the
Placement Agent, and the Placement Agent agrees to provide to each Investor,
prior to the Closing, a copy of the Prospectus and any amendments or supplements
thereto.
(e) The Company will furnish to the Placement Agent and its counsel,
without charge in New York City (i) one copy of the Registration Statement,
including financial statements and schedules, and all exhibits thereto and (ii)
so long as a prospectus relating to the Shares is required to be delivered under
the Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Placement Agent may reasonably request.
(f) The Company will comply with all the undertakings contained in the
Registration Statement.
(g) Prior to the sale of the Shares to the Investors, the Company will
cooperate with the Placement Agent and its counsel in connection with the
registration or qualification of the Shares for offer and sale under the state
securities or Blue Sky laws of such jurisdictions as the Placement Agent may
reasonably request; provided, that in no event shall the Company be obligated to
(i) qualify to do business in any jurisdiction where it is not now so qualified,
(ii) take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject, (iii) become a dealer of securities
or (iv) become subject to taxation in any jurisdiction where it is not now so
subject.
(h) The Company will apply the net proceeds from the offering and sale of
the Shares in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(i) The Company will use its reasonable best efforts to ensure that the
Shares are listed on the NNMS at the time of the Closing.
(j) For a period of one year from the Closing Date, the Company will
furnish to the Placement Agent, as soon as they are available, copies of all
reports or other communications (financial or other) furnished to holders of the
Shares, other than any such reports or communications filed with the Commission
pursuant to the Commission's ▇▇▇▇▇ system.
5. Expenses. Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay all costs
and expenses
12
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating to (1)
the preparation, printing and filing of the Registration Statement (including
each pre- and post-effective amendment thereto) and exhibits thereto, each
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, (2) the preparation and delivery of certificates representing the
Shares, (3) furnishing (including costs of shipping and mailing) such copies of
the Registration Statement (including all pre- and post-effective amendments
thereto), the Prospectus and any Preliminary Prospectus, and all amendments and
supplements to the Prospectus, as may be requested for use in connection with
the direct placement of the Shares, (4) the listing of the Common Stock on the
NNMS, (5) the registration or qualification of the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions designated pursuant
to Section 4(g), including the reasonable fees, disbursements and other charges
of counsel to the Placement Agent in connection therewith and the preparation
and printing of preliminary, supplemental and final Blue Sky memoranda, (6)
fees, disbursements and other charges of counsel to the Company, (7) fees and
disbursements of the Accountants incurred in delivering the letter(s) described
in 6(g) of this Agreement and (8) the fees of the Escrow Agent. The Company
shall reimburse the Placement Agent, upon request, for all reasonable
out-of-pocket costs and expenses, including the fees and disbursements of its
counsel.
6. Conditions of the Obligations of the Placement Agent. The obligations of
the Placement Agent hereunder are subject to the following conditions:
(a) (i) No stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceedings for that purpose shall be pending or threatened by any securities or
other governmental authority (including, without limitation, the Commission),
(ii) any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission or such authorities and (iii) after the date hereof no amendment
or supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Placement Agent and the
Placement Agent did not reasonably object thereto in good faith.
(b) Since the respective dates as of which information is given in the
Registration Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto), (i) there shall not have been a Material
Adverse Change whether or not arising from transactions in the ordinary course
of business, in each case other than as set forth in or contemplated by the
Registration Statement (exclusive of any amendment thereof) or the Prospectus
(exclusive of any supplement thereto), and (ii) the Company shall not have
sustained any material loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
(exclusive of any amendment thereof) or the Prospectus (exclusive of any
supplement thereto), if in the judgment of the Placement Agent any such
development
13
makes it impracticable or inadvisable to consummate the sale and delivery of the
Shares to Investors at the public offering price.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company or any of its officers or
directors in their capacities as such, before or by any Federal, state or local
court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, which litigation or proceeding is reasonably expected
by management to have a Material Adverse Effect.
(d) Each of the representations and warranties of the Company contained
herein shall be true and correct in all material respects at the Closing Date,
as if made on such date, and all covenants and agreements herein contained to be
performed on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date shall
have been duly performed, fulfilled or complied with in all material respects.
(e) The Company shall furnish you at the time of purchase an opinion of
White & Case LLP, counsel for the Company, addressed to the Placement Agent and
dated the Closing Date, in the form of Exhibit F hereto, with only such
departures from such form as counsel for the Placement Agent shall have
approved.
(f) The Company shall furnish you at the time of purchase an intellectual
property opinion of White & Case LLP, addressed to the Placement Agent and dated
the Closing Date, in the form of Exhibit G hereto, with only such departures
from such form as counsel for the Placement Agent shall have approved.
(g) At the Closing Date, Ernst & Young LLP shall have furnished to the
Placement Agent a letter, dated the date of its delivery, addressed to the
Placement Agent and in form and substance reasonably satisfactory to the
Placement Agent, containing statements and information of the type customarily
included in accountants' "comfort letters" to underwriters.
(h) At the Closing Date, there shall be furnished to the Placement Agent a
certificate, dated the date of its delivery, signed by the President and Chief
Executive Officer or a Senior Vice President and the principal financial or
accounting officer of the Company, each in his capacity as such, in form and
substance reasonably satisfactory to the Placement Agent to the effect that each
signer has carefully examined the Registration Statement and the Prospectus and
that to each of such person's knowledge:
(i) (A) As of the date of such certificate, (x) the Registration
Statement does not contain any 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 not misleading and (y) the Prospectus does not
contain any 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 light of the circumstances under which they were made, not
misleading and (B) no event has occurred
14
as a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein not untrue or misleading in any material
respect.
(ii) Each of the representations and warranties of the Company
contained in this Agreement are true and correct in all material respects as if
such representations and warranties were made on the Closing Date.
(iii) Each of the covenants and agreements required in this Agreement
to be performed by the Company on or prior to the Closing Date and each
condition required herein to be fulfilled or complied with by the Company on or
prior to the Closing Date has been duly performed, fulfilled or complied with in
all material respects.
(iv) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission.
(v) Subsequent to the date of the most recent financial statements in
the Prospectus, there has been no material adverse change in the financial
position or results of operations of the Company, except as set forth in or
contemplated by the Prospectus.
(i) The Shares shall be qualified for sale in such states as the Placement
Agent may reasonably request and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing Date; provided
that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to taxation or general service of process in any jurisdiction where
it is not now so subject.
(j) The Company shall have furnished or caused to be furnished to the
Placement Agent such certificates, in addition to those specifically mentioned
herein, as the Placement Agent may have reasonably requested as to the accuracy
and completeness, in all material respects, at the Closing Date of any statement
in the Registration Statement or the Prospectus, as to the accuracy, in all
material respects, at the Closing Date of the representations and warranties of
the Company, as to the performance by the Company of its obligations hereunder,
or as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Placement Agent.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless the Placement
Agent, its partners, directors and officers, and any person who controls such
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, the Placement
Agent or any such person may incur under the Act, the Exchange Act, the common
law or otherwise, insofar as such loss, damage, expense, liability or claim
arises
15
out of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company) or
in a Prospectus (the term Prospectus for the purpose of this Section 7 being
deemed to include any Preliminary Prospectus, the Prospectus and the Prospectus
as amended or supplemented by the Company), or arises out of or is based upon
any omission or alleged omission to state a material fact required to be stated
in either such Registration Statement or Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of the Placement Agent to
the Company expressly for use with reference to the Placement in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or such
Prospectus or necessary to make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against the Placement Agent or any such person in respect of which indemnity may
be sought against the Company pursuant to the foregoing paragraph, the Placement
Agent or such person shall promptly notify the Company in writing of the
institution of such Proceeding and the Company shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all reasonable fees and expenses; provided,
however, that the omission to so notify the Company shall not relieve the
Company from any liability which the Company may have to the Placement Agent or
any such person or otherwise. The Placement Agent or such person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Placement Agent or of
such person unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such Proceeding or the
Company shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such Proceeding
or such indemnified party or parties shall have reasonably concluded based on
advice of counsel that there may be defenses available to it or them which are
different from, additional to or in conflict with those available to the Company
(in which case the Company shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties), in any of which
events such reasonable fees and expenses shall be borne by the Company and paid
as incurred (it being understood, however, that the Company shall not be liable
for the reasonable expenses of more than one separate counsel (in addition to
any local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Company shall not be liable for any settlement of any
Proceeding effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless the
Placement Agent and any such person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of
16
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) The Placement Agent agrees to indemnify, defend and hold harmless the
Company, its directors and officers, and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and the successors and assigns of all of the foregoing persons from and against
any loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or any such person may
incur under the Act, the Exchange Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by or on behalf of the
Placement Agent to the Company expressly for use with reference to the Placement
Agent in the Registration Statement (or in the Registration Statement as amended
by any post-effective amendment thereof by the Company) or in a Prospectus, or
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such information
not misleading.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against the Placement Agent pursuant to
the foregoing paragraph, the Company or such person shall promptly notify the
Placement Agent in writing of the institution of such Proceeding and the
Placement Agent shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify the Placement Agent shall not relieve the Placement Agent from any
liability which the Placement Agent may have to the Company or any such person
or otherwise. The Company or such person shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company or such person unless the employment of such counsel
shall have been authorized in writing by the Placement Agent in connection with
the defense of such Proceeding or the Placement Agent shall not have, within a
reasonable period of time in light of the circumstances, employed counsel to
have charge of the defense of such Proceeding or such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or
17
additional to or in conflict with those available to the Placement Agent (in
which case the Placement Agent shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties, but the Placement
Agent may employ counsel and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of the Placement Agent), in any
of which events such reasonable fees and expenses shall be borne by the
Placement Agent and paid as incurred (it being understood, however, that the
Placement Agent shall not be liable for the reasonable expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Placement Agent
shall be liable for any settlement of any such Proceeding effected without the
written consent of the Placement Agent but if settled with the written consent
of the Placement Agent, the Placement Agent agrees to indemnify and hold
harmless the Company and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 business
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding.
(c) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 7 in respect
of any losses, damages, expenses, liabilities or claims referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agent 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 of the
Placement Agent on the other in connection with the statements or omissions
which resulted in such losses, damages, expenses, liabilities or claims, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Placement Agent on the other shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company from the sale of
the Shares and the total fee received by the Placement Agent in connection
therewith, in
18
each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Shares. The relative fault of the Company on the
one hand and of the Placement Agent on the other shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the Company or by the Placement Agent and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, damages, expenses, liabilities and claims referred to in
this subsection shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating, preparing to
defend or defending any Proceeding.
(d) The Company and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 7, in no event shall the
Placement Agent be required to contribute any amount in excess of the fee
received by it with respect to the offering exceeds the amount of any damage
which the Placement Agent has otherwise been required to pay by reason of such
untrue statement or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this Section 7
and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the Placement Agent, its partners,
directors or officers or any person (including each partner, officer or director
of such person) who controls the Placement Agent within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors or officers or any person who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and
shall survive any termination of this Agreement or the issuance and delivery of
the Shares. The Company and the Placement Agent agree promptly to notify each
other of the commencement of any Proceeding against it and, in the case of the
Company, against any of the Company's officers or directors in connection with
the issuance and sale of the Shares, or in connection with the Registration
Statement or Prospectus.
8. Termination.
(a) The obligations of the Placement Agent under this Agreement may be
terminated, in the absolute discretion of the Placement Agent, at any time prior
to the Closing Date, by notice to the Company from the Placement Agent, without
liability on the part of the Placement Agent to the Company if, prior to
delivery and payment for the Shares, (i) trading generally shall have been
suspended or materially limited on or by any of the NNMS, the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
19
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade; (ii) trading of any securities issued or
guaranteed by the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities shall have been declared by federal or New York State authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities within
or outside the United States, that, in the judgment of the Placement Agent, is
material and adverse and makes it impracticable or inadvisable to proceed with
the offering, sale or delivery of the Shares on the Closing Date on the terms
and in the manner contemplated by this Agreement and Prospectus.
(b) The obligations of the parties under this Agreement shall be
automatically terminated in the event that notice is given by the Placement
Agent to the Escrow Agent prior to the close of business on the date scheduled
for receipt of the Requisite Funds, that the Requisite Funds have not been
deposited by the Investors into the Escrow Account by the close of business on
the Closing Date.
(c) If this Agreement shall be terminated pursuant to any of the provisions
hereof (otherwise than pursuant to Section 8(b) and other than a termination of
the Placement Agent's Engagement pursuant to Section 8(a)), or if the sale of
the Shares provided for herein is not consummated because any condition to the
obligations of the Placement Agent set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by the Placement Agent, reimburse you for all reasonable out-of-pocket
expenses incurred in connection herewith.
9. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, ▇▇ ▇.▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (facsimile:
305-374-7336), with copy to White & Case LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq. (facsimile:
212-354-8113), or (b) if to the Placement Agent, at the office of Life Science
Group, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇
▇▇▇▇▇▇ (facsimile: 203-422-0601), with a copy to Stroock & Stroock & ▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(facsimile: 212-806-6006). Any such notice shall be effective only upon receipt.
Any notice under Section 7 may be made by facsimile or telephone, but if so made
shall be subsequently confirmed in writing.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the Placement
Agent set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Company, any of its officers
or directors, the Placement Agent or any controlling person referred to in
Section 7 hereof and (ii) delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections 5,
7 and 8 hereof
20
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the Placement Agent, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
indemnification and contribution contained in Sections 7(a) and (c) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agent and any person or persons who control the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnification and contribution contained in Sections
7(b) and (c) of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Shares shall be deemed to be a successor Investor by reason merely of such
purchase.
12. Applicable Law. The validity and interpretations of this Agreement, and
the terms and conditions set forth herein, 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.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto as to the matters covered hereby and supersedes all
prior understandings, written or oral, relating to such subject matter.
21
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Placement Agent.
Very truly yours,
APHTON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
Confirmed as of the date first
above mentioned:
LIFE SCIENCE GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
SCHEDULE I
Subsidiaries of the Company
Aphton (BVI) Corporation
EXHIBIT A
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of September 23, 2002, by and among Aphton
Corporation, a Delaware corporation (the "Company"), Life Science Group, Inc.
(the "Placement Agent"), and Citibank, N.A., a national banking institution
incorporated under the laws of the United States of America (the "Escrow
Agent").
WHEREAS, the Company proposes to sell an aggregate of 2,500,000 shares of
its common stock, par value $0.0001 per share (the "Shares"), all as described
in the Company's prospectus supplement to its prospectus dated July 17, 2002,
which forms a part of a registration statement on Form S-3 (Registration No.
333-92058) (which, together with all amendments or supplements thereto is
referred to herein as the "Registration Statement");
WHEREAS, the Shares are being offered by the Company to investors whom the
Placement Agent has introduced to the Company, pursuant to registration under
the Securities Act of 1933, as amended, and pursuant to registration or
exemptions from registration under state securities laws;
WHEREAS, the offering of the Shares will terminate on September 26, 2002
(the "Closing Date") and, if subscriptions for the total number of Shares being
offered pursuant to the Registration Statement have not been received by the
Company on or before the Closing Date, no Shares will be sold and all payments
made by subscribers will be refunded by the Escrow Agent; and
WHEREAS, with respect to all subscription payments received from
subscribers, the Company proposes to establish an escrow account with the Escrow
Agent at the office of its Escrow Administration, Citibank, N.A., ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇.
NOW THEREFORE, it is agreed as follows:
1. Establishment of Escrow. The Escrow Agent hereby agrees to receive and
disburse the proceeds from the offering of the Shares in accordance herewith.
2. Deposit of Escrowed Property. The Placement Agent, on behalf of the
subscribers for the Shares, shall from time to time, but in no event later than
12:00 noon on the date following the date of receipt by the Placement Agent,
cause to be wired to or deposited with, or, cause the subscribers for the Shares
to wire or deposit with, the Escrow Agent funds or checks of the subscribers
delivered in payment for Shares (the "Escrowed Property"). Any checks delivered
to the Escrow Agent pursuant to the terms hereof shall be made payable to or
endorsed to the order of the Escrow Agent. The Escrow Agent upon receipt of such
checks shall
present such checks for payment to the drawee-bank under such checks. Any checks
not honored by the drawee-bank thereunder after the first presentment for
payment shall be returned to the Placement Agent, on behalf of such subscriber,
in the same manner notices are delivered pursuant to Section 6. Upon receipt of
funds or checks from the Placement Agent, the Escrow Agent shall credit such
funds and the amount of such checks to a non-interest-bearing account (the
"Escrow Account") held by the Escrow Agent. If following the credit of the
amount of any check to the Escrow Account such check is dishonored, the Escrow
Agent, if such dishonored check amount shall have been invested pursuant to
Section 3, shall liquidate to the extent of such dishonored check amount such
investments and debit the Escrow Account for the amount of such dishonored
check.
3. Investment of Escrowed Property. The Escrow Agent on or before the
second business day ("business day" defined for purposes of this Escrow
Agreement as any day which is not a Saturday, a Sunday or a day on which banks
or trust companies in the City and State of New York are authorized or obligated
by law, regulation or executive order to remain closed) succeeding (unless such
deposit is made in federal or other immediately available or "same day" funds,
in which case, on the business day next succeeding) the credit of any
subscription proceeds to the Escrow Account pursuant to Section 2 and until
release of such proceeds in accordance with the terms hereof, shall deposit such
proceeds in a non-interest bearing account, pursuant to Rule 15c2-4 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended.
4. List of Subscribers. The Placement Agent shall furnish or cause to be
furnished to the Escrow Agent, at the time of each deposit of funds or checks
pursuant to Section 2, a list, substantially in the form of Exhibit A hereto,
containing the name of, the address of, the number of Shares subscribed for by,
the subscription amount delivered to the Escrow Agent on behalf of, and the
social security or taxpayer identification number, if applicable, of each
subscriber whose funds are being deposited, and to which is attached a completed
W-9 form (or, in the case of any subscriber who is not a United States citizen
or resident, a W-8 form) for each listed subscriber. The Escrow Agent shall
notify the Placement Agent and the Company of any discrepancy between the
subscription amounts set forth on any list delivered pursuant to this Section 4
and the subscription amounts received by the Escrow Agent. The Escrow Agent is
authorized to revise such list to reflect the actual subscription amounts
received and the release of any subscription amounts pursuant to Section 5.
5. Withdrawal of Subscription Amounts. (a) If the Escrow Agent shall
receive a notice, substantially in the form of Exhibit B hereto (an "Offering
Termination Notice"), from the Company, the Escrow Agent shall promptly after
receipt of such Offering Termination Notice and the clearance of all checks
received by the Escrow Agent as Escrowed Property, liquidate any investments
that shall have been made pursuant to Section 3 and send to each subscriber
listed on the list held by the Escrow Agent pursuant to Section 4 whose total
subscription amount shall not have been released pursuant to paragraph (b) or
(c) of this Section 5, in the manner set forth in paragraph (e) of this Section
5, a check to the order of such subscriber in the amount attributable to such
subscriber of the remaining subscription amount held by the Escrow Agent as set
forth on such list held by the Escrow Agent.
(b) In the event that (i) the Shares have been subscribed for and funds in
respect thereof shall have been deposited with the Escrow Agent on or before the
Closing Date and (ii) no Offering Termination Notice shall have been delivered
to the Escrow Agent, the Company and the Placement Agent, shall deliver to the
Escrow Agent a joint notice, substantially in the form of Exhibit C hereto (a
"Closing Notice"), designating the date on which Shares are to be sold and
delivered to the subscribers thereof as the "Closing Date", which date shall not
be earlier than the clearance of any checks received by the Escrow Agent as
Escrowed Property, the proceeds of which are to be distributed on such Closing
Date, and identifying the subscribers and the number of Shares to be sold to
each thereof on such Closing Date. Such Closing Notice, unless one of the
parties objects, shall be delivered not less than one (1) nor more than three
(3) business days prior to such Closing Date. The Escrow Agent, after receipt of
such Closing Notice and the clearance of such checks:
(i) on or prior to the Closing Date identified in such Closing Notice,
shall liquidate any investments that shall have been made pursuant to Section 3
to the extent of the subscription amount to be distributed pursuant to the
immediately succeeding clause (ii); and
(ii) on such Closing Date, pay to the Company and the Placement Agent,
in federal or other immediately available funds and otherwise in the manner and
amount specified by the Company and the Placement Agent in such Closing Notice,
an amount equal to the aggregate of the subscription amounts paid by the
subscribers identified in such Closing Notice for the Shares to be sold on such
Closing Date as set forth on the list held by the Escrow Agent pursuant to
Section 4.
(c) If at any time and from time to time prior to the release of any
subscriber's total subscription amount pursuant to paragraph (a) or (b) of this
Section 5 from escrow, the Company shall deliver to the Escrow Agent a notice,
substantially in the form of Exhibit D hereto (a "Subscription Termination
Notice"), to the effect that any or all of the subscriptions of such subscriber
have been rejected by the Company (a "Rejected Subscription"), the Escrow Agent
promptly after receipt of such Subscription Termination Notice and, if such
subscriber delivered a check in payment of its Rejected Subscription, after the
clearance of such check, shall liquidate, to the extent of the sum of such
subscriber's Rejected Subscription amount as set forth in the Subscription
Termination Notice, any investments that shall have been made pursuant to
Section 3 and send to such subscriber, in the manner set forth in paragraph (e)
of this Section 5, a check to the order of such subscriber in the amount of such
Rejected Subscription amount.
(d) For the purposes of this Section 5, any check that the Escrow Agent
shall be required to send to any subscriber shall be sent to such subscriber by
first class mail, postage prepaid, at such subscriber's address furnished to the
Escrow Agent pursuant to Section 4.
6. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be (a) delivered by hand or (b)
sent by mail, registered or certified, with proper postage prepaid, and
addressed as follows:
if to the Company, to:
Aphton Corporation
▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
with a copy to:
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile:
if to the Placement Agent, to:
Life Science Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Escrow Agent, to:
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile:
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if
mailed, shall be effective when deposited in the mails, except that notices and
communications to the Escrow Agent and notices of changes of address shall not
be effective until received.
7. Concerning the Escrow Agent. To induce the Escrow Agent to act
hereunder, it is further agreed by the Company and Placement Agent that:
(a) The Escrow Agent shall not be under any duty to give the Escrowed
Property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Escrow Agreement against the Escrow Agent.
The Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, and the other parties hereto shall jointly and
severally indemnify and hold harmless the Escrow Agent (and any successor Escrow
Agent) from and against any and all losses, liabilities, claims, actions,
damages and expenses, including reasonable attorneys' fees and disbursements,
arising out of and in connection with this Escrow Agreement. Without limiting
the foregoing, the Escrow Agent shall in no event be liable in connection with
its investment or reinvestment of any cash held by it hereunder in good faith,
in accordance with the terms hereof, including without limitation any liability
for any delays (not resulting from gross negligence or willful misconduct) in
the investment or reinvestment of the Escrowed Property.
(d) The Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of counsel with respect
to any matter relating to this Escrow Agreement and shall not be liable for any
action taken or omitted in good faith and in accordance with such advice.
(f) The Escrow Agent does not have any interest in the Escrowed Property
deposited hereunder but is serving as escrow holder only. Any payments of income
from the Escrow Account shall be subject to withholding regulations then in
force with respect to United States taxes. The parties hereto will provide the
Escrow Agent with appropriate W-9 forms for tax I.D., number certification, or
non-resident alien certifications.
This paragraph (f) and paragraph (c) of this Section 7 shall survive
notwithstanding any termination of this Escrow Agreement or the resignation of
the Escrow Agent.
(g) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectibility of any security or other document or
instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any party as to the
wisdom of selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor escrow agent) at any time may be
discharged from its duties and obligations hereunder by the delivery to it of
notice of termination signed by both the Company and the Placement Agent or at
any time may resign by giving written notice to such effect to the Company and
the Placement Agent. Upon any such termination or resignation, the Escrow Agent
shall deliver the Escrowed Property to any successor escrow agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction if no such successor escrow agent is agreed upon, whereupon the
Escrow Agent shall be discharged of and from any and all further obligations
arising in connection with this Escrow Agreement. The termination or resignation
of the Escrow Agent shall take effect on the earlier of (i) the appointment of a
successor (including a court of competent jurisdiction) or (ii) the day that is
30 days after the date of delivery: (A) to the Escrow Agent of the other
parties' notice of termination or (B) to the other parties hereto of the Escrow
Agent's written notice of resignation. If at that time the Escrow Agent has not
received a designation of a successor escrow agent, the Escrow Agent's sole
responsibility after that time shall be to keep the Escrowed Property safe until
receipt of a designation of successor escrow agent or a joint written
disposition instruction by the other parties hereto or any enforceable order of
a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the contents of any
writing of any third party contemplated herein as a means to resolve disputes
and may rely without any liability upon the contents thereof.
(k) In the event of any disagreement among or between the other parties
hereto and/or the subscribers of the Shares resulting in adverse claims or
demands being made in connection with the Escrowed Property, or in the event
that the Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled to retain the Escrowed Property
until the Escrow Agent shall have received (i) a final and non-appealable order
of a court of competent jurisdiction directing delivery of the Escrowed Property
or (ii) a written agreement executed by the other parties hereto and consented
to by the subscribers directing delivery of the Escrowed Property, in which
event the Escrow Agent shall disburse the Escrowed Property in accordance with
such order or agreement. Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to the Escrow Agent to the effect that said court order is final and
non-appealable. The Escrow Agent shall act on such court order and legal opinion
without further question.
(l) As consideration for its agreement to act as Escrow Agent as herein
described, the Company agrees to pay the Escrow Agent fees determined in
accordance with the terms set forth on Exhibit E hereto (made a part of this
Escrow Agreement as if herein set forth). In addition, the Company agrees to
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel).
(m) The other parties hereto irrevocably (i) submit to the jurisdiction of
any New York State or federal court sitting in New York City in any action or
proceeding arising out of or relating to this Escrow Agreement, (ii) agree that
all claims with respect to such action or proceeding shall be heard and
determined in such New York State or federal court and (iii) waive, to the
fullest extent possible, the defense of an inconvenient forum. The other parties
hereby consent to and grant any such court jurisdiction over the persons of such
parties and over the subject matter of any such dispute and agree that delivery
or mailing of process or other papers in connection with any such action or
proceeding in the manner provided hereinabove, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
(n) No printed or other matter in any language (including, without
limitation, the Registration Statement, notices, reports and promotional
material) which mentions the Escrow Agent's name or the rights, powers, or
duties of the Escrow Agent shall be issued by the other parties hereto or on
such parties' behalf unless the Escrow Agent shall first have given its specific
written consent thereto. The Escrow Agent hereby consents to the use of its name
and the reference to the escrow arrangement in the Registration Statement.
8. Miscellaneous.
(a) This Escrow Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their respective successors and assigns,
heirs, administrators and representatives, and the subscribers of the Shares and
shall not be enforceable by or inure to the benefit of any other third party
except as provided in paragraph (i) of Section 7 with respect to the termination
of, or resignation by, the Escrow Agent. No party may assign any of its rights
or obligations under this Escrow Agreement without the written consent of the
other parties.
(b) This Escrow Agreement shall be construed in accordance with and
governed by the internal law of the State of New York (without reference to its
rules as to conflicts of law).
(c) This Escrow Agreement may only be modified by a writing signed by all
of the parties hereto and consented to by the subscribers of the Shares
adversely affected by such modifications. No waiver hereunder shall be effective
unless in a writing signed by the party to be charged.
(d) This Escrow Agreement shall terminate upon the payment pursuant to
Section 5 of all amounts held in the Escrow Account.
(e) The section headings herein are for convenience only and shall not
affect the construction thereof. Unless otherwise indicated, references to
Sections are to Sections contained herein.
(f) This Escrow Agreement may be executed in one or more counterparts but
all such separate counterparts shall constitute but one and the same instrument;
provided that, although executed in counterparts, the executed signature pages
of each such counterpart may be affixed to a single copy of this Agreement which
shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed as of the day and year first above written.
APHTON CORPORATION
By:
-----------------------------
Name:
Title:
LIFE SCIENCE GROUP, INC.
By:
----------------------------
Name:
Title:
CITIBANK, N.A.
By:
---------------------------
Name:
Title:
EXHIBIT A
SUMMARY OF CASH RECEIVED
NEW PARTICIPANT DEPOSIT
Date:
Deposit Date: List Number:
Investment Date: Page of
Batch Number: Approved By
JOB#:
For Bank use only
TITLE:
------------------------------------------------------------------------------------------------------------------
* * AMOUNT OF * TAX ID NO./ | | FOR BANK
NAME * DEPOSIT * SHARES * ADDRESS | SOC.SEC. NO. * USE ONLY
------------------------------------------------------------------------------------------------------------------
* * * * * TAX CODE
* * * * * * EXEMPT(Y/N)
* * * * * * W-9(YR) NRA
* * * * * * W-8(YR)
* * * * * * 1008(87)
* * * * * *
-------------------------------------------------------------------------------------------------------------------
Broker Misc. * * * * Misc. II * Misc. III | TAX CODE
* * * * * * EXEMPT(Y/N)
* * * * * * W-9(YR) NRA
* * * * * * W-8(YR)
* * * * * * 1008(87)
* * * * * *
-------------------------------------------------------------------------------------------------------------------
Broker Misc. * * * * Misc. II * Misc. III | TAX CODE
* * * * * * EXEMPT(Y/N)
* * * * * * W-9(YR) NRA
* * * * * * W-8(YR)
* * * * * * 1008(87)
* * * * * *
-------------------------------------------------------------------------------------------------------------------
Broker Misc. * * * * Misc. II * Misc. III | TAX CODE
* * * * * * EXEMPT(Y/N)
* * * * * * W-9(YR) NRA
* * * * * * W-8(YR)
* * * * * * 1008(87)
* * * * * *
-------------------------------------------------------------------------------------------------------------------
A-1
Broker Misc. * * * * Misc. II * Misc. III |
* * * * * *
A-2
EXHIBIT B
[Form of Offering Termination Notice]
September __, 2002
Citibank N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
Pursuant to Section 5(a) of the Escrow Agreement dated as of September 20,
2002 (the "Escrow Agreement") among Aphton Corporation (the "Company"), Life
Science Group, Inc. and you, the Company hereby notifies you of the termination
of the offering of the Shares (as that term is defined in the Escrow Agreement)
and directs you to make payments to subscribers as provided for in Section 5(a)
of the Escrow Agreement.
Very truly yours,
APHTON CORPORATION
By:
-----------------------
Name:
Title:
B-1
EXHIBIT C
[Form of Closing Notice]
September __, 2002
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
Pursuant to Section 5(b) of the Escrow Agreement dated as of September 20,
2002, (the "Escrow Agreement") among Aphton Corporation (the "Company"), Life
Science Group, Inc. and you, the Company hereby certifies that it has received
subscriptions for the Shares (as that term is defined in the Escrow Agreement)
and the Company will sell and deliver Shares to the subscribers thereof at a
closing to be held on September 26, 2002 (the "Closing Date"). The names of the
subscribers concerned, the number of Shares subscribed for by each of such
subscribers and the related subscription amounts are set forth on Schedule I
annexed hereto.
Please accept these instructions as standing instructions for the closing
to be held on the Closing Date. The parties hereto certify that they do not wish
to have a call back regarding these instructions.
We hereby request that the aggregate subscription amount be paid to the
Placement Agent and us as follows:
1. To the Company, $_________;
2. To Life Science Group, Inc., $_________; and
3. To the Escrow Agent, $____.
C-1
These instructions may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
Very truly yours,
APHTON CORPORATION
By:
------------------------------------
Name:
Title:
LIFE SCIENCE GROUP, INC.
By:
------------------------------------
Name:
Title:
C-2
SCHEDULE I
----------
Name of Number of Subscription
Subscriber Shares Amount
---------- ------ ------
EXHIBIT D
[Form of Subscription Termination Notice]
September __, 2002
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
Pursuant to Section 5(c) of the Escrow Agreement dated as of October 16,
2001 (the "Escrow Agreement") among Aphton Corporation (the "Company"), Life
Science Group, Inc. and you, the Company hereby notifies you that the following
subscription(s) have been rejected:
Amount of Dollar
Subscribed Amount of
Name of Shares Rejected
Subscriber Rejected Subscription
--------- -------- ------------
Very truly yours,
APHTON CORPORATION
By:
-----------------------------------
Name:
Title:
D-1
EXHIBIT E
Fee to Citibank, N.A.: $_________.
Exhibit F
Opinion of White & Case LLP
[Aphton Corporation - Form of Opinion]
Exhibit G
Intellectual Property Opinion of White & Case LLP
[Form of Intellectual Property Opinion]