HEALTHCARE CAPITAL CORP.
0000-000 Xxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Xxxxxx
U.S. PLACEMENT AGREEMENT
October 14, 1996
Sunrise Securities Corporation
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
HealthCare Capital Corp., an Alberta corporation (the "Company"),
hereby confirms its agreement with you ("Sunrise") 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 X.X. Xxxxxx & 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 SUNRISE. The Company hereby appoints Sunrise 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
"Sunrise Offer"). (Dallas Research & Trading Inc. ("Dallas Research") may as
co-agent solicit subscriptions for an additional 2,000,000 Special Warrants).
Sunrise, 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
endeavor to obtain, on a best efforts basis, subscribers ("Subscribers") for the
Special Warrants offered as part of the Sunrise Offer. By executing this
Agreement, the Agent: (a) consents to the execution, delivery and
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performance by the Company and Sunrise 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 Sunrise 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
Sunrise 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 Sunrise, 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 Sunrise deems
necessary to comply with the statutes, rules, regulations and judicial
and administrative interpretations applicable to the Sunrise 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 Sunrise shall deem
appropriate.
(c) SEGREGATION OF FUNDS. Each Subscriber shall tender a check
or money order payable to "Sunrise Securities Corporation, as agent for
HealthCare Capital Corp.," or wire transfer funds to the Escrow Account
(defined below), in payment of the full purchase price of the Special
Warrants subscribed for. The proceeds of such checks and such funds
shall be held in an escrow account (the "Escrow Account") at United
States Trust Company of New York (the "Bank"). Fees charged by the Bank
in connection with the Escrow Account shall be paid by the Company and
the Company shall be entitled to any interest earned in the Escrow
Account.
(d) CLOSING; TERMINATION OF OFFERING. The Closing of the
Sunrise Offer (the "Final Closing") shall occur on November 15, 1996 or
such later date as may be mutually agreed upon by the Company and
Sunrise (the "Final Closing Date"). By mutual agreement of the Company
and Sunrise, an interim closing (the "Initial Closing") of the Sunrise
Offer may occur prior to the Final Closing Date. Each of the Initial
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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". At each Closing, the Company shall deliver to Sunrise, on behalf
of the appropriate Subscribers, the certificates representing the
Special Warrants being purchased by such Subscribers at such Closing
against payment therefor out of the Escrow Account. 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 4.3 and Section 9 of this Agreement.
4. COMPENSATION OF SUNRISE.
4.1. At each Closing, the Company shall pay Sunrise (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 Sunrise, 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
"Sunrise Option") entitling Sunrise to acquire without the payment of
any consideration warrants (the "Sunrise 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 Sunrise a non-refundable consulting fee equal to 1% of the gross
proceeds from the sale of Special Warrants in the Sunrise Offer (not to exceed
U.S. $25,000) for financial advisory services to be rendered by Sunrise to the
Company.
4.2. The Compensation Warrants, the Sunrise Option, the securities
issuable upon the exercise or deemed exercise of each, and the Common Shares
issuable upon exercise of the Sunrise 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.
4.3. In addition to the compensation payable to Sunrise under Section
4.1 of this Agreement, the Company shall, at each Closing, pay, or reimburse
Sunrise for, the previously unpaid reasonable fees, disbursements and costs of
Xxxxxx, Xxxxxxx & Xxxxxxx, legal counsel to Sunrise, in connection with this
Agreement and the transactions contemplated hereby and in
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connection with the Agency Agreement and the Dallas Research Agreement
(hereinafter defined).
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Sunrise 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 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,
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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 Sunrise Option, the
Sunrise 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 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 Sunrise 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
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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 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
Sunrise Option and the securities issuable upon the exercise of any of
the foregoing and of the Warrants and the Sunrise 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,
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(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 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
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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 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 Sunrise, 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
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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
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
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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 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 Sunrise 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 Dallas Research
(the "Dallas 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
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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 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 Sunrise, or to counsel for Sunrise, shall be deemed to be a
representation and warranty by the Company to Sunrise as to the matters covered
thereby.
6. COVENANTS OF THE COMPANY.
(a) PLACEMENT MEMORANDUM. The Company will furnish Sunrise,
without charge, with as many copies of the Memorandum as Sunrise 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 Sunrise thereof and furnish to Sunrise, in such quantities as
Sunrise 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
Sunrise, 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 Sunrise
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
Sunrise'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 Sunrise determines that offers or sales will be
made,
- 11 -
or (ii) obtain an exemption from such qualification or registration in
such states. The Company will promptly advise Sunrise:
(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
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 Sunrise any additional information, documents
and instruments which Sunrise 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 co-operate with Sunrise'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 Sunrise,
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,
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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 SUNRISE.
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:
(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, Sunrise and
Dallas Research, 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 Sunrise 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, Sunrise and Dallas
Research 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, Sunrise and Dallas
Research 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
- 13 -
cause the exemption afforded by Regulation S to be unavailable for
offers and sales in the Canadian Offer.
7.3 Sunrise 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.
(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 Sunrise Offer, and (e) it has not and will not take
any action in connection with the Sunrise Offer that would constitute a
violation of Rule 10b-6 or 10b-7 under the Exchange Act.
8.(a) CONDITIONS TO SUNRISE'S OBLIGATIONS. The obligations of Sunrise
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 Sunrise
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. Sunrise 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 Sunrise'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 Sunrise 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;
- 14 -
(iv) OPINION OF COUNSEL. Sunrise will have received
from Ballem XxxXxxxx, 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 XxxXxxxx and is acceptable to Sunrise
and its counsel; and
(v) LOCK-UP AGREEMENTS. Sunrise 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 securities of
the Company without the prior written consent of Sunrise 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 Sunrise contained
herein as of the date hereof and as of such Closing Date, to the
performance by Sunrise 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 Sunrise 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
Sunrise.
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 Sunrise 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 Sunrise 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 Sunrise's counsel in connection therewith.
- 15 -
10. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless Sunrise and each person, if any, who
controls Sunrise within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which
Sunrise 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
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 Sunrise and each such controlling person
for any legal or other expenses reasonably incurred by Sunrise 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 Sunrise specifically
for use in the Memorandum.
(b) INDEMNIFICATION BY SUNRISE. Sunrise 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 Sunrise, 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 Sunrise) 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 Sunrise 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 Sunrise
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
- 16 -
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 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 Sunrise 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 Sunrise 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 Sunrise on the other hand, shall be
deemed to be in the same proportion as the total proceeds from the
Sunrise Offer before deducting expenses) received by the Company, bear
to the initial value of the compensation and to Sunrise pursuant to
Section 4.1 of this Agreement. The relative fault of the Company on the
one hand, and Sunrise 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
- 17 -
in connection with investigating or defending any action or claim. The
Company and Sunrise 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 Sunrise herein
will survive the delivery and execution hereof and each Closing hereunder, and
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Sunrise or any person who controls Sunrise
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 SUNRISE. Sunrise 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 Sunrise 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 Sunrise for all reasonable out-of-pocket
disbursements (including fees and disbursements of Sunrise's counsel) actually
incurred by Sunrise in connection with the Sunrise Offer and not theretofore
paid. Notwithstanding the foregoing, nothing contained in this Section 12 shall
imply that Sunrise 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 Sunrise, to Sunrise Securities Corporation, 000 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile 212-421-5924),
Attention: Xx. Xxxx Xxxxxxxxx, with a copy to Xxxxxx, Xxxxxxx & Xxxxxxx, 0 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx (facsimile
212-732-3232); if to the Company, to HealthCare Capital Corp., 0000-000 Xxxx
Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0, Xxxxxx, Attn: Xxxxxxx X. Good, with a copy to
Ballem XxxXxxxx, 1800 First Canadian Centre, 350 - 7th Avenue S.W., Calgary,
Alberta T2P 3N9, Canada, Attn: Xxxxxxx XxXxxx (facsimile 403-233-
- 18 -
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 Sunrise, 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 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
Sunrise, 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 deemed to have been made and delivered
in New York City and will be governed as to validity, interpretation,
construction, effect and in all other
- 19 -
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 Supreme Court of the State of New
York, County of New York, or in the United States District Court for the
Southern District of New York, (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 the Supreme Court of the State
of New York, County of New York, and the United States District Court for the
Southern District of New York 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.
If the foregoing correctly sets forth our understanding, please so
indicate in the space
- 20 -
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/ XXXXXXX X. GOOD
Name: Xxxxxxx X. Good
Title: Chairman
CONFIRMED AND ACCEPTED: Confirmed as to Section 2:
SUNRISE SECURITIES CORPORATION X.X. XXXXXX & COMPANY
LIMITED
By: /S/ XXXX XXXXXXXXX By: /S/ C. M. O'XXXXX
Name: Xxxx Xxxxxxxxx Name:
Title: Vice President Title:
- 21 -
EXHIBIT A
[HERE WILL BE INSERTED THE SUNRISE OPTION AND RELATED WARRANT]
- 1 -
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 Sunrise Offer; (ii) the exercise of the
Warrants issued upon the exercise or deemed exercise of such Special Warrants
and (iii) the exercise of the Sunrise Warrants issued upon the exercise of the
Sunrise 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
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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 Sunrise
Option, the Sunrise 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 Sunrise 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 Sunrise 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 and Dallas Research & Trading
Inc. 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 Sunrise and Dallas 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.
(see Exhibit 10.17)
