SETTLEMENT AGREEMENT
This Settlement Agreement, dated as of November 2, 2001, is by and between
Criticare Systems, Inc., a Delaware corporation ("Criticare"), and Immtech
International, Inc., a Delaware corporation ("Immtech").
WHEREAS, Criticare is currently the record holder of 474,956 shares of
Immtech Common Stock, par value $0.01 per share (the "Shares"), 18,582 Shares of
which are held by Criticare for Dale Geiss and Alan Doyle;
WHEREAS, the share certificates evidencing Criticare's ownership of the
Shares (the "Existing Certificates") contain restrictive legends prohibiting the
transfer of the certificates under the Securities Act of 1933, as amended,
absent registration thereunder or an opinion of counsel acceptable to Immtech
stating that such registration is not required;
WHEREAS, Criticare and Immtech have disagreed as to whether the Shares are
properly subject to any ongoing transfer restrictions; and
WHEREAS, Criticare and Immtech, desiring to avoid the time and expense of
litigation, have determined to resolve their disagreement pursuant to the terms
of this Settlement Agreement;
NOW, THEREFORE, in order to resolve the differences between the parties
with respect to these matters, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
1. Share Certificates. Within five (5) days following delivery of the
Existing Certificates by Criticare to Computershare Investor Services, as
transfer agent (the "Transfer Agent"), Immtech will cause the Transfer Agent to
issue and deliver to Criticare seven (7) new Certificates representing the same
aggregate number of Shares (the "New Certificates"), all of which New
Certificates shall be free of any restrictive legend. Four of the New
Certificates shall be issued to Criticare in its name in the amount of Fifty
Thousand Shares each, and the fifth New Certificate shall be issued to Criticare
in its name in the amount of Two Hundred Fifty Six Thousand Three Hundred
Seventy Four (256,374) Shares. The sixth New Certificate (the "Geiss
Certificate") shall be issued to Criticare in the name of Dale Geiss in the
amount of Eleven Thousand Thirty Three (11,033) Shares, and the seventh New
Certificate (the "Doyle Certificate") shall be issued to Criticare in the name
of Alan Doyle in the amount of Seven Thousand Five Hundred Forty Nine (7,549)
Shares. If and to the extent the Transfer Agent requires an opinion of legal
counsel as a condition to effectuate the removal of the restrictive legends,
Criticare shall cause its special legal counsel, Sullivan & Worcester LLP, to
issue and deliver such an opinion of law, in substantially the form of Exhibit A
hereto, within such five day period (the "Legal Opinion"). Immtech agrees not to
object either to the Legal Opinion or to its issuance by Sullivan & Worcester
LLP. If, notwithstanding the foregoing, the Transfer Agent does not deliver to
Criticare the New Certificates free of any restrictive legend within five days
following delivery to it of the Existing Certificates and the Legal Opinion,
this Settlement Agreement shall thereupon become null and void and have no
further force or effect.
2. Restrictions on Transfer. The date of delivery to Criticare of the New
Certificates is the "Effective Date". Except for Shares to be represented by the
Geiss Certificate and the Doyle Certificate, Criticare has not to date "sold
short," disposed of, or agreed to dispose of any of the Shares. From and after
the Effective Date, Criticare will not sell, offer to sell, contract to sell,
grant any option to purchase, or otherwise dispose of (collectively, "Sell") the
Shares except in accordance with the following contractual restrictions, which
restrictions Immtech agrees shall be the only restrictions between the parties,
on Criticare's ability to Sell the Shares:
(a) Criticare may deliver the Geiss Certificate to Dale Geiss and the
Doyle Certificate to Alan Doyle at any time, and each of Messrs. Geiss
and Doyle shall thereupon be free to deal with and to Sell their
Shares without any restrictions.
(b) From and after the Effective Date and up to and including the 60-day
anniversary thereof (the "Lock-up Period"), Criticare shall not Sell
any Shares, except that Criticare may deliver the Geiss Certificate
and the Doyle Certificate as specified in subparagraph (a).
(c) From and after the 61-day anniversary of the Effective Date and up to
and including the 120-day anniversary thereof (the "Initial Selling
Period"), Criticare may only Sell up to 31,418 Shares (the "Initial
Selling Period Allocation").
(d) From and after the 121-day anniversary of the Effective Date up to and
including the 180-day anniversary of such date (the "Second Selling
Period"), Criticare may only Sell up to an additional 50,000 Shares
plus any portion of the Initial Selling Period Allocation not sold by
Criticare during the Initial Selling Period (the "Second Selling
Period Allocation").
(e) Notwithstanding the provisions of subparagraphs (b), (c), and (d)
above, if at any time during the Initial Selling Period (including for
purposes of this subparagraph (e), the Lock-up Period) or the Second
Selling Period, the closing bid price for Immtech common stock is, for
any three days within any ten business day period, in excess of $12
per share, then the applicable Selling Period Allocation for such
Period (including in the case of the Second Selling Period, any
portion of the Initial Selling Period Allocation not utilized during
the Initial Selling Period and not previously increased as a result of
the provisions of this subparagraph (e)) shall be doubled.
(f) Notwithstanding the foregoing provisions of this Section 2, Criticare
shall not be restricted or limited in its ability to Sell any portion
of the Shares at any time after the 90-day anniversary of the
Effective Date in a transaction that is not an open-market
transaction, provided that Criticare Sells in such transaction at
least one-half the number of Shares that it then owns. After any such
sale has occurred, Criticare shall promptly inform Immtech of the
identity of the purchaser (provided that the purchaser consents to
such disclosure) and the number of Shares sold. However, Criticare
shall in no event be obligated to disclose to Immtech any other
information regarding such transaction,
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including (inter alia) the purchase price paid. Any such purchaser
shall take free and clear of the restrictions set forth in this
Section 2.
(g) Between the date of this Settlement Agreement and the 180-day
anniversary of the Effective Date, Criticare shall continue to hold in
its own name all Shares that it does not Sell in accordance with this
Settlement Agreement, shall not cause such Shares to be reissued in a
"street name", and shall not engage in any "short sale" transaction
with respect to such Shares.
(h) Upon the earliest to occur of (i) the 181-day anniversary of the
Effective Date, (ii) a Change in Control (as defined below) of
Immtech, or (iii) a bankruptcy, receivership, or insolvency filing by
or against Immtech, the restrictions on Selling set forth in this
Section 2 shall be of no further force and effect and Criticare may
thereafter Sell all or any of the Shares at any time or from time to
time free of the restrictions set forth herein.
(i) For purposes of this Settlement Agreement, a "Change in Control" with
respect to any company shall mean (A) the sale, lease or transfer, in
one or a series of related transactions, of all or substantially all
of its assets to any person or group (as such term is used in Section
13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange
Act")), (B) the adoption of a plan relating to the liquidation or
dissolution of the company, or (C) the acquisition, directly or
indirectly, by any person or group (as such term is used in Section
13(d)(3) of the Exchange Act) of forty percent (40%) or more of the
voting power of the voting stock of the company by way of merger or
consolidation or otherwise.
3. Release of Claims. Criticare and Immtech hereby release one another, and
their officers, employees, agents, representatives, successors, and assigns,
from any and all claims which each does or may have against the other as of the
day before the date hereof, provided that, if either party to this Settlement
Agreement breaches any provision of this Settlement Agreement, then in any
subsequent legal action brought by the aggrieved party with respect to such
breach, the provisions of this Section 3 shall be null and void.
4. Confidentiality. Criticare and Immtech will not disclose the terms and
conditions of this Settlement Agreement to anyone other than their attorneys,
accountants, auditors, tax advisors, officers, directors and employees with a
need to know, or except as either party determines is otherwise required by law
or regulation and consistent with the disclosure requirements of applicable
federal and state securities laws.
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5. Miscellaneous.
(a) Notices. All notices under this Settlement Agreement shall be in
writing, and shall be delivered by hand or by a nationally recognized
commercial overnight delivery service, addressed or transmitted,
if to Criticare, at:
20925 Crossroads Circle
Waukesha, WI 53186
Attn: Emil H. Soika, President
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attn: Dennis J. White, Esq.
if to Immtech, at:
150 Fairway Drive
Suite 150
Vernon Hills, IL 60061
Attn: T. Stephen Thompson, President
with a copy to:
Cadwalader Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attn: Keith W. Miller, Esq.
Such notices shall be effective (i) in the case of hand deliveries,
when received and (ii) in the case of an overnight delivery service,
on the next business day after being placed in the possession of such
delivery service, with delivery charges prepaid. Either party may
change its address by written notice to the other.
(b) Counterparts. This Settlement Agreement may be executed in any number
of counterparts, each of which shall constitute an original and all of
which, taken together, shall constitute one and the same instrument.
(c) Governing Law. This Settlement Agreement shall be construed in
accordance with and governed by the internal laws of the State of
Delaware applicable to
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agreements made and to be performed in such state. If any action or
proceeding shall be brought hereunder in order to enforce any right or
remedy under this Agreement, each party hereby consents and will
submit to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the State of New York.
(d) Severability. Any provision of this Settlement Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or
affecting the validity or enforceability of such provision in any
other jurisdiction.
(e) Amendment and Waiver. No waiver or amendment to this Settlement
Agreement shall be effective unless written and signed by both parties
hereto.
(f) Entire Agreement. This Settlement Agreement embodies the entire
agreement and understanding between the parties hereto and supersedes
all prior agreements and understandings, whether oral or written,
relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Settlement
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
CRITICARE SYSTEMS, INC.
/s/ Emil H. Soika
-----------------------------------
Emil H. Soika
Chief Executive Officer & President
IMMTECH INTERNATIONAL, INC.
/s/ T. Stephen Thompson
-----------------------------------
T. Stephen Thompson
Chief Executive Officer & President
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