IMMTECH INTERNATIONAL, INC.
1,333,333 Units
Each Unit Consisting of Two
Shares of Common Stock
and
One Class A Warrant
INTERNATIONAL PURCHASE AGREEMENT
New China Hong Kong Capital Limited New York, New York
October , 1998
Hong Kong
Dear Sirs:
Immtech International, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to New China Hong Kong Capital Limited (the
"Purchaser") an aggregate of 1,333,333 units (the "Units"), each Unit consisting
of two shares of common stock, par value $.01 per share ("Common Stock") and one
Class Common Stock Purchase Warrant (each, a "Class A Warrant" and collectively,
the "Class A Warrants"), at a price of U.S. $3.00 per Unit. Each Class A Warrant
entitles the holder thereof to purchase, at an exercise price of U.S. $1.50, at
any time after the closing of the sale of the Units pursuant to this Agreement
and until December 31, 1998, one share of Common Stock, one Class B Common Stock
Purchase Warrant (each, a "Class B Warrant" and collectively, the "Class B
Warrants") and one Class C Common Stock Purchase Warrant (each, a "Class C
Warrant" and collectively, the "Class C Warrants"). Each Class B Warrant
entitles the holder thereof to purchase at an exercise of U.S. $1.50, at any
time from the date of issuance thereof to March 31, 1999, one share of Common
Stock. Each Class C Warrant entitles the holder thereof to purchase at an
exercise price of U.S. $1.50, at any time from the date of issuance thereof
until June 30, 1999, one share of Common Stock. The Class A Warrants, the Class
B Warrants and the Class C Warrants (collectively, the "Warrants" and each, a
"Warrant") will be issued pursuant to a Warrant Agreement (the "Warrant
Agreement") to be dated as of the Closing Date (as hereinafter defined) by and
among the Company, the Purchaser and __________________________, as warrant
agent (the "Warrant Agent").
The Company also proposes to issue and sell to the Purchaser for its
own account and the accounts of its designees, warrants (the "Purchaser's
Warrants") to purchase an aggregate of 500,000 shares (collectively, the
"Purchaser Warrant Shares"), which sale will be consummated in accordance with
the terms and conditions of the form of Purchaser's Warrant Agreement filed as
an exhibit to the Registration Statement (the "Purchaser's Warrant Agreement").
The shares of Common Stock issuable upon exercise of the Warrants and the
Purchaser's Warrant Shares are hereinafter sometimes referred to as the "Warrant
Shares." The Units, the shares of Common Stock included in the Units
(hereinafter sometimes the "Unit Shares"), the Warrants, the Purchaser's
Warrants, and the Warrant Shares (collectively, the "Securities") are more fully
described in the Registration Statement and the Prospectus, as defined below.
The Company hereby confirms its agreement with the Purchaser as
follows:
1. Purchase and Sale of Offered Shares and Offered Warrants. On the
basis of the representations and warranties herein contained, but subject to the
terms and conditions herein set forth, the Company hereby agrees to sell the
Units to Purchaser and Purchaser agrees to purchase the Units from the Company
at a purchase price of U.S.$3.00 per Unit.
2. Payment and Delivery.
(a) Payment for the Units will be made to the Company by wire
transfer of immediately available funds to an account designated by the Company
against delivery of the Units to the Purchaser at the offices of ▇▇▇▇▇▇▇, Carton
& ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, counsel to the
Company. Such payment and delivery will be made at 10:00 A.M., Chicago time, on
the third business day following the Effective Date as defined below, the date
and time of such payment and delivery being herein called the "Closing Date."
The certificates representing the Unit Shares and Class A Warrants (comprising
the Units) to be delivered will be in such denominations and registered in such
names as the Purchaser may request not less than three full business days prior
to the Closing Date, and will be made available to the Purchaser for inspection,
checking and packaging at the office of the Company's transfer agent or
correspondent in _____________________________, not less than one full business
day prior to the Closing Date.
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(b) On the Closing Date, the Company will sell the Purchaser's
Warrants to the Purchaser and/or its designees (limited to affiliates of the
Purchaser and such other institutions as shall purchase Securities directly from
the Purchaser, "Designees"). The Purchaser's Warrants will be in the form of,
and in accordance with, the provisions of the Purchaser's Warrant Agreement
filed as an exhibit to the Registration Statement. The aggregate purchase price
for the Purchaser's Warrants shall be $100. The Purchaser's Warrants will be
restricted from sale, transfer, assignment or hypothecation for a period of one
year from the Closing Date, except to Designees. Delivery of the certificates
representing the Purchaser's Warrants will be made at the closing on the Closing
Date. The certificates representing the Purchaser's Warrants will be in such
denominations and such names as the Purchaser may request prior to the Closing
Date.
(c) The Company has agreed to pay the Purchaser a placement
and due diligence fee of up to U.S. $250,000 as follows: (i) U.S. $100,000 by
deduction of such amount from the purchase price for the Units; (ii) U.S.
$50,000 on the date the Company receives, when taken together with the gross
proceeds received by the Company from all prior exercises of Class A Warrants,
an aggregate of U.S. $2,000,000 from the exercise of Class A Warrants in
accordance with their terms; (iii) $50,000 on the date the Company receives,
when taken together with the gross proceeds received by the Company from all
prior exercises of Class B Warrants, an aggregate of $2,000,000 from the
exercise of Class B Warrants in accordance with their terms, and (iv) U.S.
$50,000 on the date the Company receives, when taken together with the gross
proceeds received by the Company from all prior exercises of Class C Warrants,
an aggregate of $2,000,000 from the exercise of Class B Warrants in accordance
with their terms. All payments on account of the placement and due diligence
fee, other than the initial amount, shall be made in U.S. dollars and in
immediately available funds to a deposit account with a commercial bank
designated by the Purchaser.
3. Optional Shares and/or Optional Warrants.
[INTENTIONALLY OMITTED]
4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchaser that:
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(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware, with full
corporate power and authority to own or lease and operate its properties and to
conduct its business as described in the Registration Statement and to execute,
deliver and perform this Agreement, the Warrant Agreement and the Purchaser's
Warrant Agreement to issue the securities and to consummate the transactions
contemplated hereby and thereby. The Company is duly qualified to do business as
a foreign corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company, and
each of the Warrant Agreement and the Purchaser's Warrant Agreement, when
executed and delivered by the Company on the Closing Date, and each of the
Warrants and the Purchaser's Warrants, when issued, will be the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies and except that
enforceability of the indemnification provisions and the contribution provisions
set forth herein may be limited by the federal securities laws of the United
States or state securities laws or public policy underlying such laws. The
execution, delivery and performance of this Agreement, the Warrant Agreement and
the Purchaser's Warrant Agreement by the Company and the issuance of the
securities, the consummation by the Company of the transactions herein and
therein contemplated and the compliance by the Company with the terms of this
Agreement, the Warrant Agreement and the Purchaser's Warrant Agreement have been
duly authorized by all necessary corporate action and do not and will not, with
or without the giving of notice or the lapse of time, or both, (i) result in any
violation of the certificate of incorporation or by-laws of the Company, (ii)
result in a material breach of or materially conflict with any of the terms or
provisions of, or constitute a default under, or result in the modification or
termination of, or result in the creation or imposition of any material lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company pursuant to any indenture, mortgage, note, contract, commitment or
other agreement or instrument to which the Company is a party
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or by which the Company or any of its assets is or may be bound or, affected;
(iii) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or business; or (iv) have
any material adverse effect on any permit, certification, registration,
approval, consent, license or franchise necessary for the Company to own or
lease and operate its properties and to conduct its business or the ability of
the Company to make use thereof.
(c) No authorization, approval, consent, order, registration,
license or permit of any court or governmental agency or body, other than such
as have been obtained and other than under the Securities Act of 1933, as
amended (the "Act"), the Regulations (as hereinafter defined), applicable state
securities or Blue Sky laws and clearance of such offering with the National
Association of Securities Dealers, Inc., is required for the valid
authorization, issuance, sale and delivery of the Units, Unit Shares, the Class
A Warrants and the Purchaser's Warrants to the Purchaser, and the consummation
by the Company of the transactions contemplated by this Agreement, the Warrant
Agreement or the Purchaser's Warrants.
(d) The Company has prepared in conformity with the
requirements of the Act and the regulations (the "Regulations") of the
Securities and Exchange Commission (the "Commission") and filed with the
Commission a registration statement (File No. 333-) on Form SB-2 and amendments
thereto, covering the registration of the Units, the Unit Shares and the
Warrants under the Act, including the related preliminary prospectus (each
thereof being herein called a "Preliminary Prospectus") and a proposed final
prospectus. Each Preliminary Prospectus was endorsed with the legend required by
Item 501(c)(5) of Regulation S-B of the Regulations. Such registration statement
including any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended at the time it becomes effective, and
the final prospectus included therein are herein, respectively, called the
"Registration Statement" and the "Prospectus," except that (i) if the prospectus
filed by the Company pursuant to Rule 424(b) of the Regulations differs from the
Prospectus, the term "Prospectus" will also include the prospectus filed
pursuant to Rule 424(b), and (ii) if the Registration Statement is amended or
such Prospectus is supplemented after the effective date of the Registration
Statement (the "Effective Date") and prior to ________________, the terms
"Registration Statement" and
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"Prospectus" shall include the Registration Statement as amended or
supplemented.
(e) Neither the Commission nor, to the best of the Company's
knowledge, any state regulatory authority has issued any order preventing or
suspending the use of any Preliminary Prospectus or has instituted or, to the
best of the Company's knowledge, threatened to institute any proceedings with
respect to such an order.
(f) The Registration Statement when it becomes effective, the
Prospectus (and any amendment or supplement thereto) when it is filed with the
Commission pursuant to Rule 424(b), and both documents as of the Closing Date
will contain all statements which are required to be stated therein in
accordance with the Act and the Regulations and will in all material respects
conform to the requirements of the Act and the Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, on such dates, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that this representation and warranty does not
apply to statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company in connection with the
Registration Statement or Prospectus or any amendment or supplement thereto by
the Purchaser expressly for use therein.
(g) The Company had at the date or dates indicated in the
Prospectus a duly authorized and outstanding capitalization as set forth in the
Registration Statement and Prospectus. Based on the assumptions stated in the
Registration Statement and Prospectus, the Company will have on the Closing Date
the adjusted stock capitalization set forth therein. Except as set forth in the
Registration Statement or in the Prospectus, on the Effective Date and on the
Closing Date, there will be no options to purchase, warrants or other rights to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell shares of the Company's capital stock
or any such warrants, convertible securities or obligations. Except as set forth
in the Prospectus, no holder of any of the Company's securities has any rights,
"demand," "piggyback" or otherwise, to have such securities registered under the
Act.
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(h) The descriptions in the Registration Statement and the
Prospectus of contracts and other documents are accurate and present fairly the
information required to be disclosed, and there are no contracts or other
documents required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement under the Act or the
Regulations which have not been so described or filed as required.
(i) Deloitte & Touche, the accountants who have certified
certain of the financial statements filed and to be filed with the Commission as
part of the Registration Statement and the Prospectus, are independent public
accountants within the meaning of the Act and Regulations. The financial
statements and schedules and the notes thereto filed as part of the Registration
Statement and included in the Prospectus present fairly the financial position
of the Company as of the dates thereof, and the results of operations and cash
flows of the Company for the periods indicated therein, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods ("GAAP") involved, except as otherwise stated in the
Registration Statement and Prospectus. The selected financial data set forth in
the Registration Statement and Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
and unaudited financial statements included in the Registration Statement and
Prospectus.
(j) The Company has filed with the appropriate federal, state
and local governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns, including franchise tax returns, which
are required to be filed under applicable laws or have duly obtained extensions
of time for the filing thereof and have paid all taxes shown on such returns and
all assessments received by it to the extent that the same have become due. The
provisions for income taxes payable, if any, shown on the financial statements
filed with or as part of the Registration Statement are sufficient for all
accrued and unpaid foreign and domestic taxes, whether or not disputed, and for
all periods to and including the dates of such financial statements. Except as
disclosed in writing to the Purchaser, neither the Company nor the Subsidiary
has executed or filed with any taxing authority, foreign or domestic, any
agreement extending the period for assessment or collection of any income taxes
and is not a party to any pending action or proceeding by any foreign or
domestic governmental agency for assessment or
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collection of taxes; and no claims for assessment or collection of taxes have
been asserted against the Company.
(k) The outstanding Common Stock and outstanding options and
warrants to purchase Common Stock have been duly authorized and validly issued.
The outstanding shares of Common Stock are fully paid and nonassessable. The
outstanding options and warrants to purchase Common Shares constitute the valid
and binding obligations of the Company, enforceable in accordance with their
terms. None of the outstanding Common Stock, options or warrants to purchase
Common Stock has been issued in violation of the preemptive rights of any
shareholder of the Company. The offers and sales of the outstanding Common Stock
and outstanding options and warrants to purchase Common Stock were at all
relevant times either registered under the Act and the applicable state
securities or Blue Sky laws or exempt from such registration requirements. The
authorized Common Stock conforms to the description thereof contained in the
Registration Statement and Prospectus. Except as set forth in the Registration
Statement and the Prospectus, on the Effective Date and the Closing Date, there
will be no outstanding options or warrants for the purchase of, or other
outstanding rights to purchase, Common Stock or securities convertible into
Common Shares.
(l) No securities of the Company have been sold by the Company
or by or on behalf of, or for the benefit of, any person or persons controlling,
controlled by, or under common control with the Company within the three years
prior to the date hereof, except as disclosed in the Registration Statement.
(m) The issuance and sale of the Unit Shares and Warrant
Shares have been duly authorized and, when the Unit Shares and the Warrant
Shares have been issued and duly delivered against payment therefor, as
contemplated by this Agreement, by the Warrant Agreement or the Purchaser's
Warrant Agreement, as the case may be, the Unit Shares and the Warrant Shares
will be validly issued, fully paid and nonassessable. The offering and sale of
the Securities will not be subject to preemptive rights of any shareholder of
the Company, except those that have been waived in connection therewith.
(n) The issuance and sale of the Warrants and the Purchaser's
Warrants have been duly authorized and, when issued, paid for and delivered
pursuant to the terms of this Agreement, the Warrant Agreement or the
Purchaser's Warrant Agreement, as the case may be, the Warrants and the
Purchaser's Warrants will be validly issued, fully paid and nonassessable. The
Warrant
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Shares have been duly reserved for issuance upon exercise of the Warrants and
the Purchaser's Warrants in accordance with the provisions of the Warrants and
the Purchaser's Warrants. The Warrants and the Purchaser's Warrants will, as of
the Closing Date (the date of issuance) conform to the descriptions thereof
contained in the Registration Statement and Prospectus.
(o) The Company is not in violation of, or in default under,
(i) any term or provision of its Certificate of Incorporation, as amended, or
By-Laws; (ii) any material term or provision or any financial covenants of any
indenture, mortgage, contract, commitment or other agreement or instrument to
which it is a party or by which it or any of its property or business is or may
be bound or affected; or (iii) any existing applicable law, rule or regulation,
or, to the best of the Company's knowledge, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company or any of the Company's or the Subsidiary's properties or business,
except any of the foregoing, the violation of which would not have a material
adverse effect on the Company. Except as otherwise disclosed in the Prospectus,
the Company owns, possesses or has obtained all material governmental licenses,
permits, certifications, registrations, approvals or consents and other
authorizations necessary to own or lease, as the case may be, and to operate its
properties, whether tangible or intangible, and to conduct its business and
operations as presently conducted. All such licenses, permits, certifications,
registrations, approvals, consents and other authorizations are in good
standing, and there are no proceedings pending or, to the best of the Company's
knowledge, threatened, or any basis therefor, seeking to cancel, terminate or
limit such licenses, permits, certifications, registrations, approvals or
consents or other authorizations, except for any such proceedings which, if
determined adversely to the Company, would not have a material adverse effect on
the Company.
(p) Except as set forth in the Prospectus, there are no
claims, actions, suits, proceedings, arbitrations, or to the best of the
Company's knowledge, any investigations or inquiries before any governmental
agency or court or tribunal, domestic or foreign, or before any private
arbitration tribunal, pending, or, to the best of the Company's knowledge,
threatened against the Company or involving the Company's properties or business
which, if determined adversely to the Company, would, individually or in the
aggregate, result in any material adverse effect in the financial condition,
results of operations, properties or business, or business prospects of the
Company or
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which threaten the validity of the capital stock of the Company or this
Agreement or of any action taken or to be taken by the Company pursuant to, or
in connection with, this Agreement; nor, to the best of the Company's knowledge,
is there any basis for any such claim, action, suit, proceeding, arbitration,
investigation or inquiry. There are no outstanding orders, judgments or decrees
of any court, governmental agency or other tribunal naming the Company, or to
which the Company or the Company's properties or businesses is bound or subject
and enjoining the Company from taking, or requiring the Company to take, any
action the taking of which or the failure to so take, respectively, would have a
material adverse effect on the financial condition, results of operations,
properties or business of the Company.
(q) Neither the Company nor any of its affiliates has incurred
any liability for any finder's fees or similar payments in connection with the
transactions contemplated which are not fully disclosed in the Prospectus.
(r) Except as otherwise disclosed in the Prospectus, the
Company owns or possesses adequate and enforceable rights to use all material
patents, patent applications, trademarks, service marks, copyrights, trade
secrets, confidential information, processes and formulations used or proposed
to be used in the conduct of its business as described in the Prospectus
(collectively the "Intangibles"); to the best of the Company's knowledge, the
Company has not infringed or is not infringing the rights of others with respect
to Intangibles; and the Company has not received any notice of conflict with the
asserted rights of others with respect to Intangibles which could, singly or in
the aggregate, materially adversely affect its business as presently conducted
or prospects, financial condition or results of operations of the Company, and
the Company knows of no basis therefor; and, to the best of the Company's
knowledge, no others have infringed upon the Intangibles.
(s) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and the Company's latest
financial statements included therein, the Company has not incurred any material
liability or obligation, direct or contingent, or entered into any material
transaction not in the ordinary course of business, nor sustained any material
loss or interference with its business from fire, storm, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree; and since the respective dates
as of
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which information is given in the Registration Statement and the Prospectus,
there have not been, and prior to the Closing Date referred to below, there will
not be, any changes in the capital stock or any material increases in the
long-term debt of the Company or any material adverse change in or affecting the
general affairs, management, financial condition, shareholders' equity, results
of operations or prospects of the Company, otherwise than as set forth or
contemplated in the Prospectus.
(t) The Company has good and marketable title in fee simple to
all real property and good title to all personal property (tangible and
intangible) owned by it, free and clear of all security interests, charges,
mortgages, liens, encumbrances and defects, except such as are described in the
Registration Statement and Prospectus or such as do not materially affect the
value of such property and do not interfere with the use of such property made,
or proposed to be made, by the Company. The material leases, licenses or other
contracts or instruments under which the Company leases, holds or is entitled to
use any property, real or personal, are valid and enforceable only with such
exceptions as are not material and do not interfere with the use of such
property made, or proposed to be made, by the Company, and all rentals,
royalties or other payments accruing thereunder which became due prior to the
date of this Agreement have been duly paid, except where the failure to so pay
would not have a material adverse effect on the Company, and neither the Company
nor, to the best of the Company's knowledge, any other party is in material
default thereunder and, to the best of the Company's knowledge, no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a material default thereunder. The Company has not received notice of
any violation of any applicable law, ordinance, regulation, order or requirement
relating to its owned or leased properties. The Company has reasonably insured
its properties against loss or damage by fire or other casualty and such other
insurance as is typically maintained by companies of its stage of development
engaged in the same or similar businesses located in its geographical area.
(u) Each material contract or other instrument (however
characterized or described) to which the Company is a party or by which its
property or business is or may be bound or affected is described in the
Prospectus and has been duly and validly executed by the Company, is in full
force and effect in all material respects and is enforceable against the Company
and the other parties thereto in accordance with its terms, and none of such
contracts or instruments has been assigned by the
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Company, and neither the Company, nor, to the best of the Company's knowledge,
any other party is in material default thereunder and, to the best of the
Company's knowledge, no event has occurred which, with the lapse of time or the
giving of notice, or both, would constitute a material default thereunder.
None of the material provisions of such contracts or
instruments violates any existing applicable law, rule, regulation, or, to the
best of the Company's knowledge, any judgment, order or decree of any
governmental authority or court having jurisdiction over the Company or the
subsidiary or any of their respective assets or businesses.
(v) The employment, consulting, confidentiality and
non-competition agreements between the Company and its officers, employees and
consultants, described in the Registration Statement, are binding and
enforceable obligations upon the respective parties thereto in accordance with
their respective terms.
(w) Except as set forth in the Prospectus, the Company has no
employee benefit plans (including, without limitation, profit sharing and
welfare benefit plans) or deferred compensation arrangements that are subject to
the provisions of the Employee Retirement Income Security Act of 1974.
(x) Except as set forth in the Prospectus, the Company does
not manufacture, fabricate or market any product or perform any service which is
subject to regulation by the Federal Food and Drug Administration (the "FDA"),
or to any provision of the Food, Drug and Cosmetic Act, as amended (the "FDA
Act"), or any rule or regulation promulgated thereunder.
With respect to the products manufactured, fabricated or
marketed by the Company and the services performed by the Company which are
subject to such regulation, the Company is in compliance in all material
respects with the provisions of the FDA Act and the rules and regulations
promulgated thereunder.
(y) There are no strikes, significant controversies or work
stoppages (other than those arising in the ordinary course of business) pending
or threatened against the Company or the Subsidiary in any manner which are, in
the aggregate, material to the financial condition, results of operations,
business or prospects of the Company.
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(z) The Company has not, directly or indirectly, at any time
(i) made any contributions to any candidate for political office and failed to
disclose fully any such contribution 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 or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.
(aa) The Unit Shares have been approved for listing on the
Nasdaq Small-Cap Market System ("Nasdaq").
Any certificate signed by an officer of the Company delivered
to the Purchaser or to counsel for the Purchaser shall be deemed to be a
representation and warranty by the Company to the Purchaser as to the matters
covered thereby.
5. Certain Covenants of the Company. The Company covenants with the
Purchaser as follows:
(a) The Company will not at any time, whether before the
Effective Date or thereafter during such period as the Prospectus is required by
law to be delivered in connection with the sales of the Units, the Unit Shares
and the Class A Warrants by the Purchaser or a dealer, file or publish any
amendment or supplement to the Registration Statement or Prospectus of which the
Purchaser or its counsel has not been previously advised and furnished a copy,
or to which the Purchaser shall reasonably object in writing.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective and will advise the Purchaser or its
counsel promptly, and, if requested by the Purchaser, confirm such advice in
writing, (i) when the Registration Statement, or any post-effective amendment to
the Registration Statement or any supplemented Prospectus is filed with the
Commission; (ii) of the receipt of any comments from the Commission; (iii) of
any request of the Commission for amendment or supplement of the Registration
Statement or Prospectus or for additional information; and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus, or of the suspension of the qualification of the Units
or any of constituent securities
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of the Units for offering or sale in any jurisdiction, or of the initiation of
any proceedings for any of such purposes. The Company will use its best efforts
to prevent the issuance of any such stop order or of any order preventing or
suspending such use and to obtain as soon as possible the lifting thereof, if
any such order is issued.
(c) The Company will deliver to the Purchaser, without charge,
from time to time until the Effective Date, as many copies of each Preliminary
Prospectus as the Purchaser may reasonably request, and the Company hereby
consents to the use of such copies for purposes permitted by the Act. The
Company will deliver to the Purchaser, without charge, as soon as the
Registration Statement becomes effective, and thereafter from time to time as
requested, such number of copies of the Prospectus (as supplemented, if the
Company makes any supplements to the Prospectus) as the Purchaser may reasonably
request. The Company has furnished or will furnish to the Purchaser one signed
copy and one conformed copy of the Registration Statement as originally filed
and of all amendments thereto, whether filed before or after the Registration
Statement becomes effective, two copies of all exhibits filed therewith and one
signed copy and one conformed copy of all consents and certificates of experts.
(d) The Company will comply, as required, with the Act, the
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder so as to permit the continuance
of sales of and dealings in the Units and the constituent securities of the
Units, in any of which may be issued and sold, and in the Warrant Shares
underlying such Warrants. If, at any time when a prospectus relating to such
securities is required to be delivered under the Act, any event occurs as a
result of which the Registration Statement and Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a 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 Registration Statement and Prospectus to
comply with the Act or the regulations thereunder, the Company will promptly
file with the Commission, subject to Section 5(a) hereof, an amendment or
supplement which will correct such statement or omission or which will effect
such compliance.
(e) If Purchaser determines to reoffer any Shares in the
United States, the Company will furnish such proper information as may be
required and otherwise cooperate in
-14-
qualifying the Shares and Warrants for offering and sale under the securities or
Blue Sky laws relating to the offering or for sale in such jurisdictions as the
Purchaser may designate, provided that no such qualification will be required in
any jurisdiction where, solely as a result thereof, the Company would be subject
to service of general process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction.
(f) The Company will make generally available to its security
holders, in the manner specified in Rule 158(b) under the Act, and deliver to
the Purchaser as soon as practicable and in any event not later than 45 days
after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earning statement
meeting the requirements of Rule 158(a) under the Act covering a period of at
least 12 consecutive months beginning after the effective date of the
Registration Statement.
(g) For a period of five years from the Effective Date, upon
request, the Company will deliver to the Purchaser on a timely basis (i) a copy
of each report or document, including, without limitation, reports on Forms 8-K,
10-C, 10-K (or 10-KSB, where applicable) and 10-Q (or 10-QSB, where applicable)
and exhibits thereto, filed with the Commission, any securities exchange or the
National Association of Securities Dealers, Inc. (the "NASD") as soon as
practicable after the date each such report or document is so filed; (ii) as
soon as practicable, copies of any reports or communications (financial or
other) of the Company mailed to its security holders; and (iii) as soon as
practicable, a copy of any Schedule 13D, 13G, 14D-1 or 13E-3 received or
prepared by the Company from time to time. The Company will furnish to its
shareholders annual reports containing audited financial statements and such
other periodic reports as it may determine to be appropriate or as may be
required by law.
(h) Neither the Company nor any person that controls, is
controlled by or is under common control with the Company will take any action
designed to or which might be reasonably expected to cause or result in the
stabilization or manipulation of the price of the Shares or Warrants.
(i) If the transactions contemplated by this Agreement are
consummated, the Company will pay or cause to be paid to the appropriate persons
the following: all costs and expenses incident to the performance of the
obligations of the
-15-
Company under this Agreement, including, but not limited to, the fees and
expenses of accountants and counsel for the Company, the preparation, printing,
mailing and filing of the Registration Statement (including financial statements
and exhibits), Preliminary Prospectuses and the Prospectus, and any amendments
or supplements thereto, the issuance and delivery of the Units and the
constituent securities thereof Shares to the Purchaser; all taxes, if any, on
the issuance of the Units and the constituent securities thereof; if
qualification of Units and the constituent securities thereof for sale under
such laws is requested by Purchaser the reasonable fees, expenses and other
costs of qualifying the Units and the constituent securities thereof for sale
under the Blue Sky or securities laws of those states in which the Shares and
Warrants are to be offered or sold, the cost of mailing the "Blue Sky Survey"
and reasonable fees and disbursements of counsel in connection therewith,
including those of such local counsel as may have been retained for such
purpose; the filing fees incident to securing any required review by the NASD;
the cost of furnishing to the Purchaser copies of the Registration Statement,
Preliminary Prospectuses and the Prospectus as herein provided; and all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section.
In addition, at the Closing Date, the Purchaser will deduct
$100,000 from the purchase price for the Units as payment on account of the
Purchaser's placement and due diligence fee, which amount will include the fees
and expenses of counsel for the Purchaser.
(j) The Purchaser's placement and due diligence fee in the
amount of $250,000 will be payable by the Company as follows: (1) $100,000 on
the Closing Date; (2) $50,000 on the date the Company receives, when taken
together with the gross proceeds received by the Company from all prior
exercises of Class A Warrants, an aggregate of $2,000,000 from the exercise of
the Class A Warrants in accordance with their terms; (3) $50,000 on the date the
Company receives, when taken together with the gross proceeds received by the
Company from prior exercises of Class B Warrants, an aggregate of $2,000,000
from the exercise of Class B Warrants in accordance with their terms; and (4)
$50,000 on the date the Company receives, when taken together with the gross
proceeds received by the Company from all prior exercises of Class C Warrants,
an aggregate of $2,000,000 from the exercise of Class C Warrants in accordance
with their terms.
-16-
(k) The Company intends to apply the net proceeds from the
sale of the Shares and Warrants for the purposes set forth in the Prospectus.
(l) During the period of two years from the date hereof, the
Company will not, and it will use its best efforts to ensure that Criticare and
none of the officers and directors of the Company and Criticare, and the
security holders listed on Schedule 5(l) (the "Lock-Up Shareholders") will offer
for sale or sell or otherwise dispose of, directly or indirectly, any securities
of the Company, in any manner whatsoever, whether pursuant to Rule 144 of the
Regulations or otherwise, without the prior written consent of the Purchaser.
The Company will deliver to the Purchaser the undertakings as of the date hereof
of Criticare and the officers and directors of the Company and Criticare, and
the Lock-Up Shareholders to this effect.
(m) The Company will not file any registration statement
relating to the offer or sale of any of the Company's securities, including any
registration statement on Form S-8, during the nine (9) months following the
date hereof without the Purchaser's prior written consent.
(n) The Company maintains and will continue to maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
in order to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain accountability for
assets; (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 existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(o) The Company will use its best efforts to maintain the
listing of the Unit Shares and, when issued, the Warrant Share underlying the
Warrants on Nasdaq and, if so qualified, on the Nasdaq National Market System,
American Stock Exchange or the New York Stock Exchange for so long as the Shares
are qualified for such listing.
(p) The Company will, concurrently with the Effective Date,
register the class of equity securities of which the Shares are a part under
Section 12(g) of the Exchange Act and
-17-
the Company will maintain the registration for a minimum of five years after the
Effective Date.
(q) The Company shall retain a transfer agent for the Unit
Shares and Warrants, and when issued, the Warrant Shares, reasonably acceptable
to the Purchaser, for a period of five years following the Effective Date. In
addition, for a period of thirteen months from the Effective Date, the Company,
at its own expense, shall cause such transfer agent to provide the Purchaser, if
so requested in writing to the Company, with copies of the Company's daily
transfer sheets and when requested by the Purchaser to the Company, a current
list of the Company's security holders, including a list of the beneficial
owners of securities held by a depository trust company and other nominees if
readily available to the Company.
(r) The Company hereby agrees, at its sole cost and expense,
to supply and deliver to the Purchaser, within a reasonable period from the date
hereof, four bound volumes, including the Prospectus and all other underwriting
documents.
(s) The Company shall, as of the date hereof, have applied for
listing in Standard & Poor's Corporation Records Service (including annual
report information) or ▇▇▇▇▇'▇ Industrial Manual (▇▇▇▇▇'▇ OTC Industrial Manual
not being sufficient for these purposes) and shall use its best efforts to have
the Company listed in such manual as soon as practicable after the Effective
Date and shall use its best efforts to maintain such listing for a period of
five years from the Effective Date.
(t) For a period of five years from the Effective Date, the
Company shall continue to retain Deloitte & Touche LLP (or such other nationally
recognized accounting firm reasonably acceptable to the Purchaser) as the
Company's independent public accountants.
(u) For a period of five years from the Effective Date, the
Company, at its expense, shall cause its independent certified public
accountants, as described in Section 5(t) above, to read (but not review or
audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's 10-Q quarterly report and the mailing of quarterly
financial information to stockholders, if applicable.
-18-
(v) For a period of 13 months from the Effective Date, the
Company will not increase or authorize an increase in the cash compensation of
the Senior Executives (as defined in the Prospectus) over and above the amounts
provided in their employment agreements, without the prior written consent of
the Purchaser.
(w) For a period of 25 days from the Effective Date, the
Company will not issue press releases or engage in any other publicity without
the Purchaser's prior written consent, other than normal and customary releases
issued in the ordinary course of the Company's business or those releases
required by law.
6. Conditions of the Purchaser's Obligation to Purchase Securities
from the Company. The obligation of the Purchaser to purchase and pay for the
Units which it has agreed to purchase from the Company is subject (as of the
date hereof and the Closing Date) to the accuracy of and compliance in all
material respects with the representations and warranties of the Company herein,
to the accuracy of the statements of the Company or its officers made pursuant
hereto, to the performance in all material respects by the Company of its
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement will have become effective not
later than 9:00 A.M., New York City time, on the day following the date of this
Agreement, or at such later time or on such later date as the Purchaser may
agree to in writing; prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or will be pending or, to
the best of the Purchaser's or the Company's knowledge, will be contemplated by
the Commission; and any request on the part of the Commission for additional
information will have been complied with to the reasonable satisfaction of
_______________________, counsel for the Purchaser ("Purchaser's Counsel").
(b) At the Effective Date and at the Closing Date, there will
have been delivered to the Purchaser a signed opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Company ("Company Counsel"), dated as of the Effective
Date hereof or Closing Date, as the case may be (and any other opinions of
counsel referred to in such opinion of Company Counsel or relied upon by Company
Counsel in rendering their opinion), reasonably
-19-
satisfactory to Purchaser's Counsel, substantially to the effect as set forth in
Exhibit A attached hereto.
In rendering its opinion, Company Counsel may rely upon
(A) opinions of local counsel acceptable to Purchaser's Counsel with respect to
matters relating to the laws of any jurisdiction other than Illinois, the
general corporation laws of the State of Delaware or the United States of
America; and (B) the certificates of government officials and officers of the
Company as to matters of fact, provided that Company Counsel shall state that
they have no reason to believe, and do not believe, that they are not justified
in relying upon such opinions or such certificates of government officials and
officers of the Company as to matters of fact, as the case may be.
(c) At the Closing Date (i) the Registration Statement and the
Prospectus and any amendments or supplements thereto will contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and will conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; (ii)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there will not have been any material adverse
change in the financial condition, results of operations or business of the
Company from that set forth or contemplated in the Registration Statement and
the Prospectus, except changes which the Registration Statement and the
Prospectus indicates might occur after the Effective Date; (iii) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall have been no material transaction, contract or
agreement entered into by the Company, other than in the ordinary course of
business, which would be required to be set forth in the Registration Statement
and the Prospectus, other than as set forth therein; and (iv) no action, suit or
proceeding at law or in equity will be pending or, to the best of the Company's
knowledge, threatened against the Company which is required to be set forth in
the Registration Statement and the Prospectus, other than as set forth therein,
and no proceedings will be pending or, to the best of the Company's knowledge,
threatened against the Company before or by any federal, state or other
commission, board or administrative agency wherein an
-20-
unfavorable decision, ruling or finding would materially adversely affect the
business, financial condition or results of operations of the Company, other
than as set forth in the Registration Statement and the Prospectus. At the
Closing Date, there will be delivered to the Purchaser a certificate signed by
the Chairman of the Board or the President or a Vice President of the Company,
dated the Closing Date, evidencing compliance with the provisions of this
Section 6(d) and stating that the representations and warranties of the Company
set forth in Section 4 hereof were accurate and complete in all material
respects when made on the date hereof and are accurate and complete in all
material respects on the Closing Date as if then made; that the Company has
performed all covenants and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to or as of the
Closing Date; and that, as of the Closing Date, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or, to the best of his knowledge, are
contemplated or threatened. In addition, the Purchaser will have received such
other and further certificates of officers of the Company as the Purchaser or
Purchaser's Counsel may reasonably request.
(d) At the time that this Agreement is executed and at the
Closing Date, the Purchaser will have received a signed letter from Deloitte &
Touche LLP, dated the date such letter is to be received by the Purchaser and
addressed to it, confirming that it is a firm of independent public accountants
within the meaning of the Act and Regulations and stating that: (i) insofar as
reported on by them, in their opinion, the financial statements of the Company
included in the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable Regulations;
(ii) on the basis of procedures and inquiries (not constituting an examination
in accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim financial statements of the Company, if any,
appearing in the Registration Statement and the Prospectus and the latest
available unaudited interim financial statements of the Company, if more recent
than that appearing in the Registration Statement and Prospectus, inquiries of
officers of the Company responsible for financial and accounting matters as to
the transactions and events subsequent to the date of the latest audited
financial statements of the Company, and a reading of the minutes of meetings of
the shareholders, the Board of Directors of the Company and any committees of
the Board of Directors, as set forth in the minute books of the Company, nothing
has come to
-21-
their attention which, in their judgment, would indicate that (A) during the
period from the date of the latest financial statements of the Company appearing
in the Registration Statement and Prospectus to a specified date not more than
three business days prior to the date of such letter, there have been any
decreases in net current assets or net assets as compared with amounts shown in
such financial statements or decreases in net sales or increases in total or per
share net loss compared with the corresponding period in the preceding year or
any change in the capitalization or long-term debt of the Company, except in all
cases as set forth in or contemplated by the Registration Statement and the
Prospectus, and (B) the unaudited interim financial statements of the Company,
if any, appearing in the Registration Statement and the Prospectus, do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Regulations or are not fairly presented in
conformity with generally accepted accounting principles and practices on a
basis substantially consistent with the audited financial statements included in
the Registration Statement or the Prospectus; and (iii) they have compared
specific dollar amounts, numbers of shares, numerical data, percentages of
revenues and earnings, and other financial information pertaining to the Company
set forth in the Prospectus (with respect to all dollar amounts, numbers of
shares, percentages and other financial information contained in the Prospectus,
to the extent that such amounts, numbers, percentages and information may be
derived from the general accounting records of the Company, and excluding any
questions requiring an interpretation by legal counsel) with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter,
and found them to be in agreement.
(e) There shall have been duly tendered to the Purchaser
certificates representing the Unit Shares and Class A Warrants comprising the
Units to be sold on the Closing Date.
(f) The NASD shall have indicated that it has no objection to
the Underwriting arrangements pertaining to the sale of the Shares and Warrants
by the Purchaser following the Purchaser's use of its best efforts to obtain
such an indication.
(g) If the Purchaser determines to reoffer Units, Unit Shares
and/or Class A Warrants in the United States, no action shall have been taken by
the Commission or the NASD the effect of which would make it improper, at any
time prior to the
-22-
Closing Date, for any member firm of the NASD to execute transactions (as
principal or as agent) in the Units, the Unit Shares and/or the Class A
Warrants, and no proceedings for the purpose of taking such action shall have
been instituted or shall be pending, or, to the best of the Company's knowledge,
shall be contemplated by the Commission or the NASD. The Company represents at
the date hereof, and shall represent as of the Closing Date, that it has no
knowledge that any such action is in fact contemplated by the Commission or the
NASD.
(h) The Company meets the current and any existing proposed
criteria for listing of the Unit Shares on Nasdaq Small Cap Market.
(i) All proceedings taken at or prior to the Closing Date or
the Option Closing Date, as the case may be, in connection with the
authorization, issuance and sale of the Shares and Warrants shall be reasonably
satisfactory in form and substance to the Purchaser and to Purchaser's Counsel,
and such counsel shall have been furnished with all such documents, certificates
and opinions as they may reasonably request for the purpose of enabling them to
pass upon the matters referred to in Section 6(c) hereof and in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company, the performance of any covenants of the Company,
or the compliance by the Company with any of the conditions herein contained.
(j) The Company shall have delivered to the Purchaser
agreements of Criticare, the officers and directors of the Company and
Criticare, and the individuals set forth on Schedule 5(L), not to sell or
otherwise dispose of, directly or indirectly, any of the Securities of the
Company for a period of two years from the date hereof without the prior written
consent of the Purchaser.
(k) Criticare shall have declared and paid out to its
shareholders a dividend in the form of 750,000 shares of the Common Stock of the
Company.
If any of the conditions specified in this Section 6 have not
been fulfilled in any material respect, this Agreement may be terminated by the
Purchaser on written notice to the Company.
7. Indemnification.
-23-
(a) Each of Criticare and the Company jointly and severally
agrees to indemnify and hold harmless the Purchaser, each officer, director,
partner, employee and agent of the Purchaser, including Purchaser's counsel, and
each person, if any, who controls the Purchaser within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, from and against any and all
losses, claims, damages, expenses or liabilities, joint or several (and actions
in respect thereof), to which they or any of them may become subject under the
Act or under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the Purchaser and each such person, if any,
for any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions, whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained (i) in the Registration Statement, in any
Preliminary Prospectus or in the Prospectus (or the Registration Statement or
Prospectus as from time to time amended or supplemented) or (ii) in any
application or other document executed by the Company, or made in conformity
with written information furnished by or on behalf of the Company specifically
for use in such application, filed in any jurisdiction in order to qualify the
Units, the Unit Shares and the Class A Warrants under the Blue Sky or securities
laws thereof (hereinafter "application"), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, in light of the circumstances under which they were made, unless
such untrue statement or omission was made in such Registration Statement,
Preliminary Prospectus, Prospectus or application in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by the Purchaser or any such person through the Purchaser expressly
for use therein; provided, however, that the indemnity agreement contained in
this Section 7(a) with respect to any Preliminary Prospectus will not inure to
the benefit of the Purchaser (or to the benefit of any other person that may be
indemnified pursuant to this Section 7(a)) if (A) the person asserting any such
losses, claims, damages, or liabilities purchased the Shares and/Warrants which
are the subject thereof from the Purchaser or other indemnified person; (B) the
Purchaser or other indemnified person failed to send or give a copy of the
Prospectus to such person at or prior to the written confirmation of the sale of
such Shares and/or Warrants to such person; and (C) the Prospectus did not
contain any untrue statement or alleged untrue statement or omission or alleged
-24-
omission giving rise to such cause, claim, damage, expense or liability.
(b) The Purchaser agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers and each of its employees
and agents and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, and Rade
Management Company and Rade's counsel, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions in
respect thereof), to which they or any of them may become subject under the Act
or under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the Company and each such director,
officer, employee, agent or controlling person for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any actions, whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained (i) in the Registration Statement, in any Preliminary Prospectus
or in the Prospectus (or the Registration Statement or Prospectus as from time
to time amended or supplemented) or (ii) in any application (including any
application for registration of the Shares and Warrants under state securities
or Blue Sky laws), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, in light of
the circumstances under which they were made, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by the
Purchaser expressly for use therein.
(c) Promptly after receipt of notice of the commencement of
any action in respect of which indemnity may be sought against any indemnifying
party under this Section 7, the indemnified party will notify the indemnifying
party in writing of the commencement thereof, and the indemnifying party will,
subject to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of expenses) insofar as such action relates to an alleged
liability in respect of which indemnity may be sought against the indemnifying
party. After notice from the indemnifying party of its election to assume the
defense of such claim or action, the indemnifying party shall no longer be
liable to the indemnified
-25-
party under this Section 7 for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that if, the defendants in
any such action and such parties include both the indemnifying party and the
indemnified party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, or the indemnified and indemnifying parties may have conflicting
interests which would make it inappropriate for the same counsel to represent
both of them, the indemnified party or parties shall have the right to employ a
single counsel to represent the indemnified parties who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the indemnified parties thereof against the indemnifying party, in which
event the fees and expenses of such separate counsel shall be borne by the
indemnifying party. Any party against whom indemnification may be sought under
this Section 7 shall not be liable to indemnify any person that might otherwise
be indemnified pursuant hereto for any settlement of any action effected without
such indemnifying party's consent, which consent shall not be unreasonably
withheld.
8. Contribution. To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to Section 7
hereof (subject to the limitations thereof) and it is finally determined, by a
judgment, order or decree not subject to further appeal, that such claim for
indemnification may not be enforced, even though this Agreement expressly
provides for indemnification in such case; or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the Exchange Act, or
otherwise, then the Company (including, for this purpose, any contribution made
by or on behalf of any director of the Company, any officer of the Company who
signed the Registration Statement and any controlling person of the Company) as
one entity and the Purchaser (including, for this purpose, any contribution by
or on behalf of each person, if any, who controls the Purchaser within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each
officer, director, partner, employee and agent of the Purchaser) as a second
entity, shall contribute to the losses, liabilities, claims, damages and
expenses whatsoever to which any of them may be subject, so that the Purchaser
is responsible for the proportion thereof equal to the percentage which the
underwriting discount per Share and per Warrant set forth on the cover page of
the Prospectus represents of the initial public offering price
-26-
per Share and per Warrant set forth on the cover page of the Prospectus and the
Company is responsible for the remaining portion; provided, however, that if
applicable law does not permit such allocation, then, if applicable law permits,
other relevant equitable considerations such as the relative fault of the
Company and the Purchaser in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses shall also be considered. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission or alleged omission, shall be determined by, among other things,
whether such statement, alleged statement, omission or alleged omission relates
to information supplied by the Company or by the Purchaser, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, alleged statement, omission or alleged omission. The
Company and the Purchaser agree that it would be unjust and inequitable if the
respective obligations of the Company and the Purchaser for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to in this Section
8. No person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. For purposes of this Section
8, each person, if any, who controls the Purchaser within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
partner, employee and agent of the Purchaser will have the same rights to
contribution as the Purchaser and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, each officer of the Company who has signed the Registration Statement and
each director of the Company will have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 8. Anything in
this Section 8 to the contrary notwithstanding, no party will be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 8 is intended to supersede, to the
extent permitted by law, any right to contribution under the Act or the Exchange
Act or otherwise available.
9. Survival of Indemnities, Contribution, Warranties and
Representations. The respective indemnity and contribution agreements of the
Company and the Purchaser contained in Sections 7 and 8 hereof, and the
representations and warranties of the Company contained herein shall remain
operative and in full force
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and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of the Purchaser, the Company or any of
its directors and officers, or any controlling person referred to in said
Sections, and shall survive the delivery of, and payment for, the Shares and the
Warrants.
10. Termination of Agreement.
(a) The Company, by written or telegraphic notice to the
Purchaser, or the Purchaser, by written or telegraphic notice to the Company,
may terminate this Agreement prior to the earlier of (i) 11:00 A.M., New York
City time, on the first full business day after the Effective Date; or (ii) the
time when the Purchaser, after the Registration Statement becomes effective,
releases the Units, the Unit Shares and Class A Warrants for public offering.
The time when the Purchaser "releases the Units, the Unit Shares and Class A
Warrants for public offering" for the purposes of this Section 10 means the time
when the Purchaser releases for publication the first newspaper advertisement,
which is subsequently published, relating to the Offered Warrants, or the time
when the Company's trading symbols for its Common Stock on NASDAQ are released
and trading in the Company's Common Stock and Warrants on NASDAQ commences,
whichever will first occur.
(b) This Agreement, including without limitation, the
obligation to purchase the Units, are subject to termination in the absolute
discretion of the Purchaser, by notice given to the Company prior to delivery of
and payment for the Units if, prior to such time, any of the following shall
have occurred: (i) the Company withdraws the Registration Statement from the
Commission or the Company does not or cannot expeditiously proceed with the
public offering; (ii) the representations and warranties in Section 4 hereof are
not materially correct or cannot be complied with; (iii) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange will
have been suspended; (iv) limited or minimum prices will have been established
on either such Exchange; (v) a banking moratorium will have been declared either
by federal or New York State authorities; (vi) any other restrictions on
transactions in securities materially affecting the free market for securities
or the payment for such securities, including the Units, the Unit Shares and
Class A Warrants, will be established by either of such Exchanges, by the
Commission, by any other federal or state agency, by action of the Congress or
by Executive Order; (vii) trading in any securities of the Company shall have
been suspended or halted by any national securities exchange, the NASD
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or the Commission; (viii) there has been a material adverse change in the
financial condition, business prospects or obligations of the Company; (ix) the
Company will have sustained a material loss, whether or not insured, by reason
of fire, flood, accident or other calamity; (x) any action has been taken by the
government of the United States or any department or agency thereof which, in
the judgment of the Purchaser, has had a material adverse effect upon the market
or potential market for securities in general; or (xi) the market for securities
in general or political, financial or economic conditions will have so
materially adversely changed that, in the judgment of the Purchaser, it will be
impracticable to offer for sale, or to enforce contracts made by the Purchaser
for the resale of, the Units, the Unit Shares and Class A Warrants.
(c) If this Agreement is terminated pursuant to Section 6
hereof or this Section 10 or if the purchases provided for herein are not
consummated because any condition of the Purchaser's obligations hereunder is
not satisfied or because of any refusal, inability or failure on the part of the
Company to comply with any of the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company shall be unable to or does not
perform all of its obligations under this Agreement, the Company will not be
liable to the Purchaser for damages on account of loss of anticipated profits
arising out of the transactions covered by this Agreement, but the Company will
remain liable to the extent provided in Sections 7, 8 and 9 of this Agreement.
11. Information Furnished by the Purchaser to the Company. It is
hereby acknowledged and agreed by the parties hereto that for the purposes of
this Agreement, including, without limitation, Sections 4(f), 7(a), 7(b) and 8
hereof, the only information given by the Purchaser to the Company for use in
the Prospectus are the statements set forth in the last sentence of the last
paragraph on the cover page, the statement, if any, appearing in the last
paragraph on page 2 with respect to stabilizing the market price of the Units,
the Unit Shares and Class A Warrants, the information in paragraph on page with
respect to the fees received by the Purchaser as placement agent in connection
with any bridge financing and the information in the last paragraph on page with
respect to the determination of the public offering prices, as such information
appears in any Preliminary Prospectus and in the Prospectus.
12. Notices and Governing Law. All communications hereunder will be
in writing and, except as otherwise provided,
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will be delivered at, or mailed by certified mail, return receipt requested, or
telegraphed to, the following addresses: if to the Purchaser, to New China Hong
Kong Capital Limited, __________________ Hong Kong, Attention:
__________________; with copies to __________________ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; if to the Company, addressed to it at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇,
Carton & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
This Agreement shall be deemed to have been made and delivered
in New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. The Company (1) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (2) waives any objection
which the Company may have now or hereafter to the venue of any such suit,
action or proceeding, and (3) irrevocably consents to the jurisdiction of the
New York State Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. The Company further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
the New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of
process upon the Company mailed by certified mail to the Company's address shall
be deemed in every respect effective service of process upon the Company, in any
such suit, action or proceeding.
13. Parties in Interest. This Agreement is made solely for the
benefit of the Purchaser, the Company and, to the extent expressed, any person
controlling the Company or the Purchaser, each officer, director, partner,
employee and agent of the Purchaser, the directors of the Company, its officers
who have signed the Registration Statement, and their respective executors,
administrators, successors and assigns, and, no other person will acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" will not include any purchaser of the Units, the Unit Shares or Class A
Warrants from the Purchaser, as such purchaser.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the
Purchaser in accordance with its terms.
Very truly yours,
IMMTECH INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
CRITICARE SYSTEMS, INC.
By:
-----------------------------------
Name:
Title:
Confirmed and accepted in
________________, N.Y., as of the
date first above written:
NEW CHINA HONG KONG LIMITED
By:
-----------------------------------
Name:
Title:
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