SECURITIES PURCHASE AGREEMENT
Exhibit
99.1
TABLE
OF CONTENTS
|
1.
|
PURCHASE AND SALE OF PREFERRED
SHARES.
|
1
|
|
(a)
|
Sale
and Purchase of the Preferred Shares.
|
1
|
|
(b)
|
Closing.
|
2
|
|
(c)
|
Form
of Payment.
|
2
|
|
2.
|
BUYER’S REPRESENTATIONS AND
WARRANTIES.
|
2
|
|
(a)
|
Organization;
Authority.
|
2
|
|
(b)
|
No
Public Sale or Distribution.
|
2
|
|
(c)
|
Accredited
Investor Status.
|
2
|
|
(d)
|
Reliance
on Exemptions.
|
2
|
|
(e)
|
Information.
|
3
|
|
(f)
|
No
Governmental Review.
|
3
|
|
(g)
|
Transfer
or Resale.
|
3
|
|
(h)
|
Acknowledgment
by Buyer.
|
4
|
|
(i)
|
U.S.
Legend.
|
4
|
|
(j)
|
Canadian
Legends.
|
5
|
|
(k)
|
Validity;
Enforcement.
|
5
|
|
(l)
|
No
Conflicts.
|
5
|
|
(m)
|
Residency.
|
6
|
|
(n)
|
No
Effect on Reliance.
|
6
|
|
3.
|
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
|
6
|
|
(a)
|
Organization
and Qualification.
|
6
|
|
(b)
|
Authorization;
Enforcement; Validity.
|
6
|
|
(c)
|
Issuance
of Securities.
|
7
|
|
(d)
|
No
Conflicts.
|
7
|
|
(e)
|
Consents.
|
8
|
|
(f)
|
Acknowledgment
Regarding Buyer’s Purchase of Securities.
|
8
|
|
(g)
|
No
General Solicitation; Placement Agent’s Fees.
|
8
|
|
(h)
|
No
Integrated Offering.
|
8
|
|
(i)
|
Dilutive
Effect.
|
9
|
|
(j)
|
Application
of Takeover Protections; Rights Agreement.
|
9
|
|
(k)
|
SEC
Documents; Financial Statements.
|
9
|
|
(l)
|
Absence
of Certain Changes.
|
10
|
|
(m)
|
No
Undisclosed Events, Liabilities, Developments or
Circumstances.
|
10
|
|
(n)
|
Conduct
of Business; Regulatory Permits.
|
10
|
|
(o)
|
Foreign
Corrupt Practices.
|
11
|
|
(p)
|
Xxxxxxxx-Xxxxx
Act.
|
11
|
|
(q)
|
Transactions
With Affiliates.
|
11
|
|
(r)
|
Equity
Capitalization.
|
12
|
|
(s)
|
Indebtedness
and Other Contracts.
|
12
|
i
|
(t)
|
Absence
of Litigation.
|
13
|
|
(u)
|
Insurance.
|
13
|
|
(v)
|
Employee
Relations.
|
13
|
|
(w)
|
Title.
|
14
|
|
(x)
|
Intellectual
Property Rights.
|
14
|
|
(y)
|
Environmental
Laws.
|
15
|
|
(z)
|
Subsidiary
Rights.
|
15
|
|
(aa)
|
Tax
Status
|
15
|
|
(bb)
|
Internal
Accounting and Disclosure Controls.
|
16
|
|
(cc)
|
Off-Balance
Sheet Arrangements.
|
16
|
|
(dd)
|
Investment
Company Status.
|
16
|
|
(ee)
|
U.S.
Real Property Holding Corporation.
|
16
|
|
(ff)
|
Transfer
Taxes.
|
16
|
|
(gg)
|
Shares
Freely Tradeable.
|
17
|
|
(hh)
|
TSX.
|
17
|
|
(ii)
|
NASDAQ.
|
17
|
|
(jj)
|
Acknowledgement
Regarding Buyer’s Trading Activity.
|
17
|
|
(kk)
|
Manipulation
of Price.
|
17
|
|
(ll)
|
Disclosure.
|
17
|
|
(mm)
|
Xxxx-Xxxxx-Xxxxxx
Act Exemption.
|
18
|
|
(nn)
|
No
Effect on Reliance.
|
18
|
|
4.
|
COVENANTS.
|
18
|
|
(a)
|
Best
Efforts.
|
18
|
|
(b)
|
Form
D and Blue Sky; Canadian Filings
|
18
|
|
(c)
|
Reporting
Status
|
18
|
|
(d)
|
Use
of Proceeds.
|
19
|
|
(e)
|
Financial
Information
|
19
|
|
(f)
|
Listing.
|
19
|
|
(g)
|
Fees
|
19
|
|
(h)
|
Pledge
of Securities.
|
19
|
|
(i)
|
Disclosure
of Transactions and Other Material Information.
|
20
|
|
(j)
|
Additional
Registration Statements.
|
20
|
|
(k)
|
Reservation
of Shares.
|
20
|
|
(l)
|
Compliance
with Series A Share Rights.
|
21
|
|
(m)
|
Conduct
of Business.
|
21
|
|
(n)
|
Withholding
Taxes
|
21
|
|
(o)
|
Holding
Periods
|
21
|
|
(p)
|
Lock-Up
Agreements.
|
21
|
|
(q)
|
Approval
of Principal Markets.
|
21
|
|
5.
|
REGISTER; TRANSFER AGENT
INSTRUCTIONS.
|
21
|
|
(a)
|
Register.
|
21
|
|
(b)
|
Transfer
Agent Instructions.
|
22
|
|
6.
|
CONDITIONS TO THE COMPANY’S OBLIGATION TO
SELL.
|
22
|
|
7.
|
CONDITIONS TO THE BUYER’S OBLIGATION TO
PURCHASE.
|
23
|
ii
|
8.
|
TERMINATION.
|
24
|
|
9.
|
MISCELLANEOUS.
|
24
|
|
(a)
|
Governing
Law; Jurisdiction; Jury Trial
|
25
|
|
(b)
|
Counterparts.
|
25
|
|
(c)
|
Headings.
|
25
|
|
(d)
|
Severability.
|
25
|
|
(e)
|
Entire
Agreement; Amendments.
|
26
|
|
(f)
|
Notices.
|
27
|
|
(g)
|
Successors
and Assigns.
|
27
|
|
(h)
|
No
Third Party Beneficiaries.
|
27
|
|
(i)
|
Survival.
|
27
|
|
(j)
|
Currency
|
27
|
|
(k)
|
Further
Assurances
|
28
|
|
(l)
|
Indemnification
|
28
|
|
(m)
|
No
Strict Construction.
|
28
|
|
(n)
|
Remedies.
|
28
|
|
(o)
|
Independent
Nature of Obligations.
|
29
|
|
(p)
|
Rescission
and Withdrawal Right.
|
29
|
|
(q)
|
Payment
Set Aside.
|
29
|
|
(r)
|
Judgment
Currency.
|
33
|
EXHIBITS
Exhibit
A - Form of
Series A Share Rights
Exhibit
B - Form of
Registration Rights Agreement
Exhibit
C - Form of
Irrevocable Transfer Agent Instructions
Exhibit
D - Form of
Officer’s Certificate
Exhibit
E - Form of
Officer’s Certificate
Exhibit
F - Form of
Lock-Up Agreement
Exhibit
G - Form of
XxXxxxxx Xxxxxxxx LLP Opinion
Exhibit
H - Form of
Xxxxxx & Xxxxxxx LLP Opinion
iii
SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as
of July 23, 2008, by and between Cardiome Pharma Corp., a Canadian corporation,
with headquarters located at 6th Floor,
0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0 (the “Company “), and CR
Intrinsic Investments, LLC (the “Buyer”).
WHEREAS:
A. The
Company and the Buyer are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the “1933 Act”), and Rule
506 of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933
Act and BC Instrument 00-000 - Xxxxxxxxxxxx xx Xxxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxxx as promulgated under the Securities Act (British
Columbia) (the “BCSA”).
B. The
Company has authorized a new series of preferred shares of the Company
designated as Series A Shares, the terms of which are set forth in the rights,
privileges, conditions and restrictions for such series of preferred shares (the
“Series A Share
Rights”) in the form attached hereto as Exhibit A (together
with any preferred shares issued in replacement thereof in accordance with the
terms thereof, the “Preferred Shares”),
which Preferred Shares shall be convertible into common shares in the capital of
the Company (the “Common Shares”), in
accordance with the terms of the Series A Share Rights.
C. The
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, certain Preferred Shares.
D. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in the
form attached hereto as Exhibit B (as in
effect from time to time, the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement), under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities
laws.
E. The
Preferred Shares and the Common Shares issuable upon conversion of the Preferred
Shares (the “Conversion Shares”)
are collectively referred to herein as the “Securities.”
NOW,
THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF
PREFERRED SHARES.
(a) Sale and Purchase of the
Preferred Shares.
Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, on the
Closing Date (as defined below), the Company shall issue and sell to the Buyer,
and the Buyer agrees to purchase from the Company, 2,272,727 Preferred Shares at
a price of US$11.00 per Preferred Share, for an aggregate cash purchase price of
US$24,999,997 (the “Purchase
Price”).
1
(b) Closing.
The
closing (the “Closing”) of the
purchase and sale of the Preferred Shares by the Buyer shall occur at the
offices of XxXxxxxx Xxxxxxxx LLP, located at Suite 1300, 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0. The date and time of the
Closing (the “Closing
Date”) shall be 10:00 a.m., Pacific Standard Time, on July 25, 2008
subject to and after the notification of satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 6 and 7 below (or such
later date and time as is mutually agreed to by the Company and the
Buyer).
(c) Form of
Payment.
On
the Closing Date, the Buyer shall pay the Purchase Price to the Company for the
Preferred Shares to be issued and sold to the Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the Company’s written
wire instructions. At the Closing, the Company shall deliver to the Buyer a
certificate evidencing the Preferred Shares, free and clear of all restrictive
legends (except as expressly provided in Section 2(i) and
(k) hereof),
duly executed on behalf of the Company and registered on the transfer books of
the Company in the name of the Buyer.
2. BUYER’S REPRESENTATIONS AND
WARRANTIES.
The
Buyer represents, warrants and covenants to, and agrees with, the Company
that:
(a) Organization;
Authority.
The
Buyer is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with the requisite power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to
carry out its obligations hereunder and thereunder.
(b) No Public Sale or
Distribution.
The
Buyer is (i) acquiring the Preferred Shares and (ii) upon conversion of the
Preferred Shares will acquire the Conversion Shares, in each case, for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales of Conversion
Shares registered or exempted under the 1933 Act or qualified for public
distribution or exempted under the securities legislation and regulations and
regulations of, and the instruments, policies, rules, orders, codes, notices and
published interpretation notes of, the securities regulatory authorities of the
provinces and territories of Canada (the “Canadian Securities
Laws”), as applicable; provided, however, that by making the
representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act and in accordance with Canadian
Securities Laws. The Buyer is acquiring the Securities hereunder in
the ordinary course of its business. The Buyer does not presently
have any agreement or understanding, directly or indirectly, with any Person (as
defined in Section 3(s)) to distribute any of the Securities.
(c) Accredited Investor
Status.
The
Buyer is an “accredited investor” (i) as that term is defined in Rule 501(a) of
Regulation D and (ii) within the meaning National Instrument 45-106 - Prospectus and Registration
Exemptions of the Canadian Securities Administrators (the “CSA”).
(d) Reliance on
Exemptions.
The
Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from (i) the registration requirements of
United States federal and applicable state securities laws and (ii) the
registration and prospectus requirements of applicable Canadian Securities Laws
and that the Company is relying in part upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
2
(e) Information.
The
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities which have been requested by the Buyer.
The Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by the Buyer or its advisors, if any, or its
representatives shall modify, amend or affect the Buyer’s right to rely on the
Company’s representations and warranties contained herein. The Buyer
understands that its investment in the Securities involves a high degree of risk
and uncertainty, and the Buyer has the capability and financial ability to bear
such risk and uncertainty, including a potential loss of its
investment. The Buyer has sought such accounting, legal, tax and
other advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities. The Buyer
understands that the action date for FDA’s review of the New Drug Application
(“NDA”) for
KYNAPID™ (vernakalant hydrochloride) has not yet been determined, and that the
outcome of the FDA’s review of the NDA is uncertain. The Buyer
further understands that the Company publicly announced a strategic review
process on March 17, 2008 that is ongoing and that the outcome of such review
process is uncertain. The Buyer understands that the Company may have
access to information that has not been fully analyzed or that is subject to
confirmation and further investigation. The Buyer agrees that, except
for disclosures required by United States federal securities laws and Canadian
Securities Laws applicable to the Company, the Company has no obligation to
provide the Buyer with information concerning the status of either such matter,
beyond what the Company has publicly disclosed, and the Buyer has not relied on
the Company for any such information. The foregoing shall not modify, amend or
effect the Buyer’s right to rely on the Company’s representations and warranties
contained herein.
(f) No Governmental
Review.
The
Buyer understands that no United States or Canadian federal, state or provincial
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
(g) Transfer or
Resale.
The
Buyer acknowledges and agrees that (i) the Securities have not been and are
not being registered under the 1933 Act or any state securities laws or
qualified by prospectus under Canadian Securities Laws (ii) the Preferred Shares
are subject to the restrictions on transfer contained in the Series A Share
Rights (iii) the Buyer agrees that if it decides to offer, sell or
otherwise transfer any of the Securities such Securities may be offered, sold or
otherwise transferred only: (A) pursuant to an effective registration
statement under the 1933 Act; (B) to the Company; (C) outside the
United States in accordance with Regulation S under the 1933 Act and in
compliance with local laws; or (D) within the United States (1) in
accordance with the exemption from registration under the 1933 Act provided by
Rule 144 or Rule 144A thereunder, if available, and in compliance with
any applicable state securities laws or (2) in a transaction that does not
require registration under the 1933 Act or applicable state securities laws, and
(iv) any sale or transfer of the Securities to a purchaser or transferee
whose address is in Canada (or who is a resident of Canada) is prohibited unless
it is made in compliance with applicable Canadian Securities Laws.
3
(h) Acknowledgment by
Buyer.
The
Buyer acknowledges and agrees that (i) no securities commission or similar
regulatory authority has reviewed or passed on the merits of the Preferred
Shares or the Common Shares issuable upon conversion of the Preferred Shares,
(ii) there is no government or other insurance covering the Preferred
Shares or the Common Shares issuable upon conversion of the Preferred Shares,
(iii) there are risks associated with the purchase of the Preferred Shares
and the acquisition and holding of the Common Shares issuable upon conversion of
the Preferred Shares, (iv) in addition to the restrictions on transfer contained
hereunder and under the terms of the Preferred Shares, there are restrictions
under Canadian Securities Legislation on the Buyer’s ability to resell the
Preferred Shares and the Common Shares issuable upon conversion of the Preferred
Shares and it is the responsibility of the Buyer to find out what those
restrictions are and to comply with them before selling such securities and (v)
the Company has advised the Buyer that the Company is relying on an exemption
from the requirements to provide the Buyer with a prospectus and to sell
securities through a person registered to sell securities under the BCSA and, as
a consequence of acquiring securities pursuant to this exemption, certain
protections, rights and remedies provided by the BCSA, including statutory
rights of rescission or damages, will not be available to the
Buyer.
(i) U.S.
Legend.
The
Buyer understands that the certificates or other instruments representing the
Securities shall bear a legend set forth below:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, (THE “1933 ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND MAY BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE UNITED STATES
ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND, IF
REQUESTED BY CARDIOME PHARMA CORP. (“CARDIOME”), UPON DELIVERY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO CARDIOME THAT THE PROPOSED TRANSFER IS EXEMPT
FROM THE 1933 ACT. BY PURCHASING THESE SECURITIES, THE HOLDER AGREES
FOR THE BENEFIT OF CARDIOME THAT IT WILL COMPLY WITH THESE RESALE
RESTRICTIONS.
The
legend set forth above shall be removed and the Company shall issue certificates
representing such securities without such legend to the holder of the Securities
upon which it is stamped, if, unless otherwise required by state securities
laws, (A) such Securities are registered for resale under the 1933 Act,
(B) in connection with a sale, assignment or other transfer, such holder
provides the Company with reasonable assurance that the sale, assignment or
transfer of the Securities may be made without registration under the applicable
requirements of the 1933 Act, (C) if the Company is a “foreign issuer,”
within the meaning of Regulation S under the 1933 Act and the Securities
are being sold pursuant to Regulation S, such legend may be removed by
providing a declaration to the Company that such shares may be sold pursuant to
Regulation S or (D) such holder provides the Company with reasonable
assurance that the Securities can be sold, assigned or transferred without
volume limitations or manner of sale restrictions pursuant to Rule 144 or have
been sold in accordance with Rule 144.
4
(j) Canadian
Legends.
The
Buyer understands that, in addition to the legends referred to in Section 2(i) or
required under the Series A Share Rights, the certificates or other
instruments representing the Securities shall bear a legend set forth
below:
“UNLESS
PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THESE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE NOVEMBER 26, 2008.”
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities at the earlier
of the date the Securities are qualified for public distribution under
applicable Canadian Securities Laws and anytime on or after November 26,
2008.
In
addition, if the Conversion Shares are issued before November 26, 2008, then, in
addition to the foregoing legend, such Conversion Shares shall bear the
following legend until such time as the legend no longer applies:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON TSX.
(k) Validity;
Enforcement.
This
Agreement and the Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of the Buyer and shall constitute
the legal, valid and binding obligations of the Buyer enforceable against the
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.
(l)
No
Conflicts.
The
execution, delivery and performance by the Buyer of this Agreement and the
Registration Rights Agreement and the consummation by the Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of the Buyer, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to the Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Buyer to perform its obligations
hereunder.
5
(m)
Residency.
The
Buyer (i) is organized in Anguilla, (ii) is not resident in British Columbia or
any other province or territory of Canada and (iii) is not a U.S. Person (as
such term is defined in Regulation S under the 1933 Act, which definition
includes, but is not limited to, an individual resident in the United States, an
estate or trust of which any executor or administrator or trustee, respectively,
is a U.S. Person and any partnership or corporation organized or incorporated
under the laws of the United States) and it is not purchasing the Preferred
Shares on behalf of, or for the account or benefit of, a person in the United
States or a U.S. Person.
(n) No Effect on
Reliance.
None
of the representations and warranties of the Buyer contained in this Section 2 shall
modify, amend or otherwise affect the Buyer’s right to rely on the Company’s
representations and warranties contained in Section
3.
3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.
The
Company represents, warrants and covenants to, and agrees with, the Buyer
that:
(a) Organization and
Qualification.
Each
of the Company and its “Subsidiaries” (which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns a majority of the capital stock or equity or similar
interests) are entities duly organized and validly existing and in good standing
under the laws of the jurisdiction in which they are formed, and have the
requisite power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign entity to do business and, to the
extent legally applicable, is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, properties,
assets, operations, results of operations, condition (financial or otherwise) or
prospects of the Company, its Subsidiaries, individually or taken as a whole, or
on the transactions contemplated hereby or in the other Transaction Documents
(as defined below) or by the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of the Company
to perform its obligations under the Transaction Documents (as defined in Section 3(b)). The
Company has no Subsidiaries except as set forth on in the SEC-CSA Documents. As
used in this Agreement, “Material
Subsidiaries” means Cardiome, Inc., Cardiome Research and Development
(Barbados), Inc. and Cardiome Development AG.
(b) Authorization; Enforcement;
Validity.
The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement, the Series A Share Rights, the Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in
Section 5(b))
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the “Transaction
Documents”) and to issue the Securities in accordance with the terms
hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Preferred Shares and the reservation for issuance and the issuance of the
Conversion Shares issuable upon conversion of the Preferred Shares, have been
duly authorized by the Company’s board of directors or a duly appointed
committee of the board of directors and, other than (i) the filing with
applicable Canadian securities regulators and authorities under the applicable
Canadian Securities Laws of a Form 45-106F1, (ii) the filing with the SEC of a
Form D, (iii) the filings with the SEC and the British Columbia Securities
Commission of one or more prospectuses (or supplements to a shelf prospectus)
and Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (iv) any other filings as may be required under
applicable securities or “Blue Sky” laws of the states of the United States, (v)
the filing of Articles of Amendment in respect of the Preferred Shares with the
Director (as that term is defined in the Canada Business Corporations
Act) of Industry Canada and (vi) the submission of a listing application
for the Conversion Shares with the Principal Markets, no further filing,
consent, or authorization is required by the Company, its board of directors or
its shareholders (and, for the avoidance of doubt, no shareholder approval is
required under any TSX or NASDAQ rule). This Agreement and the other
Transaction Documents of even date herewith have been duly executed and
delivered by the Company, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.
6
(c) Issuance of
Securities.
The
issuance of the Preferred Shares is duly authorized and upon issuance in
accordance with the terms of the Transaction Documents shall be free from all
taxes, liens and charges with respect to the issue thereof, and the Preferred
Shares shall be entitled to the rights, privileges, conditions and restrictions
set forth in the Series A Share Rights. As of the Closing, a number
of Common Shares shall have been duly authorized and reserved for issuance which
equals or exceeds the maximum number of Common Shares issuable upon conversion
of the Preferred Shares. Upon issuance or conversion in accordance
with the Series A Share Rights, the Conversion Shares will be validly issued,
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common
Shares. Subject to the representations and warranties of the Buyer in
this Agreement, the offer and issuance of the Preferred Shares to the Buyer by
the Company is exempt from registration under the 1933 Act and from the
prospectus and registration requirements of applicable Canadian Securities
Laws.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Preferred Shares and
reservation for issuance and issuance of the Conversion Shares) will
not (i) result in a violation of the constating documents of the Company or any
of its Material Subsidiaries (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) in any
material respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Company or any of its Material Subsidiaries is a party, or (iii)
result in a material violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
or applicable Canadian Securities Laws and regulations and the rules and
regulations of the Toronto Stock Exchange (the “TSX”) or the NASDAQ
Global Market (“NASDAQ”, and
collectively with the TSX, the “Principal Markets”
and individually, each a “Principal Market”)
applicable to the Company or by which any property or asset of the Company is
bound or affected.
7
(e) Consents.
The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof, except for the filing by the Company of Articles of Amendment in
respect of the Preferred Shares with the Director (as that term is defined in
the Canada Business
Corporations Act) of Industry Canada and the approval thereof, and the
submission by the Company of a listing application for the Conversion Shares
with the Principal Markets and the approval thereof. The Company is
unaware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence. The Company is in compliance in all
material respects with the requirements of the Principal Markets and has no
knowledge of any facts which would reasonably lead to delisting or suspension of
the Common Shares in the foreseeable future.
(f) Acknowledgment Regarding
Buyer’s Purchase of Securities.
The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that the Buyer is not (i) an
officer or director of the Company, (ii) an “affiliate” (as defined in Rule 144
under the 0000 Xxx) of the Company or any of its Subsidiaries (as
defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the “1934
Act”)) or (iii) to the knowledge of the Company, a “beneficial owner” of
more than 10% of the Common Shares. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of the Company
or any of its Subsidiaries (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by the Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Buyer’s purchase of the
Securities. The Company further represents to the Buyer that the
Company’s decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives, including,
without limitation, the Agent (as defined in Section
3(g)).
(g) No General Solicitation;
Placement Agent’s Fees.
Neither
the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by the Buyer or its investment
advisor) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold the Buyer harmless against,
any liability, loss or expense (including, without limitation, attorney’s fees
and out-of-pocket expenses) arising in connection with any such
claim. The Company acknowledges that it has engaged Xxxxxxx Xxxxx
& Co. as agent (the “Agent”) in connection
with the sale of the Securities. Other than the Agent, neither the
Company nor any of its Subsidiaries has engaged any placement agent or other
agent in connection with the sale of the Securities.
(h) No Integrated
Offering.
None
of the Company, its Subsidiaries, any of their affiliates, and any Person acting
on their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated. None of the Company, its
Subsidiaries, any of their affiliates and any Person acting on their behalf will
take any action or steps referred to in the preceding sentence that would
require registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.
8
(i) Dilutive
Effect.
The
Company acknowledges that its obligation to issue Conversion Shares upon
conversion of the Preferred Shares in accordance with this Agreement and the
Series A Share Rights is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
shareholders of the Company.
(j) Application of Takeover
Protections; Rights Agreement.
The
Company has no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision which is or could become applicable to the Buyer as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and the Buyer’s ownership
of the Securities. The Company has not adopted a shareholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Shares or a change in control of the Company.
(k) SEC Documents; Financial
Statements.
Since
December 31, 2006, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC and the
CSA pursuant to the reporting requirements of the 1934 Act and the applicable
Canadian Securities Laws (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the “SEC-CSA
Documents”). The Company has delivered to the Buyer or its
representatives true, correct and complete copies of all material SEC-CSA
Documents not available on the XXXXX and SEDAR system that have been requested
by the Buyer. As of their respective dates, the SEC-CSA Documents complied in
all material respects with the requirements of the 1934 Act and the Canadian
Securities Laws and the rules and regulations of the SEC and the CSA promulgated
thereunder applicable to the SEC-CSA Documents, and none of the SEC-CSA
Documents, at the time they were filed with the SEC or the CSA, as applicable,
contained any untrue statement of a material fact or omitted to state 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. As of
their respective dates, the financial statements of the Company included in the
SEC-CSA Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC and
the CSA with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles in Canada,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the
Company to the Buyer which is not included in the SEC-CSA Documents, including,
without limitation, information referred to in Section 2(e) of this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made, not
misleading.
9
(l) Absence of Certain
Changes.
Except
as disclosed in the SEC-CSA Documents, since December 31, 2007, (i) there has
been no material adverse change and no material adverse development in the
business, assets, properties, operations, condition (financial or otherwise),
results in operations or prospects of the Company or its Subsidiaries and (ii)
neither the Company nor any of its Subsidiaries has (A) declared or paid any
dividends, (B) sold any assets, individually or in the aggregate, in excess of
$250,000 outside of the ordinary course of business or (C) had capital
expenditures, individually or in the aggregate, in excess of $500,000 outside of
the ordinary course of business. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do
so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means,
with respect to any Person (as defined in Section 3(s)), any
Person (i) who is for any reason unable to meet its obligations as they
generally become due or (ii) who has ceased paying its current obligations in
the ordinary course of business as they generally become due.
(m)
No Undisclosed Events,
Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance other than in the ordinary course
of business has occurred or exists, or is contemplated to occur with respect to
the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws which has not been
publicly announced. The Company is not required to make under
applicable securities laws, and therefore has not made, any forward-looking
disclosure or guidance to the Buyer, including, but not limited to,
forward-looking disclosure relating to cash flows, expenses, revenues or any
other forward-looking financial projections or statements. The Buyer
acknowledges that it has chosen not to be provided with, and has not been
provided with, any such forward-looking information or guidance, or information
concerning the Company’s financial statements or financial results as of and for
the quarter ended March 31, 2008.
(n) Conduct of Business;
Regulatory Permits.
Neither
the Company nor its Material Subsidiaries is in violation of any term of or in
default under the Articles, any certificate of designation, preferences or
rights of any other outstanding series of preferred shares of the Company or the
Bylaws or their organizational charter or certificate of incorporation or
bylaws, respectively. Except where it would not result in a Material
Adverse Effect, neither the Company nor any of its Material Subsidiaries is in
violation of any judgment, decree or order or any statute, ordinance, rule or
regulation applicable to the Company or its Material
Subsidiaries. Neither the Company nor any of its Material
Subsidiaries will conduct its business in violation of any of the foregoing,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company is not in violation of any of the
rules, regulations or requirements of either of the Principal Markets and has no
knowledge of any facts or circumstances that would reasonably lead to delisting
or suspension of the Common Shares by either of the Principal Markets in the
foreseeable future. Since December 31, 2006, (i) the Common Shares
have been designated for quotation on the Principal Markets, (ii) trading in the
Common Shares has not been suspended by the SEC, the CSA or either of the
Principal Markets other than a trading halt during the trading day imposed by
Market Regulation Services, Inc. for pending news of the Company and (iii) the
Company has received no communication, written or oral, from the SEC, the CSA or
either of the Principal Markets regarding the suspension or delisting of the
Common Shares from the Principal Markets. The Company and its
Material Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit. The Company is a
reporting issuer in good standing under the applicable Canadian Securities Laws
and satisfies all requirements necessary to enable it to file a registration
statement under the Multijurisdictional Disclosure System (“MJDS”) in the manner
contemplated under the Registration Rights Agreement.
10
(o) Foreign Corrupt
Practices.
Neither
the Company nor any of its Subsidiaries nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of his, her or its actions for, or on behalf of,
the Company or any of its Subsidiaries (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(p) Xxxxxxxx-Xxxxx
Act.
The
Company is in material compliance with any and all applicable requirements of
the Xxxxxxxx-Xxxxx Act of 2002 that are applicable to a “foreign private issuer”
(as defined in Rule 405 of the 0000 Xxx) and are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof.
(q) Transactions With
Affiliates.
Except
as set forth in the SEC-CSA Documents filed at least ten (10) days prior to the
date hereof and other than the grant of stock options pursuant to the Company’s
Amended Incentive Stock Option Plan (the “Stock Option Plan”),
none of the officers, directors or employees of the Company or any of its
Subsidiaries is presently a party to any transaction with the Company or any of
its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company or any of
its Subsidiaries, any corporation, partnership, trust or other entity in which
any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.
11
(r) Equity
Capitalization.
As
of the date hereof, the authorized share capital of the Company consists of (i)
an unlimited number of Common Shares, of which as of the date hereof, 63,762,296
are issued and outstanding and 4,950,562 Common Shares are reserved for issuance
pursuant to the Stock Option Plan and no shares are reserved for issuance
pursuant to securities (other than the Preferred Shares) exercisable or
exchangeable for, or convertible into, Common Shares and (ii) an unlimited
number of Preferred shares of which, as of the date hereof, none are issued and
outstanding (other than the Preferred Shares). All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. Except pursuant to the Stock Option
Plan or any incentive compensation plans or arrangements approved by the board
of directors prior to the date hereof, (i) none of the
Company’s share capital is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company, (ii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any share capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional share capital of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any share capital of the
Company or any of its Subsidiaries, (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness (as defined in Section 3(s)) of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound, (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act or under
applicable Canadian Securities Laws (except pursuant to the Registration Rights
Agreement), (v) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities, (vii) the Company does
not have any share appreciation rights or “phantom share” plans or agreements or
any similar plan or agreement, (viii) the Company and its Subsidiaries have no
liabilities or obligations required to be disclosed in the SEC-CSA Documents but
not so disclosed in the SEC-CSA Documents, other than those incurred in the
ordinary course of the Company’s or its Subsidiaries’ respective businesses and
which, individually or in the aggregate, do not and would not have a Material
Adverse Effect. The Company has furnished to the Buyer true, correct
and complete copies of the Company’s Articles, as amended and as in effect on
the date hereof (the “Articles”), and the
Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the
terms of all securities convertible into, or exercisable or exchangeable for,
Common Shares and the material rights of the holders thereof in respect
thereto.
(s) Indebtedness and Other
Contracts.
Except
as disclosed in the Company’s Annual Report on Form 40-F for the fiscal year
ended December 31, 2007, neither the Company nor any of its Subsidiaries (i) has
any outstanding Indebtedness (as defined below) in excess of $500,000, (ii) is a
party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any material contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate, in a
Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. The Company’s Annual Report on Form 40-F for the
fiscal year ended December 31, 2007 contains a detailed description of the
material terms of any such outstanding Indebtedness as of December 31,
2007. The Company has not incurred any Indebtedness for borrowed
money since December 31, 2007. For purposes of this Agreement, (x)
“Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital
leases” in accordance with Canadian generally accepted accounting principles)
(other than trade payables and accrued liabilities entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with Canadian generally
accepted accounting principles, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness referred to in
clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, lien, pledge, charge, security interest or other encumbrance upon
or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above, (y) “Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto, and (z) “Person“ means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
12
(t) Absence of
Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by either of
the Principal Markets, any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Material
Subsidiaries, the Common Shares or any of the Company’s Subsidiaries or any of
the Company’s or its Material Subsidiaries’ officers or directors in their
capacities as such.
(u) Insurance.
The
Company and each of its Material Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Material Subsidiaries are
engaged. Neither the Company nor any such Material Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Material Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.
(v) Employee
Relations.
(i) Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. No executive officer (as
defined in Rule 501(f) of the 0000 Xxx) of the Company or any of its Material
Subsidiaries has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. No
executive officer of the Company or any of its Material Subsidiaries is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.
(ii) The
Company and its Material Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
13
(w) Title.
The
Company and its Material Subsidiaries do not own any real
property. The Company and its Material Subsidiaries have good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Material Subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as do not materially
affect the value of such property or interests and do not interfere with the use
made and proposed to be made of such property or interests by the Company and
any of its Material Subsidiaries. Any real property and facilities
held under lease by the Company or any of its Material Subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are
not material and do not materially interfere with the use made and proposed to
be made of such property and buildings by the Company and its Material
Subsidiaries.
(x) Intellectual Property
Rights.
(i)
The Company and its Subsidiaries own, or have obtained valid and enforceable
licenses for, or other adequate rights to use, the inventions, patent
applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights, trade secrets and other proprietary information
described in the SEC-CSA Documents as being owned or licensed by them or which
are necessary for the conduct of their respective businesses, except where the
failure to own, license or have such rights would not, individually or in the
aggregate, have a Material Adverse Effect (collectively, the “Intellectual
Property”), (ii) the Company has no knowledge that the Company lacks or
will be unable to obtain any rights or licenses to use all patent and other
material intangible property and assets necessary for the conduct of their
respective businesses (including the commercialization of the Company’s product
candidates) as described in the SEC-CSA Documents, (iii) to the Company’s
knowledge, there are no third parties who have or, will be able to establish,
rights to any Intellectual Property, except for the ownership rights of the
owners of the Intellectual Property which is licensed to the Company and except
where the failure to have or establish such rights would not, individually or in
the aggregate, have a Material Adverse Effect, (iv) to the Company’s knowledge,
there is no infringement by third parties of any Intellectual Property, (v)
there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s rights in or to any
Intellectual Property and the Company is unaware of any facts which could form a
reasonable basis for any such claim, (vi) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property, and the Company
is unaware of any facts which could form a reasonable basis for any such claim,
(vii) there is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes or otherwise
violates (or would infringe or otherwise violate upon commercialization of the
Company’s product candidates as described in the SEC-CSA Documents) any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware that any of its activities could form a reasonable basis
for any such claim, and (viii) the Company, when appropriate, has disclosed to
the U.S. Patent and Trademark Office prior art, of which it has knowledge, that
may render any patent application owned by the Company of the Intellectual
Property unpatentable. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property.
14
(y) Environmental
Laws.
The
Company and its Subsidiaries (i) are in material compliance with any and all
applicable Environmental Laws (as hereinafter defined), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
material compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. The term “Environmental Laws”
means all United States and Canadian federal, state, provincial, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(z) Subsidiary
Rights.
The
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(aa) Tax
Status
. The Company and each of
its Subsidiaries (i) has timely made or timely filed all foreign, United States
and Canadian federal, state and provincial income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply, except in each
case where the failure to make or file any return, report or declaration, or to
pay or set aside any amount, would not have a Material Adverse
Effect. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and neither the officers of
the Company not the officers of the Material Subsidiaries know of any basis for
any such claim.
15
(bb) Internal Accounting and
Disclosure Controls.
The
Company and each of its Material Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with Canadian generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15 under
the 1934 Act and applicable Canadian Securities Laws) that provide reasonable
assurance that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act and the Canadian Securities
Laws is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms of the SEC and the CSA, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act and the applicable Canadian Securities Laws is accumulated
and communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof neither
the Company nor any of its Material Subsidiaries have received any notice or
correspondence from any accountant relating to any potential material weakness
in any part of the system of internal accounting controls of the Company or any
of its Material Subsidiaries.
(cc) Off-Balance Sheet
Arrangements.
Except
as disclosed in the SEC-CSA Documents, there is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its 1934
Act and applicable Canadian Securities Law filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse
Effect.
(dd) Investment Company
Status.
The
Company is not, and upon consummation of the sale of the Securities will not be,
an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended.
(ee) U.S. Real Property Holding
Corporation.
The
Company is not, has never been, and so long as any Securities remain outstanding
shall not become, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Buyer’s request.
(ff) Transfer
Taxes.
On
the Closing Date, all share transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the sale and
transfer of the Securities to be sold to the Buyer hereunder will be, or will
have been, fully paid or provided for by the Company, and all laws imposing such
taxes will be or will have been complied with.
16
(gg) Shares Freely
Tradeable.
The
Conversion Shares will be freely tradeable on the TSX from and after the earlier
of the date the Securities are qualified for public distribution under
applicable Canadian Securities Laws and November 26, 2008.
(hh) TSX.
The
Conversion Shares have been conditionally approved for listing by the TSX
subject to the requirements set forth in the letter of the TSX to the Company
dated July 22, 2008 (the “TSX Letter”), a copy
of which has been furnished to Buyer.
(ii) NASDAQ.
With
respect to the transactions contemplated hereby, the Company has satisfied the
home country practice requirements of the NASDAQ pursuant to Rule 4350(a) of the
NASDAQ Rules or has otherwise complied with the NASDAQ Rules.
(jj) Acknowledgement Regarding
Buyer’s Trading Activity.
It
is understood and acknowledged by the Company (i) that the Buyer has not been
asked by the Company or its Subsidiaries to agree, nor has the Buyer agreed with
the Company or its Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term, (ii) that the Buyer, and counterparties in “derivative” transactions to
which the Buyer is a party, directly or indirectly, presently may have a “short”
position in the Common Shares, and (iii) that the Buyer shall not be deemed to
have any affiliation with or control over any arm’s length counterparty in any
“derivative” transaction. The Company further understands and
acknowledges that the Buyer may engage in hedging and/or trading activities at
various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value of the Conversion Shares
deliverable with respect to Securities are being determined and such hedging
and/or trading activities, if any, can reduce the value of the existing
shareholders’ equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement, the Series A Share Rights or any of the
documents executed in connection herewith.
(kk) Manipulation of
Price.
The
Company has not and, to its knowledge, no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities (except for the Agent), or (iii) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company.
(ll) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf has
provided the Buyer or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic
information. The Company understands and confirms that the Buyer will
rely on the foregoing representations in effecting transactions in securities of
the Company. All disclosure provided to the Buyer regarding the
Company and its Subsidiaries, their business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or its
Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state 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 are made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, prospects, operations or financial conditions,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
17
(mm) Xxxx-Xxxxx-Xxxxxx Act
Exemption.
As
of the date hereof and as of the Closing Date, the Company has determined in
good faith that the fair market value of all assets located in the United States
(other than investment assets and voting or nonvoting securities of another
person) held by the Company and its Subsidiaries (and any other entities which
are controlled by the Company, as the term "control" is defined in the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder) is not in excess of US$63.1
million. The Company and its Subsidiaries did not make aggregate
sales in or into the United States in excess of US$63.1 million in its most
recent fiscal year.
(nn) No Effect on
Reliance.
None
of the representations and warranties of the Company contained in this Section 3 shall
modify, amend or otherwise affect the Company’s right to rely on the Buyer’s
representations and warranties contained in Section
2.
4. COVENANTS.
(a) Best
Efforts.
Each
party shall use its reasonable best efforts to timely satisfy each of the
conditions to be satisfied by it as provided in Sections 6 and 7 of this
Agreement.
(b) Form D and Blue Sky;
Canadian Filings
. The
Company agrees to file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to the Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Buyer at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyer on or prior to the Closing Date. The Company shall make all
filings and reports relating to the offer and sale of the Securities required
under applicable securities or “Blue Sky” laws of the states of the United
States and the applicable Canadian Securities Laws following the Closing
Date.
(c) Reporting
Status
. Until
the earlier of (i) the later of (x) the first anniversary of the Closing Date
and (y) if, on or prior to such anniversary, the Buyer delivers to the Company
an opinion of outside counsel that the Buyer is or is substantially likely to be
regarded by the SEC as an “affiliate” of the Company (as defined in Rule 144
under the 1933 Act), the first date on which such counsel is unable to confirm
such opinion in writing upon request by the Company and (ii) the first date on
which the Buyer shall have sold all the Conversion Shares (the “Reporting Period”),
the Company shall timely file all reports required to be filed with the SEC
pursuant to the 1934 Act and the CSA under applicable Canadian Securities Laws,
and shall maintain its eligibility to file a prospectus with the CSA in the form
of a base shelf prospectus and any necessary shelf prospectus supplements as
contemplated by National Instrument 44-102, Shelf Distributions and a
Registration Statement on Form F-10, in each case covering the resale of the
Conversion Shares pursuant to the MJDS (or, in the event that
that any of such forms is unavailable for such a registration, such other form
or forms as are available for such a registration).
18
(d) Use of
Proceeds.
The
Company will use the proceeds from the sale of the Securities for the repayment
of debt, working capital and general corporate purposes, and not for the
redemption or repurchase of any of its or its Subsidiaries’ equity
securities.
(e) Financial
Information
. The
Company agrees to send the following to the Investor (as defined in the
Registration Rights Agreement) during the Reporting Period unless the following
are filed with the SEC through XXXXX and are available to the public through the
XXXXX system: (i) within one (1) Business Day after the filing
thereof with the SEC, a copy of its Annual Reports on Form 40-F, any Current
Reports on Form 6-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act and (ii) copies of any notices and
other information made available or given to the shareholders of the Company
generally, contemporaneously with the making available or giving thereof to the
shareholders. As used herein “Business Day” means
any day other than a Saturday, Sunday or other day on which commercial banks in
Vancouver, Canada or The City of New York are authorized or required by law to
remain closed.
(f) Listing.
The
Company shall promptly secure the listing of all of the Conversion Shares on
each national securities exchange and automated quotation system, if any, on
which the Common Shares are then listed (subject to official notice of issuance)
and shall maintain the listing of the Common Shares on the Principal
Markets. Except as may result from a Change of Control (as defined
under the Series A Share Rights) or other similar transaction following which
the Common Shares cease to be publicly listed or traded, neither the Company nor
any of its Subsidiaries shall take any action which would be reasonably expected
to result in the delisting or suspension of the Common Shares on the Principal
Markets. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section
4(f).
(g) Fees
. Except
as otherwise set forth in the Transaction Documents, each party to this
Agreement shall bear its own expenses in connection with the sale of the
Securities to the Buyer.
(h) Pledge of
Securities.
The
Company acknowledges and agrees that the Securities may be pledged by the
Investor (as defined in the Registration Rights Agreement) in connection with a
bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities. The pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and if
the Investor effects a pledge of Securities the Investor shall not be required
to provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction
Document. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by the
Investor.
19
(i) Disclosure of Transactions
and Other Material Information.
Upon
the execution of this Agreement by the parties hereto, the Company shall issue a
press release (which issuance may be delayed until immediately prior to the
start of the next trading day on the TSX if the TSX is closed at the time this
Agreement is so executed). The Company shall file a Current Report on
Form 6-K describing the terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and attaching the
material Transaction Documents (including, without limitation, this Agreement
(and all schedules to this Agreement), the form of Series A Share Rights and the
form of the Registration Rights Agreement) as exhibits to such filing (including
all attachments, the “6-K Filing”) and a
material change report on Form 51-102F3 in accordance with National Instrument
51-102 - Continuous Disclosure
Obligations of the CSA with respect thereto (the “Material Change
Report”) no later than the first Business Day following the
date of this Agreement. From and after the 6-K Filing with the SEC
and the filing of the Material Change Report with the CSA, the Buyer shall not
be in possession of any material, nonpublic information received from the
Company, any of its Subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in the 6-K Filing and the Material
Change Report. The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide the Buyer with any material, nonpublic information
regarding the Company or any of its Subsidiaries from and after the filing of
the 6-K Filing with the SEC and the filing of the Material Change Report with
the CSA without the express written consent of the Buyer or as may be required
under the terms of the Transaction Documents. If the Buyer has, or
believes it has, received any such material, nonpublic information regarding the
Company or any of its Subsidiaries directly from the Company, any of its
Subsidiaries, any of their affiliates, officers, directors or any other Person
acting on their behalf, it shall promptly provide the Company with written
notice thereof. The Company shall, within five (5) Business Days of
receipt of such notice, make public disclosure of such material, nonpublic
information, unless the Company determines in good faith, after consultation
with its outside legal counsel, that such information is not material nonpublic
information of the Company or its Subsidiaries. Subject to the
foregoing, neither the Company, its Subsidiaries nor the Buyer shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 6-K Filing and the Material Change Report and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) the Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written
consent of the Buyer, neither the Company nor any of its Subsidiaries or
affiliates shall disclose the name of the Buyer in any filing, announcement,
release or otherwise, unless such disclosure is required by law, regulation or
either of the Principal Markets; provided, that, for greater
certainty, the Company may file unredacted copies of the Transaction Documents
as exhibits to the 6-K Filing and Material Change Report.
(j) Additional Registration
Statements.
Until
the Effective Date (as defined in the Registration Rights Agreement), the
Company shall not file a registration statement under the 1933 Act or a
prospectus in Canada relating to securities that are not the Securities, other
than as may be necessary or desirable in connection with a transaction involving
a Change of Control (as defined in the Series A Share Rights).
(k) Reservation of
Shares.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than the maximum number of Common
Shares issuable upon conversion of the Preferred Shares in accordance with the
Series A Share Rights.
20
(l) Compliance with Series A
Share Rights.
So
long as any Buyer holds any Preferred Shares, the Company shall comply with the
Series A Share Rights.
(m) Conduct of
Business.
The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the aggregate, in a
Material Adverse Effect.
(n) Withholding
Taxes
. The
Company shall be entitled to deduct and withhold from any Common Shares
issuable, or any amount payable, to the Buyer upon the conversion, redemption or
other disposition in whole or in part of the Preferred Shares to the extent
required by law for remittance to the appropriate governmental agency (other
than in respect of any taxes payable by Company pursuant to Section 3.4(b) of
the Series A Share Rights).
(o) Holding
Periods
. For
the purposes of Rule 144 and applicable Canadian Securities Laws, the Company
acknowledges that the holding period of the Conversion Shares may be tacked onto
the holding period of the Preferred Shares and the Company agrees not to take a
position contrary to this Section
4(o).
(p) Lock-Up
Agreements.
The
Company shall not amend, waive or modify any of the Lock-Up Agreements (as
defined below) without the written consent of the Buyer.
(q) Approval of Principal
Markets.
The
Company shall use its reasonable best efforts, acting diligently and in good
faith, to obtain required approvals from the Principal Markets with respect to
the transactions contemplated by the Transaction Documents as soon as
practicable.
5. REGISTER; TRANSFER AGENT
INSTRUCTIONS.
(a) Register.
The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities) a register for the Preferred Shares in which the Company shall
record the name and address of the Person in whose name the Preferred Shares
have been issued, the number of Preferred Shares held by such Person and the
number of Conversion Shares issuable upon conversion of the Preferred
Shares. The Company shall keep the register open and available at all
times during business hours for inspection by the Buyer or its legal
representatives.
21
(b) Transfer Agent
Instructions.
The
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates or credit shares to the
applicable balance accounts at The Depository Trust Company (“DTC”), registered in
the name of the Buyer or its respective nominee(s), for the Conversion Shares in
such amounts as specified from time to time by the Buyer to the Company upon
conversion of the Preferred Shares in the form of Exhibit D attached
hereto (the “Irrevocable Transfer Agent
Instructions”). The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b) and stop
transfer instructions to give effect to Section 2(h) hereof
will be given by the Company to its transfer agent with respect to the
Securities, and that the Conversion Shares shall otherwise be freely
transferable on the books and records of the Company, as applicable, and to the
extent provided in this Agreement and the other Transaction
Documents. If the Buyer effects a sale, assignment or transfer of the
Conversion Shares in accordance with Section 2(g), the
Company shall permit the transfer and shall promptly instruct its transfer agent
to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by the Buyer
to effect such sale, transfer or assignment. In the event that such
sale, assignment or transfer involves Conversion Shares sold, assigned or
transferred pursuant to an effective registration statement with prospectus
delivery (unless an exemption from the prospectus delivery requirements is
available) or pursuant to Rule 144 and pursuant to an exemption from the
registration and prospectus requirements, or following the expiration of all
applicable hold periods, under applicable Canadian Securities Laws, the transfer
agent shall issue such Securities to the Buyer, assignee or transferee, as the
case may be, without any restrictive legend. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer and that the remedy at law for a breach of its obligations under this
Section 5 will
be inadequate. In addition, the Company agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section 5, that the
Buyer shall be entitled, in addition to all other available remedies, to seek an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required.
6. CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Preferred Shares to
the Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing the Buyer with prior written
notice thereof:
(i) The
Buyer shall have executed each of the Transaction Documents to which it is a
party and delivered the same to the Company.
(ii) The
Buyer shall have delivered to the Company the Purchase Price for the Preferred
Shares being purchased by the Buyer at the Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by the
Company.
(iii) The
representations and warranties of the Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date), and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at or prior
to the Closing Date.
(iv)
The Company shall have obtained the conditional approval of the Principal
Markets with respect to the consummation of the transactions contemplated by the
Transaction Documents.
22
7. CONDITIONS TO THE BUYER’S
OBLIGATION TO PURCHASE.
The
obligation of the Buyer hereunder to purchase the Preferred Shares at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the Buyer’s
sole benefit and may be waived by the Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:
(i) The
Company shall have duly executed and delivered to the Buyer (a) the certificate
evidencing the Preferred Shares being purchased by the Buyer at the Closing
pursuant to this Agreement, and (b) each of the other Transaction
Documents.
(ii) The
Buyer shall have received an opinion of XxXxxxxx Xxxxxxxx LLP and Xxxxxx &
Xxxxxxx LLP, the Company’s outside counsel, dated as of the Closing Date, in
substantially the form of Exhibits G and H attached
hereto.
(iii) The
Company shall have delivered to the Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form of Exhibit C attached
hereto, or such other form reasonably acceptable to the Buyer and its counsel,
which instructions shall have been delivered to and acknowledged in writing by
the Company’s transfer agent.
(iv) The
Company shall have delivered to the Buyer a certificate evidencing the formation
and good standing of the Company and each of its Subsidiaries in each such
entity’s jurisdiction of formation issued as of a date within ten (10) Business
Days of the Closing Date, except that the Company may deliver such certificates
in respect of Cardiome UK Limited, Cardiome Development AG and Cardiome Research
and Development (Barbados), Inc. within twenty (20) Business Days of the Closing
Date.
(v) The
Company shall have delivered to the Buyer a certificate, executed by an officer
of the Company and dated as of the Closing Date, as to (a) the resolutions
consistent with Section 3(b) as
adopted by the Company’s board of directors, or a duly appointed committee
thereof, in the form attached hereto as Exhibit D, (b) the
Articles, as in effect at the Closing, and (c) the Bylaws, as in effect at the
Closing, in the form attached hereto as Exhibit
D.
(vi) The
representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. The Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Buyer in the form attached hereto as Exhibit
E.
23
(vii) The
Company shall have delivered to the Buyer a letter from the Company’s transfer
agent certifying the number of Common Shares outstanding as of a date within
five days of the Closing Date.
(viii) The
Common Shares (a) shall be designated for quotation or listed on the Principal
Markets and (b) shall not have been suspended, as of the Closing Date, by the
SEC, the CSA or either of the Principal Markets from trading on the Principal
Markets nor shall suspension by the SEC, CSA or either of the Principal Markets
have been threatened, as of the Closing Date, either (I) in writing by the SEC,
the CSA or either of the Principal Markets or (II) by falling below the minimum
listing maintenance requirements of either of the Principal
Markets.
(ix) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
(x) The
Series A Share Rights in the form attached hereto as Exhibit A shall have
been filed with the Director (as that term is defined in the Canada Business Corporations
Act) of Industry Canada and shall be in full force and
effect.
(xi) The
Buyer shall have received lock-up agreements in the form attached hereto as
Exhibit F (the
“Lock-Up
Agreements”), duly executed and delivered by all directors and officers
of the Company.
(xii) The
approval of each of the Principal Markets for the issuance of the Securities
contemplated hereby and conditional listing of the Conversion Shares shall have
been obtained.
(xiii) The
Company shall have delivered to the Buyer such other documents relating to the
transactions contemplated by this Agreement as the Buyer or its counsel may
reasonably request.
8. TERMINATION.
In
the event that the Closing shall not have occurred on or before ten (10)
Business Days from the date hereof due to the Company’s or the Buyer’s failure
to satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party’s failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such
date. No such termination shall relieve a breaching party from
liability to the non-breaching party for fees and expenses incurred by the
non-breaching party in connection with the preparation and negotiation of the
Transaction Documents.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction;
Jury Trial
.
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. The Company hereby appoints CT
Corporation System, with offices at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 as its agent for service of process in New York. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
24
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement;
Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral or
written agreements between the Buyer, the Company, their Affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement, the other Transaction Documents and the instruments referenced herein
and therein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Buyer. No provision hereof may
be waived other than by an instrument in writing signed by the party against
whom enforcement is sought. The Company has not, directly or
indirectly, made any agreements with the Buyer relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement, the
Buyer has not made any commitment or promise or has any other obligation to
provide any financing to the Company or otherwise.
25
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with an overnight courier
service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications
shall be:
If
to the Company:
6th
Floor,
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X
0X0,
Telephone: (000) 000-0000
Facsimile number: (000)
000-0000
Attention: Chief Executive
Officer
With
a copy (for informational purposes only) to:
XxXxxxxx Xxxxxxxx LLP
Suite 1300,
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X
0X0
Telephone: (000) 000-0000
Facsimile number: (000)
000-0000
Attention: Xxxxxx X.
Xxxxxx
and:
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, 00xx
Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx
00000
Telephone Number: (000)
000-0000
Facsimile number: (000)
000-0000
Attention: Xxxxxxx
X. Xxxx, Esq.
R. Xxxxx Xxxxx, Esq.
Xxxx X. Xxxxxx, Esq.
If
to the Transfer Agent:
Computershare Trust Company of
Canada
3rd Floor,
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx,
X0X 0X0
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxx
Xxx
26
If
to the Buyer:
To the address on the first page
hereof
with
a copy to:
CR Intrinsic Investors,
LLC
c/o S.A.C. Capital Advisors,
LLC
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx
00000
Attention: General
Counsel
Facsimile: (000) 000-0000
and
to:
Xxxx Xxxxx & Xxxxxxx
LLP
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx
00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
III, Esq.
or
to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party pursuant to this Section. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by an overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance with clause
(i), (ii) or (iii) above, respectively.
(g) Successors and
Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the
Preferred Shares. No party shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party.
(h) No Third Party
Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(i) Survival.
Unless
this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyer contained in Sections 2 and 3 and the agreements
and covenants set forth in Sections 4, 5 and 9 shall survive the
Closing and the delivery and exercise of Securities, as applicable.
(j) Currency
. Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars. All amounts owing under this Agreement or any Transaction
Document shall be paid in US dollars. All amounts denominated in other
currencies shall be converted in the US dollar equivalent amount in accordance
with the Exchange Rate on the date of calculation. “Exchange Rate” means,
in relation to any amount of currency to be converted into US dollars pursuant
to this Agreement, the US dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.
27
(k) Further
Assurances
. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(l) Indemnification
. In
consideration of the Buyer’s execution and delivery of the Transaction Documents
and acquiring the Securities thereunder and in addition to all of the Company’s
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless the Buyer, any affiliate of the Buyer to
which the Buyer transfers Preferred Shares with the consent of the Company’s
board of directors and their respective shareholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out
of, or relating to (i) any material inaccuracy in any representation or
warranty made by the Company in the Transaction Documents or any inaccuracy in
any representation or warranty in the Transaction Documents that is qualified by
materiality or Material Adverse Effect, (ii) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(iii) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
the completion of the transactions contemplated hereby or thereby; provided,
that indemnification pursuant to this clause (iii) shall not be available
to the extent arising from the Buyer’s material misrepresentation, fraud, gross
negligence or willful misconduct. To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 9(l) shall be the same as those set forth in
Section 6 of the Registration Rights Agreement.
(m)
No Strict
Construction.
The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will
be applied against any party.
(n) Remedies.
The
Buyer and each holder of the Securities shall have all rights and remedies set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law. Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge any
or all of its obligations under the Transaction Documents, any remedy at law may
prove to be inadequate relief to the Buyer. The Company therefore
agrees that the Buyer shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.
28
(o) Independent Nature of
Obligations.
The
obligations of each Investor (as defined in the Registration Rights Agreement)
under any Transaction Document are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under any Transaction
Document. The Buyer confirms that it has independently participated in the
negotiation of the transactions contemplated hereby with the advice of its own
counsel and advisors. Each Investor shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents to which it is a party,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.
(p) Rescission and Withdrawal
Right.
Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever the Buyer exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
the Buyer may rescind or withdraw, in its sole discretion from time to time
prior to the Company’s performance upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.
(q) Payment Set
Aside.
To
the extent that the Company makes a payment or payments to the Buyer hereunder
or pursuant to any of the other Transaction Documents or the Buyer enforce or
exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
(r) Judgment
Currency.
(i)
If for the purpose of obtaining or enforcing judgment against the Company in any
court in any jurisdiction it becomes necessary to convert into any other
currency (such other currency being hereinafter in this Section 9(r)
referred to as the “Judgment Currency”)
an amount due in US dollars under this Agreement, the conversion shall be made
at the Exchange Rate prevailing on the Business Day immediately
preceding:
29
(1) the
date of actual payment of the amount due, in the case of any proceeding in the
courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date: or
(2) the
date on which the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such conversion is made
pursuant to this Section being hereinafter referred to as the “Judgment Conversion
Date”).
(ii)
If in the case of any proceeding in the court of any jurisdiction referred to in
Section 9(q)(i)(2) above, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.
(iii)
Any amount due from the Company under this provision shall be due as a separate
debt and shall not be affected by judgment being obtained for any other amounts
due under or in respect of this Agreement.
[Signature
Page Follows]
30
IN
WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
By: “Xxxxxx
Xxxxxx”
Name:Xxxxxx
Xxxxxx
Title: Chairman
and CEO
CR INTRINSIC INVESTMENTS,
LLC
By: CR Intrinsic Investors,
LLC
By: “Xxxxx X.
Xxxxxxxx”
Name: Xxxxx X.
Xxxxxxxx
Title: Authorized Signatory
31
EXHIBIT “A” TO SECURITIES PURCHASE AGREEMENT
|
3.
|
Rights,
Privileges, Restrictions & Conditions Attaching to the Series A
Preferred Shares
|
The
first Series of Preferred shares of the Corporation, designated as the
Series A Preferred Shares (the “Series A
Shares”) shall have attached thereto, in addition to the rights,
privileges, restrictions and conditions attaching to the Preferred shares as a
class, the following rights, privileges, restrictions and
conditions:
3.1 Interpretation.
In
this Article 3, the following terms shall have the following
meanings:
“Business Day” means
any day on which commercial banks are generally open for business in New York,
New York or Vancouver, British Columbia other than a Saturday or Sunday or a day
observed as a holiday in New York, New York under the laws of the State of New
York or the federal laws of the United States of America applicable therein or
in Vancouver, British Columbia or the federal laws of Canada applicable
therein.
“Change of Control”
means an acquisition of Common Shares by means of take-over bid, tender offer,
exchange offer, amalgamation, merger, acquisition, sale of shares, plan of
arrangement or other form of corporate reorganization in which outstanding
Common Shares are exchanged for money, securities or other consideration paid,
or caused to be issued or paid, and upon completion of such transaction at least
50% of the voting securities of the Corporation or the reorganized, amalgamated,
continuing, merged, surviving or consolidated entity resulting from such
transaction are “beneficially owned”
(within the meaning of that expression as defined in the Exchange Act), directly
or indirectly, by one or more “persons” or “groups” (within the
meaning of such terms as used for purposes of Section 13(d) and 14(d) of
the Exchange Act) other than persons who beneficially owned at least 50% of the
Common Shares (together with, if applicable, other shares of the Corporation
that carry a voting right for the election of directors generally either under
all circumstances or under some circumstances that have occurred and are
continuing) immediately before the completion of such transaction.
“Change of Control
Price” means, in respect of any transaction constituting a Change of
Control, the value of the consideration paid per Common Share to holders of
outstanding Common Shares under such transaction, expressed in U.S.
dollars. If any of the consideration paid is other than cash, the
value of such consideration will be the amount the Board, acting reasonably,
determines is the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the value of
such consideration will be the last trade price for such securities on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg Financial Markets (“Bloomberg”), or if
the foregoing is not applicable the last trade price of such security in the
over-the counter market on the electronic bulletin board for such security as
reported by Bloomberg, or if no last trade price is reported for such security
by Bloomberg the average of the ask prices of any market makers for such
security as reported in the “pink sheets” by Pink
Sheets LLC. If such trade price cannot be calculated for a security
on a particular date on any of the foregoing bases, the value of such security
on such a date will be such value as the Board, acting reasonably, determines is
the fair market value of such consideration. In the event that the
Board makes any determination of the value of any consideration as contemplated
herein, the Corporation shall promptly notify the holders in writing by
facsimile of such determination. If any holder objects in writing by
facsimile to the Corporation to such determination within two Business Days of
receipt of such notice from the Corporation, the Corporation shall submit via
facsimile the determination of the value of such consideration to an
independent, reputable investment bank selected by the Corporation and
reasonably acceptable to the holders of a majority of the Series A Shares,
or failing agreement of such holders, an independent, reputable investment bank
selected by the auditors of the Corporation. The Corporation shall
cause, at the Corporation’s expense, such investment bank to make such
determination and shall notify the holders of the results of such determination
no later than two Business Days from the time the Corporation receives such
determination. Such investment bank’s determination shall be final
and binding on the Corporation and all holders, absent error.
“Common Shares” means
the Common shares of the Corporation as constituted on the Issue Date, and any
other shares or securities into which such shares may be exchanged (whether or
not the Corporation is the issuer of such other shares or securities) or any
other consideration which may be received by the holders of such shares pursuant
to a capital reorganization, merger, amalgamation or arrangement of the
Corporation or comparable transaction affecting the Common Shares of the
Corporation, provided that, where any such capital reorganization, merger,
amalgamation, or arrangement or transaction requires approval of shareholders of
the Corporation, including holders of Series A Shares, such capital
reorganization, merger, amalgamation, arrangement or transaction is approved as
required by these Articles.
“Conversion Price”
means initially U.S. $11.00, subject to adjustment from time to time pursuant to
Article 3.7.
“Conversion Ratio” at
any particular time means the Conversion Ratio determined at that time by the
following formula:
|
Conversion
Ratio =
|
Issue
Price
|
|
Conversion
Price
|
|
“Exchange Act” means
the United States Securities
Exchange Act of 1934, as amended.
A
“holder” means,
with respect to any Series A Share, the person or entity in whose name such
Preferred Share is registered on the register of Series A Shares maintained
by the Corporation or its agent.
“Issue Date” means the
date on which the Corporation first issues Series A Shares.
2
“Issue Price” means
U.S. $11.00.
“Junior Shares” means
any class or Series of shares of the Corporation (other than the Common
Shares) hereafter created and authorized over which the Series A Shares
have preference or priority in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation or other distribution of assets of
the Corporation for the purposes of winding up its affairs.
“Parity Shares” means
any class or Series of shares of the Corporation (other than the
Series A Shares) that ranks on a parity with the Series A Shares in
the distribution of assets on any liquidation, dissolution or winding up of the
Corporation or other distribution of assets of the Corporation for the purposes
of winding up its affairs, provided that the authorization or issuance of any
such shares authorized or issued (including by reclassification) after the Issue
Date shall have been approved as required pursuant to
Article 3.15.
“Reference Package”
initially means one fully paid and non-assessable Common Share, but is subject
to adjustment as provided in Article 3.7.
“Strategic Review Termination
Date” means the date that is the earlier of the date that the Corporation
publicly announces that (a) the Corporation has terminated or is otherwise
no longer continuing the review and evaluation of partnership opportunities and
other strategic alternatives announced by the Corporation on March 17, 2008
(provided that this clause (a) shall not be satisfied by a public
announcement that the Corporation has elected to pursue a partnership
opportunity or other strategic transaction with one or more persons), or
(b) the Corporation has entered into a strategic partnership or licensing
transaction with respect to Vernakalant (iv) or Vernakalent (oral) that does not
constitute a Change of Control.
|
|
3.2
|
Dividends.
|
The
holders of Series A Shares shall be entitled to receive, and the
Corporation will pay thereon, if, as and when and as declared by the board of
directors of the Corporation (the “Board”), but only out
of money or property of the Corporation legally available for the payment of
dividends, dividends (each, a “Participating
Dividend”) on each date (each, a “Payment Date”) that
any dividend or other distribution is payable or made (whether in the form of
cash, securities, rights, warrants or other property) on or in respect of the
Common Shares in an amount per Series A Share equal to the aggregate amount
of the dividend that would be payable on the Payment Date to such holder if such
holder had held, on the record date for the dividend payable on such Payment
Date, in lieu of such Series A Share, the Reference Package (without giving
effect to any limitations on conversion of Series A Shares contained in
these Articles). Each such dividend shall be paid to the holders of
record of the Series A Shares on the date fixed by the Board to determine
the holders of the Series A Shares entitled to receive such Participating
Dividend, which date shall not be more than 60 days before the Payment Date and
shall be the same as the record date fixed by the Board to determine the holders
of Common Shares entitled to receive a dividend on such Payment
Date.
3
|
|
3.3
|
Certain
Restrictions.
|
So
long as any Series A Share is outstanding, no dividend shall be paid on or
in respect of the Common Shares or any Junior Shares unless all of the
Participating Dividends on all of the outstanding Series A Shares payable
prior thereto or contemporaneously therewith shall have been, or shall
contemporaneously be, paid in full.
|
|
3.4
|
Liquidation,
Dissolution or Winding Up.
|
In
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation (or its subsidiaries whose assets constitute
all or substantially all of the assets of the Corporation and its subsidiaries,
taken as whole), whether in a single transaction or Series of transactions,
or other distribution of assets of the Corporation among its shareholders
(collectively, a “Liquidation”), the
holders of Series A Shares shall be entitled, before any distribution or
payment is made on any date to the holders of the Common Shares or any Junior
Shares in connection with such Liquidation, to be paid in full out of the
property and assets of the Corporation available for distribution to its
shareholders an amount per Series A Share equal to (i) the Issue
Price, plus (ii) all declared and unpaid dividends thereon (the “Liquidation
Preference”). After payment to the holders of the
Series A Shares of the Liquidation Preference so payable to them as above
provided, the holders of Series A Shares as such shall not be entitled to
share in any further distribution of property or assets of the Corporation among
its shareholders for the purpose of winding up its affairs and shall have no
rights or claims to any remaining property or assets of the
Corporation. In the event the property and assets of the Corporation
available for distribution to the holders of Series A Shares in connection
with any Liquidation shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to this Article 3.4 and all liquidation
preferences to which all Parity Shares are entitled in connection with such
Liquidation, the holders of Series A Shares and such Parity Shares shall
participate rateably in respect of the distribution of such amounts in
accordance with the sums that would be payable on such distributions if all
amounts so payable were paid in full. For the purposes of this
Article 3.4, any transaction that constitutes a Change in Control shall not
be deemed to constitute a Liquidation.
|
|
3.5
|
Voting.
|
|
|
(a)
|
Each
holder of Series A Shares shall be entitled to receive the same notice of
and to attend all meetings of the shareholders of the Corporation (except
meetings at which only holders of another specified class or
Series of shares of the Corporation are entitled to vote separately
as a class or series) as is provided to the holders of Common Shares, as
well as prior notice of all shareholders’ actions to be taken by
shareholders of the Corporation by legally available means in lieu of a
meeting of shareholders, and shall have the right to vote (at the rate of
one vote in person or by proxy for each Common Share which the holder
would be entitled to receive upon full conversion of the holder’s
Series A Shares into Common Shares under Article 3.8) with the
holders of Common Shares as if they were a single class of shares upon any
matter submitted to a vote of shareholders, except those matters required
by law or the terms hereof to be submitted to a class vote of the holders
of Series A Shares, in which case the holders of Series A Shares
shall vote as a separate class and have one vote for each Series A
Share held.
|
4
|
|
(b)
|
Notwithstanding
any other provision of these Articles, the Corporation shall not give
effect to any voting rights of a holder of Series A Shares, and such
holder of Series A Shares will not have the right to exercise voting
rights with respect to any Series A Shares voting with the Common
Shares pursuant to this Article 3.5 (as opposed to class voting of
only holders of Series A Shares), to the extent that giving effect to
such voting rights would result in such holder (together with its “affiliates”
(within the meaning of that expression as used in the Exchange Act)) being
deemed (for the purposes of such Act) to beneficially own in excess of
9.99% of the number of Common Shares outstanding immediately after giving
effect to such exercise or result in such holder or any other person
having beneficial ownership of, or control or direction over, directly or
indirectly, securities of the Corporation carrying 10% or more of the
voting rights attached to all of the Corporation’s outstanding voting
securities.
|
|
|
3.6
|
Amalgamations
and Arrangements.
|
Subject
to the provisions of the Canada Business Corporations
Act, with respect to any vote to approve an amalgamation or an
arrangement that constitutes a Change of Control that would result in an
acquisition, exchange or cancellation of the Series A Shares and the Common
Shares in exchange for money, securities or other consideration paid or caused
to be paid to the holders thereof on substantially the same basis, the holders
of the Series A Shares shall be entitled to vote, on an as converted basis
(with such holders having one vote in person or by proxy for each Common Share
which the holder would be entitled to receive upon full conversion of the
holder’s Series A Shares into Common Shares under Article 3.8),
together with the holders of the Common Shares and of any other Series of
Preferred shares of the Corporation, but not separately as a class or
Series (unless, and only to the extent, that Article 3.15(b) is
applicable).
|
|
3.7
|
Adjustments.
|
|
|
(a)
|
Extraordinary Common
Share Event. If the Corporation shall (i) issue any
additional Common Shares as all or part of a dividend or other
distribution on or in respect of outstanding Common Shares,
(ii) subdivide the outstanding Common Shares into a greater number of
Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of Common Shares, then and in each such
case:
|
|
|
(i)
|
the
Conversion Price shall simultaneously be adjusted upon the happening of
each such event by multiplying the Conversion Price in effect immediately
prior to such event by a fraction, the numerator of which is the number of
Common Shares issued and outstanding immediately prior to such event and
the denominator of which is the number of Common Shares issued and
outstanding immediately after completion of such event;
and
|
5
|
|
(ii)
|
the
Reference Package shall simultaneously be adjusted upon the happening of
each such event by multiplying the Reference Package in effect immediately
prior to such event by a fraction, the numerator of which is the number of
Common Shares issued and outstanding immediately after completion of such
event and the denominator of which is the number of Common Shares issued
and outstanding immediately prior to such
event.
|
|
|
(b)
|
Changes in the Common
Shares. Subject to the provisions hereof requiring
approval of certain matters by holders of Series A Shares, if the
issued and outstanding Common Shares are exchanged for or changed into
other shares or securities, cash or any other property as a result of any
amalgamation, arrangement, merger, consolidation, reclassification or
other transaction, then in any such case thereafter, on any conversion of
Series A Shares into Common Shares pursuant to these rights,
privileges, restrictions and conditions, the holder of each Series A
Share so converted shall be entitled to receive the kind and amount of
shares and other securities and property (including cash) that a holder of
the Reference Package would have received as a result of such transaction
if it was entitled to participate
therein.
|
|
|
(c)
|
Certificate of
Conversion Adjustment. Adjustments made under this
Article 3.7 shall be successive and each resulting new Conversion
Price and Reference Package shall continue in effect until the next
adjustment (if any) is made hereunder. Upon the occurrence of
each such adjustment, the Corporation shall compute the adjustment in
accordance with the terms thereof and promptly furnish to each holder a
certificate setting forth:
|
|
|
(i)
|
the
adjustment calculations in detail;
|
|
|
(ii)
|
the
facts upon which the adjustment and calculations are
based;
|
|
|
(iii)
|
the
resulting new Conversion Price and Reference Package;
and
|
|
|
(iv)
|
if
applicable, the number and kind of other securities or property which
would be received pursuant to Article 3.7(b) by holders of
Series A Shares upon conversion of each Series A
Share.
|
Upon
written request from time to time of any holder, the Corporation shall promptly
furnish to such holder a certificate setting out the then applicable Conversion
Price and Reference Package and, if applicable, the number and kind of other
securities or property which would be received pursuant to Article 3.7(b)
by holders of Series A Shares upon conversion of each Series A Share,
together with a copy of any certificate previously furnished pursuant to this
Article.
|
|
(d)
|
Resolution of
Conversion Adjustment Questions. If at any time a
question arises with respect to adjustments or calculations made under
this Article 3.7, such questions shall be determined by the auditors
of the Corporation, or, if requested in writing by a holder of
Series A Shares or the Corporation prior to such determination by the
auditors of the Corporation by arbitration administered by the American
Arbitration Association’s International Center for Dispute Resolution in
New York, New York in accordance with its International Arbitration Rules
then currently in effect by a single arbitrator who will be appointed in
accordance with such rules and the determination of such arbitrator shall
be binding upon the Corporation and all shareholders of the
Corporation.
|
6
|
|
3.8
|
Conversion.
|
|
|
(a)
|
Conversion at Holder’s
Option. Subject to Article 3.8(j), commencing on
the earlier of the date which is three months after the Issue Date and the
Strategic Review Termination Date, each holder of Series A Shares
shall have the right (the “Holder Conversion
Right”) at any time to convert all or from time to time to convert
any part of the Series A Shares held by such holder into fully paid
Common Shares.
|
|
|
(b)
|
Holder Conversion
Notice. The Holder Conversion Right may be exercised by
any holder of the Series A Shares giving notice (the “Holder Conversion
Notice”) in writing delivered to the Corporation. The
Holder Conversion Notice shall be irrevocable (unless the Corporation
fails to effect the conversion as required pursuant to these Articles) and
shall specify the number of Series A Shares (the “Specified
Shares”) the holder wishes to be converted and the date upon which
the conversion is to occur, which shall not be less than three Business
Days and not more than 30 days after the date of the Holder Conversion
Notice.
|
|
|
(c)
|
Conversion at
Corporation’s Option. Subject to Article 3.8(j), at
any time after the earlier of the first anniversary of the Issue Date and
the Strategic Review Termination Date, the Corporation shall have the
right (the “Corporation Conversion
Right”) at any time to convert all or from time to time to convert
any part of the Series A Shares held by any holder into fully paid
Common Shares.
|
|
|
(d)
|
Corporation Conversion
Notice. The Corporation Conversion Right may be
exercised by the Corporation giving notice (the “Corporation Conversion
Notice”) in writing delivered to each holder of Series A
Shares to be converted. The Corporation Conversion Notice shall
specify the number of Series A Shares (the “Specified
Shares”) held by any holder that the Corporation wishes to be
converted, and shall specify the date upon which the conversion is to
occur, which shall not be less than 10 days and not more than 30 days
after the date of the Corporation Conversion
Notice.
|
|
|
(e)
|
Automatic Conversion
Upon Change of Control. In the event that any Change of
Control is consummated, subject to Article 3.8(j), each issued and
outstanding Series A Share shall be converted into fully paid Common
Shares.
|
|
|
(f)
|
Notice of Change of
Control. In the event any Change of Control is
consummated, the Corporation shall give notice in writing to each holder
of Series A Shares at least 10 days prior to such consummation
notifying such holder of the Change of Control and the conversion of
Series A Shares pursuant to
Article 3.8(e).
|
7
|
|
(g)
|
Conversion
Ratio. Any conversion of Series A Shares into
Common Shares shall be at a conversion ratio (a number of Common Shares
for each 1.0 Series A Share) equal to the Conversion
Ratio.
|
|
|
(h)
|
Procedure for
Conversion.
|
|
|
(i)
|
A
holder of Series A Shares subject to conversion under this
Article 3.8 shall transmit by facsimile, or otherwise deliver, a
notice of conversion in the form attached hereto as Exhibit I (the
“Conversion
Notice”) duly and properly completed and executed by the holder of
Series A Shares subject to such conversion to the Corporation and to
the designated transfer agent (the “Transfer
Agent”) for the Common Shares and, subject to Article 3.8(n),
shall surrender the certificate or certificates representing the shares
being converted to the Corporation at its principal office (which
certificate or certificates shall, if required by the Corporation, have
the transfer form on the back thereof duly endorsed in such manner as may
be required by the Corporation or be accompanied by such instruments of
transfer or appropriate share transfer power acceptable to the Corporation
duly endorsed in such manner as may be required by the
Corporation). Subject to compliance by the holder with the
conditions specified above and, if applicable, in Article 3.8(h)(ii),
upon receipt by the Corporation of such a Conversion Notice, the
Corporation shall, as soon as practicable, but in any event within two
Business Days, send via facsimile, a confirmation of receipt of such
Conversion Notice to such holder and the Transfer Agent, which
confirmation shall constitute an instruction to the Transfer Agent to
process such Conversion Notice and issue Common Shares in connection with
such conversion.
|
|
|
(ii)
|
If
a holder of Series A Shares subject to conversion under this
Article 3.8 wishes that any Common Shares deliverable in connection
with the conversion be issued to, registered in the name of, or delivered
to, any person other than the holder of the Series A Shares
converted, the holder must deliver to the Corporation written notice in
form and execution satisfactory to the Corporation directing the
Corporation to arrange for the registration of such Common Shares in some
other name or names (the “Transferee” or
“Transferees”)
and stating the name and addresses of the Transferee or Transferees in
which a certificate or certificates or other appropriate instruments
evidencing the shares or other property to which such holder is entitled
upon such conversion is to be registered. In such event, if
required by any applicable law or by the Corporation, such notice shall be
accompanied by a written declaration as to the residence and share
ownership status of the Transferee or Transferees and such other matters
as may be required by such law or the Corporation in order to determine
the entitlement of such Transferee or Transferees to such Common
Shares. The holder of Series A Shares shall (A) pay
any applicable security transfer taxes including, without limitation, any
documentary, stamp, transfer or other taxes that may be payable in respect
of any transfer involved in the issuance or delivery of any shares or
securities to any person other than the holder of Series A Shares or
(B) shall provide the Corporation evidence satisfactory to the
Corporation that such taxes, if any, have been
paid.
|
8
|
|
(iii)
|
All
declared and unpaid dividends payable on any Series A Shares
converted pursuant to this Article 3.8 during the period from the
close of business on any record date for the payment of such dividend on
such shares to the opening of business on the date of payment of such
dividend shall be payable to the holder of record of such shares as of
such record date notwithstanding such
conversion.
|
|
|
(iv)
|
Effective
upon (A) in respect of Article 3.8(a), the date specified in the
Holder Conversion Notice, subject to compliance by such holder with the
other conditions specified above; or (B) in respect of
Article 3.8(c), the date specified in the Corporation Conversion
Notice; or (C) in respect of Article 3.8(e), the date of the
Change of Control (and contingent upon the consummation of such Change of
Control) causing the automatic conversion (each of (A), (B), or (C), a
“conversion
date”), the Series A Shares to be converted shall be
converted. Such conversion shall be deemed to have been made as
of the close of business on such conversion date (except in respect of a
conversion pursuant to Article 3.8(e), which shall be effective
immediately prior to the completion of the Change of Control) or at such
other time as the Board may in good faith determine and as may be approved
by holders holding not less than a majority of the aggregate Series A
Shares then outstanding, being no later than the close of business on such
date, and the holder of the Series A Shares converted (or, if
applicable, subject to compliance by the holder with the conditions
specified above prior to such time, the Transferee or Transferees directed
by the holder) shall be deemed to have become and treated for all purposes
as a holder or holders of record of Common Shares (or, in the case of
securities or property not in registered form, the owner or owners) on
such applicable conversion date, notwithstanding any delay in the delivery
of a certificate or certificates representing the Common Shares into which
such Series A Shares have been converted, and the rights of the
holder of such converted Series A Shares shall
cease.
|
|
|
(v)
|
Subject
to compliance by the holder with the conditions specified above, as
promptly as practicable after (but in no event later than two Business
Days after) the later of (A) the date of receipt by the Transfer
Agent of the confirmation of receipt of a Conversion Notice as
contemplated in Article 3.8(h)(i) and (B) the conversion date,
the Corporation shall deliver or cause to be delivered to the holder of
the Series A Shares converted or, if applicable, subject to
compliance by the holder with the conditions specified above, the
Transferee or Transferees directed by the holder, at the address specified
in the Conversion Notice, a certificate or certificates evidencing the
number of whole Common Shares, or other securities and property to which
such person or persons shall be entitled as provided herein, and the
amounts described in Article 3.8(h)(iii). Alternatively,
in lieu of such delivery of a share certificate representing such Common
Shares, the Corporation may arrange to have the Transfer Agent credit the
number of Common Shares issued upon conversion to the applicable balance
account of the holder or its designee at The Depository Trust Company as
specified in the Conversion Notice.
|
9
|
|
(i)
|
Partial
Conversion. In the event some but not all of the
Series A Shares represented by a certificate or certificates
surrendered by a holder are converted under this Article 3.8, subject
to Article 3.8(n), the holder of such Series A Shares shall be
entitled to receive within three Business Days after the later of
(i) the date of receipt by the Transfer Agent of the confirmation of
receipt of a Conversion Notice as contemplated in Article 3.8(h)(i)
and (ii) the conversion date, a new certificate representing the number of
Series A Shares comprised in the certificate or certificates
surrendered which were not
converted.
|
|
|
(j)
|
Deferral of
Conversion. The Corporation shall not effect any
conversion of Series A Shares and the right of holders of
Series A Shares to receive Common Shares upon the conversion of any
Series A Shares shall continue but be deferred to the extent that,
after giving effect to such conversion, the holder of such Series A
Shares, together with such holder’s “affiliates”
(within the meaning of that term as defined in the Exchange Act) would
have acquired, through conversion of Series A Shares or otherwise,
beneficial ownership (“Beneficial
Ownership”) of a number of Common Shares that exceeds 9.99% of the
number of Common Shares outstanding immediately after giving effect to
such conversion or result in such holder or any other person having
beneficial ownership of, or control or direction over (“Beneficial Ownership
or Control”), directly or indirectly, securities of the Corporation
carrying 10% or more of the voting rights attached to all of the
Corporation’s outstanding voting securities. For the purposes
of this Article 3.8(j): (i) the number of Common Shares
Beneficially Owned by a holder and its affiliates shall include the number
of Common Shares issuable on conversion of the Series A Shares with
respect to which the determination of such clause is being made, but shall
exclude the number of Common Shares which would be issuable upon
(A) conversion of the remaining, non converted Series A Shares
Beneficially Owned by such holder or any of its affiliates and
(B) exercise or conversion of the unexercised of unconverted portion
of any other securities of the Corporation subject to a limitation on
conversion or exercise analogous to the limitation contained in this
clause Beneficially Owned by such holder or any of its affiliates;
(ii) except as set forth in the preceding clause (i), Beneficial
Ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act; (iii) Beneficial Ownership or Control shall be
calculated in accordance with applicable United States and Canadian
securities laws, rules and regulations (and in the event the calculation
under applicable United States and Canadian securities laws, rules and
regulations, respectively, may yield different results, the calculation
shall be made under the applicable laws, rules and regulations that
reflects the greater number of Common Shares being beneficially owned, or
controlled or directed by such holder or person); (iv) in determining
the number of outstanding Common Shares, a holder may rely on the number
of outstanding Common Shares as reflected in (A) the Corporation’s
most recent Form 40-F or Form 6-K, as the case may be, filed under the
Exchange Act, (B) a more recent public announcement by the
Corporation, or (C) any other notice by the Corporation or the
transfer agent for the Common Shares setting out the number of Common
Shares outstanding; (v) in determining the number of Common Shares
Beneficially Owned by a holder and its affiliates, the Corporation may
rely on the number of Common Shares stated to be Beneficially Owned by the
holder and its affiliates as reflected in (A) any filing made by the
holder or any of its affiliates under the Exchange Act, or (B) any
other notice by the holder or any of its affiliates setting forth the
number of Common Shares so beneficially owned; (vi) in calculating
the number of voting securities over which the holder or any other person
has Beneficial Ownership or Control, the Corporation may rely on the
number of such securities stated to be beneficially owned, or over which
control or direction is exercised in (A) any filing made by the
holder or any other person under applicable Canadian securities laws, or
(B) any other notice by the holder or any other person setting forth
such information; (vii) for any reason at any time, upon written
request of any holder, the Corporation shall within one Business Day
following receipt of such request, confirm orally and in writing to such
holder the number of Common Shares then outstanding; (viii) for any
reason at any time, upon written request of the Corporation, any holder
shall within one Business Day following receipt of such notice, confirm
orally and in writing to the Corporation the number of Common Shares
Beneficially Owned by the holder and its affiliates and the number of
voting securities of the Corporation over which the holder exercises
Beneficial Ownership or Control, directly or indirectly; and (ix) the
number of outstanding Common Shares shall be determined after giving
effect to the conversion or exercise of securities of the Corporation,
including the Series A Shares, by such holder and its
affiliates. Notwithstanding any other provision of these
Articles, any holder may, by notice in writing to the Corporation, elect
(a “Filing
Election”) that the provisions of this Article 3.8(j) and
Article 3.5(b) do not apply to such holder provided that, prior to
giving such notice, such holder has filed with the Toronto Stock Exchange
a “Personal
Information Form” and such other documents and forms as the Toronto
Stock Exchange may require in relation to such holder’s investment in the
Corporation and the Toronto Stock Exchange shall have accepted such forms
and documents for filing and notified the Corporation in writing that it
has accepted such forms and documents for filing. In the event
any holder provides such notice, thereafter the provisions of this
Article 3.8(j) and Article 3.5(b) will not apply to such
holder.
|
10
|
|
(k)
|
No Fractional
Shares. Notwithstanding any other provision hereof, no
fractional shares shall be issued upon any conversion of Series A
Shares and the number of Common Shares to be issued shall be rounded down
to the nearest whole share.
|
|
|
(l)
|
Redemption of
Unconverted Series A Shares. In the event that any
Series A Shares to be converted pursuant to Article 3.8(e) are
not converted as provided in Article 3.8(j), on or after the
occurrence of the Change of Control referred to in Article 3.8(e) the
Corporation shall redeem the whole of the outstanding Series A Shares
that are so not converted from any one or more of the holders thereof on
payment of an amount for each Series A Share to be redeemed equal to
the number of Common Shares to be issued and delivered on conversion of
such Series A Shares pursuant to Article 3.8(e), multiplied by
the Change of Control Price, plus all declared and unpaid dividends on
such Series A Shares redeemed (the whole being referred to as the
“Change of
Control Redemption Amount”), on the following
conditions:
|
|
|
(i)
|
the
Corporation shall redeem all such Series A
Shares;
|
|
|
(ii)
|
subject
to Article 3.8(l)(iii), the Corporation must give notice in writing
to each person who at the record date for the determination of holders
entitled to receive notice is a holder of Series A Shares to be
redeemed pursuant to this Article 3.8(l) at least three Business Days
before the date specified for redemption of the intention of the
Corporation to redeem such Series A Shares. Such notice
may be given by mail or delivered by courier (or with the consent of any
particular holder, otherwise delivered) and (subject to the consent of any
particular holder as referred to above) may be mailed, postage prepaid or
delivered, addressed to each holder at the last address of such holder as
it appears on the records of the Corporation or in the event of the
address of the holder not so appearing then to the last know address of
such holder. The accidental failure to give such notice to one
or more such holders will not affect the validity of such
redemption. Such notice will set out the Change of Control
Redemption Amount and the date on which redemption is to take place, which
date shall not be later than 10 days after the date of consummation of the
Change of Control, and if only part of the shares held by the person to
whom it is addressed are to be redeemed the number thereof to be
redeemed. The Corporation will use its best efforts to redeem
such Series A Shares on the date of conversion of Series A
Shares pursuant to Article 3.8(e), or as soon as is reasonably
practicable thereafter. For greater certainty, at the option of
the Corporation, such notice may be given prior to the completion of a
Change of Control, conditional upon such completion, and may provide that
redemption of the Series A Shares to be redeemed will occur on the
date of consummation of such Change of Control and either concurrently
with such consummation or immediately prior to such consummation but
conditional upon such completion.
|
11
|
|
(iii)
|
any
person who is otherwise entitled to notice pursuant to
Article 3.8(l)(ii) may waive such notice or any of the requirements
for that notice or the time for giving that notice and that waiver,
whether given before or after redemption, will be effective for all
purposes of these Articles and will cure any failure in respect of such
notice, including without limitation, any failure to give that notice, to
give any specified or required form of notice, or to give such notice by
any particular dates;
|
|
|
(iv)
|
on
or after the date specified for redemption, the Corporation will pay or
cause to be paid to the order of the holders of the Series A Shares
to be redeemed the Change of Control Redemption Amount on presentation and
surrender at the registered office of the Corporation or any other place
designated in such notice of the certificates representing the
Series A Shares called for redemption and upon such payment such
Series A Shares will be redeemed. Such payment will be
made by cheque payable in U.S. currency at par at any branch of the
Corporation’s bankers in Canada (or, with the consent of the holder, by
any other means of immediately available funds). In the case of
any dispute as to the determination of the value of any consideration
forming all or part of the Change of Control Price where the determination
has not been finally determined as provided in the definition of “Change of Control
Price” prior to the date specified for redemption, in lieu of
paying the Change of Control Redemption Amount in full pursuant to this
Article 3.8(l)(iv), the Corporation will pay or cause to be paid, on
account of the Change of Control Redemption Amount (A) any part of
the Change of Control Redemption Amount that is not disputed, plus
(B) in respect of any consideration where the value has been
disputed, the value of such consideration as determined by the
Board. Upon such payment, the Series A Shares will be
redeemed. Thereafter, if it is subsequently finally determined
as provided in the definition of “Change of Control
Price” that the value of any consideration forming part of the
Change of Control Price that was so disputed is greater than the value of
such consideration as determined by the Board, such that the amount so
paid on account of the Change of Control Redemption Amount was less than
the Change of Control Redemption Amount, the Corporation will forthwith
after such determination pay or cause to be paid to the order of the
holders of the Series A Shares so redeemed the balance of the Change
of Control Redemption Amount. From and after the date specified
for redemption in any such notice the holders of the Series A Shares
called for redemption will cease to be entitled to dividends (if any) to
which they may otherwise be entitled and will not be entitled to exercise
any of the rights of holders of Series A Shares in respect thereof
unless payment of the Change of Control Redemption Amount is not made upon
presentation of certificates in accordance with the foregoing provisions,
in which case the rights of the holder of the said Series A Shares
will remain unaffected. The Corporation will have the right at
any time before or after mailing (or delivery, as the case may be) of the
notice of its intention to redeem any Series A Shares to deposit the
Change of Control Redemption Amount of the shares called for redemption
represented by certificates as have not as at the date of such deposit
been surrendered by the holders thereof in connection with such redemption
to a special account in any major Canadian chartered bank or any major
trust company in Canada, in each case as named in such notice, or in such
other notice the Corporation may send in the same manner to such holders,
to be paid without interest to or to the order of the respective holders
of the such Series A Shares called for redemption upon presentation
and surrender to such bank or trust company of the certificates
representing such shares, and upon such deposit being made or upon the
date specified for redemption, whichever is later, the Series A
Shares in respect whereof such deposit has been made will be redeemed and
the rights of the holders thereof after such deposit or such redemption
date, as the case may be, will be limited to receiving without interest
their proportionate part of the total Change of Control Redemption Amount
so deposited against presentation and surrender of the said certificates
held by them respectively. Any interest allowed on such deposit
will belong to the Corporation.
|
12
|
|
(m)
|
Reservation of Common
Shares. The Corporation shall at all times reserve and
keep available out of its authorized but unissued Common Shares a
sufficient number of its Common Shares to effect the conversion of all the
then outstanding Series A Shares and shall take such corporate action
as may be necessary in order to enable and effect the full conversion
thereof in accordance with the provisions
hereof.
|
|
|
(n)
|
Book
Entry. Unless the Board otherwise determines in good
faith that the following will result in undue expense to the Corporation
or be contrary to applicable law, notwithstanding anything to the contrary
set forth herein, upon conversion of Series A Shares in accordance
with the terms hereof, the holder thereof shall not be required to
physically surrender the certificate representing the Series A Shares
to the Corporation unless (i) the full or remaining number of
Series A Shares represented by the certificate are being converted or
(ii) a holder has provided the Corporation with prior written notice
(which notice may be included in a Holder Conversion Notice) requesting
reissuance of Series A Shares upon physical surrender of any
Series A Shares. The holder and the Corporation shall
maintain records showing the number of Series A Shares converted and
the dates of such conversions or shall use such other method, reasonably
satisfactory to the holder and the Corporation, so as not to require
physical surrender of the certificate representing the Series A
Shares upon each such conversion. In the event of any dispute
or discrepancy, such records of the Corporation establishing the number of
Series A Shares to which the record holder is entitled shall be
controlling and determinative in the absence of manifest
error. In connection with any transfer of all or any portion of
Series A Shares held by any holder (subject to Article 3.11),
such holder may physically surrender the certificate representing the
Series A Shares to the Corporation, whereupon the Corporation will
forthwith issue and deliver upon the order of such holder a new
certificate or certificates of like tenor, registered as such holder may
request, representing in the aggregate the remaining number of
Series A Shares represented by such certificate. A holder
and any assignee, by acceptance of a certificate, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion
of any Series A Shares, the number of Series A Shares
represented, by such certificate may be less than the number of
Series A Shares stated on the face thereof. Each
certificate representing Series A Shares shall bear the following
legend:
|
13
“ANY
TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE RIGHTS,
PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHED TO THE SERIES A SHARES
REPRESENTED BY THIS CERTIFICATE, INCLUDING ARTICLE 3.8(n)
THEREOF. THE NUMBER OF SERIES A SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE LESS THAN THE NUMBER OF SERIES A SHARES STATED ON THE
FACE HEREOF PURSUANT TO ARTICLE 3.8(n) OF THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHED TO THE SERIES A SHARES REPRESENTED BY
THIS CERTIFICATE.”
|
|
(o)
|
Corporation’s Failure
to Timely Convert. Subject to compliance by the holder
with the conditions specified above, in the event the Corporation fails to
deliver to the holder of any Series A Shares converted or required to
be converted pursuant to this Article 3.8 a certificate or
certificates or other security or property as required pursuant to
Article 3.8(h)(v) no later than four Business Days after the later of
(i) receipt by the Corporation and the Transfer Agent of a facsimile
copy of a properly completed Conversion Notice as contemplated in
Article 3.8(h)(i) and (ii) the conversion date, then due to the
uncertainty and difficulty in estimating a holder’s damages for any delay
in such delivery and as a reasonable estimate of such holder’s additional
actual loss due to such delay in delivery and not as a penalty, the
Corporation shall, in addition to any rights of indemnification or other
remedies at law or in equity which the holder may otherwise have against
the Corporation, pay damages to such holder for each thirty day period, or
portion thereof, after such fourth Business Day that such delivery is not
effected in an amount equal to 1.5% of the product of (A) the sum of the
number of Common Shares represented by the certificate not delivered to
such holder on or prior to such fourth Business Day and to which such
holder is entitled and (B) the Closing Sale Price of the Common
Shares on such fourth Business Day. For the purposes hereof,
the “Closing
Sale Price” of the Common Shares means the last closing trade price
of such Common Shares on the principal securities exchange or trading
market where such shares are listed or traded as reported by
Bloomberg.
|
|
|
3.9
|
Notices.
|
|
|
(a)
|
The
Corporation shall distribute to the holders of Series A Shares copies
of all notices, materials, annual and quarterly reports, proxy statements,
information statements and any other documents that it distributes
generally to the holders of Common Shares, at such times and by such
method as such documents are distributed to such holders of Common
Shares.
|
14
|
|
(b)
|
The
Corporation will give written notice to each holder at least 10 days prior
to the date on which the Corporation closes its books or takes a record
(i) with respect to any dividend or distribution upon the Common Shares,
or (ii) with respect to any pro rata subscription offer to holders of
Common Shares to acquire securities of the
Corporation.
|
|
|
(c)
|
The
Corporation will use reasonable commercial efforts to give each holder at
least 30 days, and in any event will give each holder not less than ten
days, prior notice of any pending Change of Control or Liquidation,
provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to such
holder.
|
|
|
3.10
|
No
Reissuance.
|
No
shares of Series A Shares acquired by the Corporation by reason of
redemption, purchase, conversion or otherwise shall be reissued and any such
shares shall be cancelled.
|
|
3.11
|
Non-transferrable.
|
No
Series A Shares shall be transferred without the prior consent of the
directors expressed by a resolution of the Board and the directors shall not be
required to give any reason for refusing to consent to any proposed
transfer.
|
|
3.12
|
Redemption
at Option of the Corporation.
|
Any
time after the first anniversary of the Issue Date, the Corporation shall have
the right, exercisable at any time and from time to time, to redeem the whole or
any part of the outstanding Series A Shares from any one or more of the
holders thereof as the Board may in its sole discretion determine on payment of
an amount for each Series A Share to be redeemed equal to the Issue Price,
plus all declared and unpaid dividends thereon (the whole being referred to as
the “Redemption
Amount”) on the following conditions:
|
|
(a)
|
the
Corporation may redeem all or any of such Series A Shares held by any
holder and need not redeem such Series A Shares on a pro rata basis
among all holders of such Series A Shares, but the Corporation shall
give notice of such redemption to all holders of Series A
Shares;
|
|
|
(b)
|
subject
to clause (d), the Corporation must give notice in writing to each
person who at the record date for the determination of holders entitled to
receive notice is a holder of Series A Shares to be redeemed pursuant
to this Article 3.12 at least 10 days before the date specified for
redemption of the intention of the Corporation to redeem such
Series A Shares. Such notice may be given by mail or
delivered by courier (or with the consent of any particular holder,
otherwise delivered) and (subject to the consent of any particular holder
as referred to above) may be mailed, postage prepaid or delivered,
addressed to each holder at the last address of such holder as it appears
on the records of the Corporation or in the event of the address of the
holder not so appearing then to the last know address of such
holder. The accidental failure to give such notice to one or
more such holders will not affect the validity of redemption from other
holders. Such notice will set out the Redemption Amount and the
date on which redemption is to take place and if only part of the shares
held by the person to whom it is addressed are to be redeemed the number
thereof to be redeemed;
|
15
|
|
(c)
|
notwithstanding
any other provision in these Articles, the Corporation will not redeem
Series A Shares pursuant to this Article 3.12 to the extent that
such redemption would render the Corporation insolvent after such
redemption, or would be contrary to the solvency requirements or other
provision of applicable law;
|
|
|
(d)
|
any
person who is otherwise entitled to notice pursuant to clause (b) may
waive such notice or any of the requirements for that notice or the time
for giving that notice and that waiver, whether given before or after
redemption, will be effective for all purposes of these Articles and will
cure any failure in respect of such notice, including, without limitation,
any failure to give that notice, to give any specified or required form of
notice, or to give such notice by any particular
dates;
|
|
|
(e)
|
on
or after the date specified for redemption, the Corporation will pay or
cause to be paid to the order of the holders of the Series A Shares
to be redeemed the Redemption Amount on presentation and surrender at the
registered office of the Corporation or any other place designated in such
notice of the certificates representing the Series A Shares called
for redemption and upon such payment such Series A Shares will be
redeemed. Such payment will be made by cheque at par at any
branch of the Corporation’s bankers in Canada (or, with the consent of the
holder, by any other means of immediately available funds, or by issuance
to the holder of a promissory note of the Corporation payable upon demand
without interest, or by the distribution of property or assets of the
Corporation or by any other means). If only part of the shares
represented by any certificate are to be redeemed, a new certificate for
the balance will be issued at the expense of the
Corporation. From and after the date specified for redemption
in any such notice the holders of the Series A Shares called for
redemption will cease to be entitled to dividends (if any) to which they
may otherwise be entitled and will not be entitled to exercise any of the
rights of holders of Series A Shares in respect thereof unless
payment of the Redemption Amount is not made upon presentation of
certificates in accordance with the foregoing provisions, in which case
the rights of the holder of the said Series A Shares will remain
unaffected. The Corporation will have the right at any time
after mailing (or delivery, as the case may be) of the notice of its
intention to redeem any Series A Shares to deposit the Redemption
Amount of the shares called for redemption represented by certificates as
have not as at the date of such deposit been surrendered by the holders
thereof in connection with such redemption to a special account in any
major Canadian chartered bank or any major trust company in Canada, in
each case as named in such notice, or in such other notice the Corporation
may send in the same manner to such holders, to be paid without interest
to or to the order of the respective holders of the such Series A
Shares called for redemption upon presentation and surrender to such bank
or trust company of the certificates representing such shares, and upon
such deposit being made or upon the date specified for redemption,
whichever is later, the Series A Shares in respect whereof such
deposit has been made will be redeemed and the rights of the holders
thereof after such deposit or such redemption date, as the case may be,
will be limited to receiving without interest their proportionate part of
the total Redemption Amount so deposited against presentation and
surrender of the said certificates held by them
respectively. Any interest allowed on such deposit will belong
to the Corporation.
|
16
|
|
(f)
|
Other
than as specifically permitted by Article 3.8(l) and this
Article 3.12, the Corporation may not redeem any of the outstanding
Series A Shares.
|
|
|
3.13
|
Conversion
Rights Upon Redemption.
|
If
the Corporation delivers a notice of redemption pursuant to Article 3.12,
each holder of Series A Shares shall have seven days from the date of such
notice of redemption to notify the Corporation pursuant to Article 3.8(b)
that the holder wishes the Corporation to convert all or part of the
Series A Shares held by the holder that would otherwise be subject to the
notice of redemption. If any holder delivers a Holder Conversion
Notice within such seven-day period and otherwise complies with the requirements
of these Articles in respect of the conversion of the Specified Shares referred
to in such Holder Conversion Notice, the redemption of such Specified Shares
shall be suspended pending the conversion of such Specified Shares and, if such
Specified Shares are converted pursuant to the provisions of Article 3.8,
such Specified Shares shall not be redeemed. If a holder fails to
deliver a Holder Conversion Notice within such seven-day period, or otherwise
fails to comply with the requirements of these Articles in respect of the
conversion of such Specified Shares, the right of such holder to exercise the
Holder Conversion Right in respect of the Series A Shares held by such
holder that are subject to the notice of redemption shall cease and terminate;
provided, however, that if the Corporation fails to redeem all or part of the
Series A Shares referred to in the notice of redemption, the Holder
Conversion Right in respect of the Series A Shares of such holder which are
not redeemed as a result of such failure shall thereupon be
reinstated. Notwithstanding the foregoing, if a holder exercises the
Holder Conversion Right, but any of the Specified Shares to be converted
pursuant to Article 3.8(a) are not converted as provided in
Article 3.8(j), the Corporation may not redeem Series A Shares that
are not so converted from the holder thereof under Article 3.12 for a
period of 180 days from the date on which such conversion was to have
occurred.
|
|
3.14
|
Withholding
Rights; Other Taxes.
|
|
|
(a)
|
The
Corporation shall be entitled to deduct and withhold from any
distribution, consideration or other amount payable under these Articles
to any holder of Series A Shares such amounts as the Corporation is
required to deduct and withhold with respect to such payment under the
Income Tax Act
(Canada), the United
States Internal Revenue Code of 1986 or any provision of
provincial, state, local or foreign tax law, in each case as amended or
succeeded. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes as having been paid to
the holder of the Series A Shares in respect of which such deduction
and withholding was made, provided that such withheld amounts are actually
remitted to the appropriate taxing authority. To the extent
that the amount so required or permitted to be deducted or withheld from
any payment to any holder of Series A Shares exceeds the cash portion
of any consideration otherwise payable to such holder, the Corporation is
authorized to sell or otherwise dispose of such portion of the
consideration as is necessary to provide sufficient funds to the
Corporation to enable it to comply with such deduction or withholding
requirement and the Corporation shall notify such holder and remit to such
holder any unapplied balance of net proceeds of such sale. If
the Corporation becomes aware that it must make any deduction and
withholding contemplated in this Article 3.14 (or that there is a
change in the rate or basis for such withholding), it will promptly notify
the affected holders. As soon as practicable after making any
deduction and withholding contemplated in this Article 3.14 and
remission of any withheld amount to the appropriate taxing authority the
Corporation will deliver to any affected holder evidence of such
remission.
|
17
|
|
(b)
|
The
Corporation will pay in accordance with applicable law any stamp or
documentary taxes or similar levies (other than transfer taxes) that arise
from any payment made hereunder or in connection with the rights,
privileges, restrictions and conditions set out herein. The
Corporation shall promptly notify any affected holder of any such payment
and deliver to any affected holder evidence of such
payment.
|
|
|
3.15
|
Specific
Matters Requiring Approval of Holders of Series A
Shares.
|
So
long as any Series A Shares are issued and outstanding, the Corporation
shall only undertake or proceed with any of the following matters with the prior
approval of shareholders of the Corporation holding at least 50% of the issued
and outstanding Series A Shares (which approval may be given in writing
signed in one or more counterparts):
|
|
(a)
|
authorize
the creation of, or allot or issue (including by reclassification) any
preferred shares of the Corporation of any class or Series that ranks
in priority to or on a parity with the Series A Shares in respect of
dividends or in the distribution of assets on any liquidation, dissolution
or winding up of the Corporation or its subsidiaries;
or
|
|
|
(b)
|
amend
or repeal the Articles or by-laws of the Corporation, or any provision
thereof, in any manner which would alter or change the rights, privileges,
restrictions and conditions attached to the Series A Shares or avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder, including preferences, rights,
privileges, powers, restrictions and conditions contained herein, so as to
affect the holders of Series A Shares adversely, regardless of how
such amendment is effected, including by way of merger, consolidation,
amalgamation or other voluntary action of the Corporation, other than an
acquisition, exchange or cancellation of Series A Shares in exchange
for money, securities or other consideration which constitutes a Change of
Control as contemplated in Article 3.6;
or
|
18
|
|
(c)
|
authorize
the creation of or issue any securities, where such authorization or
issuance would result in a breach of any of the terms, conditions or
provisions of these rights, privileges, restrictions or conditions;
or
|
|
|
(d)
|
increase
or decrease the authorized number of Preferred shares of the Corporation
or Series A Shares.
|
|
|
3.16
|
Lost
or Stolen Certificates.
|
Upon
receipt by the Corporation of evidence satisfactory to the Corporation, acting
reasonably, of the loss, theft, destruction or mutilation of any certificates
representing Series A Shares, and, in the case of loss, theft or
destruction, the holder executing an agreement satisfactory to the Corporation,
acting reasonably, agreeing to indemnify the Corporation from loss incurred by
it in connection with such certificates and, in the case of mutilation, upon
surrender of the mutilated certificate, the Corporation shall execute and
deliver one or more new share certificate(s) of like tenor and date; provided,
however, the Corporation shall not be obligated to re-issue any share
certificate if the holder contemporaneously requests the Corporation to convert
the Series A Shares represented by such certificate into Common
Shares.
|
|
3.17
|
Failure
or Indulgence Not Waiver.
|
No
failure or delay on the part of a holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
|
|
3.18
|
Notice.
|
Whenever
notice or other communication is required to be given under these rights,
privileges restrictions and conditions, unless otherwise provided herein, such
notice shall be given in the manner provided for notices in the Securities
Purchase Agreement dated July 23, 2008 and made among the Corporation and
the purchasers of Series A Shares.
|
|
3.19
|
Preferred
Share Register.
|
The
Corporation shall maintain at its principal executive offices (or such other
office or agency of the Corporation as it may designate by notice to the
holders), a register for the Series A Shares, in which the Corporation
shall record the name and address of the persons in whose name the Series A
Shares have been issued, as well as the name and address of each permitted
transferee. The Corporation may treat the person in whose name any
Series A Share is registered on the register as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all
events recognizing any properly made transfers.
|
|
3.20
|
Currency.
|
All
dollar amounts referred to herein shall be in United States dollars
(U.S.$).
19
EXHIBIT
I
CARDIOME PHARMA CORP.
CONVERSION NOTICE
Reference
is made to the Articles of Cardiome Pharma Corp., as amended (the “Articles”). In
accordance with and pursuant to the Articles, the undersigned hereby elects to
convert the number of Series A Preferred Shares without par value (the
“Preferred
Shares”) of Cardiome Pharma Corp., a corporation existing under the laws
of Canada (the “Company”), indicated
below into Common Shares without par value (the “Common Shares”) of
the Company, as of the date specified below.
|
Date
of Conversion:
|
|
|
Number
of Preferred Shares to be converted:
|
|
|
Stock
certificate no(s). of Preferred Shares to be converted:
|
|
|
Tax
ID Number (If applicable):
|
|
|
Please
confirm the following information:
|
|
|
Conversion
Ratio:
|
|
|
Number
of Common Shares to be issued:
|
Notwithstanding
anything to the contrary contained herein, this Conversion Notice shall
constitute a representation by the holder of Preferred Shares submitting this
Conversion Notice that, after giving effect to the conversion provided for in
this Conversion Notice, such holder (together with its affiliates) will not have
beneficial ownership (together with the beneficial ownership of such person’s
affiliates) of a number of Common Shares which exceeds 9.99% of the number of
Common Shares outstanding immediately after giving effect to such conversion or
result in such holder or any other person having beneficial ownership of, or
control or direction over, directly or indirectly, securities of the Company
carrying 10% or more of the voting rights attached to all of the Company’s
outstanding voting securities, determined in accordance with the provisions of
the rights, privileges, restrictions and conditions attached to the Preferred
Shares, except to the extent that the holder of Preferred Shares has made a
“Filing
Election” as defined in the Articles.
Please
issue the Common Shares into which the Preferred Shares are being converted in
the following name and with the following address:
|
Issue
to:
|
|
|
Address:
|
|
|
Telephone
Number:
|
|
|
Facsimile
Number:
|
|
|
Authorization:
|
|
|
By:
|
|
|
Title:
|
|
|
Dated:
|
|
|
Account
Number (if electronic book entry transfer):
|
|
|
Transaction
Code Number (if electronic book entry transfer):
|
[NOTE
TO HOLDER - THIS FORM MUST BE SENT CONCURRENTLY TO TRANSFER
AGENT]
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs [Transfer Agent] to issue the
above indicated number of Common Shares in accordance with the Irrevocable
Transfer Agent Instructions dated July ____, 2008 from the Company and
acknowledged and agreed to by [Transfer Agent].
By:
Name:
Title:
EXHIBIT “B” TO SECURITIES PURCHASE AGREEMENT
|
Registration
Rights Agreement
|
TABLE
OF CONTENTS
Page
|
1.
|
DEFINITIONS.
|
1
|
|
2.
|
REGISTRATION.
|
3
|
|
(a)
|
Mandatory
Registration
|
3
|
|
(b)
|
Allocation
of Registrable Securities
|
3
|
|
(c)
|
Legal
Counsel
|
4
|
|
(d)
|
Ineligibility
for Form F-10
|
4
|
|
(e)
|
Sufficient
Number of Common Shares Registered
|
4
|
|
(f)
|
Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement
|
4
|
|
3.
|
RELATED
OBLIGATIONS.
|
5
|
|
4.
|
OBLIGATIONS
OF THE INVESTORS.
|
11
|
|
5.
|
EXPENSES
OF REGISTRATION.
|
11
|
|
6.
|
INDEMNIFICATION.
|
12
|
|
7.
|
CONTRIBUTION.
|
15
|
|
8.
|
REPORTS
UNDER THE 1934 ACT AND CANADIAN PROVINCIAL SECURITIES
LAWS.
|
15
|
|
9.
|
ASSIGNMENT
OF REGISTRATION RIGHTS.
|
15
|
|
10.
|
AMENDMENT
OF REGISTRATION RIGHTS.
|
15
|
|
11.
|
MISCELLANEOUS.
|
16
|
i
REGISTRATION
RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as
of July 25, 2008, by and among Cardiome Pharma Corp., a corporation continued
under the laws of Canada (the “Company”), with headquarters located at 6th
Floor, 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, and CR
Intrinsic Investments, LLC, a limited liability company formed in Anguilla with
a business address at Box 174, Xxxxxxxx House, The Valley, Anguilla, British
West Indies (the “Buyer”).
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions set forth in the Securities Purchase Agreement, to issue and sell to
each Buyer preferred shares of the Company designated as Series A Preferred
Shares, the terms of which are set forth in the Company’s Articles of
Incorporation (the “Articles”) in the
form attached as Exhibit A to the Securities Purchase Agreement (the “Preferred Shares”)
which, among other things, will be convertible into common shares in the capital
of the Company, no par value (the “Common Shares”) (as
converted, the “Conversion Shares”),
in accordance with the terms set forth in the Articles.
B. To
induce the Buyer to execute and deliver the Securities Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “1933 Act”), and
applicable state securities laws.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Buyer hereby agree as
follows:
|
|
1.
|
Definitions.
|
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following
meanings:
(a) “Business Day” means
any day other than Saturday, Sunday or any other day on which commercial banks
in the City of New York are authorized or required by law to remain
closed.
(b) “Canadian Prospectus”
means a prospectus or prospectuses of the Company filed under Canadian
provincial securities laws qualifying the Registrable Securities.
(c) “Closing Date” shall
have the meaning set forth in the Securities Purchase Agreement.
(d) “CSA” means the
Canadian provincial and territorial securities regulatory
authorities.
(e) “Effective Date” means
the date that the Registration Statement has been declared effective by the SEC
or has become effective upon filing with the SEC pursuant to Rule 467 under the
1933 Act.
(f) “Effectiveness
Deadline” means the date which is (i) in the event that the Registration
Statement is not subject to any review by the SEC, thirty (30) days after the
Filing Deadline, or (ii) in the event that the Registration Statement is subject
to any review by the SEC, seventy-five (75) days after the Filing
Deadline.
(g) “Filing Deadline”
means the date that is the earlier of (i) fourteen (14) days after the Strategic
Review Termination Date or (ii) ninety (90) days after the Closing
Date.
(h) “Investor” means a
Buyer or any transferee or assignee thereof (subject, in the case of a
transferee of Preferred Shares, to approval by the board of directors of the
Company pursuant to Article 3.11 of the Articles), to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 and any transferee or assignee
thereof (subject, in the case of a transferee of Preferred Shares, to approval
by the board of directors of the Company pursuant to Article 3.11 of the
Articles), to whom a transferee or assignee assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
(i) “Person” means an
individual, a limited liability company, a partnership, a limited partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
(j) “register,” “registered, “and
“registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the 1933 Act and
pursuant to the Multijurisdictional Disclosure System (“MJDS”) and the
effectiveness of such Registration Statement(s) upon filing with or pursuant to
an order by the SEC.
(k) “Registrable
Securities” means (i) the Conversion Shares issued or issuable upon
conversion of the Preferred Shares, and (ii) any equity security of the Company
issued or issuable with respect to the Conversion Shares as a result of any
share split, share dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on conversions of the Preferred
Shares; provided, however, that registerable securities shall not include any
Common Shares that have been previously sold pursuant to a Registration
Statement, Rule 144 or Regulation S under the 1933 Act.
(l) “Registration
Statement” means the registration statement or registration statements of
the Company filed under the 1933 Act covering the Registrable
Securities.
(m) “Required Holders”
means the holders of at least a majority of the Registrable
Securities.
(n) “Required Registration
Amount” means the maximum number of Conversion Shares issued and issuable
pursuant to the Articles, as of the trading day immediately preceding the
applicable date of determination, subject to adjustment as provided in Section
2(e).
2
(o) “SEC” means the United
States Securities and Exchange Commission.
(p) “Strategic Review Termination
Date” has the meaning given to that term in the Articles.
2. Registration.
(a) Mandatory
Registration
The
Company shall prepare as soon as practicable and shall use its reasonable best
efforts to file, prior to the Filing Deadline, (i) the Canadian Prospectus with
the CSA in the form of a base shelf prospectus and any necessary shelf
prospectus supplements as contemplated by National Instrument 44-102, Shelf Distributions ("NI44-102"), and (ii) the
Registration Statement on Form F-10 with the SEC covering the resale of all of
the Registrable Securities pursuant to the MJDS. In the event that the MJDS or
Form F-10 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration, subject to the provisions of
Section 2(d). The Registration Statement prepared pursuant hereto shall register
for resale at least the number of Common Shares equal to the Required
Registration Amount as of the date the Registration Statement is initially filed
with the SEC. Neither the Company nor any Subsidiary or affiliate thereof shall
identify any Buyer as an underwriter in any public disclosure or filing with the
SEC, the CSA or any stock exchange, and if any Buyer is deemed an underwriter by
the SEC, such event shall not relieve the Company of any obligations it has
under this Agreement or any other Transaction Document (as defined in the
Securities Purchase Agreement); provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the "Plan of Distribution" section attached hereto as Exhibit B in the
Registration Statement and Canadian Prospectus. The Registration Statement, and
to the extent applicable, the Canadian Prospectus, shall contain (except if
otherwise directed by the Required Holders) the "Selling Shareholders"
and "Plan of
Distribution" sections in substantially the form attached hereto as Exhibit B. The
Company shall use its reasonable best efforts to have the Registration Statement
become effective and to obtain a final MJDS decision document from the CSA as
soon as practicable, but in no event later than the Effectiveness Deadline. By
9:30 am on the Business Day following the Effective Date, the Company shall file
with the SEC in accordance with the General Instruction II.L. of Form F-10 the
prospectus supplement to be used in connection with sales pursuant to the
Registration Statement.
(b) Allocation of Registrable
Securities
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein shall
be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC or becomes effective upon filing with the
SEC. In the event that an Investor sells or otherwise transfers any
of such Investor’s Registrable Securities, each transferee shall be allocated a
pro rata portion of the then remaining number of Registrable Securities included
in such Registration Statement for such transferor. Any Common Shares
included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration
Statement shall be allocated to the remaining Investors, pro rata based on the
number of Registrable Securities then held by such Investors which are covered
by such Registration Statement. In no event shall the Company include
any securities other than Registrable Securities on any Registration Statement
without the prior written consent of the Required Holders.
3
(c) Legal
Counsel
Subject
to Section 5 hereof, the Required Holders shall have the right to select one
legal counsel to review and oversee any registration pursuant to this Section 2
(“Legal
Counsel”), which shall be Xxxx Xxxxx & Xxxxxxx LLP or such other
counsel as thereafter designated by the Required Holders and reasonably
acceptable to the Company. The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.
(d) Ineligibility for Form
F-10
In
the event that Form F-10 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on another appropriate form reasonably acceptable to
the Required Holders and (ii) undertake to register the Registrable Securities
on Form F-10 as soon as such form is available, provided that the Company shall
maintain, subject to applicable Grace Periods, the effectiveness of
the Registration Statement then in effect until such time as a Registration
Statement on Form F-10 covering the Registrable Securities has been declared
effective by the SEC or becomes effective upon filing with the SEC.
(e) Sufficient Number of Common
Shares Registered
In
the event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor’s allocated portion of the Registrable Securities pursuant to Section
2(b), the Company shall amend the applicable Registration Statement, or file a
new Registration Statement, or both (and make parallel amendments or filings
with the CSA, to the extent necessary or advisable), so as to cover at least the
Required Registration Amount as of the trading day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises. The Company shall use its
reasonable best efforts to cause such amendment and/or new Registration
Statement to be declared effective by the SEC or to become effective upon filing
with the SEC, as soon as practicable following the filing
thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed “insufficient to
cover all of the Registrable Securities” if at any time the number of Common
Shares available for resale under the Registration Statement is less than the
product determined by multiplying (i) the Required Registration Amount as of
such time by (ii) 0.90. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on the conversion of
the Preferred Shares and such calculation shall assume that the Preferred Shares
are then convertible into Common Shares at the then prevailing Conversion Rate
(as defined in the Articles).
(f) Effect of Failure to File
and Obtain and Maintain Effectiveness of Registration
Statement
If
(i) a Registration Statement covering all of the Registrable Securities required
to be covered thereby and required to be filed by the Company pursuant to this
Agreement does not become effective on or before the Effectiveness Deadline (an
“Effectiveness
Failure”), (ii) subject to Section 3(r) of this Agreement on any day
after the Effective Date sales of all of the Registrable Securities required to
be included on such Registration Statement cannot be made (other than during an
Allowable Grace Period (as defined in Section 3(r)) pursuant to such
Registration Statement (including, without limitation, because of a failure to
keep such Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to such Registration Statement or to
register a sufficient number of Common Shares) (a “Maintenance Failure”)
or (iii) any Registrable Securities on and after the Effective Date, are not
freely tradeable under applicable Canadian provincial securities laws (a “Qualification
Failure”) then, as partial relief for the damages to any holder by reason
of any such delay in or reduction of its ability to sell the underlying Common
Shares (which remedy shall not be exclusive of any other remedies available at
law or in equity), the Company shall pay to each holder of Registrable
Securities relating to such Registration Statement an amount in cash equal to
one and one-half percent (1.5%) of the aggregate Purchase Price on each of the
following dates: (i) on the thirtieth day following such Effectiveness Failure
and every thirtieth day thereafter (pro rated for periods totaling less than
thirty (30) days) until the earlier of the date such Effectiveness Failure is
cured or the one year anniversary of the Issue Date (as defined in the
Articles); (ii) on the thirtieth day following such Maintenance Failure and
every thirtieth day thereafter (pro rated for periods totaling less than thirty
(30) days) until the earlier of the date such Maintenance Failure is cured or
the one year anniversary of the Issue Date; and (iii) on the thirtieth day
following such Qualification Failure and every thirtieth day thereafter (pro
rated for periods totaling less than thirty (30) days) until the earlier of the
date such Qualification Failure is cured or the one year anniversary of the
Issue Date. The payments to which a holder shall be entitled pursuant
to this Section 2(f) are referred to herein as “Registration Delay
Payments.” For avoidance of doubt, the parties acknowledge and
agree, except as otherwise provided in Section 3(p), that Registration Delay
Payments shall apply regardless of any action or inaction by the SEC, the CSA,
the TSX (as defined in the Securities Purchase Agreement) or any applicable
governmental entity (whether considered capricious or otherwise by the Company
and whether in the control of the Company or otherwise). Registration
Delay Payments shall be paid on the earlier of (I) the first Business Day after
the day such Registration Delay Payments are incurred pursuant to the previous
sentence and (II) the third Business Day after the event or failure giving rise
to the Registration Delay Payments is cured. In the event the Company fails to
make any Registration Delay Payment in a timely manner, such Registration Delay
Payment shall bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full.
4
3. Related
Obligations.
At
such time as the Company is obligated to file a Registration Statement with the
SEC pursuant to Section 2(a), 2(d) or 2(e), the Company will use its reasonable
best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:
(i) The
Company shall keep each Registration Statement effective at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement pursuant to Rule
144 promulgated under the 1933 Act without volume or manner of sale restrictions
or (ii) the date on which the Investors shall have sold all of the Registrable
Securities covered by such Registration Statement (the “Registration
Period”). The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading, except that this
obligation shall not apply to any information provided by in writing, or
required to be provided and not provided by, any Investor specifically for use
in connection with the preparation of a Registration Statement, any prospectus
relating to such Registration Statement, or any amendment or supplement
thereto.
(ii) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
amendments or supplements are to be filed pursuant to General Instruction II to
Form F-10, as may be necessary to permit sales of the Registrable Securities
under the Registration Statement at all times during the Registration Period,
and the Company shall during such period, comply with the provisions of the 1933
Act with respect to the disposition of all Registrable Securities of the Company
covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In addition, the Company shall
prepare and file with the CSA such supplements and amendments to the Canadian
Prospectus as may be required under NI44-102 or applicable Canadian provincial
or territorial securities laws throughout the Registration Period, and during
such period comply with the requirements of such laws with respect to the
disposition of the Registrable Securities.
5
(iii) The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement and the Canadian Prospectus at least three (3) Business
Days prior to its filing with the SEC or the CSA and (ii) all amendments and
supplements to all Registration Statements within a reasonable number of days
prior to their filing with the SEC, and (B) not file any Registration Statement
or Canadian Prospectus or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or CSA or the
staff of the SEC or CSA to the Company or its representatives relating to any
Registration Statement, (ii) promptly after the same is prepared and filed with
the SEC or CSA, as the case may be, one copy of any Registration Statement and
Canadian Prospectus and any amendment(s) thereto, including financial statements
and schedules, all documents incorporated therein by reference, if requested by
an Investor, and all exhibits and (iii) upon the effectiveness of any
Registration Statement, one copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel in performing the Company's obligations
pursuant to this Section 3.
(iv) The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same is
prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, and, if requested by
an Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.
(v) The
Company shall use its reasonable best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale by
Investors of the Registrable Securities covered by a Registration Statement
under such other securities or “blue sky” laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and
each Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.
6
(vi) The
Company shall notify Legal Counsel and each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of such event, as
a result of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement (and/or Canadian
Prospectus) to correct such untrue statement or omission, and deliver ten (10)
copies of such supplement or amendment to Legal Counsel and each Investor (or
such other number of copies as Legal Counsel or such Investor may reasonably
request). The Company shall also promptly notify Legal Counsel and
each Investor in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by facsimile
on the same day of such effectiveness and by overnight mail), (ii) of any
request by the SEC or CSA for amendments or supplements to a Registration
Statement or Canadian Prospectus, as the case may be, or related prospectus or
related information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement or Canadian Prospectus
would be appropriate.
(vii) The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement or
Canadian Prospectus, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension as
soon as reasonably practicable and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(viii) If
any Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of such
Investor, the Company shall furnish to such Investor, at such Investor’s
expense, on the date of the effectiveness of the Registration Statement or the
Canadian Prospectus and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to such Investor, and (ii) an
opinion, dated as of such date, of Canadian and United States counsel
representing the Company (which counsel shall be XxXxxxxx Xxxxxxxx LLP, Xxxxxx
& Xxxxxxx LLP, and/or other counsel reasonably acceptable to such Investor)
for purposes of such Registration Statement or Canadian Prospectus, in form,
scope and substance as is customarily given in an underwritten public offering,
addressed to such Investor.
7
(ix)
If any Investor is required under applicable securities laws to be described in
the Registration Statement as an underwriter, the Company shall make available
for inspection, at such Investor's expense, by (i) any Investor, (ii) Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Investors (collectively, the “Inspectors”), all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall
be reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree to
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors are
so notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement of which the Inspector has knowledge. Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in any
other confidentiality agreement between the Company and any Investor) shall be
deemed to limit the Investors' ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.
(x) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal, provincial or state securities
laws or other applicable law, rule or regulation, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement or Canadian Prospectus, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to
such Investor and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
8
(xi) The
Company shall use its reasonable best efforts either to (i) cause all of the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
listing of all of the Registrable Securities covered by a Registration Statement
on The NASDAQ Global Market (or any successor thereto) or (iii) if, despite the
Company's reasonable best efforts to satisfy, the preceding clauses (i) and (ii)
the Company is unsuccessful in satisfying the preceding clauses (i) and (ii), to
secure the listing on The NASDAQ Capital Market for such Registrable Securities
and, without limiting the generality of the foregoing, to use its reasonable
best efforts to arrange for at least two market makers to register with the
Financial Industry Regulatory Authority (“FINRA”) with respect to such
Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).
(xii) The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.
(xiii) If
requested by an Investor, the Company shall (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) as soon as practicable, make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) as soon as practicable, supplement or make amendments to any Registration
Statement or Canadian Prospectus if reasonably requested by an Investor holding
any Registrable Securities.
(xiv) The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement or Canadian Prospectus to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.
(xv) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration Statement.
(i) With respect to an earnings statement that will be contained in one report
on Form 40-F (or any other form as may then be available for such purpose), such
earnings statement shall be made generally available no later than the due date
by which the Company is required, pursuant to the Securities Exchange Act of
1934, as amended (the "1934
Act"), to file such report with the SEC; and (ii) with respect to an
earnings statement that will be contained in any combination reports on Form
40-F or Form 6-K (or any other form(s) as may then be available for such
purpose), such earnings statement shall be made generally available no later
than the due date by which the Company is required, pursuant to the 1934 Act, to
file the last of such reports which together constitute such earnings
statement.
9
(xvi) The
Company shall otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and the CSA in connection with any
registration hereunder.
(xvii) Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities becomes or is declared effective by the SEC or has become effective,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit
A.
(xviii) Notwithstanding
anything to the contrary herein, at any time after the Registration Statement
has been declared effective by the SEC or become effective upon filing with the
SEC (i) if the Company possesses material, non-public information the disclosure
of which at the time is not, in the reasonable discretion of the Company, in the
best interest of the Company or (ii) an event described in Section 3(f) or 3(g)
shall occur (a “Grace
Period”), the Company shall promptly (A) notify the Investors in writing
of the reason giving rise to a Grace Period (provided that in each notice the
Company will not disclose any content of such material, non-public information
to the Investors) and the date on which the Grace Period will begin, and (B)
notify the Investors in writing of the date on which the Grace Period ends,
provided, that no Grace Period shall exceed twenty (20) consecutive days, and
during any three hundred sixty five (365) day period, such Grace Periods shall
not exceed an aggregate of forty (40) days and the first day of any Grace Period
must be at least five (5) trading days after the last day of any prior Grace
Period (each, an “Allowable Grace
Period”). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the Investors receive the
notice referred to in clause (A) and shall end on and include the later of the
date the Investors receive the notice referred to in clause (B) and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material, non-public information is no longer applicable. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended Common Shares to a transferee of an Investor in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Investor has entered into a
contract for sale, and delivered a copy of the then-current prospectus included
in the applicable Registration Statement, prior to the Investor's receipt of the
notice of a Grace Period and for which the Investor has not yet
settled.
10
4. Obligations of the
Investors.
(i) At
least ten (10) Business Days prior to the first anticipated filing date of a
Registration Statement or a Canadian Prospectus, the Company shall notify each
Investor in writing of the information the Company requires from each such
Investor in order to comply with applicable law or regulations if such Investor
elects to have any of such Investor’s Registrable Securities included in such
Registration Statement or Canadian Prospectus. It shall be a
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request.
(ii) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement or a Canadian
Prospectus hereunder, unless such Investor has notified the Company in writing
of such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement or Canadian Prospectus.
(iii) Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g), Section 3(r) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by the first sentence of
3(f) or receipt of notice that no supplement or amendment is required or until
such Investor receives notice that any applicable stop order or suspension has
been lifted. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended Common Shares to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor’s receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(g), Section 3(r) or the first sentence of 3(f)
and for which the Investor has not yet settled.
(iv) Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act, if any, as applicable to it in connection with
sales of Registrable Securities pursuant to the Registration
Statement.
5. Expenses of
Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.
11
6. Indemnification.
In
the event any Registrable Securities are included in a Registration Statement or
Canadian Prospectus under this Agreement:
(i) To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors, officers,
members, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC or CSA, whether pending or threatened, whether or not an indemnified party
is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC or
CSA, as applicable) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state, provincial or
territorial securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities pursuant to a Registration Statement
or Canadian Prospectus or (iv) any violation of this Agreement (the matters in
the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or prospectus or any such amendment thereof or supplement
thereto and; (ii) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company if such prospectus was timely made available by
the Company pursuant to Section 3(d); and (iii) shall not apply to amounts paid
in settlement of any Claim pursuant to this Section 6(a) or Section 7 if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
12
(ii) In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or
delayed; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.
(iii) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for all such Indemnified Persons or Indemnified Parties to
be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of each
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. In the case of an Indemnified Person,
legal counsel referred to in the immediately preceding sentence shall be
selected by the Investors holding at least a majority in interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates. Each Indemnified Party or Indemnified Person shall cooperate
fully with the indemnifying party in connection with any negotiation or defense
of any such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to such Indemnified
Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep each Indemnified Party or
Indemnified Person reasonably apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written
consent of any Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of each Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to any
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
13
(iv) The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
(v) The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution.
To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 6 to
the fullest extent permitted by law; provided, however, that: (i) no Person
involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.
8. Reports Under the 1934 Act
and Canadian Provincial Securities Laws.
With
a view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration (“Rule 144”), the
Company agrees to:
14
(i) make
and keep public information available, as those terms are understood and defined
in Rule 144;
(ii) file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144;
(iii) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (ii) a copy of the most recent annual report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration; and
d. continue
to make all filings and take all actions required to maintain its reporting
issuer status under applicable Canadian provincial securities laws.
9. Assignment of Registration
Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor’s Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.
10. Amendment of Registration
Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Registrable Securities. No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of any of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.
15
11. Miscellaneous.
(i) A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the record
owner of such Registrable Securities.
(ii) Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications
shall be:
|
If
to the Company:
|
|
Cardiome
Pharma Corp.
|
|
0xx
Xxxxx
|
|
0000
Xxxxxxxx Xxxx
|
|
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
|
|
Facsimile: (000)
000-0000
|
|
Attention: President
and Chief Business Officer
|
|
With
a copy to:
|
|
XxXxxxxx
Xxxxxxxx LLP
|
|
Suite
1300,
|
|
000
Xxxxxxxx Xxxxxx
|
|
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
|
|
Facsimile: (000)
000-0000
|
|
Attention: Xxxxxx
X. Xxxxxx
|
|
and:
|
|
Xxxxxx
& Xxxxxxx LLP
|
|
000
Xxxx Xxxxxx Xxxxx
|
|
Xxxxx
Xxxx, Xxxxxxxxxx 00000
|
|
Facsimile:
(000) 000-0000
|
|
Attention: Xxxxxxx
X. Xxxx, Esq.
|
|
R. Xxxxx Xxxxx,
Esq.
|
|
Xxxx X. Xxxxxx,
Esq.
|
|
If
to Buyer:
|
|
To
the address on the first page
hereof
|
16
|
With
copies to:
|
|
CR
Intrinsic Investors, LLC
|
|
c/o
S.A.C. Capital Advisors, LLC
|
|
00
Xxxxxxxx Xxxxx Xxxx
|
|
Xxxxxxxx,
Xxxxxxxxxxx 00000
|
|
Attention: General
Counsel
|
|
and
to
|
|
Xxxx
Xxxxx & Xxxxxxx LLP
|
|
000
Xxxxx Xxxxxx
|
|
Xxxxxxxx,
Xxxxxxxxxxx 00000-0000
|
|
Facsimile:
(000) 000-0000
|
|
Attention: Xxxxxxx
X. Xxxxxx III, Esq.
|
If
to the Buyer, to its address and facsimile number set forth above, or to such
other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to the other
party pursuant to this Section. Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(iii) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
(iv) All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction. The
Company hereby appoints CT Corporation with offices at 000 Xxxxxx Xxx., 00xx
Xxxxx Xxx Xxxx, XX 00000, as its agent for service of process in New
York. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
17
(v) This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the other
Transaction Documents and the instruments referenced herein and therein
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
(vi) Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
(vii) The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
(viii) This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(ix) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(x) All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
(xi) The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.
(xii) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
18
(xiii) Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars. All amounts owing under this Agreement are payable in
United States Dollars. All amounts denominated in other currencies shall be
converted in the United States dollar equivalent amount in accordance with the
Exchange Rate (as defined in the Securities Purchase Agreement) on the date of
calculation.
(xiv) The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other
Investor. Nothing contained herein, and no action taken by any
Investor pursuant hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated
herein.
[Signature Page
Follows]
19
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
CARDIOME
PHARMA CORP.
By:
Name: Xxxxxx
Xxxxxx
Title: Chairman
and CEO
CR
INTRINSIC INVESTMENTS, LLC
By: CR
Intrinsic Investors, LLC
By:
Name: Xxxxx
X. Xxxxxxxx
Title: Authorized
Signatory
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION
STATEMENT
Computershare
Trust Company of Canada
0xx
Xxxxx, 000 Xxxxxxx Xxxxxx
Vancouver,
British Columbia, Canada, V6C 3B
Attention: Xxxxxx
Xxx
Re: Cardiome
Pharma Corp.
Ladies
and Gentlemen:
[We
are][I am] counsel to Cardiome Pharma Corp., a corporation continued under the
laws of Canada (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the buyer named
therein (the “Buyer”) pursuant to
which the Company issued to the Buyer Series A convertible preferred shares (the
“Preferred
Shares”) convertible into the Company’s common shares, no par value (the
“Common
Shares”). Pursuant to the Securities Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Buyer
(the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the Registration
Rights Agreement), including the Common Shares issuable upon conversion of the
Preferred Shares, under the Securities Act of 1933, as amended (the “1933
Act”). In connection with the Company’s obligations under the
Registration Rights Agreement, on , 200, the Company filed a Registration
Statement on Form F-10 (File No. 333-) (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names each of the Holders as a selling shareholder
thereunder.
In
connection with the foregoing, [we][I] advise you that pursuant to the
Multijurisdictional Disclosure System, the Registration Statement has become
effective under the 1933 Act on [ ENTER DATE OF EFFECTIVENESS ] and [we][I] have
no knowledge, that any stop order suspending its effectiveness has been issued
or that any proceedings for that purpose are pending before, or threatened by,
the SEC and the Registrable Securities are available for resale under the 1933
Act pursuant to the Registration Statement.
This
letter shall serve as our standing opinion to you that the Common Shares are
freely transferable by the Buyer pursuant to the Registration Statement. You
need not require further letters from us to effect any future legend-free
issuance or reissuance of Common Shares to the Buyer as contemplated by the
Company's Irrevocable Transfer Agent Instructions dated ________ __, 200__. This
letter shall serve as our standing opinion with regard to this
matter.
Very
truly yours,
[ISSUER’S
COUNSEL]
By:
CC: CR Intrinsic Investments,
LLC
1
EXHIBIT
B
SELLING
SHAREHOLDERS
The
Common Shares being offered by the selling shareholders are those issuable upon
conversion of the Series A convertible preferred shares. For
additional information regarding the issuance of the Series A convertible
preferred shares, see “Private Placement of Series A convertible preferred
shares” above. We are registering the Common Shares in order to
permit the selling shareholders to offer the shares for resale from time to
time. Except for the ownership of the Series A convertible preferred
shares issued pursuant to the Securities Purchase Agreement, the selling
shareholders have not had any material relationship with us within the past
three years.
The
table below lists the selling shareholders and other information regarding the
beneficial ownership of the Common Shares by each of the selling
shareholders. The second column lists the number of Common Shares
beneficially owned by the selling shareholder, based on its ownership of
outstanding Common Shares and the Series A convertible preferred shares, as of
__________, 200___, assuming
conversion of all convertible preferred shares held by the selling shareholders
on that date without regard to any limitations on conversions.
The
third column lists the Common Shares being offered by this prospectus by the
selling shareholders.
In
accordance with the terms of a registration rights agreement with the selling
shareholders, this prospectus generally covers the resale of at least the
maximum number of Common Shares issuable upon conversion of the Series A
convertible preferred shares as of the trading day immediately preceding the
date the registration statement is initially filed with the
SEC. Because the conversion price of the Series A convertible
preferred shares may be adjusted, the number of shares that will actually be
issued may be more or less than the number of shares being offered by this
prospectus. The fourth column assumes the sale of all of the shares
offered by the Selling Shareholders pursuant to this prospectus.
Under
the terms of the articles of incorporation of the Company, a selling shareholder
may not convert the Series A convertible preferred shares to the extent such
conversion would cause such selling shareholder, together with its affiliates,
to beneficially own a number of Common Shares which would exceed a percentage
specified by the selling shareholder of our then outstanding Common Shares
following such conversion, excluding for purposes of such determination Common
Shares issuable upon conversion of the Series A convertible preferred shares
which have not been converted. The number of shares in the second
column does not reflect this limitation. The selling shareholders may
sell all, some or none of their shares in this offering. See “Plan of
Distribution.”
1
EXHIBIT
B
|
Name of selling
shareholder
|
Number of Common Shares
Owned Prior to Offering
|
Maximum Number of
Common Shares to be Sold
Pursuant to this Prospectus
|
Number of Common
Shares Owned After
Offering
|
|||
|
[Buyer]
(1)
|
0
|
|||||
|
(1)
|
||||||
|
1
|
||||||
1
EXHIBIT
B
PLAN
OF DISTRIBUTION
We
are registering the Common Shares issuable upon conversion of the Series A
convertible preferred shares and to permit the resale of these Common Shares by
the holders of the Series A convertible preferred shares from time to time after
the date of this prospectus. We will not receive any of the proceeds
from the sale by the selling shareholders of the Common Shares. We
will bear all fees and expenses incident to our obligation to register the
Common Shares.
The
selling shareholders may sell all or a portion of the Common Shares beneficially
owned by them and offered hereby from time to time directly or through one or
more underwriters, broker-dealers or agents. If the Common Shares are
sold through underwriters or broker-dealers, the selling shareholders will be
responsible for underwriting discounts or commissions or agent’s
commissions. The Common Shares may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated
prices. These sales may be effected in transactions, which may
involve crosses or block transactions,
|
|
•
|
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
|
|
•
|
in
the over-the-counter market;
|
|
|
•
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
|
|
•
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
|
•
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
|
•
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
•
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
|
•
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
•
|
privately
negotiated transactions;
|
|
|
•
|
short
sales;
|
|
|
•
|
sales
pursuant to Rule 144;
|
|
|
•
|
broker-dealers
may agree with the selling shareholders to sell a specified number of such
shares at a stipulated price per
share;
|
|
|
•
|
a
combination of any such methods of sale;
and
|
|
|
•
|
any
other method permitted pursuant to applicable
law.
|
If
the selling shareholders effect such transactions by selling Common Shares to or
through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the Common Shares for whom they may act as agent or to whom they
may sell as principal (which discounts, concessions or commissions as to
particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with
sales of the Common Shares or otherwise, the selling shareholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the Common Shares in the course of hedging in positions they
assume. The selling shareholders may also sell Common Shares short
and deliver Common Shares covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short
sales. The selling shareholders may also loan or pledge Common Shares
to broker-dealers that in turn may sell such shares.
1
The
selling shareholders may pledge or grant a security interest in some or all of
the Series A convertible preferred shares owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the Common Shares from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling shareholders to include, pursuant to prospectus
amendment or prospectus supplement, the pledgee, transferee or other successors
in interest as selling shareholders under this prospectus. The
selling shareholders also may transfer and donate the Common Shares in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling shareholders and any broker-dealer participating in the distribution of
the Common Shares may be deemed to be “underwriters” within the meaning of the
Securities Act, and any commission paid, or any discounts or concessions allowed
to, any such broker-dealer may be deemed to be underwriting commissions or
discounts under the Securities Act. At the time a particular offering
of the Common Shares is made, a prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of Common Shares being
offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling shareholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the securities laws of some states, the Common Shares may be sold in such states
only through registered or licensed brokers or dealers. In addition,
in some states the Common Shares may not be sold unless such shares have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.
There
can be no assurance that any selling shareholder will sell any or all of the
Common Shares registered pursuant to the registration statement, of which this
prospectus forms a part.
The
selling shareholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the Common Shares by the selling shareholders and
any other participating person. Regulation M may also restrict the
ability of any person engaged in the distribution of the Common Shares to engage
in market-making activities with respect to the Common Shares. All of
the foregoing may affect the marketability of the Common Shares and the ability
of any person or entity to engage in market-making activities with respect to
the Common Shares.
2
We
will pay all expenses of the registration of the Common Shares pursuant to the
registration rights agreement, estimated to be $[______] in total, including,
without limitation, Securities and Exchange Commission filing fees and expenses
of compliance with state securities or “blue sky” laws; provided, however, that
a selling shareholder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling shareholders
against liabilities, including some liabilities under the Securities Act, in
accordance with the registration rights agreements, or the selling shareholders
may be entitled to contribution. The selling shareholder has agreed
to indemnify us against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to us by
the selling shareholder specifically for use in this prospectus, in accordance
with the related registration rights agreement, or we may be entitled to
contribution.
Once
sold under the shelf registration statement, of which this prospectus forms a
part, the Common Shares will be freely tradable in the hands of persons other
than our affiliates.
3
EXHIBIT
“C” TO SECURITIES PURCHASE AGREEMENT
TRANSFER
AGENT INSTRUCTIONS
CARDIOME
PHARMA CORP.
July
25, 2008
Computershare
Trust Company of Canada
3rd
Floor, 000 Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0
Attention: Xxxxxx
Xxx
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement, dated as of July 23, 2008
(the “Agreement”), by and
among Cardiome Pharma Corp., a corporation existing under the laws of
Canada (the “Company”), and CR
Intrinsic Investments, LLC (the “Holder”), pursuant to
which the Company is issuing to the Holder Series A Preferred Shares (the “Preferred Shares”),
which are convertible into common shares of the Company, without par value (the
“Common
Shares”).
This
letter shall serve as our authorization and direction to you (provided that you
are the transfer agent of the Company at such time), subject to any stop
transfer instructions that we may issue to you from time to time, if at all, to
issue Common Shares upon conversion of the Preferred Shares (the “Conversion Shares”)
to or upon the order of a Holder from time to time upon delivery to you of a
properly completed and duly executed Conversion Notice, in the form attached
hereto as Exhibit
I, which has been acknowledged by the Company as indicated by the
signature of a duly authorized officer of the Company thereon.
You
acknowledge and agree that so long as (a) you have previously received written
confirmation from the Chief Executive Office, Chief Business Officer, Corporate
Secretary or outside legal counsel of the Company that either (i) a registration
statement covering resales of the Conversion Shares has been declared effective
by the Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act”), together
with a copy of such registration statement, a prospectus in the form of a base
shelf prospectus and related prospectus supplement has been receipted by the
British Columbia Securities Commission (the “BCSC”), together with
a copy of such prospectus and prospectus supplement, and you have not received a
notice from the Company that resale of the Conversion Shares under a
registration statement or prospectus and prospectus supplement is not permitted
at that time (a “No
Registered Resale Notice”) pursuant to the terms of the Registration
Rights Agreement dated as of July 25, 2008 by and among the Company and the
Holder, or (ii) that sales of the Conversion Shares may be made in conformity
with Rule 144 under the 1933 Act, and (b) you have not received a No
Registered Resale Notice; then, within two business days after your receipt of a
Conversion Notice, you shall issue the certificates representing the Conversion
Shares and such certificates shall not bear any legend restricting transfer of
the Conversion Shares thereby and should not be subject to any stop-transfer
restriction. If you have not previously received the confirmation
referred to in (a) above, or received a No Registered Resale Notice, then,
unless the Company otherwise directs in writing, the certificates for such
Conversion Shares shall bear the following legend:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, (THE “1933 ACT”), OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES, AND MAY BE OFFERED, SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE UNITED STATES ONLY PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND, IF REQUESTED BY CARDIOME
PHARMA CORP. (“CARDIOME”), UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CARDIOME THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE 1933
ACT. BY PURCHASING THESE SECURITIES, THE HOLDER AGREES FOR THE
BENEFIT OF CARDIOME THAT IT WILL COMPLY WITH THESE RESALE
RESTRICTIONS.
If the Conversion Shares are issued
before November 26, 2008, then in addition to the foregoing legend, such
Conversion Shares shall bear the following legend:
UNLESS
PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THESE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE NOVEMBER 26, 2008.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON TSX.
The Company shall indemnify and save
harmless you and any of your assignees from and against any and all liabilities,
claims, damages, actions, charges, and expenses sustained or incurred in
connection with the Preferred Shares.
A
form of written confirmation from the Company’s outside legal counsel that a
registration statement covering resales of the Conversion Shares has been
declared effective by the SEC under the 1933 Act and the prospectus and
prospectus supplement has been receipted by the BCSC is attached hereto as Exhibit
II.
Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions. Should you have any questions concerning
this matter, please contact me at (000) 000-0000.
Very truly yours,
CARDIOME PHARMA CORP.
By:
Name:
Title:
2
THE
FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED
AND AGREED TO
this
_____ of July, 2008
COMPUTERSHARE
TRUST COMPANY OF CANADA
By:
Name:
Title:
Enclosures
cc: CR
Intrinsic Investments, LLC
3
EXHIBIT
I
CARDIOME PHARMA CORP.
CONVERSION NOTICE
Reference
is made to the Articles of Cardiome Pharma Corp., as amended (the “Articles”). In
accordance with and pursuant to the Articles, the undersigned hereby elects to
convert the number of Series A Preferred Shares without par value (the
“Preferred
Shares”) of Cardiome Pharma Corp., a corporation existing under the laws
of Canada (the “Company”), indicated
below into Common Shares without par value (the “Common Shares”) of
the Company, as of the date specified below.
Date
of Conversion:
Number
of Preferred Shares to be converted:
Stock
certificate no(s). of Preferred Shares to be converted:
Tax
ID Number (If applicable):
Please
confirm the following information:
Conversion
Ratio:
Number
of Common Shares to be issued:
Notwithstanding
anything to the contrary contained herein, this Conversion Notice shall
constitute a representation by the holder of Preferred Shares submitting this
Conversion Notice that, after giving effect to the conversion provided for in
this Conversion Notice, such holder (together with its affiliates) will not have
beneficial ownership (together with the beneficial ownership of such person’s
affiliates) of a number of Common Shares which exceeds 9.99% of the number of
Common Shares outstanding immediately after giving effect to such conversion or
result in such holder or any other person having beneficial ownership of, or
control or direction over, directly or indirectly, securities of the Company
carrying 10% or more of the voting rights attached to all of the Company’s
outstanding voting securities, determined in accordance with the provisions of
the rights, privileges, restrictions and conditions attached to the Preferred
Shares, except to the extent that the holder of Preferred Shares has made a
“Filing Election” as defined in the Articles.
Please
issue the Common Shares into which the Preferred Shares are being converted in
the following name and with the following address:
Issue
to:
Address:
Telephone
Number:
Facsimile
Number:
Authorization:
By:
Title:
Dated:
Account
Number (if electronic book entry transfer):
Transaction
Code Number (if electronic book entry transfer):
[NOTE
TO HOLDER - THIS FORM MUST BE SENT CONCURRENTLY
TO
TRANSFER AGENT]
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs [Transfer
Agent] to issue the above indicated number of Common Shares in accordance with
the Irrevocable Transfer Agent Instructions dated July ____, 2008 from the
Company and acknowledged and agreed to by [Transfer Agent].
CARDIOME PHARMA CORP.
By:
Name:
Title:
2
EXHIBIT
II
FORM OF NOTICE OF
EFFECTIVENESS
OF REGISTRATION
STATEMENT
[Transfer
Agent]
[Address]
Attention:
Re: Cardiome
Pharma Corp.
Ladies
and Gentlemen:
[We
are][I am] counsel to Cardiome Pharma Corp., a corporation existing under the
laws of Canada (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the buyer named
therein (the “Holder”) pursuant to
which the Company issued to the Holder Preferred shares (the “Preferred Shares”)
convertible into the Company’s Common Shares without par value (the “Common
Shares”). Pursuant to the Securities Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holder
(the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the Registration
Rights Agreement), including the Common Shares issuable upon conversion of the
Preferred Shares, under the Securities Act of 1933, as amended (the “1933 Act”) and to
qualify the distribution of the Registrable Securities under applicable Canadian
securities laws. In connection with the Company’s obligations under
the Registration Rights Agreement, on ____________, 200__, the Company filed a
Registration Statement on Form (File No. -__________) (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) and a
prospectus in the form of a base shelf prospectus and related prospectus
supplement as contemplated in National Instrument 44-102 (the “Canadian
Prospectus”) with the British Columbia Securities Commission (the “BCSC”) relating to
the Registrable Securities which names the Holder as a selling stockholder
thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC’s
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement. [We][I] also advise you that the BCSC
issued a final receipt for the Canadian Prospectus on __________,
20__.
Subject
to the specific prohibitions contained in the Registration Rights Agreement
regarding the inability to use the Registration Statement and the Canadian
Prospectus under specific circumstances (the “Registration Statement
Limitations”), this letter shall serve as our standing instruction to you
that the Common Shares are freely transferable by the Holder pursuant to the
Registration Statement and the Canadian Prospectus provided the prospectus
delivery requirements, if any, are complied with. Subject to the Registration
Statement Limitations, you need not require further letters from us to effect
any future legend-free issuance or reissuance of Common Shares to the Holder as
contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
___________, 2008. This letter shall serve as our standing opinion with regard
to this matter.
Very truly yours,
[ISSUER’S COUNSEL]
By:
CC: [LIST NAMES OF
HOLDERS]
EXHIBIT
“D” TO SECURITIES PURCHASE AGREEMENT
OFFICER’S
CERTIFICATE
(the
“Certificate”)
TO: CR
Intrinsic Investments, LLC
|
RE:
|
Securities
Purchase Agreement, dated as of July 23, 2008 (the “Purchase
Agreement”), by and between Cardiome Pharma Corp. (the “Corporation”)
and CR Intrinsic Investments, LLC (the “Buyer”)
|
The
undersigned, Xxxxxx Xxxxxx, having knowledge of the matters hereinafter referred
to, hereby certifies, for and on behalf of the Corporation and without personal
liability, that he is the duly appointed Chief Executive Officer of the
Corporation and that:
(a) attached
as Exhibit A1
to this Certificate is a true and correct copy of resolutions passed by the
directors of the Corporation on July 18, 2008 (the “Director
Resolutions”), which resolutions are in full force and effect, unamended,
as of the date of this Certificate;
(b) attached
as Exhibit A2
to this Certificate is a true and correct copy of resolutions passed by the
financing committee of the directors of the Corporation (which committee was
established and appointed by the directors of the Corporation on July 18, 2008)
on July 22, 2008 (the “Financing Committee
Resolutions”), which resolutions are in full force and effect, unamended,
as of the date of this Certificate;
(c) attached
as Exhibit B to
this Certificate is a true and correct copy of the Certificate of Continuance,
Articles of Continuance, Certificate of Amendment dated May 14, 2003 and
Articles of Amendment dated May 12, 2003 of the Corporation (collectively, the
“Pre-Amendment
Articles”). The Pre-Amendment Articles are in full force and
effect as of the date of this Certificate and, except for the adoption of
Articles of Amendment dated July 24, 2008 (the “2008 Articles of
Amendment”) and the sending of such Articles of Amendment to the Director
under the Canada Business
Corporations Act and the Director Resolutions and the Financing Committee
Resolutions, no resolutions have been passed by the shareholders or directors
(including any committee thereof) of the Corporation, and no proceedings have
been taken or are pending, to alter or amend the Pre-Amendment
Articles. No resolutions have been passed by the shareholders or
directors (including any committee thereof) of the Corporation, and no
proceedings have been taken or are pending, to alter or amend the 2008 Articles
of Amendment or the Pre-Amendment Articles as amended by the 2008 Articles of
Amendment (collectively, the “Articles”), and the
Articles are in full force and effect, unamended, as of the date of this
Certificate; and
(d) attached
as Exhibit C to
this Certificate is a true and correct copy of the by-laws of the Corporation
(the “By-laws”). The
By-laws are in full force and effect, unamended, as of the date of this
Certificate and no resolutions have been passed by the shareholders or directors
(including any committee thereof) of the Corporation, and no proceedings have
been taken or are pending, to alter or amend the By-laws.
This Certificate is being delivered to
the Buyer pursuant to Section 7(v) of the Purchase
Agreement. Capitalized terms used in this Certificate and not
otherwise defined herein shall have the meanings ascribed to such terms the
Purchase Agreement.
IN
WITNESS WHEREOF the undersigned has, on behalf of the Corporation and without
personal liability, executed this Certificate.
Dated: July
__, 2008
Xxxxxx
Xxxxxx
Chief
Executive Officer
EXHIBIT
A1
RESOLUTIONS
OF THE BOARD OF DIRECTORS
EXHIBIT
A2
RESOLUTIONS
OF THE FINANCING COMMITTEE
EXHIBIT
B
ARTICLES
EXHIBIT
C
BY-LAW
NO. 1
EXHIBIT
“E” TO SECURITIES PURCHASE AGREEMENT
CARDIOME
PHARMA CORP.
OFFICER’S
CERTIFICATE
(the
“Certificate”)
TO: CR
Intrinsic Investments, LLC (the “Buyer”)
|
RE:
|
Securities
Purchase Agreement, dated as of July 23, 2008 (the “Purchase
Agreement”), by and between Cardiome Pharma Corp. (the “Corporation”)
and the Buyer
|
The
undersigned, Xxxxxx Xxxxxx, having knowledge of
the matters hereinafter referred to, hereby certifies, for and on behalf of the
Corporation and without personal liability, that he is the duly appointed Chief
Executive Officer of the Corporation and that:
1. The
representations and warranties of the Corporation in the Purchase Agreement are
true and correct in all material respects (except for (i) those representations
and warranties that are qualified by materiality or Material Adverse Effect and
(ii) the representation and warranty contained in Section 3(mm), which in each
case are true and correct in all respects) on and as of the date of the Purchase
Agreement and on and as of the date hereof as though made on and as of such
dates (except for representations and warranties that speak as of a specific
date, which are true and correct as of such specified date).
2. The
Corporation has performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company at or prior to the
date hereof.
This Certificate is being delivered to
the Buyer pursuant to Section 7(vi) of the Purchase
Agreement. Capitalized terms used in this Certificate and not
otherwise defined herein shall have the meanings ascribed to such terms the
Purchase Agreement.
IN
WITNESS WHEREOF the undersigned has, on behalf of the Corporation and without
personal liability, executed this Certificate.
Dated: July
__, 2008
Xxxxxx
Xxxxxx
Chief
Executive Officer
EXHIBIT
“F” TO SECURITIES PURCHASE AGREEMENT
FORM
OF LOCK-UP AGREEMENT
July
___, 2008
Cardiome
Pharma Corp.,
0xx
Xxxxx, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx
Xxxxxx
X0X 0X0
Re: Cardiome Pharma Corp - Lock-Up
Agreement
Dear
Sirs:
This
Lock-Up Agreement is being delivered to Cardiome Pharma Corp. (the “Company”) in
connection with the Securities Purchase Agreement (the “Purchase Agreement”),
dated as of July 23, 2008, by and among the Company and the CR Intrinsic
Investments, LLC (the “Buyer”), with respect to the issuance of Series A
Preferred Shares in the capital of the Company (the “Preferred Shares”) which
Preferred Shares shall be convertible into the Company’s common shares, without
par value (the “Common Shares”). Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the
Purchase Agreement. For the purpsoes of this Agreement, Issue Date
and Strategic Review Termination Date have the meanings ascribed to those terms
in the rights, privileges, restrictions and conditions attaching to the
Preferred Shares.
In
order to induce the Company to enter into the Purchase Agreement, the
undersigned agrees that commencing on the date hereof and ending on the date
that is the earlier of the date that is three months after the Issue Date or the
Strategic Review Termination Date (the “Lock-Up Period”), the undersigned will
not, without the written consent of the Buyer (i) sell, offer to sell, contract
or agree to sell, hypothecate, hedge, pledge, grant any option to purchase, make
any short sale or otherwise dispose of or agree to dispose of, directly or
indirectly, any Common Shares, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the Securities and Exchange
Commission, or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
any Common Shares, owned directly by the undersigned (including holding as a
custodian) or with respect to which the undersigned has beneficial ownership
within the rules and regulations of the Securities and Exchange Commission,
whether any such transaction is to be settled by delivery of such securities, in
cash or otherwise, (collectively, the “Undersigned’s Shares”).
The
foregoing restriction is expressly agreed to preclude the undersigned or any
affiliate of the undersigned from engaging in, without the written consent of
the Buyer, any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of
the Undersigned’s Shares even if the Undersigned’s Shares would be disposed of
by someone other than the undersigned. Such prohibited hedging or other
transactions would include, without limitation, any short sale or any purchase,
sale or grant of any right (including, without limitation, any put or call
option) with respect to any of the Undersigned’s Shares or with respect to any
security that includes, relates to, or derives any significant part of its value
from the Undersigned’s Shares.
Notwithstanding
the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a
bona fide gift or gifts, provided that the donee or donees thereof agree to be
bound in writing by the restrictions set forth herein, or (ii) to any trust for
the direct or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this Lock-Up
Agreement, “immediate family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. The undersigned now has,
and, except as contemplated by clauses (i) and (ii) above, for the duration of
this Lock-Up Agreement will have, good and marketable title to the Undersigned’s
Shares, free and clear of all liens, encumbrances, and claims
whatsoever. The undersigned also agrees and consents to the entry of
stop transfer instructions with the Company’s transfer agent and registrar
against the transfer of the Undersigned’s Shares except in compliance with the
foregoing restrictions.
The
undersigned understands and agrees that this Lock-Up Agreement is irrevocable
during the Lock-Up Period and shall be binding upon the undersigned’s heirs,
legal representatives, successors, and assigns during the Lock-Up
Period.
This
Lock-Up Agreement may be executed in two counterparts, each of which shall be
deemed an original but both of which shall be considered one and the same
instrument.
This
Lock-Up Agreement will be governed by and construed in accordance with the laws
of the State of New York, without giving effect to any choice of law or
conflicting provision or rule (whether of the State of New York, or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied. In furtherance of the foregoing, the internal laws of
the State of New York will control the interpretation and construction of this
Lock-Up Agreement, even if under such jurisdiction’s choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would ordinarily
apply.
The
Buyer shall be an intended third party beneficiary of this Agreement to the same
extent as if it were a party hereto, and shall be entitled to enforce the
provisions hereof. No provision of this Agreement may be amended or
waived without the prior written consent of the Buyer.
|
Very
truly yours,
|
|
|
Xx.
Xxxxxx Xxxxxx
|
|
|
Authorized
Signature
Chairman
and CEO
|
Agreed
to and Acknowledged:
By:
Name:
Title:
2
EXHIBIT
“G” TO SECURITIES PURCHASE AGREEMENT
FORM
OF OPINION OF XXXXXXXX XXXXXXXX LLP
July
__, 0000
XX
Xxxxxxxxx Investments, LLC
Box
174
Xxxxxxxx
House
The
Valley, Anguilla
British
West Indies
Dear
Sirs:
Re: Cardiome
Pharma Corp.
We
have acted as Canadian counsel to Cardiome Pharma Corp. (the “Corporation”) in connection
with:
|
(a)
|
the
filing by the Corporation of articles of amendment with the Director under
the Canada Business
Corporations Act (the “CBCA”) in respect of the
creation of the Series A Preferred Shares of the Corporation (the “Series A Shares”) and
the obtaining by the Corporation of a Certificate of Amendment in respect
thereof dated as of the date hereof (the “2008 Articles of
Amendment”); and
|
|
(b)
|
the
issue and sale by the Corporation today of 2,272,727 Series A Shares (the
“Issued Series A
Shares”) to CR Intrinsic Investments, LLC (the “Purchaser”) pursuant to
the terms of a securities purchase agreement, dated as of July 23,
2008 (the
“Purchase
Agreement”), between the Corporation and the
Purchaser.
|
In
that regard, we are giving the opinions expressed below. Words and
phrases in this opinion with initial capital letters and not defined herein have
the meaning assigned to such words and phrases in the Purchase
Agreement.
Materials
Reviewed
We
have participated in the preparation of the following documents:
|
(a)
|
the
Purchase Agreement;
|
|
(b)
|
the
registration rights agreement, dated as of the date hereof (the “Registration Rights
Agreement” and, together with the Purchase Agreement, the “Transaction Documents”),
between the Corporation and the Purchaser;
and
|
|
(c)
|
the
2008 Articles of Amendment.
|
We
have examined such statutes, regulations, corporate documents, records,
certificates, opinions and instruments and made such investigations as we have
considered necessary or advisable in connection with the opinions hereafter
expressed. In particular, as to various questions of fact, we have
relied upon one or more certificates of an officer or officers of the
Corporation (the “Officer
Certificates”) and on the certificate of Pacific Corporate Trust Company,
the Corporation’s transfer agent and registrar (the “Transfer Agent Certificate”),
copies of which have been delivered to you.
Assumptions and
Reliance
We
have assumed:
|
(a)
|
the
authenticity of documents purporting to be originals or photostatic or
facsimile copies of originals;
|
|
(b)
|
the
conformity to originals of documents purporting to be photostatic or
facsimile copies of originals;
|
|
(c)
|
the
genuineness of all signatures on all documents reviewed by
us;
|
|
(d)
|
the
accuracy and completeness of all representations and statements of fact
contained in any certificate or other document upon which we have relied
and identified herein;
|
|
(e)
|
the
identity, capacity and authority of any person acting or purporting to act
in a representative capacity or as a public
official;
|
|
(f)
|
the
accuracy and completeness of all information provided to us (in written
form or by facsimile transmission) by offices of public
record;
|
|
(g)
|
that
the representations, warranties, covenants and acknowledgements of the
Purchaser in the Transaction Documents are true and correct and accurate
in all respects as at all applicable times up to and including the date
hereof;
|
|
(h)
|
the
Purchaser is not resident in British Columbia or any other province or
territory of Canada and is not acquiring any of the Issued Series A Shares
for the benefit of any person resident in British Columbia or any other
province or territory of Canada and that if any registration or delivery
instructions in respect of any of the Issued Series A Shares refer to any
person other than the Purchaser, or to an address in British Columbia or
any other province or territory of Canada, such instructions an any acts
or conduct carried out in connection therewith do not affect the
assumption in this clause (h) and do not constitute or create a connection
with such other person or jurisdiction sufficient to render the applicable
securities laws of any other province or territory of Canada in any manner
applicable to the offering and sale of the Issued Series A Shares sold to
the Purchaser;
|
|
(i)
|
that
at the time of any distribution of or trade in securities of the
Corporation hereinafter referred to, no order, ruling or decision is in
effect that restricts any trades in such securities or that affects any
person or company who engages in any such trades, including, without
limitation, any cease trade orders;
|
2
|
(j)
|
that
the Corporation and the Purchaser have complied with all applicable laws
of each jurisdiction other than British Columbia in which the Purchaser is
resident or otherwise subject and, insofar as any obligation under the
Transaction Documents is to be performed in any jurisdiction other than
British Columbia, its performance will not be illegal or unenforceable by
virtue of the laws of that other jurisdiction;
and
|
|
(k)
|
that
the trades of securities referred to in paragraphs 11 and 12 will not
constitute a transaction or series of transactions involving the purchase
and sale or resale, or further purchases and sales, in the course of or
incidental to a “distribution” (as such term is defined in the Securities Act (British
Columbia) (the “BCSA”)) and that if any
seller in any trade of securities referred to in paragraph 12 is in a
“special relationship” (within the meaning of that expression as used in
the BCSA) with the Corporation, such seller does not know of any “material
fact” or “material change” (as those terms are defined in the BCSA) with
respect to the Corporation that has not been generally
disclosed.
|
Whenever
any opinion set forth herein is based on a state of facts and is qualified by
the phrase “of which we are aware”, or the negative of such phrase, it is
intended to indicate that during the course of our representation of the
Corporation in relation to the transactions which are the subject of the
opinion, no information has come to the attention of lawyers who are actively
engaged in the transactions which are the subject of the opinion which has given
them actual knowledge that such state of facts does or does not
exist. We have not undertaken any independent investigation or
reviewed any files in our possession to determine the existence or absence of
such facts or the accuracy of the matters covered by any such statement and any
limited enquiry undertaken by us during the preparation of this opinion letter
should not be regarded as such an investigation. No inference as to
our knowledge of any matters bearing on the accuracy of the facts underlying any
such statement should be drawn from the fact of our representation of the
Corporation or as a result of the fact that Xxx Xxxxxx of our firm is the
Corporate Secretary of the Corporation.
Subject
to the assumptions and qualifications set out in this letter, the opinions set
forth in this letter are an expression of our professional judgement and as such
should not be construed as a guarantee of a specific outcome or
result. We express no opinion as to matters of fact and as to matters
of fact bearing on the opinions expressed herein, we have relied upon
information in the Officer Certificates and the Transfer Agent Certificate and
other certificates and statements of public officials and have assumed that the
information and representations and warranties contained in the agreements,
documents, records, and certificates that we have reviewed in connection with
this opinion letter are accurate and complete.
The
opinions expressed by us in this letter are restricted to the matters expressly
referred to herein and no opinion is intended to be given or to be implied or
inferred, beyond those expressly stated herein. The opinions
expressed herein are based upon our consideration of only those statutes, rules,
and regulations which, in our experience, are normally applicable to
transactions of the type provided for in the Transaction Documents.
The
opinions expressed herein are confined and limited to the laws of the Province
of British Columbia and the federal laws of Canada applicable therein as such
laws exist and are construed as at the date of this letter. We
express no opinion as to any laws, or matters governed by any laws, other than
the laws of British Columbia and the federal laws of Canada applicable
therein. The opinions expressed herein are limited to the facts known
to us and the law as it exists at the date of this letter and we disclaim any
obligation to advise you of any change after the date hereof in any matter set
forth herein or to update this letter, for events (whether they be changes in
fact or laws or otherwise) occurring after the date of this letter or to advise
you of matters that may come to our attention subsequent to the date hereof that
may affect our opinions expressed herein.
3
In
providing the opinion expressed in paragraph 1 below with respect to the
continuance and existence of the Corporation under the laws of Canada we have
relied solely upon a certificate of status of recent date issued under the CBCA
in respect of the Corporation.
In
providing the opinion expressed in paragraph 6 below, insofar as such opinion
relates to the number of issued and outstanding shares of the Corporation, we
have relied exclusively on the Officer Certificates and on the Transfer Agent
Certificate.
In
expressing the opinions set forth in paragraphs 6 and 7, insofar as such
opinions relate to such shares being fully paid, we have relied on the Officer
Certificates.
In
expressing the opinions set forth in paragraph 9, we have relied solely upon a
letter from the Toronto Stock Exchange (the “TSX”) dated July 22, 2008 (the
“TSX Letter”), a copy of
which has been delivered to you.
Opinion
Based
and relying on the foregoing, and subject to the qualifications set out below,
we are of the opinion that:
|
1.
|
The
Corporation is a body corporate continued under the CBCA and not
discontinued or dissolved under the
CBCA.
|
|
2.
|
The
Corporation has all necessary corporate power and capacity to carry on
business as now conducted and own its assets and to execute and deliver
the Transaction Documents and to perform its obligations thereunder and
under the 2008 Articles of Amendment. All necessary corporate
action has been taken by the Corporation to authorize the execution and
delivery by it of the Transaction Documents and the performance by it of
its obligations thereunder and under the 2008 Articles of
Amendment.
|
|
3.
|
The
Series A Shares have been validly
created.
|
|
4.
|
Each
of the Transaction Documents has been duly executed and delivered by the
Corporation.
|
|
5.
|
The
execution and delivery by the Corporation of the Transaction Documents and
the performance by the Corporation of its obligations thereunder and under
the 2008 Articles of Amendment, including the issue and sale of the Issued
Series A Shares by the Corporation and the issuance of the Conversion
Shares pursuant to the 2008 Articles of Amendment, do not and will not
result in a breach of, and do not create a state of facts which, after
notice or lapse of time or both, will result in a breach of any of the
terms, conditions or provisions of the articles of continuance or by-laws
of the Corporation, any of the resolutions of the shareholders or
directors of the Corporation of which we are aware, or any statute or
regulation of the Province of British Columbia or any Canadian federal
statute or regulation applicable in British Columbia binding on or
applicable to the Corporation.
|
4
|
6.
|
The
authorized capital of the Corporation consists of (i) an unlimited number
of Common shares without par value (“Common Shares”) and (ii)
an unlimited number of Preferred shares without par value, of which an
unlimited number have been designated as Series A
Shares. Immediately following the Closing there will be [63,762,296] Common
Shares and 2,272,727 Series A Shares issued and outstanding and no other
Preferred Shares are issued and
outstanding.
|
|
7.
|
Upon
the Closing, the Issued Series A Shares will be validly issued to, and
registered in the name of, the Purchaser, as fully paid and non-assessable
shares of the Corporation.
|
|
8.
|
The
Common Shares issuable upon the conversion of the Issued Series A Shares
(the “Conversion
Shares”) have been reserved for issuance pursuant to such
conversion, and when issued and delivered by the Corporation in accordance
with the rights, privileges, restrictions and conditions attached to the
Series A Shares, will be validly issued as fully paid and non-assessable
shares of the Corporation.
|
|
9.
|
The
TSX has conditionally approved the listing of the Conversion Shares on the
TSX, subject only to the fulfillment of the requirements set forth in the
TSX Letter.
|
|
10.
|
Each
of the issuance and sale of the Issued Series A Shares to the Purchaser
has been effected in such a manner as to be exempt, either by statute,
regulation, rule or order from the applicable prospectus and dealer
registration requirements of the BCSA, and no prospectus or any other
documents are required to be executed, filed, proceedings taken or
approvals, permits, consents or authorizations of regulatory authorities
obtained under the BCSA to permit such issuance and sale by the
Corporation to the Purchaser, other than approvals as have already been
obtained and such filings which may be made within the required time
periods after the date hereof.
|
|
11.
|
The
issuance by the Corporation of the Conversion Shares in accordance with
the rights, privileges, restrictions and conditions attached to the Series
A Shares will be exempt from the prospectus and dealer registration
requirements of the BCSA and no prospectus or any other documents are
required to be executed, filed, proceedings taken or approvals, permits,
consents or authorizations of regulatory authorities obtained under the
BCSA to permit such issue, other than approvals as have already been
obtained.
|
|
12.
|
The
first trade of the Conversion Shares issued upon the conversion of the
Issued Series A Shares in accordance with the rights, privileges,
restrictions and conditions attached to the Series A Shares will be exempt
from the prospectus and dealer registration requirements of the BCSA and
no prospectus or any other documents are required to be executed, filed,
proceedings taken or approvals, permits, consents or authorizations of
regulatory authorities obtained under the BCSA to permit the first trade
of such securities, provided that at the time such
trade:
|
5
|
|
(a)
|
the
Corporation is and has been a reporting issuer in a jurisdiction of Canada
for the four months immediately preceding the
trade;
|
|
|
(b)
|
at
the time of such trade, at least four months have elapsed from the date of
this opinion;
|
|
|
(c)
|
the
certificates representing the Conversion Shares that are the subject of
the trade, if issued prior to November 26, 2008, bear the legend required
under s. 2.5 of National Instrument 45-102 - Resale of Securities
(“NI 45-102”);
|
|
|
(d)
|
the
trade is not a “control distribution” as defined in NI
45-102;
|
|
|
(e)
|
no
unusual effort is made to prepare the market or to create demand for the
securities that are the subject of the
trade;
|
|
|
(f)
|
no
extraordinary commission or consideration is paid to a person or company
in respect of the trade; and
|
|
|
(g)
|
if
the selling securityholder is an insider or officer of the Corporation,
the selling securityholder has no reasonable grounds to believe that the
Corporation is in default of “securities legislation” (as such term is
defined in National Instrument 14-101 - Definitions and
Interpretations).
|
The
opinions expressed above are for the benefit of the Purchaser in connection with
the issue of the Issued Series A Shares to the Purchaser and may not be relied
upon by any other person without our prior written consent.
Yours
truly,
6
EXHIBIT
“H”
TO
SECURITIES PURCHASE AGREEMENT
OPINIONS
TO BE PROVIDED BY XXXXXX & XXXXXXX LLP
|
1.
|
Assuming
that the Securities Purchase Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by the parties
thereto, the Securities Purchase Agreement and the Registration Rights
Agreement constitute legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms.1
|
|
2.
|
The
execution and delivery of the Securities Purchase Agreement and the
issuance and sale of the Preferred Shares by the Company to the Purchaser
pursuant to the Securities Purchase Agreement do not on the date
hereof:
|
|
|
(i)
|
violate
any federal or New York statute, rule or regulation applicable to the
Company; or
|
|
|
(ii)
|
require
any consents, approvals, or authorizations to be obtained by the Company
from, or any registrations, declarations or filings to be made by the
Company with, any governmental authority under any federal or New York
statute, rule or regulation applicable to the Company on or prior to the
date hereof that have not been obtained or
made.
|
|
3.
|
Assuming
(i) the accuracy of the representations and warranties of the Purchaser
contained in the Securities Purchase Agreement, (ii) the due performance
by the Company of the covenants and agreements set forth in the Securities
Purchase Agreement, and (iii) compliance by the Purchaser with the
offering and transfer procedures and restrictions described in the
Securities Purchase Agreement, the offer, sale and issuance of the
Preferred Shares by the Company to the Purchaser in the manner
contemplated by the Securities Purchase Agreement on the date hereof, do
not require registration thereof under the Securities Act of 1933, as
amended; it being understood that we express no opinion as to any
subsequent reoffer or resale of any of the Preferred Shares initially sold
to the Purchaser by the Company.
|
