AGENCY AGREEMENT
HEALTHCARE CAPITAL CORP. August 22, 1996
0000-000 Xxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
ATTENTION: XXXXXXX X. GOOD
Dear Sirs:
X.X. Xxxxxx & Company Limited (the "Agent") understands that HealthCare Capital
Corp. (the "Company") proposes to create and issue 4,800,000 special warrants of
the Company having the attributes and characteristics specified in this
agreement (the "Special Warrants"). Upon its acceptance of this agreement and
subject to the terms and conditions set forth in this agreement, the Company
hereby appoints the Agent to act as the Company's project manager and exclusive
agent in Canada to use its best efforts to effect the sale of the Special
Warrants at a price of $1.25 (U.S.) per Special Warrant, for an aggregate price
of up to $6,000,000 (U.S.) ("Aggregate Purchase Price"), and the Agent agrees to
act as the Company's agent to use its reasonable best efforts to effect the sale
of the Special Warrants in Canada on the Company's behalf. In so acting, the
Agent is under no obligation to purchase any of the Special Warrants, although
the Agent may subscribe for Special Warrants if it so desires. The Company
reserves the right to reject subscriptions, at its discretion, only if it
considers acceptance not to be in the best interests of the Company or if
acceptance of the Subscription would obligate the Company to issue and sell more
than 4,800,000 Special Warrants.
The closing of the issue and sale of the Special Warrants will take place in two
tranches, as follows:
(a) the first tranche and closing (the "First Closing")
will include only subscribers who are not "U.S.
Persons" within the meaning of Regulation S of the
U.S. Securities and Exchange Commission; and
(b) a second tranche and closing (the "Second Closing")
will include only subscribers who are "U.S. Persons".
All offers and sales of the Special Warrants to "U.S. Persons" will be made
directly by the Company through duly registered U.S. broker-dealers, who are
members of the selling group organized by the Agent and the Company.
In consideration of the services to be rendered by the Agent to the Company in
effecting the sale of the Special Warrants and as corporate advisor, the Company
agrees to pay to the Agent, at the time and in the manner specified in
subsection 5.3:
(a) a fee (the "Fee") equal to 9% of the Aggregate
Purchase Price of the Special Warrants sold by the
Company on the First Closing payable at the time of
Closing of the issue and sale of the Special Warrants
(a "Closing Date"), in cash, in Special Warrants or
in a combination thereof, as directed by the Agent;
(b) a corporate finance fee of $50,000 (Cdn.);
(c) a syndication fee of 1% of the gross proceeds
received by the Company from the sale of all Special
Warrants, payable at the Agent's option in cash or
Special Warrants; and
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(d) a special option (the "Agent's Option") entitling the
Agent to acquire warrants to purchase up to 10% of
the number of the Special Warrants sold by the Agent
on the first tranche (the "Option Warrants") which
shall be exercisable into that number of common
shares (the "Option Shares") of the Company at a
price of $1.25 (U.S.) per share until August 31, 1998
unless cancelled earlier, as described below. 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 force the
exercise or cancellation of the Agent's Option.
The Agent's Option to acquire the Option Warrants may be exercised by the Agent
without any further action on its part, at any time during the 12 month period
following the Closing Date, and in any event shall be deemed to be exercised on
the 5th business day following the day on which a receipt is issued for the
Final Prospectus (as hereinafter defined) by the last of the British Columbia
Securities Commission and any other securities regulatory authority for a
Canadian Province or Territory in which a trade in the Special Warrants has
taken place (the "Qualification Date"), or the date which is 12 months following
the Closing Date, whichever is earlier.
1. TERMS OF THE SPECIAL WARRANTS
1.1 The Special Warrants will be issued under and governed by a trust indenture
(the "Special Warrant Indenture") to be dated as of the First Closing Date and
to be made between the Company and The R-M Trust Company (the "Trustee").
Subject to subsection 1.3, each Special Warrant will entitle the holder, upon
exercise and without payment of any additional consideration, to be issued one
common share in the capital of the Company (an "Underlying Share") and one
non-transferrable share purchase warrant (an "Underlying Warrant"). The
Underlying Warrants will be issued under and governed by a trust indenture (the
"Purchase Warrant Indenture") to be dated as of the Closing Date and to be made
between the Company and the Trustee. Each Underlying Warrant will entitle the
holder thereof to acquire one common share in the capital of the Company (an
"Underlying Warrant Share") at a price of $2.00 (U.S.) per share until August
31, 1998, subject to earlier cancellation as described below. The Underlying
Shares and the Underlying Warrants will be collectively referred to as the
"Underlying Securities".
1.2 The Company covenants to, and, if required by the Agent, the Company will
covenant under the Special Warrant Indenture that it will:
(a) prepare and file, using its reasonable best efforts
to do so on or before the day which is 45 days from
the First Closing Date, under the applicable
securities laws, regulations and rules of British
Columbia and such other Canadian Provinces or
Territories in which a trade in Special Warrants
takes place (collectively the "Qualifying
Jurisdictions"), a preliminary prospectus (the
"Preliminary Prospectus"), together with the required
supporting documents, to qualify the distribution of
the Underlying Securities and the Option Warrants;
(b) use its reasonable best efforts to address as
expeditiously as possible the comments made in
respect of the Preliminary Prospectus by the
securities regulatory authorities (the "Securities
Commissions") of the Qualifying Jurisdictions; and
(c) prepare and file, using its reasonable best efforts
to do so on or before the day which is 120 days from
the Second Closing Date, under the applicable
securities laws of the Qualifying Jurisdictions, a
final prospectus (the "Final Prospectus"), together
with the
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required supporting documents, and use its reasonable
best efforts to expeditiously obtain receipts for the
Final Prospectus from the Securities Commissions and
take all other steps and proceedings that may be
necessary in order to qualify, under the applicable
securities legislation of the Qualifying
Jurisdictions, and the rules, policies,
interpretation notices and orders of the Securities
Commissions (the "Applicable Securities Laws") the
distribution of the Underlying Securities and the
Option Warrants.
1.3 The Special Warrants will be subject to the following terms and conditions,
provision for which will be made in the Special Warrant Indenture:
(a) at any time after the Closing Date, the holders of
the Special Warrants are entitled to exercise the
Special Warrants and to receive, without further
payment, the Underlying Securities;
(b) any unexercised Special Warrants will be deemed to
have been exercised by the holders, without any
further action on their part, at any time on the
fifth business day following the Qualification Date;
(c) any Special Warrants then outstanding will be deemed
to be exercised on the day which is one year from the
First Closing Date (the "Expiry Date"); and
(d) if a receipt for the Final Prospectus is not issued
by the Securities Commissions within 120 days of the
Second Closing Date, or such other date as may be
agreed between the Company and the Agent, the holders
of the Special Warrants are entitled to exercise the
Special Warrants and to receive, without further
payment, 1.1 Underlying Shares and 1.1 Underlying
Warrants with the exception of any Special Warrants
issued to the Agent as part of the Fee or syndication
fee referred to above.
1.4 The terms and conditions of the Special Warrant Indenture and the attributes
and characteristics of the Special Warrants provided for under the Special
Warrant Indenture will be substantially as described in this agreement subject
to the changes, if any, that the Company and the Agent may agree to, and
otherwise the Special Warrant Indenture will be in a form and contain terms and
conditions as are satisfactory to the Company and to the Agent.
1.5 The Underlying Warrants will be issued pursuant to a trust indenture between
the Company and the Trustee (the "Purchase Warrant Indenture") and the
attributes and characteristics of the Underlying Warrants will be substantially
as described in this Agreement, subject to the changes if any that the Company
and the Agent may agree to, and otherwise the Purchase Warrant Indenture will be
in a form and contain terms and conditions as are satisfactory to the Company
and to the Agent, including, among other things, a provision that if, after the
Qualification Date the closing bid for the Company's common shares is greater or
equal to $3.00 (U.S.) per common share (calculated according to the rate stated
by the Bank of Canada for conversion of Canadian dollars to U.S. dollars on each
such day) for a period of twenty consecutive trading days on The Alberta Stock
Exchange, or on such other recognized stock exchange or trading market on which
the largest volume of common shares of the Company traded on each such day, the
Company may, at its option, by written notice to the Trustee and the holders of
the Underlying Warrants, amend the expiry date of the Underlying Warrants to a
day determined by the Company not less than 45 days after the notice is given.
2. NATURE OF THE TRANSACTION
2.1 The sale of the Special Warrants to purchasers (the "Purchasers") is to be
effected in a manner exempt from any prospectus filing or delivery requirements
of the Applicable Securities Laws without the necessity
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of obtaining any order or ruling of any of the Securities Commissions.
Notwithstanding that offers and sales of Special Warrants may be made outside of
Canada, the offers or sales must also be in compliance with the law of Alberta.
Each trade of the Special Warrants to which the law of Alberta applies will be
made by the Company under the prospectus filing exemptions in sections 107(1)(d)
of the Securities Act (Alberta) (the "Alberta Act").
If the Agent chooses to offer the Special Warrants outside of Canada, which it
is not required to do, the Agent will offer the Special Warrants outside of
Canada only in compliance with the applicable securities laws, regulations,
rules and policies of the jurisdictions (the "Offering Jurisdictions") in which
they are offered. The Agent will, at its own expense, take all such steps and
make all required filings which must be made in order to effect compliance with
such laws, regulations, rules and policies.
The Agent will notify the Company with respect to the identity and jurisdiction
of residence of each Purchaser as soon as practicable with a view to affording
sufficient time to allow the Company to secure compliance with the Applicable
Securities Laws and the applicable law and policy in the Offering Jurisdictions
in connection with the sale of the Special Warrants to the Purchasers under the
exemptions referred to above (collectively the "Exemptions").
2.2 The Company will, at its own expense, comply with the Applicable Securities
Laws in connection with the sale of the Special Warrants to the Purchasers,
including the filing of required reports and the payment of any applicable fees
relating thereto.
2.3 The Company will, at its own expense, comply with all Applicable Securities
Laws in connection with obtaining the receipt for the Final Prospectus to
qualify the distribution of the Underlying Securities and Option Warrants
including the filing of required reports and the payment of any applicable fees
relating thereto.
2.4 The Agent will conduct its activities in connection with the distribution of
the Special Warrants in compliance with all Applicable Securities Laws and,
without limiting the foregoing, the Agent represents, warrants and agrees, that:
(a) all solicitation, offering and other selling efforts
carried out by it in connection with the distribution
of the Special Warrants have been and will be made,
and all purchases of Special Warrants will be made,
in accordance with the provisions of the Exemptions;
and
(b) it is a member, in good standing, of The Alberta
Stock Exchange (the "Exchange").
2.5 The Agent will obtain from each Purchaser a properly completed and duly
executed subscription agreement (a "Subscription Agreement"), in the form
provided by the Company, and a properly completed and duly executed private
placement questionnaire and undertaking (a "Questionnaire and Undertaking"), in
the form attached to the Subscription Agreement, and for those Purchasers who
are individuals in circumstances where the B.C. Act applies a Form 20A(IP) in
the form attached to the Subscription Agreement.
2.6 The Agent will not offer or sell the Special Warrants or the Underlying
Securities in the United States and makes the representations, warranties and
covenants set forth in Part II of Schedule "A", which are incorporated into and
form part of this agreement.
3. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE COMPANY
3.1 The Company represents and warrants to the Agent and to the Purchasers as at
the date hereof and as at the Time of Closing, and acknowledges that the Agent
and the Purchasers will be relying upon such representations and warranties in
entering into this agreement and the Subscription Agreements, that:
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(a) the Company is a "reporting issuer" in Alberta and is
not in default of any of the require- ments of the
Applicable Securities Laws of Alberta;
(b) the audited consolidated balance sheet of the Company
as at July 31, 1995 and the audited consolidated
statements of loss and deficit and changes in
financial position of the Company for the year then
ended, and the notes thereto, all as filed by the
Company under the requirements of the Applicable
Securities Laws, were prepared in accordance with
generally accepted accounting principles and present
fairly the assets, liabilities and financial
condition and the sales, income and results of
operation of the Company on a consolidated basis for
the period covered;
(c) there has not occurred any adverse "material change"
(as that term is defined in the British Columbia Act
- a "Material Change"), financial or otherwise, in
the assets, liabilities (contingent or otherwise),
business, financial condition or capital of the
Company, taken as whole, since July 23, 1996, the
date of the Company's preliminary prospectus (the
"Preliminary Prospectus") filed with the British
Columbia and Alberta Securities Commission which has
not been generally disclosed and specifically made
aware of to the Agent and its solicitors;
(d) the Company is not a party to any actual, pending,
threatened or contemplated, suits or proceedings
which could materially affect its business or
financial condition;
(e) this agreement, the Subscription Agreements, the
Special Warrant Indenture and the Purchase Warrant
Indenture have been authorized by all necessary
corporate action on the part of the Company, the form
of certificates for and the issuance of the Special
Warrants and the Agent's Option;
(f) the Special Warrants, the Underlying Warrants and the
Option Warrants, when issued, will have been validly
authorized, created and issued;
(g) the Underlying Shares, the Underlying Warrant Shares,
the Agent's Shares and the Option Shares have been
validly allotted for issuance when issued upon
exercise (or deemed exercise, if applicable) of the
Special Warrants, Underlying Warrants, or Option
Warrants, as applicable, in accordance with their
terms, respectively, will be validly issued as fully
paid and non-assessable;
(h) the Company has no subsidiaries other than HealthCare
Hearing Clinics Inc., HC HealthCare Clinics Ltd.,
Pacific Hearing Clinics Inc., Pacific Audiology Inc.
and Oakridge Hearing Clinic Inc., each of which is
wholly owned directly or indirectly by the Company;
(i) the Company has not engaged in any form of
advertising in connection with the Offering of
Special Warrants, such that it is not required to
prepare and deliver to Purchasers an offering
memorandum;
(j) the authorized capital of the Company consists of an
unlimited number of common shares without par value,
of which, as of the date hereof, 16,147,000 common
shares are issued and outstanding as fully paid and
non-assessable shares; and
(k) except as set out in the Preliminary Prospectus,
there are no persons, firms or corporations having
any agreement or option or any right or privilege
capable of
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becoming an agreement for the purchase, subscription
or issuance of any securities of the Company.
3.2 The Company makes the representations, warranties and covenants set forth in
Part I of Schedule "A", which are incorporated into and form part of this
agreement.
4. CONDITIONS TO PURCHASE AND SALE OBLIGATIONS
4.1 The following are conditions to the obligations of the Agent and of the
Purchasers to complete the transactions contemplated in this agreement and in
the Subscription Agreements:
(a) all actions required to be taken by or on behalf of
the Company, including the passing of all requisite
resolutions of directors of the Company, will have
been taken so as to validly create, sell, issue and
deliver:
(i) the Special Warrants and Underlying
Securities to the Purchasers; and
(ii) the Agent's Option, Option Warrants, and
Option Shares to the Agent;
(b) the Company will have made all necessary filings and
obtained all necessary approvals, consents and
acceptances of appropriate regulatory authorities,
within the time required (subject to any extensions
permitted by the Exchange and agreed to by the Agent,
in writing), in order to permit the Company to
create, sell, issue and deliver:
(i) the Special Warrants and Underlying
Securities to the Purchasers; and
(ii) the Agent's Option, Option Warrants, and
Option Shares to the Agent;
(c) the Underlying Shares, Underlying Warrant Shares, and
Option Shares will have been accepted for listing on
the Exchange;
(d) the Company will have caused a favourable legal
opinion to be addressed and delivered by its legal
counsel to the Agent, the Purchasers and the Agent's
legal counsel, dated as of the Closing Date, in form
and content acceptable to the Agent, acting
reasonably;
(e) the Company will have delivered to the Agent a legal
opinion of United States Counsel of recognized
standing acceptable to the Agent, acting reasonably
at the First Closing that the offering and the sale
of the Special Warrants has been made in accordance
with Regulation S, and at the Second Closing that the
offer and sale of the Special Warrants is exempt from
or does not require registration under applicable
United States federal and state securities laws;
(f) the Company will have delivered an officers'
certificate addressed and delivered to the Agent, the
Purchasers and the Agent's legal counsel, dated as of
the Closing Date, in form and content acceptable to
the Agent, acting reasonably, certifying, among other
things, that:
(i) no order ceasing or suspending trading in
any securities of the Company or prohibiting
the sale of the Special Warrants or the
issuance of the Underlying Securities are in
effect (except for any order based upon the
activities or alleged
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activities of the Agent and not of the
Company) and, to the knowledge of the
officers, no proceedings for this purpose
are pending or threatened;
(ii) no adverse Material Change, financial or
otherwise, in the assets, liabilities
(contingent or otherwise), business,
financial condition or capital of the
Company, taken as a whole, has, to the
knowledge of the officers, occurred since
July 24, 1996 which has not been generally
and publicly disclosed and specifically
communicated to the Agent and its legal
counsel;
(iii) neither the execution and delivery by the
Company of this agreement, the Subscription
Agreements, the Special Warrant Indenture or
the Purchase Warrant Indenture, or the
fulfilment of or compliance with the terms
of any of them by the Company, nor the
creation, sale, issuance and delivery of the
Special Warrants to the Purchasers as
contemplated in this agreement, the
Subscription Agreements, the Special Warrant
Indenture and the Purchase Warrant
Indenture, or the issuance and delivery of
the Underlying Securities upon the exercise
of the Special Warrants, conflicts or will
conflict with or results or will result in a
breach of any of the provisions of the
Memorandum or Articles of the Company, or of
any resolutions of the directors or
shareholders of the Company, or of any term
of any agreement or instrument to which the
Company is a party or by which it is bound;
(iv) the Company has complied in all material
respects with all terms and conditions of
this agreement, the Subscription Agreements,
the Special Warrant Indenture and the
Purchase Warrant Indenture on its part to be
complied with at or prior to the Time of
Closing (as hereinafter defined);
(v) the Company is a "reporting issuer" for the
purposes of, and is not in default of any of
the requirements under, the Applicable
Securities Laws in Alberta;
(vi) the Company has no subsidiaries, other than
HealthCare Hearing Clinics Inc., HC
HealthCare Clinics Ltd., Pacific Hearing
Clinics Inc., Pacific Audiology Inc. and
Oakridge Hearing Clinic Inc., each of which
is a wholly owned subsidiary of the Company
and is duly incorporated and validly
existing under the laws under which it was
incorporated, amalgamated or continued;
(vii) the Agency Agreement, the Subscription
Agreements, the Agent's Option, the Special
Warrant Indenture and the Purchase Warrant
Indenture have been duly authorized,
executed and delivered by the Company and
constitute valid and binding obligations of
the Company in accordance with their terms;
(viii) the representations and warranties of the
Company contained in this agreement, the
Subscription Agreements, the Special Warrant
Indenture and the Purchase Warrant Indenture
are true and correct as of the Time of
Closing,
and the certificate will be signed on behalf
of the Company by its President and by its
Chief Financial Officer or by such other
officers or directors of the Company as the
Agent, acting reasonably, may accept in
place of those officers;
(g) the Company will have delivered to the Agent a legal
opinion in a form and of tax counsel acceptable to
the Agent, acting reasonably, that the Special
Warrants and the
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Underlying Securities do not constitute "foreign
property" within the meaning of proposed amendments
to the Income Tax Act (Canada); and
(h) the representations and warranties of the Company
contained in this agreement will be true and correct
as of the Time of Closing as if such representations
and warranties had been made as of the Time of
Closing.
The Company covenants to use its reasonable best efforts to have these
conditions fulfilled at or prior to the Time of Closing. These conditions may be
waived in writing in whole or in part by the Agent.
4.2 The obligation of the Company to complete the transactions contemplated in
this agreement is subject to the condition, which may be waived in writing by
the Company, that the Company receives and has accepted, at or prior to the Time
of Closing, properly completed and duly executed Subscription Agreements and
Questionnaires and Undertakings in respect of all of the Special Warrants sold.
The Company agrees to accept each Subscription Agreement tendered to it provided
that it is satisfied, acting reasonably, that the applicable Exemptions are
available in respect of the sale of the Special Warrants subscribed for under
that Subscription Agreement, all applicable securities laws of the Offering
Jurisdictions have been complied with and the acceptance of the Subscription,
together with the subscriptions previously accepted by the Company, will not
obligate the Company to issue more than 4,800,000 Special Warrants.
5. CLOSING
5.1 The First Closing of the transactions contemplated under this agreement and
the Subscription Agreements (the "Closing") will be completed at the offices of
XxXxxxxxxx O'Xxxxxx Xxxxx, the solicitors for the Agent, at 2:00 p.m. (Vancouver
time) on September 23, 1996 or at such other time or at such other time and date
as the Company and the Agent may agree (being the "Time of Closing").
5.2 At the First Closing and the Second Closing, the Agent will deliver or cause
to be delivered:
(a) to the Company one or more certified cheques or bank
drafts made payable on the Closing Date to the
Company, in an amount equal to the Aggregate Purchase
Price for the Special Warrants sold, less the Fee, if
payable in cash, and the expenses of the Agent,
subject to any written direction given by the Company
to the Agent and accepted by the Agent; and
(b) to the Company properly completed and duly executed
original or facsimile copies of the Subscription
Agreements, Questionnaires and Undertakings and Form
20As, where applicable, relating to the Special
Warrants which have not previously been delivered to
the Company,
but the Agent will not be required to deliver any certified cheque or bank
draft, Subscription Agreement or Questionnaire and Undertaking for or on behalf
of any Purchaser which has notified the Agent that he does not intend to close
in accordance with his Subscription Agreement.
5.3 At each Closing, upon payment to the Company of the amount specified in
paragraph 5.2(a), the Company will deliver or cause to be delivered to the Agent
and to the Purchasers, the following:
(a) definitive certificates evidencing the Special
Warrants sold, duly registered as directed by the
Purchasers in their Subscription Agreements;
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(b) the requisite certificates, opinions, comfort letters
and other documents provided for in this agreement;
(c) a certificate representing the Agent's Option and
representing the right to acquire Option Warrants to
purchase common shares equal in number to 10% of the
Special Warrants sold at that Closing; and
(d) in the case of the First Closing, a certificate
representing any Special Warrants to be issued to the
Agent in payment of the Fee.
5.4 If, at the Time of Closing, the Company has been unable to comply with all
of the conditions set forth in subsection 4.1 or the condition set forth in
subsection 4.2 has not been satisfied, and such condition has not been waived by
the Agent or the Company, as the case may be, the respective obligations of the
parties will terminate and none of the Purchasers, the Agent or the Company will
have any liability to the other, except that the Company's obligations under
section 8 and subsection 9.1 will survive and continue.
6. TERMINATION
The Agent may terminate its obligations under this agreement and the obligations
of the Purchasers under the Subscription Agreements by notice in writing to the
Company at any time before Closing if:
(a) an adverse material change (as defined in the B.C.
Act) in the affairs of the Company occurs or is
announced by the Company;
(b) there is an event, accident, governmental law or
regulation or other occurrence of any nature which,
in the opinion of the Agent, seriously affects or
will seriously affect the financial markets, or the
business of the Company or any subsidiary of the
Company, or the ability of the Agent to perform its
obligations under this agreement, or a Purchaser's
decision to purchase the Special Warrants;
(c) following a consideration of the history, business,
products, property or affairs of the Company or its
principals, or of the state of the financial markets
in general, or the state of the market for the
Company's securities in particular, the Agent
determines, in its sole discretion, that it is not in
the interest of the investors to complete the
purchase and sale of the Special Warrants;
(d) an enquiry or investigation (whether formal or
informal) in relation to the Company, or the
Company's directors or officers, is commenced or
threatened by an officer or official of any competent
authority;
(e) any order to cease trading (including communicating
with persons in order to obtain expressions of
interest) in the securities of the Company is made by
a competent regulatory authority and that order is
still in effect;
(f) the Company is in breach of any term of this
agreement; or
(g) the Agent determines that any of the representations
or warranties made by the Company in this agreement
is false or has become false.
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7. ADDITIONAL COVENANTS
7.1 The Company covenants with the Agent and with the Purchasers
as follows:
(a) the Company will use its reasonable best efforts to
comply with the covenants referred to in subsection
1.2 and, with respect to the filing of the
Preliminary Prospectus and the Final Prospectus
(individually a "Prospectus" and collectively the
"Prospectuses") as contemplated therein, will fulfil
all legal requirements required to be fulfilled by
the Company in connection therewith, which
requirements will include the execution and filing of
each of the Prospectuses in each of the Qualifying
Jurisdictions, in each case in form and substance
satisfactory to the Agent as evidenced by its
execution thereof;
(b) prior to the filing of each of the Prospectuses, the
Company will allow the Agent and its affiliates to
conduct all investigations of the Company and its
affairs the Agent considers necessary in order to
fulfil the Agent's obligations as statutory
underwriters and in order to enable the Agent
responsibly to execute the certificates required to
be executed by the Agent in such documents;
(c) the Company will deliver or cause to be delivered to
the Agent:
(i) at the time of execution of each of the
Prospectuses by the Agent, the Prospectus
duly executed by officers and directors of
the Company, in the form required by the
Applicable Securities Laws of the Qualifying
Jurisdictions; and
(ii) at the time of execution of the Final
Prospectus by the Agent, a comfort letter of
auditor of the Company addressed to the
Agent and the directors of the Company and
dated as of the date of the Prospectus, in
form and content acceptable to the Agent,
acting reasonably, relating to the
verification of the financial information
and accounting data contained in the
Prospectus;
(d) the Company will deliver or cause to be delivered to
the Agent duly executed copies of any Supplementary
Material required to be filed by the Company in
accordance with subsection (e) below and if any
financial or accounting information is contained in
any of the Supplementary Material, a comfort letter
similar to that required by subclause (c)(ii) above;
(e) during the period prior to the completion of the
distribution of the Underlying Securities, the
Company will promptly notify the Agent in writing of
any Material Change (actual or proposed) in the
business, affairs, operations, assets or liabilities
(contingent or otherwise) or capital of the Company,
taken as a whole, or of any change which is of such a
nature as to result in a "Misrepresentation" (as that
term is defined in the British Columbia Act) in
either of the Prospectuses or any amendment thereto
and:
(i) the Company will promptly, and in any event
within any applicable time limitation,
comply with all filing and other
requirements under the Applicable Securities
Laws, and with the rules of the stock
exchanges on which the Underlying Securities
are listed, applicable to the Company as a
result of any such change; and
(ii) notwithstanding the foregoing, the Company
will not file any amendment to either of the
Prospectuses or any other material
supplementary to the
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Prospectuses (all such amendments and
material being the "Supplementary Material")
without first obtaining the approval of the
Agent as to the form and content thereof,
which approval will not be unreasonably
withheld and which will be provided on a
timely basis;
and, in addition to the foregoing, the Company will,
in good faith, discuss with the Agent any change in
circumstances (actual or proposed) which is of such a
nature that there is or ought to be consideration
given by the Company as to whether notice in writing
of such change need be given to the Agent pursuant to
this paragraph;
(f) the Company will, from time to time, without charge
to the Agent, deliver to the Agent as many copies of
the Prospectuses (and in the event of any amendment
to the Prospectuses, copies of such amendments) and
the Supplementary Material as the Agent may
reasonably request for the purposes contemplated
hereunder, provided that, in the case of the
Preliminary Prospectus and any amendment thereto,
such copies need not be in commercial form, and such
delivery will constitute the consent of the Company
to use of the documents by the Agent in connection
with the distribution of the Underlying Securities,
subject to compliance by the Agent with the
Applicable Securities Laws of each of the Qualifying
Jurisdictions and the Offering Jurisdictions;
(g) the delivery by the Company to the Agent, of the
Prospectus and any Supplementary Material will
constitute the Company's representation and warranty
to the Agent that all material information and
statements (except information and statements
relating solely to the Agent) contained in such
documents, at the respective dates of initial
delivery thereof, comply with the Applicable
Securities Laws of the Qualifying Jurisdictions and
are true and correct in all material respects, and
that such documents, at such dates, contain no
Misrepresentation and constitute full, true and plain
disclosure of all material facts (as that phrase
would be interpreted under the B.C. Act and the
Alberta Act) relating to the Company, taken as a
whole, and to the Underlying Securities as required
by the Applicable Securities Laws of the Qualifying
Jurisdictions;
(h) other than securities to be issued in partial payment
of the acquisition of hearing clinics or incentive
stock options granted to directors, officers or
employees of the Company, the Company will not issue
or announce the issuance of any common shares or
other securities of the Company, except for those
securities issuable under those securities set out in
the Preliminary Prospectus, for a period of six
months following the completion of the issuance of
the Special Warrants without the prior written
consent of the Agent, which consent will not be
unreasonably withheld. If any common shares or
options to purchase common shares are issued, then
the issue or striking price shall be not less than
the price of the Special Warrants offered hereunder;
(i) the Company will maintain its status as a reporting
issuer not in default under the Alberta Act, and its
regulations and rules until the Qualification Date,
and if the Qualification Date has not occurred on or
before the Expiry Date, the Company will use its
reasonable best efforts to:
(i) maintain that status for a period of one
year from the Closing Date; and
(ii) in the event that:
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(1) any holder of Special Warrants who
acquires Underlying Securities upon
the exercise of his Special Warrants
is or becomes entitled under
Applicable Securities Laws to the
remedy of rescission by reason of
the or the Final Prospectus or any
amendment thereto containing a
Misrepresentation, the holder will
be entitled to rescission not only
of the holder's exercise of those
Special Warrants but also of the
purchase of the Special Warrants
hereunder, and will be entitled in
connection with the rescission to a
full refund of all consideration
paid to the Company on the
acquisition of those Special
Warrants; and
(2) if the holder is a permitted
assignee of the interest of the
original Purchaser of Special
Warrants, the permitted assignee
will be entitled to exercise the
rights of rescission and refund
granted hereunder as if the
permitted assignee was the original
Purchaser of the Special Warrants;
and the foregoing is in addition to
any other right or remedy available
to a holder of the Special Warrants
under section 114 of the B.C. Act or
corresponding provisions of the
Alberta Act or other securities
legislation or otherwise at law.
7.2 The Agent covenants with the Company as follows:
(a) subject to the Company satisfying subsection 7.1, the
Agent will, upon the request of the Company, execute
each of the Prospectuses and any Supplementary
Material presented to the Agent for execution and
will use its reasonable best efforts to assist the
Company in obtaining any requisite regulatory
approvals in connection with the preparation and
filing of such documents; and
(b) the Agent will use its reasonable best efforts to as
soon as practicable after the Qualification Date and
will, upon the request of the Company, deliver copies
of the Final Prospectus to the holders of the Special
Warrants and assist the Company in facilitating the
exercise of the Special Warrants and the issuance of
the Underlying Securities to the holders thereof.
8. PAYMENT OF EXPENSES
Whether or not the transactions contemplated in this agreement are completed,
the Company will pay or cause to be paid all expenses of or incidental to the
issuance and sale of the Special Warrants and all other matters in connection
with the transactions contemplated under this agreement, including, without
limitation, the reasonable direct out-of-pocket expenses incurred by the Agent
including without limitation, advertising, travel courier and telephone expenses
and the reasonable fees and disbursements of counsel to the Agent. Other than
legal expenses, the Agent agrees to obtain authorization from the Company prior
to incurring any single expense greater than $1,000. All third party costs
incurred with respect to this offering shall be the responsibility of the
Company, including, without limitation, printing, mailing and road show
expenses, regardless of whether this offering is completed.
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9. INDEMNITY AND CONTRIBUTION
9.1 The Company will protect and indemnify the Agent and each of the Agent's
directors, officers, employees, agents and solicitors (collectively the
"Indemnified Persons") against all losses, claims, costs, damages or liabilities
caused by or arising directly or indirectly by reason of:
(a) any Misrepresentation or alleged Misrepresentation
(except of a fact relating solely to the Agent)
contained in the Prospectuses, any Supplementary
Material or any certificate of the Company or any
officer thereof delivered to the Agent pursuant to
this agreement;
(b) the Company not complying with any requirement of
applicable legislation of Canada or any of the
Qualifying Jurisdictions to make any document
available for inspection;
(c) any order made by any securities commission, stock
exchange or other competent authority, based upon any
Misrepresentation or alleged Misrepresentation
(except of a fact relating solely to the Agent) in
the Prospectuses or any Supplementary Material, which
prevents or materially adversely affects trading or
distribution of the Underlying Securities in any of
the Qualifying Jurisdictions;
(d) the Agent's activities in connection with this
offering unless the losses, claims, damages,
liabilities or expenses arise from the gross
negligence or bad faith of the Agent; or
(e) any other breach by the Company of any of the terms
of this agreement.
9.2 If any matter contemplated by subsection 9.1 is asserted in an action or
claim against any one or more of the Indemnified Persons in respect of which
matter indemnity may be sought against the Company pursuant to this agreement,
or any potential action or claim comes to their knowledge, the Indemnified
Person will notify the Company as soon as possible in writing of the nature of
the action or claim and the Company will be entitled to (but not required to)
assume the defence of that action or claim, including the employment of legal
counsel (satisfactory to the Indemnified Person, acting reasonably) and assume
payment of the expenses in relation thereto. Each Indemnified Person will have
the right to employ separate legal counsel in any action or claim and to
participate in the defence thereof, but the fees and expenses of that counsel
will be at the expense of the Indemnified Person and not of the Company unless:
(a) the employment of that legal counsel has been
specifically authorized in writing by the Company in
connection with the defence of the action or claim;
(b) the Company has not, within five business days after
having received written notice of the action or
claim, employed legal counsel to have conduct of the
defence of the action or claim; or
(c) the named parties to any action or claim (including
any added, third or interpleaded parties) include
both the Indemnified Person and the Company, and such
Indemnified Person has been advised by counsel that
there may be defenses available to the Indemnified
Person which are different from or additional to
those available to the Company (in which case the
Company will not have the right to assume or direct
the defence of the action or claim on behalf of the
Indemnified Person);
Notwithstanding the foregoing, no settlement may be made by the Indemnified
Person concerned without the prior written consent of the Company which consent
will not be unreasonably withheld.
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9.3 The Company will not make any claim for, and hereby irrevocably waives any
right by statute or common law to, contribution against the Agent or any of the
Agent's directors, officers, employees, agent or solicitors in the event of any
action or claim brought against the Company as a result of any Misrepresentation
or alleged Misrepresentation referred to in subsection 9.1 other than a
Misrepresentation or alleged Misrepresentation relating solely to the Agent.
9.4 The right to indemnity herein provided will be in addition to and not in
derogation of any other right to indemnity or contribution which any Indemnified
Person may have by statute or otherwise at law.
10. RIGHT OF FIRST REFUSAL
10.1 The Company will notify the Agent of the terms of any further brokered
equity financing that it requires or proposes to obtain in Canada for the period
commencing on the date of this Agreement and expiring 12 months following the
Closing Date and the Agent will have the right of first refusal to act as agent
in any such financing.
10.2 The right of first refusal must be exercised by the Agent within 15 days
following the receipt of the notice by notifying the Company that it will act as
agent in such financing on the terms set out in the notice.
10.3 If the Agent fails to give notice within the 15 days that it will act as
agent in such financing upon the terms set out in the notice, the Company will
then be free to make other arrangements to obtain financing from another source
on the same terms or on terms no less favourable to the Company, subject to
obtaining the acceptance of the regulatory authorities pursuant to Applicable
Securities Laws.
10.4 The right of first refusal will not terminate if, on receipt of any notice
from the Company under this Section, the Agent fails to exercise the right.
11. ASSIGNMENT AND SELLING GROUP PARTICIPATION
11.1 The Agent will not assign this agreement or any of its rights under this
agreement nor, with respect to the securities, enter into any agreement in the
nature of an option or a sub-option unless and until, for each intended
transaction, the Agent has obtained the consent of the Company and notice has
been given to and accepted by the regulatory authorities pursuant to Applicable
Securities Laws.
11.2 The Agent may offer selling group participation in the normal course of the
brokerage business to selling groups of other licensed dealers, brokers and
investments dealers, who may or who may not be offered part of the Fee, the
Corporate Finance Fee, the Syndication Fee or Agent's Option derived from this
offering.
12. MISCELLANEOUS
12.1 Any notice to be given hereunder will be in writing and may be given by
telecopier or by hand delivery and will, in the case of notice to the Company,
be addressed and telecopied or delivered to:
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HealthCare Capital Corporation
Xxxxx 0000, 000 Xxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxxxxxx X. Good
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Ballem XxxXxxxx
Barristers and Solicitors
0000 Xxxxx Xxxxxxxx Xxxxxx
350 - 7th Avenue, S.W.
Calgary, Alberta
T2P 3N9
Attention: Xxxxxxx XxXxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
and in the case of the Agent, be addressed and telecopied or delivered to:
X.X. Xxxxxx & Company Limited
2nd Floor, 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxxx Xxxxx
Telephone: 000-0000
Fax: 000-0000
with a copy to:
XxXxxxxxxx O'Xxxxxx Xxxxx
Solicitors
0000-000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxxxxxxx XxXxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
The Company and the Agent may change their respective addresses for notice by
notice given in the manner referred to above.
12.2 The representations, warranties, covenants, obligations and agreements of
the Company contained herein or delivered pursuant hereto will survive the
purchase by the Purchasers of the Special Warrants and will continue in full
force and effect notwithstanding any subsequent exercise or disposition by the
Purchasers of the Special Warrants or the Underlying Securities and the
Purchasers will be entitled to rely on the representations and warranties of the
Company contained herein or delivered pursuant hereto notwithstanding any
investigation which the Purchasers may undertake or which may be undertaken on
the Purchasers' behalf.
- 15 -
12.3 This agreement is governed by the laws of the Province of British Columbia
and the parties hereby attorn to the non-exclusive jurisdiction of the courts of
British Columbia for the resolution of any disputes arising out of or in
connection with this agreement.
12.4 Time is of the essence of this agreement and will be calculated in
accordance with the Interpretation Act (British Columbia).
12.5 This agreement will be effective as of and from the date of this letter
notwithstanding the actual date or dates this letter was signed and delivered by
the Agent and accepted by the Company.
12.6 Whenever a singular or masculine expression is used in this agreement it
will include the plural or the feminine or the body corporate as the context
requires.
If the foregoing is in accordance with your understanding and agreed to by you,
please signify your acceptance on the accompanying counterparts of this letter
and return the counterparts to us whereupon this letter as so accepted will
constitute an agreement between the Company and the Agent enforceable in
accordance with its terms. The agreement resulting from your acceptance of this
letter contains (together with the Subscription Agreements) the whole agreement
between the Company, the Agent and the Purchasers in respect of the subject
matters hereof and there are no warranties, representations, terms, conditions
or collateral agreements, express, implied or statutory, relating to this
offering other than as expressly set forth herein and in any amendments hereto,
or except as incorporated by reference herein.
Yours truly,
X.X. XXXXXX & COMPANY LIMITED
By: /S/ XXXXXX X. YEA
C. Michael O'Xxxxx, Chairman
Xxxxxx X. Yea, Director
The foregoing is accepted and agreed to on the 23RD day of SEPTEMBER , 1996
effective as of the date appearing on the first page of this agreement.
HEALTHCARE CAPITAL CORP.
By: /S/ XXXXXXX XXXXXX
Authorized Signatory
XXXXXXX XXXXXX
Print Name
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SCHEDULE "A"
UNITED STATES OFFERS AND SALES
As used in this Schedule "A", the following terms shall have the meanings
indicated:
(a) "Directed Selling Efforts" means "directed selling efforts" as
that term is defined in Regulation S. Without limiting the
foregoing, but for greater clarity in this schedule, it means,
subject to the exclusions from the definition of "directed
selling efforts" contained in Regulation S, any activity
undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the
United States for any of the Special Warrants or Underlying
Securities, and includes the placement of any advertisement in
a publication with a general circulation in the United States
that refers to the offering of the Special Warrants or
Underlying Securities;
(b) "Foreign Issuer" means a "foreign issuer" as that term is
defined in Regulation S;
(c) "Regulation S" means Regulation S adopted by the United States
Securities and Exchange Commission under the U.S. Securities
Act;
(d) "Substantial U.S. Market Interest" means "substantial U.S.
market interest" as that term is defined in Regulation S;
(e) "U.S. Securities Act" means the United States Securities Act
of 1933, as amended;
(f) "United States" means the United States of America, its
territories and possessions, any state of the United States,
and the District of Columbia; and
(g) "U.S. Person" means "U.S. person" as that term is defined in
Regulation S.
PART I - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company acknowledges that neither the Special Warrants nor the Common Shares
have been or will be registered under the U.S. Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, any U.S. Person except in accordance with Regulation S under the U.S.
Securities Act or pursuant to an exemption from the registration requirements of
the U.S. Securities Act. Accordingly, the Company represents, warrants,
covenants and agrees to and with the Agent that:
1. The Company is a Foreign Issuer with no Substantial U.S. Market Interest. A
majority of its outstanding voting securities are and will at the Closing be
held by persons with registered addresses outside the United States.
2. In connection with all offers and sales of the Special Warrants in the United
States or to, or for the account or benefit of, a U.S. Person:
(a) It acknowledges that the Special Warrants, the Underlying
Securities and the Agent's Option have not been and will not
be registered under the U.S. Securities Act and may not be
offered or sold within the United States or, to or for the
account or benefit of, U.S. Persons, except pursuant to an
exemption from the registration requirements of the U.S.
Securities Act. It has offered and sold and will offer and
sell the Special Warrants only in accordance with Rule 903 of
Regulation S or as provided in paragraphs (b) through (e)
below. Accordingly, neither it or its affiliate(s), nor any
persons acting on its or their behalf have engaged or will
engage in any Directed Selling Efforts with respect to the
Special Warrants.
- 1 -
- 2 -
It has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Special
Warrants, except with the prior written consent of the Agent.
(b) All offers and sales of the Special Warrants in the United
States will be effected directly by the Company through a U.S.
broker-dealer.
(c) Immediately prior to soliciting offerees in the United States,
it had reasonable grounds to believe and did believe that each
offeree was an "accredited investor" as defined in Rule 501(a)
of Regulation D under the U.S. Securities Act (an "Accredited
Investor").
(d) No form of general solicitation or general advertising (as
those terms are defined in Regulation D under the U.S.
Securities Act) will be used, including advertisements,
articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio
or television, or any seminar or meeting whose attendees have
been invited by general solicitation or general advertising.
(e) Prior to any sale of Special Warrants in the United States, it
shall cause each purchaser thereof to enter into the form of
U.S. Subscription Agreement attached hereto as Schedule "C".
3. The Company agrees to obtain substantially identical undertakings from any
placement agent engaged in connection with the distribution of the Special
Warrants contemplated hereby. The Company has not entered and will not enter
into any contractual arrangement with respect to the distribution of the Special
Warrants, except with the prior written consent of the Agent.
4. The Company is not an open-end investment company or unit investment trust
registered or required to be registered or closed-end investment company
required to be registered, but not registered, under the United States
Investment Company Act of 1940.
PART II - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE AGENT
The Agent represents, warrants, covenants and agrees with the Company that:
1. The Agent acknowledges that the Special Warrants, the Underlying Securities
and the Agent's Option have not been and will not be registered under the U.S.
Securities Act.
2. Neither the Agent nor any of its affiliates, a member of any selling group
formed in connection with the distribution of the Special Warrants, nor any
person acting on its or their behalf, has made or will make:
(a) any offer to sell, or any solicitation of an offer to buy, any
Special Warrants to a U.S. Person or a person in the United
States; or
(b) any sale of Special Warrants unless, at the time the buy order
was or will have been originated, the purchaser is:
(i) outside the United States, or
(ii) the Company, its affiliates, and any person acting on
their behalf reasonably believes that the purchaser
is outside the United States.
- 2 -
- 3 -
3. During the period in which the Special Warrants (as well as the Common Shares
issuable upon exercise thereof) are offered for sale, neither it nor any of its
affiliates, a member of any selling group formed in connection with the
distribution of the Special Warrants, nor any person acting on its or their
behalf has made or will make any Directed Selling Efforts in the United States,
or has taken or will take any action that would cause the exclusion from
registration afforded by Regulation S to be unavailable for offers and sales of
the securities offered pursuant to this Agreement.
- 3 -
