WARRANT AGREEMENT
Agreement made as of November __, 1998 between Immtech International,
Inc., a Delaware corporation with offices at 0000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000 (the "Company"), and New China Hong Kong Securities
Limited (hereinafter referred to as the "Underwiter").
WHEREAS, the Company proposes to issue to the Underwriter warrants
("Warrants") to purchase up to 500,000 shares (the "Shares") of common stock of
the Company, $.01 par value (the "Common Stock"); and
WHEREAS, the Underwriter has agreed, pursuant to the underwriting
agreement (the "Underwriting Agreement") dated November ___, 1998 between the
Underwriter and the Company, to act as the underwriter in connection with the
Company's proposed public offering (the "Public Offering") of 1,333,333 units
(the "Units"), each consisting of 2 shares of Common Stock (the "Public Shares")
and one warrant (the "Class A Warrant) at an initial public offering price of
$3.00 per Unit and up to 2,666,666 underlying warrants (the "Class B and Class C
Warrants").
WHEREAS, the Warrants issued pursuant to this Agreement are being issued
by the Company to the Underwriter or officers and partners of the Underwriter in
consideration for, and as part of the Underwriter's compensation in connection
with, the Underwriter acting as the underwriter pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the premises and agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
(a) The Underwriter, and/or its designees who are officers or
partners of the Underwriter in connection with the Public Offering, are
hereby granted the right to purchase, pursuant to the contingencies and
provisions set forth in Section 1(b) hereof, up to 500,000 Shares.
(b) The Warrants represented hereby (the "Underwriter's Warrants")
become exercisable as follows: (1) as to up to 200,000 Shares, on the
closing of the Public Offering; (2) as to up to 100,000 Shares, on the
date the Company receives, when taken together with the gross proceeds
received by the Company from all prior exercises of Class A Warrants, an
aggregate of $1,500,000 from the exercise of all Class A Warrants in
accordance with their terms; (3) as to up to 100,000 shares of Common
Stock, on the date the Company receives, when taken together with the
gross proceeds received by the Company from all prior exercises of Class B
Warrants, an aggregate of $1,500,000from the exercise of all Class B
Warrants in accordance with their terms; and (4) as to up to 100,000
shares of Common Stock, on the date the Company receives, when taken
together with the gross proceeds received by the Company from all prior
exercises of Class C Warrants, an aggregate of $1,500,000 from the
exercise of all Class C Warrants in accordance with their terms. The
Underwriter's Warrants will expire proportionately based upon the number
of shares of Common Stock underlying any Class A, Class B or Class C
Warrants issued by the Company to the extent that any such Class A, Class
B or Class C Warrants are unexercised at the respective expiration dates
thereof. To the extent theUnderwriter's Warrants become exercisable, each
will be exercisable at any time during a five-year term commencing on the
date such Warrant becomes exercisable. The Underwriter's Warrants may not
be transferred for a period of one year from their date of issuance,
except to affiliates of the Underwriter.
2. Exercise of Warrants.
2.1 Cash Exercise. The Warrants initially are exercisable at a price
of $0.05 per Share, payable in cash or by check to the order of the
Company, or any combination of cash or check, subject to adjustment as
provided in Article 8 hereof. Upon surrender of this Warrant Agreement
with the annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price (as hereinafter defined) for the Shares
purchased, at the Company's principal offices or, if a Warrant Agent has
been appointed for this Warrant, the offices of the Warrant Agent, the
registered holder of this Warrant ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the Shares so
purchased. The purchase rights represented by each this Warrant are
exercisable at the option of the Holder hereof, in whole or in part (but
not as to fractional Shares). In the case of the purchase of less than all
the Shares purchasable under any this Warrant, the Company or the Transfer
Agent shall cancel the Warrant upon the surrender thereof and shall
execute and deliver a new Warrant Agreement of like tenor for the balance
of the Shares purchasable hereunder.
2.2 Cashless Exercise. At any time during the Warrant Exercise Term,
the Holder may, at its option, exchange this Warrant, in whole or in part
(a "Warrant Exchange"), into the number of Shares determined in accordance
with this Section, by surrendering this Warrant at the principal office of
the Company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange
shall take place on the date specified in the Notice of Exchange or, if
later, the date the Notice of Exchange is received by the Company (the
"Exchange Date") or the Warrant Agent. Certificates for the Shares
issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the Shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the
Holder within three business (3) days following the Exchange Date. In
connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the
next highest integer) equal to (A) the number of Shares specified by the
Holder in its Notice of Exchange (the "Total Share Number") less (B) the
number of Shares equal to the quotient obtained by dividing (i) the
product of the
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Total Share Number and the existing Exercise Price per Share (as
hereinafter defined) by (ii) the current market value of a Public Share.
3. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for
the Shares purchased shall be made forthwith (and in any event within
three business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of
the issuance thereof, and such certificates shall (subject to the
provisions of Article 4 hereof) be issued in the name of, or in such names
as may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder and the Company shall
not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
The certificates representing the Shares shall be executed on behalf
of the Company by the manual or facsimile signature of the present or any
future Chairman or Vice Chairman of the Board of Directors or President or
Vice President of the Company under its corporate seal reproduced thereon,
attested to by the manual or facsimile signature of the present or any
future Secretary or Assistant Secretary of the Company. The Warrants
represented hereby shall not be issued in certificated form. Upon exercise
of the Warrants, in part or in whole, certificates representing the
Shares, shall bear a legend substantially similar to the following:
"The securities represented by thiscertificate have not been
registered underthe Securities Act of 1933, as amended (the "Act"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act, (Act (or any similar rule
under such Act relating to the disposition of securities), or (iii)
upon the delivery by the holder to the Company of an opinion of
counsel, reasonably satisfactory to counsel to the Company, stating
that an exemption from registration under such Act is available."
4. Restriction on Transfer of Warrants.
The Holder of Warrants represented hereby, by its acceptance hereof,
covenants and agrees that the Warrants are being acquired as an investment
and not with a view to the distribution thereof, and that the Warrants may
not be sold, transferred, assigned, hypothecated or otherwise disposed of,
in whole or in part, for a period of one (1) year from the date hereof,
except to officers or partners of the Underwriter or to any member
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of the selling group participating in the distribution to the public of
the Public Shares and Public Warrants and/or their respective officers or
partners.
5. Price.
5.1 Initial and Adjusted Exercise Price. The initial exercise price
of each Warrant shall be $0.05 per Share. The adjusted exercise price
shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the
provisions of this Article.
5.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
5.3 Adjustments of Exercise Price and Number of Shares. The
following adjustments apply to the Exercise Price of the Warrants with
respect to the Shares and the number of Shares purchasable upon exercise
of the Warrants.
5.4 Computation of Adjusted Price. In case the Company shall at any
time after the date hereof pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock, then upon such dividend or
distribution the Exercise Price in effect immediately prior to such
dividend or distribution shall forthwith be reduced to a price determined
by dividing:
(a) an amount equal to the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution multiplied
by the Exercise Price in effect immediately prior to such dividend or
distribution, by
(b) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
For the purposes of any computation to be made in accordance with
the provisions of this Section, the Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed
to have been issued immediately after the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution.
5.5 Subdivision and Combination. In case theCompany shall at any
time subdivide or proportionately decreased in the case of subdivision or
increased in the case of combination.
5.6 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
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5.7 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in the case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock,
except a change as a result of a subdivision or combination of such shares
or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of the property of the Company as an
entirety, the Holders shall thereafter have the right to purchase the kind
and number of shares of stock and other securities and property receivable
upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the Shares immediately
prior to any such events, at a price equal to the product of (x) the
number of shares issuable upon exercise of the Holders' Warrants and (y)
the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if
such Holders had exercised the Warrants.
5.8 Determination of Outstanding Shares of Common Stock. The number
of shares of Common Stock at any one time outstanding shall include the
aggregate number of shares issued or issuable upon the exercise of
options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
5.9 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock) or otherwise distribute to
its shareholders any monies, assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock), whether
issued by the Company or by another person or entity, or any other thing
of value, the Holder or Holders of the unexercised Warrants
shallthereafter be entitled, in addition to the shares of Common Stock or
other securities receivable upon the exercise thereof, to receive, upon
the exercise of such Warrants, the same monies, property, assets, rights,
evidences of indebtedness, securities or any other thing of value that
they would have been entitled to receive at the time of such dividend or
distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance
of the provisions of this Subsection.
5.10 Subscription Rights for Shares of Common Stock or Other
Securities. In the case the Company or an affiliate of the Company shall
at any time after the date hereof and prior to the exercise of all the
Warrants issue any rights to subscribe for shares of Common Stock or any
other securities of the Company or of such affiliate to all the
shareholders of the ompany, the Holders of the unexercised Warrants shall
be entitled, in addition to the shares of Common Stock or other securities
receivable upon the exercise of the Warrants, to receive such rights at
the time such rights are distributed to the other shareholders of the
Company.
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6. Exchange and Replacement of Warrants.
The Warrants represented hereby are exchangeable without expense,
upon the surrender hereof by the registered Holder at the principal
executive office of the Company or the office of the Warrant Agent,
together with the assignment form attached hereto, duly executed and
completed, and payment of all transfer taxes, if any, payable in
connection therewith. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant Agreement, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it, and reimbursement to
the Company of all reasonable expenses incidental thereto, and upon
surrender and cancellation of this Agreement, if mutilated, the Company
will make and deliver a new Agreement of like tenor, in lieu thereof.
7. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue
scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding
any fraction up to the nearest whole number of shares of Common Stock.
8. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon
the exercise of the Warrants, such number of shares of Common Stock as
shall be issuable upon the exercise thereof. The Company covenants and
agrees that, upon exercise of the Warrants and payment of the Exercise
Price therefor, all Shares issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any shareholder. As long as the Warrants shall be
outstanding, the Company shall use its reasonable best efforts to cause
all shares of Common Stock issuable upon the exercise of the Warrants to
be listed on or quoted by NASDAQ or listed on such national securities
exchanges as the Company's securities might be quoted or listed on.
9. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive
notice as a shareholder in respect of any meetings of shareholders for the
election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior
to the expiration of the Warrants and their exercise, any of the following
events shall occur:
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(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings,
as indicated by the accounting treatment of such dividend or distribution
on the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety
shall be proposed; then, in any one or more of said events, the Company
shall give written notice of such event at least fifteen (15) days prior
to the date fixed as a record date or the date of closing the transfer
books for the determination of the shareholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription
rights, options or warrants, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case
may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any
convertible or exchangeable securities or subscription rights, options or
warrants, or any proposed dissolution, liquidation, winding up or sale.
10. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to a registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or (b) If to the
Company, to the following address or to such other address as the Company
may designate by notice to the Holders:
11. Supplements and Amendments.
The Company and the Underwriter may from time to time supplement or
amend this Agreement to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem not
to adversely affect
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12. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
13. Termination.
This Agreement shall terminate at the close of business
on _______ 1, 200_. Notwithstanding the foregoing, this Agreement
will terminate on any earlier date when all Warrants have been
exercised.
14. Governing Law.
This Agreement shall be deemed to be a contract made under the laws
of the State of New York and for all purposes shall be construed in
accordance with the laws of said State.
15. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person
or corporation other than the Company and the Underwriter and any other
registered holder this Agreement; and this Agreement shall be for the sole
and exclusive benefit of the Company and the Underwriter and any other
holder or holders of the Warrant or the Shares.
16. Counterparts.
This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
IMMTECH INTERNATIONAL, INC.
Attest: By:
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Name: Name:
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XXX XXXXX XXXX XXXX SECURITIES
LIMITED
Attest: By:
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Name: Name:
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