May 22, 2008 ViRexx Medical Corp.
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May 22,
2008
0000
Xxxxx Xxxx
Xxxxxxxx,
XX X0X 0X0
Desjardins
Securities Inc.
000 Xxxx
Xxxxxx Xxxx
Xxxxx
0000
Xxxxxxx,
XX X0X 0X0
Dear
Sirs:
Re: Standby
Purchase Agreement – ViRexx Medical Corp. Proposed Rights Offering
The
undersigned understands that ViRexx Medical Corp. (“ViRexx” or the “Corporation”) proposes to
complete an offering of rights to the holders of its common shares (the “Rights
Offering”). Under the Rights Offering, holders of common
shares of the Corporation as of the record date (to be established) will receive
one right (“Right”) for
each common share held as of the record date. Each right will entitle
the holder thereof to purchase one common share in the capital of the
Corporation at a price (the “Subscription Price”) equal to
the weighted average of the closing prices of the Corporation’s common shares on
the TSX for each of the trading days on which there was a closing price during
the three trading days immediately preceding the date of the Prospectus (as
defined below) in respect of the Rights Offering, less a discount of
25%. If all of the Rights are exercised, the Corporation will issue
an aggregate of 72,760,717 common shares.
The
Rights will be offered in Canada pursuant to a final rights offering prospectus
(the “Prospectus”),
which will be filed by the Corporation with the applicable securities regulatory
authorities in each of the provinces of Canada in which ViRexx is a reporting
issuer (collectively, the “Qualifying Provinces”) and the
common shares issuable upon the exercise of the Rights will be registered under
the United States Securities Act of 1933, as amended (the “1933 Act”), pursuant to a
registration statement (the “Registration Statement”) on
Form F-7 under the Multijurisdictional Disclosure System. The record
date, expiry of the Rights Offering and issue price of the common shares upon
exercise of the Rights will be determined at the time of filing the (final)
Prospectus. Any capitalized terms used herein that are not otherwise
defined shall have the meaning ascribed to them in the Prospectus.
The
undersigned understands that the Corporation has appointed Desjardins Securities
Inc. (the “Dealer
Manager”), as the sole and exclusive Dealer Manager to manage the Rights
Offering and solicit the exercise of Rights in the Qualifying Provinces and
through its U.S. registered broker-dealer affiliate in the United States at the
Subscription Price, provided that the Dealer Manager shall be obligated only to
use its commercially reasonable best efforts to solicit the exercise of the
Rights.
It is
understood that ViRexx will file all applicable documentation to effect the
Rights Offering in each of the Qualifying Provinces and to register under the
1933 Act the common shares issuable upon the exercise of the Rights in the
United States and that ViRexx will cover all of the out-of-pocket expenses of
the Rights Offering, including printing, mailing and applicable legal and other
professional fees which shall include the reasonable fees of the undersigned’s
counsel.
Standby
Commitment
The
undersigned who enters into this Standby Purchase Agreement shall be referred to
herein as the “Standby Purchaser”.
Pursuant
to the Standby Purchase Agreement the undersigned hereby agrees, to exercise one
Right for every common share of the Corporation held, directly or indirectly, as
at the date hereof or to purchase shares pursuant to the Rights Offering (the
“Basic Rights
Exercise”).
The
undersigned also hereby agrees to pay to the Corporation the funds set forth
beneath its signature below (the “Commitment Amount”). The
Commitment Amount shall be allocated by the Corporation in the manner set forth
below.
Following
the exercise of the Basic Subscription Rights and Additional Subscription
Privileges, the Corporation has the right to cause the Standby Purchasers to
purchase, at the Subscription Price, that number of common shares of the
Corporation resulting in aggregate subscription proceeds to the Corporation
equal to the difference between (i) the proceeds received by the Corporation in
connection with the exercise of all Basic Subscription Rights and all Additional
Subscription Privileges; and (ii) CA$3,000,000 (the “Standby Commitment”). A
proportion of the Aggregate Cash Commitment shall be used to satisfy the Standby
Commitment.
Following
the satisfaction of the Standby Commitment, the remainder of the Commitment
Amount shall be used to purchase units pursuant to a private placement described
in Exhibit “1” hereto (the “Private
Placement”).
Based on
the above understanding, the undersigned specifically hereby agrees to complete
the Basic Rights Exercise, and/or purchase common shares pursuant to the Rights
Offering and the undersigned specifically hereby commits to pay to the
Corporation the Commitment Amount set out beneath its signature
below.
Within a
reasonable time following approval of the final prospectus for the Rights
Offering by the Alberta Securities Commission and the issuance of final receipt,
the undersigned shall pay to Xxxxxx XxXxxx llp, in trust, the funds required to
complete the undersigned’s Basic Rights Exercise (including share purchase)
(such amount being set forth beneath its signature below (the “Basic Rights
Exercise Price”) and the full Commitment Amount. The Corporation
shall provide the appropriate account information to the undersigned upon the
undersigned’s request. Funds deposited in trust shall only be
released to the Corporation upon a closing of the Rights Offering (the date upon
which such closing occurs being hereafter referred to as the “Closing
Date”).
The
undersigned hereby agrees to complete and execute the Rights Certificate in
accordance with the instructions of the Corporation in order to effect the Basic
Rights Exercise (including share purchase) and agrees to provide to the
Corporation and to Xxxxxx XxXxxx llp such additional documentation as may be
reasonably required to expeditiously fulfill its obligations
hereunder.
Conditions
of Standby Commitment
The
Standby Commitment is subject to the following conditions in the undersigned’s
favour:
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(a)
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the
Rights Offering shall be undertaken substantially in accordance with the
provisions of the Prospectus and, in particular, the Rights Offering shall
close no later than June 30, 2008;
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(b)
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a
final receipt for the Prospectus shall have been issued, or deemed to have
been issued, by the Canadian securities regulatory authority in each of
the Qualifying Provinces, and the Registration Statement shall have become
effective under the 1933 Act;
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(c)
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as
at the Expiry Time (as such term is defined in the Prospectus), there
shall be no order to cease or suspend trading in any securities of the
Corporation, or prohibiting or restricting the distribution of the common
shares of the Corporation, and no proceedings shall have been announced or
commenced for the making of any such order, by any Canadian securities
commission or similar regulatory authority or by the U.S. Securities and
Exchange Commission;
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(d)
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as
at the Expiry Time, no inquiry, action, suit, investigation or other
proceeding shall have been commenced, threatened or announced and no order
have been issued under or pursuant to any law and there shall not have
been any change of law or the interpretation or administration thereof,
which, in the reasonable opinion of the undersigned, operates or could
operate to prevent or restrict trading in or distribution of the common
shares of the Corporation;
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(e)
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as
at the Expiry Time, the Corporation shall not be in breach of, default
under or non-compliance with any material representation, warranty,
covenant, term or condition of this Standby Purchase Agreement;
and
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(f)
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prior
to closing of the Rights Offering, the Dealer Manager shall not have
determined that it is not proceeding with the Rights
Offering.
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If any of
the foregoing events occur, then the undersigned may, at any time on or prior to
the Expiry Time, give written notice to ViRexx and the Dealer Manager
terminating the Standby Commitment of the undersigned whereupon this Standby
Purchase Agreement shall be terminated with respect to the undersigned as of the
date of such notice without any liability to the undersigned.
Representations
and Warranties of the Undersigned
In
connection with the Standby Commitment and Loan Commitment, the undersigned
hereby represents and warrants, to and in favour of ViRexx as follows and
acknowledges that ViRexx is relying thereon, that:
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(a)
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the
execution and delivery of this Standby Purchase Agreement constitutes a
legal and binding obligation of the undersigned, enforceable against him
in accordance with its terms, subject to limitations with respect to
enforcement imposed by law in connection with bankruptcy, insolvency and
creditors' rights generally and to general principles of equity, including
the availability of equitable remedies such as specific performance and
injunctive relief which are in the discretion of the court from which they
are sought;
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(b)
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the
undersigned is a bona fide resident of a Qualifying Province or the United
States or is otherwise a resident of a jurisdiction where the offer, sale
and issue of the Purchased Shares may be lawfully made under the
Prospectus; and
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(c)
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the
undersigned has the financial resources to pay for the Basic Rights
Exercise, and to pay to the Corporation the full Commitment
Amount.
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Covenants
of the Undersigned
The
undersigned hereby covenants and agrees that he will, upon request by the
Corporation, provide evidence, in form and substance satisfactory to the
Corporation, acting reasonably of that the undersigned has the financial
resources necessary to comply with all of his obligations under this Standby
Purchase Agreement, including the payment of the funds required in connection
with the Standby Commitment. The undersigned hereby authorizes the
Corporation to make such information available to any securities regulatory
authority that requires such information.
Representations,
Warranties and Covenants of ViRexx
ViRexx
represents, warrants and covenants, as applicable, to the undersigned as
follows, and acknowledges that the undersigned is relying thereon:
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(a)
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ViRexx
will prepare and file, a preliminary prospectus in respect of the Rights
Offering with the securities regulatory authorities in each of the
Qualifying Provinces;
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(b)
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ViRexx
will prepare and file the Prospectus in respect of the Rights Offering
with the securities regulatory authorities in each of the Qualifying
Provinces and obtain a receipt therefore from such
authorities;
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(c)
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ViRexx
will take such steps as are required to comply with all applicable United
States securities laws, including, without limitation, preparing and
filing the Registration Statement under the 1933
Act;
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(d)
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ViRexx
will use its best efforts to obtain the acceptance of the Toronto Stock
Exchange for the Rights Offering, including the listing and trading of the
Rights and the underlying common shares, and otherwise to comply with all
applicable requirements of the TSX in connection with the Rights
Offering
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(e)
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ViRexx
will comply with all applicable requirements of the American Stock
Exchange (“AMEX”) in connection with the Rights Offering, including the
listing of the common shares underlying the Rights (it being understood
that the Rights themselves will not be listed for trading on
AMEX);
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(f)
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ViRexx
will immediately notify the undersigned in writing of any demand, request
or inquiry by any securities regulatory authority or other governmental
body concerning any matter relating to the affairs of the Corporation, the
Rights Offering contemplated by this Standby Purchase Agreement and of the
issuance, or threatened issuance, by any such authority of any cease
trading or similar order relating to the securities of ViRexx;
and
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(g)
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the
execution and delivery of this Standby Purchase Agreement constitutes a
legal and binding obligation of the Corporation enforceable against it in
accordance with its terms, subject to limitations with respect to
enforcement imposed by law in connection with bankruptcy, insolvency and
creditors' rights generally and to general principles of equity, including
the availability of equitable remedies such as specific performance and
injunctive relief which are in the discretion of the court from which they
are sought.
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Closing
The sale
by ViRexx of common shares to the undersigned pursuant to the exercise of the
Standby Commitment is subject to all of the representations and warranties of
the undersigned made in or pursuant to this Standby Purchase Agreement being
true and correct in all material respects at the time of closing on the Closing
Date, and that the performance or completion by the undersigned of his
obligations, covenants and agreements hereunder. The foregoing
condition has been inserted herein for the benefit of the Corporation which may,
in its absolute discretion, waive compliance as it may deem fit.
ViRexx
shall deliver to the undersigned, at the time of closing on the Closing Date,
certificates representing the common shares purchased by the undersigned under
the Rights Offering and a certificate to evidencing the Debenture.
General
This
Standby Purchase Agreement and all schedules and all documents contemplated
hereby constitute the entire agreement between the parties relating to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties.
The
provisions of this Standby Purchase Agreement shall enure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns, and each and every person so bound shall
make, execute and deliver all documents necessary to carry out this Standby
Purchase Agreement. Neither this Standby Purchase Agreement nor any rights or
obligations hereunder shall be assignable by ViRexx or by the undersigned
without the prior written consent of the other party.
This
Standby Purchase Agreement shall be governed by the laws of the Province of
Alberta.
Time
shall be of the essence of this Standby Purchase Agreement and of every part
hereof.
This
Standby Purchase Agreement may be executed in any number of
counterparts.
Each
party hereby agrees that upon the written request of any other party hereto,
such party will do all such acts and execute all such further conveyances,
deeds, assignments, transfers and other documents, and will cause the doing of
all such acts and the execution of all further documents as are within his power
to cause the doing or execution of, as any other party hereto may from time to
time reasonably request be done and/or executed as may be necessary or desirable
to give effect to this Standby Purchase Agreement.
If this
Standby Purchase Agreement is in accordance with your understanding, would you
kindly execute a copy of this Standby Purchase Agreement enclosed herewith and
return it to us.
Yours
sincerely,
1370300
Alberta Ltd.
/s/ Xxxxx
Xxxxxxxx
________________________________
STANDBY
PURCHASER (signature)
________________________________
Print
Name: Xxxxx Xxxxxxxx
Number of Common Shares Held,
directly or indirectly: ____________________________
Basic
Rights Exercise Price: CA$0.10 or as allowed pursuant to the prospectus at the
discretion of the undersigned
Commitment
Amount: CA$3,000,000
ACCEPTANCE
We hereby
accept the above offer on the terms and conditions therein set
forth.
DATED
this ____ day of May 2008.
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Per:
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/s/
Xxxxxxx Xxxxxxx
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Name:
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Xxxxxxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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EXHIBIT
“1”
PRIVATE
PLACEMENT
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Issuer
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ViRexx
Medical Corp. (“ViRexx”)
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Subscriber
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The
Offeror or one or both of them
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Securities
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The
issuance of the securities shall be governed by the Subscription Agreement
to be executed at the appropriate time.
Each
unit offered consists of one common share of ViRexx and one –half of a
warrant of ViRexx. Two of the one-half warrants combined shall
consist of one full warrant.
The
Common Shares and Warrants comprising the Units, and the Common Shares
issuable upon exercise of the Warrants, have not been and will not be
registered under the United States Securities Act of 1933, as amended (the
“U.S. Securities
Act”), and may not be offered or sold in the United States or to,
or for the account or benefit of, U.S. persons (as defined in Regulation S
of the U.S. Securities Act) or persons within the United States (other
than distributors) unless such Common Shares and Warrants comprising the
Units, and the Common Shares issuable upon exercise of the Warrants, are
registered under the U.S. Securities Act or an exemption from the
registration requirements of the U.S. Securities Act is
available.
Each
full Warrant will entitle the holder, on exercise, to purchase one
additional Common Share (a “Warrant Share”) at a price equal to $0.20 (the
“Warrant Exercise Price”) at any time until the close of business on the
day that is 12 months from the date of issue of the
Warrants. If at anytime during the 12 month term of the
Warrants the average daily price per share as quoted on the TSX Exchange
exceeds the Warrant Exercise Price for 15 consecutive trading days then
upon notice from the Issuer the Warrants must be exercised or they lapse
within 30 days of such notice. The Warrants will not be listed
and will be non-transferable.
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Price
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$0.10
per Unit or if a 25% discount to market price of the common shares at the
closing date of the private placement is more than $0.10 whichever is the
greater price at the time of the closing of this private
placement.
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Gross
Proceeds
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The
difference between $3,000,000 (CAD) and the amount advanced to acquire
ViRexx common shares pursuant to the Rights Offering.
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Canadian
Exemptions
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The
offering will be made in accordance with the following exemption from the
prospectus and regulation requirements of applicable Canadian securities
laws:
(a) the
“accredited investors” exception found in section 2.3 of National
Instrument 45-106 and
(b) the
“offshore exemption” provided by Alberta Securities Commission Rule 72.50
Distribution to
Purchasers Outside Alberta.
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Resale
Restrictions and legends
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The
Common Shares, Warrants and Warrant Shares will be subject to a four month
hold period in Canada under National Instrument 45-102 Resale of
Securities.
All
certificates representing the Common Shares and Warrants, and any
certificates representing Warrant Shares issued before the expiration of
the hold period, will bear legends required by NI 45-102 and the rules of
the Toronto Stock Exchange.
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Stock
Exchange Listings
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Common
Shares of ViRexx are listed on the Toronto Stock Exchange and on the
American Stock Exchange.
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Use
of Proceeds
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Working
capital and to advance the science platforms, development and
commercialisation.
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