IMMTECH INTERNATIONAL, INC.
700,000 SHARES OF COMMON STOCK
INTERNATIONAL UNDERWRITING AGREEMENT
, 1999
New China Hong Kong Securities Limited
as International Representative of the International Underwriters
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Dear Sirs:
Immtech International, Inc.. a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "International Underwriters"), seven hundred thousand shares of
Common Stock (the "Initial International Securities"). The Company hereby
confirms the agreement made by it with respect to the purchase of the Securities
by the International Underwriters, which Securities are more fully described in
the Registration Statement referred to below. New China Hong Kong Securities
Limited is referred to herein as the "International Underwriter" or the
"International Representative."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Underwriting Agreement") providing
for (i) the offering by the Company of an aggregate of 300,000 shares of Common
Stock (the "International U.S. Securities") through arrangements with certain
underwriters in the United States (the "U.S. Underwriters") for which Westport
Resources Investment Services, Inc. is acting as representative (the "U.S.
Representative"); (ii) the grant by the Company to the U.S. Underwriters, acting
severally and not jointly, of an option to purchase all or any part of the U.S.
Underwriters' pro rata portion of up to 45,000 additional shares of Common Stock
("U.S. Option Securities") solely to cover overallotments, if any; and (iii) the
offering by the Company to the U.S. Representative (together with the
International Representative) of warrants to purchase up to 100,000 shares of
Common Stock. It is understood that the Company is not obligated to sell and the
International Underwriters are not obligated to purchase, any Initial
International Securities unless all of the Initial U.S. Securities are
contemporaneously purchased by the U.S. Underwriters.
You have advised the Company that the International Underwriters desire to
act on a firm commitment basis to offer and sell the International Securities
for the Company and that you are authorized to execute this Agreement. The
Company confirms the agreement made by it with respect to the relationship with
the International Underwriters as follows:
1. Filing of Registration Statement with S.E.C. and Definitions. A
Registration Statement and Prospectus on Form SB-2 (File No.333-64393) with
respect to the Securities has been carefully and accurately prepared by the
Company in conformity with the requirements of the Securities Act of 1933,
as amended (the "Act"), and the published rules and regulations (the "Rules and
Regulations") thereunder or under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and has been filed with the Securities and Exchange
Commission (the "Commission") and such other states that the International Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one to the International Securities (the "Form of International
Prospectus"). The Form of International Prospectus is identical to the Form of
U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting" and the inclusion in the Form of
International Prospectus of a section under the caption "Certain United States
Tax Considerations Applicable to Non- U.S. Holders of the Common Stock." Such
registration statement, including the prospectuses, Part II, and all financial
schedules and exhibits thereto, as amended at the time when it shall become
effective, is herein referred to as the "Registration Statement," and the
prospectuses included as part of the Registration Statement on file with the
Commission that discloses all the information that was omitted from the
prospectuses on the effective date pursuant to Rule 430A of the Rules and
Regulations with any changes contained in any prospectuses filed with the
Commission by the Company with the International Underwriters consent after the
effective date of the Registration Statement, is herein referred to as the
"Final Prospectus." The prospectuses included as part of the Registration
Statement of the Company and in any amendments thereto prior to the effective
date of the Registration Statement is referred to herein as a "Preliminary
Prospectus."
2. Discount, Delivery, and Sale of the Securities
a. Subject to the terms and conditions of this Agreement, and on the
basis of the representations, warranties, and agreements herein contained,
the Company agrees to sell to, and the International Underwriters agree to
buy from the Company at a purchase price of $______ per share before any
underwriter expense allowances, an aggregate of 700,000 shares of Common
Stock on a firm commitment basis the "Initial International Securities".
It is understood that the International Underwriters propose to
offer the International Securities to be purchased hereunder upon the
terms and conditions set forth in the Registration Statement, after the
Registration Statement becomes effective.
b. Delivery of the Initial International Securities against payment
of the purchase price therefor by certified or official bank check or
checks or wire transfer in next-day funds, payable to the order of the
Company shall take place at the offices of the clearing broker for the
International Underwriter at New York City, within three (3) business days
after the Initial International Securities are first traded (or such other
place as may be designated by agreement between you and the Company) at
11:00 A.M., New York time or such time and date as you and the Company may
agree upon in writing, such time and date of payment and delivery for the
Initial International Securities being herein called the "Initial Closing
Date."
The Company will make the certificates for the shares of Common
Stock to be purchased by the International Underwriters hereunder
available to the International Underwriters for inspection and packaging
at least two (2) full business days prior to the Initial Closing Date. The
certificates shall be in such names and denominations as the International
Underwriters may request to the Company in writing at least two (2) full
business days prior to any Closing Date.
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c. In addition, subject to the terms and conditions of this
Agreement and on the basis of the representations, warranties and
agreements herein contained, the Company grants an option to the
International Underwriters to purchase up to an additional 105,000 shares
of Common Stock (" International Option Securities") at the same terms as
the International Underwriters shall pay for the Initial International
Securities being sold by the Company pursuant to the provisions of Section
2(a) hereof. This option may be exercised from time to time, for the
purpose of covering overallotments, within forty-five (45) days after (i)
the effective date of the Registration Statement if the Company has
elected not to rely on Rule 430A under the Rules and Regulations or (ii)
the date of this Agreement if the Company has elected to rely upon Rule
430A under the Rules and Regulations, upon written notice by the
International Underwriter setting forth the number of International Option
Securities as to which the International Underwriter is exercising the
option and the time and date at which such certificates are to be
delivered. Such time and date shall be determined by the International
Underwriter but shall not be earlier than four (4) nor later than ten (10)
full business days after the date of the exercise of said option. Nothing
herein shall obligate the International Underwriter to make any
overallotment.
d. Definitive certificates in negotiable form for the Initial
International Securities to be purchased by the International Underwriter
hereunder will be delivered at the closing by the Company to the
International Underwriters against payment of the purchase price by the
International Underwriters by certified or bank cashier's checks or wire
transfer in next day funds payable to the order of the Company.
e. The information set forth under "Underwriting" in any preliminary
prospectus and Prospectus relating to the Initial International Securities
and the information set forth in the third full paragraph on page 2
concerning stabilization and over-allotment by the International
Underwriters, and (insofar as such information relates to the
International Underwriters) constitutes the only information furnished by
the International Underwriter to the Company for inclusion therein, and
you represent and warrant to the Company that the statements made therein
are correct.
f. On the Initial Closing Date, the Company shall issue and sell to
the International Representative, warrants (the "International
Representative's Warrants") at a purchase price of $.01 per
Representative's Warrant, which shall entitle the holders thereof to
purchase an aggregate of 70,000 shares of Common Stock. The shares of
common stock issuable upon the exercise of the Representative's Warrants
are hereafter referred to as the "International Representative's
Securities" or "International Representative's Warrants." The
International Representative's Warrants shall be exercisable for a period
of four (4) years commencing twelve (12) months from the effective date of
the Final Prospectus at a price equaling one hundred twenty percent (120%)
of the initial public offering price of the Initial International
Securities. The form of Representative's Warrant Certificate shall be
substantially in the form filed as an Exhibit to the Registration
Statement. Payment for the International Representative's Warrant shall be
made on the Initial Closing Date.
3. Representations and Warranties of the Company.
a. The Company represents and warrants to you as follows:
(1) The Company has prepared and filed with the Commission a
registration statement, and an amendment or amendments thereto, on
Form SB-2 (No.333-64393), including any related preliminary
prospectus ("Preliminary Prospectus"), for the registration of the
Initial International
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Securities, the International Option Securities, the International
Representative's Warrant (sometimes referred to herein collectively
as the "International Securities"), under the Act, which
registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the
Act, and the Rules and Regulations. The Company will promptly file a
further amendment to said registration statement in the form
heretofore delivered to the International Underwriter and will not
file any other amendment thereto to which the International
Underwriter shall have objected verbally or in writing after having
been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file
with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, any
schedules, exhibits and all other documents filed as a part thereof
or that may be incorporated therein (including, but not limited to
those documents or information incorporated by reference therein)
and all information deemed to be a part thereof as of such time
pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations), is hereinafter called the "Registration Statement,"
and the form of prospectus in the form first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, is
hereinafter called the "Prospectus."
(2) Neither the Commission nor any state regulatory authority
has issued any order preventing or suspending the use of any
Prospectus or the Registration Statement and no proceeding for an
order suspending the effectiveness of the Registration Statement or
any of the Company's securities has been instituted or is pending or
threatened. Each such Prospectus and/or any supplement thereto has
conformed in all material respects with the requirements of the Act
and the Rules and Regulations and on its date did not include any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, in light of
the circumstances under which they were made and (i) the Prospectus
and/or any supplement thereto will contain all statements which are
required to be stated therein by the Act and Rules and Regulations,
and (ii) the Prospectus and/or any supplement thereto will not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances
under which they were made; provided, however, that no
representations, warranties or agreements are made hereunder as to
information contained in or omitted from the Prospectus in reliance
upon, and in conformity with, the written information furnished to
the Company by you as set forth in Section 2(e) above.
(3) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
state of its incorporation, with full power and authority (corporate
and other) to own its properties and conduct its businesses as
described in the Prospectus and is duly qualified to do business as
a foreign corporation in good standing in all other jurisdictions in
which the nature of its business or the character or location of its
properties requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the business,
properties or operations of the Company and the subsidiaries as a
whole.
(4) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Initial International
Securities, the International Option Securities and the
International Representative's Securities; to enter into this
Agreement, the U.S. Underwriting Agreement, the Representative's
Warrant Agreement dated as of the Initial Closing Date to be
executed and delivered by the Company to the International
Representative (the "International Representative's
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Warrant Agreement"); and to consummate the transactions provided for
in such agreements. Each of such agreements has been duly and
properly authorized, and on the Initial Closing Date will be duly
and properly executed and delivered by the Company. This Agreement
and the U.S. Underwriting Agreement constitute and, on the Initial
Closing Date, with the International Representative's Warrant
Agreement will then constitute valid and binding agreements,
enforceable in accordance with their respective terms (except as the
enforceability thereof may be limited by bankruptcy or other similar
laws affecting the rights of creditors generally or by general
equitable principles and except as the enforcement of
indemnification provisions may be limited by federal or state
securities laws).
(5) Except as disclosed in the Prospectus, the Company is not
in violation of its respective certificate or articles of
incorporation or bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any material bond, debenture, note or other
evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture, partnership or other
agreement or instrument to which the Company is a party or by which
it may be bound or is not in material violation of any law, order,
rule, regulation, writ, injunction or decree of any governmental
instrumentality or court, domestic or foreign; and the execution and
delivery of this Agreement, the U.S. Underwriting Agreement and the
International Representative's Warrant Agreement; and the
consummation of the transactions contemplated therein and in the
Prospectus and compliance with the terms of each such agreement will
not conflict with, or result in a material breach of any of the
terms, conditions or provisions of, or constitute a material default
under, or result in the imposition of any material lien, charge or
encumbrance upon any of the property or assets of the Company
pursuant to, any material bond, debenture, note or other evidence of
indebtedness or any material contract, indenture, mortgage, loan
agreement, lease, joint venture, partnership or other agreement or
instrument to which the Company is a party nor will such action
result in the material violation by the Company of any of the
provisions of its respective certificate or articles of
incorporation or bylaws or any law, order, rule, regulation, writ,
injunction, decree of any government, governmental instrumentality
or court, domestic or foreign, except where such violation will not
have a material adverse effect on the financial condition of the
Company.
(6) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus and the Company will
have the adjusted capitalization set forth therein on the Initial
Closing Date; all of the shares of issued and outstanding capital
stock of the Company set forth therein have been duly authorized,
validly issued and are fully paid and nonassessable; the holders
thereof do not have any rights of rescission with respect therefor
and are not subject to personal liability for any obligations of the
Company by reason of being stockholders under the laws of the state
in which the Company is incorporated; none of such outstanding
capital stock is subject to or was issued in violation of any
preemptive or similar rights of any stockholder of the Company; and
such capital stock (including the Initial International Securities,
the Option Securities and the International Representative's
Securities) conforms in all material respects to all statements
relating thereto contained in the Prospectus.
(7) The Company is not a party to or bound by any instrument,
agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for
this Agreement, the U.S. Underwriting Agreement, the International
Representative's Warrant Agreement, and as described in the
Prospectus. The Initial International
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Securities, the International Option Securities and the
International Representative's Securities are not and will not be
subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof and thereof, will
be validly issued, fully paid and non-assessable and will conform to
the respective descriptions thereof contained in the Prospectus;
except for payment of the applicable purchase price payable upon
exercise of the options or warrants, as the case may be, the holders
thereof will not be subject to any liability solely as such holders;
all corporate action required to be taken for the authorization,
issue and sale of the Initial International Securities, the
International Option Securities and the International
Representative's Securities has been duly and validly taken; and the
certificates representing the Initial International Securities, the
International Option Securities and the International
Representative's Securities will be in due and proper form. Upon the
issuance and delivery pursuant to the terms of this Agreement, the
U.S. Underwriting Agreement and the International Representative's
Warrant Agreement of the Initial International Securities, the
Option Securities and the Representative's Securities to be sold by
the Company hereunder, the International Underwriter will acquire
good and marketable title to such securities free and clear of any
lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction of any kind whatsoever other than restrictions
as may be imposed under the securities laws.
(8) The Company has good and marketable title to all
properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions,
except such as are described or referred to in the Prospectus or
which are not materially significant or important in relation to its
business or which have been incurred in the ordinary course of
business; except as described in the Prospectus, all of the leases
and subleases under which the Company holds properties or assets as
lessee or sublessee as described in the Prospectus are in full force
and effect, and the Company is not in material default in respect of
any of the terms or provisions of any of such leases or subleases,
and no claim has been asserted by anyone adverse to the Company's
rights as lessor, sublessor, lessee or sublessee under any of the
leases or subleases mentioned above or affecting or questioning the
Company's right to the continued possession of the leased or
subleased premises or assets under any such lease or sublease; and
the Company owns or leases all such properties as are necessary to
its operations as now conducted and as contemplated to be conducted,
except as otherwise stated in the Prospectus.
(9) The financial statements, together with related notes, set
forth in the Prospectus fairly present the financial position and
results of operations of the Company at the respective dates and for
the respective periods to which they apply. Said statements and
related notes have been prepared in accordance with generally
accepted accounting principles applied on a basis which is
consistent in all material respects during the periods involved but
any stub period has not been audited by an independent accounting
firm. There has been no material adverse change or material
development involving a prospective change in the condition,
financial or otherwise, or in the prospects, value, operation,
properties, business or results of operations of the Company whether
or not arising in the ordinary course of business, since the date of
the financial statements included in the Registration Statement and
the Prospectus.
(10) Subsequent to the respective dates as of which
information is given in the Prospectus as it may be amended or
supplemented, and except as described in the Prospectus, the Company
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has not, directly or indirectly, incurred any liabilities or
obligations, direct or contingent, not in the ordinary course of
business or entered into any transactions not in the ordinary course
of business, which are material to the business of the Company as a
whole and there has not been any change in the capital stock of, or
any incurrence of long term debts by, the Company or any issuance of
options, warrants or rights to purchase the capital stock of the
Company or declaration or payment of any dividend on the capital
stock of the Company or any material adverse change in the condition
(financial or otherwise), net worth or results of operations of the
Company as a whole and the Company has not become a party to, any
material litigation whether or not in the ordinary course of
business.
(11) To the knowledge of the Company, there is no pending or
threatened, action, suit or proceeding to which the Company is a
party before or by any court or governmental agency or body, which
might result in any material adverse change in the condition
(financial or otherwise), business or prospects of the Company as a
whole or might materially and adversely affect the properties or
assets of the Company as a whole nor are there any actions, suits or
proceedings against the Company related to environmental matters or
related to discrimination on the basis of age, sex, religion or race
which might be expected to materially and adversely affect the
conduct of the business, property, operations, financial condition
or earnings of the Company as a whole; and no labor disturbance by
the employees of the Company individually exists or is, to the
knowledge of the Company, imminent which might be expected to
materially and adversely affect the conduct of the business,
property, operations, financial condition or earnings of the Company
as a whole.
(12) Except as may be disclosed in the Prospectus, the Company
has properly prepared and filed all necessary federal, state, local
and foreign income and franchise tax returns, has paid all taxes
shown as due thereon, has established adequate reserves for such
taxes which are not yet due and payable, and does not have any tax
deficiency or claims outstanding, proposed or assessed against it.
(13) The Company has sufficient licenses, permits, right to
use trade or service marks and other governmental authorizations
currently required for the conduct of its business as now being
conducted and as contemplated to be conducted and the Company is in
all material respects complying therewith. Except as set forth in
the Prospectus, the expiration of any such licenses, permits, or
other governmental authorizations would not materially affect the
Company's operations. To its knowledge, none of the activities or
businesses of the Company are in material violation of, or cause the
Company to materially violate any law, rule, regulations, or order
of the United States, any state, county or locality, or of any
agency or body of the United States or of any state, county or
locality.
(14) The Company has not at any time (i) made any
contributions to any candidate for political office in violation of
law, or failed to disclose fully any such contribution, 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.
(15) Except as set forth in the Prospectus the Company knows
of no outstanding claims for services either in the nature of a
finder's fee, brokerage fee or otherwise with respect to this
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financing for which the Company or the International Underwriters
may be responsible, except as otherwise disclosed in the Prospectus
or known by the International Underwriters.
(16) The Company has its property adequately insured against
loss or damage by fire and maintains such other insurance as is
customarily maintained by companies in the same or similar business.
(17) The International Representative's Warrants herein
described are duly and validly authorized and upon delivery to the
International Representative in accordance herewith will be duly
issued and legal, valid and binding obligations of the Company,
except as the enforceability thereof may be limited by bankruptcy or
other similar laws affecting the rights of creditors generally or by
equitable principles, and except as the enforcement of
indemnification provisions may be limited by federal or state
securities laws.
The International Representative's Securities issuable upon
exercise of any of the International Representative's Warrants have
been duly authorized, and when issued upon payment of the exercise
price therefor, will be validly issued, fully paid and
nonassessable.
(18) Except as set forth in the Prospectus, no default exists
in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement,
purchase order, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or
instrument to which the Company is a party or by which the Company
may be bound or to which the property or assets (tangible or
intangible) of the Company is subject or affected.
(19) To the best of the Company's knowledge it has generally
enjoyed a satisfactory employer-employee relationship with its
employees and, to the best of its knowledge, is in substantial
compliance in all material respects with all federal, state, local,
and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages
and hours. To the best of the Company's knowledge, there are no
pending investigations involving the Company, by the U.S. Department
of Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and
regulations. To the best of the Company's knowledge, there is no
unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or
threatened against or to its knowledge involving the Company, or any
predecessor entity, and none has ever occurred. To the best of the
Company's knowledge, no representation question is pending
respecting the employees of the Company, and no collective
bargaining agreement or modification thereof is currently being
negotiated by the Company. To the best of the Company's knowledge,
no grievance or arbitration proceeding is pending or to its
knowledge threatened under any expired or existing collective
bargaining agreements of the Company. No labor dispute with the
employees of the Company is pending, or, to its knowledge is
imminent; and the Company is not aware of any pending or imminent
labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors which may result in any
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the
Company.
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(20) Except as may be set forth in the Registration Statement,
the Company does not maintain, sponsor or contribute to any program
or arrangement that is an "employee pension benefit plan," an
"employee welfare benefit plan," or a "multiemployer plan" as such
terms are defined in Sections 3(2), 3(l) and 3(37), respectively, of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or
contribute, now or at any time previously, to a defined benefit
plan, as defined in Section 3(35) of ERISA. No ERISA Plan (or any
trust created thereunder) has engaged in a "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code (the "Code"), which could subject the Company
to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in compliance with all
material reporting, disclosure and other requirements of the Code
and ERISA as they relate to any such ERISA Plan. Determination
letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code
Section 401 (a), stating that such ERISA Plan and the attendant
trust are qualified thereunder. The Company has never completely or
partially withdrawn from a "multiemployer plan."
(21) None of the Company, or any of its employees, directors,
stockholders, or affiliates (within the meaning of the Rules and
Regulations) has taken or will take, directly or indirectly, any
action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
International Securities, International Option Securities,
International Representative's Securities or otherwise.
(22) None of the patents, patent applications, trademarks,
service marks, trade names, copyrights, and licenses and rights to
the foregoing presently owned or held by the Company, are in dispute
or, to the best knowledge of the Company's management are in any
conflict with the right of any other person or entity. The Company,
(i) except as disclosed in the Prospectus, owns or has the right to
use, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or
proposed to be conducted without infringing upon or otherwise acting
adversely to the right or claimed right of any person, corporation
or other entity under or with respect to any of the foregoing, and
(ii) except as set forth in the Prospectus or otherwise disclosed to
the International Underwriter in writing, to the best knowledge of
the Company's management is not obligated or under any liability
whatsoever to make any material payments by way of royalties, fees
or otherwise to any owner or licensee of, or other claimant to, any
patent, trademark, service xxxx, trade name, copyright, know-how,
technology or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or
otherwise.
(23) Except as disclosed in the Prospectus, the Company owns
and has adequate right to use to the best knowledge of the Company's
management all trade secrets, formulas, copyrights, know-how
(including all other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), inventions,
trademarks, service marks, trade names, designs, processes, works of
authorship, computer programs and technical data and information
(collectively herein "intellectual property") required for or
incident to the development, manufacture, operation and sale of all
products and services sold or proposed to be sold by the Company.
The Company is not aware of any such development of similar or
identical trade
9
secrets or technical information by others. The Company has valid
and binding confidentiality agreements with all of its officers,
covering its intellectual property (subject to the equitable powers
of any court), which agreements have remaining terms of at least two
years from the effective date of the Registration Statement except
where the failure to have such agreements would not materially and
adversely effect the Company's business taken as a whole. The
Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated
in the Prospectus, to be owned or leased by it free and clear of all
liens, charges, claims, encumbrances, pledges, security interests,
defects, or other restrictions or equities of any kind whatsoever,
other than those referred to in the Prospectus and liens for taxes
not yet due and payable.
(24) Deloitte & Touche LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules
and Regulations.
(25) The Company has agreed to cause to be duly executed
agreements pursuant to which each of the Company's officers and
directors, holders of 5% or more (the "5% Holders") of the
outstanding shares of the Company's stock and the holders of 553,896
stock options ("Option Holders") have agreed not to, directly or
indirectly, sell, assign, transfer, or otherwise dispose of any
shares of Common Stock or securities convertible into, exercisable
or exchangeable for or evidencing any right to purchase or subscribe
for any shares of Common Stock (either pursuant to Rule 144 of the
Rules and Regulations or otherwise) for a period of not less than
twelve (12) months following such effective date without the prior
written consent of the International Underwriter. The 5% Holders and
the Option Holders have further agreed with and for the
International Representative not to sell or transfer any of their
shares unless the share market price, adjusted for splits and like
transactions, closes at or above $20.00 for a period of 20
consecutive days within 10 days prior to sale by them. The Company
will cause the Transfer Agent, as defined below, to xxxx an
appropriate legend on the face of stock certificates representing
all of such securities and to place "stop transfer" orders on the
Company's stock ledgers.
(26) The Registered Securities have been approved for listing
on NASDAQ or an Exchange.
(27) Except as set forth in the Prospectus or disclosed in
writing to the International Underwriter (which writing specifically
refers to this Section), no officer or director of the Company,
holder of 5% or more of securities of the Company or any "affiliate"
or "associate" (as these terms are defined in Rule 405 promulgated
under the Rules and Regulations) of any of the foregoing persons or
entities has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to
be furnished or sold by the Company, or (B) purchases from or sells
or furnishes to the Company any goods or services, or (ii) has a
beneficiary interest in any contract or agreement to which the
Company is a party or by which it may be bound or affected. Except
as set forth in the Prospectus under "Certain Transactions" or
disclosed in writing to the International Underwriter (which writing
specifically refers to this Section), there are no existing
agreements, arrangements, understandings or transactions, or
proposed agreements, arrangements, understandings or transactions,
between or among the Company, and any officer, director,
10
principal stockholder of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(28) Any certificate signed by any officer of the Company, and
delivered to the International Underwriter or to the International
Underwriter's counsel (as defined herein) shall be deemed a
representation and warranty by the Company to the International
Underwriter as to the matters covered thereby.
(29) Each of the minute books of the Company has been made
available to the International Underwriter and contains a complete
summary of all meetings and actions of the directors and
stockholders of the Company, since the time of its incorporation and
reflect all transactions referred to in such minutes accurately in
all respects.
(30) Except and only to the extent described in the Prospectus
or disclosed in writing to the International Underwriter (which
writing specifically refers to this Section), no holders of any
securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right
to include any securities issued by the Company in the Registration
Statement or any registration statement to be filed by the Company
or to require the Company to file a registration statement under the
Act and no person or entity holds any anti-dilution rights with
respect to any securities of the Company. Except as disclosed in the
Prospectus, all rights so described or disclosed have been waived or
have not been triggered with respect to the transactions
contemplated by this Agreement, the U.S. Underwriting Agreement and
the Representative's Warrant Agreement (including the warrants
issuable thereunder).
(31) The Company has not entered into any employment
agreements with its executive officers, except as disclosed in the
Prospectus.
(32) No consent, approval, authorization or order of, and no
filing with, any court, regulatory body, government agency or other
body, domestic or foreign, is required for the issuance of the
International Registered Securities pursuant to the Prospectus and
the Registration Statement, the issuance of the International
Underwriter's Warrants, the performance of this Agreement, the U.S.
Underwriting Agreement, the International Representative's Warrant
Agreement, and the transactions contemplated hereby and thereby,
including without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the
issue and/or sale of any of the Initial International Securities,
the International Option Securities and the International
Underwriter's Securities, except such as have been or may be
obtained under the Act, otherwise or may be required under state
securities or blue sky laws in connection with the International
Underwriter's purchase and distribution of the Initial International
Securities, the International Option Securities, the International
Representative's Securities and the International Underwriter's
Warrants to be sold by the Company hereunder.
(33) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other documents filed as
exhibits to the Registration Statement to which the Company is a
party or by which it may be bound or to which its assets, properties
or businesses may be subject have been duly and validly authorized,
executed and delivered by the Company and constitute the legal,
valid and binding agreements of the Company, enforceable against the
Company, in accordance with their respective terms. The descriptions
in the
11
Registration Statement of agreements, contracts and other documents
are accurate and fairly present the information required to be shown
with respect thereto by Form SB-2, and there are no contracts or
other documents which are required by the Act to be described in the
Registration Statement or filed as exhibits to the Registration
Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of
the documents of which they purport to be copies.
(34) Within the past five (5) years, none of the Company's
independent public accountants has brought to the attention of the
Company's management any "material weakness" as defined in the
Statement of Auditing Standard No. 60 in any of the Company's
internal controls.
4. Covenants of the Company. The Company covenants and agrees with you
that:
a. It will cooperate in all respects in making the Prospectus
effective and will not at any time, whether before or after the effective
date, file any amendment to or supplement to the Prospectus of which you
shall not previously have been advised and furnished with a copy or to
which you or your counsel shall have reasonably objected or which is not
in material compliance with the Act and the Rules and Regulations.
As soon as the Company is advised thereof, the Company will advise
you, and confirm the advice in writing, of the receipt of any comments of
the Commission or any state securities department, when the Registration
Statement becomes effective if the provisions of Rule 430A promulgated
under the Act will be relied upon, when the Prospectus has been filed in
accordance with said Rule 430A, of the effectiveness of any posteffective
amendment to the Registration Statement or Prospectus, or the filing of
any supplement to the Prospectus or any amended Prospectus, of any request
made by the Commission or any state securities department for amendment of
the Prospectus or for supplementing of the Prospectus or for additional
information with respect thereto, of the issuance of any stop order
suspending the effectiveness of the Prospectus or any order preventing or
suspending the use of any Prospectus or any order suspending trading in
the Common Stock of the Company, or of the suspension of the qualification
of the Initial International Securities, the International Option
Securities or the International Representatives Securities for offering in
any jurisdiction, or of the institution of any proceedings for any such
purposes, and will use its best efforts to prevent the issuance of any
such order and, if issued, to obtain as soon as possible the lifting or
dismissal thereof.
The Company has caused to be delivered to you copies of such
Prospectus, and the Company has consented and hereby consents to the use
of such copies for the purposes permitted by law. The Company authorizes
you and the dealers to use the Prospectus and such copies of the
Prospectus in connection with the sale of the Initial International
Securities, the International Option Securities and the International
Representative's Securities for such period as in the opinion of your
counsel and our counsel the use thereof is required to comply with the
applicable provisions of the Act and the Rules and Regulations. The
Company will prepare and file with the states, promptly upon your request,
any such amendments or supplements to the Prospectus, and take any other
action, as, in the opinion of your counsel, may be necessary or advisable
in connection with the initial sale of the Initial International
Securities, the International Option Securities and the International
Underwriter's Securities and will use its best efforts to cause the same
to become effective as promptly as possible.
12
The Company shall file the Prospectus (in form and substance
satisfactory to the International Underwriter) or transmit the Prospectus
by a means reasonably calculated to result in filing with the Commission
pursuant to rule 424(b)(1) or pursuant to Rule 424(b)(3) not later than
the Commission's close of business on the earlier of (i) the second
business day following the execution and delivery of this Agreement, and
(ii) the fifth business day after the effective date of the Registration
Statement.
In case of the happening, at any time within such period as a
Prospectus is required under the Act to be delivered in connection with
the sale of the Initial International Securities, the International Option
Securities and the International Representative's Securities of any event
of which the Company has knowledge and which materially affects the
Company, or the securities thereof, and which should be set forth in an
amendment of or a supplement to the Prospectus in order to make the
statements therein not then misleading, in light of the circumstances
existing at the time the Prospectus is required under the Act to be
delivered, or in case it shall be necessary to amend or supplement the
Prospectus to comply with the Act, the Rules and Regulations or any other
law, the Company will forthwith prepare and furnish to you copies of such
amended Prospectus or of such supplement to be attached to the Prospectus,
in such quantities as you may reasonably request, in order that the
Prospectus, as so amended or supplemented, will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they are made. The
preparation and furnishing of any such amendment or supplement to the
Prospectus or supplement to be attached to the Prospectus shall be without
expense to you.
The Company will to the best of its ability comply with the Act, the
Exchange Act and applicable state securities laws so as to permit the
initial offer and sales of the Initial International Securities, the
International Option Securities and the International Representatives
Securities under the Act, the Rules and Regulations, and applicable state
securities laws.
b. It will cooperate to qualify the Initial International Securities
and the International Option Securities and the International
Representative's Securities for initial sale under the securities laws of
such jurisdictions as you may designate and will make such applications
and furnish such information as may be required for that purpose, provided
the Company shall not be required to qualify as a foreign corporation or a
dealer in securities. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue
such qualification in effect for so long as the International Underwriter
may reasonably request.
c. So long as any of the Initial International Securities, the
International Option Securities or the International Representative's
Securities remain outstanding in the hands of the public, the Company, at
its expense, will annually furnish to its shareholders a report of its
operations to include financial statements audited by independent public
accountants, and will furnish to the International Underwriter as soon as
practicable after the end of each fiscal year, a balance sheet of the
Company as at the end of such fiscal year, together with statements of
operations, shareholders' equity, and changes in cash flow of the Company
for such fiscal year, all in reasonable detail and accompanied by a copy
of the certificate or report thereon of independent public accountants.
d. It will deliver to you at or before the Initial Closing Date
three signed copies of the Registration Statement including all financial
statements and exhibits filed therewith, whether or not incorporated by
reference. The Company will deliver to you, from time to time until the
effective
13
date of the Prospectus, as many copies of the Prospectus as you may
reasonably request. The Company will deliver to you on the effective date
of the Prospectus and thereafter for so long as a Prospectus is required
to be delivered under the Act and the Rules and Regulations as many copies
of the Prospectus, in final form, or as thereafter amended or
supplemented, as you may from time to time reasonably request.
e. The Company will apply the net proceeds from the sale of the
Initial International Securities and the International Option Securities
substantially in the manner set forth under "Use of Proceeds" in the
Prospectus. No portion of the proceeds shall be used, directly or
indirectly, to acquire any securities issued by the Company, without the
prior written consent of the International Underwriter.
f. As soon as it is practicable, but in any event not later than the
first (lst) day of the fifteenth (15th) full calendar month following the
effective date of the Registration Statement, the Company will make
available to its security holders and the International Underwriter an
earnings statement (which need not be audited) covering a period of at
least twelve (12) consecutive months beginning after the effective date of
the Registration Statement, which shall satisfy the requirements of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations.
g. Non-Accountable Expense Allowance and other Costs and Expenses.
The Company shall pay to the International Underwriter at each
closing date, an amount equal to three percent (3%) of the gross proceeds
received by the Company from the sale of the Initial International
Securities and the International Option Securities at such closing date.
If the sale of the Initial International Securities by the International
Underwriter is not consummated for any reason not attributable to the
International Underwriter, or if (i) the Company withdraws the
Registration Statement from the Commission or does not proceed with the
public offering, or (ii) the representations in Section 3 hereof are not
correct or the covenants cannot be complied with, or (iii) there has been
a materially adverse change in the condition, prospects or obligations of
the Company or a materially adverse change in stock market conditions from
current conditions, all as determined by the International Underwriter,
then the Company shall reimburse the International Underwriter for its out
of pocket expenses including without limitation, its legal fees and
disbursements all on an accountable basis.
Costs and Expenses. Subject to the provisions above, the Company
will pay all costs and expenses incident to the performance of this
Agreement, the U.S. Underwriting Agreement and the International
Representative's Warrant Agreement including, but not limited to, the fees
and expenses of counsel to the Company and of the Company's accountants;
the costs and expenses incident to the preparation, printing, filing and
distribution under the Act of the Registration Statement and Prospectus
(including the fee of the Commission, any securities exchange and the
NASD; all expenses, including fees of counsel, which shall be due and
payable on the Closing Date in connection with the qualification of the
International Securities under the state securities or blue sky laws; the
cost of furnishing to you copies of the Prospectus; the cost of printing
the certificates representing the International Securities and of
preparing and photocopying this Agreement, the U.S. Underwriting
Agreement, the International Representative's Warrant Agreement and
related Underwriting documents; the cost of three underwriter's bound
volumes; any advertising costs and expenses, including but not limited to
the Company's expenses on "road show" information meetings and
presentations, prospectus memorabilia, issue and transfer taxes, if any.
The Company will also
14
pay all costs and expenses incident to the furnishing of any amended
Prospectus of or any supplement to be attached to the Prospectus.
h. As a condition of the closing, the Company shall obtain from its
officers and directors of the Company written commitments restricting the
sale of 100% of their common stock for (12) months after the closing.
i. During the period ending five years after the date hereof, the
Company will make available to its shareholders, as soon as practicable,
and deliver to the International Underwriter:
(1) as soon as they are available, copies of all reports
(financial or other) mailed to shareholders;
(2) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the
NASD or any securities exchange;
(3) every press release and every material news item or
article of interest to the financial community in respect of the
Company or its affairs which was prepared and released by or on
behalf of the Company; and
(4) any additional information of a public nature concerning
the Company (and any future subsidiaries) or its businesses which
the International Underwriter may request.
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company
and its subsidiaries are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which is
not so consolidated.
j. The Company will maintain a Transfer Agent and, if necessary
under the jurisdiction of incorporation of the Company, a Registrar (which
may be the same entity as the Transfer Agent) for its Common Stock.
k. The Company will furnish to the International Underwriter or on
the International Underwriter's order, without charge, at such place as
the International Underwriter may designate, copies of each Preliminary
Prospectus, the Final Prospectus the Registration Statement and any
pre-effective or post-effective amendments thereto (two of which copies
will be signed and will include all financial statements and exhibits),
the Prospectus, and all amendments and supplements thereto, including any
prospectus prepared after the effective date of the Registration
Statement, in each case as soon as available and in such quantities as the
International Underwriter may request.
l. Neither the Company nor any of its officers, directors,
stockholders or any of its affiliates will take, directly or indirectly,
any action designed to, or which might in the future reasonably be
expected to cause or result in stabilization or manipulation of the price
of any of the Company's securities.
15
m. The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms
and documents filed will comply as to form and substance with the
applicable requirements under the Act, the Exchange Act, and the Rules and
Regulations.
n. The Company shall cause the Initial International Securities to
be listed on the NASDAQ Small Cap Market or on an exchange for a period of
five (5) years from the date hereof, and use its best efforts to maintain
the listing of the Securities to the extent they are outstanding.
o. As soon as practicable, (i) before the effective date of the
Registration Statement, file a Form 8-A with the Commission providing for
the registration under the Exchange Act of the Securities and (ii) but in
no event more than 30 days from the effective date of the Registration
Statement, take all necessary and appropriate actions to be included in
Standard and Poor's Corporation Descriptions and/or Xxxxx'x OTC Manual and
to continue such inclusion for a period of not less than five years if the
securities are not listed on an exchange. The Company also agrees to take
such steps as may be necessary to comply with the requirements of any
state to be in compliance with the aftermarket provisions of Section 18 of
the Securities Act of 1933, as amended, and as further amended by the
National Securities Markets Improvement Act of 1996.
p. Until the completion of the distribution of the Initial
International Securities, the Company shall not without the prior written
consent of the International Underwriter and its counsel which consent
shall not be unreasonably withheld or delayed, issue, directly or
indirectly, any press release or other communication or hold any press
conference with respect to the Company or its activities or the offering
contemplated hereby, other than trade releases issued in 'the ordinary
course of the Company's business consistent with past practices with
respect to the Company's operations.
q. Until the earlier of five (5) years from the date hereof, the
Company will not take any action or actions which may prevent or
disqualify the Company's use of Form SB-2 (or other appropriate form) for
the registration under the Act of the International Representative's
Securities.
5. Conditions of the International Underwriter's Obligations. The
obligation of the International Underwriters to offer and sell the Initial
International Securities and the International Option Securities is
subject to the accuracy (as of the date hereof, and as of the Closing
Dates) of and compliance with the representations and warranties of the
Company to the performance by it of its agreement and obligations
hereunder and to the following additional conditions:
a. The Registration Statement shall have become effective as and
when cleared by the Commission, and you shall have received notice
thereof; on or prior to any closing date, no stop order suspending the
effectiveness of the Prospectus shall have been issued and no proceedings
for that or similar purpose shall have been instituted or shall be
pending, or, to your knowledge or to the knowledge of the Company, shall
be contemplated by the Commission; any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the International Underwriter; and
no stop order shall be in
16
effect denying or suspending effectiveness of such qualification nor shall
any stop order proceedings with respect thereto be instituted or pending
or threatened under such law.
b. On any Closing Date and, with respect to the letter referred to
in subparagraph (3), as of the date hereof, you shall have received:
(1) the opinion, together with such number of signed or
facsimile copies of such opinion as you may reasonably request,
addressed to you by Xxxxxxx, Carton & Xxxxxxx, counsel for the
Company, in form and substance reasonably satisfactory to the
International Underwriter, dated each such closing date, to the
effect that:
(A) The Company has been duly incorporated and is a
validly existing corporation in good standing under the laws
of the jurisdiction in which it is incorporated and has all
necessary corporate power and authority to carry on its
business as described in the Prospectus.
(B) The Company is qualified to do business in each
jurisdiction in which conducting its business requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the Company's
business or assets.
(C) The Company has full legal right, power and
authority to authorize, issue, deliver and sell the
International Securities and the International
Representative's Securities. The Company has the full
corporate power and authority to enter into this Agreement,
the U.S. Underwriting Agreement, the International
Representative's Warrant Agreement and to consummate the
transactions provided for therein. Each such agreement has
been duly and validly authorized, executed and delivered by
the Company. Each of this Agreement, the U.S. Underwriting
Agreement and the Representative's Warrant Agreement, assuming
due authorization, execution and delivery by each other party
thereto, constitutes a legal, valid and binding agreement of
the Company enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency or similar laws
governing the rights of creditors and to general equitable
principles, and provided that no opinion need be given as to
the enforceability of any indemnification or contribution
provisions, and none of the Company's execution or delivery of
this Agreement, the U.S. Underwriting Agreement or the
International Representative's Warrant Agreement, its
performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of
its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto,
conflicts with or will conflict with or results or will result
in any material breach or violation of any of the terms or
provisions of, or constitutes or will constitute a material
default under, or result in the creation or imposition of any
material lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction of any kind whatsoever
upon, any property or assets (tangible or intangible) of the
Company pursuant to the terms of (A) the articles of
incorporation or by-laws of the Company, (B) to the knowledge
of such counsel, any material license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by
which it is or may be bound, or (C) to the knowledge of such
counsel, any statute,
17
judgment, decree, order, rule or regulation applicable to the
Company, whether domestic or foreign.
(D) The Company had authorized and outstanding capital
stock as set forth in the Prospectus under the heading
"Capitalization" as of the date set forth therein, and all of
such issued and outstanding shares of capital stock have been
duly and validly authorized and issued, and to the knowledge
of such counsel are fully paid and nonassessable, and to the
knowledge of such counsel no stockholder of the Company is
entitled to any preemptive rights to subscribe for, or
purchase shares of the capital stock and to the knowledge of
such counsel none of such securities were issued in violation
of the preemptive rights of any holders of any securities of
the Company.
(E) To the knowledge of such counsel, the Company is not
a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this
Agreement, the U.S. Underwriting Agreement, the International
Representative's Warrant Agreement, and except as described in
the Prospectus. The International Securities and the
International Representative's Securities are not subject to
any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and
delivered in accordance with the terms of this Agreement, the
U.S. Underwriting Agreement and the Representative's Warrant
Agreement, will be validly issued, fully paid and
non-assessable and will conform to the respective descriptions
thereof contained in the Prospectus; except for payment of the
applicable purchase price paid upon exercise of the options or
warrants, as the case may be, the holders thereof will not be
subject to any liability solely as such holders.
(F) The certificates representing the International
Securities comprising the Common Stock are in due and proper
form and the International Representative's Warrant has been
duly authorized and the shares of Common Stock to be issued
pursuant hereto and upon exercise of the International
Representative's Warrant have been reserved for issuance and
when issued and delivered in accordance with the respective
terms of this Agreement and the International Representative's
Warrant Agreement will duly and validly issued, fully paid and
nonassessable. All corporate action required to be taken for
the authorization, issue and sale of the International
Securities and the International Representative's
International Securities has been duly and validly taken. Upon
the issuance and delivery pursuant to the terms of this
Agreement, the U.S. Underwriting Agreement and the
Representative's Warrant Agreement of the Securities and the
International Representative's Securities, the International
Underwriter will acquire good and marketable title to such
International Securities and International Representative's
Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other
restriction of any kind whatsoever other than restrictions as
may be imposed under the securities laws.
(G) To the knowledge of such Counsel, there is no
pending or threatened, action, suit or proceeding to which the
Company is a party before or by any court or governmental
agency or body, which might result in any material adverse
change in the condition (financial or otherwise), business or
prospects of the Company as a whole or
18
might materially and adversely affect the properties or assets
of the Company as a whole nor are there any actions, suits or
proceedings against the Company related to environmental
matters or related to discrimination on the basis of age, sex,
religion or race which might be expected to materially and
adversely affect the conduct of the business, property,
operations, financial condition or earnings of the Company as
a whole; and no labor disturbance by the employees of the
Company individually exists or is, to the knowledge of the
Company, imminent which might be expected to materially and
adversely affect the conduct of the business, property,
operations, financial condition or earnings of the Company as
a whole.
(H) Based on oral and/or written advice from the staff
of the Commission, the Registration Statement has been
declared effective; any required filing of the Final
Prospectus pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Prospectus is in effect and no
proceedings for that purpose are pending before, or threatened
by, federal or by a state securities administrator.
(I) To the knowledge of such counsel, there are no legal
or governmental proceedings, actions, arbitrations,
investigations, inquiries or the like pending or threatened
against the Company of a character required to be disclosed in
the Prospectus which have not been so disclosed, questions the
validity of the capital stock of the Company or this
Agreement, the U.S. Underwriting Agreement or the
International Representative's Warrant Agreement or might
adversely affect the condition, financial or otherwise, or the
prospects of the Company or which could adversely affect the
Company's ability to perform any of its obligations under this
Agreement, the U.S. Underwriting Agreement or the
International Representative's Warrant Agreement.
(J) To such counsel's knowledge, there are no statutes
or regulations that are required to be described in the
Prospectus that are not described as required.
(K) To such counsel's knowledge, there are no material
agreements, contracts or other documents known to such counsel
required by the Act to be described in the Registration
Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the
Registration Statement and the Prospectus and filed as
exhibits thereto, and to such counsel's knowledge (i) the
exhibits which have been filed are correct copies of the
documents of which they purport to be copies; (ii) the
descriptions in the Registration Statement and the Prospectus
and any supplement or amendment thereto of contracts and other
documents to which the Company is a party or by which it is
bound, including any document to which the Company is a party
or by which it is bound incorporated by reference into the
Prospectus and any supplement or amendment thereto, are
accurate in all material respects and fairly represent the
information required to be shown by Form SB-2.
(L) No consent, approval, order or authorization from
any regulatory board, agency or instrumentality having
jurisdiction over the Company, or its properties (other than
registration under the Act or qualification under state or
foreign securities law or
19
approval by the NASD) is required for the valid authorization,
issuance, sale and delivery of the International Securities,
the International Option Securities or the International
Representative's Warrant.
(M) The statements in the Prospectus under "Risk
Factors- Dependence on Key Personnel," "Risk Factors-NASDAQ
Stock Market; Boston Stock Exchange," "Risk Factors-Xxxxx
Stock Regulations," "Risk Factors-Limitation of Liability and
Indemnification," "Management's Discussion and Analysis of
Financial Condition and Results of Operation-Government
Regulation," "Management's Discussion and Analysis of
Financial Condition and Results of Operation-Litigation,"
"Management and Key Scientific Personnel-Employment
Agreements," "Management and Key Scientific
Personnel-Consulting Arrangements," "Certain U.S. Tax
Considerations Applicable to Non-U.S. Holders of the Common
Stock," "Description of the Securities," and "Shares Eligible
For Future Sale" have been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of
statutes, licenses, rules or regulations or legal conclusions,
are correct in all material respects.
In addition, such counsel shall state that such counsel
has participated in conferences with officials and other
representatives of the Company, the International
Representatives, International Underwriters' Counsel and the
independent certified public accountants of the Company, at
which such conferences the contents of the Registration
Statement and Prospectus and related matters were discussed,
and although they have not certified the accuracy or
completeness of the statements contained in the Registration
Statement or the Prospectus, nothing has come to the attention
of such counsel which leads them to believe that, at the time
the Registration Statement became effective and at all times
subsequent thereto up to and on the Closing Date and on any
later date on which International Option Shares are to be
purchased, the Registration Statement and any amendment or
supplement, when such documents became effective or were filed
with the Commission (other than the financial statements
including the notes thereto and supporting schedules and other
financial and statistical information derived therefrom, as to
which such counsel need express no comment) contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or at the Closing
Date or any later date on which the International Option
Shares are to be purchased, as the case may be, the Prospectus
and any amendment or supplement thereto (other than the
financial statements including the notes thereto and other
financial and statistical information derived therefrom, as to
which such counsel need express no comment) contained any
untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
Such opinion shall also cover such other matters
incident to the transactions contemplated hereby and the
offering Prospectus as you shall reasonably request. In
rendering such opinion, to the extent deemed reasonable by
them, such counsel may rely upon certificates of any officer
of the Company or public officials as to matters of fact of
which the maker of such certificate has knowledge.
20
(2) a certificate, signed by the Chief Executive Officer and
the Principal Financial or Accounting Officer of the Company dated
the Closing Date, to the effect that with regard to the Company,
each of the conditions set forth in Section 5(d) have been
satisfied.
(3) a letter, addressed to the International Underwriter and
in form and substance satisfactory to the International Underwriter
in all respects (including the nonmaterial nature of the changes or
decreases, if any, referred to in clause (D) below), from, Deloitte
& Touche LLP dated, respectively, as of the effective date of the
Registration Statement and as of the Closing Date, as the case may
be:
(A) Confirming that they are independent public
accountants with respect to the Company and its consolidated
subsidiaries, if any, within the meaning of the Act and the
applicable published Rules and Regulations.
(B) Stating that, in their opinion, the financial
statements, related notes and schedules of the Company and its
consolidated subsidiaries, if any, included in the
Registration Statement examined by them comply as to form in
all material respects with the applicable accounting
requirements of the Act and the published Rules and
Regulations thereunder.
(C) Stating that, with respect to the period from
December 31, 1998, to a specified date (the specified date")
not earlier than five (5) business days prior to the date of
such letter, they have read the minutes of meetings of the
stockholders and board of directors (and various committees
thereof) of the Company and its consolidated subsidiaries, if
any, for the period from December 31, 1998 through the
specified date, and made inquiries of officers of the Company
and its consolidated subsidiaries, if any, responsible for
financial and accounting matters and, especially as to whether
there was any decrease in sales, income before extraordinary
items or net income as compared with the corresponding period
in the preceding year; or any change in the capital stock of
the Company or any change in the long-term debt or any
increase in the short-term bank borrowings or any decrease in
net current assets or net assets of the Company or of any of
its consolidated subsidiaries, if any, and further stating
that while such procedures and inquiries do not constitute an
examination made in accordance with generally accepted
auditing standards, nothing came to their attention which
caused them to believe that during the period from December
31, 1998, through the specified date there were any decreases
as compared with the corresponding period in the preceding
year in sales, income before extraordinary items or net
income; or any change in the capital stock of the Company or
consolidated subsidiary, if any, or any change in the long
term debt or any increase in the short-term bank borrowings
(other than any increase in short-term bank borrowings in the
ordinary course of business) of the Company or any
consolidated subsidiary, if any, or any decrease in the net
current assets or net assets of the Company or any
consolidated subsidiary, if any; and
(D) Stating that they have carried out certain specified
procedures (specifically set forth in such letter or letters)
as specified by the International Underwriter (after
consultations with Deloitte & Touche LLP relating to such
procedures), not constituting an audit, with respect to
certain tables, statistics and other financial data in the
Prospectus
21
specified by the International Underwriter and such financial
data not included in the Prospectus but from which information
in the Prospectus is derived, and which have been obtained
from the general accounting records of the Company or
consolidated subsidiaries, if any, or from such accounting
records by analysis or computation, and having compared such
financial data with the accounting records of the Company or
the consolidated subsidiaries, if any, stating that they have
found such financial data to agree with the accounting records
of the Company.
c. All corporate proceedings and other legal matters relating to
this Agreement, the U.S. Underwriting Agreement, the Representative's
Warrant Agreement, the Prospectus and other related matters shall be
satisfactory to or approved by counsel to the International Underwriter
and you shall have received from Xxxxxxx, Carton & Xxxxxxx a signed
opinion dated as of each closing date, with respect to the incorporation
of the Company, the validity of the Securities, the form of the
Prospectus, (other than the financial statements together with related
notes and other financial and statistical data contained in the Prospectus
or omitted therefrom, as to which such counsel need express no opinion),
the execution of this Agreement, the U.S. Underwriting Agreement, the
International Representative's Warrant Agreement and other related matters
as you may reasonably require.
d. Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Underwriters of the Initial International
Securities under this Agreement, the U.S. Underwriters shall have
purchased the Initial U.S. Securities under the U.S. Underwriting
Agreement.
e. At each closing date, (i) the representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects with the same effect as if made on and as of such
closing date; (ii) the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated
therein in accordance with the Act and the Rules and Regulations and in
all material respects conform to the requirements thereof, and neither the
Prospectus nor any amendment or supplement thereto shall contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary, in light of the circumstances
under which they were made, in order to make the statements therein not
misleading; (iii) there shall have been since the respective dates as of
which information is given no material adverse change in the business,
properties or condition (financial or otherwise), results of operations,
capital stock, long-term debt or general affairs of the Company from that
set forth in the Prospectus, except changes which the Prospectus indicates
might occur after the effective date of the Prospectus, and the Company
shall not have incurred any material liabilities or material obligations,
direct or contingent, or entered into any material transaction, contract
or agreement not in the ordinary course of business other than as referred
to in the Prospectus and which would be required to be set forth in the
Prospectus; and (iv) except as set forth in the Prospectus, no action,
suit or proceeding at law or in equity shall be pending or threatened
against the Company which would be required to be set forth in the
Prospectus, and no proceedings shall be pending or threatened against the
Company or any subsidiary before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an
unfavorable decision, ruling or finding would materially and adversely
affect the business, property, condition (financial or otherwise), results
of operations or general affairs of the Company.
22
f. On the Initial Closing Date, the Company shall have executed and
delivered to the International Underwriter, (i) a copy of the U.S.
Underwriting Agreement substantially in the form filed as an Exhibit to
the Registration Statement in final form and substance satisfactory to the
U.S. Underwriter, (ii) the International Representatives' Warrant
Agreement substantially in the form filed as an Exhibit to the
Registration Statement in final form and substance satisfactory to the
International Underwriter, and (iii) the International Representative's
Warrants in such denominations and to such designees as shall have been
provided to the Company.
g. On or before the Initial Closing Date, the International
Securities shall have been duly approved for listing on an exchange or on
NASDAQ, Small Cap Market.
h. On or before the Initial Closing Date, there shall have been
delivered to the International Underwriter all of the Lock-up Agreements
required to be delivered pursuant to Sections 3(a)(25) and 4(h), in form
and substance satisfactory to the International Underwriter and
International Underwriter's counsel.
If any condition to the International Underwriter's obligations
hereunder to be fulfilled prior to or at the Closing Date or the relevant
Option Closing Date, as the case may be, is not so fulfilled, the
International Underwriter may terminate this Agreement or, if the
International Underwriter so elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
6. Conditions of the Company's Obligations. The obligation of the Company
to sell and deliver the Securities is subject to the following:
a. The provisions regarding the effective date, as described in
Section 10.
b. At the Initial Closing Date, no stop order suspending the
effectiveness of the Prospectus shall have been issued under the Act or
any proceedings therefor initiated or threatened by the Commission or by
any state securities department.
c. Tender of payment by the International Underwriter in accord with
Section 2 hereof.
The foregoing discussion of the Company's financial conditions, results of
operation and liquidity, and other portions of this Report, contain
forward-looking statements. Such statements include, but are not limited to, the
Company's expectations regarding its prospective merger with Aquis, future
financial condition and operating results, market conditions and competitive
environment. The Company's actual results could differ markedly from those
anticipated as a result of certain factors, including but not limited to, its
failure to consummate the merger with Acquis, increased price competition from
other paging companies, the further development of products and technologies
which compete with paging and the reduction of prices for such alternate
products and services.
7. Indemnification.
a. The Company agrees to indemnify and hold harmless each
International Underwriter and its employees, agents and counsel, and each
person, if any, who controls you within the meaning of the Act, against
any losses, claims, damages or liabilities, joint or several (which shall,
for any purposes
23
of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees), to which each International
Underwriter such employees, agents, counsel or controlling person may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission made in the Prospectus, or such amendment or supplement
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, which is in reliance upon and
in conformity with written information furnished by the Company to you
specifically for use in the preparation thereof, and provided further that
the indemnity agreement contained in this subsection (a) shall not inure
to the benefit of you with respect to any person asserting any such loss,
claim, damage or liability who has purchased the International Securities
which are the subject thereof if you or any participants 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 International Securities to such person
and except that, with respect to any untrue statement or omission or any
alleged untrue statement or omission, made in any Pre-Effective
Prospectus, the indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any International Underwriter (or to any
person controlling any such underwriter) from whom the person asserting
any such loss, claim, damage or liability purchased the securities
concerned to the extent that such untrue statement or omission, or alleged
untrue statement or omission, has been corrected in a later Pre-Effective
Prospectus or in the Final Prospectus unless the International Underwriter
circulated a later Pre-Effective Prospectus or the Final Prospectus to
such person.
b. Each International Underwriter will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if
any, who controls the Company within the meaning of the Act against any
losses, claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs
of defense and investigation and all attorneys' fees) to which the Company
or any such director, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission was made in the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by you specifically for use in the preparation
thereof. This indemnity will be in addition to any liability which any
International Underwriter may otherwise have.
c. Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any
other indemnifying party, similarly notified, to assume the defense
thereof, subject
24
to the provisions herein stated, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnified party shall have the
right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel shall not
be at the expense of the indemnifying party if the indemnifying party has
assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that, if the indemnified party is you or a
person who controls you, the fees and expenses of such counsel shall be at
the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying
party or (ii) the named parties to any such action (including any
impleaded parties) include both you or such controlling person and the
indemnifying party and you or such controlling person shall have been
advised by such counsel that there is a conflict of interest which would
prevent counsel for the indemnifying party from representing the
indemnifying party and you or such controlling person (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of you or such controlling person, it being understood,
however, that the indemnifying party shall not, in connection with any one
such action or separate but substantially similar or related actions in
the same jurisdiction or which are consolidated into the same jurisdiction
arising out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of more than one separate firm of
attorneys for you and all such controlling persons, which firm shall be
designated in writing by you). No settlement of any action against an
indemnified party shall be made without the consent of the indemnified
party, which shall not be unreasonably withheld in light of all factors of
importance to such indemnified party.
8. Contribution. In order to provide for just and equitable contribution
under the Act in any case in which (i) the indemnifying party makes a claim for
indemnification pursuant to Section 7 hereof but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of the
International Underwriters, then the Company and the International Underwriters
in the aggregate shall contribute to the aggregate losses, claims, damages, or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) in either such case (after contribution
from others) in such proportions that the International Underwriters are
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities determined by multiplying the total amount of such losses, claims,
damages or liabilities times the commission to the International Underwriter and
dividing the product thereof by the public offering price, and the Company, if
applicable, shall be responsible for that portion of such losses, claims,
damages or liabilities determined by multiplying the total amount of such
losses, claims, damages or liabilities times the public offering price less the
commission to the International Underwriter and dividing the product thereof by
the public offering price; provided, however, that the International
Underwriters shall not be required to so contribute any amount in excess of the
underwriting discount applicable to the International Securities purchased by
the International Underwriters hereunder. If such allocation is not permitted by
applicable law, then the relative fault of the Company and the International
Underwriters in connection with the statements or omissions which resulted in
such damages and other relevant equitable considerations shall also be
considered. No person guilty of a fraudulent
25
misrepresentation (within the meaning of Section 12(2) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The foregoing contribution agreement shall in no way affect
the contribution liabilities of any person having liability under Section 12 of
the Act other than the Company and the International Underwriter. As used in
this paragraph, the term "International Underwriters" includes any person who
controls the International Underwriters within the meaning of Section 15 of the
Act. If the full amount of the contribution specified in this paragraph is not
permitted by law, then any International Underwriter and each person who
controls any International Underwriter shall be entitled to contribution from
the Company, to the full extent permitted by law.
9. Effective Date. This Agreement shall become effective at 10:00 a.m. New
York time on the next full business day following the effective date of the
Registration Statement, or at such other time after the effective date of the
Registration Statement as you in your discretion shall determine, provided,
however, that at all times the provisions of Sections 7, 8, 9 and 11 shall be
effective.
10. Termination.
a. This Agreement, may be terminated at any time prior to the
Closing Date by you if in your judgment it is impracticable to offer for
sale or to enforce contracts made by you for the sale of the International
Securities agreed to be sold hereunder by reason of (i) the Company as a
whole having sustained a material loss, whether or not insured, by reason
of fire, earthquake, flood, accident or other calamity, or from any labor
dispute or court or government action, order or decree, (ii) trading in
securities of the Company having been suspended by a state securities
administrator or by the Commission, (iii) material governmental
restrictions having been imposed on trading in securities generally (not
in force and effect on the date hereof) or trading on the New York Stock
Exchange, Hong Kong Stock Exchange, Boston Stock Exchange, or in the
over-the-counter market shall have been suspended, (iv) a banking
moratorium having been declared by federal or New York State or Hong Kong
authorities, (v) an outbreak or escalation of hostilities or other
national or international calamity having occurred, (vi) the passage by
the Congress of the United States or by any state legislative body, of any
act or measure, or the adoption of any orders, rules or regulations by any
governmental body or any authoritative accounting institute or board, or
any governmental executive, which is believed likely by you to have a
material impact on the business, financial condition or financial
statements of the Company; or (vii) any material adverse change having
occurred, since the respective dates as of which information is given in
the Prospectus, in the condition, financial or otherwise, of the Company
as a whole, whether or not arising in the ordinary course of business,
(viii) T. Xxxxxxx Xxxxxxxx ceases to be employed by the Company in his
present capacity; (ix) the Securities are not listed the Boston Stock
Exchange or any other exchange or on NASDAQ.
b. If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section 10 or in Section
9, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
11. Representations, Warrants and Agreements to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company (or its officers) and the International 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
International Underwriter, the
26
Company, or any of their officers or directors and will survive delivery of and
payment for the Securities.
12. Notices. All communications hereunder will be in writing and, except
as otherwise expressly provided herein, if sent to you, will be mailed,
delivered or telephoned and confirmed to you at, New China Hong Kong Securities
Limited, ___________________, ________, _________, Attn: _________,
______________; and to Immtech International, Inc., 0000 Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxx 00000, Attn: T. Xxxxxxx Xxxxxxxx, President.
13. Parties in Interest. This Agreement is made solely for the benefit of
the International Underwriter(s), and the Company, and their respective
controlling persons, directors and officers, and their respective successors,
assigns, executors and administrators. No other person shall acquire or have any
right under or by virtue of this Agreement.
14. Headings. The Section headings in this Agreement have been inserted as
a matter of convenience of reference and are not a part of this Agreement.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of law principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same
instrument.
If the foregoing correctly sets forth the understanding between the Company and
you, as International Representative of the several underwriters, please so
indicate in the space provided below for such purpose, whereupon this letter and
your acceptance shall constitute a binding agreement between us.
Very truly yours,
IMMTECH INTERNATIONAL, INC.
By: ______________________________
(Authorized Officer)
T. Xxxxxxx Xxxxxxxx, President
Accepted as of the date first above written:
New China Hong Kong Securities Limited
As International Representative of the several International Underwriters
By: ________________________________
(Authorized Officer)
[Name], [Title]
27
SCHEDULE I
INTERNATIONAL UNDERWRITERS
Shares of
International Underwriters Common Stock
-------------------------- ------------
New China Hong Kong Securities Limited
TOTAL 700,000
A-1
