HEALTHCARE CAPITAL CORP.
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▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
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U.S. PLACEMENT AGREEMENT
October 14, 1996
Dallas Research & Trading, Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
HealthCare Capital Corp., an Alberta corporation (the "Company"),
hereby confirms its agreement with you ("Dallas Research") as follows:
1. DESCRIPTION OF TRANSACTION. The Company is in the process of
offering and selling in a private offering (the "Offering") up to 4,810,000
special warrants in the capital of the Company (the "Special Warrants") at a
price of U.S. $1.25 per Special Warrant for gross proceeds of up to U.S.
$6,012,500 and, in an Agency Agreement (the "Agency Agreement") dated August 22,
1996 between it and ▇.▇. ▇▇▇▇▇▇ & Company Limited (the "Agent") appointed the
Agent as the Company's project manager for the Offering and as its exclusive
agent in Canada, on a best efforts basis, to solicit subscriptions under the
Offering from persons resident in certain provinces of Canada (the "Canadian
Offer"). The Canadian Offer was completed, with the sale thereunder of 810,000
Special Warrants, on September 23, 1996. Each Special Warrant entitles the
holder thereof to receive, without the payment of any additional consideration,
one common share in the capital of the Company (a "Common Share") and one share
purchase warrant (a "Warrant") entitling the holder thereof to purchase, until
August 31, 1998, one Common Share at a price of U.S. $2.00.
2. APPOINTMENT OF DALLAS RESEARCH. The Company hereby appoints Dallas
Research as its co-agent to solicit subscriptions in the United States, on a
best efforts basis, for up to 2,000,000 Special Warrants constituting a part of
the Offering (the "Dallas Research Offer"). (Sunrise Securities Corporation
("Sunrise") may as co-agent solicit subscriptions for an additional 2,000,000
Special Warrants). Dallas Research, on the basis of the representations,
warranties, covenants and agreements of the Company herein, and subject to the
conditions herein, accepts such appointment and agrees, in connection with the
Offering that it will
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endeavor to obtain, on a best efforts basis, subscribers ("Subscribers") for the
Special Warrants offered as part of the Dallas Research Offer. By executing this
Agreement, the Agent: (a) consents to the execution, delivery and performance by
the Company and Dallas Research of this Agreement; (b) makes for itself the
representations and agreements made by the Company in Sections 7.2(c), (d) and
(e) of this Agreement (deleting for this purpose the parenthetical exclusions
contained therein); and (c) confirms the representations, warranties and
covenants made by it in Schedule A to the Agency Agreement as of the date made
and as of the date hereof.
3. PURCHASE, SALE AND DELIVERY OF UNITS. Subject to the terms and
conditions set forth herein, the Company and Dallas Research agree as follows:
(a) REGULATION D OFFERING. Neither the offer nor the sale of
the Special Warrants has been or will be registered with the United
States Securities and Exchange Commission (the "Commission") under the
United States Securities Act of 1933, as amended (the "Securities
Act"). The Special Warrants will be offered and sold pursuant to the
Dallas Research Offer in reliance upon and in compliance with the
exemptions from registration provided by Sections 3(b), 4(2) and 4(6)
of the Securities Act and Regulation D thereunder ("Reg D") and will
only be sold to "accredited investors" as such term is defined in Reg
D. Such Special Warrants will be offered for sale only in those states
in which the Special Warrants shall have been qualified or registered
for sale or are exempt from such qualification or registration. The
Company will provide Dallas Research, for delivery to all offerees and
purchasers and their representatives, copies of the United States
Confidential Offering Memorandum dated October 16, 1996 of the Company
(the "Memorandum") and such other information, documents and
instruments which Dallas Research deems necessary to comply with the
statutes, rules, regulations and judicial and administrative
interpretations applicable to the Dallas Research Offer.
(b) SUBSCRIPTION FOR SPECIAL WARRANTS. Purchase of Special
Warrants shall occur by execution and delivery by a Subscriber of two
copies of a Subscription Agreement in the form annexed to the
Memorandum (the "Subscription Agreement"), together with such other
documents and instruments as the Company or Dallas Research shall deem
appropriate.
(c) PAYMENT. Each Subscriber shall tender a cashier's or
certified check payable to HealthCare Capital Corp., in payment of the
full purchase price of the Special Warrants subscribed for.
(d) CLOSING; TERMINATION OF OFFERING. The Closing of the
Dallas Research Offer (the "Final Closing") shall occur on November 15,
1996 or such later date as may be mutually agreed upon by the Company
and Dallas Research (the "Final Closing Date"). By mutual agreement of
the Company and Dallas Research, an interim closing (the "Initial
Closing") of the Dallas Research Offer may occur prior to the Final
Closing Date. Each of the Initial Closing and the Final Closing is
referred to herein as a "Closing" and the date on which each occurs is
referred to herein as a "Closing Date".
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At each Closing, the Company shall deliver to Dallas Research, on
behalf of the appropriate Subscribers, the certificates representing
the Special Warrants being purchased by such Subscribers at such
Closing against payment therefor as provided in Section 3(c) of this
Agreement. In the event that no Special Warrants are sold hereunder, on
the Final Closing Date all terms of this Agreement shall be
automatically terminated and neither party shall have any further
obligation to the other party under this Agreement other than the
Company's obligation to pay expenses as set forth in Section 9 of this
Agreement.
4. COMPENSATION OF DALLAS RESEARCH.
4.1. At each Closing, the Company shall pay Dallas Research (or,
subject to applicable securities laws, its designee), as compensation for its
services rendered under this Agreement, the following:
(a) A selling commission equal to 9% of the gross proceeds
from the sale of Special Warrants at such Closing, payable, at the
option of Dallas Research, in cash or in Special Warrants (the
"Compensation Warrants") valued for this purpose at U.S. $1.25 per
Special Warrant; and
(b) A special option in the form of Exhibit A hereto (the
"Dallas Research Option") entitling Dallas Research to acquire without
the payment of any consideration warrants (the "Dallas Research
Warrants") to purchase, at an exercise price of U.S. $1.25 per share,
Common Shares in a number equal to 10% of the number of Special
Warrants sold at such Closing.
In addition, at each Closing the Company shall, to the extent not theretofore
paid, pay to Dallas Research a non-refundable consulting fee equal to 1% of the
gross proceeds from the sale of Special Warrants in the Dallas Research Offer
(not to exceed U.S. $25,000) for financial advisory services to be rendered by
Dallas Research to the Company.
4.2. The Compensation Warrants, the Dallas Research Option, the
securities issuable upon the exercise or deemed exercise of each, and the Common
Shares issuable upon exercise of the Dallas Research Warrants and of the
Warrants acquired upon the exercise or deemed exercise of the Compensation
Warrants will all be "restricted securities" within the meaning of Rule 144
under the Securities Act and the certificates therefor (and any certificates
issued in exchange therefor or replacement thereof) shall bear an appropriate
restrictive legend reflecting applicable restrictions on transfer.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Dallas Research as follows:
(a) OFFERING MEMORANDUM. The Memorandum, as of its date and as
of the date of this Agreement does not, and at all subsequent times up
to and including the Final Closing Date will not, contain any untrue
statement of a material fact, or omit to state
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any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they
were made, not misleading.
(b) ORGANIZATION; GOOD STANDING; SUBSIDIARIES. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of Alberta, with full power and authority, corporate and
other, to own or lease and operate its properties and to conduct its
business as currently conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in the States
of Oregon and Washington, the only jurisdictions in which such
qualification is necessary and where failure so to qualify could have a
material adverse effect on the financial condition, results of
operations, business, properties or prospects of the Company and its
Subsidiaries taken as a whole. The Company is the direct or indirect
beneficial owner of all of the outstanding securities of the following
corporations (each, a "Subsidiary" and, collectively, the
"Subsidiaries"):
HC HealthCare Hearing Clinics Ltd., a British Columbia
corporation;
Pacific Hearing Clinic Inc., a British Columbia corporation;
Oakridge Hearing Clinic Inc., a British Columbia corporation;
HealthCare Hearing Clinics Inc., a Washington corporation; and
Pacific Audiology Inc., a British Columbia corporation.
Each Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation,
with full power and authority, corporate and other, to own or lease and
operate its properties and to conduct its business as currently
conducted, and is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where such
qualification is necessary and where failure so to qualify could have a
material adverse effect on its financial condition, results of
operations, business, properties or prospects. Except for the
Subsidiaries, the Company has no subsidiaries.
(c) GOVERNMENTAL AUTHORITY. Except as may be required under
applicable state securities laws in the United States ("Blue Sky
laws"), no authorization, approval, consent, order, registration,
license or permit of any court or governmental agency or body, is
required for the valid authorization, issuance, sale and delivery of
the Special Warrants, the securities issuable upon the exercise or
deemed exercise of the Special Warrants and upon the exercise of the
Warrants issued upon the exercise or deemed exercise, and the
securities referred to in Section 4.2, and the consummation by the
Company of all the transactions contemplated by this Agreement, the
Subscription Agreements, the Dallas Research Option, the Dallas
Research Warrants, the indenture dated as of September 17, 1996 between
the Company and The R-M Trust Company relating to the Special Warrants
(the "Special Warrant Indenture") and the indenture
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dated as of September 17, 1996 between the Company and The R-M Trust
Company relating to the Warrants (the "Warrant Indenture")
(collectively, the "Subject Agreements").
(d) AUTHORIZATION OF AGREEMENTS. The Company has full power
and authority, corporate and other, to execute, deliver and perform the
Subject Agreements and to consummate the transactions contemplated
thereby. The execution, delivery and performance of the Subject
Agreements by the Company, the consummation by the Company of the
transactions therein contemplated, and the compliance by the Company
with the terms of the Subject Agreements have been duly authorized by
all necessary corporate action on the part of the Company. This
Agreement, the Special Warrant Indenture and Warrant Indenture have
been, and the Subscription Agreement and the Dallas Research Option
will be, duly executed and delivered by the Company and are or will be
the valid and binding obligations of the Company enforceable against
the Company in accordance with their respective terms, except insofar
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of
creditors generally and by the discretion of courts in granting
equitable remedies, and except that enforceability of the
indemnification provisions and the contribution provisions set forth in
this Agreement may be limited by the federal securities laws of the
United States or state securities laws or the public policy underlying
such laws. The execution, delivery and performance of the Subject
Agreements by the Company, the consummation by the Company of the
transactions therein contemplated, and the compliance by the Company
with the terms of the Subject Agreements do not, and will not, with or
without the giving of notice or the lapse of time, or both, (i) result
in any violation of the constating documents of the Company or any of
its Subsidiaries, (ii) result in a breach of or conflict with any of
the terms or provisions of, or constitute a default under, or result in
the modification or termination of, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon
any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any
of its or their properties or assets are or may be bound or affected;
(iii) violate any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or its
or their properties or business; or (iv) have any material adverse
effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company or any Subsidiary to own
or lease and operate any of its properties and to conduct its business
or the ability of the Company or such Subsidiary to make use thereof.
(e) CAPITALIZATION. The Company had, at July 31, 1996, a duly
authorized and outstanding capitalization as set forth in the
Memorandum under the caption "Capitalization," and the Common Shares,
special warrants and warrants described in the description thereof
contained in the Memorandum under the caption "Description of Share
Capital" conform to such description. All the outstanding Common Shares
have
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been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in the Memorandum and except as
contemplated by the Offering, there are, and until the Closing Date
there will be, no outstanding securities convertible into Common Shares
("Convertible Securities") or any options, warrants or other rights to
purchase any Common Shares or Convertible Securities ("Options"). All
such outstanding Options constitute the valid and binding obligations
of the Company, enforceable against the Company in accordance with
their respective terms. None of the outstanding Common Shares, Options
or Convertible Securities have been issued in violation of any
preemptive or similar right of any securityholder of the Company, and
none of the holders of the outstanding Common Shares, Options or
Convertible Securities is subject to personal liability solely by
reason of being such a holder. The offers and sales of the outstanding
Common Shares, Options and Convertible Securities were at all relevant
times exempt from registration or qualification under the Securities
Act and any applicable Blue Sky Laws and were in full compliance with
all applicable Canadian federal and provincial laws and stock exchange
regulations. Except as provided in Exhibit B hereto and except for
registration rights granted in connection with the acquisition by the
Company of Hearing Care Associates and proposed to be granted, in the
"SONUS" acquisition described in the Memorandum, no holder of any of
the Company's issued securities has any rights ("demand," "piggyback"
or otherwise) to have such securities registered under the Securities
Act.
(f) AUTHORIZATION OF SHARES AND WARRANTS. The issuance and
sale of the Special Warrants (including the Compensation Warrants), the
Dallas Research Option and the securities issuable upon the exercise of
any of the foregoing and of the Warrants and the Dallas Research
Warrants have been duly authorized, and when issued as contemplated by
the indentures or agreements relevant thereto, will be validly issued
and fully paid and nonassessable, and the holders thereof will not be
subject to personal liability solely by reason of being such holders.
None of such securities is or will be subject to preemptive rights of
any securityholder of the Company.
(g) NO ANTI-DILUTION ADJUSTMENT. The issuance of the
securities of the Company contemplated by this Agreement will not
result in any adjustment in the number of Common Shares, or the
exercise price or conversion ratio per Common Share, under any of the
Company's outstanding Options or Convertible Securities.
(h) NONCONTRAVENTION. Neither the Company nor any of its
Subsidiaries is in violation of, or in default under, any term or
provision of (i) its constating documents, (ii) any indenture,
mortgage, contract, commitment or other agreement or instrument to
which it is a party or by which it or any of its properties or business
is or may be bound or subject, or (iii) any existing applicable law,
rule, regulation, judgment, order or decree of any governmental agency
or court, Canadian or otherwise, having jurisdiction over the Company
or the Subsidiary or any of their respective properties or businesses.
The Company and each Subsidiary owns, possesses or has obtained all
governmental and other licenses, permits, certifications,
registrations, approvals or consents and other authorizations necessary
to own or lease, as the case may be, and to operate its
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properties and to conduct its business as currently conducted and
described in the Memorandum, and all such licenses, permits,
certifications, registrations, approvals, consents and other
authorizations are in good standing. There are no proceedings pending
or, to the best of the Company's knowledge, threatened, nor is there
any basis therefor, seeking to cancel, terminate or limit any such
licenses, permits, certifications, registrations, approvals or consents
or authorizations.
(i) LITIGATION. Except as set forth in the Memorandum, there
are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries before any governmental agency, court or
tribunal, Canadian or otherwise, or before any private arbitration
tribunal, pending or, to the best of the Company's knowledge,
threatened against the Company or any Subsidiary or involving the
properties or business of the Company or any Subsidiary which, if
determined adversely, would, individually or in the aggregate, result
in any material adverse change in the financial position, shareholders'
equity, results of operations, properties, business, management or
affairs of the Company and the Subsidiaries taken as a whole, or which
relate in any way to the validity of the capital stock of the Company
or the validity of this Agreement, or of any action taken or to be
taken by the Company pursuant to, or in connection with this Agreement,
nor, to the best of the Company's knowledge, is there any basis for any
such claim, action, suit, proceeding, arbitration, investigation or
inquiry. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal specifically naming the
Company or any Subsidiary and enjoining the Company or any Subsidiary
from taking, or requiring the Company or any Subsidiary to take, any
action, or to which the Company or any Subsidiary or its or their
properties or business is bound or subject.
(j) FINANCIAL STATEMENTS. Shikaze Ralston, the chartered
accountants who have rendered a report with respect to the financial
statements included in the Memorandum, are "independent public
accountants" within the meaning of the Securities Act and the
regulations promulgated under the Securities Act. The financial
statements and notes thereto included in the Memorandum are complete
and correct and present fairly the financial position of the Company as
of the dates thereof, and the results of operations and changes in
financial position of the Company for the periods indicated therein,
all in conformity with generally accepted accounting principles in
Canada applied on a consistent basis throughout the periods involved.
(k) LIABILITIES. Except as and to the extent reflected or
reserved against in the financial statements of the Company included in
the Memorandum, the Company as at July 31, 1996, had no material
liabilities, debts, obligations or claims asserted against it, whether
accrued, absolute, contingent or otherwise, and whether due or to
become due, including, but not limited to, liabilities on account of
taxes, other governmental charges or lawsuits brought subsequent to
such date.
(l) TAXES. The Company and each Subsidiary has filed all tax
returns required to be filed with the appropriate taxing authorities in
Canada and the United States, including all provincial, state,
municipal and other local authorities (whether
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relating to income, sales, franchise, withholding, real or personal
property or other types of taxes) or has duly obtained extensions of
time for the filing thereof, and has paid in full all taxes which have
become due pursuant to such returns or claimed to be due by any such
taxing authority or otherwise due and owing; and the provisions for
income taxes payable, if any, shown on the consolidated financial
statements contained in the Memorandum are sufficient for all accrued
and unpaid taxes, whether or not disputed, and for all periods to and
including the dates of such consolidated financial statements. Each of
the tax returns heretofore filed by the Company and each Subsidiary
correctly and accurately reflects the amount of its tax liability
thereunder. The Company and each Subsidiary has withheld, collected and
paid all other levies, assessments, license fees and taxes to the
extent required and, with respect to payments, to the extent that the
same have become due and payable. Except as disclosed in writing to
Dallas Research, neither the Company nor any Subsidiary has executed or
filed with any taxing authority, United States, Canada or otherwise,
any agreement extending the period for assessment or collection of any
income taxes and is not a party to any pending action or proceeding by
any foreign or domestic governmental agency for assessment or
collection of taxes, and no claims for assessment or collection of
taxes have been asserted against the Company.
(m) CONDUCT OF BUSINESS. Since the respective dates as of
which information is given in the Memorandum, neither the Company nor
any Subsidiary has (i) canceled, without payment in full, any notes,
loans or other obligations receivable or other debts or claims held by
it other than in the ordinary course of business; (ii) sold, assigned,
transferred, abandoned, mortgaged, pledged or subjected to lien any of
its properties, tangible or intangible, or rights under any contract,
permit, license, franchise or other agreement other than sales or other
dispositions of goods or services in the ordinary course of business at
customary terms and prices; (iii) increased the compensation payable to
any of its officers, directors or other employees (including salaries,
fringe benefits, pensions, profit participations and payments or
benefits of any kind whatsoever but excluding an increase of US $20,000
in the base annual salary of the Vice-President Finance); (iv) entered
into any line of business other than that conducted by it on such date
or entered into any transaction not in the ordinary course of its
business; (v) conducted any line of business in any manner except by
transactions customary in the operation of its business as conducted on
such date; or (vi) declared, made or paid or set aside for payment any
cash or non-cash distribution on any shares of its capital stock.
(n) PROPERTIES. The Company and each Subsidiary has good and
marketable title in fee simple to all real property, and good title to
all personal property (tangible and intangible), owned by it, free and
clear of all security interests, charges, mortgages, liens,
encumbrances and defects, except such as are described in the
Memorandum or such as do not materially affect the value or
transferability of such property and do not interfere with the use of
such property made or proposed to be made by the Company or such
Subsidiary. The leases, licenses or other contracts or instruments
under which the Company and each Subsidiary leases, holds or is
entitled to use any property, real or personal, are valid, subsisting
and enforceable only with such exceptions as are not material and do
not interfere with the use of such property made, or proposed to be
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made, by the Company or such Subsidiary, and all rentals, royalties or
other payments accruing thereunder which became due prior to the date
of this Agreement have been duly paid, and neither the Company nor any
Subsidiary is in default thereunder and, to the best of the Company's
knowledge, no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default thereunder.
Neither the Company nor any Subsidiary has received notice of any
violation of any applicable law, ordinance, regulation, order or
requirement relating to its owned or leased properties.
(o) INSURANCE. The Company and each Subsidiary has adequately
insured its properties against loss or damage by fire or other casualty
and maintains, in adequate amounts, such other insurance, including but
not limited to, liability insurance, as is usually maintained by
prudent companies engaged in the same or similar businesses.
(p) CONTRACTS. Each contract or other instrument (however
characterized or described) to which the Company or any Subsidiary is a
party, or to which the Company's or any Subsidiary's properties or
businesses are or may be subject, has been duly and validly executed,
is in full force and effect in all material respects and is enforceable
against the parties thereto in accordance with its terms, and none of
such contracts or instruments has been assigned by the Company or a
Subsidiary. Neither the Company nor the Subsidiary nor, to the best of
the Company's knowledge, any other party to such contract or instrument
is in default thereunder and, to the best of the Company's knowledge,
no event has occurred which, with the lapse of time or the giving of
notice, or both, would constitute a default thereunder. None of the
material provisions of such contracts or instruments violates any
existing applicable law, rule, regulation, judgment, order or decree of
any governmental agency or court having jurisdiction over the Company
or any Subsidiary or any of its or such Subsidiary's assets or
businesses.
(q) EMPLOYMENT AGREEMENTS. The employment agreements described
in the Memorandum under the caption "Management and Directors --
Employment and Consulting Agreements" are valid and binding agreements
enforceable against the Company and the respective other parties
thereto in accordance with their terms, except insofar as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws or arrangements affecting creditors'
rights generally and subject to principles of equity.
(r) BENEFIT PLANS. Except for the Incentive Stock Option Plan
described in the Memorandum under the caption "Options to Purchase
Shares," the Company has no employee benefit plans (including, without
limitation, profit sharing and welfare benefit plans) or deferred
compensation arrangements.
(s) CONTRIBUTIONS. Neither the Company nor any Subsidiary,
directly or indirectly, at any time (i) made any contributions to any
candidate for political office, or failed to disclose fully any such
contribution in violation of law, or (ii) made any payment to any
governmental officer or official, or other person charged with public
or
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quasi-public duties, other than payments or contributions required or
allowed by applicable law.
(t) REG D QUALIFICATION. Subject to the warranties and
covenants of Dallas Research in Section 7.2 of this Agreement, the
offer and sale of the Special Warrants by the Company have satisfied
and on each Closing Date will have satisfied, all of the requirements
of Rule 506 of Reg D, and the Company is not disqualified from the
exemption under Rule 506 of Reg D by virtue of Rule 507 of Reg D
because neither it, nor any of its predecessors or affiliates has been
subject to any order, judgment, or decree of any court of competent
jurisdiction temporarily, preliminarily or permanently enjoining such
person for failure to comply with Rule 503 of Reg D.
(u) FINDER'S FEE. Except for amounts paid or payable pursuant
to the Agency Agreement, this Agreement and the U.S. Placement
Agreement dated the date hereof between the Company and Sunrise (the
"Sunrise Research Agreement"), neither the Company nor any Subsidiary
incurred any liability for, or is aware of any claim for, any finder's
or broker's fees or similar payments in connection with the Offering.
(v) INTANGIBLES. The Company and each Subsidiary owns or
possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, service marks, copyrights, rights, trade
secrets, confidential information, processes and formulations used or
proposed to be used in the conduct of its business as currently
conducted (collectively, the "Intangibles"). To the best of the
Company's knowledge, neither the Company nor any Subsidiary has
infringed upon, or is presently infringing upon, the rights of others
with respect to the Intangibles, and neither the Company nor any
Subsidiary has received (i) any notice that it has or may have
infringed or is infringing upon the rights of others with respect to
the Intangibles, or (ii) any notice of conflict with the asserted
rights of others with respect to the Intangibles which could, singly or
in the aggregate, materially and adversely affect its business as
presently conducted or its prospects, financial condition or results of
operations, and the Company does not know of any basis therefor. To the
best of the Company's knowledge, no others have infringed upon the
Intangibles.
(w) LABOR RELATIONS. Except as disclosed in the Memorandum, no
labor problem exists with the Company's employees or, to its knowledge,
is imminent, which could have a material adverse effect on the Company.
(x) NO ADVERSE CHANGE. Since the date of the latest audited
financial statements in the Memorandum, except as otherwise stated in
the Memorandum, the Company has not (i) incurred any material liability
or obligation, direct or contingent, or entered into any material
transaction, whether or not in the ordinary course of business, or
sustained any material loss or interference with its business from
fire, storm, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, and (ii) there have not been, and prior to the
Final Closing Date there will not be, any changes in the capital stock
or any material increases in the long-term debt of the Company or any
material
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adverse change in or affecting the general affairs, management,
financial condition, shareholders' equity, results of operations or
prospects of the Company.
In addition, any certificate signed by an officer of the Company and
delivered to Dallas Research, or to counsel for Dallas Research, shall be deemed
to be a representation and warranty by the Company to Dallas Research as to the
matters covered thereby.
6. COVENANTS OF THE COMPANY.
(a) PLACEMENT MEMORANDUM. The Company will furnish Dallas
Research, without charge, with as many copies of the Memorandum as
Dallas Research may reasonably request. If, prior to the Final Closing
Date, any event occurs as the result of which the Memorandum, as then
amended or supplemented, would include an untrue statement of a
material fact, or omit to state a material fact necessary in order to
make the statements made, in light of the circumstances in which they
were made, not misleading, or if it shall be necessary to amend or
supplement the Memorandum to comply with applicable law, the Company
will forthwith notify Dallas Research thereof and furnish to Dallas
Research, in such quantities as Dallas Research may reasonably request,
an amended or supplemental Memorandum which corrects such statements or
omissions or causes the Memorandum to comply with applicable law.
Without the prior written consent of Dallas Research, no copies of the
Memorandum or any other material prepared by the Company in connection
with the Offering will be given by the Company or its counsel, or by
any employee, director or agent of the Company, to any person in the
United States except as contemplated by the Dallas Research Agreement.
(b) ADDITIONAL INFORMATION. The Company will furnish Dallas
Research with such other information, documents and instruments as may
be required for an offer made solely to accredited investors under
Sections 3(b), 4(2) or 4(6) of the Securities Act and Reg D.
(c) STATE SECURITIES QUALIFICATION. The Company will provide
Dallas Research's counsel with all information which such counsel
determines to be necessary and otherwise cooperate with such counsel,
to permit such counsel to take all necessary action to (i) qualify or
register the Special Warrants for sale under the Blue Sky laws of the
states of the United States in which Dallas Research determines that
offers or sales will be made, or (ii) obtain an exemption from such
qualification or registration in such states. The Company will promptly
advise Dallas Research:
(A) Of any order, request or suggestion by a
securities regulator of any state for any amendment to the
Memorandum or any other filed materials, or for additional
information; and
(B) Of any action by a securities regulator of any
state suspending the registration or qualification of the
Special Warrants for offer or sale in such state or denying an
exemption from such registration or qualification, or of the
- 11 -
initiation or threat of any proceeding for such purpose, and
the Company will use its best efforts to prevent such action,
or if such action shall be taken, to obtain the withdrawal
thereof at the earliest practicable date.
The Company will provide Dallas Research any additional information,
documents and instruments which Dallas Research shall deem necessary to
comply with the rules, regulations and judicial and administrative
interpretations in those states and jurisdictions where the Special
Warrants are to be offered for sale or sold. The Company will cooperate
with Dallas Research's counsel in filing all post-Offering forms,
documents or materials and take all other post-Offering actions
required by the Blue Sky laws of the states in which the Special
Warrants have been offered or sold.
(d) USE OF PROCEEDS. The Company will use its reasonable best
efforts to use the net proceeds of the Offering as set forth in the
Memorandum under the caption "Use of Proceeds."
(e) REG D COMPLIANCE; PROSPECTUS UNDERTAKINGS. The Company
will comply in all respects with the terms and conditions of Reg D and
applicable Blue Sky laws with respect to the offering and the sale of
the Special Warrants only to "accredited investors" within the meaning
of Rule 501(a) of Reg. D. The Company will perform and fulfill in all
respects the agreements and undertakings made by it in the Agency
Agreement and the Subscription Agreements with respect to filing and
obtaining receipts for a prospectus in Canada.
(f) RESTRICTION ON ISSUANCE OF SECURITIES. During the period
commencing on the date hereof and terminating on the Final Closing Date
the Company will not, without the prior written consent of Dallas
Research, issue any securities other than upon the exercise of rights
to acquire such securities exercised by holders of outstanding
Convertible Securities or Options of the Company described in the
Memorandum and other than stock options granted under the Plan
described under the caption "Options to Purchase Shares" in the
Memorandum.
(g) REGISTRATION RIGHTS. The Company will register Common
Shares under the Securities Act for the public resale thereof in the
United States in accordance with, and will be bound by the provisions
of, Exhibit B to this Agreement which is incorporated herein by
reference.
7. ADDITIONAL REPRESENTATIONS AND COVENANTS OF THE COMPANY AND
DALLAS RESEARCH.
7.1. The Company hereby confirms the representations, warranties and
covenants made by it in Schedule A to the Agency Agreement as of the date made
and as of the date hereof.
7.2. The Company hereby represents and agrees to the following:
- 12 -
(a) The Company was on September 23, 1996 (the date of the
sale of September Special Warrants under the Canadian Offer) a "foreign
issuer" as defined in Rule 902(f) of Regulation S and reasonably
believes that as of the date hereof there is and as of the dates of
issuance of the Special Warrants and the Common Shares and Warrants
(collectively, the "Securities") there will be no "substantial U.S.
market interest" (as defined in Rule 902(n) of Regulation S) in the
Securities.
(b) The Company is not an open-end investment company,
closed-end investment company, unit investment trust or face-amount
certificate company that is registered or required to be registered
under the United States Investment Company Act of 1940, as amended.
(c) Neither the Company nor any of its affiliates nor any
person acting on its or their behalf (other than the Agent, Dallas
Research and Sunrise, as to which the Company makes no representation)
has taken or will take any action which would cause the safe harbor
provision afforded by Rule 903 of Regulation S to be unavailable for
the Canadian Offer or the private offering exemption under Section 4(2)
of the Securities Act to be unavailable for the Dallas Research Offer
or which would constitute a violation of Rule 10b-6 or Rule 10b-7 under
the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act") under the Exchange Act.
(d) None of the Company, its affiliates or any person acting
on its or their behalf (other than the Agent, Dallas Research and
Sunrise as to which the Company makes no representation) has offered or
will offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Reg D)
or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(e) Neither the Company nor its affiliates nor any person
acting on its or their behalf (other than the Agent, Dallas Research
and Sunrise as to which the Company makes no representation) has
offered or will offer any of the Securities other than pursuant to the
Canadian Offer, the Dallas Research Agreement and this Agreement or has
made or will make any "directed selling efforts" within the meaning of
Rule 902(b) of Regulation S with respect to the Securities, to the
extent that any such action would cause the exemption afforded by
Regulation S to be unavailable for offers and sales in the Canadian
Offer.
7.3 Dallas Research represents and agrees to the following:
(a) it will comply in all respects with the terms and
conditions of Reg D and applicable Blue Sky laws with respect to the
offering and the sale of the Special Warrants only to "accredited
investors" within the meaning of Rule 501(a) of Reg D.
- 13 -
(b) it will not make offers or sales of the Special Warrants
in any jurisdiction in which the Special Warrants have not been
qualified or registered, or are not exempt from such qualification or
registration.
(c) it has not and will not engage in any "directed selling
efforts" within the meaning of Rule 902(b) of Regulation S or in any
general solicitation or advertising within the meaning of Reg D in
connection with the Dallas Research Offer, and (e) it has not and will
not take any action in connection with the Dallas Research Offer that
would constitute a violation of Rule 10b-6 or 10b-7 under the Exchange
Act.
8.(a) CONDITIONS TO DALLAS RESEARCH'S OBLIGATIONS. The obligations of
Dallas Research hereunder on each Closing Date will be subject to the accuracy
of the representations and warranties of the Company contained herein as of the
date hereof and as of such Closing Date, to the performance by the Company of
all its obligations hereunder and to the following additional conditions:
(i) DUE QUALIFICATION OR EXEMPTION. (A) The Dallas
Research Offer will have been registered or qualified, or be
exempt from registration or qualification, under the Blue Sky
laws of all necessary states pursuant to Section 6(c) above,
and (B) no order suspending the offer or sale of the Special
Warrants, will have been issued by the Commission or any other
governmental authority, and no proceeding for that purpose
will have been initiated or threatened;
(ii) NO MATERIAL MISSTATEMENTS. Dallas Research will
not have notified the Company that any Blue Sky law filing,
the Memorandum or any amendment or supplement thereto contains
an untrue statement of a fact which in Dallas Research's
opinion is material, or omits to state a fact which in its
opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading;
(iii) CERTIFICATE OF CHAIRMAN. The Company will have
delivered to Dallas Research a certificate of the Company's
Chairman, dated as of such Closing Date, to the effect that
all the representations and warranties of the Company set
forth in Section 5 and Section 7 of this Agreement remain true
and in full force and effect as of such Closing Date;
(iv) OPINION OF COUNSEL. Dallas Research will have
received from Ballem ▇▇▇▇▇▇▇▇, counsel to the Company, a
signed opinion, dated as of such Closing Date, substantially
in the form attached as Exhibit C hereto or in such other form
as may be proposed by Ballem ▇▇▇▇▇▇▇▇ and is acceptable to
Dallas Research and its counsel; and
(v) LOCK-UP AGREEMENTS. Dallas Research will have
received from each director and each officer of the Company a
written undertaking in the form of Exhibit D hereto
prohibiting dispositions of Common Shares and other equity
- 14 -
securities of the Company without the prior written consent of
Dallas Research at any time prior to the date specified
therein.
(b) CONDITIONS OF THE COMPANY'S OBLIGATIONS. The obligations
of the Company hereunder on each Closing Date will be subject to the
accuracy of the representations and warranties of Dallas Research
contained herein as of the date hereof and as of such Closing Date, to
the performance by Dallas Research of its obligations hereunder and to
the following additional conditions:
(i) ABSENCE OF GOVERNMENT ACTION. No order
suspending the offer or sale of the Special Warrants will have
been issued by the Commission or any other governmental
authority, and no proceeding for that purpose will have been
initiated or threatened; and
(ii) NO MATERIAL MISSTATEMENTS. The Company will not
have notified Dallas Research that any Blue Sky law filing,
the Memorandum or any amendment or supplement thereto contains
an untrue statement of a fact which in the Company's opinion
is material, or omits to state a fact which in its opinion is
material and is required to be stated therein or is necessary
to make the statements therein not misleading, in each case
only with respect to information contained therein concerning
Dallas Research.
9. EXPENSES OF SALE. In addition to those items referred to in Section
4 hereof, the Company will pay or cause to be paid all costs and expenses
incident to the Dallas Research Offer, whether or not it is consummated,
including, without limitation, all taxes, if any, payable as a result thereof
and the fees, disbursements and expenses of (a) the Company's counsel and
accountants, (b) the preparation, printing or other reproduction and the mailing
of the Memorandum and other documents (all in such quantities as Dallas Research
may reasonably require), and (c) the registration or qualification of the
Special Warrants for offer and sale in the applicable states as provided in
Section 6(c), or obtaining exemptions from such registration or qualification,
including the fees, expenses and disbursements of Dallas Research's counsel in
connection therewith.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless Dallas Research and each person, if any,
who controls Dallas Research within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several,
to which Dallas Research or such controlling person may become subject,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained (A) in the Memorandum, or (B) in any Blue Sky
law filing to the extent such statement was based on information
furnished by the Company, or (ii) the omission or alleged omission to
state in the Memorandum or in any Blue Sky law filing a material fact
required to be
- 15 -
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and will reimburse Dallas Research and each such
controlling person for any legal or other expenses reasonably incurred
by Dallas Research or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Memorandum in reliance upon
and in conformity with written information furnished to the Company by
Dallas Research specifically for use in the Memorandum.
(b) INDEMNIFICATION BY DALLAS RESEARCH. Dallas Research agrees
to indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act against
any losses, claims, damages or liabilities, joint or several, to which
the Company or such controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Memorandum, or (B) in any Blue Sky filing to
the extent such statement relates solely to Dallas Research, or (ii)
the omission or alleged omission to state a material fact required to
be stated in the Memorandum or (to the extent such omission was of a
material fact relating solely to Dallas Research) in any Blue Sky law
filing, or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that Dallas Research will be liable in any such case based on
the Memorandum only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission in the Memorandum was
made in reliance upon and in conformity with written information
furnished to the Company by Dallas Research specifically for use in the
Memorandum.
(c) PROCEDURE. Promptly after receipt by an indemnified party
under this Section 10 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 10, notify in writing
the indemnifying party of the commencement thereof; and the omission so
to notify the indemnifying party will (unless the indemnifying party
was unaware of such action and was materially prejudiced by such
omission) relieve it from any liability under this Section 10 as to the
particular item for which indemnification is then being sought, but not
from any other liability which it may have to any indemnified party. In
case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the
extent that it may wish, jointly with any other indemnifying party,
similarly notified, to assume the defense thereof, with counsel who
shall be to the reasonable satisfaction of such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 10 for
any legal or other expenses subsequently incurred by such indemnified
- 16 -
party in connection with the defense thereof other than reasonable
costs of investigation; provided that if, in the reasonable judgment of
the indemnified party, it is advisable for the indemnified party to be
represented by separate counsel, the indemnified party shall have the
right to employ a single counsel in each jurisdiction to represent the
indemnified parties who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the indemnified
parties thereof against the indemnifying party, in which event the fees
and expenses of such separate counsel shall be borne by the
indemnifying party. Any such indemnifying party shall not be liable to
any such indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 10 is unavailable to any indemnified party in respect to any
losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified
party, will contribute to the amount paid or payable by such
indemnified party, as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand,
and Dallas Research on the other hand, from the Offering, or (ii) if
the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand, and of Dallas Research
on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses as
well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand, and Dallas Research
on the other hand, shall be deemed to be in the same proportion as the
total proceeds from the Dallas Research Offer before deducting
expenses) received by the Company, bear to the initial value of the
compensation and to Dallas Research pursuant to Section 4.1 of this
Agreement. The relative fault of the Company on the one hand, and
Dallas Research on the other hand, will be determined with reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Company, and its relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount payable by a party as a result
of the losses, claims, damages, liabilities or expenses referred to
above will be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim. The Company and Dallas Research agree
that it would not be just and equitable if contribution pursuant to
this Section 10 were determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to in this Section 10(d).
11. REPRESENTATIONS AND COVENANTS TO SURVIVE DELIVERY. All
representations, warranties and covenants of the Company and of Dallas Research
herein will survive the delivery and execution hereof and each Closing
hereunder, and shall remain operative and in full
- 17 -
force and effect regardless of any investigation made by or on behalf of Dallas
Research or any person who controls Dallas Research within the meaning of the
Securities Act, or by the Company or any person who controls the Company within
the meaning of the Securities Act, and will survive delivery of the Special
Warrants hereunder and any termination of this Agreement.
12. TERMINATION BY DALLAS RESEARCH. Dallas Research will have the right
to terminate this Agreement by giving written notice as herein specified, at any
time:
(a) If the Company shall have failed, refused, or been unable
to perform any of its obligations hereunder;
(b) If any condition set forth in Section 8 hereof is not
fulfilled; or
(c) If there has occurred an event materially or adversely
affecting the value of the Special Warrants.
If Dallas Research elects to terminate this Agreement pursuant to this Section
12, the Company will be notified promptly in accordance with Section 13 hereof.
If this Agreement is terminated pursuant to this Section 12 prior to the Final
Closing, the Company will reimburse Dallas Research for all reasonable
out-of-pocket disbursements (including fees and disbursements of Dallas
Research's counsel) actually incurred by Dallas Research in connection with the
Dallas Research Offer and not theretofore paid. Notwithstanding the foregoing,
nothing contained in this Section 12 shall imply that Dallas Research has
undertaken any commitment to sell the Special Warrants other than to use its
best efforts.
13. NOTICES. Any notice hereunder shall be in writing and shall be
effective when delivered in person or by facsimile transmission, or seven
business days after being mailed by certified or registered mail, postage
prepaid, return receipt requested, to the appropriate party or parties, at the
following addresses: if to Dallas Research, to Dallas Research & Trading, Inc.,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (facsimile 972-239-2110),
Attention: Mr. ▇▇▇▇ Still, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (facsimile
212-732-3232); if to the Company, to HealthCare Capital Corp., ▇▇▇▇-▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. Good, with a copy to
Ballem ▇▇▇▇▇▇▇▇, 1800 First Canadian Centre, 350 - 7th Avenue S.W., Calgary,
Alberta T2P 3N9, Canada, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (facsimile 403-233- 8979), or, in
each case, to such other address as the parties may hereinafter designate by
like notice.
14. PARTIES. This Agreement will inure to the benefit of and be binding
upon Dallas Research, the Company and their respective successors and assigns.
This Agreement is intended to be, and is for the sole and exclusive benefit of
the parties hereto and the other indemnified parties described in subsections
10(a) and 10(b) hereof and Exhibit B hereto, and their respective successors and
assigns, and for the benefit of no other person, and no other person will have
any legal or equitable right, remedy or claim under, or in respect of this
Agreement. No purchaser
- 18 -
of any of the Special Warrants will be construed as successor or assign merely
by reason of such purchase.
15. AMENDMENT OR MODIFICATION. Neither this Agreement, nor any term or
provision hereof, may be changed, waived, discharged, amended, modified or
terminated or in any manner other than by an instrument in writing signed by
each of the parties hereto.
16. FURTHER ASSURANCES. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intent and purposes of this
Agreement and to carry out its provisions.
17. VALIDITY. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
18. WAIVER OF BREACH. The failure of any party hereto to insist upon
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and remain
in full force and effect.
19. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding of the parties with respect to the entire subject matter hereof,
and there are no representations, inducements, promises or agreements, oral or
otherwise, not embodied herein. Any and all prior discussions, negotiations,
commitments and understanding relating thereto, including without limitation,
that certain letter of intent dated August 23, 1996, between the Company and
Dallas Research, are superseded hereby. There are no conditions precedent to the
effectiveness of this Agreement other than as stated herein, and there are no
related collateral agreements existing between the parties that are not referred
to herein.
20. COUNTERPARTS. This Agreement may be executed in counterparts and
each of such counterparts will for all purposes be deemed to be an original, and
such counterparts will together constitute one and the same instrument.
21. LAW. This Agreement will be governed as to validity,
interpretation, construction, effect and in all other respects by the internal
laws of the State of New York. The Company (a) agrees that any legal suit,
action or proceeding arising out of or relating to this letter will be
instituted exclusively in the federal or state courts in Dallas, Texas, (b)
waives any objection which the Company may have now or hereafter to the venue of
any such suit, action or proceeding, and (c) irrevocably consents to the
jurisdiction of such courts in any such suit, action or proceeding. The Company
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in such courts and agrees
that service of process upon the Company mailed by certified mail to the
Company's address will be deemed in every respect effective service of process
upon the Company, in any suit, action or proceeding.
- 19 -
If the foregoing correctly sets forth our understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
will constitute a binding agreement between us dated for reference October 14,
1996 but effective November 7, 1996.
HEALTHCARE CAPITAL CORP.
By: /S/ ▇▇▇▇▇▇▇ ▇. GOOD
Name: ▇▇▇▇▇▇▇ ▇. Good
Title: Chairman
CONFIRMED AND ACCEPTED: Confirmed as to Section 2:
DALLAS RESEARCH & TRADING, INC. ▇.▇. ▇▇▇▇▇▇ & COMPANY LIMITED
By: By: /S/ C. M. O'▇▇▇▇▇
Name: Name: C. Michael O'▇▇▇▇▇
Title: Title: Director and Chairman
- 21 -
EXHIBIT A
AGENT'S SPECIAL OPTION
for Shares
of
HEALTHCARE CAPITAL CORP. (the "Company")
(Incorporated under the laws of Alberta)
THIS IS TO CERTIFY THAT, of o (the "Agent") is the registered holder of an
option whereby it is entitled, without payment of any additional consideration,
to be issued o warrants (the "Agent's Warrants") of HealthCare Capital Corp.
(the "Company") during the exercise period referred to below, subject to
adjustment as provided for herein. The Agent's Warrants will entitle the Agent
to purchase up to o common shares of the Company at a price of $1.25 (U.S.) per
share on or prior to August 31, 1998 unless cancelled earlier as described in
the certificate for the agent's Warrants. The Agent's Warrants will be in the
form attached as Schedule "B".
This Special Option may be exercised only at the offices The R-M Trust Company
(the "Transfer Agent"), at 600 The Dome Tower, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, by completing the exercise form attached hereto as Schedule
"A".
The Company has covenanted under the placement agreement between the Company and
the Agent dated as of October 14, 1996 (the "Placement Agreement") that, among
other things, it will use its reasonable best efforts to expeditiously obtain
receipts for a final prospectus (the "Final Prospectus") from the securities
regulatory authority of each of British Columbia, Alberta and such other
jurisdictions as approved by the Agent and the Company (the "Qualifying
Jurisdictions"), for the purposes of qualifying, under the applicable laws of
such provinces, the distribution of the Agent's Warrants, issuable upon the
exercise of this Special Option. This Special Option will be deemed to have been
exercised by the Agent (without any further action on the part of the Agent), on
the earlier of the fifth business day following the day (the "Qualification
Date") on which a receipt is issued for the Final Prospectus by the last of the
securities regulatory authorities of the Provinces of the Qualifying
Jurisdictions and the first anniversary of the date of this Special Option (such
earlier date being herein called the "Deemed Exercise Date").
This Special Option may be exercised by the Agent during the period commencing
on the day this Special Option is issued and ending at 5:00 p.m. (Calgary time)
on the day prior to the Deemed Exercise Date. The Agent may not exercise less
than all of this Special Option.
If this Special Option is exercised by the Agent on or before the day prior to
the Qualification Date, the Agent's Warrants issued on the exercise may be
subject to statutory restrictions on
- 2 -
transfer and the Agent's Warrants will be endorsed with a legend stating that
they may not be traded in Alberta until the day which is one year from the date
of this Special Option.
On and after the date of any exercise or deemed exercise of this Special Option
evidenced by this Special Option Certificate, the Agent will have no rights
hereunder except to receive certificates representing the Agent's Warrants
registered in the names and amounts directed by the Agent upon surrender of this
Special Option to the Transfer Agent at its principal office in Calgary,
Alberta.
The number of common shares issuable upon the exercise or deemed exercise of
this Special Option shall be adjusted in the events and in the manner following
(a) If, after November 20, 1996, the Company consolidates or
subdivided its shares or pays a stock dividend, the number of
shares to be issued on the exercise of the Agent's Special
Option will be increased or decreased proportionately so that
the Agent's Special Option will entitle the Agent to the same
percentage of shares of the Company immediately after the
subdivision, consolidation or stock dividend as the Agent was
entitled to immediately before that event occurred.
(b) In case of any capital reorganization or reclassification of
the capital of the Company or the merger or amalgamation of
the Company with or into any other company after November 20,
1996, this Special Option will, after the capital
reorganization, reclassification of capital, merger or
amalgamation, confer the right to purchase the number of
shares or other securities of the Company or of the company
resulting from the capital reorganization, reclassification,
merger or amalgamation, as the case may be, which would have
been issued to the Agent if the Agent had fully exercised this
Special Option immediately before the capital reorganization,
reclassification, consolidation, merger or amalgamation and in
any such case, if necessary, appropriate adjustments will be
made in the application of the provisions of this Special
Option so that rights of the Agent after the event correspond
as nearly as possible to the rights of the Agent before the
event.
(c) The adjustments provided for herein are cumulative.
On presentation at the offices of the Transfer Agent as set out above, this
Special Option may be exchanged for the Agent's Warrants.
This Special Option is non-transferable other than to members of the Agent's
selling group, as contemplated in the Agency Agreement.
The Holding of this Special Option does not constitute the Agent a shareholder
of the Company or entitle it to any right or interest in respect thereof except
as otherwise provided herein.
Time will be of the essence hereof.
- 3 -
IN WITNESS WHEREOF HealthCare Capital Corp. has caused this Special Option to be
signed by an officer duly authorized in that behalf as of November o, 1996.
HEALTHCARE CAPITAL CORP.
Authorized Signatory
SCHEDULE "A"
NOTICE OF EXERCISE OF AGENT'S SPECIAL OPTION
TO: HEALTHCARE CAPITAL CORP.
c/o THE R-M TRUST COMPANY
600 The Dome Tower
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
The undersigned, o hereby exercises its right to be issued o warrants of
HealthCare Capital Corp. (the "Agent's Warrants") that are issuable pursuant to
an option.
The undersigned hereby irrevocably directs that the said Agent's Warrants be
issued and delivered as follows:
c/o o
DATED THIS day of , 19 .
---------- --------------------------------------- ------
Witness Signature
Position
SCHEDULE "B"
No. B-1 HEALTHCARE CAPITAL CORP.
NON-TRANSFERABLE SHARE PURCHASE WARRANTS
THIS IS TO CERTIFY that for value received, o of o is entitled to purchase up to
o fully paid and non-assessable common shares of HealthCare Capital Corp. (the
"Company") pursuant to this share purchase warrant (the "Warrant") on the
following terms and conditions:
(a) the o common shares may be purchased at any time up to 5:00
p.m., Calgary Time, on August 31, 1998, unless cancelled
earlier in accordance with the terms and conditions attached
as Appendix I (the "Terms and Conditions");
(b) the exercise price is $1.25 (U.S.) per share;
(c) this Warrant may be exercised only at the offices of The R-M
Trust Company, 600 The Dome Tower, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, the Registrar and Transfer Agent of
the Company, or at the offices of another Registrar and
Transfer Agent appointed by the Company;
(d) this Warrant is non-transferable;
(e) this Warrant is subject to the Terms and Conditions.
The terms used in this certificate have the same meaning set out in the Terms
and Conditions.
DATED:
HEALTHCARE CAPITAL CORP.
c/s
By:
Authorized Signatory
COUNTERSIGNED BY:
THE R-M TRUST COMPANY
By:
Authorized Signatory
Appendix I
WARRANT
HEALTHCARE CAPITAL CORP.
These are the terms and conditions attached to the non-transferable share
purchase warrant of Dallas Research & Trading Inc. issued by HealthCare Capital
Corp. (the "Warrant"):
1. INTERPRETATION
1.1 Definitions
In these terms and condition:
(a) "Company" means HealthCare Capital Corp. or a successor
corporation bound under this agreement pursuant to section 6;
(b) "Company's Auditors" means the independent firm of accountants
appointed from time to time as auditors of the Company;
(c) "Company's Registrar and Transfer Agent") means The R-M Trust
Company, of 600 The Dome Tower, 333 - 7th Avenue S.W.,
Calgary, Alberta, T2P 2Z1, or another registrar and transfer
agent of the Company duly appointed by the Company as its
registrar and transfer agent;
(d) "Director" means a director of the Company for the time being,
and reference, without more, to action by the directors means
action by the directors of the Company as a board, or whenever
duly empowered, action by a committee of the board;
(e) "person" means an individual, corporation, partnership,
trustee or any unincorporated organization;
(f) "Warrant"" means the share purchase warrant of the Company
authorized under subsection 2.1 and outstanding from time to
time.
(g) "shares" means the common shares in the capital of the Company
as it is constituted at the date of the Warrant and any shares
substituted for such shares or resulting from any subdivision
or consolidation of such shares;
(h) "Warrant Holder" or "Holder" means the bearer of the Warrant
for the time being; and
(i) Words importing the singular number include the plural and
vice versa and words importing the masculine gender include
the feminine and neuter genders.
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1.2 Interpretation Not Affected by Headings
The division of these terms and conditions into sections, subsections,
paragraphs and subparagraphs and the insertion of headings are for convenience
of reference only and do not affect the construction or interpretation of those
terms and conditions.
1.3 Applicable Law
The Warrant will be governed by the law of Alberta.
1.4 Currency
A reference to currency in the Warrant means United States dollars, unless
otherwise indicated.
2. ISSUE OF WARRANT
2.1 Issue of Warrant
The Warrant entitles the Warrant Holder to purchase an aggregate of opreviously
unissued common shares in the capital of the Company, subject to adjustment
under section 4.9 hereof.
2.2 Additional Warrant
The Warrant will not restrict the Company from issuing further shares in its
capital or rights to purchase shares while the Warrant is outstanding.
2.3 Issue in Substitution of Loss Warrant
If a Warrant is mutilated, lost, destroyed or stolen:
(a) the Company in its discretion may issue and deliver a new
Warrant in substitution for the one mutilated, lost, destroyed
or stolen, and the substituted Warrant will entitle the Holder
to the same rights and benefits as the mutilated, lost,
destroyed or stolen Warrant;
(b) the Company will be entitled to require the Holder to provide:
(i) appropriate evidence of ownership of the lost,
destroyed or mutilated Warrant;
(ii) proof of loss, destruction or mutilation of the
Warrant;
(iii) an indemnity in the amount and form acceptable to the
Company; and
(iv) payment of the reasonable costs of the Company to
replace the Warrant.
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2.4 Warrant Holder Not a Shareholder
The Warrant does not entitle the Holder to any rights as a share holder of the
Company.
3. TRANSFER AND NOTICE
3.1 Warrant Not Transferable
The Warrant is not transferable.
3.2 Notice to Warrant Holder
Any notice by the Company to a Holder may be delivered, mailed or sent by
facsimile. Notices delivered are deemed to be received on actual delivery.
Notices mailed are deemed to be received on the second business day after
mailing and notices sent by facsimile are deemed to be received at the time of
transmission.
3.3 Early Cancellation
Upon the acceptance for listing or quotation of the Company's shares on a
recognized stock exchange or national trading market in the United States, if
the closing bid for the Company's shares is not less than $3.00 (U.S.) per share
for a period of twenty consecutive trading days, the Company will have the
option, on 45 days written notice to the Holder, to force the exercise or
cancellation of the Warrant.
4. EXERCISE OF WARRANT
4.1 Method of Exercise of Warrant
The rights to acquire the shares of the Company granted by this Warrant
Certificate may be exercised by the Holder, in whole or in part (but not as to a
fractional Common Share), by:
(1) duly completing in the manner indicated and executing the
subscription form attached hereto;
(2) delivering and surrendering this Warrant certificate at the
offices of the Company's Registrar and Transfer Agent; and
(3) delivering to the Company's Registrar and Transfer Agent cash,
certified cheque or bank draft payable to the Company for the
amount then due to the Company for the number of shares
purchased on the exercise of this Warrant.
4.2 Effective Date of Issue
Any shares issued on the exercise of the Warrant will be issued effective on the
date the Warrant is surrendered and payment is made.
- 4 -
4.4 Delivery of Share Certificates
Unless otherwise directed, the Company will, within ten days of the date a
Warrant is validly exercised, mail to the Holder a certificate or certificates
representing the shares purchased.
4.5 Subscription for Less than Entitlement
The Holder of any Warrant may subscribe for and purchase a number of shares less
than the number to which he is entitled to purchase pursuant to the surrendered
Warrant and the Company will deliver to the Holder a new Warrant representing
the right to purchase the balance of the shares which he was entitled to
purchase pursuant to the surrendered Warrant at the same price and on the same
terms and conditions as the surrendered Warrant.
4.6 Warrant for Fractions of Shares
The Warrant will not entitle the Holder to purchase a fraction of a share.
4.7 Expiry of Warrant
After the expiry of the period within which a Warrant is exercisable, all rights
will wholly cease and terminate and such Warrant will be void and of no effect.
4.8 Exercise Price
Except as adjusted pursuant to these terms and conditions, the exercise price of
the Warrant is the price set out on the face of the Warrant.
4.9 Adjustment of Number and Price
The exercise price and the number of shares deliverable upon the exercise of the
Warrant are subject to adjustment in the events and in the manner following:
(a) If, after November 20, 1996, the Company consolidates or
subdivides its shares or pays a stock dividend, the exercise
price and the number of shares to be issued on the exercise of
the Warrant will be increased or decreased proportionately so
that the Warrant will entitle the Holder to purchase the same
percentage of shares of the Company at the same total price
immediately after the subdivision, consolidation or stock
dividend as the Holder could purchase immediately before that
event occurred.
(b) In case of any capital reorganization or reclassification of
the capital of the Company or the merger or amalgamation of
the Company with or into any other company, after November 20,
1996, each Warrant will, after the capital reorganization,
reclassification of capital, merger or amalgamation, confer
the right to purchase the number of shares or other securities
of the Company or of the company resulting from the capital
reorganization, reclassification, merger or amalgamation, as
the case may be, which would have been issued to the Holder if
the Holder had fully exercised the Warrant immediately before
the capital reorganization, reclassification, consolidation,
merger or
- 5 -
amalgamation and in any such case, if necessary, appropriate
adjustments will be made in the price and the application of
the provisions of the Warrant so that rights of the Holder
after the event correspond as nearly as possible to the rights
of the Holder before the event.
(c) The Adjustments provided for in this subsection are
cumulative.
4.10 Determination of Adjustments
Any disputes between the company and any Holder relating to adjustments made
under this section will be finally determined by the Company's Auditors or, if
they will not consent to determine the dispute, another firm of Chartered
Accountants in Calgary, Alberta, appointed by the Company.
5. COVENANTS BY THE COMPANY
5.1 General Covenants
The Company will reserve and set aside sufficient shares in its authorized
capital to issue all the shares which may be issued from time to time on the
exercise of the Warrant.
6. MODIFICATION OF TERMS, MERGER, SUCCESSORS
6.1 Modification of Terms and Conditions for Certain Purposes
The Company may modify these terms and conditions for any one or more or all of
the following purposes:
(a) to add to these terms and conditions any additional covenants
and enforcement provisions as, in the opinion of counsel for
the Company, are necessary or advisable to clarify or more
fully articulate the terms of the Warrant, if additional
covenants and enforcement provisions do not affect the
substantive rights or obligations of the Warrant Holder;
(b) to add to or alter the provisions of these terms and
conditions for the registration, transfer or exchange of the
Warrant which do not affect the substance of these terms and
conditions;
(c) for any other purpose not inconsistent with the terms hereof,
including the correction or rectification of any ambiguities,
defective provisions, errors or omissions herein; and
(d) to evidence the succession of any corporation and the
assumption by any successor of the covenants of the Company
under the Warrant.
6.2 Company May Merge on Certain Terms
- 6 -
The Warrant will not prevent the Company from amalgamating or otherwise merging
with another corporation or corporations, if the resulting entity is bound or
agrees to be bound by the terms of the Warrant.
6.3 Successor Company Substituted
If the Company is amalgamated or otherwise merged with or into any other
corporation or corporations, the successor corporation formed by such
consolidation or amalgamation, or into which the Company is merged will be
substituted for the Company hereunder. such changes in phraseology and form (but
not in substance) may be made in the Warrant as may be appropriate in view of
such consolidation, amalgamation, merger or transfer.
SUBSCRIPTION FORM
TO: HEALTHCARE CAPITAL CORP.
The undersigned holder of this Warrant hereby subscribes for previously unissued
common shares in the capital of HealthCare Capital Corp. (the "Company")
pursuant to this Warrant on the terms specified in the said Warrant. This
subscription is accompanied by a certified cheque or money order payable to the
Company for the whole amount of the purchase price of the said shares.
Please register the shares in the name and address appearing on the face of the
Warrant or as follows:
Name
Address
TOTAL:
Number of Shares
(Please print full name in which share certificates are to be issued.)
Dated this day of , 199 .
----------- ----------------------------------- ---
In the presence of:
Signature of Witness Signature of Warrant Holder
Name of Witness
- 8 -
Address of Witness
EXHIBIT B
1. REGISTRATION UNDERTAKINGS.
(a) For the purpose of this Exhibit B, the term "Registerable
Shares" shall mean the Common Shares of the Company issuable upon (i) the
exercise or deemed exercise of the Special Warrants (including the Compensation
Warrants) issued in connection with the Dallas Research Offer; (ii) the exercise
of the Warrants issued upon the exercise or deemed exercise of such Special
Warrants and (iii) the exercise of the Dallas Research Warrants issued upon the
exercise of the Dallas Research Option.
(b) At any time prior to the fourth anniversary of the Final
Closing Date, the holder or holders (the "Holders") of at least twenty percent
(20%) of the Registerable Shares (counting as Registerable Shares for this
purpose securities referred to in Section 1(a) above that are exercisable for
Registerable Shares) may request, in writing, that the Company register for
resale under the Securities Act not less than twenty percent (20%) of the
Registerable Shares. The Company will give prompt written notice (the "Notice")
of such request to each other Holder and will, as promptly as practicable (but
in any event within 60 days), after receipt of such request prepare and file
with the United States Securities and Exchange Commission (the "Commission") (at
the Company's own expense) a registration statement under the Securities Act
sufficient to permit the public offering of the Registerable Shares specified by
the Holders in the aforementioned request and such other Registerable Shares as
may be specified by other Holders by written notice to the Company given within
twenty (20) days after the receipt by them of the Notice. The Company will use
its reasonable best efforts to cause such registration statement to become
effective under the Securities Act as promptly as practicable and to maintain
such effectiveness so as to permit resale of the Registerable Shares covered
thereby until the earlier of the time that all such Registerable Shares have
been sold and the time that all such Registerable Shares may be sold pursuant to
the provisions of Rule 144(k) under the Securities Act; provided that the
Company shall only be obligated to file one such registration statement under
this Section 1(b).
(c) If at any time from and after the Final Closing Date the
Company proposes to register any of its securities under the Securities Act (on
a form other than Form S-4 or S-8 or their equivalents), the Company will (i)
promptly notify all Holders that such registration statement will be filed and
that the Registerable Shares which are then held by such Holders will be
included in such registration statement at their request and (ii) subject to the
last sentence of this subsection (c), cause such registration statement to cover
all Registerable Shares which it has been so requested to include by the
Holders, provided such request is delivered to the Company not later than 20
days after such notice is given to the Holders and specifies the number of
Registerable Shares to be included in the proposed registration statement.
Notwithstanding the foregoing provisions, if such registration statement relates
to an underwritten offer of Common Shares and the managing underwriter shall
inform in writing the Company and the Holders that the managing underwriter
believes that the number of shares requested to be included in such registration
statement would materially, adversely affect its
- 1 -
ability to effect such offering, then the Company will include in such
registration statement the number of Common Shares which the Company is so
advised can be sold in (or during the time of) such offering as follows: First,
all shares proposed by the Company to be sold for its own account, and, second,
such Registerable Shares requested to be included in such registration, pro rata
by the Holders and other security holders having registration rights on the
basis of the number of Registerable Shares and other Common Shares so proposed
to be sold by the Holders and by such other security holders and so requested to
be included; PROVIDED, HOWEVER, that the Company shall be obligated to register
any Registerable Shares and other Common Shares so excluded from the
registration statement pursuant to a registration statement within ninety (90)
days after the effectiveness of such registration statement or such greater
number of days as may be specified in "lock-up" agreements entered into with the
managing underwriter.
(d) In connection with any registration statement filed
pursuant to this Section 1 (a "Registration Statement"), the Company shall take
such action as may be necessary to register or qualify the Registerable Shares
registered thereunder under the securities or blue sky laws of such states of
the United States as shall reasonably be requested by the prospective sellers,
and shall do any and all other acts which may be necessary or advisable to
permit the proposed sale or other disposition of such Registerable Shares in any
such state; provided that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation in any jurisdiction
where it is not already so qualified, or to execute a general consent for
service of process in suits other than those arising out of the offer and sale
of the Registerable Shares, or to take any action which would subject it to
taxation in any jurisdiction where it is not then so subject.
(e) The Company's obligations to register and qualify under
this Section 1 Registerable Shares of any Holder shall be conditioned in each
instance upon the timely receipt by the Company in writing of (1) information
from such Holder as to the proposed plan of distribution of such Holder's
Registerable Shares to be included in the Registration Statement, and (2) such
other information as the Company may reasonably require from such Holder for
inclusion in the Registration Statement.
(f) All fees, disbursements and out-of-pocket expenses (other
than any brokerage fees and commissions and legal fees of counsel to any Holder)
in connection with the Registration Statement (or seeking or obtaining the
opinion of counsel to the Company under Section 1(g) and, if in the sole
discretion of the Company deemed desirable, any no-action position of the
Commission with respect to sales pursuant to Rule 144 under the Securities Act)
and in complying with applicable state securities laws shall be borne by the
Company. The Company at its expense will supply the Holders of Registerable
Shares included in the Registration Statement with copies of such Registration
Statement and the prospectus included therein and in such quantities as may be
reasonably requested by them. In connection with each Registration Statement,
the Company shall furnish to Holders of Registerable Shares included therein
with such opinions of counsel, comfort letters of accountants, certificates and
such other documents that are customary in connection with underwritten public
offerings and that are reasonably requested by such Holders.
- 2 -
(g) The Company shall not be required by this Section 1 to
file any Registration Statement relating to Registerable Shares of any Holder if
the Company shall furnish such Holder with a written opinion of counsel
reasonably satisfactory to such Holder to the effect that the proposed public
offering or other transfer of Registerable Shares as to which registration is
requested is exempt from the registration or qualification requirements of all
applicable federal and state securities laws and would result in all purchasers
or transferees thereof obtaining securities which are not "restricted
securities" as defined in Rule 144 under the Securities Act.
(h) If, after the date of the Memorandum, the Company grants
to any person registration rights which are more favorable to such person than
those afforded to the Holders under this Section 1, the Holders shall without
further action be entitled to the benefits of such more favorable rights.
2. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement
pursuant to Section 1 hereof, the Company agrees to indemnify and hold harmless
each Holder of Registerable Shares identified as a selling security holder
therein and each person, if any, who controls such Holder within the meaning of
the Securities Act, against any and all losses, claims, damages or liabilities,
joint or several (including the costs of any reasonable investigation and legal
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted) to which
they, or any of them, may become subject under the Securities Act, the Exchange
Act or other federal or state law or regulation, at common law 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 such Registration Statement, or any
related preliminary prospectus, final prospectus, or amendment thereof or
supplement thereto, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company shall
not be liable under this Section 2(a) in any such case to the extent that any
such losses, claims, damages or liabilities arise solely out of or are based
upon an untrue statement of a material fact contained in or any omission of a
material fact from such Registration Statement, preliminary prospectus, final
prospectus or amendment thereof or supplement thereto in reliance upon, and in
conformity with, information furnished in writing to the Company by such Holder
specifically for use therein. This indemnity will be in addition to any
liability which the Company may otherwise have.
(b) Each Holder of Registerable Shares who is identified as a
selling security holder in a Registration Statement referred to in Section 2(a)
will agree, severally and not jointly, to indemnify and hold harmless the
Company, each other person referred to in subparts (1), (2) and (3) of Section
11(a) of the Securities Act in respect of such Registration Statement, and each
person, if any, who controls the Company or any such person within the meaning
of Section 15 of the Securities Act, against any and all losses, claims, damages
or liabilities (including costs of any reasonable investigation and legal and
other expenses incurred in
- 3 -
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted) to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other federal or state law
or regulation, at common law, 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 such Registration Statement, or any related preliminary prospectus,
final prospectus or amendment thereof or supplement thereto, or arise out of or
are based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
omission was made in such Registration Statement, preliminary prospectus, final
prospectus or amendment thereof or supplement thereto in reliance upon, and in
conformity with, information furnished in writing to the Company by such Holder
specifically for use therein. This indemnity agreement will be in addition to
any liability which a Holder may otherwise have to the Company.
(c) Any party that proposes to assert the right to be
indemnified under this Section 2 shall, promptly after receipt of notice of the
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section 2, notify each such indemnifying party of the commencement thereof,
enclosing a copy of all papers served. No indemnification provided for in
Section 2(a) or 2(b) shall be available to any party who shall fail to give
notice as provided in this Section 2(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice but the omission so
to notify such indemnifying party of any such action, suit or proceeding shall
not relieve it from any liability that it may have to any indemnified party
other than under this Section 2 or Section 3 below. In case any such action,
suit or proceeding is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, such indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and the approval by the indemnified party of such
counsel (which shall not be unreasonably withheld), the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, suit or proceeding but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be differing or additional defenses available to it and not to one or more
of the indemnifying parties in such action, suit or proceeding so that it would
be inappropriate for counsel to represent both the indemnified party and the
indemnifying party in view of actual or potential conflicts of interest (in
which case if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the
- 4 -
indemnifying party shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such indemnified party); or (iii) the
indemnifying parties shall not have employed counsel to assume the defense of
such action within a reasonable time after notice of the commencement thereof,
in each of which cases the fees and expenses of the indemnified party's counsel
shall be at the expense of the indemnifying parties, it being understood,
however, that the indemnifying party shall not, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Holders and their
controlling persons, which firm shall be designated in writing by a majority in
interest of such Holders (based upon the value of the securities included in the
Registration Statement). An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its written
consent.
3. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 2 is due in accordance with its terms but for any reason is held to be
unavailable or insufficient to hold harmless an indemnified party, the Company
on the one hand and any Holder on the other hand shall, in lieu of indemnifying
such indemnified party, contribute to the aggregate losses, claims, damages or
liabilities referred to in Section 2 above (including costs of any investigation
and legal and other expenses reasonably incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted), in such proportions as is appropriate to reflect the relative
benefits received by the Company and the Holders from any offering of
Registerable Shares and the relative fault of the Company and such Holder in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and any Holder shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission related to information supplied
by the Company (including for this purpose information supplied by any officer,
director, employee or agent of the Company) or to written information furnished
to the Company by or on behalf of such Holder specifically for use in the
preparation of the Registration Statement or any amendment thereof or supplement
thereto, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. It is understood
and agreed that it would not be just and equitable if contribution pursuant to
this Section 3 were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 3 in no case shall any Holder
(except as may be provided by agreement among them) be liable or responsible for
any amount in excess of the proceeds received by such Holder from the sale of
the Registerable Shares included in the Registration Statement, provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 3, each person, if any, who
controls a Holder within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Holder, and each person, if any, who controls the Company within the
meaning of the
- 5 -
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each
director of the Company and each officer of the Company who shall have signed
the Registration Statement shall have the same rights to contribution as the
Company, subject to the immediately preceding sentence of this Section 3. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 3, notify such party or parties from whom contribution may be
sought, and the omission so to notify such party or parties from whom
contribution may be sought shall relieve the party or parties from whom
contribution may be sought (if such party was unaware of such action suit,
proceeding and was materially prejudiced by such omission) from any liability
under this Section 3, but not from any other obligation it or they may have
hereunder or other than under this Section 3. No party shall be liable for
contribution with respect to the settlement of any action, suit, proceeding or
claim effected without its written consent. The obligations of the Holders to
contribute pursuant to this Section 3 are several in proportion to their
respective number of Registerable Shares included in the Registration Statement
and not joint.
- 6 -
EXHIBIT C
OPINION OF COMPANY COUNSEL
(A) The Company is a corporation duly organized, validly existing and
in good standing under the laws of Alberta, with full corporate power and
authority to own or lease and operate its properties and to conduct its business
as described in the Memorandum.
(B) The Company is the direct or indirect beneficial owner of all of
the outstanding securities of each of the corporations (a "Subsidiary") listed
in Section 5(b) of the U.S. Placement Agreement. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, with full power and authority, corporate
and other, to own or lease and operate its properties and to conduct its
business as currently conducted, and is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions where such
qualification is necessary and where failure so to qualify could have a material
adverse effect on its financial condition, results of operations, business,
properties or prospects. Except for the Subsidiaries, the Company has no
subsidiaries.
(C) Except as may be required under applicable securities laws in the
United States, no authorization, approval, consent, order, registration, license
or permit of any court or governmental agency or body is required for the valid
authorization, issuance, sale and delivery of the Special Warrants, the Common
Shares and Warrants issuable upon exercise of the Special Warrants, the Dallas
Research Option, the Dallas Research Warrants and the Common Shares issuable
upon the exercise of any of the foregoing, and the consummation by the Company
of all the transactions contemplated by the Subject Agreements.
(D) The Company has full power and authority, corporate and other, to
execute, deliver and perform the Subject Agreements and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
the Subject Agreements by the Company, the consummation by the Company of the
transactions therein contemplated, and the compliance by the Company with the
terms of the Subject Agreements have been duly authorized by all necessary
corporate action on the part of the Company. Each of the Subject Agreements has
been duly executed and delivered by the Company and, assuming due authorization,
execution and delivery by the other parties thereto, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except insofar as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights of
creditors generally and by the discretion of courts in granting equitable
remedies, and except that enforceability of the indemnification provisions and
the contribution provisions set forth in the U.S. Placement Agreement may be
limited by the securities laws in the United States or the public policy
underlying such laws.
(E) The execution, delivery and performance of the Subject Agreements
by the Company, the consummation by the Company of the transactions therein
contemplated, and the
compliance by the Company with the terms of the Subject Agreements do not, and
will not, with or without the giving of notice or the lapse of time, or both,
(1) result in a violation of the constating documents of the Company, (2) result
in a breach of or conflict with any terms or provisions of, or constitute a
default under, or result in the modification or termination of, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company pursuant to, any indenture,
mortgage, note, contract, commitment or other agreement or instrument of which
we are aware and to which the Company is a party or by which the Company or any
of its properties or assets are or may be bound or affected, (3) violate any
existing applicable law, rule, regulation or, to the best of our knowledge, any
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
businesses, or (4) have any material adverse effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company to own or lease and operate any of its properties and to conduct
its business or the ability of the Company to make use thereof.
(F) The Common Shares conform to the description thereof contained in
the Memorandum under the caption "Description of Securities." All the
outstanding Common Shares have been duly authorized and validly issued and are
fully paid and nonassessable. Except as set forth in Section 5(e) to the U.S.
Placement Agreement, there are no outstanding securities convertible into Common
Shares ("Convertible Securities") or any options, warrants or other rights to
purchase any Common Shares or Convertible Securities ("Options"). All such
Options constitute the valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms. None of the
outstanding Common Shares, Options or Convertible Securities has been issued in
violation of the preemptive rights of any securityholder of the Company, and
none of the holders of the outstanding Common Shares, Options or Convertible
Securities is subject to personal liability solely by reason of being such a
holder. The offers and sales of the outstanding Common Shares, Options and
Convertible Securities were in full compliance with all applicable Canadian
federal and provincial laws. To the best of our knowledge, after due
investigation, except as described in the Memorandum or as provided in Section
5(e) of the U.S. Placement Agreement, no holder of any of the Company's issued
securities has any rights ("demand," "piggyback" or otherwise) to have such
securities registered under the Securities Act.
(G) The issuance and sale of the Special Warrants (including the
Compensation Warrants), the Warrants, and the Dallas Research Warrants and the
securities issuable upon the exercise of such warrants have been duly
authorized, and when they are issued as contemplated by the Agreements, will be
validly issued, and, in the case of Common Shares, fully paid and nonassessable,
and the holders thereof will not be subject to personal liability solely by
reason of being such holders. None of such warrants or other securities will be
subject to preemptive rights of any security-holder of the Company.
(H) The certificates representing the securities referred to in (G)
above are in proper legal form.
(I) The descriptions in the Memorandum of statutes, regulations,
government classifications, contracts, instruments and other documents have been
reviewed by us and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and there
are no material statutes, regulations or government classifications or, to the
best of our knowledge, after due investigation, material contracts or documents,
which should be described in the Memorandum that are not so described. None of
the material provisions of the contracts or instruments described above violates
any existing applicable law, rule, regulation, or, to the best of our knowledge,
any judgment, order or decree of any governmental agency or court having
jurisdiction over the Company or any of its assets or businesses. To the best of
our knowledge, the Company is not in default under any contract or agreement
material to its business or under any promissory note or other evidence of
indebtedness for borrowed funds.
(J) Upon delivery of the Special Warrants (including the Compensation
Warrants) and the Dallas Research Warrants as provided in the U.S. Placement
Agreement, the persons acquiring the same will acquire good title thereto free
and clear of all liens, encumbrances, equities, security interests and claims,
other then such liens, encumbrances, equities, security interests or claims
placed on the securities by such persons.
(K) To the best of our knowledge, after due investigation, the Company
is not in violation of, or in default under, any term or provision of (i) its
constating documents, (ii) any indenture, mortgage, contract, commitment or
other agreement or instrument to which it is a party or by which it or any of
its properties or business is or may be bound or subject, or (iii) any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, Canadian or otherwise, having jurisdiction over the Company or
any Subsidiary or any of their respective properties or businesses. The Company
owns, possesses or has obtained all governmental and other licenses, permits,
certifications, registrations, approvals or consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties and
to conduct its business as currently conducted and described in the Memorandum,
and all such licenses, permits, certifications, registrations, approvals,
consents and other authorizations are outstanding and in good standing. To the
best of our knowledge, after due investigation, there are no proceedings pending
or threatened, nor is there any basis therefor, seeking to cancel, terminate or
limit such licenses, permits, certifications, registrations, approvals or
consents or authorizations.
(L) To the best of our knowledge, after due investigation, there are no
claims, actions, suits, proceedings, arbitrations, investigations or inquiries
before any governmental agency, court or tribunal, Canadian or otherwise, or
before any private arbitration tribunal, pending or threatened against the
Company, or involving the properties or business of the Company which, if
determined adversely to the Company, would, individually or in the aggregate,
result in any material adverse change in the financial position, shareholders'
equity, results of operations, properties, business, management or affairs of
the Company, or which relate in any way to the validity of the capital stock of
the Company or the validity of the U.S. Placement Agreement or of any action
taken or to be taken by the Company pursuant to, or in connection with, the U.S.
Placement Agreement.
(M) The Company and the Subsidiaries own or possess adequate and
enforceable rights to use all patents, patent applications, trademarks, service
marks, copyrights, trade secrets, confidential information, processes and
formulations used or proposed to be used in the conduct of their businesses
currently conducted and described in the Memorandum (collectively, the
"Intangibles"). To the best of our knowledge, after due investigation, neither
the Company nor any Subsidiary has infringed upon, and is not infringing upon,
the rights of others with respect to the Intangibles, and we are not aware of
any licenses with respect to the Intangibles which are required to be obtained
by the Company; and, to the best of our knowledge, no other party has infringed
or is infringing upon the Intangibles.
While we have not made any independent investigation of, are
not passing upon, and do not assume responsibility for, the accuracy or
completeness of the statements contained in the Memorandum (other than as
indicated in paragraph (F) of this opinion), on the basis of discussions
regarding the business and affairs of the Company and our familiarity with such
business and affairs as a result of having served as counsel for the Company,
nothing has come to our attention that would lead us to believe that the
Memorandum (other than the financial statements and notes and other financial
and statistical data included therein, as to which we express no view) contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
UNDERTAKING
The undersigned officer or director of HealthCare Capital
Corp., an Alberta corporation (the "Company"), pursuant to the provisions of
Section 8(a)(v) of the U.S. Placement Agreements dated for reference October 14,
1996 relating to the private placement of Special Warrants of the Company,
hereby agrees that he shall not, directly or indirectly, without the prior
written consent of Sunrise Securities Corporation ("Sunrise") and Dallas
Research & Trading, Inc. ("Dallas Research") offer, sell or otherwise dispose or
contract to dispose of (or announce any offer, sale, grant of any option to
purchase, or other disposition of) any Common Shares or other equity securities
of the Company at any time prior to the earliest of (a) date on which Dallas
Research and Sunrise may effect without registration under the United States
Securities Act of 1933, as amended, an offer and sale to the public in the
United States of the Common Shares of the Company acquired by them on the
exercise of the Warrants granted to them as compensation pursuant to Section 4.1
of the aforementioned U.S. Placement Agreements, (b) the date on which said
Common Shares are so registered, and (c) the date on which said Common Shares
are eligible for trading through the facilities of the Alberta Stock Exchange.
IN WITNESS WHEREOF, I have signed this Undertaking as of the
15th day of November, 1996.
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