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EXHIBIT 10(vi)
January 7, 1997
Receptagen Ltd.
000 X Xxxxxx
Xxxxx 000
Xxxxxxx, XX 980
Dear Sirs:
Re: Receptagen Ltd. ("Receptagen" or the "Company")
This letter, together with the attached schedules, is a follow-up to
our letter dated December 16, 1996 and will serve to summarize our discussions
in Palm Beach on December 30, 1996.
We would ask you to signify your agreement to the terms outlined in the
attached term sheet by signing the enclosed duplicate copy of this letter prior
to January 8, 1997 at 10:00 A.M. (Palm Beach time). Upon receipt of the executed
letter, we shall prepare the necessary News Release together with you. We shall
then instruct our respective legal counsel to prepare the appropriate
documentation and obtain the necessary approvals and/or exemptions from the
shareholders and the regulators.
Yours truly,
INTERUNION FINANCIAL CORPORATION
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
President and C.E.O.
Accepted this 19th day of January 1997
Receptagen Ltd.
Per: /s/ Xxxxxx Xxxxxxx
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Encls.: Schedules "A", "B", "C"
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Schedule "A"
RECEPTAGEN LTD. ("Receptagen")
RECAPITALIZATION PLAN
PROPOSED RESTRUCTURING:
ROLLOVER OF DEBT: All trade creditors, excluding: the University of
Washington and the National Research Council, the
Biomedical Research Centre (BRC) at the University of
B.C., and the Brooklyn Health Service Center at the
State University of New York, agree to exchange debt
of approximately C$7,000,000 for InterUnion Financial
Corporation ("IUFC") shares. (Terms as outlined
below).
BRIDGE FINANCING: IUFC will guarantee a commitment from New
Researches Corp. ("NRC") to make available to
Receptagen up to C$300,000, starting immediately
upon completion of the due diligence, but not later than
January 25, 1997. The proceeds of the bridge
financing will be disbursed by IUFC upon instructions
from Receptagen. This credit facility will be
exchangeable for a convertible debenture of
Receptagen.
PRIVATE PLACEMENT: Receptagen to complete a Private Placement of Special
Warrants for aggregate proceeds of up to C$2,500,000.
(Terms as outlined below)
BOARD OF DIRECTORS: As agreed by the Company and IUFC; IUFC will have
a minimum of one nominee on the Board of directors.
DUE DILIGENCE: To commence immediately
EXPENSES AND
LEGAL FEES: To be paid by Receptagen
CLOSING DATE: February 14, 1997
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XXXXXXXX XX XXXX:
TRANSACTION #1:
AMOUNT: Approximately C$7,000,000
CONVERSION OF DEBT: Trade creditors will receive C$0.10 per C$1.00 in IUFC
Common Shares under Regulation "S".
PRICE OF
COMMON SHARES: US$5.00 per IUFC Common Share
NUMBER OF
COMMON SHARES: Approximately 105,000 IUFC Common Shares
TRANSACTION #2:
ROLLOVER OF DEBT: IUFC will receive C$0.10 per C$1.00 of debt.
CONVERSION OF PRICE: Maximum discount allowed by the Toronto Stock
Exchange but not greater than C$0.07 per Common
Share
NUMBER OF
COMMON SHARES: Approximately 9,300,000 Common Shares of
Receptagen together with the same number of Common
Share Purchase Warrants ("Units 'A'")
QUALIFICATION: All the Units 'A' will qualify under the Prospectus to be
filed with the Ontario Securities Commission, as
outlined in Schedule "C".
ADVISOR: Credifinance Capital Inc.
ADVISOR'S FEE: 10% of the amount of the debt, payable by Receptagen
CLOSING DATE: January 25, 1997
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SCHEDULE "B"
RECEPTAGEN LTD.
BRIDGE FINANCING:
AMOUNT: Up to C$300,000 in the form of a revolving credit
facility, exchangeable into a convertible debenture of
Receptagen.
CONVERSION OF
THE LOAN: IUFC will convert the amount of funds advanced to the
Company into Receptagen Common Shares together
with the same number of Common Share Purchase
Warrants ("Units 'B'"). The exercise price of the
Warrant will be the same as the conversion price. The
Units "B" underlying the convertible debenture will be
qualified by way of Prospectus.
CONVERSION PRICE: C$0.07 per Common Share
NUMBER OF
COMMON SHARES: Up to 4,285,000 Common Shares
NUMBER OF WARRANTS: Up to 4,285,000 Warrants
COMMENCEMENT DATE: Immediately upon finalizing due diligence, but not later
than January 25, 1997.
SECURITY: General Security Agreement on the assets of the
Company and Undertaking from the Company and its
subsidiaries in a form acceptable to the Lender and its
legal counsel. The Security will specifically include all
rights to Receptagen's intellectual property.
ADVISOR: Credifinance Capital Inc.
ADVISOR'S FEE: 10% of the amount of the line of credit, in cash
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SCHEDULE "C"
RECEPTAGEN LTD.
PRIVATE PLACEMENT OFFERING
ISSUER: Receptagen
OFFERING: Private Placement of o Special Warrants
AMOUNT: Up to C$2,500,000
OFFERING PRICE: - per special warrant The Offering Price will be the closing
market price of the Common Shares of the Company on the Toronto
Stock Exchange for the business day immediately prior to the
Company's press release announcing the warrant restructuring
less the maximum discount allowed.
USE OF PROCEEDS: The proceeds will be used to fund research and development.
Pending use for these purposes, the proceeds will be added
to the working capital of the Company.
TERMS OF
DISBURSEMENT: The offering is subject to the Company converting its trade
payables into Common shares of IUFC. Funds will be
disbursed to the Company only if creditors of Receptagen
accept the terms of conversion of the Company debt.
LISTING: The Common Shares of the Company are listed on the
Toronto Stock Exchange (symbol "RCG")
JURISDICTION: Ontario and such other jurisdictions as agreed to by the
Company and the Agent.
MINIMUM -Special Warrants
SUBSCRIPTION: ($- per purchaser)
SPECIAL WARRANTS: Each Special Warrant will be exercisable, without payment
of additional consideration, for one Unit 'C', with each Unit
'C' consisting of one Common share of the Company and one
transferable Share Purchase Warrant exercisable into one common
share at C$o per common Share for two years.
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PROSPECTUS FILING: The Company and the Agent agree to prepare and file a final
prospectus (the "Prospectus") for the Common Shares to be
issued upon the exercise of the Special Warrants with the
Ontario Securities Commission and the Company agrees to
use its best efforts to obtain receipts therefor on or before 5:00
P.M. (Toronto time) on o, 1997 (the "Qualification Date").
EXERCISE OF
SPECIAL WARRANTS: The purchaser will be entitled to exercise the Special Warrants
for Common Shares at any time or prior to 5:00 p.m. (Toronto
time) on the earlier of (I) the sixth business day following the
date that a receipt is issued for the Prospectus by the Ontario
Securities Commission and (ii) o, 1997 (the "Expiry Date").
Any Special Warrants not exercised by the Expiry Date shall
be deemed to be exercised by the holder thereof, without
further action on the holder's part immediately prior thereto.
PENALTY: If the Prospectus is not filed and receipts issued therefor by the
Ontario Securities Commission on or before the Qualification
Date, each Special Warrant shall be exercisable for 1.1 Common
Share without payment of additional consideration.
AGENT: Credifinance Securities Limited
AGENT'S COMPENSATION: 7.50% of the total gross proceeds realized by the Company
upon the sale of the Special Warrants.
AGENT'S WARRANTS: Subject to entering into a standard agency agreement (which
will be subject to standard industry outs), the Agent will receive
a two year non-transferrable warrant to buy that number of
Common Shares of the Company that is equal to 10% of the
number of Common Shares forming part of the Units issuable
on exercise of the Special Warrants sold pursuant to the
Offering. The exercise price of the Warrant shall be that of
Offering Price.
CLOSING DATE: February 14, 1997 or such other date as agreed by the
Company and the Agent.
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