Common Stock
($0.001 par value)
UNDERWRITING AGREEMENT
March 18, 2002
Xxxxxx Xxxxxx & Company, Inc.
Fifty Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Aphton Corporation, a Delaware corporation (the "Company"), proposes to
offer and sell up to 1,200,000 shares (the "Shares") of the Company's common
stock, $0.001 par value (the "Common Stock"). Such Shares are to be offered and
placed by Xxxxxx Xxxxxx & Company, Inc. (the "Underwriter") on a best efforts
basis, as agent and not as principal. The Common Stock is described more fully
in each Final Prospectus, referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with the Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on such form (file number 333-82344), which has become effective, for the
registration under the Act of the Shares. Such registration statement, as
amended as of the date of this Agreement, meets the requirements set forth in
Rule 415(a)(1) under the Act and complies in all other material respects with
the Act and the rules and regulations promulgated thereunder, including, without
limitation, Regulation S-K. Such registration statement, including the exhibits
thereto, as amended as of the date of this Agreement, is hereinafter called the
"Registration Statement"; the prospectus in the form in which it appears in the
Registration Statement is hereinafter called the "Basic Prospectus"; and such
supplemented form of prospectus, including any final prospectus in preliminary
form, in the form in which it shall be filed with the Commission pursuant to
Rule 424 or Rule 434 (including the Basic Prospectus as so supplemented), is
hereinafter called the "Final Prospectus." Unless expressly otherwise provided
herein, any reference herein to the Registration Statement, the Basic Prospectus
or any Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or before the date of this Agreement, or the issue date of the Basic
Prospectus or any Final Prospectus, as the case may be; and any reference herein
to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus or any Final Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange Act
after the date of this Agreement, or the issue date of the Basic Prospectus or
any Final Prospectus, as the case may be,
and deemed to be incorporated therein by reference. At the time of purchase of
any Shares (defined in Section 3 below), the Shares will be duly approved for
quotation in the Nasdaq National Market upon official notice of issuance.
(b) Each Final Prospectus, if filed by electronic transmission
pursuant to the Commission's Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX") (except as may be permitted by Regulation S-T under the Act),
was identical to the copy thereof delivered to the Underwriter for use in
connection with the offer and sale of the Shares. As of the date hereof, when
any Final Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the regulations under the Act, when any supplement to or
amendment of any Final Prospectus is filed with the Commission and at the time
of purchase of any Shares, the Registration Statement and each Final Prospectus
and any amendments thereof and supplements thereto complied (and, in the event
of any of the aforementioned filings that may occur in the future will, at the
time of such filing(s), comply) in all material respects with the applicable
provisions of the Act and the regulations thereunder, did not and will not
contain an untrue statement of a material fact and did not and will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. If Rule 434 is used, the Company
will comply with the requirements of Rule 434. The documents which are
incorporated by reference in any Final Prospectus or from which information is
so incorporated by reference, when they became effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act and the rules and regulations thereunder or the Exchange
Act and the rules and regulations thereunder, as applicable, and did not, when
such documents were so filed, 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 any documents so filed and incorporated by
reference subsequent to the effective date of the Registration Statement shall,
when they are filed with the Commission, conform in all material respects with
the requirements of the Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder, as applicable. The
Commission has not issued any stop order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of any
Final Prospectus or, to the knowledge of the Company, instituted proceedings for
that purpose.
(c) As of the date of this Agreement, the Company has, and at the
time of purchase will have, an authorized capitalization as set forth in the
Registration Statement and the Basic 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") has been duly incorporated
and is validly existing as a corporation and is in good standing under the laws
of its respective jurisdiction of incorporation with all requisite corporate
power and authority to own, lease and operate its respective
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properties and to conduct its respective business as conducted and as proposed
to be conducted as described in the Registration Statement and Final Prospectus.
(e) Each of the Company and the Subsidiaries is 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 Basic
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 made during the term of this Agreement.
(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 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, neither the
Company nor any of the Subsidiaries is 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 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.
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(k) The execution, delivery and performance of this Agreement, the
issuance and sale of the Shares and the consummation of the transactions
contemplated hereby 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 certificates 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 this Agreement and to consummate the transactions contemplated
herein; this Agreement 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 Final Prospectus.
(n) The offer of the Shares by the Underwriter as contemplated
hereby and the issuance and sale of the Shares by the Company have 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, 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 issue and sale of the Shares contemplated by this Agreement, or to
require the Company to include such securities with the Shares registered
pursuant to the Registration Statement, nor does any 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
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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 this Agreement and the consummation of the
transactions contemplated hereby 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 and (z) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriter.
(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 Final Prospectus, are and were during the
periods covered by their reports independent public accountants as required by
the Act. The Company has no reason or basis to believe, and does not believe,
that it will not file its annual report on Form 10-K under the Exchange Act for
calendar year 2001 on or before April 1, 2002 or, assuming successful completion
of the offering contemplated by this Agreement, that the auditor's report of
Ernst & Young LLP on the consolidated financial statements of the Company to be
contained therein will be subject to any exception, limitation or qualification.
(s) The Company and each Subsidiary 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) 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.
(u) 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
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expected to have a Material Adverse Effect or prevent consummation of the
transactions contemplated hereby.
(v) The consolidated financial statements of the Company and the
Subsidiaries included in the Registration Statement and the Final 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
Final 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 Final Prospectus; any pro forma financial
statements and other pro forma financial information included or incorporated by
reference in the Registration Statement and the Final 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.
(w) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final 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, 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.
(x) 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).
(y) 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").
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(z) Except as disclosed in the Final 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.
(aa) 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 or is otherwise proscribed by
Regulation M promulgated by the Commission.
(bb) 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.
(cc) The Company has not relied upon the Underwriter or legal
counsel for the Underwriter for any legal, tax or accounting advice in
connection with the offering and sale of the Shares.
(dd) Any certificate signed by any officer of the Company or any
Subsidiary delivered to the Underwriter or to counsel for the Underwriter
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
(ee) To the Company's knowledge, all agreements between the
Company or any of the Subsidiaries and third parties expressly referenced in the
Final 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.
(ff) 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 Final Prospectus that is not so described.
(gg) 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
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the Final 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 Final 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.
(hh) 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.
(ii) 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.
(jj) 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.
(kk) 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 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.
(ll) 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. The
Board of Directors of the Company maintains an audit committee that meets the
listing standards imposed by the Nasdaq National Market for companies whose
stock is
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approved for quotation in that market and the members of which are independent
of the Company as required by such listing standards. The audit committee meets
regularly and during 2001 reviewed with management and Ernst & Young all
financial statements filed with the Commission.
(mm) 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.
(nn) 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
Final Prospectus.
(oo) 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 Final Prospectus, Registration Statement and other
materials permitted by the Act.
2. Purchase and Sale. Upon the basis of the representations, warranties
and covenants and subject to the terms and conditions herein set forth, the
Underwriter, acting as agent for the Company and not as principal, agrees on a
best efforts basis to offer the Shares for sale to the public in accordance with
the Plan of Distribution set forth in the Final Prospectus. The Underwriter may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as it and the Company may mutually
determine. The Company understands and agrees that the Underwriter is under no
obligation to obtain offers to purchase any or all of the Shares, that the
Underwriter's undertaking hereunder is a best efforts undertaking and the
Underwriter is not obligated to purchase any Shares that are not sold to the
public, and that offers to purchase Shares may be accepted on more than one day
at more than one time. As compensation for the sale of Shares on behalf of the
Company pursuant to this Agreement, the Company will pay the Underwriter, at
Closing out of the proceeds of the Offering, a commission per share equal to six
percent (6%) of the price per share for each Share sold in the Offering.
3. Delivery and Payment. Payment of the purchase price for Shares
offered and sold pursuant to this Agreement shall be made to the Company by
Federal Funds wire transfer against delivery of the certificates for the Shares
to you through the facilities of the
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Depository Trust Company (DTC) for the account of Xxxxxx Xxxxxx & Company, Inc.
Such payment and delivery shall be made at 10:00 A.M., New York City time, on
the third trading day after the trade date with respect to Shares sold pursuant
to this Agreement (unless another time shall be agreed to by you and the
Company). The time at which such payment and delivery are actually made with
respect to any Shares is hereinafter sometimes called the time of purchase.
Certificates for the Shares shall be delivered to you in definitive form in such
names and in such denominations as you shall specify on the second business day
preceding the time of purchase. For the purpose of expediting the checking of
the certificates for the Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the time of purchase.
4. Agreements. The Company agrees with the Underwriter that:
(a) Prior to the termination of the offering of the Shares, the
Company will not file any amendment of the Registration Statement or supplement
(including any Final Prospectus) to the Basic Prospectus unless the Company has
furnished you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, the Company will cause each Final Prospectus to be filed
with the Commission pursuant to Rule 424 or Rule 434 via XXXXX. The Company will
advise the Underwriter promptly (i) when each Final Prospectus shall have been
filed with the Commission pursuant to Rule 424 or Rule 434, (ii) when any
amendment to the Registration Statement relating to the Shares shall have become
effective, (iii) of any request by the Commission for any amendment of the
Registration Statement or amendment of or supplement to the Final Prospectus or
for any additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of the
receipt by the Company of any notification with respect to the suspension of the
approval of the Shares for quotation in the Nasdaq National Market or
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its
reasonable best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act, except with respect to any such delivery
requirement imposed upon an affiliate of the Company in connection with any
secondary market sales, any event occurs as a result of which each Final
Prospectus as then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement the Final
Prospectus to comply with the Act or the Exchange Act or the respective rules
thereunder, the Company promptly will prepare and file with the Commission,
subject to the first sentence of paragraph (a) of this Section 4, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance.
(c) The Company will make generally available to its security
holders and to the Underwriter as soon as practicable, but not later than 90
days after the close of the period covered thereby, an earnings statement (in
form complying with the provisions of Rule 158
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under the Act) covering a twelve month period beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(d) The Company will furnish to the Underwriter and counsel for
the Underwriter, without charge, copies of the Registration Statement (including
exhibits thereto) and each amendment thereto which shall become effective on or
prior to the first time of purchase occurring hereunder and, so long as delivery
of a prospectus by the Underwriter or any dealer may be required by the Act, as
many copies of any Final Prospectus and any amendments thereof and supplements
thereto as the Underwriter may reasonably request. The Company will pay the
expenses of printing all documents relating to the offering.
(e) The Company will arrange for the qualification of the Shares
for sale under the laws of such jurisdictions as the Underwriter may reasonably
designate, will maintain such qualifications in effect so long as required for
the distribution of the Shares; provided, however, that the Company shall not be
required 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 or
unlimited service of process of 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.
(f) Until the business day following the last time of purchase
occurring pursuant to this Agreement, the Company will not, without the consent
of the Underwriter, offer or sell, or announce the offering of, any securities
covered by the Registration Statement or by any other registration statement
filed under the Act; provided, however, the Company may, at any time, offer or
sell or announce the offering of any securities (A) covered by a registration
statement on Form S-8 or (B) covered by a registration statement on Form S-3 and
pursuant to which the Company issues securities for any dividend reinvestment
plan.
(g) The Company will prepare a prospectus supplement with respect
to any Shares sold by the Company pursuant to this Agreement, in a form
previously approved by the Underwriter and its counsel, and to file such
prospectus supplement pursuant to Rule 424(b) under the Act not later than 5:00
p.m. on the second business day after the signing of this Agreement, and to
provide copies of such prospectus supplement to the Underwriter via e-mail in
".pdf" format to an account designated by the Underwriter.
(h) The Company will make available to the Underwriter, as soon as
practicable after the Registration Statement becomes effective, and thereafter
from time to time will furnish to the Underwriter, as many copies of the Final
Prospectus (or of the Final Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective date
of the Registration Statement) as the Underwriter may reasonably request for the
purposes contemplated by the Act; and for so long as this Agreement is in
effect, or in any case if the Underwriter is required to deliver a prospectus
within the nine-month period referred to in Section 10(a)(3) of the Act in
connection with the sale of the Shares, the Company will prepare and file
promptly such amendment or amendments to the Registration Statement and the
Final Prospectus as may be necessary to comply with the requirements of Section
10(a)(3) of the Act.
-11-
(i) The Company will furnish to you for a period of one year from
the date of this Agreement (i) copies of any reports or other communications
which the Company shall send to its stockholders or shall from time to time
publish or publicly disseminate, (ii) copies of all annual, quarterly and
current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such
other similar form as may be designated by the Commission, and (iii) copies of
documents or reports filed with any national securities exchange on which any
class of securities of the Company is listed, and to furnish to you from time to
time during the term of this Agreement such other information as you may
reasonably request regarding the Company or the Subsidiaries, in each case as
soon as such reports, communications, documents or information becomes
available.
(j) The Company will furnish to you four signed copies of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto, including all exhibits thereto and all documents
incorporated by reference therein.
(k) The Company will furnish to you upon request as early as
practicable prior to the time of purchase a copy of the latest available
unaudited interim consolidated financial statements, if any, of the Company and
its Subsidiaries which have been read by the Company's independent certified
public accountants, as stated in their letter to be furnished pursuant to
Section 6 hereof.
(l) The Company will apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of Proceeds" in the Final
Prospectus.
(m) The Company will pay all costs, expenses, fees and taxes in
connection with (i) the preparation and filing of the Registration Statement,
each Basic Prospectus, the Final Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriter and to dealers (including costs of mailing and shipment), (ii) the
registration, issue, sale and delivery of the Shares, (iii) the producing, word
processing and/or printing of this Agreement, any powers of Attorney and any
closing documents (including compilations thereof) and the reproduction and/or
printing and furnishing of copies of each thereof to the Underwriter (including
costs of mailing and shipment), (iv) the qualification of the Shares for
offering and sale under state laws and the determination of their eligibility
for investment under state law as aforesaid (including the legal fees and filing
fees and other disbursements of counsel for the Underwriter) and the printing
and furnishing of copies of any blue sky surveys or legal investment surveys to
the Underwriter, (v) the listing of the Shares on the Nasdaq National Market and
any registration thereof under the Exchange Act, (vi) any filing for review of
the public offering of the Shares by the NASD, including the fees and
disbursements of counsel to the Underwriter in connection therewith, (vii) all
other fees and disbursements of counsel to the Company, and (viii) the
performance of the Company's other obligations hereunder; provided that the
Underwriter shall be responsible for any transfer taxes on resale of Shares by
them.
(n) The Company will furnish to you, before filing with the
Commission subsequent to the effective date of the Registration Statement and
during the period referred to in paragraph (i) above, a copy of any document
proposed to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act.
-12-
5. Reimbursement of Underwriter's Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to Section 8 hereof, the Company shall, in addition to paying the amounts
described in Section 4(m) hereof, reimburse the Underwriter for all of its
reasonable out-of-pocket expenses, including the fees and disbursements of its
counsel.
6. Conditions to the Obligations of the Underwriter. The obligations of
the Underwriter to offer the Shares for sale on a best efforts basis pursuant
hereto shall be subject to the accuracy of the representations and warranties on
the part of the Company contained herein as of the date hereof, as of the date
of each Final Prospectus, as of the date of the effectiveness of any amendment
to the Registration Statement filed prior to the first time of purchase
occurring hereunder (including the filing of any document incorporated by
reference therein) and as of each time of purchase occurring hereunder, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and any
Final Prospectus shall have been filed with the Commission within the time
period prescribed by the Commission.
(b) The Company shall have furnished to the Underwriter the
opinion of White & Case LLP, counsel for the Company, dated the first time of
purchase occurring hereunder substantially in the form attached hereto as
Exhibit A.
(c) The Company shall have furnished to the Underwriter the
opinion of White & Case LLP, counsel for the Company, dated the first time of
purchase occurring hereunder, as to certain intellectual property matters.
(d) The Representatives shall have received from counsel for the
Underwriter, such opinion or opinions, dated the first time of purchase
occurring hereunder, with respect to the issuance and sale of the Shares, the
Registration Statement, the Final Prospectus and other related matters as the
Underwriter may reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(e) The Company shall have furnished to the Underwriter a
certificate of the Company, signed by the President and Chief Executive Officer
or a Senior Vice President and the principal financial or accounting officer of
the Company, dated the first time of purchase occurring hereunder, to the effect
that the signers of such certificate have carefully examined the Registration
Statement, the Final Prospectus and this Agreement and that to the best of their
knowledge:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the first
time of purchase occurring hereunder with the same effect as if made on such
date and the Company has complied
-13-
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the first time of purchase occurring
hereunder;
(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no proceedings for that
purpose have been instituted or threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus, there has been no
material adverse change in the condition (financial or other), earnings,
business or properties of the Company and its Subsidiaries, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Prospectus.
(f) At the first time of purchase occurring hereunder, Ernst &
Young LLP shall have furnished to the Underwriter a letter or letters (which may
refer to letters previously delivered to the Underwriter, either as a
representative of other underwriters or as an underwriter represented by another
representative), dated as of the Closing Date, in form and substance
satisfactory to the Underwriter.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, there shall not
have been (i) any change or decrease specified in the letter or letters referred
to in paragraph (f) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the earnings, business or
properties of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the reasonable judgment of the
Underwriter, so material and adverse as to make it impractical or inadvisable to
proceed with the offering or the delivery of the Shares as contemplated by the
Registration Statement and the Final Prospectus.
(h) Prior to the first time of purchase occurring hereunder, the
Company shall have furnished to the Underwriter such further information,
certificates and documents as the Underwriter may reasonably request.
(i) [Intentionally Omitted]
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and its counsel, this Agreement and all
obligations of the Underwriter hereunder may be canceled at, or at any time
prior to, the Closing Date by the Underwriter. Notice of such cancellation shall
be given to the Company in writing or by telephone or telegraph confirmed in
writing.
7. [Intentionally Omitted]
8. Effective Date of Agreement; Termination. This Agreement shall
become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
-14-
Your obligations hereunder shall be subject to termination in your
absolute discretion if, since the time of execution of this Agreement or the
respective dates as of which information is given in the Registration Statement
and Final Prospectus, (y) there has been any material adverse and unfavorable
change, financial or otherwise (other than as referred to in the Registration
Statement and Final Prospectus at the time of execution of this Agreement), in
the operations, business, condition or prospects of the Company and its
Subsidiaries taken as a whole, which would, in your judgment, make it
impracticable to market the Shares, or (z) there shall have occurred any
downgrading, or any notice shall have been given of (i) any intended or
potential downgrading or (ii) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or guaranteed
by the Company or any Subsidiary by any "nationally recognized statistical
rating organization", as that term is defined in Rule 436(g)(2) under the Act
or, if, at any time prior to the time of purchase trading in securities on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or limitations or minimum prices shall have
been established on the New York Stock Exchange, the American Stock Exchange or
the Nasdaq National Market, or if a banking moratorium shall have been declared
either by the United States or New York State authorities, or if the United
States shall have declared war in accordance with its constitutional processes
or there shall have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis of such magnitude in its
effect on the financial markets of the United States as, in your judgment, to
make it impracticable to market the Shares.
If you elect to terminate this Agreement as provided in this Section 8,
the Company shall be notified promptly by letter or telegram.
If the offer of the Shares, as contemplated by this Agreement, is not
carried out by the Underwriter for any reason permitted under this Agreement or
if such sale is not carried out because the Company shall be unable to comply
with any of the terms of this Agreement, the Company shall not be under any
obligation or liability under this Agreement (except to the extent provided in
Sections 4(m), 5 and 9 hereof), and the Underwriter shall be under no obligation
or liability to the Company under this Agreement (except to the extent provided
in Section 9 hereof) or to one another hereunder.
Notwithstanding any other provision in this Agreement to the contrary,
if all the Shares have not been placed by the Underwriter by March 22, 2002,
then this Agreement (except to the extent provided in Sections 4(m), 5 and 9
hereof) shall terminate at 4:00 p.m. EST on the third business day after the
trade date of the last sale made by the Underwriter pursuant to this Agreement
on or before March 22, 2002.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless the
Underwriter, Regions Financial Corporation, directors and officers of the
Underwriter, and any person who controls the Underwriter 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 the Underwriter 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
-15-
arises 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 9 being deemed to include the Basic Prospectus and the Final 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 (i) 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
Underwriter to the Company expressly for use with reference to the Underwriter
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, or (ii)
with respect to any untrue statement or omission of material fact made in the
Prospectus, the indemnity agreement contained in this section shall not inure to
the benefit of the Underwriter from or through whom the person asserting any
such loss, claim, damage, liability or action purchased the securities
concerned, to the extent that any such loss, claim, damage, liability or action
of the Underwriter occurs under the circumstance where it shall have been
determined by a court of competent jurisdiction that (w) the Company had
previously furnished copies of the Prospectus, as amended or supplemented to the
Underwriter, (x) delivery of the Prospectus, as amended or supplemented, was
required by the Securities Act to be made to such person, (v) the untrue
statement or omission of a material fact contained in the Prospectus was
corrected in the Prospectus as amended or supplemented, and (z) there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such securities to such person, a copy of the Prospectus as amended or
supplemented.
If any action, suit or proceeding (together, a "Proceeding") is brought
against the Underwriter or any such person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, the Underwriter
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 Underwriter or any such person or
otherwise. The Underwriter 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 Underwriter 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
-16-
(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 Underwriter 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 and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) The Underwriter 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
Underwriter to the Company expressly for use with reference to the Underwriter
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 Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Underwriter in writing of the institution of such Proceeding and the Underwriter
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 Underwriter
shall not relieve the Underwriter from any liability which the Underwriter 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 Underwriter in connection with the defense of such Proceeding or
the Underwriter
-17-
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 additional
to or in conflict with those available to the Underwriter (in which case the
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but the Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of the Underwriter), in any of which events such
reasonable fees and expenses shall be borne by the Underwriter and paid as
incurred (it being understood, however, that the Underwriter 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). No Underwriter shall be liable for any settlement of any such
Proceeding effected without the written consent of the Underwriter but if
settled with the written consent of the Underwriter, the Underwriter 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 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 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 Underwriter 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 Underwriter 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 Underwriter on the
other shall be deemed to be in the same respective proportions as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriter, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the
-18-
Underwriter 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 Underwriter 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 Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 9 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 9, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares offered by the Underwriter and distributed to the
public were offered to the public exceeds the amount of any damage which the
Underwriter 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 9 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 Underwriter, its shareholders,
directors or officers or any person (including each partner, officer or director
of such person) who controls the Underwriter 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 Underwriter 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.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 9 hereof,
and will survive delivery of and payment for the Shares. The provisions of
Section 8 and 9 hereof and this Section 10 shall survive the termination or
cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Underwriter, will be mailed,
delivered by courier or facsimile and confirmed to the Underwriter, at Fifty
Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000; Attention Minor Perkins, with a
copy to: Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxx 00000; Attention Xxxx X. Good; or, if sent to the Company, will be
mailed,
-19-
delivered by courier or facsimile and confirmed to it at Aphton Corporation, 00
X.X. 0xx Xxxxxx, Xxxxx, Xxxxxxx 331, Attention: Xxxx Xxxxx.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 9 hereof, and no
other person will have any right or obligation hereunder.
13. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute a single instrument.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflict of laws.
-20-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the Underwriter.
Very truly yours,
APHTON CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Vice President, Treasurer
and Chief Accounting Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date specified herein.
Xxxxxx Xxxxxx & Company, Inc.
By: /s/ Minor Perkins
--------------------------------------
Name: Minor Perkins
Title: Executive Managing Director
-21-
SCHEDULE I
Subsidiaries
There are no Subsidiaries
-22-
EXHIBIT A
[Letterhead of White & Case]
March ___, 2002
Xxxxxx Xxxxxx & Co., Inc.,
Fifty Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Re: Aphton Corporation
Ladies and Gentlemen:
We have acted as special counsel for Aphton Corporation, a Delaware
corporation ("the Company"), in connection with (i) the execution and delivery
of an Underwriting Agreement, dated March ___, 2002 (the "Underwriting
Agreement"), between the Company and Xxxxxx Xxxxxx & Co., Inc., (the
"Underwriter"), providing for the offer by the Underwriter on a best efforts
basis, upon the terms and conditions set forth in the Underwriting Agreement, of
an aggregate of 1,200,000 shares of the Company's common stock, par value $.001
per share (the "Shares"), and (ii) the preparation and filing by the Company
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act") of the Registration Statement on
Form S-3 (File No. 333-82344). As described in the Prospectus, the Company's
Annual Report on Form 10-K/A for the year ended January 31, 2001, its Quarterly
Reports on Form 10-Q for the five months ended June 30, 2001 and eight months
ended September 30, 2001, its Current Reports on Form 8-K dated March 16, 2001,
January 23, 2002, January 31, 2002, February 5, 2002, February 7, 2002, February
11, 2002 and March ___, 2002, and the description of the Company's common stock
contained in the Company's Registration Statement on Form 8-A, filed with the
Commission on January 30, 1998 (collectively, the "Incorporated Documents"), are
incorporated in the Prospectus by reference.
In so acting, we have examined such certificates of public officials,
and certificates of officers of the Company, and the originals (or copies
thereof certified to our satisfaction) of such corporate documents and records
of the Company, and such other documents, records and papers as we have deemed
relevant in order to give the opinions hereinafter set forth. In this
connection, we have assumed the genuineness of signatures on, the authenticity
of all documents submitted to us as originals and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
photostatic copies. Also, we have relied upon such certificates of public
officials, and officers of the Company and such other certifications with
respect to the accuracy of material factual matters contained therein which were
not independently established. We did not participate in the preparation of the
Incorporated Documents or review any of them prior to their being filed with the
Commission under the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"), but we did
review them in connection with our participation in the preparation of the
Prospectus.
Based upon and subject to the foregoing, it is our opinion that:
1. The Company has been duly incorporated and is validly existing
as a corporation in corporate good standing under the laws of the State of
Delaware and has the corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Registration
Statement, to enter into the Underwriting Agreement, to issue, sell and
deliver the Shares and to consummate the transactions contemplated in the
Prospectus.
2. The Common Stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus.
3. The Shares have been duly and validly authorized by the Company
for offer, sale, issuance and delivery pursuant to the Underwriting
Agreement and, when issued and delivered against payment therefor as
provided in the Underwriting Agreement, will be duly and validly issued and
fully paid and non-assessable.
4. To our knowledge, based solely on a Certificate issued by the
Secretary of State of the State of Florida dated within three (3) days of
the first time of purchase hereunder, the Company is duly qualified to do
business as a foreign corporation and is in good standing in the State of
Florida.
5. To our knowledge and other than as set forth in the Prospectus,
there is no legal or governmental proceeding threatened in writing or
pending in any state or federal court to which the Company is a party or to
which any property of the Company is subject, which could prevent
consummation of the transactions contemplated by the Underwriting Agreement.
6. The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
7. The execution, delivery and performance of the Underwriting
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated by the Underwriting Agreement 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 provisions of the
charter or by-laws of the Company or, (ii) under 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 is a party or by which it or its property
may be bound or affected and which have been filed by the Company with the
Commission under the Exchange Act, and are listed in the exhibit index to
the Company's most recent Annual Report on Form 10-K/A or were subsequently
filed prior to the date hereof under the Exchange Act, or (iii) under any
decree, judgment or order known to us to be applicable to the Company or
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under any U.S. Federal or New York State law, regulation or rule which in
our experience are normally applicable to transactions of the type
contemplated by the Underwriting Agreement, except in the case of clauses
(ii) and (iii) for such conflicts, breaches, or defaults, individually or in
the aggregate, as would not reasonably be expected to have a material
adverse effect on the business, properties, prospects, financial condition
or results of operation of the Company taken as a whole.
8. No approval, authorization, consent or order of or filing with
any New York State or U.S. Federal governmental agency or body or any New
York State or U.S. Federal court is required to be obtained or made by the
Company for the issuance and sale of the Shares or the consummation by the
Company of the transactions as contemplated by the Underwriting Agreement
except such as may be required by the Act and the applicable rules and
regulations thereunder, the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriter (as
to which we express no opinion) or under the rules and regulations of the
National Association of Securities Dealers, Inc. (as to which we express no
opinion).
9. The Company is not and, after giving effect to the offering and
sale of the Shares, will not be required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
In passing upon the form of the Registration Statement and the
Prospectus, we necessarily have assumed the accuracy and completeness of the
information included or incorporated by reference therein by the Company and the
responsiveness to the applicable forms, rules and regulations of the Commission
promulgated under the Exchange Act of the information included in the
Incorporated Documents by the Company and we take no responsibility therefor.
Based upon such assumptions, in our opinion the Registration Statement, as of
its effective date, and the Prospectus, as of its date (except in each case for
the financial statements and schedules and other financial and statistical data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), appeared on their face to comply as to form in all
material respects with the requirements of the Act and the rules and regulations
of the Commission thereunder.
In the course of the preparation by the Company of the Registration
Statement and the Prospectus (other than the Incorporated Documents), we have
participated in conferences with certain officers of the Company, with
representatives of the independent auditors of the Company, and with you and
your counsel. Based upon such participation in the preparation of the
Registration Statement and the Prospectus (other than the Incorporated
Documents, except for the statements in the Company's Annual Report on Form
10-K/A for the year ended January 31, 2001 set forth under the captions "The
Company", "Basis of Approach", "Strategic Alliances", "Manufacturing and
Marketing", "Strategy and Earnings", "Patents and Trade Secrets", "Competition",
"Directors and Executive Officers", "Executive and Principal Scientific
Officers", "Administrative and Scientific Staff", "Scientific Advisory Board",
"Properties", "Legal Proceedings", "Market for Registrant's Common Equity and
Related Stockholder Matters", "Directors and Executive Officers of the
Registrant"), and our review and discussion of the contents thereof, but without
independent check or verification except as otherwise specified above, nothing
has come to our attention which causes us to believe that the
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Registration Statement, as of its effective date, or the Prospectus, as of its
date, (except in each case for the financial statements and schedules and other
financial or statistical data contained or incorporated by reference therein or
omitted therefrom as to which we express no belief), contained any untrue
statement of a material fact or omitted therefrom to state any material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading.
The opinions expressed above are limited to questions arising under the
Federal Law of the United States, the General Corporation Law of the State of
Delaware and the law of the State of New York. This opinion may not be relied
upon by or published or communicated to any person and may not be used for any
other purpose whatsoever without prior written approval in each instance.
Very truly yours,
