Exhibit 4.11
EXECUTION COPY
August 10, 2001
Cardiome Pharma Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX X0X 0X0
XXXXXX
Re: Introduction Agreement (the "Agreement")
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Dear Sirs:
1. This is to confirm our understanding that Paramount Capital, Inc.
("Paramount"), its affiliates and designees have been engaged as non exclusive
introducing agent and consultant (with the exception of those services that may
be performed by Paramount, regarding a merger or acquisition of the Company as
described in paragraph 4 herein, in which case Paramount shall be the exclusive
introducing agent and consultant) of Cardiome Pharma Corporation (the "Company")
for a period of six (6) months commencing on the date hereof (as may be extended
pursuant to Paragraph 10 hereto, or by mutual agreement of the parties hereto,
the "Term").
2. (a) The Company agrees that it will pay Paramount a non-refundable
retainer fee in an amount equal to five thousand dollars (US$5,000) per month
("Retainer Fee"), with the first three (3) months payable at the time of the
execution of this Agreement (the "Initial Retainer Fee").
(b) (1) Upon execution of this Agreement, the Company will issue to
Paramount, or its designees, warrants (the "Retainer Warrants") to purchase
750,000 shares of the Company's Common Stock ("the Common Stock"). The Retainer
Warrants shall immediately vest upon execution of this Agreement. The Retainer
Warrants shall contain a cashless exercise feature and standard antidilution
protection provisions. The Retainer Warrants shall be issued in three classes
as follows: 450,000 Retainer Warrants shall be issued to Paramount pursuant to
this Paragraph 2 and shall have an exercise price of US$.60 (hereinafter the
"Class A Retainer Warrants"); 150,000 Retainer Warrants shall be issued to
Paramount pursuant to this Paragraph 2 and shall have an exercise price of
US$1.20 (hereinafter the "Class B Retainer Warrants"); and 150,000 Retainer
Warrants shall be issued to Paramount pursuant to this Paragraph 2 and shall
have an exercise price of US$3.00 (hereinafter the "Class C Retainer Warrants").
The term of the Retainer Warrants, subject to Paragraphs 4, 5, and 10 herein,
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shall be as follows: i) 150,000 Class A Retainer Warrants shall be exercisable
for a period of seven (7) years commencing on the date that is six (6) months
from the date of this Agreement; ii) the remaining 300,000 Class A Retainer
Warrants shall be exercisable for a period of two (2) years commencing on the
date that is six (6) months from the date of this Agreement; iii) 50,000 Class B
Retainer Warrants shall be exercisable for a period of seven (7) years
commencing on the date that is six (6) months from the date of this Agreement;
iv) the remaining 100,000 Class B Retainer Warrants shall be exercisable for a
period of two (2) years commencing on the date that is six (6) months from the
date of this Agreement; v) 50,000 Class C Retainer Warrants shall be exercisable
for a period of seven (7) years commencing on the date that is six (6) months
from the date of this Agreement; iv) the remaining 100,000 Class C Retainer
Warrants shall be exercisable for a period of two (2) years commencing on the
date that is six (6) months from the date of this Agreement. Notwithstanding
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the foregoing, IF the Company completes a Sale or Acquisition as described in
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paragraph 4 herein at any time before the date that is two (2) years from the
date hereof THEN all of the Retainer Warrants shall be exercisable for a period
of seven (7) years commencing on the date that is six (6) months from the date
of this Agreement. Notwithstanding the foregoing, should Paramount cancel this
Agreement, pursuant to Paragraph 10 herein, prior to the date that is six (6)
months from the date of this Agreement, then the Retainer Warrants shall
automatically expire and become null and void.
(2) The shares of Common Stock issuable upon exercise of the Retainer
Warrants shall be included in the Company's next filed registration statement
with the Securities and Exchange Commission and subsequently be freely
tradeable, without restriction The Company represents and warrants that no
documents are required to be filed, proceedings taken or approvals, permits,
consents, orders or authorizations of regulatory authorities required to be
obtained in Canada for Paramount to be able to sell the common shares issued on
exercise of the Retainer Warrants through the facilities of The Toronto Stock
Exchange, provided that Paramount is not a "control person" as that term is
defined in the British Columbia Securities Act. In the event that documents are
required to be filed, proceedings taken or approvals, permits, consents, orders
or authorizations of regulatory authorities are required to be obtained in
Canada for Paramount to be able to sell the common shares issued on exercise of
the Retainer Warrants through the facilities of The Toronto Stock Exchange, then
the Company shall use its best efforts to complete such filings or proceedings
or obtain such approvals, permits, consents, orders or authorizations.
(c) The Company also agrees to reimburse Paramount for all out-of pocket
expenses incurred by Paramount in providing its services hereunder, including
reasonable fees and disbursements of Paramount's counsel, such expenses to be
paid upon submission of a xxxx or bills by Paramount from time to time. If any
individual expense shall exceed $5,000, or the expenses in the aggregate exceed
$50,000, Paramount agrees to obtain prior written authorization for such expense
from the Company.
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3. At its sole discretion, Paramount's services hereunder may include,
among other services, identifying, contacting and introducing potential
investors to the Company. Upon the closing of each Investment (as defined
below) during the Term or during the twelve (12) month period following the
expiration or earlier termination of the Term, the Company shall i) pay to
Paramount a fee in an amount equal to seven percent (7%) of the aggregate value
of such Investment; and ii) issue to Paramount warrants (the "Warrants") to
purchase an amount of securities equal to ten percent (10%) of the securities
sold as part of such Investment at a per share exercise price equal to
one-hundred-ten percent (110%) of the per share price of such securities,
exercisable until seven (7) years from the date of issuance of such Warrants.
The Warrants shall contain a cashless exercise feature and standard antidilution
protection provisions which shall include below market price protection (on a
weighted average basis). The shares of Common Stock issuable upon exercise of
the Warrants shall be i) included in the Company's next filed registration
statement with the US Securities and Exchange Commission. In addition, the
Company represents that it will use its commercially reasonable efforts to
ensure that, immediately upon exercise of the Warrants by Paramount or its
designees, at any time, such the shares of Common Stock underlying the Warrants
will be freely tradable on the Toronto Stock Exchange without restriction
(subject to compliance with applicable securities laws). For the purposes of
this Agreement, an "Investment" shall mean any sale by the Company of its
securities which is made i) during the Term or ii) during the 12 month period
following the expiration of the Term to an investor first introduced to the
Company by or through Paramount during or prior to the Term; provided, however,
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that no compensation shall be due to Paramount pursuant to this paragraph 3 for
an Investment with respect to which Paramount is entitled to compensation
pursuant to an agreement between the Company and Paramount which supersedes this
paragraph 3; and provided further that if the terms of both such superseding
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agreement and this Agreement would be applicable to any particular investment,
the terms of such superseding agreement shall govern and Paramount shall be
entitled to the compensation set forth therein.
4. (a) Should the Company enter into an agreement with a party first
introduced to the Company by or through Paramount during or prior to the Term
pursuant to which the Company consummates a sale, merger, consolidation, tender
offer, business combination or similar transaction involving a majority of the
business assets or stock of the Company (a "Sale") during the Term, or during
the 12 month period following the expiration of such Term, then the Company
shall pay Paramount a fee equal to (i) three percent (3%) of the Aggregate
Consideration (defined in paragraph 4(c) below) paid to the Company by the
acquiror for that portion of the Aggregate Consideration that is less than
$20,000,000; (ii) four percent (4%) of the Aggregate Consideration paid to the
Company by the acquiror for that portion of the Aggregate Consideration that is
greater than or equal to $20,000,000 and less than $30,000,000; and (iii) five
percent (5%) of the Aggregate Consideration paid to the Company by the acquiror
for that portion of the Aggregate Consideration that is greater than or equal to
$30,000,000. Such fee shall be paid to Paramount, simultaneously with the
closing of such Sale, in proportion to the amount of cash and securities
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comprising the Aggregate Consideration paid to the Company by the acquirer,
provided, however, that the Company shall pay to Paramount a cash fee based on
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the fair market value (as determined by both Paramount and the Company) of any
portion of the Aggregate Consideration received by the Company that is not in
the form of cash or securities. In no event, however, will the form of the fee
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paid to Paramount pursuant to this Paragraph 4(a) be less than fifty percent
(50%) cash. Notwithstanding the foregoing, should the Company enter into an
agreement to complete a Sale with any one of the companies listed on Schedule A
(attached hereto) as described in this paragraph 4(a), on or prior to November
30, 2001, Paramount shall not be entitled to a fee under this Paragraph 4(a),
provided, however, that should the Company enter into an agreement to complete a
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Sale as described in this Section 4(a) with any one of the companies listed on
Schedule A on or prior to November 30, 2001, the term of all the Retainer
Warrants shall be seven (7) years commencing on the date that is six (6) months
from the date of this Agreement.
(b) Should the Company enter into an agreement with a party first
introduced to the Company by or through Paramount during or prior to the Term
pursuant to which the Company consummates a transaction wherein the Company
acquires all or substantially all of the business assets or stock of another
entity in which the Company is the surviving entity (an "Acquisition") during
the Term, or during the 12 month period following the expiration of such Term,
then i) the Company shall pay Paramount a fee equal to three percent (3%) of the
Aggregate Consideration paid by the Company to the entity acquired; and ii) the
terms of the Retainer Warrants shall all equal 7 years commencing on the date
that is six months from the date of this Agreement. Such fee shall be paid to
Paramount, simultaneously with the closing of such transaction, in proportion to
the amount of cash and securities comprising the Aggregate Consideration paid by
the Company to the entity being acquired, provided, however, that the Company
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shall pay to Paramount a cash fee based on the fair market value (as determined
by both Paramount and the Company) of any portion of the Aggregate Consideration
received by the Company that is not in the form of cash or securities. In no
event, however, will the form of the fee paid to Paramount pursuant to this
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Paragraph 4(b) be less than fifty percent (50%) cash. Notwithstanding the
foregoing, should the Company enter into an agreement for an Acquisition with
any one of the companies listed on Schedule A (attached hereto) as described in
this paragraph 4(b), on or prior to November 30, 2001, Paramount shall not be
entitled to a fee under this Paragraph 4(b), provided, however, that should the
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Company complete an Acquisition with any one of the companies listed on Schedule
A on or prior to November 30, 2001, the term of all the Retainer Warrants shall
be seven (7) years commencing on the date that is six (6) months from the date
of this Agreement.
(c) For purposes of calculating Paramount's fee under this Paragraph 4,
the aggregate consideration ("Aggregate Consideration") paid with respect to the
business, assets or stock of the Company shall equal the total of all cash,
securities and/or other assets paid for such business, assets or stock by the
acquiror. Aggregate Consideration shall also include: (i) any commercial bank or
similar indebtedness of the Company which is repaid or for which the
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responsibility to pay is assumed by the acquiror in connection with such
transaction; (ii) the greater of the stated value or the liquidation value of
preferred stock, convertible securities, debt securities, equity securities,
notes, debentures, rights, options, and warrants of the Company which is assumed
or acquired by the acquiror and which is not converted into common stock upon
the consummation of such transaction; (iii) future payments for which the
acquiror is obligated absolutely within one year following the consummation of
transaction described in this paragraph 4 ("Acquiror Future Payments"); and (iv)
future payments for which the acquiror is a) obligated to pay upon the
attainment of milestones or financial results or b) obligated to pay absolutely
following the date that is one year from the consummation of the transaction
described in this Paragraph 4 ("Acquiror Contingent Payments"). Aggregate
Contingent Payments and Aggregate Future Payments shall not include compensation
paid pursuant to employment or consulting contracts, or the grant of equity
incentives by the acquiror to officers or employees of the Company. The fee to
be paid to Paramount as a result of Acquiror Future Payments shall be paid upon
the date of closing of such Acquisition and shall be valued at the present value
of the Acquiror Future Payments. The fee to be paid to Paramount as a result of
Acquiror Contingent Payments shall be paid upon the receipt of such payments by
the Company. In the event that a Sale of the Company or an Acquisition by the
Company is consummated through a multiple-step transaction wherein the acquiror
is not obligated either absolutely or upon the attainment of milestones or
financial results to make future payments to further increase the acquiror's
ownership in the Company (the "Multiple-Step Payments"), the Company agrees to
pay Paramount a fee on such Multiple-Step Payments which shall be calculated
pursuant to this Paragraph 4. Such fee shall be paid to Paramount upon receipt
by the Company of such Multiple-Step Payments and shall be in addition to the
fee paid to Paramount in the first step of such transaction.
5. (a) Should the Company enter into an agreement with a party first
introduced to the Company by or through Paramount during or prior to the Term
pursuant to which the Company consummates a Strategic Alliance(s) (as defined
below) during the term, or during the 12 month period following the expiration
of such Term, then i) the Company shall pay Paramount a fee equal to three
percent (3%) of the Aggregate Compensation (defined in paragraph 5(c) below) and
ii) the terms of the Retainer Warrants shall all equal 7 years commencing on the
date that is six (6) months from the date of this Agreement. Such fee shall be
paid to Paramount, simultaneously with the closing of such transaction, in
proportion to the amount of cash and securities comprising the Aggregate
Compensation received by or paid by the Company, its shareholders and employees
in each such transaction, provided, however, that the Company shall pay to
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Paramount a cash fee based on the fair market value (as determined by both
Paramount and the Company) of any portion of the Aggregate Compensation received
by or paid by the Company that is not in the form of cash or securities. In no
event, however, will the form of the fee paid to Paramount pursuant to this
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Paragraph 5(a) be less than fifty percent (50%) cash.
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(b) If prior to July 1, 2002, the Company is contemplating a Strategic
Alliance with an entity listed on Schedule B (attached hereto) and, pursuant to
the Company's written request, Paramount is asked to consult on or evaluate the
Strategic Alliance for the Company or assist in the negotiation of the Strategic
Alliance, in any way, then the term of all the Retainer Warrants shall become
seven years commencing on the date that is six (6) months from the date of this
Agreement. If, (A) at any time during the Term or during the 12 months following
the expiration of the Term the Company consummates a Strategic Alliance with any
entity listed on Schedule B subsequent to July 1, 2002 or any other entity not
listed on Schedule B and not introduced to the Company by Paramount, and (B)
pursuant to the Company's written request, Paramount is asked, prior to or
during the Term, to consult on or evaluate the Strategic Alliance for the
Company or to assist in the negotiation of the Strategic Alliance, in any way,
then i) the term of all the Retainer Warrants shall become seven years
commencing on the date that is six (6) months from the date of this Agreement
and ii) the Company shall pay Paramount a fee equal to three percent (3%) of the
Aggregate Compensation.
(c) For the purpose of calculating Paramount's fee under this Paragraph 5,
aggregate compensation ("Aggregate Compensation") shall include, but not be
limited to: (i) all payments (whether the form of such payments be cash,
securities, or some other form) made at the closing of such transaction for
equity securities, equity security rights or similar rights; (ii) technology
access fees or similar up-front payments; (iii) other future payments, including
without limitation, licensing fees, lump sum payments, royalties and deferred
technology access fees, to be made to or by the Company or its employees for
which the Strategic Alliance partner(s) or other counter-parties (each a
"Partner") is obligated absolutely and within one year following the
consummation of the Strategic Alliance ("Strategic Future Payments") or either
a) upon the attainment of milestones or on a percentage or royalty basis or b)
obligated absolutely to pay at a time that is more than one year from the
consummation of the Strategic Alliance ("Strategic Contingent Payments"); (iv)
funding provided, arranged or introduced by the Partner (through reimbursement
or otherwise) relative to research and development, whether such work is
performed, subcontracted or managed by the Company or the Partner; and (v) the
repayment or assumption by the Partner or the Company of obligations of the
Company, including indebtedness for money borrowed or amounts owed by the
Company or the Partners to inventors or owners of technology. It is further
understood that the Aggregate Compensation shall not be reduced by the amount of
the fee due to Paramount hereunder. Any portion of the Aggregate Compensation
constituting Strategic Future Payments shall be paid at closing and shall be
valued at the present value of the Strategic Future Payments. The fee to be
paid to Paramount as a result of Strategic Contingent Payments shall be paid
upon the receipt of such payments and shall be in addition to any fees paid at
closing. A "Strategic Alliance" may include, but is not limited to: (i) any
joint venture, partnership, license or other contract for the research,
development, manufacturing, marketing, distribution, sale or other activity
relating to the Company's present and/or future products or proposed products;
(ii) the purchase of, or commitment to purchase from the Company, less than a
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majority of the business, assets or stock of the Company by one or more
Partner(s); (iii) the sale of any of the Company's assets or any rights in
respect to its products and/or technology; and (iv) a commitment to provide
funding for all or part of the Company's research and development activities,
whether such work is performed or managed by the Company or such Partner(s).
(d) For the purposes of calculating Paramount's fee, securities
constituting part of Aggregate Compensation which are traded on a national or
recognized foreign securities exchange or the Nasdaq SmallCap or Nasdaq National
Market System shall be valued at the average closing bid price for the ten days
preceding the date of the consummation or closing of any such transaction. Such
securities which are traded over-the-counter shall be valued at the mean between
the latest bid and asked prices for the ten days preceding the date of the
consummation or closing of any such transaction. Should the Company enter into
a transaction with a third party introduced to it by Paramount, Paramount shall
be entitled to compensation pursuant to either this paragraph 5 or paragraph 4,
but not both.
6. In the event that the Company, its directors or management initiate any
discussions with a third party in furtherance of any investment (pursuant to
paragraph 3), Sale, Acquisition, Investment or Strategic Alliance or receive any
meaningful inquiry or are aware of the interest of any third party concerning a
Sale, Acquisition, Investment or Strategic Alliance which is the subject of this
Agreement, including from those entities listed on Schedule A and Schedule B,
they shall promptly inform Paramount of the party and its interest. Should that
Company contract with one or more of the entities to raise capital (hereinafter
a 3rd Party Agent), the Company shall immediately notify Paramount. Paramount
will then have the option to raise the capital the Company requires, pursuant to
Paragraph 3 herein, on a pro-rata basis with such 3rd Party Agent. By way of
illustration, if the Company contracts with two 3rd Party Agents to raise $3
Million, then Paramount shall have the right, but not the obligation, to raise
$1 Million of the required $3 Million. The two 3rd Party Agents would then be
limited to raising the remaining $2 Million required by the Company.
7. Any information or consulting advice rendered by Paramount pursuant to
this Agreement, as well as the existence of this Agreement, shall not be
disclosed publicly in any manner without Paramount's prior written approval
(other than the minimum disclosure required to the Toronto Stock Exchange and
applicable securities regulatory authorities) and shall be treated by the
Company as confidential information; provided, however, that if Paramount has
refused to give prior written approval and the Company has obtained a written
opinion of independent counsel stating that disclosure is necessary for the
Company to comply with such action and that any course of action not involving
disclosure would likely result in a violation of law. The Company shall provide
Paramount with all financial and other information requested by Paramount for
the purposes of rendering its services pursuant to this Agreement.
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8. All non-public information given to Paramount by the Company shall not
be divulged by Paramount to any third parties and shall be treated by Paramount
as confidential information and shall not be used by Paramount except in
rendering its services pursuant to this Agreement. Paramount may rely, without
independent verification, on the accuracy and completeness of any information
furnished to Paramount by the Company, subject to its obligations under the
securities laws.
9. (a) The Company agrees to indemnify each of Paramount, the directors,
officers, employees, shareholders, controlling persons under the Act, affiliates
and agents thereof (each an "Indemnitee," together, the "Indemnitees"), pay on
demand and protect, defend, save and hold each Indemnitee harmless from and
against any and all liabilities, damages, losses, settlements, claims, actions,
suits, penalties, fines, costs or expenses (and all actions in respect thereof)
(including, without limitation, reasonable attorneys' fees and related expenses)
incurred by or asserted against any Indemnitee of whatever kind or nature,
arising from, in connection with or occurring as a result of, this Agreement or
the matters contemplated by this Agreement, including without limitation, (i)
the engagement of Paramount pursuant to this Agreement or any other related
agreement, including any modifications or future additions to such engagement
and related activities prior to the date hereof; (ii) any act by Paramount or
any Indemnitee taken in connection with this Agreement or the transactions
contemplated herein other than the gross negligence or willful misconduct of
Paramount; (iii) a breach of any representation, warranty, covenant, or
agreement of the Company contained in this Agreement, any securities purchase
agreement between the Company and investors in any securities offering or any of
the other documents utilized in connection with any securities offering; (iv)
the employment by the Company of any device, scheme or artifice to defraud, or
the engaging by the Company in any act, practice or course of business which
operates or would operate as a fraud or deceit, or any conspiracy with respect
thereto, in connection with any securities offering; or (v) any untrue statement
or alleged untrue statement of a material fact contained in any of the documents
used in connection with or otherwise related to any securities offering or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading unless as a result of the gross negligence or willful
misconduct of Paramount. The Company further agrees that it will not, without
the prior written consent of Paramount, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not Paramount or any Indemnitee is an actual or potential party to such
claim, action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of Paramount and each other Indemnitee
hereunder from all liability arising out of such claim, action, suit or
proceeding. Notwithstanding the foregoing, the Company's obligations to
Paramount for out of pocket expenses incurred by Paramount solely in providing
its services hereunder shall be limited to those set forth in Paragraph 2.
(b) The foregoing shall be in addition to any rights that any Indemnitee
may have at common law or otherwise.
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(c) The Company hereby consents to personal jurisdiction and service and
venue in any court in which any claim which is subject to this Agreement is
brought against any Indemnitee, if such service is made to the Company by
registered mail, return receipt requested, at 0000 Xxxxxxxx Xxxx, Xxxxxxxxx,
XX X0X 0X0, XXXXXX; Attn: President.
10. The Term of this Agreement shall be 6 months commencing on the date
hereof. Thereafter, this Agreement shall continue on a bi-annual basis until
terminated by either party upon not less than thirty (30) days notice prior to
each six month period (an "Extended Term"). Upon the commencement of any
Extended Term, the Company shall again pay to Paramount the Initial Retainer
Fee, as designated in paragraph 2, as if this Agreement were executed for the
first time. Notwithstanding the foregoing, this Agreement may be terminated
solely by Paramount, for any reason, upon 30 days notice; provided, however,
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regardless of any termination, the rights to compensation (or termination or
expiration thereof) contained in Paragraphs 2, 3, 4 and 5, to indemnity
contained in Paragraph 9, and expense reimbursement in Paragraph 2 shall
survive.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law. The parties hereto irrevocably consent to the jurisdiction of the courts of
the State of New York and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Agreement, any document or instrument delivered pursuant to, in connection with
or simultaneously with this Agreement, or a breach of this Agreement or any such
document or instrument if such service of process is made to the Company by
registered mail, return receipt requested, at 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX
X0X 0X0, XXXXXX; Attn: President. In any such action or proceeding, each party
hereto waives personal service of any summons, complaint or other process and
agrees that service thereof may be made in accordance with this Section 11.
Within thirty (30) days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the party so served shall appear or answer such summons,
complaint or other process.
12. This Agreement shall be binding upon Paramount and the Company and
their successors and assigns. The Company shall not assign or sell all or
substantially all of the Company's business and/or assets without first
requiring in writing that such assignee or successor is bound by the provisions
of this Agreement.
13. (a) Paramount shall not be in any way precluded from (i) entering into
similar agreements with companies which engage in similar business activities or
lines of business as the Company or developing or marketing any products,
services or technologies that do or may in the future compete, directly or
indirectly, with those of the Company, (ii) investing or owning any interest
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publicly or privately in, or developing a business relationship with, any
corporation, partnership or other person or entity engaged in the same or
similar activities or lines or business as, or otherwise in competition with,
the Company or (iii) doing business with any client, collaborator, licensor,
consultant, vendor or customer of the Company. Paramount and any of its
officers, directors, employees or former employees and affiliates shall not have
any obligation, or be liable, to the Company solely on account of the conduct
described in the preceding sentence. The Company recognizes that Paramount is
not obligated to present any opportunities for an Investment, Sale, Acquisition,
Strategic Alliance or any other opportunities to the Company and nothing in this
Agreement shall be construed to limit Paramount's ability to introduce
Investment, Sale, Acquisition, Strategic Alliance or any other opportunities to
any other company. In the event that Paramount and/or any officer, director,
employee or former employee or affiliate thereof acquires knowledge of a
potential transaction, agreement, arrangement or other matter which may be a
corporate opportunity for both Paramount and the Company, neither Paramount nor
any of its officers, directors, employees or former employees or affiliates
shall have any duty to communicate or offer such corporate opportunity to the
Company and neither Paramount nor any of its officers, directors, employees or
former employees or affiliates shall be liable to the Company for breach of any
fiduciary or other duty, as a stockholder or otherwise, solely by reason of the
fact that Paramount or any of its officers, directors, employees or former
employees or affiliates pursue or acquire such corporate opportunity for
Paramount, direct such corporate opportunity to another person or entity or
communicate or fail to communicate such corporate opportunity or entity to the
Company.
(b) The provisions of this Section 13 shall be enforceable to the fullest
extent permitted by law.
14. (a) Paramount represents and warrants to the Company that:
(1) The Retainer Warrants of the Company described in this Agreement are
being acquired by Paramount for investment purposes only, for the account of
Paramount and not with the view to any resale or distribution thereof, and
Paramount is not participating, directly or indirectly, in an underwriting of
such Retainer Warrants and will not take, or cause to be taken, any action that
would cause Paramount to be deemed an "underwriter," as defined in Section 2(11)
of the U.S. Securities Act of 1933, as amended, of such Retainer Warrants.
(2) Paramount, through its officers, directors and professional advisors,
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Company.
(3) Paramount has had access to all materials, books, records and
documents relating to the Company as Paramount has desired.
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(4) Paramount acknowledges that it has been offered the opportunity to
ask questions and receive answers concerning the Company and its proposed
business, and that all requests for such information have been complied with to
Paramount's full satisfaction.
(5) Paramount has been advised and understands that an investment in the
Company involves substantial risks, and hereby represents that it is able to
bear the risks of its investment in the Company.
(6) Paramount further represents and acknowledges that it has been solely
responsible for its own analysis of the merits and risks of such investment, and
for its own analysis of the fairness and desirability of the terms of such
investment.
(7) Paramount was not formed for the purpose of acquiring the Retainer
Warrants or any of their underlying Shares, and is duly authorized and otherwise
qualified to enter into the Agreement and to issue this letter of further
assurances.
(8) Paramount understands and acknowledges that the Retainer Warrants and
Shares are not, and will not be, registered under the U.S. Securities Act of
1933, as amended (the "Act"); that the securities being issued hereunder are
being sold pursuant to the "private offering" exemption under Section 4(2) of
the U. S. Securities Act of 1933 and similar exemptions under applicable state
securities laws. Hence, Paramount understands that, except as provided in
Paragraphs 14(a)(9), 14(a)(11) and 14(b) hereof, the shares for which Paramount
has subscribed pursuant to the Agreement must be held indefinitely, unless and
until subsequently registered under U.S. federal and/or applicable state
securities laws, or unless an exemption from registration is available, in which
case Paramount may still be limited with respect to the extent to which such
Retainer Warrants may be transferred (which term, as used herein, includes,
without being limited to, any sale, offer, pledge or encumbrance).
(9) Paramount understands and agrees that each certificate evidencing the
securities issued under the Agreement shall be stamped conspicuously on its face
"SEE TRANSFER AND OTHER RESTRICTIONS ON REVERSE," and on its reverse side shall
be stamped or imprinted with, and such securities' transfer shall be subject to
the terms of, the following legend:
NOTICE: RESTRICTION ON TRANSFER AND OTHER MATTERS
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF UNLESS (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE UNITED STATES
Page 11 of 15
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES,
OR (B) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF
THESE SECURITIES (CONCURRED IN BY LEGAL COUNSEL FOR THIS CORPORATION) STATING
THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THIS CORPORATION
OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
(10) Paramount hereby consents to the notation of "STOP TRANSFER"
restrictions in the Company's stock transfer books relative to its holdings, and
to assist in the enforcement of the covenants and limitations set forth herein.
(11) Paramount understands and agrees that the Retainer Warrants and
underlying Shares shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to ensure compliance with
the exemptions sought to be obtained by the Company under applicable securities
laws.
(12) Paramount represents that it is not a resident in British Columbia.
(b) Paragraphs 14(a)(9) and 14(a)(11) hereof notwithstanding, following the
expiration of any hold periods imposed by Canadian law and for so long as the
Company remains a Foreign Issuer, as defined in Rule 902 of the U.S. Securities
and Exchange Commission, the Company will instruct its Transfer Agent that any
U.S. restrictive legend applicable to the Shares is to be promptly removed upon
their sale in compliance with the requirements of Rule 904 of the U.S.
Securities and Exchange Commission
(c) The parties hereto acknowledge that the Company's obligation to effect
such transfers is subject to future changes to relevant provisions of United
States' securities laws (or the Company's status thereunder) that affect the
conditions under which such restrictive legends may be removed, and agree that
in the event of any such change they will work together in good faith to adopt
an alternative procedure for the removal of such legends in accordance with then
available exemptions.
(d) Paramount acknowledges that: i) no securities commission or similar
regulatory authority has reviewed or passed on the merits of the securities, or
underlying securities, that may be issued in connection with this Agreement
(collectively the "Securities"); ii) there is no government or other insurance
covering the Securities; iii) there are risks associated with the purchase of
the Securities; iv) there are restrictions on Paramount's ability to resell the
securities and it is the responsibility of Paramount to find out what those
restrictions are and to comply with them before selling the Securities; v) the
Company has advised Paramount that the Company is relying on an exemption from
Page 12 of 15
the requirement to provide Paramount with a prospectus and to sell securities
through a person registered to sell securities under the Securities Act (British
Columbia) and, as a consequence of acquiring securities pursuant to this
exemption, certain protections, rights and remedies provided by the Securities
Act (British Columbia), including statutory rights of rescission or damages,
will not be available to Paramount; vi) the certificates representing the
Securities will be endorsed with a legend stating that the Securities are
subject to a hold period and may not be traded in British Columbia until the
expiry of the hold period except as permitted by the Securities Act (British
Columbia) and the rules thereto; and vii) the Company's obligations pursuant to
this Agreement are subject to the prior approval of the Toronto Stock Exchange.
Sincerely yours,
PARAMOUNT CAPITAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: Chairman of the Board
Confirmed as of the date hereof:
CARDIOME PHARMA CORPORATION
By: /s/ Xxx Xxxxxx
----------------------------------
Name: Xxx Xxxxxx
Title: President and CEO
Page 13 of 15
SCHEDULE A
M&A EXCEPTIONS
Discovery Therapeutics Inc.
CV Therapeutics Inc.
Icager, Inc.
Transgene S.A. / Eurekardio
Page 14 of 15
SCHEDULE B
PARTNERING EXCEPTIONS
Merck
Glaxo Smithkline
Servier
Xxxxxxx and Xxxxxx
Solvay
Xxxxxxx Pharma
Medtronics
CV Therapeutics
Astra Zeneca
Aventis
Sanofi - Synthelabo
Berlex
Page 15 of 15
