Exhibit 1.27
SUBSCRIPTION AND DEBENTURE PURCHASE AGREEMENT
To: ALTAREX CORP.
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A. SUBSCRIPTION
1. (a) The undersigned United Therapeutics Corporation (the
"Purchaser") hereby subscribes for and agrees to purchase from
AltaRex Corp., a company incorporated under the laws of
Alberta, Canada (the "Company"), the following:
(A) a unit consisting of:
(i) 4,900,000 common shares of the Company (the
"Common Shares") at a price of $0.50 per
Common Share; and
(ii) a warrant to purchase 3,250,000 common
shares of the Company (the "Warrant") at a
price of $0.50 per share (a "Warrant Share")
in the form attached hereto as Exhibit A,
for a total purchase price of $2,450,000 (the
"Purchase Price"). The Common Shares represent 11.8%
of the pro forma outstanding common shares of the
Company on April 17, 2002, after giving effect to the
purchase of the Common Shares; and
(B) a convertible debenture in the amount of $50,000 (the
"First Debenture") pursuant to the terms of a
convertible debenture entered into between the
parties, which is attached hereto as Exhibit B-1. The
First Debenture will automatically convert into
100,000 common shares of the Company (the "First
Debenture Shares") at 5:00 p.m. (Toronto time) on
August 21, 2002.
(b) The Corporation hereby grants to Purchaser the right (the
"Debenture Subscription Right") to subscribe for a convertible
debenture in the amount of $875,000 (the "Second Debenture")
pursuant to the terms of a convertible debenture entered into
between the parties dated as of August 20, 2002, which is
attached hereto as Exhibit B-2. Pursuant to the terms of the
Second Debenture, 883,380 common shares of the Company (the
"Second Debenture Shares") will be automatically issued upon
the occurrence of certain events at a price of $0.50 per
share. The Debenture Subscription Right may be exercised by
the Purchaser delivering to the Corporation (i) on or before
August 14, 2002, the subscription form, attached hereto as
Exhibit B-2A, duly completed and executed, and (ii), on the
Debenture Closing Date (as defined herein), with the documents
to be delivered by the Purchaser pursuant to Section 2(b);
all on the terms and conditions set forth below. The Common Shares, the
Warrant and the First Debenture are collectively referred to herein as
the "Purchased Securities". The
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First Debenture and Second Debenture are collectively referred to
herein as the "Debentures". The First Debenture Shares and Second
Debenture Shares are collectively referred to herein as the "Debenture
Shares".
2. (a) The closing of the purchase and sale of the Purchased
Securities hereunder (the "Initial Closing") shall be held at
the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Dominion Bank
Tower, Toronto ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, on
April 17, 2002 or at such other place upon which the Company
and the Purchaser shall agree (the "Initial Closing Date"). At
the Closing, the Company will deliver to the Purchaser the
Purchased Securities being subscribed for by the Purchaser,
registered in the name of the Purchaser, against payment to
the Company of the Purchase Price for the Purchased Securities
being subscribed for hereunder, by wire transfer, cheque or
other method acceptable to the Company and the parties shall
execute and deliver the security agreement in the form
attached hereto as Exhibit C. All documents, certificates and
payments shall be held in escrow until all such documents,
certificates and payments have been delivered and the parties
hereto have agreed that the escrow is terminated.
(b) The closing of the purchase and sale of the Second Debenture
hereunder (the "Second Closing") shall be held at 10:00 a.m.
(Toronto time) on August 20, 2002 (the "Second Closing Date")
at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP at the above-noted
address or at such other time and place upon which the Company
and the Purchaser shall agree in writing. At the Second
Closing, the Company will execute and deliver to the
Purchaser, and the Purchaser will execute and deliver to the
Company the Second Debenture in the form attached hereto as
Exhibit B-2, against payment by the Purchaser to the Company
of US$875,000 by wire transfer, cheque or other method
acceptable to the Company.
3. The Company has authorized the sale and issuance of an aggregate of the
Purchased Securities and of the Second Debenture, Warrant Shares and
the Debenture Shares to the Purchaser. The Purchaser acknowledges being
provided with and has read a term sheet (the "Term Sheet") outlining
the features of the Purchased Securities, a copy of which is attached
hereto as Exhibit D. The Purchaser acknowledges that the Term Sheet is
only a summary of the terms and conditions of the Purchased Securities,
that the Term Sheet may not contain all the information that is
important to the Purchaser and that the terms and conditions of the
Purchased Securities and each Debenture shall be governed and subject
to, in all respects, the terms of such securities.
B. PURCHASER'S ACKNOWLEDGMENTS AND AGREEMENTS
The Purchaser understands, acknowledges and agrees that:
1. This subscription may be accepted or rejected in whole or in part by
the Company, in its sole discretion.
2. Except as provided under applicable securities laws, this subscription
is and shall be irrevocable except that (i) the Purchaser's execution
and delivery of this Subscription
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Agreement will not constitute an agreement between the Company and the
Purchaser until this Subscription Agreement is accepted on behalf of
the Company and, if not so accepted, the Purchaser's subscription and
obligations hereunder will terminate and (ii) the Purchaser can, at any
time prior to acceptance of this Subscription Agreement, request in
writing that he or it be released from his or its obligations hereunder
(and the Company may, but need not, in its discretion, elect to release
the Purchaser from his or its subscription and from such obligations).
THE COMMON SHARES, THE WARRANT, THE DEBENTURES, THE WARRANT SHARES AND
THE DEBENTURE SHARES HAVE NOT BEEN RECOMMENDED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE OR PROVINCIAL SECURITIES COMMISSION
OR REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENCE.
3. Because the Purchased Securities, the Second Debenture, the Warrant
Shares and the Debenture Shares will not have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or
applicable state securities laws, the Purchaser is aware that any
resale inconsistent with the Securities Act may create liability on his
or its part and/or the part of the Company, and agrees not to assign,
sell, pledge, transfer or otherwise dispose of or transfer the
Purchased Securities, the Second Debenture, the Warrant Shares and the
Debenture Shares, except in compliance with the Securities Act and
applicable state securities laws. The Purchaser is also aware that any
resale inconsistent with applicable securities laws in the province of
Ontario ("Canadian Securities Laws") may create liability on his or its
part and/or the part of the Company, and agrees not to assign, sell,
pledge, transfer or otherwise dispose of or transfer the Purchased
Securities, the Second Debenture, the Warrant Shares and the Debenture
Shares except in compliance with Canadian Securities Laws.
4. Unless permitted under Canadian Securities legislation, the Purchaser
shall not trade (i) the Purchased Securities in the Province of Ontario
before August 18, 2002, and (ii) the Second Debenture or Second
Debenture Shares before the date that is four months and one day after
the Second Closing Date.
5. Each certificate representing the Purchased Securities, the Second
Debenture, the Warrant Shares and the Debenture Shares will bear a
legend to the following effect:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE
BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C)
INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. UNLESS PERMITTED UNDER CANADIAN
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SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES AND THE COMMON
SHARES ISSUABLE UPON THE EXERCISE OR CONVERSION THEREOF SHALL NOT TRADE
THE SECURITIES IN THE PROVINCE OF ONTARIO BEFORE [IN THE CASE OF THE
FIRST DEBENTURE INSERT AUGUST 18, 2002] [IN THE CASE OF THE SECOND
DEBENTURE AND SECOND DEBENTURE SHARES INSERT DATE THAT IS FOUR MONTHS
AND ONE DAY AFTER SECOND CLOSING].
provided that, if any such Purchased Securities, Debenture, the Warrant
Shares or the Debenture Shares are being sold under Rule 144 under the
Securities Act, the legend may be removed by delivery to Computershare
Trust Company of Canada of an opinion of counsel, of recognized
standing reasonably satisfactory to the Company, to the effect that
such legend is no longer required under applicable requirements of the
Securities Act or state securities laws.
6. Provided that nothing herein shall limit the rights of the Company and
the Purchaser pursuant to a registration rights agreement to be entered
into between the Company and the Purchaser (the "Registration Rights
Agreement") substantially in the form as Exhibit D attached hereto, the
Purchaser acknowledges that neither the Company nor any other
representative on behalf of the Company has made any representations
with respect to registration under the Securities Act or qualification
under Canadian Securities Laws of the Purchased Securities or the
Second Debenture Shares, that no such registration is contemplated,
that there can be no assurance that there will be any market for the
Purchased Securities or the Second Debenture Shares in the United
States in the foreseeable future or any liquid market for four months,
and that, as a result, the Purchaser may be required to bear the
economic risk of his or its investment for an indefinite period of time
under the Securities Act, or a period of four months and one day under
the Canadian Securities Laws.
C. COMPANY WARRANTIES AND REPRESENTATIONS
The Company hereby represents and warrants to the Purchaser as follows
and acknowledges that the Purchaser is relying upon the following
representations and warranties in connection with its subscription for the
Purchased Securities and, if applicable, the Debenture:
1. The Company is a corporation duly amalgamated and organized and validly
existing under the laws of the Province of Alberta, is duly qualified
to carry on its business and is in good standing in each jurisdiction
in which the conduct of its business or the ownership, leasing or
operation of its property and assets requires such qualification, and
has all requisite corporate power, authority and capacity to carry on
its business as now conducted and to own, lease or operate its property
and assets and to enter into, execute, deliver and perform its
obligations under this Agreement. The Company is conducting business in
compliance in all material respects with all applicable laws, rules and
regulations of each jurisdiction in which its business is carried on,
and all licenses, registrations and qualifications of the Company are
valid, subsisting and in good standing, except in respect of matters
that do not and would not reasonably be expected to have a Material
Adverse Effect on the Company, and except for a failure to be so
qualified or the absence of any such license, registration or
qualification which does not
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and would not reasonably be expected to have a Material Adverse Effect
on the Company;
"Material Adverse Effect" means a material adverse effect on the
business, operation, results of operations, assets, liabilities or
financial condition of the Company and the subsidiaries of the Company
taken as a whole;
2. (i) The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Directors is
required, except for the requirement of shareholder approval
contemplated herein (ii) this Agreement has been duly executed and
delivered by the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, receivership or
similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of
general application;
3. Each of the Company's subsidiaries is a wholly-owned subsidiary
corporation duly incorporated and organized and validly existing under
the laws of its jurisdiction of incorporation, is duly qualified to
carry on its business and is in good standing in each jurisdiction in
which the conduct of its business or the ownership, leasing or
operation of its property and assets requires such qualification, and
has all requisite corporate power, authority and capacity to carry on
its business as now conducted and to own, lease or operate its property
and assets, except for the failure to be so qualified that does not and
would not reasonably be expected to have a Material Adverse Effect on
the Company. No subsidiaries of the Company own or license any
intellectual property other than licences for intellectual property
which are owned by the Company;
4. As of the date hereof, the authorized capital of the Company consists
of an unlimited number of Common Shares and an unlimited number of
preferred shares;
5. The Company is a "reporting issuer" (or its equivalent), not in
default, in each of the provinces of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, Quebec, Newfoundland, New Brunswick,
Nova Scotia and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island;
6. The issued and outstanding common shares of the Company are listed and
posted for trading on the Toronto Stock Exchange and no order ceasing
or suspending trading in any securities of the Company or prohibiting
the sale of the Purchased Securities or the trading of any of the
Company's issued securities has been issued;
7. On April 16, 2002 there are 36,763,556 common shares of the Company
issued and outstanding;
8. All necessary corporate action has been taken by and on behalf of the
Company to authorize the creation, issuance and sale of the Purchased
Securities and upon receipt of the purchase price therefor, such
securities shall be issued as fully paid and non-assessable securities
of the Company; and
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9. Neither the Company nor any of its subsidiaries has committed an act of
bankruptcy or sought protection from its creditors from any court or
pursuant to any legislation, proposed a compromise or arrangement to
its creditors generally, taken any proceeding with respect to a
compromise or arrangement, taken any proceeding to have itself declared
bankrupt or wound up, as the case may be, taken any proceeding to have
a receiver appointed of any part of its assets, had any encumbrance or
receiver take possession of any of its property, had an execution or
distress become enforceable or levied upon any portion of its property
or had any petition for a receiving order in bankruptcy filed against
it.
D. PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser hereby represents and warrants to the Company as follows:
1. (i) The Purchaser has all requisite corporate or other power and
capacity and has taken all requisite corporate or other action to
execute and deliver this Agreement, to purchase the Purchased
Securities, the Second Debenture, the Debenture Shares and the Warrant
Shares to be purchased by it and to carry out and perform all of its
obligations under this Agreement; and (ii) this Agreement constitutes
the legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, receivership or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application.
2. The Purchaser has completed or caused to be completed the Purchaser
Certificates, Private Placement Questionnaire and Undertaking attached
hereto as Exhibit F and the responses provided therein shall be true
and correct as of the date hereof and the Closing Date and the
Debenture Closing Date.
3. The Purchaser is an "accredited investor" as defined in Rule 501(a) of
Regulation D under the Securities Act. The Purchaser is aware of the
Company's business affairs and financial condition and has had access
to and has acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Purchased
Securities, the Second Debenture, the Debenture Shares and the Warrant
Shares. Purchaser has such business and financial experience as is
required to permit it to protect his or its own interests in connection
with the purchase of the Purchased Securities, the Second Debenture,
the Debenture Shares and the Warrant Shares. The Purchaser's financial
condition is such that it is able to bear the risk of holding the
Purchased Securities, the Second Debenture, the Debenture Shares and
the Warrant Shares for an indefinite period of time and the risk of
loss of his or its entire investment.
4. The Purchaser is an "accredited investor" as defined in Rule 45-501 of
the Ontario Securities Commission and has delivered the written
declaration in the form of Exhibit F-3 to the Company and the
representations, warranties and covenants contained therein shall
survive the closing of the purchase of the Purchased Securities and the
Second Debenture, respectively.
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5. The Purchaser is purchasing the Purchased Securities, the Second
Debenture, the Debenture Shares and the Warrant Shares for his or its
own account as principal, for investment purposes only, and not with a
present view to, or for, the resale distribution thereof, in whole or
in part, within the meaning of the Securities Act or any state or
provincial securities laws. Purchaser understands that its acquisition
of the Purchased Securities, the Second Debenture, the Debenture Shares
and the Warrant Shares has not been registered under the Securities Act
or registered or qualified under any state or provincial law in
reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein. Except as contemplated by this
Agreement, the Purchaser has no present agreement, undertaking,
arrangement, obligation or commitment providing for the disposition of
the Purchased Securities, the Second Debenture, the Debenture Shares or
the Warrant Shares. The Purchaser represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Purchased Securities. The Purchaser will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a
pledge of) any of the Purchased Securities, the Second Debenture, the
Debenture Shares or the Warrant Shares except in compliance with the
Securities Act, and the rules and regulations promulgated thereunder
and applicable state securities laws.
6. The Purchaser has received and reviewed the Term Sheet. The Purchaser
is aware that the purchase of the Purchased Securities, the Second
Debenture, the Debenture Shares or the Warrant Shares may have tax
consequences both in Canada and the United States.
7. The foregoing representations and warranties are true as of the date of
this Agreement and shall be true as of the final date that the Company
issues and sells the Purchased Securities and the Second Debenture,
respectively, to the Purchaser and the date the Company issues the
Warrant Shares or the Debenture Shares, as applicable. If such
representations and warranties shall not be true in any respect prior
to any such date, the Purchaser will give prompt written notice of such
fact to the Company.
E. CONDITIONS TO CLOSING
The Company's obligation to sell and issue Purchased Securities at the
Initial Closing and the Second Debenture at the Second Closing, respectively, is
at the option of the Company, subject to the fulfillment or waiver of the
following conditions:
1. The representations made by the Purchaser and the Company herein shall
be true and correct when made, and shall be true and correct on the
Initial Closing Date and the Second Closing Date, respectively, with
the same force and effect as if they had been made on and as of each
such date.
2. The delivery of a legal opinion of Company's legal counsel at the
Initial Closing satisfactory to the Purchaser.
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3. All covenants, agreements and conditions contained in this Agreement to
be performed by the Purchaser on or prior to the applicable Closing
Date shall have been performed or complied with in all material
respects.
4. The Company shall have obtained all necessary blue sky law permits and
qualifications, or secured exemptions therefrom, required to be filed
prior to closing by any state or province for the offer and sale of the
Purchased Securities and the Second Debenture.
5. All necessary regulatory approvals shall have been obtained by the
Company.
6. No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted or be pending
before any court, arbitrator, governmental body, agency or official.
7. The sale of Purchased Securities and the Second Debenture by the
Company shall not be prohibited by any law or governmental order or
regulation and shall not require any additional consent or approval
other that the ones obtained by the Company.
8. The issue and sale of Purchased Securities and the Second Debenture are
exempt from the requirement to file a prospectus and the requirement to
deliver an offering memorandum under applicable securities laws.
9. The delivery of a share certificate representing the Common Shares and
the Warrant or at the Initial Closing.
F. PRE-EMPTIVE RIGHTS
1. The Company shall not issue, sell or exchange, agree to issue, sell or
exchange, or reserve or set aside for issuance, sale or exchange, any
equity securities of the Company, including common shares and preferred
shares, any option, warrant or other right to subscribe for, purchase
or otherwise acquire any equity securities of the Company or any debt
instrument that is convertible into equity of the Company
(collectively, the "Offered Securities") to Financial Investors (as
defined herein) for capital raising purposes unless in each case the
Company shall have first complied with this Section F. The Company
shall deliver to the Purchaser a written notice of any proposed or
intended issuance, sale or exchange of Offered Securities (an "Offer"),
which shall (i) identify and describe the Offered Securities, (ii)
describe the price and other terms upon which they are to be issued,
sold or exchange, and the number or amount of the Offered Securities to
be issued, sold or exchanged, (iii) identify the persons or entities
(if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged, and (iv) subject to receipt by the
Company of applicable regulatory approval, offer to issue and sell to
or exchange with the Purchaser 19.9% of the Offered Securities on the
same terms and conditions as the Offered Securities, including without
limitation the delivery of a legal opinion to anyone in connection with
the Offering, if delivered. For the purposes of Section F, "Financial
Investors" are all investors other than employees and directors of, and
consultants and advisors (including without limitation placement agents
and underwriters) to the Company in their respective capacities as
such, other than any person
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or entity with whom the Company enters into a research and development,
licensing or partnering agreement. Notwithstanding the foregoing, in
the event that the Company enters into a research and development,
licensing or partnering agreement with a third party and in connection
therewith issues, sells or exchanges securities with a third party, the
Company shall deliver the Offer to the Purchaser promptly after the
sale of securities to such third party, and the Purchaser shall have
the right to purchase an amount of securities equal to 19.9% of the
securities of the Company issued with respect to such research and
development, licensing or partnering agreement after the closing of
such agreement on the same terms and conditions as such securities are
sold, including, without limitation, the delivery of a legal opinion to
anyone in connection with the Offering, if delivered.
2. To accept the Offer, in whole or in part, the Purchaser must deliver to
the Company, on or prior to 10 business days after the date of delivery
of the Offer, a written notice of acceptance indicating that the
Purchaser elects to purchase its share of the Offered Securities.
3. If the Purchaser does not accept to buy a portion of the Offered
Securities, the Company will have 120 days from the expiration of the
period set forth in paragraph 2 above to issue, sell or exchange all or
any part of the Offered Securities, but only upon terms and conditions
which are not more favourable, in the aggregate, to the acquiring
persons or persons or less favourable to the Company than those set
forth in the Offer.
4. The rights of the Purchaser under this Section F shall not apply to:
(A) the issuance of any shares as a stock dividend to
holders of common shares or upon any subdivision or
combination of common shares,
(B) the issuance of any common shares upon conversion of
shares of outstanding convertible preferred shares,
(C) the issuance of any common shares upon the exercise
of outstanding warrants,
(D) the issuance of securities solely in consideration
for the acquisition (whether by merger or otherwise)
by the Company or any of its subsidiaries of the
shares or assets of any other entity,
(E) the issuance of common shares by the Company pursuant
to a firm-commitment underwritten public offering, or
(F) the issuance of common shares or options with respect
thereto, issued or issuable to employees, directors
or officers of, or consultant to, the Company or any
of its subsidiaries pursuant to any plan, agreement
or arrangement approved by the Board of Directors of
the Company.
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Notwithstanding Section F(4)(v) above, in the event of a firm commitment
underwritten public offering, the Company will use its best efforts to ensure
that the Purchaser is able to purchase 19.9% of the shares offered thereunder.
5. The provisions in this Section F shall terminate upon the earlier of:
(A) 18 months from the date hereof;
(B) the sale of the Company by merger, sale of assets or
otherwise, or
(C) the termination of the licence agreement of even date
herewith between the Purchaser and the Company.
G. COVENANTS OF THE COMPANY
1. The Company covenants to include in its information circular for its
annual meeting of shareholders an item seeking shareholders approval in
connection with the issuance of 883,380 Common Shares of the Company to
the Purchaser (the "Resolution") and such solicitation shall be done in
compliance with laws which shall include the option for shareholders to
vote by proxy; and
2. The Company agrees to insert in its information circular sent to the
Company's shareholders in connection with the approval of the
Resolution a recommendation of the board of directors of the Company
recommending that shareholders vote in favour of the Resolution.
H. BOARD OBSERVER
For so long as the Purchaser holds at least 5% of the capital stock of
the Company outstanding and the licence agreement entered into between the
Purchaser and the Company as of the date hereto is in effect, the Purchaser
shall be entitled to receive notice of, to send an Observer and to receive
copies of all materials distributed to the Company's Board of Directors to all
meetings, held in person or by any other means, of the Company's Board of
Directors; provided however, that rights granted pursuant to this section are
not assignable without the consent of the Company and the Company requires as a
condition precedent to such right that each Observer proposing to attend any
meeting of the Board of Directors shall agree to hold in confidence and trust
and to act in a fiduciary manner with respect to all information so received
during such meetings or otherwise; and, provided further, that the Company
reserves the right not to provide information and to exclude the Observer from
any meeting or portion thereof if attendance at such meeting by the Observer
(absent adequate steps to preserve confidentiality) would adversely affect the
attorney-client privilege between the Company and its counsel, is necessary to
protect highly confidential proprietary information or for other similar
reasons.
I. INDEMNIFICATION
1. The Company shall indemnify, defend and hold harmless the Purchaser and
any director, officer, employee, agent or representative of the
Purchaser (each an "Indemnified Party") from and after the Closing,
from and against any and all material losses, claims, damages,
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liabilities, obligations, penalties, judgments, awards, costs,
reasonable expenses and disbursements (and any and all actions, suits,
proceedings and investigations in respect thereof and any and all legal
and other costs, reasonable expenses or disbursements in giving
testimony or furnishing documents in response to a subpoena or
otherwise), including, without limitation, the costs, reasonable
expenses and disbursements as and when incurred, of investigating,
preparing or defending any such action, suit, proceeding or
investigation (whether or not such Indemnified Party is a party)
(together, "Losses") (provided that Losses shall be calculated net of
the amount of insurance proceed or Third Party contribution or
indemnification payments actually paid to the Purchaser as
reimbursement for such Losses), directly or indirectly, caused by,
relating to, based upon, arising out of or in connection with the
breach of any representation, warranty, covenant or agreement of the
Company set forth in this Agreement.
2. The Purchaser shall indemnify, defend and hold harmless the Company and
any director, officer, employee, agent or representative of the Company
(each an "Indemnified Party") from and after the Closing, from and
against any and all material losses, claims, damages, liabilities,
obligations, penalties, judgments, awards, costs, reasonable expenses
and disbursements (and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other
costs, reasonable expenses or disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise),
including, without limitation, the costs, reasonable expenses and
disbursements as and when incurred, of investigating, preparing or
defending any such action, suit, proceeding or investigation (whether
or not such Indemnified Party is a party) (together, "Losses")
(provided that Losses shall be calculated net of the amount of
insurance proceed or Third Party contribution or indemnification
payments actually paid to the Company as reimbursement for such
Losses), directly or indirectly, caused by, relating to, based upon,
arising out of or in connection with the breach of any representation,
warranty, covenant or agreement of the Purchaser set forth in this
Agreement.
3. An Indemnified Party shall give the Company or the Purchaser, as the
case may be, (the "Indemnifying Party") prompt, written notice of any
claim, assertion, event or proceeding concerning any liability or
damage as to which they may request indemnification from the
Indemnifying Party hereunder; provided, however, that any failure by an
Indemnified Party to notify the Indemnifying Party shall not relieve
the Indemnifying Party from its obligations hereunder except to the
extent the Indemnifying Party is prejudiced by such failure and shall
not relieve the Indemnifying Party from any other obligation or
liability that it may have to any Indemnified Party otherwise than
under this Article. Upon written notice to such Indemnified Party given
by the Indemnifying Party after receipt of notice of any such action or
proceeding, the Indemnifying Party may participate in the defense
thereof at its own expense with counsel chosen by the Indemnifying
Party. The Indemnified Party shall not, without the prior written
consent of the Indemnifying Party, settle or compromise any claim, or
permit a default or consent to the entry of any judgement in respect
thereof, which consent shall not be unreasonably withheld. If the
Indemnifying Party does not participate in the defense of any such
claim or proceeding pursuant to this section and the Indemnified Party
proposes to settle such claim or proceeding prior to such a final
judgement thereon or to forego appeal with respect thereto, then such
Indemnified Party shall give the Indemnifying Party prompt written
- 12 -
notice thereof and the Indemnifying Party shall have the right to
participate in the settlement proceedings
J. MISCELLANEOUS
1. The terms of this Agreement may be waived or amended with the written
consent of the Company and the Purchaser.
2. Except for eMedsecurities Inc., for which fees the Purchaser is
responsible, each of the parties hereto hereby represents that, on the
basis of any actions and agreements by it, there are no brokers or
finders entitled to compensation in connection with the sale of
Purchased Securities, the Second Debenture, the Debenture Shares or the
Warrant Shares to the Purchaser.
3. This Agreement shall be governed in all respects by and construed in
accordance with the laws of the Province of Ontario without any regard
to conflicts of laws principles.
4. The representations, warranties, covenants and agreements made in this
Agreement shall survive any investigation made by the Company or the
Purchaser and the Closing.
5. The provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of
the parties to this Agreement. Notwithstanding the foregoing, the
Purchaser shall not assign this Agreement or its rights hereunder
without the prior written consent of the Company.
6. This Agreement, the Debentures, the Warrant and the Registration Rights
Agreement constitutes the full and entire understanding and agreement
between the parties with regard to the subjects thereof.
7. All notices and other communications required or permitted under this
Agreement shall be effective upon receipt and shall be in writing and
may be delivered in person, by telecopy, overnight delivery service or
registered or certified United States mail addressed to the Company or
the Purchaser, as the case may be, at their respective addresses set
forth at the beginning of this Agreement or on the signature page to
this Agreement or at such other address as the Company or the Purchaser
shall have furnished to the other party in writing. All notices and
other communications shall be effective upon the earlier of actual
receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or
telecopy, one business day after such notice or communication arrives
at the applicable address or was successfully sent to the applicable
telecopy number, (ii) in the case of notices and communications sent by
overnight delivery service, at noon (local time) on the second business
day following the day such notice or communication was sent, and (iii)
in the case of notices and communications sent by United States mail
seven days after such notice or communication shall have been deposited
in the United States mail.
8. If any provision of this Agreement shall be judicially determined to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
- 13 -
9. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute
one instrument.
10. Each party to this Agreement shall do and perform or cause to be done
and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and
documents as the other party hereto may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
11. Subject to the provisions of the Registration Rights Agreement, the
Company and the Purchaser shall each bear its own costs and expenses
incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel.
12. Except as otherwise specified, all references to "dollars" or "$" in
this Agreement (including the Exhibits attached hereto) shall be deemed
to refer to United States dollars.
[Signature page follows]
SUBSCRIPTION AND DEBENTURE PURCHASE AGREEMENT SIGNATURE PAGE
The foregoing agreement is hereby executed as of the date last below written.
UNITED THERAPEUTICS CORPORATION
Per: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President and General Counsel
REGISTRATION INSTRUCTIONS DELIVERY INSTRUCTIONS
Number of Purchased Securities: Name:
4,900,000 Common Shares and a warrant to purchase
3,250,000 Common Shares
Purchase Price: US$2,450,000 Address:
Name or Nominee:
Account reference, if applicable: Account Reference, if applicable:
Contact Name:
Telephone Number:
Fax Number:
Agreed to and Accepted:
ALTAREX CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Title: President and Chief Executive Officer
-----------------------------------------------
Date: April 17, 2002
-----------------------------------------------
EXHIBIT A
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
REGULATION S UNDER THE U.S. SECURITIES ACT, OR (C) IN ACCORDANCE WITH RULE 144
UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE WARRANT OR COMMON SHARES ISSUABLE ON EXERCISE
THEREOF IN THE PROVINCE OF ONTARIO BEFORE AUGUST 20, 2002.
Certificate No. 1
ALTAREX CORP.
(AN ALBERTA CORPORATION)
Dated this 17th day of April, 2002
WARRANT CERTIFICATE
1. UNITED THERAPEUTICS CORPORATION (the "HOLDER") is the holder of a share
purchase warrant (the "WARRANT") of AltaRex Corp. (the "CORPORATION") and is
thereby entitled to purchase at any time during the period commencing on August
14, 2002 and prior to 5:00 p.m. (Toronto time) (the "EXPIRY TIME") on August 20,
2002 (the "EXERCISE PERIOD") three million two-hundred and fifty thousand
(3,250,000) fully paid and non-assessable common shares (the "SHARES") in the
capital of the Corporation as constituted on the date hereof, at a price per
Share equal to US$0.50 (the "SUBSCRIPTION PRICE"), subject, in each case, to
adjustment in the manner set forth herein, by delivering: (i) the exercise form,
attached hereto as Exhibit "I" (the "EXERCISE FORM"), duly completed and
executed; and (ii) a certified cheque, bank draft or wire transfer payable in
lawful money of the United States to or to the order of the Corporation at par
in the amount of US$1,625,000, to the Corporation at its principal offices at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ or such other address as
may be set forth in a written notice to the Holder from the Corporation (the
"CORPORATION'S ADDRESS"). The Corporation will cause to be personally delivered
to the person or persons specified in the Exercise Form the certificate or
certificates for the Shares subscribed for at the respective address or
addresses specified therein within three business days of its receipt of the
duly completed Exercise Form and the aggregate Subscription Price in respect
thereof.
2. The Holder may exercise the Warrant only during the Exercise Period. The
Holder shall not be entitled to exercise the Warrant after the Expiry Time. The
Holder shall not be entitled to
- 2 -
exercise the Warrant in part only for a number of Shares which is less than the
total number of Shares into which the Warrant may be exercised. No fractional
Shares will be issued.
3. The holding of the Warrant under this Warrant certificate does not make the
Holder a shareholder of the Corporation, nor does it entitle the Holder to any
right or interest except as is expressly provided in this Warrant certificate.
4. Exhibit "I" and Exhibit "II" form part of this Warrant certificate and,
without limitation, the Holder shall be entitled to the additional rights
contained in Exhibit "II".
5. Warrants may not be transferred by the Holder.
6. From time to time the Corporation may, subject to the provisions of this
certificate, execute and deliver by its proper officers, instruments
supplemental hereto, which thereafter shall form part hereof, for any one or
more or all of the following purposes of setting forth adjustments in the
application of Section 2 of Exhibit "II" hereto.
In the case of the consolidation, amalgamation, arrangement or merger
("SUCCESSOR CORPORATION"), the successor corporation shall be bound by all the
provisions hereof including the due and punctual performance of all covenants of
the Corporation and forthwith following the occurrence of such event the
successor corporation resulting from such consolidation, amalgamation,
arrangement, merger or transfer (if not the Corporation) shall expressly assume,
by supplemental certificate satisfactory in form to the Holder and executed and
delivered to the Holder, the due and punctual performance and observance of each
and every covenant and condition of this certificate to be performed and
observed by the Corporation.
7. Time shall be of the essence hereof. This Warrant certificate shall be
governed by and construed in accordance with the laws in force in the Province
of Ontario and the laws of Canada applicable therein and shall be treated in all
respects as an Ontario contract.
8. All dollar amounts herein are expressed in lawful money of the United States.
9. A register shall be kept by the Corporation at the Corporation's Address, and
at such other offices as may be required by law wherein shall be entered the
name, address and description of the Holder and particulars of the Warrant.
10. In case this Warrant certificate shall become mutilated or be lost,
destroyed or stolen, the Corporation shall issue and shall certify and deliver a
new Warrant certificate of like date and tenor as the one mutilated, lost,
destroyed or stolen upon surrender of and in place of and upon cancellation of
the mutilated Warrant certificate or in lieu of and in substitution for the
lost, destroyed or stolen Warrant certificate and the substituted Warrant
certificate shall rank equally in accordance with its terms with the previous
Warrant certificate issued to the Holder.
The applicant for the issue of a new Warrant certificate pursuant to this
section 10 shall bear the cost of the issue thereof and in case of loss,
destruction or theft shall, as a condition precedent to
- 3 -
the issue thereof, furnish to the Corporation such evidence of ownership and of
the loss, destruction or theft of the Warrant certificate so lost, destroyed or
stolen as shall be satisfactory to the Corporation in its discretion and the
applicant may also be required to furnish an indemnity in amount and form
satisfactory to the Corporation in its discretion, and shall pay the reasonable
charges of the Corporation in connection therewith.
11. This Warrant certificate may, upon compliance with the reasonable
requirements of the Corporation, be exchanged for one or more Warrant
certificates representing Warrants entitling the Holder to acquire an equal
aggregate number of Shares. Warrants may be exchanged only at the Corporation's
Address or at any other place that is designated by the Corporation. Any
Warrants tendered for exchange shall be surrendered to the Corporation and
cancelled. The Corporation shall sign all Warrant certificates necessary to
carry out exchanges as aforesaid and those Warrant certificates shall be
certified by or on behalf of the Corporation.
12. In the event any provision hereof shall be void or unenforceable for any
reason, it shall be severed from the remainder of the provisions hereof and such
remainder shall remain in full force and effect notwithstanding such severance.
Any court with jurisdiction over any dispute with respect to the Warrants may
amend the provisions hereof to the minimum extent required to render the
impugned provision valid and enforceable.
IN WITNESS WHEREOF, the Corporation has executed this Warrant
certificate.
ALTAREX CORP.
Per:
---------------------------
Authorized Signatory
REGISTRATION PANEL
(No writing on this panel except by the Corporation or other Registrar)
DATE OF NUMBER OF IN WHOSE NAME SIGNATURE OF CORPORATION OR OTHER
CERTIFICATE NO. REGISTRATION WARRANTS REGISTERED REGISTRAR
EXHIBIT "I"
EXERCISE FORM
TO: ALTAREX CORP. (the "Corporation")
The Holder hereby exercises its right to purchase 3,250,000 Shares (or
such number of other securities or property to which such Warrants entitle the
Holder in lieu thereof or in addition thereto under the provisions set out
elsewhere in the attached Warrant certificate) pursuant to the provisions of
this Warrant certificate at a price of US$0.50 per Share (or such other adjusted
Subscription Price as may be prescribed elsewhere in the attached Warrant
certificate) on the terms specified in this Warrant certificate and encloses and
tenders herewith a certified cheque, bank draft or wire transfer payable in
lawful money of the United States to or to the order of the Corporation at par
for the aggregate Subscription Price of US$1,625,000.
Capitalized terms used in this Exercise Form have the same meanings
ascribed to them elsewhere in this Warrant certificate.
The Holder hereby directs that the securities or property be registered
as follows:
NAME(S) IN FULL ADDRESS(ES) NUMBER(S) OF SHARES
(Please print the full name in which certificates representing the Shares are to
be issued. If space is insufficient, attach a separate sheet. If any of the
securities are to be issued to a person or persons other than the Holder, the
Holder must pay all requisite transfer taxes and provide proof of such payments
to the Corporation.)
The Holder hereby acknowledges that, upon the registration of the
securities purchased herein and except as set out below, the Holder's rights
under this Warrant certificate are hereby terminated and that, if the number of
Warrants exercised is less than the total number of Warrants represented by this
Warrant certificate, the Corporation shall forthwith deliver to the Holder a new
Warrant certificate in respect of the Warrants not then exercised.
- ii -
Dated this ____________ day of _________________, ___________.
----------------------------------------------
Signature
Print name and address of Holder in full below
Name
-------------------------------------------
Address:
---------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
This Exercise Form must be completed and delivered, together with payment for
the Shares purchased, to the Corporation.
EXHIBIT "II"
1. DEFINITIONS
In this Exhibit II:
(a) "CURRENT MARKET PRICE" per Share or Participating Share at any
date shall be the weighted average price per share for such
shares for any 20 consecutive trading days (such 20
consecutive trading days being selected by the Corporation)
commencing not more than 25 trading days before such date on
such stock exchange on which such shares are listed as may be
selected for such purpose by the directors of the Corporation
or if such shares are not listed on any stock exchange, then
on an automated quotation system, such as NASDAQ or the over
the counter market. The weighted average price shall be
determined by dividing the aggregate sale price of all such
shares so sold on the exchange, system or market, as the case
may be, during the said 20 consecutive trading days by the
total number of such shares so sold. If such shares are not
listed on any stock exchange, automated quotation system or
traded on an over the counter market, the Current Market Price
shall be determined in good faith by the Board of Directors of
the Corporation.
(b) "DIVIDENDS PAID IN THE ORDINARY COURSE" means cash dividends
declared payable on the Shares in any fiscal year of the
Corporation to the extent that such cash dividends do not
exceed, in the aggregate, the greater of: (i) 125% of the
aggregate amount or value of dividends declared payable by the
Corporation on the Shares in its immediately preceding fiscal
year; and (ii) 50% of the aggregate net earnings of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year (less the amount or value of all
dividends paid or payable in respect of such fiscal year) as
shown in the audited consolidated financial statements of the
Corporation for such preceding fiscal year or, if there are no
audited financial statements with respect to such period,
computed in accordance with generally accepted accounting
principles consistent with the applications made in
preparation of the most recent audited consolidated financial
statements of the Corporation, and for such purpose the
amounts of any dividend paid in shares shall be the aggregate
stated value of such shares and the amount of any dividend
paid in other than cash or shares shall be the fair market
value of such dividend as declared by resolution passed by the
board of directors of the Corporation.
(c) "PARTICIPATING SHARE" means a share that carries the right to
participate in earnings or in capital on a liquidation or
winding-up to an unlimited degree, or which ranks, in terms of
priority, equally with the Shares with respect to
participation in earnings or in capital on a liquidation or
winding-up.
- ii -
2. ADJUSTMENT OF SUBSCRIPTION RIGHTS
The Subscription Price in effect and the number and type of securities
purchasable under the Warrant at any date shall be subject to adjustment from
time to time as follows:
(a) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time, the Corporation shall (i) subdivide or
redivide the outstanding Shares into a greater number of
shares, (ii) reduce, combine or consolidate the outstanding
Shares into a smaller number of shares, or (iii) issue Shares
or other Participating Shares to the holders of all or
substantially all of the outstanding Shares by way of a stock
dividend, the Subscription Price in effect on the effective
date of any such event shall be adjusted immediately after
such event or on the record date for such issue of Shares or
other Participating Shares by way of stock dividend, as the
case may be, so that it shall equal the amount determined by
multiplying the Subscription Price in effect immediately prior
to such event by a fraction, of which the numerator shall be
the total number of Shares and other Participating Shares
outstanding immediately prior to such event and of which the
denominator shall be the total number of Shares and other
Participating Shares outstanding immediately after such event;
and the number of Shares which the Holder is entitled to
purchase under the terms of this Warrant certificate shall be
adjusted at the same time by multiplying the number by the
inverse of the aforesaid fraction; such adjustments shall be
made successively whenever any event referred to in this
subsection (a) shall occur; any such issue of Shares or other
Participating Shares by way of a stock dividend shall be
deemed to have been made on the record date for the stock
dividend for the purpose of calculating the number of
outstanding Shares or other Participating Shares immediately
after such event under this subsection (a) and subsection (e)
of this Section.
(b) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time the Corporation shall fix a record date for
the issuance of rights, options or warrants to all or
substantially all of the holders of the outstanding Shares,
entitling them, for a period expiring not more than 45 days
after such record date, to subscribe for or purchase Shares or
other Participating Shares (or securities convertible into or
exchangeable for Shares or other Participating Shares) at a
price per share (or having a conversion or exchange price per
share) less than 95% of the Current Market Price on such
record date, the Subscription Price shall be adjusted
immediately after such record date so that it shall equal the
price determined by multiplying the Subscription Price in
effect on such record date by a fraction, of which the
numerator shall be the total number of Shares outstanding on
such record date plus the number arrived at by dividing the
aggregate price of the total number of additional Shares or
other Participating Shares offered for subscription or
purchase (or the aggregate conversion or exchange price of the
convertible or exchangeable securities so offered) by such
Current Market Price, and of which the denominator shall be
the total number of Shares outstanding on
- iii -
such record date plus the total number of additional Shares or
other Participating Shares offered for subscription or
purchase (or into which the convertible or exchangeable
securities so offered are convertible or exchangeable); any
Shares owned by or held for the account of the Corporation or
any subsidiary of the Corporation shall be deemed not to be
outstanding for the purpose of any such computation; and the
number of Shares which the Holder is entitled to purchase
under the terms of this Warrant certificate shall be adjusted
at the same time by multiplying the number by the inverse of
the aforesaid fraction; such adjustment shall be made
successively whenever such a record date is fixed; to the
extent that any such rights, options or warrants are not so
issued or any such rights, options or warrants are, not
exercised prior to the expiration thereof, the Subscription
Price and the exchange rate shall then be re-adjusted to the
Subscription Price and the exchange rate which would then be
in effect based upon the number and aggregate price of Shares
or other Participating Shares (or securities convertible into
or exchangeable for Shares or other Participating Shares)
actually issued upon the exercise of such rights, options or
warrants, as the case may be.
(c) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time the Corporation shall fix a record date for
the making of a distribution to all or substantially all the
holders of its outstanding Shares of (i) shares of any class
other than Shares or Participating Shares, other than shares
distributed to holders of Shares pursuant to their exercise of
options to receive dividends in the form of such shares in
lieu of Dividends Paid in the Ordinary Course on the Shares
and other than the issue of Shares or other Participating
Shares to the holders of all or substantially all of the
outstanding Shares by way of a stock dividend, or (ii) rights,
options or warrants (excluding rights exercisable for 45 days
or less) or (iii) evidences of its indebtedness, or (iv)
assets (excluding Dividends Paid in the Ordinary Course),
including shares of other corporations, then, in each such
case, the Subscription Price shall be adjusted immediately
after such record date so that it shall equal the price
determined by multiplying the Subscription Price in effect on
such record date by a fraction, of which the numerator shall
be the total number of Shares outstanding on such record date
multiplied by the Current Market Price per Share on such
record date, less the fair market value (as determined by the
board of directors of the Corporation, acting reasonably,
which determination, absent manifest error, shall be
conclusive) of such shares or rights, options or warrants or
evidences or indebtedness or assets so distributed, and of
which the denominator shall be the total number of Shares
outstanding on such record date multiplied by such Current
Market Price per Share; any Shares owned by or held for the
account of the Corporation shall be deemed not to be
outstanding for the purpose of any such computation; and the
number of Shares which the Holder is entitled to purchase
under the terms of this Warrant certificate shall be adjusted
at the same time by multiplying the number by the inverse of
the aforesaid fraction; such adjustment shall be made
successively whenever such a record date is fixed; to the
extent that such distribution is not so made, the
- iv -
Subscription Price and the exchange rate shall be re-adjusted
to the Subscription Price and the exchange rate which would
then be in effect if such record date had not been fixed or to
the Subscription Price and the exchange rate which would then
be in effect based upon such shares or rights, options or
warrants or evidences of indebtedness or assets actually
distributed, as the case may be, and in clause (iv) the term
"Dividends Paid in the Ordinary Course" shall include the
value of any securities or other property or assets
distributed in lieu of cash Dividends Paid in the Ordinary
Course.
(d) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time there is a reclassification of the Shares
at any time outstanding or a change of the Shares into other
shares or a capital reorganization of the Corporation not
covered in subsection (a) or a consolidation, amalgamation or
merger of the Corporation with or into any other corporation
or a sale of the property and assets of the Corporation as or
substantially as an entirety to any other person, a Holder
holding the Warrant under this Warrant certificate which has
not been exercised prior to the effective date of such
reclassification, capital reorganization, consolidation,
amalgamation, merger or sale shall thereafter, upon the
exercise of the Warrant, be entitled to receive and shall
accept in lieu of the number of Shares, as then constituted,
to which the Holder was previously entitled upon exercise of
the Warrant, but for the same aggregate consideration payable
therefor, the number of shares or other securities or property
of the Corporation or of the corporation resulting from such
reclassification, consolidation, amalgamation or merger or of
the person to which such sale may be made, as the case may be,
that such Holder would have been entitled to receive on such
reclassification, capital reorganization, consolidation,
amalgamation, merger or sale if, on the effective date
thereof, the Holder had been the registered holder of the
number of Shares to which the Holder was previously entitled
upon due exercise of the Warrant; and in any case, if
necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Warrant
certificate with respect to the rights and interests
thereafter of the Holder to the end that the provisions set
forth in this Warrant certificate shall thereafter
correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares or securities or
property to which the Holder may be entitled upon the exercise
of the Warrant thereafter.
(e) In any case in which this Warrant certificate shall require
that an adjustment shall become effective immediately after a
record date for an event referred to herein, the Corporation
may defer, until the occurrence of such event, issuing to the
Holder of the Warrant if exercised after such record date and
before the occurrence of such event the kind and amount of
shares, other securities or property to which it would be
entitled upon such exercise by reason of the adjustment
required by such event; provided, however, that the
Corporation shall deliver to the Holder an appropriate
instrument evidencing the Holder's right to
- v -
receive the kind and amount of shares, other securities or
property to which it would be entitled upon the occurrence of
the event requiring such adjustment and the right to receive
any distributions made or declared in favour of holders of
record of Shares as constituted from time to time on and after
such date as the Holder would, but for the provisions of this
subsection (e), have received, or become entitled to receive,
on such exercise.
(f) The adjustments provided for in this Warrant certificate are
cumulative and shall apply to successive subdivisions,
redivisions, reductions, combinations, consolidations,
distributions, issues or other events resulting in any
adjustment under the provisions of this Warrant certificate
provided that, notwithstanding any other provision of this
Section, no adjustment of the Subscription Price or number of
Shares, as then constituted, purchasable shall be required
unless such adjustment would require an increase or decrease,
of at least 1% in the Subscription Price or the number of
Shares, as then constituted, purchasable then in effect;
provided however, that any adjustments which by reason of this
subsection (f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(g) In the event of any question arising with respect to the
adjustments provided in this Warrant certificate, such
question shall, absent manifest error, be conclusively
determined by a firm of chartered accountants appointed by the
Corporation and acceptable to the Holder (who may be the
auditors of the Corporation) with the assistance of legal
counsel, who may be legal counsel to the Corporation; such
accountants shall have access to all necessary records of the
Corporation and such determination shall be binding upon the
Corporation and the Holder.
(h) As a condition precedent to the taking of any action which
would require an adjustment in any of the subscription rights
pursuant to the terms of the Warrant, including the number of
Shares which are to be received upon the exercise thereof, the
Corporation shall take any action which may, in the opinion of
legal counsel, be necessary in order that the Corporation may
validly and legally issue as fully paid and non-assessable all
the Shares which the Holder is entitled to receive on the full
exercise thereof in accordance with the provisions hereof.
(i) In case the Corporation shall take any action affecting the
Shares other than action described in this Warrant
certificate, which in the opinion of the board of directors of
the Corporation would materially affect the rights of Holder,
the Subscription Price and/or the number of Shares which may
be acquired upon exercise of the Warrant shall be adjusted in
such manner and at such time, by action of the board of
directors of the Corporation, in its sole reasonable
discretion as it may determine to be equitable in the
circumstances, provided that no such adjustment shall be made
unless prior approval of any stock exchange on which the
Shares
- vi -
are listed for trading has been obtained. Failure of the board
of directors of the Corporation to make such an adjustment
shall be conclusive evidence that the board of directors of
the Corporation have determined that it is equitable to make
no adjustment in the circumstances.
3. NOTICE OF ADJUSTMENT
At least 21 days prior to the effective date or record date, as the
case may be, of any event referred to in clause 2, the Corporation shall notify
the Holder of the particulars of such event and the estimated amount of any
adjustment required as a result thereof. Promptly after the occurrence of any
event which requires an adjustment in the Subscription Price or in any of the
subscription rights pursuant to the terms of the Warrant pursuant to this
Warrant certificate, including the number of Shares, as then constituted, which
are to be received upon the exercise thereof, the Corporation shall forthwith
deliver to the Holder a certificate of the Corporation specifying the
particulars of such event and the required adjustment and the computation of
such adjustment and give notice to the Holder of the particulars of such event
and the required adjustment in the manner provided in Subsection 5(b) hereof.
4. GENERAL COVENANTS OF THE CORPORATION
(a) The Corporation covenants and agrees that it is duly
authorized to enter into and perform its obligations under its
Warrant certificate.
(b) The Corporation will cause the Shares from time to time
subscribed for and the certificates representing the Shares to
be duly issued. At all times until the Expiry Time while the
Warrant is outstanding, the Corporation shall reserve and
there shall remain unissued out of its authorized capital a
number of Shares sufficient to satisfy the exercise of the
Warrant. All Shares issued upon the due exercise of the
Warrant shall be fully paid and non-assessable.
(c) The Corporation covenants and agrees that all things necessary
have been done and performed to create the Warrant and to make
the Warrant and this Warrant certificate legal, valid and
binding upon the Corporation with the benefits and subject to
the terms of this Warrant certificate. The Corporation will
do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, all other acts, deeds
and assurances in law as may be reasonably required for the
better accomplishing and effecting of the intentions and
provisions of this Warrant certificate.
(d) Subject to the express provisions hereof, the Corporation will
carry on and conduct and will cause to be carried on and
conducted its business in a proper and efficient manner and
will cause to be kept proper books of account in accordance
with generally accepted accounting practice; and, subject to
the express provisions hereof, it will do or cause to be done,
all things necessary to preserve and keep in full force and
effect its corporate existence, provided, however, that
- vii -
nothing herein contained shall prevent the amalgamation,
consolidation, merger, sale, winding up or liquidation of the
Corporation or any subsidiary of the Corporation or the
abandonment of any rights and franchises of the Corporation or
any subsidiary of the Corporation if, in the opinion of the
board of directors of the Corporation or officers of the
Corporation, it would be advisable and in the best interests
of the Corporation or of such subsidiary of the Corporation to
do so.
(e) The Corporation shall take all such steps and actions and do
all such things as may reasonably be necessary to maintain the
listing and posting for trading on The Toronto Stock Exchange
of those Shares currently listed on The Toronto Stock
Exchange.
(f) The Corporation will use its reasonable best efforts to ensure
that the Shares issuable upon the exercise of the Warrant will
be listed and posted for trading on The Toronto Stock Exchange
upon their issue or such other stock exchange or automated
quotation system on which the Shares may, from time to time,
be listed, posted or quoted for trading.
5. NOTICE
(a) Any notice to the Corporation under the provisions hereof
shall be valid and effective if delivered by hand or private
courier to the Corporation, to the attention of the President
at the Corporation's Address and any notice so delivered shall
be deemed to be validly given when delivered. The Corporation
may from time to time notify the Holder of a change in address
which thereafter, until changed by like notice, shall be the
address of the Corporation for all purposes of this Warrant
certificate.
(b) Unless herein otherwise expressly provided, any notice to be
given hereunder to a Holder shall be deemed to be validly
given if delivered by hand or private courier, addressed to
the Holder at its post office address appearing on the records
of the Corporation and shall be deemed to have been given when
delivered. In determining under any provision hereof the date
when notice of any meeting or other event must be given, the
date of giving notice shall be excluded and the date of the
meeting or other event shall be included. Accidental error or
omission in giving notice to the Holder shall not invalidate
any action or proceeding founded thereon.
EXHIBIT B-1
FORM OF FIRST DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATIONS UNDER
THE SECURITIES ACT OR (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144
UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES OR THE COMMON SHARES ISSUABLE UPON
CONVERSION THEREOF IN THE PROVINCE OF ONTARIO BEFORE AUGUST 18, 2002.
FIRST CONVERTIBLE DEBENTURE
THIS FIRST CONVERTIBLE DEBENTURE ("Agreement") is made and entered into
as of April 17, 2002 by and between UNITED THERAPEUTICS CORPORATION, a Delaware
corporation ("Lender"), and ALTAREX CORP., an Alberta corporation ("Borrower").
RECITALS
A. Borrower has requested Lender to make a loan to Borrower in an
amount equal to US$50,000 and, subject to the terms and conditions of this
Agreement, Lender is willing to make such loan to Borrower.
NOW, THEREFORE, the parties hereby mutually agree as follows:
1. THE LOAN.
1.1 Amount. Subject to the terms and conditions of this
Agreement, Lender agrees to make a loan (the "Loan") to Borrower in an amount
equal to Fifty Thousand United States Dollars (US$50,000).
1.2 Advance. The advance of the Loan shall be in the amount of
US$50,000 and shall be made within one (1) Business Day (as defined below) after
the date on which this Agreement is executed by both parties.
1.3 Method Of Disbursement. The Loan shall be made by wire
transfer of funds to such account of Borrower as may be specified by Borrower to
Lender in writing.
1.4 Maturity. Subject to Section 5, the outstanding principal
amount of the Loan, and all accrued and unpaid interest thereon, shall be due
and payable on April 17, 2005 (the "Maturity Date").
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1.5 Interest. Borrower shall pay interest on the outstanding
principal amount of the Loan at a rate of six percent (6%) simple interest per
annum (the "Applicable Rate").
1.6 Interest Computation and Payment. All computations of
interest hereunder shall be made by Lender based on a 360-day year and the
actual number of days elapsed and shall be payable to the Lender in U.S. Dollars
on the first day of April, July, October and January with the first payment date
being July 1, 2002.
1.7 Voluntary Prepayment. Borrower may at its option
voluntarily prepay the Loan in whole or in part, without premium or penalty,
upon not less than five (5) days prior written notice of any such prepayment.
Any such notice shall be irrevocable. Borrower shall, concurrently with such
prepayment, pay all accrued but unpaid interest to the date of such prepayment
on the amount prepaid.
1.8 Method of Payment. Borrower shall pay all amounts payable
to Lender under this Agreement in U.S. Dollars, in immediately available funds,
not later than 1:00 p.m. eastern standard time on the day on which such payment
is to be made, to such account as Lender may by notice specify to Borrower, or
by such other means as may be acceptable to Lender. All payments made to Lender
under this Agreement shall be applied in such order as Lender may determine.
1.9 Business Day. "Business Day" means a day other than a
Saturday, Sunday or legal holiday on which banks are authorized to close in New
York, New York. If the date on which a payment hereunder is due is a day other
than a Business Day, then such payment shall be made on the immediately
preceding Business Day.
2. CONVERSION.
2.1 The Loan will be automatically converted into 100,000
common shares of the Borrower (the "Common Shares"), being a conversion price of
$0.50 per Common Share (the "Conversion Price") on August 21, 2002. A share
certificate representing the 100,000 Common Shares will be delivered by the
Borrower to the Lender within five Business Days after the issuance of the
100,000 Common Shares.
2.2 Exhibit "I" forms part of this Agreement and the Purchaser
shall be entitled to the additional rights set forth therein.
3. SECURITY DOCUMENTS.
Concurrently with the execution of this Agreement, Borrower
shall execute and deliver to Lender a security agreement in form and substance
satisfactory to Lender (the "Security Agreement").
4. REPRESENTATIONS AND WARRANTIES.
-3-
4.1 The representations and warranties given by the Borrower
to the Lender under the Subscription and Debenture Purchase Agreement and the
License Agreement of even date (the "Borrower Representations and Warranties")
are hereby incorporated by reference and the Borrower hereby represents to the
Lender such Borrower Representations and Warranties and acknowledges that the
Lender is relying on such Representations and Warranties in connection with its
advances hereunder.
4.2 The representations and warranties given by the Lender to
the Borrower under the Subscription and Debenture Purchase Agreement of even
date (the "Lender Representations and Warranties") are hereby incorporated by
reference and the Lender hereby represents to the Borrower that such Lender
Representations and Warranties are true and that such Representation and
Warranties shall remain true at the time of the issuance of the 100,000 Common
Shares and acknowledges that the Borrower will rely on such Lender
Representations and Warranties in connection with the issuance of such 100,000
Common Shares.
5. COVENANTS OF BORROWER.
5.1 Use of Loan Proceeds. Borrower shall use the proceeds of
the Loan for research and development expenses, general and administrative
expenses and working capital and other requirements of the Borrower.
5.2 Ordinary Course of Business. Borrower shall continue to
operate its business in the ordinary course of business.
5.3 Affirmative Covenants
So long as any amount owing under this Agreement remains
unpaid and unless written consent is given by the Lender, the Borrower shall:
(a) Deliver to the Lender (i) as soon as practicable and in any event within 60
days after the end of each of the first three financial quarters in each
financial year a consolidated balance sheet of the Borrower as of the end of the
financial quarter, setting forth in comparative form the figures for the
corresponding financial quarter and corresponding portion of the previous
financial year, (ii) as soon as practicable and in any event within 120 days
after the end of each financial year, a copy of the financial statements of the
Borrower for the financial year prepared on consolidated basis reported on by
the Borrower's independent auditors, and (iii) together with each delivery of
financial statements, a compliance certificate in the form attached as Schedule
A hereto;
(b) Pay or cause to be paid when due, (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, sales,
capital or profit or any other property belonging to it, and (ii) all claims
which, if unpaid, might by law become a lien upon the assets, except any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings and in respect of which the Borrower have established
adequate reserves in accordance with Canadian Generally Accepted Accounting
Principles or which are Permitted Liens;
"Permitted Liens" means with respect to any person the following:
-4-
(a) liens for taxes, assessments or governmental charges or levies not
at the time due or delinquent;
(b) undetermined or inchoate liens and charges incidental to current
operations which have not been filed pursuant to law against the Borrower or
which relate to obligations not due or delinquent; and
(c) title defects or irregularities of a minor nature and which neither
individually nor in the aggregate will materially impair the use of the property
for the purposes for which it is held in the business or the value of such
property.
(c) Deliver to the Lender (i) promptly upon their issuance, copies of all
publicly available notices, reports, press releases, circulars, offering
documents and other publicly available documents filed with, or delivered to,
any stock exchange or the Ontario Securities Commission or a similar
governmental entity in any other jurisdiction, and (ii) such other financial
information respecting the condition or operations, financial or otherwise, of
the Borrower as the Lender may from time to time reasonably request which
information is generally prepared by the Borrower from time to time in the
ordinary course of business;
(d) Comply with the requirements of all applicable laws, judgments, orders,
decisions and awards, non-compliance with which would reasonably be expected to
have a Material Adverse Effect;
"Material Adverse Effect" means a material adverse effect on the business,
operations, results of operations, assets, liabilities or financial condition of
the Borrower and the subsidiaries of the Borrower (the "subsidiaries") taken as
a whole.
(e) At its cost and expense, upon request of the Lender, execute and deliver or
cause to be executed and delivered to the Lender such further instruments and do
and cause to be done such further acts as may be necessary or proper in the
reasonable opinion of the Lender to carry out more effectually the provisions
and purposes of this Agreement.
5.4 Negative Covenants
So long as any amount owing under this Agreement remains
unpaid and, unless written consent is given by the Lender, the Borrower shall
not:
(a) Create, incur, assume, suffer to exist, or permit any of its subsidiaries to
create, incur, assume, or suffer to exist, any lien on any of their respective
properties or assets, other than a Permitted Lien;
(b) Consumate, or permit any of its subsidiaries (the "Subsidiaries") to
consumate any reorganization, consolidation, amalgamation, arrangement,
winding-up, merger or other similar transaction with any third party, without
providing to the Lender notice of such transaction, as soon as commercially
reasonable;
-5-
(c) Sell, exchange, lease, release or abandon or otherwise dispose of, or permit
any Subsidiary to sell, exchange, lease, release or abandon or otherwise dispose
of, any of the assets or properties of the Borrower as described in the Security
Agreement to any person without providing to the Lender notice of such sale or
disposition as soon as commercially reasonable other than (i) bona fide sales,
exchanges, leases, abandonments or other dispositions in the ordinary course of
business for the purpose of carrying on the Business or its business, as the
case may be, and at fair market value, (ii) property or assets (other than
shares) which have no material economic value in the business or business or are
obsolete, and (iii) dispositions pursuant to a transaction permitted in 1(c).
Each of the Borrower and Lender acknowledge and agree that for the purposes of
this clause (b) the bona fide licensing by the Borrower of its technology shall
be deemed to be in the ordinary course of its business;
(d) Transactions with Related Parties. Except as otherwise permitted directly or
indirectly, consummate or allow any Subsidiary to consummate any agreement with,
make any financial accommodation for, or otherwise enter into any transaction
with, a non-arm's length third party except in the ordinary course of, and
pursuant to the reasonable requirements of, business or at prices and on terms
not less favourable to the Borrower or the Subsidiary, as the case may be, than
could be obtained in a comparable arm's length transaction with another person;
(e) Distributions. Declare, make or pay or permit any of its Subsidiaries to
declare, make or pay any distributions,
For purposes of this Section 5.4, "Distribution" means with respect to any
person the amount of (i) any dividend or other distribution on issued shares of
the person or any of its subsidiaries, (ii) the purchase, redemption or
retirement amount of any issued shares, warrants or any other options or rights
to acquire shares of the person or any of its subsidiaries redeemed or purchased
by the person or any its subsidiaries, or (iii) any payments whether as
consulting fees, management fees or otherwise to any related party of the person
or any of its subsidiaries. Notwithstanding the foregoing, the Borrower may make
Distributions between and among the Borrower and any wholly-owned subsidiaries
or affiliates;
5.5 Security Covenants. So long as any amount owing under this
Agreement remains unpaid, and unless written consent is given by the Lender, the
Borrower shall:
(a) Promptly cure or cause to be cured any defects in the execution and delivery
of this Agreement or any defects in the validity or enforceability of any of the
Security and at its expense, execute and deliver or cause to be executed and
delivered, all such agreements, instruments and other documents (including the
filing of any financing statements or financing change statements) as the Lender
reasonably may consider necessary or desirable to protect or otherwise perfect
the security interest granted under the Security Agreement.
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6. EVENTS OF DEFAULT AND REMEDIES.
6.1 Events of Default. The occurrence of any of the following
conditions or events shall each constitute an event of default ("Event of
Default"):
(a) failure to repay the Loan or any interest thereon when due
(whether at maturity, by acceleration, or otherwise), and such failure is not
cured within five (5) Business Days after Lender gives to Borrower written
notice of such failure;
(b) failure of Borrower to perform or comply with any term,
provision or covenant contained in this Agreement or the Security Agreement or
any other agreement or instrument granting security to or related to security
granted to the Lender (other than with respect to repayment of the Loan or any
interest thereon), and such failure is not cured within thirty (30) days after
Lender gives to Borrower written notice of such failure;
(c) the commencement by or against Borrower of a proceeding
under any bankruptcy or similar law of any jurisdiction relating to insolvency
or the relief of debtors, as now or hereafter in effect and the failure by the
Borrower to obtain a dismissal or stay of such proceeding within sixty (60) days
from the date of commencement of such proceeding; the making by Borrower of a
general assignment for the benefit of any of its creditors; the appointment of a
receiver, trustee, custodian or similar officer for Borrower and the failure by
Borrower to secure the discharge of such receiver, trustee, custodian or similar
officer within sixty (60) days from the date of appointment; or the admission in
writing by Borrower of any inability to pay its debts generally as they become
due; or
(d) any material breach of a representation, warranty or
certification made by the Borrower in this Agreement, or any document
contemplated by this Agreement, which would reasonably be expected to have a
Material Adverse Effect.
6.2 Remedies. Upon the occurrence of an Event of Default,
Lender may, in addition to exercising any other rights or remedies available to
Lender at law, in equity, under this Agreement, the Security Agreement, or
otherwise, declare all principal, interest and other amounts payable under this
Agreement to be immediately due and payable, and, upon reasonable prior notice
to Borrower, offset any amounts owed by Lender to Borrower against the
outstanding amount of the Loan.
6.3 Remedies Cumulative. All of Lender's rights, remedies,
powers and privileges are separate and cumulative, and no one of them, whether
exercised or not, shall be or be deemed to be to the exclusion of or to limit or
prejudice any other rights, remedies, powers or privileges Lender may have.
-7-
7. MISCELLANEOUS.
7.1 Waiver. No failure by Lender to exercise or delay by
Lender in exercising any right, remedy, power or privilege shall operate as a
waiver thereof nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any further exercise thereof or of any other
right, remedy, power or privilege.
7.2 Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws (other than that body of law relating to
conflicts of law) of the Province of Ontario.
7.3 Notices. Any notice, request, demand, statement,
authorization, approval or consent required or permitted under this Agreement
shall be in writing and shall be made by any of the following means, and shall
be deemed effective upon actual receipt: (a) deposit in the mail, postage
prepaid, registered or certified, return receipt requested, such mailing to be
effective upon actual receipt, (b) personal delivery, (c) delivery by a courier
of recognized reputation (such as FedEx) or (d) transmission by telecopier (with
confirmation by mail) as follows, or to such other address and/or such
additional parties as the parties hereto may specify by notice given in
accordance with this Section 7.3:
Borrower: AltaRex Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Lender: United Therapeutics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
7.4 No Third Party Beneficiary. This Agreement creates rights
and duties only among the parties hereto, and no third party shall have any
rights hereunder or in or to the Loan.
7.5 Assignment. Borrower shall not assign this Agreement or
any of its rights hereunder without the prior written consent of Lender.
7.6 Entire Agreement. This Agreement and the Security
Agreement dated as of the date hereof between the Borrower and the Lender
constitutes the entire agreement of the parties with respect to the subject
matter hereof and shall supersede any prior expressions of
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intent or understanding with respect to this transaction. This Agreement may
only be amended by a written instrument signed by the parties hereto.
7.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
UNITED THERAPEUTICS CORPORATION
By: ____________________________________
Its: ____________________________________
ALTAREX CORP.
By: ____________________________________
Its: ____________________________________
Exhibit I
1. DEFINITIONS
In this Exhibit I:
(a) "CURRENT MARKET PRICE" per Share or Participating Share at any
date shall be the weighted average price per share for such
shares for any 20 consecutive trading days (such 20
consecutive trading days being selected by the Corporation)
commencing not more than 25 trading days before such date on
such stock exchange on which such shares are listed as may be
selected for such purpose by the directors of the Corporation
or if such shares are not listed on any stock exchange, then
on an automated quotation system, such as NASDAQ or the over
the counter market. The weighted average price shall be
determined by dividing the aggregate sale price of all such
shares so sold on the exchange, system or market, as the case
may be, during the said 20 consecutive trading days by the
total number of such shares so sold. If such shares are not
listed on any stock exchange, automated quotation system or
traded on an over the counter market, the Current Market Price
shall be determined in good faith by the Board of Directors of
the Corporation.
(b) "DIVIDENDS PAID IN THE ORDINARY COURSE" means cash dividends
declared payable on the Shares in any fiscal year of the
Corporation to the extent that such cash dividends do not
exceed, in the aggregate, the greater of: (i) 125% of the
aggregate amount or value of dividends declared payable by the
Corporation on the Shares in its immediately preceding fiscal
year; and (ii) 50% of the aggregate net earnings of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year (less the amount or value of all
dividends paid or payable in respect of such fiscal year) as
shown in the audited consolidated financial statements of the
Corporation for such preceding fiscal year or, if there are no
audited financial statements with respect to such period,
computed in accordance with generally accepted accounting
principles consistent with the applications made in
preparation of the most recent audited consolidated financial
statements of the Corporation, and for such purpose the
amounts of any dividend paid in shares shall be the aggregate
stated value of such shares and the amount of any dividend
paid in other than cash or shares shall be the fair market
value of such dividend as declared by resolution passed by the
board of directors of the Corporation.
(c) "PARTICIPATING SHARE" means a share that carries the right to
participate in earnings or in capital on a liquidation or
winding-up to an unlimited degree, or which ranks, in terms of
priority, equally with the Shares with respect to
participation in earnings or in capital on a liquidation or
winding-up.
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2. ADJUSTMENT OF SUBSCRIPTION RIGHTS
The Conversion Price in effect at any date shall be subject to
adjustment from time to time as follows:
(a) If and whenever at any time following April 17, 2002 and prior
to 5:00 p.m. (Toronto time) on the Maturity Date (the "Expiry
Time"), the Corporation shall (i) subdivide or redivide the
outstanding Shares into a greater number of shares, (ii)
reduce, combine or consolidate the outstanding Shares into a
smaller number of shares, or (iii) issue Shares or other
Participating Shares to the holders of all or substantially
all of the outstanding Shares by way of a stock dividend, the
Conversion Price in effect on the effective date of any such
event shall be adjusted immediately after such event or on the
record date for such issue of Shares or other Participating
Shares by way of stock dividend, as the case may be, so that
it shall equal the amount determined by multiplying the
Conversion Price in effect immediately prior to such event by
a fraction, of which the numerator shall be the total number
of Shares and other Participating Shares outstanding
immediately prior to such event; such adjustment shall be made
successively whenever any event referred to in this subsection
(a) shall occur; any such issue of Shares or other
Participating Shares by way of a stock dividend shall be
deemed to have been made on the record date for the stock
dividend for the purpose of calculating the number of
outstanding Shares or other Participating Shares immediately
after such event under this subsection (a) and subsection (e)
of this Section.
(b) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time the Corporation shall fix a record date for
the issuance of rights, options or warrants to all or
substantially all of the holders of the outstanding Shares,
entitling them, for a period expiring not more than 45 days
after such record date, to subscribe for or purchase Shares or
other Participating Shares (or securities convertible into or
exchangeable for Shares or other Participating Shares) at a
price per share (or having a conversion or exchange price per
share) less than 95% of the Current Market Price on such
record date, the Conversion Price shall be adjusted
immediately after such record date so that it shall equal the
price determined by multiplying the Conversion Price in effect
on such record date by a fraction, of which the numerator
shall be the total number of Shares outstanding on such record
date plus the number arrived at by dividing the aggregate
price of the total number of additional Shares or other
Participating Shares offered for subscription or purchase (or
the aggregate conversion or exchange price of the convertible
or exchangeable securities so offered) by such Current Market
Price, and of which the denominator shall be the total number
of Shares outstanding on such record date plus the total
number of additional Shares or other Participating Shares
offered for subscription or purchase (or into which the
convertible or exchangeable securities so offered are
convertible or exchangeable); any Shares owned by or held for
the account of the Corporation or any subsidiary of the
-3-
Corporation shall be deemed not to be outstanding for the
purpose of any such computation; such adjustment shall be made
successively whenever such a record date is fixed; to the
extent that any such rights, options or warrants are not so
issued or any such rights, options or warrants are, not
exercised prior to the expiration thereof, the Conversion
Price shall then be re-adjusted to the Conversion Price which
would then be in effect based upon the number and aggregate
price of Shares or other Participating Shares (or securities
convertible into or exchangeable for Shares or other
Participating Shares) actually issued upon the exercise of
such rights, options or warrants, as the case may be.
(c) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time the Corporation shall fix a record date for
the making of a distribution to all or substantially all the
holders of its outstanding Shares of (i) shares of any class
other than Shares or Participating Shares, other than shares
distributed to holders of Shares pursuant to their exercise of
options to receive dividends in the form of such shares in
lieu of Dividends Paid in the Ordinary Course on the Shares
and other than the issue of Shares or other Participating
Shares to the holders of all or substantially all of the
outstanding Shares by way of a stock dividend, or (ii) rights,
options or warrants (excluding rights exercisable for 45 days
or less) or (iii) evidences of its indebtedness, or (iv)
assets (excluding Dividends Paid in the Ordinary Course),
including shares of other corporations, then, in each such
case, the Conversion Price shall be adjusted immediately after
such record date so that it shall equal the price determined
by multiplying the Conversion Price in effect on such record
date by a fraction, of which the numerator shall be the total
number of Shares outstanding on such record date multiplied by
the Current Market Price per Share on such record date, less
the fair market value (as determined by the board of directors
of the Corporation, acting reasonably, which determination,
absent manifest error, shall be conclusive) of such shares or
rights, options or warrants or evidences or indebtedness or
assets so distributed, and of which the denominator shall be
the total number of Shares outstanding on such record date
multiplied by such Current Market Price per Share; any Shares
owned by or held for the account of the Corporation shall be
deemed not to be outstanding for the purpose of any such
computation; such adjustment shall be made successively
whenever such a record date is fixed; to the extent that such
distribution is not so made, the Conversion Price shall be
re-adjusted to the Conversion Price which would then be in
effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon such
shares or rights, options or warrants or evidences of
indebtedness or assets actually distributed, as the case may
be, and in clause (iv) the term "Dividends Paid in the
Ordinary Course" shall include the value of any securities or
other property or assets distributed in lieu of cash Dividends
Paid in the Ordinary Course.
(d) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time there is a reclassification of the Shares
at any time outstanding or a change
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of the Shares into other shares or a capital reorganization of
the Corporation not covered in subsection (a) or a
consolidation, amalgamation or merger of the Corporation with
or into any other corporation or a sale of the property and
assets of the Corporation as or substantially as an entirety
to any other person, the Purchaser, to the extent that the
Loan has not been converted, prior to the effective date of
such reclassification, capital reorganization, consolidation,
amalgamation, merger or sale shall thereafter, upon conversion
of the Loan, be entitled to receive and shall accept in lieu
of the number of Shares, as then constituted, to which the
Purchaser was previously entitled upon conversion of the Loan,
the number of shares or other securities or property of the
Corporation or of the corporation resulting from such
reclassification, consolidation, amalgamation or merger or of
the person to which such sale may be made, as the case may be,
that the Purchaser would have been entitled to receive on such
reclassification, capital reorganization, consolidation,
amalgamation, merger or sale if, on the effective date
thereof, the Purchaser had been the registered holder of the
number of Shares to which the Purchaser was previously
entitled upon due conversion of the Loan; and in any case, if
necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Agreement with
respect to the rights and interests thereafter of the
Purchaser to the end that the provisions set forth in this
Agreement shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in relation to any shares or
securities or property to which the Purchaser may be entitled
upon the conversion of the Loan thereafter.
(e) In any case in which this Agreement shall require that an
adjustment shall become effective immediately after a record
date for an event referred to herein, the Corporation may
defer, until the occurrence of such event, issuing to the
Purchaser if converted after such record date and before the
occurrence of such event the kind and amount of shares, other
securities or property to which it would be entitled upon such
exercise by reason of the adjustment required by such event;
provided, however, that the Corporation shall deliver to the
Purchaser an appropriate instrument evidencing the Purchaser's
right to receive the kind and amount of shares, other
securities or property to which it would be entitled upon the
occurrence of the event requiring such adjustment and the
right to receive any distributions made or declared in favour
of holders of record of Shares as constituted from time to
time on and after such date as the Purchaser would, but for
the provisions of this subsection (e), have received, or
become entitled to receive, on such exercise.
(f) The adjustments provided for in this Agreement are cumulative
and shall apply to successive subdivisions, redivisions,
reductions, combinations, consolidations, distributions,
issues or other events resulting in any adjustment under the
provisions of this Agreement provided that, notwithstanding
any other provision of this Section, no adjustment of the
Conversion Price, as then constituted, purchasable shall be
required unless such adjustment would require an increase or
decrease, of at least 1% in the Conversion Price, then in
effect; provided however,
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that any adjustments which by reason of this subsection (f)
are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(g) In the event of any question arising with respect to the
adjustments provided in this Agreement, such question shall,
absent manifest error, be conclusively determined by a firm of
chartered accountants appointed by the Corporation and
acceptable to the Purchaser (who may be the auditors of the
Corporation) with the assistance of legal counsel, who may be
legal counsel to the Corporation; such accountants shall have
access to all necessary records of the Corporation and such
determination shall be binding upon the Corporation and the
Purchaser.
(h) As a condition precedent to the taking of any action which
would require an adjustment in any of the Conversion Price
pursuant to the terms of this Agreement, the Corporation shall
take any action which may, in the opinion of legal counsel, be
necessary in order that the Corporation may validly and
legally issue as fully paid and non-assessable all the Shares
which the Purchaser is entitled to receive on the full
exercise thereof in accordance with the provisions hereof.
(i) In case the Corporation shall take any action affecting the
Shares other than action described in this Agreement, which in
the opinion of the board of directors of the Corporation would
materially affect the rights of Purchaser, the Conversion
Price shall be adjusted in such manner and at such time, by
action of the board of directors of the Corporation, in its
sole reasonable discretion as it may determine to be equitable
in the circumstances, provided that no such adjustment shall
be made unless prior approval of any stock exchange on which
the Shares are listed for trading has been obtained. Failure
of the board of directors of the Corporation to make such an
adjustment shall be conclusive evidence that the board of
directors of the Corporation have determined that it is
equitable to make no adjustment in the circumstances.
3. NOTICE OF ADJUSTMENT
At least 21 days prior to the effective date or record date, as the
case may be, of any event referred to in clause 2, the Corporation shall notify
the Purchaser of the particulars of such event and the estimated amount of any
adjustment required as a result thereof. Promptly after the occurrence of any
event which requires an adjustment in the Conversion Price pursuant to this
Agreement, the Corporation shall forthwith deliver to the Purchaser a
certificate of the Corporation specifying the particulars of such event and the
required adjustment and the computation of such adjustment and give notice to
the Purchaser of the particulars of such event and the required adjustment in
the manner provided in Section 7.3 hereof.
4. GENERAL COVENANTS OF THE CORPORATION
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(a) The Corporation covenants and agrees that it is duly
authorized to enter into and perform its obligations under its
Agreement.
(b) The Corporation will cause the Shares issuable upon conversion
of the Loan and the certificates representing the Shares to be
duly issued. At all times until the Expiry Time, the
Corporation shall reserve and there shall remain unissued out
of its authorized capital a number of Shares sufficient to
satisfy the conversion of the Loan. All Shares issued upon the
due conversion of the Loan shall be fully paid and
non-assessable.
(c) The Corporation will do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered, all
other acts, deeds and assurances in law as may be reasonably
required for the better accomplishing and effecting of the
intentions and provisions of Section 2 of this Agreement.
(d) Subject to the express provisions hereof, the Corporation will
carry on and conduct and will cause to be carried on and
conducted its business in a proper and efficient manner and
will cause to be kept proper books of account in accordance
with generally accepted accounting practice; and, subject to
the express provisions hereof, it will do or cause to be done,
all things necessary to preserve and keep in full force and
effect its corporate existence, provided, however, that
nothing herein contained shall prevent the amalgamation,
consolidation, merger, sale, winding up or liquidation of the
Corporation or any subsidiary of the Corporation or the
abandonment of any rights and franchises of the Corporation or
any subsidiary of the Corporation if, in the opinion of the
board of directors of the Corporation or officers of the
Corporation, it would be advisable and in the best interests
of the Corporation or of such subsidiary of the Corporation to
do so.
(e) The Corporation shall take all such steps and actions and do
all such things as may reasonably be necessary to maintain the
listing and posting for trading on The Toronto Stock Exchange
of those Shares currently listed on The Toronto Stock
Exchange.
(f) The Corporation will use its reasonable best efforts to ensure
that the Shares issuable upon conversion of the Loan will be
listed and posted for trading on The Toronto Stock Exchange
upon their issue or such other stock exchange or automated
quotation system on which the Shares may, from time to time,
be listed, posted or quoted for trading.
EXHIBIT B-2
FORM OF SECOND DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATIONS UNDER
THE SECURITIES ACT OR (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144
UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES OR THE COMMON SHARES ISSUABLE UPON
CONVERSION THEREOF IN THE PROVINCE OF ONTARIO BEFORE [INSERT DATE THAT IS FOUR
MONTHS AND ONE DAY THE DATE OF THE AGREEMENT.]
SECOND CONVERTIBLE DEBENTURE
THIS SECOND CONVERTIBLE DEBENTURE ("Agreement") is made and entered
into as of August , 2002 by and between UNITED THERAPEUTICS CORPORATION, a
Delaware corporation ("Lender"), and ALTAREX CORP., an Alberta corporation
("Borrower").
RECITALS
A. Borrower has requested Lender to make a loan to Borrower in an
amount equal to US$875,000 and, subject to the terms and conditions of this
Agreement, Lender is willing to make such loan to Borrower.
NOW, THEREFORE, the parties hereby mutually agree as follows:
1. THE LOAN.
1.1 Amount. Subject to the terms and conditions of this
Agreement, Lender agrees to make a loan (the "Loan") to Borrower in an amount
equal to Eight Hundred and Seventy-Five Thousand United States Dollars
(US$875,000).
1.2 Advance. The advance of the Loan shall be in the amount of
US$875,000 and shall be made within one (1) Business Day (as defined below)
after the date on which this Agreement is executed by both parties.
1.3 Method Of Disbursement. The Loan shall be made by wire
transfer of funds to such account of Borrower as may be specified by Borrower to
Lender in writing.
1.4 Maturity. Subject to Section 5, the outstanding principal
amount of the Loan, and all accrued and unpaid interest thereon, shall be due
and payable on [insert date that is 3 years from date of issue of convertible
debenture] (the "Maturity Date").
-2-
1.5 Interest. Borrower shall pay interest on the outstanding
principal amount of the Loan at a rate of six percent (6%) simple interest per
annum (the "Applicable Rate").
1.6 Interest Computation and Payment. All computations of
interest hereunder shall be made by Lender based on a 360-day year and the
actual number of days elapsed and shall be payable to the Lender in U.S. Dollars
on the first day of April, July, October and January with the first payment date
being October 1, 2002.
1.7 Voluntary Prepayment. Borrower may at its option
voluntarily prepay the Loan in whole or in part, without premium or penalty,
upon not less than five (5) days prior written notice of any such prepayment.
Any such notice shall be irrevocable. Borrower shall, concurrently with such
prepayment, pay all accrued but unpaid interest to the date of such prepayment
on the amount prepaid.
1.8 Method of Payment. Borrower shall pay all amounts payable
to Lender under this Agreement in U.S. Dollars, in immediately available funds,
not later than 1:00 p.m. eastern standard time on the day on which such payment
is to be made, to such account as Lender may by notice specify to Borrower, or
by such other means as may be acceptable to Lender. All payments made to Lender
under this Agreement shall be applied in such order as Lender may determine.
1.9 Business Day. "Business Day" means a day other than a
Saturday, Sunday or legal holiday on which banks are authorized to close in New
York, New York. If the date on which a payment hereunder is due is a day other
than a Business Day, then such payment shall be made on the immediately
preceding Business Day.
2. CONVERSION.
2.1 Upon the approval by the shareholders of the Borrower of
the issuance of 883,380 common shares of the Borrower (the "Common Shares") to
the Lender, $441,690 of the principal amount of the Loan will be automatically
converted into 883,380 Common Shares, being a conversion price of $0.50 per
Common Share (the "Conversion Price") on the later of (i) the date that is three
Business Days after such shareholder approval, and (ii) August 20, 2002. For
greater certainty, if such shareholder approval has been obtained prior to
August 20, 2002, such automatic conversion shall occur on August 20, 2002. The
$441,690 will be cancelled from the amount outstanding under this Agreement at
that time. A share certificate representing the 883,380 Common Shares will be
delivered by the Borrower to the Lender within five Business Days after the
issuance of the 883,380 Common Shares.
2.2 If at any time, while an amount (whether principal or
interest) remains outstanding under this Agreement, the Lender exercises its
pre-emptive rights to purchase securities of the Borrower (the "Lender's
Pre-emptive Rights") under Section F of the Subscription and Debenture Purchase
Agreement dated as of the date hereof between the Borrower and the Lender, the
Lender shall pay the purchase price for the Borrower's securities in connection
with the exercise of the Lenders Preemptive Rights first by cancelling the
applicable
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amount outstanding under this Agreement, and then by paying such additional
amount as may be determined.
2.3 Exhibit "I" forms part of this Agreement and the Purchaser
shall be entitled to the additional rights set forth therein.
3. SECURITY DOCUMENTS.
Concurrently with the execution of this Agreement, Borrower
shall execute and deliver to Lender a security agreement in form and substance
satisfactory to Lender (the "Security Agreement").
4. REPRESENTATIONS AND WARRANTIES.
4.1 The representations and warranties given by the Borrower
to the Lender under the Subscription and Debenture Purchase Agreement and the
License Agreement of even date (the "Borrower Representations and Warranties")
are hereby incorporated by reference and the Borrower hereby represents to the
Lender such Borrower Representations and Warranties and acknowledges that the
Lender is relying on such Representations and Warranties in connection with its
advances hereunder.
4.2 The representations and warranties given by the Lender to
the Borrower under the Subscription and Debenture Purchase Agreement of even
date (the "Lender Representations and Warranties") are hereby incorporated by
reference and the Lender hereby represents to the Borrower that such Lender
Representations and Warranties are true and that such Representation and
Warranties shall remain true at the time of the issuance of the 883,380 Common
Shares and acknowledges that the Borrower will rely on such Lender
Representations and Warranties in connection with the issuance of such 883,380
Common Shares.
5. COVENANTS OF BORROWER.
5.1 Use of Loan Proceeds. Borrower shall use the proceeds of
the Loan for research and development expenses, general and administrative
expenses and working capital and other requirements of the Borrower.
5.2 Ordinary Course of Business. Borrower shall continue to
operate its business in the ordinary course of business.
5.3 Affirmative Covenants
So long as any amount owing under this Agreement remains
unpaid and unless written consent is given by the Lender, the Borrower shall:
(a) Deliver to the Lender (i) as soon as practicable and in any event within 60
days after the end of each of the first three financial quarters in each
financial year a consolidated balance sheet of the Borrower as of the end of the
financial quarter, setting forth in comparative form the figures for the
corresponding financial quarter and corresponding portion of the previous
financial year,
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(ii) as soon as practicable and in any event within 120 days after the end of
each financial year, a copy of the financial statements of the Borrower for the
financial year prepared on consolidated basis reported on by the Borrower's
independent auditors, and (iii) together with each delivery of financial
statements, a compliance certificate in the form attached as Schedule A hereto.;
(b) Pay or cause to be paid when due, (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, sales,
capital or profit or any other property belonging to it, and (ii) all claims
which, if unpaid, might by law become a lien upon the assets, except any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings and in respect of which the Borrower have established
adequate reserves in accordance with Canadian Generally Accepted Accounting
Principles or which are Permitted Liens;
"Permitted Liens" means with respect to any person the following:
(a) liens for taxes, assessments or governmental charges or levies not
at the time due or delinquent;
(b) undetermined or inchoate liens and charges incidental to current
operations which have not been filed pursuant to law against the Borrower or
which relate to obligations not due or delinquent; and
(c) title defects or irregularities of a minor nature and which neither
individually nor in the aggregate will materially impair the use of the property
for the purposes for which it is held in the business or the value of such
property.
(c) Deliver to the Lender (i) promptly upon their issuance, copies of all
publicly available notices, reports, press releases, circulars, offering
documents and other publicly available documents filed with, or delivered to,
any stock exchange or the Ontario Securities Commission or a similar
governmental entity in any other jurisdiction, and (ii) such other financial
information respecting the condition or operations, financial or otherwise, of
the Borrower as the Lender may from time to time reasonably request which
information is generally prepared by the Borrower from time to time in the
ordinary course of business;
(d) Comply with the requirements of all applicable laws, judgments, orders,
decisions and awards, non-compliance with which would reasonably be expected to
have a Material Adverse Effect;
"Material Adverse Effect" means a material adverse effect on the business,
operations, results of operations, assets, liabilities or financial condition of
the Borrower and the subsidiaries of the Borrower (the "subsidiaries") taken as
a whole.
(e) At its cost and expense, upon request of the Lender, execute and deliver or
cause to be executed and delivered to the Lender such further instruments and do
and cause to be done such further acts as may be necessary or proper in the
reasonable opinion of the Lender to carry out more effectually the provisions
and purposes of this Agreement.
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5.4 Negative Covenants
So long as any amount owing under this Agreement remains
unpaid and, unless written consent is given by the Lender, the Borrower shall
not:
(a) Create, incur, assume, suffer to exist, or permit any of its subsidiaries to
create, incur, assume, or suffer to exist, any lien on any of their respective
properties or assets, other than a Permitted Lien;
(b) Consumate, or permit any of its subsidiaries (the "Subsidiaries") to
consumate any reorganization, consolidation, amalgamation, arrangement,
winding-up, merger or other similar transaction with any third party, without
providing to the Lender notice of such transaction, as soon as commercially
reasonable;
(c) Sell, exchange, lease, release or abandon or otherwise dispose of, or permit
any Subsidiary to sell, exchange, lease, release or abandon or otherwise dispose
of, any of the assets or properties of the Borrower as described in the Security
Agreement to any person without providing to the Lender notice of such sale or
disposition as soon as commercially reasonable other than (i) bona fide sales,
exchanges, leases, abandonments or other dispositions in the ordinary course of
business for the purpose of carrying on the Business or its business, as the
case may be, and at fair market value, (ii) property or assets (other than
shares) which have no material economic value in the business or business or are
obsolete, and (iii) dispositions pursuant to a transaction permitted in 1(c).
Each of the Borrower and Lender acknowledge and agree that for the purposes of
this clause (b) the bona fide licensing by the Borrower of its technology shall
be deemed to be in the ordinary course of its business;
(d) Transactions with Related Parties. Except as otherwise permitted directly or
indirectly, consummate or allow any Subsidiary to consummate any agreement with,
make any financial accommodation for, or otherwise enter into any transaction
with, a non-arm's length third party except in the ordinary course of, and
pursuant to the reasonable requirements of, business or at prices and on terms
not less favourable to the Borrower or the Subsidiary, as the case may be, than
could be obtained in a comparable arm's length transaction with another person;
(e) Distributions. Declare, make or pay or permit any of its Subsidiaries to
declare, make or pay any distributions,
For purposes of this Section 5.4, "Distribution" means with respect to any
person the amount of (i) any dividend or other distribution on issued shares of
the person or any of its subsidiaries, (ii) the purchase, redemption or
retirement amount of any issued shares, warrants or any other options or rights
to acquire shares of the person or any of its subsidiaries redeemed or purchased
by the person or any its subsidiaries, or (iii) any payments whether as
consulting fees, management fees or otherwise to any related party of the person
or any of its subsidiaries. Notwithstanding the foregoing, the Borrower may make
Distributions between and among the Borrower and any wholly-owned subsidiaries
or affiliates;
5.5 Security Covenants. So long as any amount owing under this
Agreement remains unpaid, and unless written consent is given by the Lender, the
Borrower shall:
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(a) Promptly cure or cause to be cured any defects in the execution and delivery
of this Agreement or any defects in the validity or enforceability of any of the
Security and at its expense, execute and deliver or cause to be executed and
delivered, all such agreements, instruments and other documents (including the
filing of any financing statements or financing change statements) as the Lender
reasonably may consider necessary or desirable to protect or otherwise perfect
the security interest granted under the Security Agreement.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 Events of Default. The occurrence of any of the following
conditions or events shall each constitute an event of default ("Event of
Default"):
(a) failure to repay the Loan or any interest thereon when due
(whether at maturity, by acceleration, or otherwise), and such failure is not
cured within five (5) Business Days after Lender gives to Borrower written
notice of such failure;
(b) failure of Borrower to perform or comply with any term,
provision or covenant contained in this Agreement or the Security Agreement or
any other agreement or instrument granting security to or related to security
granted to the Lender (other than with respect to repayment of the Loan or any
interest thereon), and such failure is not cured within thirty (30) days after
Lender gives to Borrower written notice of such failure;
(c) the commencement by or against Borrower of a proceeding
under any bankruptcy or similar law of any jurisdiction relating to insolvency
or the relief of debtors, as now or hereafter in effect and the failure by the
Borrower to obtain a dismissal or stay of such proceeding within sixty (60) days
from the date of commencement of such proceeding; the making by Borrower of a
general assignment for the benefit of any of its creditors; the appointment of a
receiver, trustee, custodian or similar officer for Borrower and the failure by
Borrower to secure the discharge of such receiver, trustee, custodian or similar
officer within sixty (60) days from the date of appointment; or the admission in
writing by Borrower of any inability to pay its debts generally as they become
due; or
(d) any material breach of a representation, warranty or
certification made by the Borrower in this Agreement, or any document
contemplated by this Agreement, which would reasonably be expected to have a
Material Adverse Effect.
6.2 Remedies. Upon the occurrence of an Event of Default,
Lender may, in addition to exercising any other rights or remedies available to
Lender at law, in equity, under this Agreement, the Security Agreement, or
otherwise, declare all principal, interest and other amounts payable under this
Agreement to be immediately due and payable, and, upon reasonable prior notice
to Borrower, offset any amounts owed by Lender to Borrower against the
outstanding amount of the Loan.
6.3 Remedies Cumulative. All of Lender's rights, remedies,
powers and privileges are separate and cumulative, and no one of them, whether
exercised or not, shall be or
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be deemed to be to the exclusion of or to limit or prejudice any other rights,
remedies, powers or privileges Lender may have.
7. MISCELLANEOUS.
7.1 Waiver. No failure by Lender to exercise or delay by
Lender in exercising any right, remedy, power or privilege shall operate as a
waiver thereof nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any further exercise thereof or of any other
right, remedy, power or privilege.
7.2 Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws (other than that body of law relating to
conflicts of law) of the Province of Ontario.
7.3 Notices. Any notice, request, demand, statement,
authorization, approval or consent required or permitted under this Agreement
shall be in writing and shall be made by any of the following means, and shall
be deemed effective upon actual receipt: (a) deposit in the mail, postage
prepaid, registered or certified, return receipt requested, such mailing to be
effective upon actual receipt, (b) personal delivery, (c) delivery by a courier
of recognized reputation (such as FedEx) or (d) transmission by telecopier (with
confirmation by mail) as follows, or to such other address and/or such
additional parties as the parties hereto may specify by notice given in
accordance with this Section 7.3:
Borrower: AltaRex Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Lender: United Therapeutics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
7.4 No Third Party Beneficiary. This Agreement creates rights
and duties only among the parties hereto, and no third party shall have any
rights hereunder or in or to the Loan.
7.5 Assignment. Borrower shall not assign this Agreement or
any of its rights hereunder without the prior written consent of Lender.
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7.6 Entire Agreement. This Agreement and the Security
Agreement dated as of the date hereof between the Borrower and the Lender
constitutes the entire agreement of the parties with respect to the subject
matter hereof and shall supersede any prior expressions of intent or
understanding with respect to this transaction. This Agreement may only be
amended by a written instrument signed by the parties hereto.
7.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
UNITED THERAPEUTICS CORPORATION
By:
------------------------------------
Its:
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ALTAREX CORP.
By:
------------------------------------
Its:
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Exhibit I
1. DEFINITIONS
In this Exhibit I:
(a) "CURRENT MARKET PRICE" per Share or Participating Share at any
date shall be the weighted average price per share for such
shares for any 20 consecutive trading days (such 20
consecutive trading days being selected by the Corporation)
commencing not more than 25 trading days before such date on
such stock exchange on which such shares are listed as may be
selected for such purpose by the directors of the Corporation
or if such shares are not listed on any stock exchange, then
on an automated quotation system, such as NASDAQ or the over
the counter market. The weighted average price shall be
determined by dividing the aggregate sale price of all such
shares so sold on the exchange, system or market, as the case
may be, during the said 20 consecutive trading days by the
total number of such shares so sold. If such shares are not
listed on any stock exchange, automated quotation system or
traded on an over the counter market, the Current Market Price
shall be determined in good faith by the Board of Directors of
the Corporation.
(b) "DIVIDENDS PAID IN THE ORDINARY COURSE" means cash dividends
declared payable on the Shares in any fiscal year of the
Corporation to the extent that such cash dividends do not
exceed, in the aggregate, the greater of: (i) 125% of the
aggregate amount or value of dividends declared payable by the
Corporation on the Shares in its immediately preceding fiscal
year; and (ii) 50% of the aggregate net earnings of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year (less the amount or value of all
dividends paid or payable in respect of such fiscal year) as
shown in the audited consolidated financial statements of the
Corporation for such preceding fiscal year or, if there are no
audited financial statements with respect to such period,
computed in accordance with generally accepted accounting
principles consistent with the applications made in
preparation of the most recent audited consolidated financial
statements of the Corporation, and for such purpose the
amounts of any dividend paid in shares shall be the aggregate
stated value of such shares and the amount of any dividend
paid in other than cash or shares shall be the fair market
value of such dividend as declared by resolution passed by the
board of directors of the Corporation.
(c) "PARTICIPATING SHARE" means a share that carries the right to
participate in earnings or in capital on a liquidation or
winding-up to an unlimited degree, or which ranks, in terms of
priority, equally with the Shares with respect to
participation in earnings or in capital on a liquidation or
winding-up.
-2-
2. ADJUSTMENT OF SUBSCRIPTION RIGHTS
The Conversion Price in effect at any date shall be subject to
adjustment from time to time as follows:
(a) If and whenever at any time following April 17, 2002 and prior
to 5:00 p.m. (Toronto time) on the Maturity Date (the "Expiry
Time"), the Corporation shall (i) subdivide or redivide the
outstanding Shares into a greater number of shares, (ii)
reduce, combine or consolidate the outstanding Shares into a
smaller number of shares, or (iii) issue Shares or other
Participating Shares to the holders of all or substantially
all of the outstanding Shares by way of a stock dividend, the
Conversion Price in effect on the effective date of any such
event shall be adjusted immediately after such event or on the
record date for such issue of Shares or other Participating
Shares by way of stock dividend, as the case may be, so that
it shall equal the amount determined by multiplying the
Conversion Price in effect immediately prior to such event by
a fraction, of which the numerator shall be the total number
of Shares and other Participating Shares outstanding
immediately prior to such event; such adjustment shall be made
successively whenever any event referred to in this subsection
(a) shall occur; any such issue of Shares or other
Participating Shares by way of a stock dividend shall be
deemed to have been made on the record date for the stock
dividend for the purpose of calculating the number of
outstanding Shares or other Participating Shares immediately
after such event under this subsection (a) and subsection (e)
of this Section.
(b) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time the Corporation shall fix a record date for
the issuance of rights, options or warrants to all or
substantially all of the holders of the outstanding Shares,
entitling them, for a period expiring not more than 45 days
after such record date, to subscribe for or purchase Shares or
other Participating Shares (or securities convertible into or
exchangeable for Shares or other Participating Shares) at a
price per share (or having a conversion or exchange price per
share) less than 95% of the Current Market Price on such
record date, the Conversion Price shall be adjusted
immediately after such record date so that it shall equal the
price determined by multiplying the Conversion Price in effect
on such record date by a fraction, of which the numerator
shall be the total number of Shares outstanding on such record
date plus the number arrived at by dividing the aggregate
price of the total number of additional Shares or other
Participating Shares offered for subscription or purchase (or
the aggregate conversion or exchange price of the convertible
or exchangeable securities so offered) by such Current Market
Price, and of which the denominator shall be the total number
of Shares outstanding on such record date plus the total
number of additional Shares or other Participating Shares
offered for subscription or purchase (or into which the
convertible or exchangeable securities so offered are
convertible or exchangeable); any Shares owned by or held for
the account of the Corporation or any subsidiary of the
-3-
Corporation shall be deemed not to be outstanding for the
purpose of any such computation; such adjustment shall be made
successively whenever such a record date is fixed; to the
extent that any such rights, options or warrants are not so
issued or any such rights, options or warrants are, not
exercised prior to the expiration thereof, the Conversion
Price shall then be re-adjusted to the Conversion Price which
would then be in effect based upon the number and aggregate
price of Shares or other Participating Shares (or securities
convertible into or exchangeable for Shares or other
Participating Shares) actually issued upon the exercise of
such rights, options or warrants, as the case may be.
(c) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time the Corporation shall fix a record date for
the making of a distribution to all or substantially all the
holders of its outstanding Shares of (i) shares of any class
other than Shares or Participating Shares, other than shares
distributed to holders of Shares pursuant to their exercise of
options to receive dividends in the form of such shares in
lieu of Dividends Paid in the Ordinary Course on the Shares
and other than the issue of Shares or other Participating
Shares to the holders of all or substantially all of the
outstanding Shares by way of a stock dividend, or (ii) rights,
options or warrants (excluding rights exercisable for 45 days
or less) or (iii) evidences of its indebtedness, or (iv)
assets (excluding Dividends Paid in the Ordinary Course),
including shares of other corporations, then, in each such
case, the Conversion Price shall be adjusted immediately after
such record date so that it shall equal the price determined
by multiplying the Conversion Price in effect on such record
date by a fraction, of which the numerator shall be the total
number of Shares outstanding on such record date multiplied by
the Current Market Price per Share on such record date, less
the fair market value (as determined by the board of directors
of the Corporation, acting reasonably, which determination,
absent manifest error, shall be conclusive) of such shares or
rights, options or warrants or evidences or indebtedness or
assets so distributed, and of which the denominator shall be
the total number of Shares outstanding on such record date
multiplied by such Current Market Price per Share; any Shares
owned by or held for the account of the Corporation shall be
deemed not to be outstanding for the purpose of any such
computation; such adjustment shall be made successively
whenever such a record date is fixed; to the extent that such
distribution is not so made, the Conversion Price shall be
re-adjusted to the Conversion Price which would then be in
effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon such
shares or rights, options or warrants or evidences of
indebtedness or assets actually distributed, as the case may
be, and in clause (iv) the term "Dividends Paid in the
Ordinary Course" shall include the value of any securities or
other property or assets distributed in lieu of cash Dividends
Paid in the Ordinary Course.
(d) If and whenever at any time following April 17, 2002 and prior
to the Expiry Time there is a reclassification of the Shares
at any time outstanding or a change
-4-
of the Shares into other shares or a capital reorganization of
the Corporation not covered in subsection (a) or a
consolidation, amalgamation or merger of the Corporation with
or into any other corporation or a sale of the property and
assets of the Corporation as or substantially as an entirety
to any other person, the Purchaser, to the extent that the
Loan has not been converted, prior to the effective date of
such reclassification, capital reorganization, consolidation,
amalgamation, merger or sale shall thereafter, upon conversion
of the Loan, be entitled to receive and shall accept in lieu
of the number of Shares, as then constituted, to which the
Purchaser was previously entitled upon conversion of the Loan,
the number of shares or other securities or property of the
Corporation or of the corporation resulting from such
reclassification, consolidation, amalgamation or merger or of
the person to which such sale may be made, as the case may be,
that the Purchaser would have been entitled to receive on such
reclassification, capital reorganization, consolidation,
amalgamation, merger or sale if, on the effective date
thereof, the Purchaser had been the registered holder of the
number of Shares to which the Purchaser was previously
entitled upon due conversion of the Loan; and in any case, if
necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Agreement with
respect to the rights and interests thereafter of the
Purchaser to the end that the provisions set forth in this
Agreement shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in relation to any shares or
securities or property to which the Purchaser may be entitled
upon the conversion of the Loan thereafter.
(e) In any case in which this Agreement shall require that an
adjustment shall become effective immediately after a record
date for an event referred to herein, the Corporation may
defer, until the occurrence of such event, issuing to the
Purchaser if converted after such record date and before the
occurrence of such event the kind and amount of shares, other
securities or property to which it would be entitled upon such
exercise by reason of the adjustment required by such event;
provided, however, that the Corporation shall deliver to the
Purchaser an appropriate instrument evidencing the Purchaser's
right to receive the kind and amount of shares, other
securities or property to which it would be entitled upon the
occurrence of the event requiring such adjustment and the
right to receive any distributions made or declared in favour
of holders of record of Shares as constituted from time to
time on and after such date as the Purchaser would, but for
the provisions of this subsection (e), have received, or
become entitled to receive, on such exercise.
(f) The adjustments provided for in this Agreement are cumulative
and shall apply to successive subdivisions, redivisions,
reductions, combinations, consolidations, distributions,
issues or other events resulting in any adjustment under the
provisions of this Agreement provided that, notwithstanding
any other provision of this Section, no adjustment of the
Conversion Price, as then constituted, purchasable shall be
required unless such adjustment would require an increase or
decrease, of at least 1% in the Conversion Price, then in
effect; provided however,
-5-
that any adjustments which by reason of this subsection (f)
are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(g) In the event of any question arising with respect to the
adjustments provided in this Agreement, such question shall,
absent manifest error, be conclusively determined by a firm of
chartered accountants appointed by the Corporation and
acceptable to the Purchaser (who may be the auditors of the
Corporation) with the assistance of legal counsel, who may be
legal counsel to the Corporation; such accountants shall have
access to all necessary records of the Corporation and such
determination shall be binding upon the Corporation and the
Purchaser.
(h) As a condition precedent to the taking of any action which
would require an adjustment in any of the Conversion Price
pursuant to the terms of this Agreement, the Corporation shall
take any action which may, in the opinion of legal counsel, be
necessary in order that the Corporation may validly and
legally issue as fully paid and non-assessable all the Shares
which the Purchaser is entitled to receive on the full
exercise thereof in accordance with the provisions hereof.
(i) In case the Corporation shall take any action affecting the
Shares other than action described in this Agreement, which in
the opinion of the board of directors of the Corporation would
materially affect the rights of Purchaser, the Conversion
Price shall be adjusted in such manner and at such time, by
action of the board of directors of the Corporation, in its
sole reasonable discretion as it may determine to be equitable
in the circumstances, provided that no such adjustment shall
be made unless prior approval of any stock exchange on which
the Shares are listed for trading has been obtained. Failure
of the board of directors of the Corporation to make such an
adjustment shall be conclusive evidence that the board of
directors of the Corporation have determined that it is
equitable to make no adjustment in the circumstances.
3. NOTICE OF ADJUSTMENT
At least 21 days prior to the effective date or record date, as the
case may be, of any event referred to in clause 2, the Corporation shall notify
the Purchaser of the particulars of such event and the estimated amount of any
adjustment required as a result thereof. Promptly after the occurrence of any
event which requires an adjustment in the Conversion Price pursuant to this
Agreement, the Corporation shall forthwith deliver to the Purchaser a
certificate of the Corporation specifying the particulars of such event and the
required adjustment and the computation of such adjustment and give notice to
the Purchaser of the particulars of such event and the required adjustment in
the manner provided in Section 7.3 hereof.
4. GENERAL COVENANTS OF THE CORPORATION
-6-
(a) The Corporation covenants and agrees that it is duly
authorized to enter into and perform its obligations under its
Agreement.
(b) The Corporation will cause the Shares issuable upon conversion
of the Loan and the certificates representing the Shares to be
duly issued. At all times until the Expiry Time, the
Corporation shall reserve and there shall remain unissued out
of its authorized capital a number of Shares sufficient to
satisfy the conversion of the Loan. All Shares issued upon the
due conversion of the Loan shall be fully paid and
non-assessable.
(c) The Corporation will do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered, all
other acts, deeds and assurances in law as may be reasonably
required for the better accomplishing and effecting of the
intentions and provisions of Section 2 of this Agreement.
(d) Subject to the express provisions hereof, the Corporation will
carry on and conduct and will cause to be carried on and
conducted its business in a proper and efficient manner and
will cause to be kept proper books of account in accordance
with generally accepted accounting practice; and, subject to
the express provisions hereof, it will do or cause to be done,
all things necessary to preserve and keep in full force and
effect its corporate existence, provided, however, that
nothing herein contained shall prevent the amalgamation,
consolidation, merger, sale, winding up or liquidation of the
Corporation or any subsidiary of the Corporation or the
abandonment of any rights and franchises of the Corporation or
any subsidiary of the Corporation if, in the opinion of the
board of directors of the Corporation or officers of the
Corporation, it would be advisable and in the best interests
of the Corporation or of such subsidiary of the Corporation to
do so.
(e) The Corporation shall take all such steps and actions and do
all such things as may reasonably be necessary to maintain the
listing and posting for trading on The Toronto Stock Exchange
of those Shares currently listed on The Toronto Stock
Exchange.
(f) The Corporation will use its reasonable best efforts to ensure
that the Shares issuable upon conversion of the Loan will be
listed and posted for trading on The Toronto Stock Exchange
upon their issue or such other stock exchange or automated
quotation system on which the Shares may, from time to time,
be listed, posted or quoted for trading.
EXHIBIT B-2A
FORM OF DEBENTURE SUBSCRIPTION FORM
EXHIBIT B-2A
SECOND DEBENTURE SUBSCRIPTION FORM
To: AltaRex Corp.
Re: Subscription and Debenture Purchase Agreement dated as of April 17,
2002 (the "Subscription Agreement") between AltaRex Corp. and United
Therapeutics Corporation
Capitalized terms used, but not otherwise defined, herein have the
meanings given to them in the Subscription Agreement.
Pursuant to Section A.1(b) of the Subscription Agreement, United
Therapeutics Corporation hereby irrevocably exercises the Debenture Subscription
Right and hereby subscribes for and agrees to purchase from the Company the
Second Debenture all on terms and conditions set forth in the Subscription
Agreement.
DATED , 2002.
---------------------
UNITED THERAPEUTICS CORPORATION
Per:
--------------------------------
Name:
Title:
EXHIBIT C
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made as of April 17, 2002 by and between
ALTAREX CORP., an Alberta corporation ("Debtor"), and UNITED THERAPEUTICS
CORPORATION, a Delaware corporation ("Secured Party").
RECITALS
A. Secured Party and Debtor have entered into (i) a convertible
debenture of even date herewith (the "First Convertible Debenture"), pursuant
to, and subject to the terms and conditions of which, Secured Party will make a
loan to Debtor in an amount equal to US$50,000, and (ii) a subscription and
debenture purchase agreement of even date herewith pursuant to which the Debtor
has granted to the Secured Party the right to subscribe for a convertible
debenture (the "Second Convertible Debenture" and together with the First
Convertible Debenture, the "Convertible Debenture") pursuant to, and subject to
the terms and conditions of which, Secured Party will make a loan to Debtor in
an amount equal to US$875,000.
B. Debtor has executed this Agreement to induce Secured Party to enter
into the Convertible Debenture.
NOW, THEREFORE, for valuable consideration received, the receipt and
sufficiency of which are hereby acknowledged, Debtor and Secured Party hereby
agree as follows:
1. DEFINITIONS.
1.1 Definitions.
"Collateral" means all of Debtor's right, title and interest
in, to and under any and all of its intellectual property, including but not
limited to, all worldwide patents, patent rights, patent applications,
trademarks, trademark rights, trademark applications, service marks, service
▇▇▇▇ rights, service ▇▇▇▇ applications, trade names, domain names, copyrights,
copyright applications, software rights, database rights, moral rights,
inventions, know-how, trade secrets, procedures, techniques, test results,
documentation and other similar intangible personal property whether presently
existing or hereafter acquired, including without limitation the intellectual
property listed on the attached Schedule 1, and all proceeds of the foregoing.
"Secured Obligations" means all of the indebtedness and
obligations of Debtor to the Secured Party under the First Convertible Debenture
and the Second Convertible Debenture, including without limitation the
obligation of Debtor to pay principal and interest under the Convertible
Debenture.
"PPSA" means the Personal Property Security Act (Alberta), as
amended from time to time and any Act substituted therefore and all amendments
thereto;
-2-
1.2 PPSA Terms. Unless otherwise defined herein, or unless the
context otherwise requires, all terms used herein which are defined in the PPSA
shall have the meanings given in the PPSA.
1.3 Attachment. The Secured Party and the Debtor have not
agreed to postpone the time for attachment of the security interest granted
hereby.
2. SECURITY INTEREST.
2.1 Grant of Security Interest. In order to secure the full
and punctual payment and performance of the Secured Obligations, Debtor hereby
grants to Secured Party a security interest in the Collateral.
2.2 No Obligations Undertaken. Nothing contained in this
Agreement shall relieve Debtor of, or impose on Secured Party, any obligation or
liability for, under or in respect of the Collateral.
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR.
Debtor hereby represents and warrants to Secured Party as
follows:
3.1 Organization and Powers of Debtor. Debtor is a corporation
duly organized, validly existing and in good standing under the laws of the
Province of Alberta, and has all requisite power and authority to conduct its
business and own and operate its properties, and to enter into and execute the
Convertible Debenture and this Agreement and to grant the security interests
provided for herein.
3.2 Corporate Action of Debtor. Debtor has taken all
appropriate and necessary corporate action to authorize the execution, delivery
and performance of the Convertible Debenture and this Agreement, the
representatives of Debtor executing the Convertible Debenture and this Agreement
are fully authorized to do so, and the Convertible Debenture and this Agreement
have been duly executed and delivered by the Debtor to the Secured Party.
3.3 Enforceability. The Convertible Debenture and this
Agreement are the legal, valid and binding obligations of Debtor, enforceable in
accordance with their respective terms.
3.4 No Conflict. The execution, delivery and performance of
the Convertible Debenture and this Agreement are not in contravention of or in
conflict with the Certificate of Incorporation or Bylaws of Debtor, or any
agreement, indenture or undertaking to which Debtor is a party or by which
Debtor or any of its property may be bound or affected, and will not cause any
security interest, lien or other encumbrance to be created or imposed upon any
such property by reason thereof, except for the security interest created in
favor of Secured Party pursuant to this Agreement.
3.5 Consents and Approvals. No consent, approval, permit,
license, authorization, filing, registration or other action of, with, or by any
governmental authority or other
-3-
person or entity is required in connection with the execution, delivery and
performance of the Convertible Debenture and this Agreement, except for the
filing of a financing statement and the recording of appropriate documents in
the United States Patent and Trademark Office and the Canadian Intellectual
Property Office as applicable relating to the grant of the security interest.
3.6 Perfection. Upon the filing of a financing statement at
the Alberta Personal Property Registry and the recording of appropriate security
documents in the United States Patent and Trademark Office and the Canadian
Intellectual Property Office the Secured Party will have a valid and perfected
security interest in all of the Collateral.
3.7 No Other Liens. The Collateral is owned by or licensed to
the Debtor free of all security interests, mortgages, liens, claims, charges and
other encumbrances.
4. COVENANTS OF DEBTOR.
Debtor hereby covenants and agrees to and with Secured Party
as follows:
4.1 Existence. Debtor shall do or cause to be done all things
necessary to preserve and maintain its existence as a corporation under the laws
of the Province of Alberta and all rights and franchises material to its
business and operations.
4.2 Notice of Litigation. Debtor shall give or cause to be
given prompt written notice to the Secured Party of any action, suit or
proceeding instituted against Debtor or claim asserted relating to any of the
Collateral which could have a material adverse effect upon the business, assets,
value or condition (financial or otherwise) of Debtor.
4.3 Disposition of Collateral. Except as contemplated in the
license agreement to be entered into between the parties, the Debtor shall not
dispose of any Collateral without the prior written consent of Secured Party and
shall not, without the prior written consent of the Secured Party, create or
permit to exist any security interest, mortgage, lien, claim, charge and other
encumbrance against any of the Collateral.
4.4 Maintenance of Security Interests. Debtor hereby
authorizes Secured Party to file financing statements and continuation
statements with respect to the Collateral to the fullest extent permitted by
law. In addition, Debtor shall from time to time execute and deliver to Secured
Party such financing statements, continuation statements or other filings or
documents as Secured Party may reasonably require to further assure to Secured
Party its rights under this Agreement.
4.5 Defend Collateral. Debtor shall use commercially
reasonable efforts to protect and preserve the Collateral, and shall defend the
Collateral for the benefit of the Secured Party against the claims and demands
of all other persons.
4.6 Expenses. Debtor shall forthwith pay all costs, charges,
expenses and legal fees and disbursements (on a solicitor and his own client
basis) which may be incurred by the Secured Party in:
-4-
(a) taking, recovering, keeping possession of and insuring the
Collateral;
(b) connection with any disclosure requirements under the PPSA;
and
(c) all other actions and proceedings taken in connection with the
preservation of the Collateral and the confirmation,
perfection and enforcement of this Security Agreement and of
any other security held by the Secured Party as security for
the Obligations.
5. REMEDIES.
5.1 Remedies. Upon the occurrence of an Event of Default (as
defined in the Convertible Debenture):
(a) Secured Party shall have, in addition to any other rights or
remedies Secured Party may have at law or in equity or
otherwise, the right to accelerate all indebtedness
outstanding under the Convertible Debenture and to declare
such indebtedness to be immediately due and payable, with or
without notice to Debtor; and
(b) the security hereby constituted will immediately become
enforceable.
5.2 Enforcement. To enforce and realize on the security
constituted by this Security Agreement, the Secured Party may take any action
permitted by law or in equity, as it may deem expedient, and in particular,
without limiting the generality of the foregoing, the Secured Party may do any
one or more of the following:
(a) appoint by instrument a receiver, receiver and manager or
receiver-manager (the person so appointed is herein called the
"Receiver") of the Collateral, with or without bond as the
Secured Party may determine, and from time to time in its sole
discretion remove such Receiver and appoint another in its
stead;
(b) preserve, protect and maintain the Collateral as the Secured
Party may deem advisable;
(c) sell, lease or otherwise dispose of or concur in selling,
leasing or otherwise disposing of all or any part of the
Collateral, whether by public or private sale or lease or
otherwise, in such manner, at such price as can be reasonably
obtained therefor and on such terms as to credit and with such
conditions of sale and stipulations as to title or conveyance
or evidence of title or otherwise as to the Secured Party may
seem reasonable, provided that the Debtor will not be entitled
to be credited with the proceeds of any such sale, lease or
other disposition until the monies therefor are actually
received; and
(d) exercise all of the rights and remedies of a secured party
under the PPSA.
-5-
5.3 Proceeds. Subject to applicable law, all amounts realized
from the disposition of the Collateral pursuant to this Security Agreement will
be applied as the Secured Party, in its sole discretion, may direct as follows:
FIRSTLY: in or toward payment of all costs, charges and
expenses (including legal fees and disbursements on a
solicitor and his own client basis) incurred by the
Secured Party in connection with or incidental to:
(1) the exercise by the Secured Party of all or any of
the powers granted to it pursuant to this Security
Agreement; and
(2) the appointment of the Receiver and the exercise by
the Receiver of all or any of the powers granted to
the Receiver pursuant to this Security Agreement,
including the Receiver's reasonable remuneration and
all outgoings properly payable by the Receiver;
SECONDLY: in or toward payment to the Secured Party of all
principal and other monies (except interest) due in
respect of the Secured Obligations;
THIRDLY: in or toward payment to the Secured Party of all
interest remaining unpaid in respect of the Secured
Obligations;
FOURTHLY: any surplus will be paid to the Debtor.
5.4 Waivers. Secured Party may exercise any of its rights and
remedies without demand, advertisement or notice other than as may be required
by law. To the fullest extent permitted by law, Debtor waives demand, notice,
protest, notice of acceptance of this Agreement or other action taken in
reliance hereon and all other demands and notices of any description.
5.5 Deficiency. If the amounts realized from the disposition
of the Collateral are not sufficient to pay the Secured Obligations in full to
the Secured Party, the Debtor will immediately pay to the Secured Party the
amount of such deficiency.
5.6 Rights Cumulative. All rights and remedies of the Secured
Party set out in this Security Agreement are cumulative and no right or remedy
contained herein is intended to be exclusive but each will be in addition to
every other right or remedy contained herein or in any existing or future
security agreement or now or hereafter existing at law or in equity or pursuant
to any other agreement between the Debtor and the Secured Party that may be in
effect from time to time.
6. LIABILITY OF SECURED PARTY.
6.1 Obligations and Covenants of Debtor. The Secured Party
shall not be bound to do, observe or perform or to see to the observance or
performance by the Debtor of any
-6-
obligations or covenants imposed upon the Debtor nor shall the Secured Party be
obliged to keep any of the Collateral identifiable.
6.2 Duty to Inquire. The Secured Party shall not be obliged to
inquire into the right of any person purporting to be entitled under the PPSA to
information and materials from the Secured Party by making a demand upon the
Secured Party for such information and materials and the Secured Party shall be
entitled to comply with such demand and shall not be liable for having complied
with such demand notwithstanding that such person may in fact not be entitled to
make such demand.
6.3 Waiver. The Debtor hereby waives any applicable provision
of law permitted to be waived by it which imposes higher or greater obligations
upon the Secured Party than provided in this Security Agreement.
7. MISCELLANEOUS.
7.1 Performance of Obligations. If the Debtor fails to perform
any of its Obligations hereunder, the Secured Party may, but shall not be
obliged to, perform any or all of such Obligations without prejudice to any
other rights and remedies of the Secured Party hereunder, and any payments made
and any costs, charges, expenses and legal fees and disbursements (on a
solicitor and his own client basis) incurred in connection therewith shall be
payable by the Debtor to the Secured Party forthwith with interest until paid at
the highest rate borne by any of the Secured Obligations and such amounts shall
form part of the Secured Obligations and constitute a charge upon the Collateral
in favour of the Secured Party prior to all claims subsequent to this Security
Agreement.
7.2 Notices. Any notice, request, demand, statement,
authorization, approval or consent required or permitted under this Agreement
shall be in writing and shall be made by, and deemed duly given upon, (a)
deposit in the United States mail, postage prepaid, registered or certified,
return receipt requested, such mailing to be effective upon receipt, (b)
personal delivery, (c) 24 hours after delivery to a courier of recognized
reputation (such as FedEx) or (d) transmission by facsimile with a copy sent
separately by mail, as follows or to such other address and/or such additional
parties as either party may specify by notice given in accordance with this
Section 7.2:
Debtor: AltaRex Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Secured Party: United Therapeutics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
7.3 Waiver, Amendment or Modification. No waiver, amendment or
modification of any provision hereof or of any right or remedy hereunder shall
be effective unless in writing and signed by the party against whom such waiver,
amendment or modification is sought to be enforced. No failure by Secured Party
to exercise, and no delay by Secured Party in exercising, any right, power or
remedy granted hereunder shall operate as a waiver of any such right, power or
remedy. A waiver of any right or remedy by Secured Party on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion.
7.4 Assignment. Secured Party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of Debtor. Debtor may not assign any of its rights or delegate any of
its duties under this Agreement without the prior written consent of Secured
Party.
7.5 Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws of the Province of Alberta.
7.6 Severability. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
7.7 Construction of Agreement. The titles and headings of the
sections of this Agreement have been inserted for convenience of reference only
and are not intended to summarize or otherwise describe the subject matter of
such paragraphs and shall not be given any consideration in the construction of
this Agreement.
7.8 No Merger. This Security Agreement shall not operate so as
to create any merger or discharge of any Secured Obligations, or any assignment,
transfer, guarantee, lien, contract, promissory note, ▇▇▇▇ of exchange or
security in any form held or which may hereafter be held by the Secured Party
from the Debtor or from any other person whomsoever. The taking of a judgment
with respect to any of the Secured Obligations will not operate as a merger of
any of the terms, conditions, covenants, agreements or provisos contained in
this Security Agreement.
7.9 Further Assurances. At the Secured Party's request at any
time and from time to time, the Debtor shall execute and deliver such further
and other security, documents and instruments to further mortgage, charge and
grant an assignment to the Secured Party in and to the Collateral, whether in
any other jurisdiction or otherwise, and do all other acts and things as the
Secured Party reasonably requires in order to give effect to this Security
Agreement or such other mortgage, charge or assignment against the Collateral or
to confirm and perfect, and maintain perfection of, the security constituted by
this Security Agreement or such other mortgage, charge or assignment in favour
of the Secured Party.
-8-
7.10 Financing Statement. The Debtor hereby:
(a) acknowledges receiving a copy of this Security Agreement; and
(b) waives all rights to receive from the Secured Party a copy of
any financing statement, financing change statement or
verification statement filed at any time or from time to time
respect of this Security Agreement.
7.11 Additional Security. This Security Agreement and the
security constituted hereby are in addition to and not in substitution for any
other security which the Secured Party may now or from time to time hold or take
from the Debtor or from any other person whomsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ALTAREX CORP.
("Debtor")
By:
--------------------------------------
Its:
--------------------------------------
UNITED THERAPEUTICS CORPORATION
("Secured Party")
By:
--------------------------------------
Its:
--------------------------------------
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of April 17, 2002;
BETWEEN:
ALTAREX CORP., a corporation incorporated under the laws of
Alberta (hereinafter referred to as the "Company")
- and -
UNITED THERAPEUTICS CORPORATION, a corporation incorporated
under the laws of Delaware (hereinafter referred to as
"United")
WHEREAS:
(a) United wishes to purchase Purchased Securities from the
Company;
(b) the Company has agreed to issue the Purchased Securities to
United; and
(c) this Agreement is being entered into as a condition to the
completion of the purchase of the Purchased Securities;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained, the parties hereto
agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
"affiliate" and "associate" have the respective meanings assigned
thereto in the Securities Act (Ontario) as at the date hereof;
"Agreement" means this agreement and all amendments made hereto by
written agreement between the parties hereto;
"business day" means a day other than a Saturday, Sunday or statutory
or civic holiday in Toronto, Ontario;
"Canadian Securities Laws" means the securities laws of any province or
territory of Canada;
"Common Shares" means the common shares of the Company;
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"Convertible Debentures" means, collectively, the First Convertible
Debenture and Second Convertible Debenture;
"Convertible Debenture Shares" means, collectively, the 100,000 Common
Shares issued upon conversion of the First Convertible Debenture and
the 883,380 Common Shares issued upon the conversion of US $441,690 of
the Second Convertible Debenture;
"Expenses" means all expenses incident to the Company's performance of
or compliance with this Agreement (including, without limitation, all
filing fees, expenses of compliance with securities and "blue sky"
laws, printing expenses and reasonable fees and disbursements of the
Company's counsel, independent accountants, underwriters (but excluding
underwriting discounts and selling commissions) and other persons
retained by the Company) other than the Company's internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties) which
shall continue to be paid by the Company in any event;
"First Convertible Debenture" means the First Convertible Debenture
dated as of the date hereof between the Company and United;
"Piggyback Qualification" has the meaning ascribed thereto in Section
3.1;
"Prospectus" means a prospectus filed by the Company with a Canadian
commission for a public offering and sale of securities of the Company;
"Purchased Securities" means collectively the 4,900,000 Common Shares
subscribed for by United pursuant to the Subscription and Debenture
Purchase Agreement and the Convertible Debenture Shares, if any;
"Qualifiable Shares" means (i) the Convertible Debenture Shares
issuable upon conversion of the Convertible Debentures, as applicable,
and (ii) any other Common Shares issuable in respect of such shares
(because of share splits, share dividends, reclassifications,
recapitalizations or similar events);
"Second Convertible Debenture" means the Second Debenture (as such term
is defined in the Subscription and Debenture Purchase Agreement);
"Securities Acts" means the securities legislation of each of the
provinces of Canada and all regulations, policy statements, orders,
rules, rulings, communiques and interpretation notes issued thereunder
or in relation thereto, as amended, re-enacted or replaced from time to
time; and
"Subscription and Debenture Purchase Agreement" the subscription and
debenture purchase agreement dated as of the date hereof between the
Company and United.
1.2 HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of
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this Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section
or other portion hereof and include any agreement supplemental hereto. Unless
something in the subject matter or context is inconsistent therewith, references
herein to Articles and Sections are to Articles and Sections of this Agreement.
1.3 EXTENDED MEANINGS
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender shall
include the feminine and neuter genders and vice versa and words importing
persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations.
ARTICLE 2 - QUALIFICATION REQUEST
2.1 REQUEST FOR QUALIFICATION
Subject to Section 2.2, United may at any time after the issue and sale
of the applicable Convertible Debenture, by written notice to the Company,
request (a "Qualification Request") the Company to (i) qualify for distribution
Qualifiable Shares issuable upon conversion of such Convertible Debenture under
the Securities Acts, or (ii) in the event the Company is offering Common Shares
to the public by way of a prospectus, to sell on a secondary basis the Purchased
Securities, such notice to specify the number of Common Shares requested to be
qualified or sold, as the case may be, and the intended method of disposition of
such Common Shares.
Promptly upon receipt of a Qualification Request, the Company shall use
its best efforts to effect, as expeditiously as possible, the qualification for
distribution or resale under the Securities Acts of the Common Shares that the
Company has been requested to qualify by United to the extent necessary to
permit the disposition of the Common Shares to be qualified in accordance with
the intended methods of distribution.
2.2 RESTRICTIONS ON QUALIFICATION REQUEST
The Company shall not be obligated to effect:
(a) any Qualification Request that requires the Company to qualify
the Qualifiable Shares in any jurisdiction outside of Canada;
or
(b) any Qualification Request unless United has requested either
(i) the qualification for distribution of not less than 100%
of the total number of Qualifiable Shares owned by United on
the date of any such Qualification Request or (ii) the sale on
a secondary basis of not less than 100% of the total number of
Purchased Securities owned by United on the date of such
Qualification Request.
2.3 QUALIFICATION REQUEST EXPENSES
The Company will pay all Expenses relating to any Qualification
Request:
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(a) provided that with respect to the sale of Common Shares
pursuant to a public offering in Canada, United shall pay its
proportionate share (based on the number of Common Shares that
United is selling of the total number of Common Shares being
qualified for sale) of the Expenses to the extent required to
be paid by United under Securities Acts and for greater
certainty the expenses for which United would be responsible
hereunder are limited to its proportionate proportion of the
Canadian Securities Commission's regulated fees;
(b) provided, however, that if a qualification under Section 2.1
is withdrawn at the request of United (other than a withdrawal
within 10 days of the United becoming aware of, and as a
result of, information concerning the business or financial
condition of the Company which is made known to United after
the date on which such qualification was requested), United
shall pay its proportionate share (based on the number of
Common Shares that United is selling of the total number of
Common Shares being qualified for sale) of the Expenses to the
extent required to be paid by United under Securities Laws.
2.4 UNDERWRITTEN OFFERINGS
If any Qualification Request is an underwritten offering:
(a) United shall provide notice of this fact as part of its
Qualification Registration;
(b) the Company, even in the case of an offering (a "Secondary
Distribution") including United as a secondary offeror, shall
have the right to select the investment banker(s) and
manager(s) to underwrite any offering contemplated by a
Qualification Request, subject, in the case of a Secondary
Distribution, to the approval of United, such approval not to
be unreasonably withheld; and
(c) United shall bear or pay its proportionate share of the
underwriting discounts and selling commissions determined on
the basis of the proportion that the number of United's Common
Shares included in the Qualification Request bears to the
total number of Common Shares qualified for distribution.
ARTICLE 3 - PIGGYBACK QUALIFICATION
3.1 RIGHT TO PIGGYBACK
If the Company proposes to (i) qualify for distribution any Common
Shares under any of the Securities Acts (other than in connection with any
securities exchange offer, dividend reinvestment plan or stock option or other
employee benefit plan) or (ii) sell by way of prospectus commons shares out of
treasury ("Offering"), the Company shall give prompt written notice to United of
its intention to do so and, subject to Section 3.4, shall include in such
qualification all Qualifiable Shares and shall include as part of such offering
on a secondary basis the Purchased Securities (a "Piggyback Qualification") with
respect to which the Company has received from United a written request for
inclusion therein within ten Business Days after
-5-
the date of such notice. The Company has the right to postpone or withdraw any
qualification in its sole discretion.
3.2 PIGGYBACK EXPENSES
The Company will pay all Expenses relating to any Piggyback
Qualification.
3.3 UNDERWRITTEN OFFERINGS
If any Piggyback Qualification is an underwritten offering:
(a) the Company shall be entitled to select the investment
banker(s) and manager(s) to underwrite the offering
contemplated thereby;
(b) United shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for the
underwriting by the Company; and
(c) United shall bear or pay its proportionate share of the
underwriting discounts and selling commissions determined on
the basis of the proportion that the number of United's Common
Shares included in the Piggyback Qualification bears to the
total number of Common Shares qualified for distribution.
3.4 PRIORITY ON PRIMARY QUALIFICATION
If any Piggyback Qualification includes an underwritten offering and
the managing underwriters advise the Company that the number of Common Shares
that the Company and United have requested to be included in such distribution
pursuant to Section 3.1 exceeds the number (in this Section 3.4, the "Maximum
Secondary Offering Size") which can be sold on a secondary basis in an orderly
manner in such offering within a price range acceptable to the Company (the
"Assessment"), the Company shall include in such distribution as many of the
Common Shares proposed to be sold by United on a secondary basis as will not
cause the offering to exceed the Maximum Secondary Offering Size which can be
sold on a secondary basis in an orderly manner in such offering within a price
range acceptable to the Company.
If United disagrees with the Assessment, the matter shall be decided by an
arbitrator mutually agreeable to the parties within ten calendar days whose
decision shall be final and binding upon the parties.
Subject to the foregoing, the Company shall use its reasonable efforts to
arrange for the underwriters to include the Piggyback Qualification as part of
the Common Shares to be distributed by or through such underwriters.
-6-
ARTICLE 4 - QUALIFICATION PROCEDURES
4.1 OBLIGATIONS OF THE COMPANY
Whenever the Company receives a request for a Qualification Request or
a Piggyback Qualification, the Company shall use its best efforts to effect such
qualification for distribution and pursuant thereto the Company shall, as
expeditiously as possible, and to the extent necessary by virtue of the
requirements of the jurisdictions in which such qualification is to be effected:
(a) promptly prepare and file a preliminary prospectus in the
relevant jurisdictions and such other related documents as may
be necessary or appropriate relating to the proposed
distribution or qualification and shall, as soon as possible
after any comments of the relevant regulatory authorities have
been satisfied with respect thereto, prepare and file under
the Securities Acts a prospectus (provided that before filing
a preliminary prospectus, prospectus or any amendments or
supplements thereto, the Company shall furnish to United
copies of such documents for their review) and obtain receipts
therefor and shall take all other steps and proceedings that
may be necessary in order to qualify the Common Shares for
distribution under such Securities Acts by registrants who
comply with the relevant provisions of such Securities Acts;
(b) prepare and file with the relevant regulatory authorities such
amendments and supplements to such preliminary prospectus,
prospectus as may be necessary to comply with the provisions
of the Securities Acts with respect to the distribution of all
Common Shares covered thereby until all of such Common Shares
have been distributed in accordance with the intended method
or methods of disposition;
(c) furnish to United such number of copies of such preliminary
prospectus, prospectus and any amendment and supplement
thereto and such other relevant documents as such shareholder
may reasonably request in order to facilitate the disposition
of its Common Shares;
(d) furnish to United an opinion of counsel for the Company in a
form that is customary at such time addressed to United and
the underwriters and dated the effective date of such (final)
prospectus;
(e) notify, as soon as possible, United of any circumstance or the
happening of any event as a result of which the preliminary
prospectus, prospectus as then in effect would include an
untrue statement of material fact or would omit any fact that
is required to be stated or that is necessary to make any
statement therein not misleading, and at the request of United
prepare and furnish to United a reasonable number of
commercial copies of a supplement to or an amendment of the
preliminary prospectus, prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Common
Shares, such document shall not include an untrue statement of
material fact or omit to state any fact that is
-7-
required to be stated or that is necessary to make any
statement therein not misleading;
(f) otherwise comply with all applicable Securities Acts during
the course of the distribution;
(g) enter into such customary agreements, including underwriting
agreements, containing such representations and warranties by
the Company and such other terms and provisions as are
customary therein including, without limitation, rights of
indemnity and contribution;
(h) in the event of the issuance of any order or ruling suspending
the effectiveness of a prospectus receipt or of any order
suspending or preventing the use of any prospectus or
suspending the qualification of any Common Shares qualified by
such prospectus for sale in any jurisdiction, use its best
efforts promptly to obtain the withdrawal of such order or
ruling;
(i) otherwise use its reasonable efforts to facilitate the
offering of the Common Shares including, without limitation,
causing management of the Company to participate in any road
shows, sales meetings or other activities arranged by the
underwriters;
(j) if the Company has delivered a Prospectus to United and after
having done so the Prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly
notify United and, if requested, United shall immediately
cease making offers of Qualifiable Shares or Purchased
Securities and return all Prospectuses to the Company. The
Company shall promptly provide United with revised
Prospectuses and, following receipt of the revised
Prospectuses or United shall be free to resume making offers
of the Qualifiable Shares or Purchased Securities; and
(k) in the event that, in the judgement of the Company, it is
advisable to suspend use of a Prospectus due to pending
material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public
disclosure would be detrimental to the Company, the Company
shall notify United to such effect, and, upon receipt of such
notice, United shall immediately discontinue any sales of
Qualifiable Shares or Purchased Securities pursuant to such
Prospectus until United has received copies of a supplemented
or amended Prospectus or until United is advised in writing by
the Company that the then current Prospectus may be used and
has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in
such Prospectus. Notwithstanding anything to the contrary
herein, the Company shall not exercise its rights under this
Section 4.1(k) to suspend sales of Qualifiable Shares or
Purchased Securities for a number of days in excess of 120
days in any 365-day period.
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4.2 OBLIGATIONS OF UNITED
(1) If in the reasonable opinion of counsel to the Company it is necessary or
appropriate in order to comply with any applicable Securities Acts, the
obligations of the Company under Articles 2 and 3 shall be conditional upon
United and any underwriter participating in such offering executing and
delivering to the Company an appropriate agreement, in a form reasonably
satisfactory to counsel for the Company, that such person shall comply with all
prospectus delivery requirements of all relevant Securities Acts and with
anti-stabilization, manipulation and similar provisions of the relevant
Securities Acts and shall furnish to the Company information about sales made in
such offering.
(2) United shall not (until further notice) effect sales of any Common Shares
qualified by or included in a prospectus or deliver any prospectus in respect of
such sale after notification by the Company of any order or ruling suspending
the effectiveness of the receipt for such prospectus.
4.3 PREPARATION; REASONABLE INVESTIGATION
In connection with the preparation and filing of any preliminary
prospectus, prospectus, or similar document pursuant to a qualification request,
United and the underwriters, if any, and its counsel, auditors and other
representatives, shall be given the opportunity to participate in the
preparation of such documents and each amendment thereof or supplement thereto
and there shall be inserted therein such material as is required under the
applicable Securities Acts or which in the reasonable judgment of United and its
counsel should be included. United and the underwriters shall also be given such
access to the books and records of the Company and such opportunities to discuss
the business of the Company with its officers and auditors as shall be necessary
in their respective opinions or in the opinion of their respective counsel, and
to conduct all due diligence which any of the foregoing persons may reasonably
require in order to conduct a reasonable investigation for purposes of
establishing a due diligence defence as contemplated by the Securities Acts and
in order to enable United and underwriters to execute the certificates required
to be executed by them pursuant to the Securities Acts for inclusion in each
such document.
4.4 EXPENSES
(1) To the extent permitted under applicable Securities Acts, all Expenses shall
be borne by the Company. The Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties).
(2) To the extent Expenses are not permitted by law to be paid by the Company,
United shall pay those Expenses allocable to the distribution or qualification
of the Qualified Shares or Purchased Securities owned by it as provided herein.
-9-
ARTICLE 5 - ARTICLE - INDEMNIFICATION AND CONTRIBUTION
5.1 INDEMNIFICATION
(1) The Company shall indemnify and hold United, each of its officers,
directors, legal counsel and accountants and each person which owns or controls
United from and against any and all expenses, claims, losses, damages and
liabilities (or actions, proceedings or settlements in respect thereof)
including costs of investigation and reasonable fees and expenses of legal
counsel arising out of or based upon:
(a) any liability pursuant to a provision of (including any
indemnity in) any underwriting agreement, purchase agreement
or other document relating to any Qualification Request or
Piggyback Qualification and directly or indirectly arising out
of or based upon any misrepresentation, breach of warranty,
untrue statement or alleged untrue statement, whether of a
material fact or otherwise, or any omission or alleged
omission to state a fact, material or not, required to be
stated or necessary to make a statement therein not
misleading, in light of the circumstances in which it is made;
or
(b) any misrepresentation or alleged misrepresentation, breach of
warranty or untrue statement or alleged untrue statement,
whether of a material fact or otherwise contained in any
preliminary prospectus, prospectus registration statement or
similar document (including any amendment or supplement
thereto) relating to any Qualification Request or Piggyback
Qualification, or in any underwriting agreement, purchase
agreement or other document relating thereto, or arising out
of or based upon any omission or alleged omission to state in
any such preliminary prospectus, prospectus, registration
statement or similar document (including any amendment or
supplement thereto), or any such underwriting agreement,
purchase agreement or other document, a fact, material or not,
required to be stated therein or necessary to make a statement
therein not misleading, in light of the circumstances in which
it is made.
(2) In the event of any qualification of any of the Qualifiable Shares or
Purchased Securities under the Securities Act pursuant to this Agreement, United
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls the Company
or any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the Company,
such directors and officers, underwriter or controlling person may become
subject under Securities 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 a material fact
contained in any preliminary or final Prospectus under which such Qualifiable
Shares or Purchased Securities were qualified, or any amendment or supplement to
the Prospectus, or arise out of or are based upon any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, if the statement or omission was
made in reliance upon and in conformity with information relating to United
furnished in writing to the Company by or on behalf of United specifically for
use in connection with the preparation of such Prospectus, amendment or
supplement; provided,
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however, that the obligations of United hereunder shall be limited to an amount
equal to the net proceeds to United of Qualifiable Shares or Purchased
Securities sold in connection with such qualification.
(3) Each party entitled to indemnification under this Section 5.1 (the
"Indemnified Party") shall give notice to the Company or United, as the case may
be, promptly after such Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the Company or United, as the
case may be, to assume the defence of any such claim or any litigation resulting
therefrom, provided that counsel for the Company or United, as the case may be,
who shall conduct the defence of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party, and the Indemnified Party
may participate in such defence, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Company of its obligations under this Section 5.1. The Company or United, as the
case may be, shall not, in the defence of any such claim or litigation, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
5.2 CONTRIBUTION
If the indemnification provided for in Section 5.1 is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any
expenses, claims, losses, damages or liabilities or actions in respect thereof,
then the Company or United, as the case may be, shall in lieu of indemnifying
the Indemnified Parties contribute to the amount paid or payable by the
Indemnified Parties as a result of such expenses, claims, losses, damages,
liabilities or actions in such proportion as is appropriate to reflect the
relative fault of the parties thereto, in connection with the statements or
omissions which resulted in such expenses, claims, losses, damages, liabilities
or actions as well as any other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation within the
meaning of Section 11(f) of the United States Securities Act of 1933, as
amended) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 5.2 were determined
by pro rata allocation or by any other method of allocation which did not take
account of the equitable considerations referred to above in this Section 5.2.
The amount paid or payable by the Indemnified Parties as a result of the
expenses, claims, losses, damages, liabilities or actions in respect thereof
referred to above in this Section 5.2 shall be deemed to include any legal or
other expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such action or claim.
ARTICLE 6 - GENERAL
6.1 INJUNCTIVE RELIEF
The Company acknowledges and agrees that damages would be inadequate to
compensate for the breach of any of its obligations contained in this Agreement
and that other parties hereto would be seriously and irreparably injured if any
provision of this Agreement is
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not performed by it in accordance with the specific terms and conditions of this
Agreement. Accordingly, the Company agrees, without prejudice to any additional
or alternative remedies the other parties hereto may have hereunder, that such
other parties shall be entitled:
(a) to an injunction to prevent any breach of this Agreement by
the Company;
(b) to enforce specifically the terms and provisions hereof and
any obligation in favour of such other parties, or any of
them, contained in this Agreement; and
(c) to declaratory relief or injunctive relief in respect of
anything done in breach of an obligation in favour of such
other parties, or any of them, contained in this Agreement.
6.2 TERMINATION
This Agreement shall terminate (i) in the case of the Common Shares
constituting a portion of the Purchased Securities, four months from the date
hereof, and (ii) in the case of the Qualifiable Shares, four months from the
date of issue and sale of the Convertible Debentures.
6.3 FURTHER ASSURANCES
Each of the parties hereto shall from time to time execute and deliver
all such further documents and instruments and do all acts and things as the
other parties may reasonably require to effectively carry out or better evidence
or perfect the full intent and meaning of this Agreement.
6.4 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
6.5 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties hereto.
6.6 ENTIRE AGREEMENT
This Agreement, the Subscription and Debenture Purchase Agreement and
the Convertible Debenture constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and cancels and supersedes any
other understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
6.7 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by the parties hereto and
no waiver of any breach of any term
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or provision of this Agreement shall be effective or binding unless made in
writing and signed by the party purporting to give the same and, unless
otherwise provided, shall be limited to the specific breach waived.
6.8 ASSIGNMENT
This Agreement may not be assigned by any party hereto without the
written consent of the other parties hereto.
6.9 NOTICES
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by personal
delivery or by facsimile transmission addressed to the recipient as follows:
(a) to the Company:
AltaRex Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(b) to United:
United Therapeutics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
or to such other address, individual or facsimile number as may be designated by
notice given by any party to the others. Any demand, notice or other
communication given by personal delivery shall be conclusively deemed to have
been given on the day of actual delivery thereof and, if given by facsimile
transmission, on the day of transmittal thereof.
6.10 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
6.11 ATTORNMENT
In relation to any legal proceedings or action to enforce this
Agreement, the courts of the Province of Ontario shall have jurisdiction to
entertain any action arising under this Agreement.
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Each of the parties hereto hereby irrevocably attorns to the jurisdiction of the
courts of the Province of Ontario and waives any objections to proceedings in
such courts on the grounds of venue or on the grounds that the proceedings have
been brought in an inconvenient forum. This Section 6.10 shall not affect the
right of any party to take proceedings in any other jurisdiction nor shall the
taking of proceedings in any jurisdiction preclude any party from taking
proceedings in any other jurisdiction.
6.12 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which shall constitute one
and the same agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
ALTAREX CORP.
Per:
--------------------------------------
Per:
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UNITED THERAPEUTICS CORPORATION
Per:
---------------------------------------
Per:
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EXHIBIT E
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Unless otherwise defined herein, all capitalised terms shall have the meanings
ascribed thereto in the Subscription Agreement.
ALTAREX CORP.
TERM SHEET
ISSUER: AltaRex Corp. ("AltaRex" or the "Company").
ISSUE: A unit consisting of 4,900,000 Common Shares and a warrant
to purchase 3,250,000 common shares at a price of $0.50; a
convertible debenture in the principal amount of $50,000;
and a right to subscribe for a convertible debenture in the
principal amount of $875,000.
PURCHASE
PRICE: U.S. $0.50 per Common Share for a purchase price of
$2,450,000
COMMON
SHARES
OUTSTANDING: PRE-ISSUE POST-ISSUE
------------ ----------
Basic: 36.7 million 45.0 million
Fully-diluted: 49.2 million 58.4 million
RESTRICTED
SECURITIES: The Purchased Securities will not be registered under the
Securities Act, or applicable state securities laws, and may
not be transferred except in compliance with the Securities
Act and applicable state securities laws. Each certificate
representing the Purchased Securities will bear a legend to
the foregoing effect.
USE OF
PROCEEDS: Research and development expenses, general and
administrative expenses and working capital and other
requirements of the Company
LISTING: The Common Shares are listed on the TSE under the
symbol "AXO".
ANTICIPATED
CLOSING DATE: April 17, 2002.
EXHIBIT F-1
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ALTAREX CORP.
PRIVATE PLACEMENT QUESTIONNAIRE
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EXHIBIT F-2
-----------
ALTAREX CORP.
CERTIFICATE FOR CORPORATION, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
-----------------------------------------
EXHIBIT F-3
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DECLARATION OF ACCREDITED INVESTOR STATUS
EXHIBIT F-4
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THE TORONTO STOCK EXCHANGE
