Exhibit 4.13
AGENCY AGREEMENT
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February 28, 2002
Cardiome Pharma Corp.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxx Xxxxxx, President and Chief Executive Officer
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Dear Sirs:
We understand that the authorized capital of Cardiome Pharma Corp. (the
"Company"), a British Columbia company, consists of 200,000,000 common shares
("Common Shares"). We further understand that the Company, upon the terms and
conditions and for the purposes set forth in the (final) prospectus to be dated
on or about February 28, 2002, proposes to issue and offer for sale a minimum of
19,378,313 and a maximum of 29,067,469 units ("Offered Units") at a price of
$0.83 per unit (the "Offering Price"). Each unit (a "Unit") will consist of one
Common Share and one-quarter of one Common Share purchase warrant (a "Warrant").
Each whole Warrant will be exercisable for one Common Share at an exercise
price of $1.66 for a period of 24 months from the Closing Date (as hereinafter
defined). The Company also proposes to issue and offer for sale up to an
additional 9,689,157 Units pursuant to an Over-Allotment Option described below
(collectively the "Optioned Units"); and up to that number equal to 15% of the
number of Units sold at Closing pursuant to a Greenshoe Option described below
(collectively the "Greenshoe Units"), all in accordance with and on the terms
and conditions set forth in this Agreement. The Common Shares and the Warrants
forming the Units have the material attributes described in the (final)
prospectus of the Company to be dated February 28, 2002.
1. APPOINTMENT OF AGENTS
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(1) Based upon the foregoing and subject to the terms and conditions set out
below, the Company hereby appoints Sprott Securities Inc. ("Sprott") and
Xxxxxxx Xxxxx Ltd., (collectively, the "Agents" and, individually, an
"Agent") to act as its sole and exclusive agents, and the Agents hereby
accept such appointment, to effect the sale of the Offered Units for an
aggregate purchase price of a minimum of $16,084,000 and a maximum of
$24,126,000 (exclusive of any Optioned Units or Greenshoe Units) (the
"Offering"), on a best efforts basis to persons resident in Qualifying
Jurisdictions (as hereinafter defined) and to persons resident offshore or
in the United States on a private placement best efforts basis. The Agents
agree to use their best efforts to sell the Offered Units, but it is hereby
understood and agreed that the Agents shall act as agent only and are under
no obligation to purchase any of the Offered Units, although any Agent may
subscribe for Offered Units, subject to applicable laws, if it so desires.
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(2) The Agents may engage other persons, selected at their sole discretion, to
offer securities in the United States who are members of the National
Association of Securities Dealers, Inc., ("NASD") and who have entered into
a selected dealers agreement (each such person being hereinafter referred
to as a "Selected Dealer") with one or both of the Agents pursuant to which
such Selected Dealer agrees to comply with all the obligations of the
Agents hereunder as if such Selected Dealer were a party hereto for the
benefit of the Company, and the Agents may allow such persons to receive
such part of the compensation and payment of expenses payable to the Agents
hereunder as the Agents shall determine.
(3) The Company (on the basis set out in the first paragraph hereof) hereby
grants to the Agents an option (the "Over-Allotment Option") to purchase
and/or offer for sale to the public the Optioned Units at the Offering
Price, all upon the terms and conditions set forth herein for the purchase
and sale of the Offered Units. Subject to regulatory approval, the Over-
Allotment Option shall be exercisable at any time from the date hereof
until 48 hours prior to the Closing Time (as defined below) (the "Over-
Allotment Option Expiry Time"). The Over-Allotment Option shall be
exercisable in whole or in part by Sprott, on behalf of the Agents, by
giving written notice to the Company not later than the Over-Allotment
Option Expiry Time, specifying the number of Optioned Units to be
purchased. Upon furnishing such notice, the Company shall sell, in
accordance with and subject to the provisions hereof, the number of
Optioned Units indicated in such notice.
(4) The Company (on the basis set out in the first paragraph hereof) hereby
grants to the Agents an option (the "Greenshoe Option") to purchase and/or
offer for sale to the public the Greenshoe Units at the Offering Price, all
upon the terms and conditions set forth herein for the purchase and sale of
the Offered Units. The Greenshoe Option is solely to cover over-allotments,
if any. The Greenshoe Option shall be exercisable at any time from the date
hereof and for a period ending 60 days after the Closing Date (as defined
below) (the "Greenshoe Option Expiry Date"). The Greenshoe Option shall be
exercisable in whole or in part by Sprott, on behalf of the Agents, by
giving written notice to the Company not later than 5:00 p.m. (Toronto
time) on the Greenshoe Option Expiry Date, specifying the number of
Greenshoe Units to be purchased and the date and time of completion of the
sale of the Greenshoe Units (which shall not be less than three business
days after the date of notice and not more than five business days after
the Greenshoe Option Expiry Date). Upon furnishing such notice, the Agents
shall purchase and the Company shall sell, in accordance with and subject
to the provisions hereof, the number of Greenshoe Units indicated in such
notice.
(5) In this Agreement:
(a) "1933 Act" means the United States Securities Act of 1933, as amended;
(b) "Acquisition" means the acquisition of Paralex, Inc. pursuant to the
terms and conditions of an agreement and plan of merger dated as of
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December 21, 2001 (the "Merger Agreement") between the Company,
Paralex, Inc. and Cardiome, Inc., as amended;
(c) "Agents' Commission" has the meaning ascribed thereto in Section 3 of
this Agreement;
(d) "Agents' Personnel" has the meaning ascribed thereto in Subsection
13(a) hereof;
(e) "Agreement" means this agreement between the Company and the Agents
dated as of the date hereof;
(f) "Alternative Transaction" has the meaning ascribed thereto in
Subsection 4(e) hereof;
(g) "Auditors" means Ernst & Young LLP, the auditors of the Company;
(h) "Audited Financial Statements" means the audited consolidated
financial statements of the Company as at and for the twelve month
period ended November 30, 2001;
(i) "business day" means a day which is not a Saturday, a Sunday or a
statutory or civic holiday in the City of Toronto or the City of
Vancouver;
(j) "Closing" means the completion of the issue and sale by the Company of
the Offered Units and the Optioned Units, as the case may be, pursuant
to this Agreement;
(k) "Closing Date" means the date or dates on which the Closing will be
completed, the first of which shall be March 8, 2002, or such other
date as agreed to by the Company and the Agents provided that (i) the
purchase and sale of at least 19,379,845 Units shall have been
completed on the first Closing Date; and (ii) in no event shall a
Closing occur later than May 8, 2002;
(l) "Closing Time" means 8:30 a.m. (Toronto time) on the Closing Date or
such other time on the Closing Date as the Company and the Agents may
agree upon;
(m) "Common Shares" has the meaning ascribed thereto in the first
paragraph of this Agreement;
(n) "Disclosure Certificate" has the meaning ascribed thereto in
Subsection 6(b);
(o) "Exchange" means The Toronto Stock Exchange;
(p) "final MRRS Decision Document" means the decision document issued in
accordance with the Mutual Reliance Review System evidencing that
final receipts for the Prospectus have been issued for each of the
Qualifying Jurisdictions;
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(q) "Financial Information" has the meaning ascribed thereto in clause
6(c)(i) hereof;
(r) "Greenshoe Option" has the meaning ascribed thereof in Subsection 1(4)
of this Agreement;
(s) "Greenshoe Option Expiry Date" has the meaning ascribed thereto in
Subsection 1(4) of this Agreement;
(t) "Greenshoe Units" has the meaning ascribed thereto in the first
paragraph of this Agreement;
(u) "Intellectual Property" has the meaning ascribed thereto in subsection
2(nn) hereof;
(v) "Material Agreements" with respect to any company means any agreement
to which such company is a party or by which it is bound that is
material to the assets and properties, business, results of
operations, prospects or condition (financial or otherwise) of such
company (on a consolidated basis);
(w) "misrepresentation", "material fact" and "material change" have the
respective meanings ascribed thereto in the Securities Act (Ontario)
except as otherwise expressly provided in this Agreement;
(x) "Mutual Reliance Review System" means the mutual reliance review
system provided for under National Policy 43-201 Mutual Reliance
Review System for Prospectuses and Annual Information Forms of the
Canadian Securities Administrators;
(y) "Offering" means the issuance and offering for sale to the public of
the Offered Units, the Optioned Units and the Greenshoe Units pursuant
to the terms hereof;
(z) "Offering Price" shall have the meaning ascribed thereto in the first
paragraph of this Agreement;
(aa) "Offered Units" has the meaning ascribed thereto in the first
paragraph of this Agreement;
(bb) "Optioned Units" has the meaning ascribed thereto in the first
paragraph of this Agreement;
(cc) "Over-Allotment Option" has the meaning ascribed thereto in Subsection
1(3) of the Agreement;
(dd) "Over-Allotment Option Expiry Time" has the meaning ascribed thereto
in Subsection 1(3) of this Agreement;
(ee) "Paralex Financial Statements" means the audited financial statements
of Paralex Inc. for the period from incorporation until November 30,
2001;
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(ff) "preliminary MRRS Decision Document" means the decision document
issued in accordance with the Mutual Reliance Review System evidencing
that receipts for the Preliminary Prospectus have been issued for each
of the Qualifying Jurisdictions;
(gg) "Preliminary Prospectus" means the preliminary prospectus of the
Company dated February 5, 2002;
(hh) "Prospectus" means the (final) prospectus of the Company to be dated
on or about February 28, 2002;
(ii) "Qualifying Jurisdictions" means each of the provinces of British
Columbia, Alberta, Manitoba, Ontario and Quebec;
(jj) "Reporting Jurisdictions" means each of British Columbia, Alberta,
Ontario, Quebec and the Yukon;
(kk) "Securities Laws" means the applicable securities laws, regulations,
rules, published policy statements and prescribed forms, collectively,
of each of the Qualifying Jurisdictions and the rules of the Exchange;
(ll) "Securities Regulators" means the securities commission or similar
regulatory authority in each of the Qualifying Jurisdictions;
(mm) "Selected Dealer" shall have the meaning ascribed thereto in
Subsection 1(2) of this Agreement and, for greater certainty, shall
include Paramount Capital, Inc.
(nn) "Significant Interest Companies" means those companies (other than the
Subsidiaries) in which the Company owns beneficially or exercises
control or direction over 20% or more of the outstanding voting
securities;
(oo) "Subsidiaries" means the subsidiaries of the Company more particularly
listed in paragraph 2(b) hereof;
(pp) "Supplementary Material" has the meaning ascribed thereto in Section 8
of this Agreement;
(qq) "US Securities Laws" means the 1933 Act, all rules and regulations
promulgated thereunder and the applicable securities ("blue sky") laws
of the states of the United States; and
(rr) "United States" means the United States of America, its territories
and possessions, any state of the United States, and the District of
Columbia.
Any reference in this Agreement to any Section, Subsection or Subparagraph shall
refer to a Section, Subsection or Subparagraph of this Agreement.
Words importing the singular number only shall include the plural and vice
versa, and words importing the use of any gender shall include all genders.
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All defined terms herein denoted by initial capital letters and not otherwise
defined have the meanings attributed thereto in the Preliminary Prospectus.
The following schedules are attached to this Agreement, which schedules are
deemed to be a part hereof and are hereby incorporated by reference herein:
Schedule "A" - Form of Agents' Certificate
Schedule "B" - Form of Compensation Warrant
Schedule "C" - Form of U.S. Subscription Agreement
2. REPRESENTATIONS, WARRANTIES & COVENANTS OF THE COMPANY
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The Company hereby represents and warrants to and with the Agents that as at the
date hereof:
(a) the Company and each of the Subsidiaries has been duly incorporated and is
existing under the laws of its jurisdiction of incorporation and has all
requisite power and authority necessary to, and is qualified to, carry on
its business as now conducted and to own or lease its properties and
assets in all jurisdictions in which it currently carries on business and/
or owns or leases its properties and assets; and the Company has all
required corporate power and authority to undertake the Offering;
(b) the Company has no subsidiaries other than the Subsidiaries and no
Significant Interest Companies and the Company beneficially owns, directly
or indirectly, the percentage indicated below of all the issued and
outstanding shares in the capital of each of the Subsidiaries free and
clear of all mortgages, liens, charges, pledges, security interests,
encumbrances, claims or demands of any kind whatsoever, and, to the best
of the Company's knowledge all of such shares have been duly authorized
and validly issued and are outstanding as fully-paid shares and no person
has any right, agreement or option, present or future, contingent or
absolute, or any right capable of becoming a right, agreement or option,
for the purchase from the Company of any interest in any of such shares or
for the issue or allotment of any unissued shares in the capital of any
Subsidiary or any other security convertible into or exchangeable for any
such shares:
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Name of Subsidiary Jurisdiction of Incorporation Beneficial Ownership
by the Company
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Rhythm-Search British Columbia 100%
Developments Ltd.
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Cardiome, Inc. Delaware 100%
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Atriven Cardiology Corp. Canada 100%
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(c) the authorized capital of the Company consists of 200,000,000 Common
Shares, of which, as at February 27, 2002, 43,070,181 Common Shares are
issued and outstanding;
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(d) the currently issued and outstanding Common Shares are listed and posted
for trading on the Exchange and no order ceasing or suspending trading in
any securities of the Company or prohibiting the sale of the Offered
Units, the Optioned Units or the Greenshoe Units or the trading of any of
the Company's issued securities has been issued by a Securities Regulator
and no proceedings for such purpose are pending or, to the knowledge of
the Company, threatened;
(e) to the knowledge of the Company, no agreement is in force or effect
which in any manner affects the voting or control of any of the securities
of the Company or any of its Subsidiaries;
(f) except as set forth in the Prospectus or the Disclosure Certificate, no
person, firm or company, as of the date hereof, has any agreement or
option, or any right or privilege (whether preemptive or contractual)
capable of becoming an agreement or option, for the purchase, subscription
or issuance of any Common Shares, any securities of the Subsidiaries or
for any securities convertible into or exchangeable for Common Shares or
any securities of the Subsidiaries;
(g) the Company is a reporting issuer or its equivalent under the Securities
Laws of each of the Reporting Jurisdictions and is a "qualifying issuer"
as such term is defined in Multilateral Instrument 45-102 Resale of
Securities; the Company is not in default in any material respect of any
requirement of the Securities Laws of the Reporting Jurisdictions and the
Company is not included on a list of defaulting reporting issuers
maintained by any of the securities regulatory authorities in the
Reporting Jurisdictions. In particular, without limiting the foregoing,
the Company is in compliance at the date hereof with its obligations to
make timely disclosure of all material changes relating to it and since
November 30, 2001 (other than in respect of material change reports
previously filed on a confidential basis and thereafter made public or
material change reports previously filed on a confidential basis and in
respect of which no material change ever resulted) no such disclosure has
been made on a confidential basis and there is no material change relating
to the Company which has occurred and with respect to which the requisite
material change statement has not been filed;
(h) each of the Company and its Subsidiaries has conducted and is conducting
its business in compliance with all applicable laws, rules and regulations
of each jurisdiction in which its business is carried on and is duly
licensed, registered or qualified in all jurisdictions in which it owns,
leases or operates its property or carries on business to enable its
business to be carried on as now or proposed to be conducted and its
property and assets to be owned, leased and operated and all such
licences, registrations and qualifications are and will at the Closing
Time be valid, subsisting and in good standing, except in respect of
matters which do not and will not result in any material adverse change to
the business, business prospects or condition (financial or otherwise) of
the Company and its Subsidiaries, and except for the failure to be so
qualified or the absence of any such license, registration or
qualification which does not and will not have a material adverse effect
on the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its Subsidiaries or
on the power or authority of each of the Company and its Subsidiaries to
perform its obligations under this Agreement or the Material Agreements;
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(i) neither the Company nor any of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any material
certificate, authority, permit or license necessary to conduct the
business now owned or operated by it which, if the subject of an
unfavourable decision, ruling or finding, would materially and adversely
affect the conduct of the business, operations, financial condition or
income of the Company or any of its Subsidiaries;
(j) neither the Company nor, to the best of the Company's knowledge, any other
party to a Material Agreement with the Company is in material default in
the observance or performance of any term or obligation to be performed by
it under any Material Agreement to which the Company is a party and no
event has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event would
have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of
the Company and its Subsidiaries (on a consolidated basis);
(k) the execution and delivery of this Agreement and the performance of the
transactions contemplated hereunder does not and will not:
(i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, stock
exchange, securities association or other third party, except:
(i) such as have been obtained; or (ii) such as may be required
under the applicable by-laws, policies, regulations and prescribed
forms of the Exchange (subject to applicable listing conditions);
(ii) result in a breach of or default under, and do not and will not
create a state of facts which, after notice or lapse of time or
both, will result in a breach of or default under, and do not and
will not conflict with:
(A) any of the terms, conditions or provisions of the articles,
by-laws or resolutions of the shareholders, directors or any
committee of directors of the Company or any of its
Subsidiaries or any material indenture, agreement or
instrument to which the Company or any of its Subsidiaries
is a party or by which it or they are contractually bound;
or
(B) to the best of the Company's knowledge, any statute, rule,
regulation or law applicable to the Company or any of its
Subsidiaries, including, without limitation, the Securities
Laws, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company
or its Subsidiaries; and
(iii) give rise to any lien, charge or claim in or with respect to the
properties or assets now owned by the Company or its Subsidiaries
or the acceleration of or the maturity of any debt under any
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indenture, mortgage, lease, agreement or instrument binding or
affecting any of them or any of their properties;
(l) the Company is not aware of any legislation, or proposed legislation
(published by a legislative body), which it anticipates will materially
and adversely affect the business, affairs, operations, assets,
liabilities (contingent or otherwise) or prospects of the Company and its
Subsidiaries, considered as a whole;
(m) the Company has, and to the best of the Company's knowledge the directors
and officers of the Company have, answered every question or inquiry of
the Agents and their counsel in connection with the Agents' due diligence
investigations fully and truthfully;
(n) the Company has all required corporate power and authority to create,
issue and sell the Offered Units, the Optioned Units and the Greenshoe
Units and to enter into and to carry out the provisions of this Agreement;
(o) the Company's Auditors are independent public accountants as required by
the Securities Laws and U.S. Securities Laws; there has never been any
reportable disagreement (within the meaning of National Policy Statement
No. 31 of the Canadian Securities Administrators) with the present or any
former auditor of the Company;
(p) each of the Company and its Subsidiaries has filed all federal,
provincial, state, local and foreign tax returns that are required to be
filed or has requested extensions thereof (except in any case in which the
failure so to file would not have a material adverse effect on the assets
and properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries) and has paid
all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due
and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith;
(q) the Company has established on its books and records reserves that are
adequate for the payment of all taxes not yet due and payable and there
are no liens for taxes on the assets of the Company and the Subsidiaries,
and there are no audits known by the Company's management to be pending of
the tax returns of the Company or the Subsidiaries (whether federal,
state, provincial, local or foreign) and there are no claims which have
been or may be asserted relating to any such tax returns, which audits and
claims, if determined adversely, would result in the assertion by any
governmental agency of any deficiency that would have a material adverse
effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company or the
Subsidiaries;
(r) no domestic or foreign taxation authority has asserted or, to the best
of the Company's knowledge, threatened to assert any assessment, claim or
liability for taxes due or to become due in connection with any review or
examination of the tax returns of the Company or the Subsidiaries
(including, without limitation, any predecessor companies) filed for any
year which would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company or the Subsidiaries;
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(s) each of the Company and the Subsidiaries maintains 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 generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(t) at the Closing Time, the Company will have filed all documents, taken all
proceedings and obtained all regulatory consents necessary (including,
without limitation, consents of the Exchange) in connection with the sale
of the Offered Units, the Optioned Units and the Greenshoe Units;
(u) all the information and statements contained in the Preliminary Prospectus
and the Prospectus shall, at the respective dates of delivery thereof,
constitute full, true and plain disclosure of all material facts relating
to each of the Offering, the Company, Paralex, Inc., the Subsidiaries, the
Offered Units and the Greenshoe Units (provided that this representation
is not intended to extend to information and statements included in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Agents relating to the Agents specifically
for use therein);
(v) the Preliminary Prospectus, the Prospectus and any Supplementary Material
shall contain the disclosure required by all requirements of the
Securities Laws;
(w) this Agreement and all other agreements required in connection with the
issue and sale of the Offered Units, the Optioned Units and the Greenshoe
Units and each of the Material Agreements to which the Company is a party,
including but not limited to, the Merger Agreement, shall be, as at the
date of the Prospectus, duly authorized, executed and delivered by the
Company and shall be legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms (except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, (ii)
general equitable principles or (iii) limitations under applicable law in
respect of rights of indemnity, contribution and waiver of contribution);
(x) the attributes of the Offered Units, the Optioned Units and the Greenshoe
Units will, at the Closing Time, conform in all material respects with the
description thereof contained in the Prospectus;
(y) other than the Agents, any Selected Dealers or any subagents, there is no
person acting or purporting to act at the request of the Company or the
Subsidiaries who is entitled to any brokerage or agency fee in connection
with the transactions contemplated herein and in the event any person
acting or purporting to act for the Company or the Subsidiaries
establishes a claim for any such fee from the Agents, the Company
covenants to indemnify and hold harmless the Agents with respect thereto
and with respect to all costs incurred in the defence thereof;
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(z) the minute books and corporate records of the Company, its Subsidiaries
and, to the best of the Company's knowledge, Paralex, Inc. requested by
and made available to Xxxx & Berlis LLP in connection with its due
diligence investigations of the Company for the periods from its date of
incorporation or amalgamation to the date of examination thereof contain
all material proceedings (or certified copies thereof) of the
shareholders, the board of directors and all committees of the board of
directors of the Company and there have been no other meetings where
Company business was transacted, resolutions or proceedings of the
shareholders, board of directors or any committee of the board of
directors of the Company to the date hereof of such corporate records and
minute books not reflected in such minute books and other records;
(aa) there is not, in the constating documents or by-laws of the Company or the
Subsidiaries or in any agreement, mortgage, note, debenture, indenture or
other instrument or document to which the Company or the Subsidiaries is
party, any restriction upon or impediment to the declaration of payment of
dividends by the directors of the Company or the Subsidiaries on the
payment of dividends by the Company or the Subsidiaries to the holders of
its securities;
(bb) Pacific Corporate Trust Company, at its principal offices in the cities of
Toronto and Vancouver, has been duly appointed transfer agent and
registrar for the Common Shares;
(cc) the Audited Financial Statements of the Company:
(i) have been prepared in accordance with Canadian generally accepted
accounting principles applied on a basis consistent with those of
preceding fiscal periods;
(ii) present fully, fairly and correctly, in all material respects, the
assets, liabilities and financial condition of the Company and its
Subsidiaries as at November 30, 2001, respectively, and the
results of its operations and the changes in its financial
position for the periods then ended;
(iii) are in accordance with the books and records of the Company;
(iv) contain and reflect all necessary material adjustments for a fair
presentation of the results of operations and the financial
condition of the business of the Company and its Subsidiaries on a
basis for the periods covered thereby; and
(v) contain and reflect adequate provision or allowance for all
reasonably anticipated liabilities, expenses and losses of the
Company and its Subsidiaries;
(dd) since November 30, 2001, there has been no material adverse change in the
financial position or condition of the business of the Company or its
Subsidiaries, from that indicated by the Audited Financial Statements, nor
has there been any material adverse change in the affairs, business,
prospects, liabilities, assets, operations or condition of the business
(financial or otherwise) that the Company is aware of;
(ee) except as set forth in the Disclosure Certificate, there are no actions,
suits, proceedings or inquiries pending or, to the knowledge of the
Company, threatened against or affecting the Company or the Subsidiaries
at law or in equity or before or by any federal, provincial, municipal or
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other governmental department, commission, board, bureau, agency or
instrumentality which in any way materially adversely affects, or may in
any way materially adversely affect, the business, operations or condition
(financial or otherwise) of the Company or the Subsidiaries or its
properties or assets or which affects or may affect the distribution of
Offered Units, the Optioned Units or the Greenshoe Units and except as set
forth in the Disclosure Certificate, since November 30, 2001, no bonuses
have been paid or are payable to any director or officer of the Company;
(ff) except as disclosed in the Prospectus, none of the directors or officers
of the Company, any holder of more than ten per cent of any class of
shares of the Company, or any associate or affiliate of any of the
foregoing persons or companies (as such terms are defined in the
Securities Act (Ontario)), has any material interest, direct or indirect,
in any material transaction within the previous two years or any proposed
material transaction which, as the case may be, materially affected, is
material to or will materially affect the Company or the Subsidiaries on a
consolidated basis;
(gg) with respect to each premises which is material to the Company on a
consolidated basis and which the Company or any of its Subsidiaries
occupies as tenant (the "Leased Premises"), the Company or such Subsidiary
occupies the Leased Premises and has the exclusive right to occupy and use
the Leased Premises and each of the leases pursuant to which the Company
and/or its Subsidiaries occupies the Leased Premises is in good standing
and in full force and effect;
(hh) there has not been and there is not currently any labour disruption or
conflict which is adversely affecting or could adversely affect, in a
material manner, the carrying on of the Company's or any Subsidiary's
business, considered as a whole;
(ii) the Company has procured and maintains adequate insurance against all
insurable risks that the Company is aware of which are material to the
Company and its Subsidiaries, considered as a whole;
(jj) except as set forth in the Disclosure Certificate, each of the Company and
the Subsidiaries and, to the best of the Company's knowledge, Paralex,
Inc. has not caused or permitted the release, in any manner whatsoever, of
any pollutants, contaminants, chemicals or industrial toxic or hazardous
waste or substances (collectively, "Hazardous Substances") on or from any
of its properties or assets or any such release on or from a facility
owned or operated by third parties with respect to which the Company or
the Subsidiaries is or may reasonably be alleged to have material
liability nor has it or any of the Subsidiaries received any notice that
it is potentially responsible for a federal, provincial, municipal or
local clean-up site or corrective action under any applicable laws,
statutes, ordinances, by-laws, regulations or any orders, directions or
decisions rendered by any ministry, department or administrative
regulatory agency relating to the protection of the environment,
occupational health and safety or otherwise relating to dealing with
Hazardous Substances;
(kk) no securities commission or other regulatory authority has issued any
order preventing or suspending the use of the Preliminary Prospectus or
the Prospectus;
Page 13
(ll) the Company and the Subsidiaries are entitled to use, without payment of
any material royalty or other fee all of the tradenames, trademarks,
patents, designs, processes, copy rights and licenses currently used by
the Company and/or the Subsidiaries in carrying on its business (the
"Intellectual Property") including, but not limited to, the Intellectual
Property listed in the Disclosure Certificate, such Intellectual Property
being the only tradenames, trademarks, patents, designs, processes,
copyrights and licences required in connection with the business and now
used by the Company and/or the Subsidiaries in the course of carrying on
its business;
(mm) there are no material restrictions on the ability of the Company or its
Subsidiaries to use and exploit all rights in the Intellectual Property
required in the ordinary course of the Company's or its Subsidiaries'
business. None of the rights of the Company or its Subsidiaries in the
Intellectual Property will be impaired or affected in any way by the
transactions contemplated by this Agreement. To the best of the knowledge
of the Company, the conduct of the business of each of the Company and its
Subsidiaries and the use of the Intellectual Property does not infringe,
and each of the Company and its Subsidiaries has not received any notice,
complaint, threat or claim alleging infringement of, any patent, trade
xxxx, trade name, copyright, industrial design, trade secret or other
intellectual property or proprietary right of any other person, and the
conduct of the business of each of the Company and its Subsidiaries does
not, to the best of the Company's knowledge, include any activity which
may constitute passing off. Each of the Company and its Subsidiaries has
no notice of any infringements of the Intellectual Property or material
claims against the Intellectual Property by any third party; and
(nn) to the best of the Company's knowledge, the representations and warranties
of Paralex Inc. contained in Article 2 of the Merger Agreement are true
and correct as at the date hereof.
The Company further acknowledges that the Agents are relying upon such
representations, warranties, covenants and agreements.
Each certificate required to be provided in accordance with the terms of
this Agreement, signed by any two officers of the Company and delivered to
the Agents or counsel for the Agents shall be deemed to be a
representation and warranty by the Company to the Agents as to the matters
covered by such certificate.
3. AGENTS' COMPENSATION
--------------------
(a) In consideration for the Agents' services in: (a) assisting in the
preparation of this Agreement, the Preliminary Prospectus, the Prospectus
and any Supplementary Material; (b) forming and managing banking, selling
or other groups for the distribution of the Offered Units, the Optioned
Units and the Greenshoe Units, as the case may be; (c) distributing the
Offered Units, the Optioned Units and the Greenshoe Units, as the case may
be, both directly and through other registered dealers and brokers in the
Qualifying Jurisdictions, United States and offshore; and (d) all other
matters in connection with the issue and sale of the Offered Units, the
Optioned Units and the Greenshoe Units, as the case may be, in the
Qualifying Jurisdictions, United States and offshore, the Company agrees
to pay, or cause to be paid, to Sprott, on behalf of the Agents, by
Page 14
certified cheque or bank draft at the Closing Time or deducted from the
gross proceeds paid by Sprott to the Company, a fee (the "Agents'
Commission") equal to 7% of the gross proceeds of the sale of the Offered
Units, the Optioned Units and the Greenshoe Units.
(b) In addition to the Agents' Commission, as additional consideration for the
performance of its obligations hereunder, the Company shall issue to the
Agents or, subject to applicable Securities Laws, as they may direct at
the Closing Time, compensation warrants (the "Compensation Warrants"),
substantially in the form set out in Schedule "B" hereto, entitling the
Agents to purchase, in the aggregate, that number of Units equal to 10% of
the aggregate number of Offered Units, Optioned Units and Greenshoe Units
sold pursuant to the Offering exercisable for a period of 24 months
following the Closing Date at an exercise price equal to 115% of the
Offering Price or such other price that is agreed upon by the Company and
Sprott, which is acceptable to the Exchange.
4. CLOSING PROCEDURES AND ELECTION FOR GREENSHOE UNITS
---------------------------------------------------
(a) The purchase of the Offered Units shall be completed at the Closing Time
on the Closing Date at the offices of Catalyst Corporate Finance Lawyers,
Suite 1400, 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0, or at such
other place as Sprott and the Company may agree. If the Agents exercise
the Over-Allotment Option in whole or in part, in accordance with the
provisions hereof, the purchase and sale of the Optioned Units shall be
completed in the same manner as the Offered Units and at the Closing Time.
All provisions of this Agreement with respect to the sale of the Offered
Units shall apply, mutatis mutandis, to the sale of the Optioned Units.
(b) If the Agents exercise the Greenshoe Option in whole or in part from time
to time, in accordance with the provisions hereof, the purchase and sale
of such Greenshoe Units shall be completed in the same manner as the
Closing (the "Additional Closing") but at the time and on the date (the
"Additional Closing Time" and "Additional Closing Date") set for such
purchase in the notice provided to the Company by Sprott, on behalf of the
Agents. All provisions of this Agreement with respect to the sale of the
Offered Units shall apply (except for the provisions of Section 12 in
respect of which only subsections 12(a), (d), (e), (f), (g) and (h) shall
apply), mutatis mutandis, to the sale of the Greenshoe Units at any
Additional Closing, with the Additional Closing Time being substituted for
the Closing Time, the Additional Closing Date being substituted for the
Closing Date, the Greenshoe Units being substituted for the Offered Units,
and any other required substitutions being made. If the Greenshoe Option
is exercised at least two business days prior to the Closing Time, the
sale of the Greenshoe Units shall be made contemporaneously with the
sale of the Offered Units.
(c) The issue and sale of the Offered Units shall be completed by the Company
issuing and delivering to the Agents (i) one certificate representing the
Common Shares forming part of the Units to be issued and sold to Canadian
and other non-U.S. purchasers; (ii) certificates containing the
appropriate legend representing the Common Shares forming part of the
Units to be issued and sold to purchasers resident in the United States;
(iii) one certificate representing the Warrants forming part of the Units
to be issued and sold to Canadian and other non-U.S. purchasers; and (iv)
certificates containing the appropriate legend representing the Warrants
Page 15
forming part of the Units to be issued and sold to purchasers resident in
the United States, each of such certificates duly registered in the names
of purchasers as the Agents shall notify the Company in writing not less
than two business days prior to the Closing Time. Contemporaneously
therewith: (i) Sprott on behalf of the Agents, shall pay to the Company,
or as it may direct, the purchase price for the Offered Units and, if
applicable, the Optioned Units in Canadian funds by certified cheque or
bank draft; and (ii) the Company, shall pay to Sprott, on behalf of the
Agents, the Agents' Commission in the manner described in Section 3
hereof.
(d) The Company shall make all necessary arrangements for the exchange of the
certificates representing the Offered Units delivered at the Closing Time
at the principal offices of Pacific Corporate Trust Company in the Cities
of Toronto and Vancouver for certificates representing the aggregate
number of Offered Units and, if applicable, the Optioned Units in such
denominations and registered in such names as shall be designated by or on
behalf of the Agents not less than two business days prior to the Closing
Time. All such exchanges are to be made without cost to the Agents.
(e) If the Offering is not completed due to the Company's failure to proceed
because of an Alternative Transaction which is entered into by the Company
or any of its Subsidiaries on or before March 1, 2002, the Company shall,
within 10 days of the consummation of such Alternative Transaction, pay
the Agents a fee equal to U.S. $150,000 plus all of the Agents' expenses
and disbursements to date (including, without limitation, fees and
disbursements of the Agents' legal counsel). For the purposes hereof, an
"Alternative Transaction" means an issuance of securities of the Company
in excess of 5% of the total value or number of securities currently
outstanding or a business transaction involving the Company or any of its
Subsidiaries including, without limitation, a merger, amalgamation,
arrangement, reorganization, joint venture, sale of all or substantially
all assets, exchange of assets or any similar transaction other than
issuances of securities pursuant to (i) the Acquisition or (ii) as set out
herein.
5. COMPLIANCE WITH SECURITIES LAWS
-------------------------------
(a) The Company shall use its best efforts to, as soon as possible and in any
event not later than 5:00 p.m. (Toronto time) on or about February 28,
2002, or such later date as the Company and the Agents may agree, obtain a
final MRRS Decision Document for the Prospectus from the British Columbia
Securities Commission as principal regulator pursuant to the Mutual
Reliance Review System and fulfil all other requirements as appropriate in
order to qualify the Offered Units, the Optioned Units and the Greenshoe
Units for distribution in the Qualifying Jurisdictions.
(b) The Company shall cause to be delivered to the Agents, without charge, as
soon as possible following receipt of a final MRRS Decision Document such
number of commercial copies of the Prospectus in the English language and
the French language in the Cities of Toronto, Montreal, Calgary and
Vancouver as the Agents shall reasonably require (and in respect of which
they have provided the Company's printer with reasonable advance notice).
(c) The Company shall cause to be delivered to the Agents commercial copies of
any Supplementary Material required to be delivered to the Agents or to be
delivered to purchasers or prospective purchasers in the Qualifying
Page 16
Jurisdictions of the Offered Units, the Optioned Units and the Greenshoe
Units as soon as possible and in any event not later than 9:00 a.m. of the
third day following the date of such Supplementary Material (or the next
business day if such third day is not a business day) or such other time
and date as the Company and the Agents may agree.
(d) The Agents shall, and shall require any investment dealer or broker (other
than the Agents but including any Selected Dealers) with which the Agents
have a contractual relationship in respect of the distribution of the
Offered Units, the Optioned Units and the Greenshoe Units (each, a
"Selling Firm") to agree to, comply with applicable laws, including the
Securities Laws and U.S. Securities Laws, in connection with the
distribution hereof and shall offer the Offered Units, the Optioned Units
and the Greenshoe Units for sale to the public directly and through
Selling Firms upon the terms and conditions set out in the Prospectus and
this Agreement. The Agents shall, and shall require any Selling Firm to
offer for sale to the public and sell the Offered Units, the Optioned
Units or the Greenshoe Units only in those jurisdictions where they may be
lawfully offered for sale or sold.
(e) The Agents shall: (i) use all reasonable efforts to complete and cause
each Selling Firm to use all reasonable efforts to complete the
distribution of the Offered Units and the Optioned Units as soon as
reasonably practicable; (ii) promptly notify the Company when, in their
opinion, the Agents and the Selling Firms have ceased distribution of the
Offered Units, the Optioned Units and the Greenshoe Units; (iii) upon
completion of the distribution of the Offered Units, the Optioned Units
and the Greenshoe Units provide a breakdown of the number of Offered
Units, Optioned Units and Greenshoe Units distributed in each of the
Qualifying Jurisdictions where such breakdown is required for the purpose
of calculating fees payable to the Securities Regulators; and (iv) furnish
the Company on a timely basis all information necessary to enable the
Company to file a Form D with the SEC and to file all necessary "blue sky"
securities filings with each state.
(f) The Agents shall, and shall require any Selling Firm to agree to,
distribute the Offered Units, the Optioned Units and the Greenshoe Units
in a manner which complies with all applicable laws and regulations in
each jurisdiction into and from which they may offer to sell the Offered
Units, the Optioned Units or the Greenshoe Units or distribute the
Prospectus or any Supplementary Material in connection with the
distribution of the Offered Units, the Optioned Units and the Greenshoe
Units and will not, directly or indirectly, offer, sell or deliver any
Offered Units, Optioned Units or Greenshoe Units or deliver the Prospectus
or any Supplementary Material to any person in any jurisdiction other than
in the Qualifying Jurisdictions except in a manner which will not require
the Company to comply with the registration, prospectus, filing,
continuous disclosure or other similar requirements under the applicable
securities laws of such other jurisdictions or pay any additional
governmental filing fees which relate to such other jurisdictions. Subject
to the foregoing, Selected Dealers shall be entitled to offer the Offered
Units, the Optioned Units and the Greenshoe Units in the United States
solely pursuant to Rule 506 of Regulation D under the 1933 Act.
(g) (A) As used in this Agreement, the following terms shall have the
meanings indicated:
Page 17
(1) "Accredited Investor" means an accredited investor as that
term is defined in Rule 501(a) of Regulation D;
(2) "Directed Selling Efforts" means directed selling efforts as
that term is defined in Regulation S. Without limiting the
foregoing, but for greater clarity, it means, subject to the
exclusions from the definition of directed selling efforts
contained in Regulation S, any activity undertaken for the
purpose of, or that could reasonably be expected to have the
effect of, conditioning the market in the United States for
the Offered Securities and includes the placement of any
advertisement in a publication with a general circulation in
the United States that refers to the offering of the Offered
Securities;
(3) "Offered Securities" means the Offered Units, the Optioned
Units and the Greenshoe Units;
(4) "Regulation D" means Regulation D promulgated under the 1933
Act;
(5) "Regulation S" means Regulation S promulgated under the 1933
Act;
(6) "SEC" means the United States Securities and Exchange
Commission;
(7) "Substantial U.S. Market Interest" means substantial U.S.
market interest as that term is defined in Regulation S;
(8) "U.S. Exchange Act" means the United States Securities
Exchange Act of 1934, as amended; and
(9) "U.S. Person" means a U.S. person as that term is defined in
Regulation S.
(B) The Company and each Agent:
(1) acknowledge that the Offered Securities have not been and will
not be registered with the SEC under the 1933 Act and that the
Offered Securities are being offered and sold: (x) outside the
United States pursuant to a "safe harbor" provided by
Regulation S; and (y) in the United States pursuant to the
exemption from registration provided by Rule 506 of Regulation
D; and
(2) agree that neither they, nor any of their respective
affiliates, nor any person acting on behalf of the foregoing
have made or will make, except to the extent permitted by
Subsection 5(g)(D)(8): (x) any offer to sell or solicitation
of an offer to buy any of the Offered Securities to any person
in the United States or (y) any sale of the Offered Securities
Page 18
to any person unless the seller of such Offered Securities and
any person acting on its behalf reasonably believes that at
the time such person placed the order to purchase Offered
Securities such person was outside the United States.
(C) The Company hereby represents, warrants, covenants and agrees with
each Agent that:
(1) the Company is, and until the Closing Time will be, a "foreign
private issuer" within the meaning of Regulation S and
reasonably believes that there is no Substantial U.S. Market
Interest with respect to the Common Shares of the Company; and
the Company is not and does not own or control (and for two
years from the Closing Time will not be and will not own or
control) an open-end investment company, closed-end investment
company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section
8 of the United States Investment Company Act of 1940, as
amended;
(2) the Preliminary Prospectus, the Prospectus, and the United
States Confidential Private Placement Memorandum referred to
in Schedule "C" hereto and any Supplementary Material at the
respective dates thereof, did not contain any untrue statement
of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and
at the Closing Time, collectively, do not contain any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(3) none of the Company, its Subsidiaries, their affiliates or
anyone acting on its or their behalf (other than the Agents,
their affiliates, any Selected Dealer or subagent, or any
person acting on its or their behalf, as to which no
representation is made) directly or indirectly, has taken or
will take any action in violation of Regulation M under the
U.S. Exchange Act or that would cause the exemption afforded
by Regulation S or Rule 506 of Regulation D to be unavailable
for offers and sales of the Offered Securities;
(4) none of the Company, its Subsidiaries, their affiliates or any
person acting on its or their behalf (other than the Agents,
their affiliates, any Selected Dealer or subagent, or any
person acting on their behalf, in respect of which no
representation is made) has engaged or will engage in any
Directed Selling Efforts with respect to the Offered
Securities or has taken or will take any action (including
sale of securities into the United States) that would cause
the exemptions afforded by Rule 506 of Regulation D or
Page 19
Regulation S to be unavailable for offers and sales of the
Offered Securities pursuant to this Agreement;
(5) none of the Company, its Subsidiaries, their affiliates or any
person acting on their behalf (other than the Agents, their
affiliates, any Selected Dealer or subagent, or any person
acting on its or their behalf, in respect of which no
representation is made) has offered or will offer to sell, or
has solicited or will solicit offers to buy, the Offered
Securities in the United States by means of any form of
general solicitation or general advertising (as those terms
are used in Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the 1933 Act;
and
(6) the Company will, at the request of the Agents or any Selected
Dealer, execute and file with the SEC a Form D relating to the
offer and sale of the Offered Securities and execute and file
such other documents as may be required under applicable
United States state securities ("blue sky") laws.
(D) Each of the Agents, on a joint and several basis, represents,
warrants, covenants and agrees to and with the Company that:
(1) it is aware that the Offered Securities have not been and will
not be registered under the 1933 Act and have not and may not
be offered or sold outside the United States except pursuant
to Rule 903 of Regulation S or within the United States except
pursuant to an exemption from the registration requirements of
the 1933 Act provided by Rule 506 of Regulation D, in the
manner contemplated in this Subsection 5(g);
(2) such Agent, its affiliates or any persons acting on its behalf
(other than the Company, its affiliates or any person acting
on their behalf, as to which no representation is made) have
not engaged and will not engage in any Directed Selling
Efforts with respect to the Offered Securities, and has not
taken nor will take any action that would cause Rule 903 of
Regulation S or the exemption afforded by Rule 506 of
Regulation D to be unavailable for offers and sales of the
Offered Securities pursuant to this Agreement;
(3) offers to sell the Offered Securities within the United States
have been and will be made on behalf of the Company only
through Selected Dealers who are United States registered
broker dealers and all sales of the Offered Securities in the
United States shall be made by the Company pursuant to Rule
506 of Regulation D;
(4) it has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered
Securities, except with its affiliates or any selling group
Page 20
members in accordance with this Subparagraph 5(g)(D) or with
the prior written consent of the Company;
(5) it will require each Selected Dealer to agree in writing, for
the benefit of the Company, to comply with, and shall use its
best efforts to ensure that each Selected Dealer complies
with, the provisions of this Subparagraph 5(g)(D) as if such
provisions applied to such selling group member;
(6) all offers and sales of the Offered Securities in the United
States will be effected in transactions exempt from the
registration or qualification provisions of applicable state
securities ("blue sky") laws and in accordance with all
applicable U.S. federal and state broker-dealer requirements;
(7) it has not, either directly, or through any person acting on
its or their behalf, solicited and will not solicit offers
for, and has not offered and will not offer to sell, the
Offered Securities in the United States by means of any form
of general solicitation or general advertising (as those terms
are used in Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the 1933 Act,
including advertisements, articles, notices or other
communications published in any newspaper, magazine, or
similar media broadcast over radio or television or in any
seminar or meeting whose attendees have been invited by
general solicitation or advertising in connection with the
offer or sale of the Offered Securities to U.S. Persons;
(8) offers to sell and solicitation of offers to buy the Offered
Securities in the United States shall be made only to persons
with whom an Agent or any Selected Dealer has a pre-existing
relationship and to whom such Agent or Selected Dealer has
reasonable grounds to believe and believes to be Accredited
Investors and only in states of the United States where such
Agent or Selected Dealer is registered or otherwise exempt
from registration and sales of Offered Securities in the
United States will be made only to persons reasonably believed
to be Accredited Investors and who execute and deliver a U.S.
Subscription Agreement in the form of Schedule "C" hereto;
(9) at Closing, it will deliver to the Company a certificate,
substantially in the form of Schedule "A" to this Agreement
executed by each Selected Dealer relating to the manner of the
offer and sale of Offered Securities in the United States; and
(10) neither such Agent, its affiliates or any person acting on its
or their behalf (other than the Company, its third party
affiliates and any third party acting on their behalf, as to
which no representation is made) has taken or will take,
Page 21
directly or indirectly, any action in violation of Regulation
M under the U.S. Exchange Act in connection with offer and
sale of the Offered Securities.
6. DELIVERY OF PROSPECTUSES
------------------------
(a) The Company shall deliver to the Agents, without charge, in Toronto,
contemporaneously with or prior to the issuance of a preliminary MRRS
Decision Document:
(i) a copy of the Preliminary Prospectus in the English language and
the French language, signed as required by the Securities Laws of
the Qualifying Jurisdictions;
(ii) a copy of any other document required to be filed by the Company
under the Securities Laws in connection with the public offering
of the Offered Units, the Optioned Units and the Greenshoe Units
in each of the Qualifying Jurisdictions; and
(iii) a copy of all documents, in the English and French languages,
incorporated, or containing information incorporated, by reference
in to the Preliminary Prospectus, if such documents have not
previously been delivered to the Agents.
(b) The Company shall also deliver to the Agents, without charge, in Toronto,
as soon as practicable after the issuance of a preliminary MRRS Decision
Document:
(i) an opinion of the Company's counsel addressed to the Agents and
their counsel, in form and substance satisfactory to the Agents,
acting reasonably, substantially to the effect that, except for
the financial statements in the Preliminary Prospectus including
the notes thereto (collectively, the "Financial Information"), the
Preliminary Prospectus printed in the French language (i) is in
all material respects a complete and adequate translation of the
Preliminary Prospectus printed in the English language; and (ii)
the English and French language versions of the Preliminary
Prospectus, except for such information, are not susceptible of
any materially different interpretation with respect to any
material matter contained therein;
(ii) an opinion of the Auditors addressed to the Agents and their
counsel, in form and substance satisfactory to the Agents, acting
reasonably, substantially to the effect that the Financial
Information in the French language version of the Preliminary
Prospectus is, in all material respects, a complete and proper
translation of the English language version; and
(iii) a certificate (the "Disclosure Certificate") addressed to the
Agents signed by the President and Chief Executive Officer of the
Company (or such other officer of the Company, acceptable to the
Agents) in his capacity as an officer of the Company, addressed to
the Agents to the effect that, to the best of his knowledge,
information and belief, after due enquiry, the information
disclosed in the schedules attached thereto relating to certain
Page 22
factual matters in connection with the representations and
warranties set forth in Section 2 hereof are true and correct as
at the date hereof.
(c) The Company shall deliver to the Agents, without charge, in Toronto,
contemporaneously with or prior to the issuance of a final MRRS Decision
Document:
(i) a copy of the Prospectus in the English language and the French
language, signed as required by the Securities Laws of the
Qualifying Jurisdictions;
(ii) a copy of any other document required to be filed by the Company
under the Securities Laws in connection with the public offering
of the Offered Units, the Optioned Units and the Greenshoe Units
in each of the Qualifying Jurisdictions;
(iii) evidence reasonably satisfactory to the Agents that an application
to list the Offered Units, the Optioned Units and the Greenshoe
Units on the Exchange has been conditionally accepted by the
Exchange; and
(iv) a comfort letter of the Auditors dated the date of the Prospectus
and addressed to the Agents and the directors of the Company, in
form and substance satisfactory to the Agents, acting reasonably
relating to the Audited Financial Statements and the Paralex
Financial Statements and setting out agreed upon procedures
carried out by the Auditors and the findings as a result of the
procedures with respect to the financial information, accounting
data and other numerical data contained in the Prospectus since
the respective date as of which specified financial information
is given in the Prospectus to a date not more than two business
days prior to the date of such letter.
(d) The Company shall also deliver to the Agents, without charge, in Toronto,
contemporaneously with or prior to the issuance of the final MRRS Decision
Document for the Prospectus:
(i) an opinion of the Company's counsel addressed to the Agents and
their counsel, in form and substance satisfactory to the Agents,
acting reasonably, substantially to the effect that except for the
Financial Information, the Prospectus printed in the French
language (i) is in all material respects a complete and adequate
translation of the Prospectus printed in the English language; and
(ii) the English and French language versions of the Prospectus,
except for such information, are not susceptible of any materially
different interpretation with respect to any material matter
contained therein; and
(ii) an opinion of the Auditors addressed to the Agents and their
counsel, in form and substance satisfactory to the Agents, acting
reasonably, substantially to the effect that the Financial
Information in the French language version of the Prospectus is,
in all material respects, a complete and proper translation of the
English language version.
Page 23
7. NOTICE OF MATERIAL CHANGE
----------------------------
During the period of distribution or distribution to the public (as defined in
the Securities Laws) of the Offered Units, the Optioned Units and the Greenshoe
Units, which shall be the period from the date hereof to the date upon which the
Company has received the notice referred to in clause (ii) of Section 17 hereof,
the Company shall promptly notify the Agents in writing of:
(a) any material change (actual, or, to the knowledge of the Company,
proposed or threatened) in any or all of the business, affairs,
operations, assets, liabilities (contingent or otherwise) or capital
of the Company; and
(b) except for that which relates solely to the Agents, any change in a
material fact contained or incorporated by reference in the
Preliminary Prospectus, Prospectus and/or any Supplementary
Material, or the existence of a new material fact, which, in either
case, is of such a nature as to render the Preliminary Prospectus,
Prospectus and/or any Supplementary Material untrue or misleading in
any material respect or not in compliance with the Securities Laws
or to result in a misrepresentation in the Preliminary Prospectus,
Prospectus and/or any Supplementary Material.
In any such case, the Company shall promptly and, in any event within applicable
time limitations, comply with all legal requirements necessary to comply with
the Securities Laws applicable to continued distribution of the Offered Units,
the Optioned Units and the Greenshoe Units in the Qualifying Jurisdictions as
contemplated by Section 5 hereof. The Company shall in good faith discuss with
the Agents any change in circumstances (actual, proposed or prospective) which
is of such a nature that there is reasonable doubt whether notice need be given
to the Agents pursuant to this Section.
8. SUPPLEMENTARY MATERIAL
----------------------
The Company shall also deliver to the Agents and their counsel duly signed
copies of any amendments or supplements to the Preliminary Prospectus, the
Prospectus or other documents required to be filed by the Company under the
Securities Laws in connection with the Offering (collectively, the
"Supplementary Material"), together with copies of any other documents required
to be filed with the Supplementary Material. The Preliminary Prospectus, the
Prospectus and the Supplementary Material shall be in form and substance
satisfactory to the Agents, acting reasonably. The provisions of Sections 5, 6
and 9 hereof shall apply, with any changes required by the context, to any
Supplementary Material of which copies are, under the applicable Securities
Laws, required to be delivered to any purchaser or prospective purchaser of the
Offered Units, the Optioned Units and the Greenshoe Units.
9. REPRESENTATIONS AND WARRANTIES REGARDING THE PROSPECTUS
-------------------------------------------------------
The delivery to the Agents of the Preliminary Prospectus, Prospectus or any
Supplementary Material shall constitute the representation and warranty of the
Company to the Agents that, at the time of such respective deliveries:
(a) (i) such documents contain full, true and plain disclosure of all
material facts relating to the Company, (ii) the attributes of the
Offered Units, the Optioned Units and the Greenshoe Units conform in
all material respects with the description contained therein, and
Page 24
(iii) no material facts have been omitted therefrom which are
necessary to make the statements therein not misleading in light of
the circumstances in which they are made;
(b) such documents contain no misrepresentations; and
(c) such documents comply with the Securities Laws,
provided, however, that the foregoing representations and warranties will not
apply with respect to information and statements contained in the Preliminary
Prospectus and the Prospectus or misrepresentations with respect thereto or
omissions therefrom which relate solely to the Agents.
Such delivery shall constitute the consent of the Company to the use of the
Preliminary Prospectus, the Prospectus and the Supplementary Material by the
Agents and other dealers, brokers and broker-dealers whose registration permits
them to offer and sell the Offered Units, the Optioned Units and the Greenshoe
Units pursuant to the Prospectus in the Qualifying Jurisdictions in accordance
with the Securities Laws as contemplated in this Agreement.
10. COVENANTS OF THE COMPANY
------------------------
The Company covenants and agrees with the Agents as follows:
(a) The Company will advise the Agents, promptly after receiving notice
thereof, of the time when the Prospectus, or any amendment or
supplement thereto, has been filed and a MRRS Decision Document
therefor been obtained and will provide evidence satisfactory to the
Agents of each such filing and issuance of such MRRS decision
documents.
(b) The Company will advise the Agents, promptly after receiving notice
or obtaining knowledge thereof, of: (i) the issuance by any
Securities Regulator of any order preventing or suspending the use
of the Prospectus or any amendment or supplement thereto; (ii) the
suspension of the qualification of the Offered Units, the Optioned
Units and the Greenshoe Units for offering or sale in any of the
Qualifying Jurisdictions; (iii) the institution or threatening of
any proceeding for any such purpose; or (iv) any request made by any
Securities Regulator for amending or supplementing the Prospectus or
for additional information relating to the distribution of the
Offered Units, the Optioned Units and the Greenshoe Units pursuant
to the Prospectus. The Company will use its reasonable best efforts
to prevent the issuance of any such order and, if any such order is
issued, to obtain the withdrawal thereof as quickly as possible.
(c) The Company will not, directly or indirectly, without the prior
written consent of Sprott, on behalf of the Agents, which consent
shall not be unreasonably withheld, issue, offer, sell, grant any
option to purchase or otherwise dispose of (or announce any issue,
offer, sale, grant of any option to purchase or other disposition of
or intention to do) any Common Shares or any securities convertible
into, or exchangeable or exercisable for, Common Shares or any
shares ranking pari-passu or superior thereto for a period of 120
Page 25
days after the Closing Date other than: (i) the issuance of Common
Shares in connection with the exercise or conversion of any
commitments, options, warrants or other convertible securities
outstanding as at the date hereof, the particulars of which have
been disclosed in the Prospectus or to the Agents in writing; (ii)
the issuance of stock options pursuant to the Company's stock option
plan and the issuance of Common Shares pursuant to any exercise of
such options; (iii) the issuance of Units in connection with the
exercise, if any, of the Over-Allotment Option; (iv) the issuance of
Units in connection with the exercise, if any, of the Greenshoe
Option; the issuance of the Brokers' Warrants; (vi) the issuance of
Common Shares in connection with the due exercise, if any, of the
Warrants or Brokers' Warrants; and (vii) the issuance of Common
Shares pursuant to the Acquisition.
(d) The Company will use its reasonable best efforts to maintain its
status as a "reporting issuer" (or the equivalent thereof) not in
default of the requirements of the Securities Laws of each of the
Qualifying Jurisdictions to the date which is two years following
the Closing Date.
(e) The Company will use its reasonable best efforts to maintain the
listing of the Common Shares on the Exchange to the date which is
one year following the Closing Date and to ensure that the Common
Shares forming part of the Offered Units, the Optioned Units and the
Greenshoe Units, the Common Shares issuable upon the due exercise of
the Warrants and the Compensation Warrants will be listed and posted
for trading on the Exchange upon their issue.
Page 26
11. EXPENSES
--------
The Company agrees, in the manner hereinafter provided, to pay all of the
reasonable costs, fees and expenses of or incidental to the offering, delivery
and/or sale of the Offered Units, and the Optioned Units and the Greenshoe
Units, if any, whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated pursuant to Section 15 hereof,
including all costs and expenses incidental to: (i) the translation and printing
or other production of documents with respect to such transactions, including
all costs of translating into French and printing the English and French
language versions of the Preliminary Prospectus, the Prospectus, any
Supplementary Material and each amendment or supplement thereto and similar
material; (ii) all reasonable arrangements relating to the delivery to the
Agents of copies of the foregoing documents; (iii) the fees and disbursements
of the counsel, the accountants and any other experts or advisors retained by
the Company; (iv) the preparation, issuance and delivery to the Agents of any
certificates evidencing the Units, including all transfer agent's, sub-transfer
agent's, registrar's and sub-registrar's fees; (v) the qualification of the
Units and the Compensation Warrants (to the extent permitted by Applicable
Securities Laws) under the Securities Laws of the Qualifying Jurisdictions; (vi)
the private placement of the Offered Units or Optioned Units in the United
States; (vii) the filing fees of the Securities Regulators relating to the
Units; (viii) the listing fees for the Common Shares forming part of the Units
and the Common Shares issuable upon the due exercise of the Warrants and the
Compensation Warrants on the Exchange; (ix) the fees and disbursements of
Canadian and U.S. legal counsel to the Agents (to a maximum of US$100,000,
excluding GST); (x) 50% of all fees and disbursements of Canadian and U.S. legal
counsel to the Agents in excess of US$100,000); and (xi) the reasonable
out-of-pocket expenses of the Agents on presentation of reasonable invoices and
supporting documentation for same.
12. CONDITIONS OF CLOSING
---------------------
The closing of the Offering shall be subject to the accuracy of the
representations and warranties of the Company contained in this Agreement as of
the date of this Agreement and as of the Closing Time as if made at and as of
the Closing Time, to the accuracy of the statements of the officers of the
Company and others made pursuant to this Section 12, to the performance by the
Company of its covenants and agreements under this Agreement and to the
following additional conditions:
(a) The Agents shall have received an opinion, dated the Closing Date,
of Catalyst Corporate Finance Lawyers, counsel for the Company in
form and substance reasonably satisfactory to Xxxx & Berlis LLP,
counsel for the Agents, and as to such matters as may be reasonably
required by the Agents; it being understood that such counsel may
rely: (i) to the extent appropriate in the circumstances, as to
matters of fact, on certificates of the Company executed on its
behalf by the Chief Executive Officer and the Chief Financial
Officer (or such other officers of the Company acceptable to the
Agents, acting reasonably) and on certificates of Pacific Corporate
Trust Company, the registrar and transfer agent for the Common
Shares; (ii) on the opinions of local counsel (signed copies of
which shall be addressed to and delivered to the Agents and their
counsel) reasonably acceptable to the Agents' counsel as to the
qualification of the Offered Units, the Optioned Units and the
Greenshoe Units for sale to the public and as to other matters in
the Qualifying Jurisdictions applicable to the offering of the
Offered Units, the Optioned Units and the Greenshoe Units and as to
Page 27
other matters of law under the laws of Alberta, Manitoba, Ontario
and Quebec or the laws of Canada applicable therein; and (iii) as to
matters of fact not independently established, on certificates of
the Auditors; and that the Agents' counsel may rely on the opinion
of the Company's counsel as to matters which relate specifically to
the Company and to the securities laws of the Province of British
Columbia.
(b) The Agents shall have received an opinion from Xxxxxxx Xxxxx Xxxxx
LLP, in form and substance reasonably satisfactory to the Company,
the Agents and their respective counsel to the effect that
registration under the 1933 Act is not required for the offer and
sale of the Offered Securities pursuant to this Agreement.
(c) The Agents shall have received incumbency certificates dated the
Closing Date including specimen signatures of the Chief Executive
Officer and any other officer of the Company signing this Agreement
or any document delivered hereunder.
(d) The Agents shall have received from the Auditors a letter dated the
Closing Date in form and substance satisfactory to the Agents to the
effect that, in all material respects, as of the date of such letter
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than two business
days prior to the date of such letter) the conclusions and findings
of such firm with respect to the financial statements, financial
information and other matters covered by its letter referred to in
Subparagraph 6(c)(iv) hereof are confirmed. References to the
Prospectus in this Subparagraph shall include any Supplementary
Material at the date of such letter.
(e) The Agents shall have received a certificate, dated the Closing
Date, of the Chief Executive Officer and the Chief Financial Officer
of the Company (or such other officers of the Company acceptable to
the Agents, acting reasonably), in their capacity as officers of the
Company, addressed to the Agents to the effect that, to the best of
their knowledge, information and belief, after due enquiry:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects as
if made at and as of the Closing Time and the Company has
performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied in all
material respects at or prior to the Closing Time;
(ii) no order, ruling or determination having the effect of
preventing the use of the Prospectus or suspending the sale
or ceasing, suspending or restricting the trading of Common
Shares in any of the Qualifying Jurisdictions has been
issued or made by any stock exchange, securities commission
or regulatory authority and is continuing in effect and no
proceedings, investigations or enquiries for that purpose
have been instituted or are pending;
Page 28
(iii) the memorandum and articles of the Company attached to the
certificate are full, true and correct copies, unamended,
and in effect on the date thereof;
(iv) the minutes or other records of various proceedings and
actions of the Company's Board of Directors attached to the
certificate relating to the Offering are full, true and
correct copies thereof and have not been modified or
rescinded as of the date thereof;
(v) since the date hereof, there has been no material adverse
change in the business, affairs, operations, assets,
liabilities or capital of the Company; and
(vi) as to such other matters as the Agents may reasonably
request.
(f) The Common Shares forming part of the Units and the Common Shares
issuable upon the due exercise of the Warrants and the Compensation
Warrants shall have been approved for listing as at 4:01 p.m.
(Toronto time) on the business day immediately preceding Closing and
posted for trading on the Exchange as at the opening of business on
the Closing Date, subject only to the official notices of issuance
and fulfilment of such other conditions of the Exchange as may only
be fulfilled after the Closing Time.
(g) The Acquisition shall have been approved by the Company's
shareholders and all matters pertaining to the Acquisition shall be
completed in escrow in accordance with and on the terms and
conditions set forth in the Merger Agreement, subject only to the
completion of the Offering for gross proceeds of a minimum of
US$10,000,000.
(h) The Agents shall have received certificates, issued under section
72(8) of the Securities Act (Ontario) and similar provisions of the
Securities Laws of the other Qualifying Jurisdictions where
applicable stating that the Company is not in default under the
Securities Act (Ontario) and the applicable Securities Laws of the
other Qualifying Jurisdictions, respectively.
(i) The Agents shall have received a certificate from Pacific Corporate
Trust Company stating the issued capital of the Company as at the
close of business on the day immediately preceding the Closing Date.
(j) The Agents shall have had access to the Company's management and the
right to conduct due diligence satisfactory to the Agents, in their
sole discretion, prior to filing the Preliminary Prospectus and, if
applicable, any amendments thereto, and the right to update such due
diligence prior to the filing of the Prospectus and, if applicable,
any amendments thereto, and shall not have identified material
adverse information which, as at the date hereof, had not been
widely disseminated to the public.
Page 29
It is understood that the Agents may waive in whole or in part or extend the
time for compliance with any of such terms and conditions without prejudice to
its rights in respect of any other of the foregoing terms and conditions or any
other or subsequent breach or noncompliance, provided that to be binding on the
Agents any such waiver or extension must be in writing and signed by each of
them other than the delivery of the opinion referred to in Subparagraph 12(a)
above which may be waived by Sprott on behalf of the Agents, orally.
13. INDEMNIFICATION AND CONTRIBUTION
--------------------------------
(a) The Company hereby agrees to protect, indemnify and save harmless
each of the Agents and each of their respective directors, officers,
employees, shareholders and agents (including, for greater
certainty, any Selected Dealers) (collectively, the "Agents'
Personnel") from and against any and all losses (other than loss of
profits), claims, actions, causes of action, demands, costs,
damages, liabilities, whether joint or several caused or incurred by
reason of or in connection with the transactions contemplated hereby
including, without limitation, the following:
(i) any information or statement (except information or a
statement relating solely to the Agents) contained in the
Preliminary Prospectus, the Prospectus, any Supplementary
Material, the management information circular of the Company
dated January 11, 2002 or in any amended or supplemental
prospectus or in any supplemental, additional or ancillary
material, information, evidence, return, report,
application, statement, table or document that may be filed
by or on behalf of the Company under any of the Securities
Laws in connection with the Offering (collectively the
"Offering Documents") at which time and in the light of the
circumstances under which it was made contains or is alleged
to contain a misrepresentation; and/or
(ii) the omission or alleged omission (other than a material fact
omitted in reliance upon and in conformity with written
information furnished to the Company by the Agents relating
to the Agents specifically for use therein) in the Offering
Documents of any material fact or material information
required to be stated or necessary to make the statements
therein not misleading in the light of the circumstances in
which it was made; and/or
(iii) any order made or inquiry, investigation or proceeding
commenced or threatened by any Securities Regulator or other
competent authority based upon any untrue statement or
omission or alleged untrue statement or omission or any
misrepresentation or alleged misrepresentation in any of the
Offering Documents, other than a statement included in
reliance upon and in conformity with written information
furnished to the Company by the Agents relating to the
Agents specifically for use therein, which prevents or
restricts the trading in the Common Shares of the Company or
the distribution to the public of the Units in any of the
Qualifying Jurisdictions; and/or
Page 30
(iv) the non-compliance by the Company with any requirement of
Securities Laws or regulatory requirements; and/or
(v) any breach of any or all of the representations, warranties
and covenants on the part of the Company contained in this
Agreement or the failure of the Company to comply with any
of its obligations hereunder,
and will reimburse the Agents promptly upon demand for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such losses, claims, damages,
liabilities or actions in respect thereof, as incurred.
(b) The Company shall not, without the prior written consent of the
Agents, which shall not be unreasonably withheld, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any Agent or
any Agents' Personnel are a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes
an unconditional release of each Agent and each Agents' Personnel
from all liability arising out of such claim, action, suit or
proceeding.
(c) Notwithstanding the foregoing, an indemnifying party shall not be
liable for the settlement of any claim or action in respect of which
indemnity may be sought hereunder, effected without its written
consent, which consent shall not be unreasonably withheld.
(d) If any matter or thing contemplated by this paragraph shall be
asserted against any person in respect of which indemnification is
or might reasonably be considered to be provided, such person (the
"Indemnified Party") will notify the Company as soon as possible and
in any event on a timely basis, of the nature of such claim,
provided that the omission so to notify the Company will not relieve
the Company from any liability which it may have to any Indemnified
Party and the Company shall be entitled (but not required) to assume
the defence of any suit brought to enforce such claim; provided,
however, that the defence shall be through legal counsel acceptable
to the Indemnified Party, acting reasonably, and that no settlement
may be made by the Company or the Indemnified Party without the
prior written consent of the other which consent shall not be
unreasonably withheld.
(e) In any such claim, the Indemnified Party shall have the right to
retain other counsel to act on the Indemnified Party's behalf,
provided that the fees and disbursements of such other counsel shall
be paid by the Indemnified Party, unless (i) the Company and the
Indemnified Party mutually agree to retain such other counsel or
(ii) the named parties to any such claim (including any third or
implicated party) include both the Indemnified Party on the one hand
and the Company, on the other hand, and the representation of the
Company and the Indemnified Party by the same counsel would be
Page 31
inappropriate due to actual or potential conflicting interests, in
which event such fees and disbursements shall be paid by the
Company.
(f) To the extent that any Indemnified Party is not a party to this
Agreement, the Agents shall obtain and hold the right and benefit of
the indemnity provisions hereunder in trust for and on behalf of
such Indemnified Party.
(g) The Company hereby waives all rights which it may have by statute or
common law to recover contribution from the Agents in respect of
losses, claims, costs, damages, expenses or liabilities which it may
suffer or incur directly or indirectly (in this paragraph, "losses")
by reason of or in consequence of an Offering Document containing a
misrepresentation (other than in respect of information or a
statement relating solely to the Agents); provided, however, that
such waiver shall not apply in respect of losses resulting from a
claim (i) based upon a misrepresentation in any written information
or statements furnished by the Agents to the person making such
claim other than written information or statements contained in the
Preliminary Prospectus, the Prospectus, any Supplementary Material,
the United States Confidential Private Placement Memorandum referred
to in Schedule "C" hereto or any document prepared or approved by
the Company; (ii) based upon a misrepresentation or omission of a
material fact where the Agents have not delivered to the person
making such claim a copy of the Prospectus or any Supplementary
Material which is required by Securities Laws to be delivered to
such person within the time required therefor and which corrects the
misrepresentation or omission; or (iii) based upon an act of gross
negligence or wilful misconduct of the Agents or the Agents'
Personnel in the course of sales or marketing efforts relating to
the Offering.
(h) In the event that the indemnity provided for above is, for any
reason, illegal or unenforceable as being contrary to public policy
or for any other reason, each of the Agents and the Company shall
contribute to the aggregate of all losses, claims, costs, damages,
expenses or liabilities (including any legal or other expenses
reasonably incurred by the Indemnified Party in connection with
investigating or defending any action or claim which is the subject
of this section but excluding loss of profits or consequential
damages) of the nature provided for above such that the Agents shall
be responsible for that portion represented by the percentage that
the Agents' Commission paid by the Company to the Agents bears to
the gross proceeds realized from the sale and distribution of the
Units and the Company shall be responsible for the balance, whether
or not it has been sued, provided that, in no event, shall any Agent
be responsible for any amount in excess of the amount of the Agents'
Commission actually received by it. In the event that the Company
may be held to be entitled to contribution from an Agent under the
provisions of any statute or law, the Company shall be limited to
contribution in an amount not exceeding the lesser of: (i) the
portion of the full amount of losses, claims, costs, damages,
expenses and liabilities, giving rise to such contribution for
which such Agent is responsible, as determined above, and (ii) the
amount of the Agents' Commission actually received by such Agent.
Notwithstanding the foregoing, a party guilty of fraudulent
misrepresentation shall not be entitled to contribution from the
other party. Any party entitled to contribution will, promptly after
Page 32
receiving notice of commencement of any claim, action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against the other party under this section,
notify such party from whom contribution may be sought. In no case
shall such party from whom contribution may be sought be liable
under this Agreement unless such notice has been provided, but the
omission to so notify such party shall not relieve the party from
whom contribution may be sought from any other obligation it may
have otherwise than under this section.
(i) The rights to indemnity and contribution provided in this Agreement
shall be in addition and not in derogation of any other right to
indemnity or contribution which the Agents may have by statute or
otherwise by law.
14. SURVIVAL
--------
All representations, warranties, obligations, agreements and indemnities of the
Company and the Agents contained in this Agreement or contained in certificates
or other documents delivered pursuant hereto shall survive the purchase of the
Units and shall continue in full force and effect for a period of three years
following the Closing Date.
In the event that the Closing does not occur through no fault of the Company,
there will be no further liability on the part of the Company or the Agents
under this Agreement except in respect of any liability of the Company which may
have arisen or may thereafter arise under Sections 11 or 13 hereof.
15. TERMINATION
-----------
This Agreement may be terminated in the sole discretion of the Agents (or any
one of them) by written notice to the Company given prior to the Closing Time
in the event that:
(a) the Company shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed
or satisfied under this Agreement at or prior to the Closing Time;
or
(b) at or prior to the Closing Time:
(i) there shall have occurred any adverse material change or
there shall be discovered any previously undisclosed adverse
material fact in relation to the Company; or
(ii) there shall have occurred any change in the Securities Laws
of any Reporting Jurisdiction or Qualifying Jurisdiction or
any inquiry, investigation or other proceeding is made or
any order is issued under or pursuant to any statute of
Canada or any province thereof or any statute of the United
States or any state thereof or any stock exchange in
relation to the Company or any of its securities (except for
any inquiry, investigation or other proceeding based upon
activities of the Agents and not upon activities of the
Company);
which, in the opinion of the Agents, prevents or restricts trading
in or the distribution of the Common Shares and Warrants forming the
Units and/or the Common Shares issuable upon the due exercise of the
Warrants or the Compensation Warrants or adversely affects or might
reasonably be expected to adversely affect the market price or value
of the Common Shares; or
(iii) if there should develop, occur or come into effect or
existence any event, action, state, condition or major
financial occurrence or catastrophe of national or
international consequence or any law or regulation which, in
the reasonable opinion of the Agents, seriously adversely
affects or involves, or will seriously adversely affect or
involve, the financial markets or the business, operations
or affairs of the Company and its Subsidiaries, taken as a
whole;
(iv) a cease trading order is made by any securities regulator or
other competent authority by reason of the fault of the
Company or its directors, officers and agents and such cease
trading order is not rescinded within 48 hours;
(v) if the Company fails to obtain the approval of the Exchange
for the listing of the Common Shares comprising part of the
Units and issuable upon the exercise of the Warrants or the
Compensation Warrants, as the case may be; or
(vi) the due diligence investigations of the Agents identify a
material adverse fact with respect to the Corporation or any
of its Subsidiaries or the Units which existed as of the
date hereof but which had not been publicly disclosed.
Termination of this Agreement pursuant to this Section 15 shall be without
liability of any party to any other party except as provided in Sections 11, 13
or 15 hereof. The rights of termination contained in this Section 15 are in
addition to any other rights or remedies the Agents may have in respect of any
default, act or failure to act or non-compliance by the Company in respect of
any of the matters contemplated by this Agreement or otherwise.
Any termination pursuant to the foregoing provisions shall be effected by notice
in writing delivered by Sprott, on behalf of the Agents, to the Company at its
address as herein set out.
In the event of a termination pursuant to the provisions hereof and notice
having been given, as aforesaid, there will be no further liability on the part
of the Agents under this Agreement. Upon such withdrawal of services, the
Company shall be relieved of its exclusivity obligations referred to in
subsection 1(1) hereof and its obligations to pay the Agents' Commission, but
shall continue to perform, fulfill and satisfy its obligations under sections
11, 13, and 14 hereof. This Agreement may be terminated in writing by either
party at any time after 60 days following the filing of the Preliminary
Prospectus, in the event the Offering has not closed, in which case the Company
shall be relieved of its exclusivity obligations referred to in subsection 1(1)
hereof and its obligations to pay the Agents' Commission, but shall continue to
perform, fulfill and satisfy its obligations under sections 11, 13, and 14
hereof.
Page 34
16. NOTICES
-------
All communications hereunder shall be in writing and shall be delivered or
telecopied and confirmed by mail, and shall,
(a) in the case of notice to the Company, be addressed and sent to:
Cardiome Pharma Corp.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, X.X.
X0X 0X0
Facsimile No.: (604)
Attention: Xxx Xxxxxx
with a copy to:
Catalyst Corporate Finance Lawyers
Xxxxx 0000, 0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Varabioff
(b) and in the case of notice to the Agents, be addressed and sent to:
Sprott Securities Inc.
Royal Bank Plaza, South Tower
000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
Xxxxxxx Xxxxx Ltd.
Xxxxx 0000, 000 Xxxx Xxxxxxx Xx.
Xxxxxxxxx, X.X.
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
and if delivered personally shall be considered to be given on the date of
delivery and if given by facsimile shall be deemed to have been received two
hours after such faxing, provided that if such faxing takes place on a day other
than a business day or after normal business hours, it shall be deemed to have
been received at 9:00 a.m. (local time) on the first business day after the
sending of such facsimile. Any party hereto may change its address for notice
at any time by giving notice to the other parties to this agreement pursuant to
the provisions of this paragraph.
Page 35
17. POST CLOSING COVENANTS OF THE AGENTS
------------------------------------
The Agents shall, after the Closing Time: (i) use their best efforts to
terminate, and to cause the members of any banking, selling or other group to
terminate, distribution to the public of the Offered Units, the Optioned Units
and the Greenshoe Units (after the Additional Closing Time) as promptly as
possible; (ii) give prompt written notice to the Company when, in the opinion of
the Agents, they and the members of such groups have ceased distribution to the
public of the Offered Units, the Optioned Units and the Greenshoe Units; and
(iii) provide upon the cessation of distribution, a breakdown of the total
proceeds realized from such distribution in the respective Qualifying
Jurisdictions in which such information is or may be required by the appropriate
Securities Regulators.
18. TERMS, PROVISIONS AND CONDITIONS
--------------------------------
It is understood that the Agents may waive, in whole or in part, or extend the
time for compliance with, any of the terms, provisions and conditions of this
Agreement without prejudice to their rights in respect of any other term,
provisions and conditions or any other or subsequent breach or non-compliance by
the Company with any such terms, provisions or conditions, provided that to be
binding on the Agents any such waiver or extension must be in writing.
19. SEVERABILITY
------------
If any provision of this Agreement shall be adjudged by a competent authority to
be invalid or for any reason unenforceable, to the extent permitted by law, such
invalidity or unenforceability shall not affect the validity, enforceability or
operation of any other provision herein.
20. SUCCESSORS
----------
Except as contemplated herein, no party hereto may assign this Agreement or any
part hereof without the prior written consent of the other parties hereto.
Subject to the foregoing, this Agreement shall enure to the benefit of, and
shall be binding upon, the Agents and the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions contained in this Agreement; this Agreement and all conditions
and provisions of this Agreement being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that the covenants and indemnities of the Company contained in Section 13 hereof
shall also be for the benefit of the Agents' Personnel; and the covenants of
the Agents contained in Section 5 hereof shall also be for the benefit of all
officers, directors, employees and agents of the Company.
21. APPLICABLE LAW AND SUBMISSION TO JURISDICTION
---------------------------------------------
The validity and interpretation of this Agreement, and the terms and conditions
set forth herein, shall be governed by and construed in accordance with the laws
of the Province of British Columbia and the federal laws applicable therein.
The parties hereto hereby attorn to the jurisdiction of the courts of the
Province of British Columbia.
Page 36
22. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
23. ENTIRE AGREEMENT
----------------
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supercedes the letter agreement dated
January 11, 2002 other than paragraph 15 thereof between the Company and Sprott,
which letter agreement (other than paragraph 15 thereof) is hereby terminated.
24. TIME OF ESSENCE
---------------
Time shall be of the essence of this Agreement.
Page 37
If the foregoing is in accordance with your understanding and agreed to by you,
please signify your acceptance on the accompanying counterparts of this letter
and return the same to us, whereupon this letter as so accepted shall constitute
a binding agreement between us in accordance with the foregoing.
Yours very truly,
SPROTT SECURITIES INC.
Per: /s/ W. Xxxx Xxxxxxx
---------------------------------
Authorized Signing Officer
XXXXXXX XXXXX LTD.
Per: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Authorized Signing Officer
Page 38
Accepted this 28th day of February, 2002.
CARDIOME PHARMA CORP.
Per: /s/ Xxx Xxxxxx
---------------------------------
Xxx Xxxxxx
President and Chief Executive Officer
Page 39
SCHEDULE "A"
FORM OF SELECTED DEALER CERTIFICATE
In connection with the private placement in the United States of the Offered
Securities of Cardiome Pharma Corp. (the "Company"), pursuant to the agency
agreement dated February 28, 2002 among the Company and the Agents named therein
(the "Agency Agreement"), the undersigned does hereby certify to the Company as
follows:
1. it is a duly registered broker or dealer with the United States Securities
and Exchange Commission and is a member of, and in good standing with, the
National Association of Securities Dealers, Inc. on the date hereof;
2. it has not engaged or will engage in any directed selling efforts (as
defined in Rule 902 of Regulation S) with respect to the Offered Securities
and it has complied and will comply with the offering restriction
requirements of Regulation S.
3. each offeree was provided with a copy of the U.S. private placement
memorandum, including (A) the Canadian final prospectus dated February 28,
2002 relating to the Offered Securities; and (B) a U.S. covering memorandum
for the offering of the Offered Securities in the United States; and
4. immediately prior to its transmitting such U.S. private placement
memorandum to such offerees, it had reasonable grounds to believe and did
believe that each offeree was an Accredited Investor and, on the date
hereof, it continues to believe that each U.S. person purchasing Offered
Securities from it is an Accredited Investor.
The undersigned represents, warrants and covenants to the Company that, in
connection with all sales of the Offered Securities in the United States or to,
or for the account of a U.S. Person:
1. neither it nor its representatives have utilized, and none of such persons
will utilize, any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act), including
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television,
or any seminar or meeting whose attendees had been invited by general
solicitation or general advertising, in connection with the offer or sale
of the Offered Securities in the United States or have offered or will
offer to sell any Offered Securities in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act;
2. it has not used and will not use any written material other than the
Preliminary Prospectus, the Prospectus, any Prospectus Amendment,
Confidential Private Placement Memorandum, any document incorporated
therein by reference or a cover letter to accompany such documents in a
form approved by the Company (such cover letter and accompanying documents,
which shall include at least the Preliminary Prospectus or the Prospectus
and the Confidential Private Placement Memorandum being referred to herein
Page 40
as the "Offering Documents"), and each offeree of the Offered Securities in
the United States has been or will be sent a copy of the Offering
Documents; and
3. it has had a pre-existing substantial relationship with each offeree of the
Offered Securities contacted or to be contacted by it in the United States
and have reasonable grounds to believe and did believe, on the date hereof,
continue to believe that each such offeree is an "accredited investor", as
such term is defined in Rule 501(a) under the Securities Act.
Terms used in this certificate have the meanings given to them in the Agency
Agreement unless otherwise defined herein.
Dated this day of March, 2002.
[SELECTED DEALER]
By:_________________________
Name:
Title:
SCHEDULE "B"
FORM OF COMPENSATION WARRANT
[The following legend to be inserted on any certificate representing
compensation warrants not qualified by prospectus or any securities issued upon
due exercise thereof:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE JULY 9, 2002.]
[The following legend to be inserted on any certificate representing
compensation warrants issued to persons resident in the United States or any
securities issued upon due exercise thereof:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FORM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, OR (D)
PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A SATISFACTORY
LEGAL OPINION TO THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE
"GOOD DELIVERY", MAY BE OBTAINED FROM THE TRANSFER AGENT FOR SUCH SECURITIES
UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION IN A FORM
SATISFACTORY TO THE TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT THE
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT.]
COMPENSATION WARRANTS TO PURCHASE UNITS
OF CARDIOME PHARMA CORP.
(Existing under the laws of the British Columbia)
Void After
March [ ], 2004
THIS CERTIFIES that, for value received, (the "Holder"), is the registered
holder of compensation warrants (the "Compensation Warrants") each of which
entitle the holder, subject to the terms and conditions set forth in this
Compensation Warrant Certificate, to purchase from Cardiome Pharma Corp. (the
"Corporation"), one unit (a "Unit"), each Unit consisting of one common share of
the Corporation (a "Common Share") and one-quarter of one share purchase warrant
(a "Warrant"), at any time until 5:00 p.m. (Toronto time) on March , 2004 (the
"Time of Expiry") on payment of $0.95 per Unit (the "Exercise Price"). Each
whole Warrant is exercisable for one Share at a price of $1.66 per Share at any
time until March , 2004. The number of Units which the Holder is entitled to
acquire upon exercise of the Compensation Warrants and the Exercise Price are
subject to adjustment as hereinafter provided.
Page 2
1. Exercise of Compensation Warrants
---------------------------------
(a) Election to Purchase. The rights evidenced by this certificate may be
--------------------
exercised by the Holder in whole or in part and in accordance with
the provisions hereof by:
(i) surrender of this Compensation Warrant Certificate together
with an Election to Exercise in substantially the form
attached hereto as Schedule 1, properly completed and
executed, together with payment by certified cheque or bank
draft of the Aggregate Purchase Price (as defined in Schedule
"1") for the number of Units specified in the Election to
Exercise at the office of the Corporation at 0000 Xxxxxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0, or such other
address in Canada as may be notified in writing by the
Corporation (the "Corporation Office"); or
(ii) the surrender of this Compensation Warrant Certificate
together with a form in substantially the form attached
hereto as Schedule 2 properly completed and executed (the
"Cashless Exercise Form") at the address set forth in clause
(i) above. Such presentation and surrender shall be deemed a
waiver of the Holder's obligation to pay the Aggregate
Purchase Price (as defined in Schedule "1"), or the
proportionate part thereof if this Warrant is exercised in
part. In the event of a Cashless Exercise, the Holder shall
exchange its Compensation Warrant Certificate for that number
of Units subject to such Cashless Exercise multiplied by a
fraction, the numerator of which shall be the difference
between the then Current Market Price and the Exercise Price,
and the denominator of which shall be the then Current Market
Price. For the purposes of any computation under this Section
1(a)(ii) the then "Current Market Price" shall be the closing
price of the Common Shares on The Toronto Stock Exchange on
the last trading day immediately prior to the date of the
duly executed Cashless Exercise Form.
In the event that the rights evidenced by this certificate
are exercised in part, the Corporation shall,
contemporaneously with the issuance of the Units issuable on
the exercise of the Compensation Warrants so exercised, issue
to the Holder a Compensation Warrant Certificate on identical
terms in respect of that number of Units in respect of which
the Holder has not exercised the rights evidenced by this
certificate.
(b) Exercise. The Corporation shall, within three business days after
--------
receiving a duly executed Election to Exercise and the Aggregate
Purchase Price (as defined in Schedule "1") or Cashless Exercise
Form, as the case may be, for the number of Units specified therein
Page 3
(the "Exercise Date"), issue that number of Units specified in the
Election to Exercise or that number of Units determined under Section
1(a)(ii) and specified in the Cashless Exercise Form.
(c) Certificates.
------------
(i) As promptly as practicable after the Exercise Date, the
Corporation shall issue and deliver to the Holder, registered
in the name of the Holder, certificates for the number of
Common Shares and Warrants, respectively, for the number of
Units specified in the Election to Exercise or Cashless
Exercise Form, as the case may be.
(ii) To the extent permitted by law, such exercise shall be deemed
to have been effected as of the close of business on the
Exercise Date, and at such time the rights of the Holder with
respect to the number of Compensation Warrants which have
been exercised as such shall cease.
(d) Fractional Shares No fractional Common Shares shall be issued upon
-----------------
exercise of any Compensation Warrant and no payments or adjustment
shall be made upon any exercise on account of any cash dividends on
the Common Shares issued upon such exercise.
(e) Corporate Changes
-----------------
(i) Subject to paragraph 1(e)(ii) hereof, if, after the date of
issuance of this Certificate and prior to the Time of Expiry,
the Corporation shall be a party to any reorganization,
merger, dissolution or sale of all or substantially all of
its assets, whether or not the Corporation is the surviving
entity, the number of Compensation Warrants evidenced by this
certificate shall be adjusted so that the holder hereof shall
be entitled to acquire the same number and type of securities
to which the holder of that number of Units of the
Corporation subject to the unexercised Compensation Warrants
would have been entitled by reason of such reorganization,
merger, dissolution or sale of all or substantially all of
its assets (the "Event"), and the Exercise Price shall be
adjusted to be the amount determined by multiplying the
Exercise Price in effect immediately prior to the Event by
the number of Shares subject to the unexercised Compensation
Warrants immediately prior to the Event, and dividing the
product thereof by the number of securities to which the
holder of that number of Shares subject to the unexercised
Compensation Warrants would have been entitled to by reason
of such Event.
(ii) If after an event referred to in paragraph 1(e)(i) hereof,
the Corporation is unable to deliver securities to the Holder
pursuant to the proper exercise of a Compensation Warrant,
the Corporation may satisfy such obligations to the Holder
Page 4
hereunder by paying to the Holder in cash the difference
between the Exercise Price of all unexercised Compensation
Warrants granted hereunder and the Fair Market Value on the
Exercise Date of the securities to which the Holder would be
entitled to upon exercise of all unexercised Compensation
Warrants. Adjustments under this subparagraph (e) or (subject
to subparagraph (o)) any determinations as to the Fair Market
Value of any securities shall be made by the board of
directors of the Corporation, or any committee thereof
specifically designated by the board of directors to be
responsible therefor, and any reasonable determination made
by such board or committee thereof shall be binding and
conclusive, subject only to any disputes being resolved by
the Corporation's auditors, whose determination shall be
binding and conclusive.
(f) Subdivision or Consolidation of Shares
--------------------------------------
(i) In the event that, after the date of issuance of this
Certificate and prior to the Time of Expiry, the Corporation
shall subdivide its outstanding common shares ("Common
Shares") into a greater number of shares, the Exercise Price
in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the
outstanding Common Shares of the Corporation shall be
consolidated into a smaller number of shares, the Exercise
Price in effect immediately prior to such consolidation shall
be proportionately increased.
(ii) Upon each adjustment of the Exercise Price as provided
herein, the Holder shall thereafter be entitled to acquire,
at the Exercise Price resulting from such adjustment, the
number of Units (calculated to the nearest tenth of a Unit)
obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Units
which may be acquired hereunder immediately prior to such
adjustment and dividing the product thereof by the Exercise
Price resulting from such adjustment.
(g) Change or Reclassification. In the event that, after the date of
---------------------------
issuance of this Certificate and prior to the Time of Expiry, the
Corporation shall change or reclassify its outstanding Common Shares
into a different class of securities, the rights evidenced by the
Compensation Warrants shall be adjusted as follows so as to apply to
the successor class of securities:
(i) the number of the successor class of securities which the
Holder shall be entitled to acquire as part of the Units
shall be that number of the successor class of securities
which a holder of that number of Units subject to the
unexercised Compensation Warrants immediately prior to the
change or reclassification would have been entitled to by
reason of such change or reclassification; and
Page 5
(ii) the Exercise Price shall be determined by multiplying the
Exercise Price in effect immediately prior to the change or
reclassification by the number of Units subject to the
unexercised Compensation Warrants immediately prior to the
change or reclassification, and dividing the product thereof
by the number of successor securities determined in paragraph
1(g)(i) hereof.
(h) Offering to Shareholders. If and whenever at any time after the date
------------------------
of issuance of this Certificate and prior to the Time of Expiry, the
Corporation shall fix a record date or if a date of entitlement to
receive is otherwise established (any such date being hereinafter
referred to in this subsection 1(h) as the "record date") for the
issuance of rights, options or warrants to all or substantially all
the holders or the outstanding Common Shares entitling them, for a
period expiring not more than 45 days after such record date, to
subscribe for or purchase Common Shares or securities convertible
into or exchangeable for Common Shares at a price per share or, as
the case may be, having a conversion or exchange price per share less
than 95% of the Fair Market Value (as hereinafter defined) on such
record date, the Exercise Price shall be adjusted immediately after
such record date so that it shall equal the price determined by
multiplying the Exercise Price in effect on such record date by a
fraction, of which the numerator shall be the total number of Common
Shares outstanding on such record date plus a number equal to the
number arrived at by dividing the aggregate subscription or purchase
price of the total number of additional Common Shares offered for
subscription or purchase or, as the case may be, the aggregate
conversion or exchange price of the convertible or exchangeable
securities so offered by such Fair Market Value, and of which the
denominator shall be the total number of Common Shares outstanding
on such record date plus the total number of additional Common Shares
so offered (or into which the convertible or exchangeable securities
so offered are convertible or exchangeable); Common Shares owned by
or held for the account of the Corporation or any subsidiary of the
Corporation shall be deemed not to be outstanding for the purpose of
any such computation; such adjustment shall be made successively
whenever such a record date is fixed; to the extent that any rights
or warrants are not so issued or any such rights or warrants are not
exercised prior to the expiration thereof, the Exercise Price shall
then be readjusted to the Exercise Price which would then be in
effect if such record date had not been fixed or to the Exercise
Price which would then be in effect based upon the number of Common
Shares or conversion or exchange rights contained in convertible or
exchangeable securities actually issued upon the exercise of such
rights or warrants, as the case may be.
(i) Carry Over of Adjustments. No adjustment of the Exercise Price shall
-------------------------
be made if the amount of such adjustment shall be less than 1% of the
Exercise Price in effect immediately prior to the event giving rise
to the adjustment, provided, however, that in such case any
Page 6
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least 1% of the Exercise Price.
(j) Notice of Adjustment. Upon any adjustment of the number of Units and
---------------------
upon any adjustment of the Exercise Price, then and in each such case
the Corporation shall give written notice thereof to the Holder,
which notice shall state the Exercise Price and the number of Units
or other securities subject to the unexercised Compensation Warrants
resulting from such adjustment, and shall set forth in reasonable
detail the method of calculation and the facts upon which such
calculation is based. Upon the request of the Holder there shall be
transmitted promptly to the Holder a statement of the firm of
independent chartered accountants retained to audit the financial
statements of the Corporation to the effect that such firm concurs in
the Corporation's calculation of the change.
(k) Other Notices. In case at any time after the date of issuance of this
--------------
Certificate and prior to the Time of Expiry:
(i) the Corporation shall declare any dividend upon its Common
Shares payable in kind;
(ii) the Corporation shall offer for subscription pro rata to the
holders of its Common Shares any additional shares of any
class or other rights;
(iii) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or consolidation,
amalgamation or merger of the Corporation with, or sale of
all or substantially all of its assets to, another
corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation,
then, in any one or more of such cases, (other than the consolidation
disclosed in the Corporation's prospectus dated February 28, 2002)
the Corporation shall give to the Holder (A) at least 10 days' prior
written notice of the date on which a record date shall be taken for
such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization,
reclassification, consolidation (other than the consolidation
disclosed in the Corporation's prospectus dated February 28, 2002),
merger, amalgamation, sale, dissolution, liquidation or winding-up
and (B) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up,
at least 10 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause
(A) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Shares shall be entitled thereto, and such notice in
accordance with the foregoing clause (B) shall also specify the date
on which the holders of Common Shares shall be entitled to exchange
Page 7
their Common Shares for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger,
amalgamation, sale, dissolution, liquidation or winding-up, as the
case may be.
(l) Shares to be Reserved. The Corporation will at all times keep
----------------------
available, and reserve if necessary under Canadian law, out of its
authorized Common Shares, solely for the purpose of issue upon the
exercise of the Compensation Warrants and the Warrants issuable upon
the exercise of the Compensation Warrants, such number of Common
Shares as shall then be issuable upon the due exercise of the
Compensation Warrants and the due exercise of the Warrants issuable
upon the due exercise of the Compensation Warrants. The Corporation
covenants and agrees that all Common Shares which shall be so
issuable will, upon issuance, be duly authorized and issued as fully
paid and non-assessable. The Corporation will take all such actions
as may be necessary to ensure that all such Common Shares may be so
issued without violation of any applicable requirements of any
exchange upon which the Common Shares may be listed or in respect of
which the Common Shares are qualified for unlisted trading
privileges. The Corporation will take all such actions are within its
power to ensure that all such Common Shares may be so issued without
violation of any applicable law.
(m) Issue Tax. The issuance of certificates for Common Shares upon the
---------
due exercise of Compensation Warrants or Warrants issuable upon the
due exercise of the Compensation Warrants, as the case may be, shall
be made without charge to the Holder for any issuance tax in respect
thereto, provided that the Corporation shall not be required to pay
any tax which may be payable in respect of any transfer involved in
the issuance and delivery of any certificate in a name other than
that of the Holder.
(n) Listing. The Corporation will, at its expense and as expeditiously as
-------
possible, use its reasonable commercial efforts to cause all Common
Shares issuable upon the due exercise of the Compensation Warrants or
Warrants issuable upon the due exercise of the Compensation Warrants,
as the case may be, to be duly listed on The Toronto Stock Exchange
prior to the issuance of such Common Shares.
(o) Fair Market Value. For the purposes of any computation hereunder, the
------------------
"Fair Market Value" at any date shall be the weighted average sale
price per share for the Common Shares of the Corporation for the 20
consecutive trading days immediately before such date on The Toronto
Stock Exchange or such other stock exchange on which the Common
Shares may then be listed, or, if the shares or any other security in
respect of which a determination of Fair Market Value is being made
are not listed on any stock exchange, the Fair Market Value shall be
Page 8
determined by the directors, which determination shall be conclusive.
The weighted average price shall be determined by dividing the
aggregate sale price of all such shares sold on the said exchange
during the said 20 consecutive trading days by the total number of
such shares so sold.
2. Replacement
-----------
Upon receipt of evidence satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Compensation Warrant Certificate
and, if requested by the Corporation, upon delivery of a bond of indemnity
satisfactory to the Corporation (or, in the case of mutilation, upon
surrender of this Compensation Warrant Certificate), the Corporation will
issue to the Holder a replacement certificate (containing the same terms
and conditions as this Compensation Warrant Certificate).
3. Expiry Date
-----------
The Compensation Warrants shall expire and all rights to purchase Units
hereunder shall cease and become null and void at 5:00 p.m. (Toronto time)
on March , 2004.
4. Covenant
--------
So long as any Compensation Warrants remain outstanding the Corporation
covenants that it shall do or cause to be done all things necessary to
maintain its status as a reporting issuer not in default in each of the
Reporting Jurisdictions.
5. U.S. Securities Laws
--------------------
The holder:
(a) acknowledges that the Common Shares and Warrants issuable upon the
exercise of this Compensation Warrant have not been and will not be
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 and sold only outside the United States
pursuant to Regulation S under the 1933 Act ("Regulation S") or in
the United States in transactions exempt from such registration;
(b) agrees that to the extent required by the 1933 Act or state
securities laws: (i) such Common Shares and Warrants may be subject
to a "distribution compliance period" imposed by Regulation S or a
holding period imposed upon "restricted securities" under the 1933
Act or by applicable state law; and (ii) stop transfer orders may be
placed on such Common Shares and Warrants and the certificates
therefor may bear legends restricting their transfer.
Page 9
6. Defined Terms
-------------
All capitalized terms used herein and not otherwise defined shall have the
meaning ascribed thereto in the agency agreement dated as of February 28,
2002 between the Corporation and Sprott Securities Inc. and Xxxxxxx Xxxxx
Ltd.
7. Governing Law
-------------
The laws of the Province of British Columbia and the laws of Canada
applicable therein shall govern the Compensation Warrants.
8. Assignment, Successors
----------------------
Unless otherwise consented to in writing by the Corporation, such consent
not to be unreasonably withheld, this Compensation Warrant Certificate may
not be assigned. This Compensation Warrant Certificate shall enure to the
benefit of the Holder and its successors and shall be binding on the
Corporation and its successors.
IN WITNESS WHEREOF the Corporation has caused this Compensation Warrant
Certificate to be signed by a duly authorized officer.
DATED as of ________________, 2002.
CARDIOME PHARMA CORP.
Per:__________________________
Schedule "1"
------------
Election to Exercise
The undersigned hereby irrevocably elects to exercise the number of
Compensation Warrants of Cardiome Pharma Corp. set out below for the number of
Units (or other property or securities subject thereto) as set forth below:
(a) Number of Compensation Warrants to be Exercised: ________________________
(b) Number of Units to be Acquired: ________________________
(c) Exercise Price per Unit: $______________________________
(d) Aggregate Purchase Price [(b) multiplied by (c)] $_______________________
and hereby tenders a certified cheque, bank draft or cash for such Aggregate
Purchase Price, and directs such Units to be registered and certificates
therefor to be issued as directed below.
The undersigned represents that:
[Please check one box]
* It is not a U.S. person (as defined in Regulation S under the United
States Securities Act of 1933, as amended), is acquiring the Units for
its own account and not for the account or benefit of a U.S. person and
has executed and delivered this Election outside the United States.
* Accompanying this Election is a Representation Letter in the form
attached as Exhibit 1 to the Compensation Warrant Certificate.
This Election has been executed and delivered in Canada.
DATED this ______ day of ____________, 200__ .
[NAME OF HOLDER]
Per:________________________________
____________________________________
Name of Registered Holder:
____________________________________
Address of Registered Holder:
____________________________________
____________________________________
Schedule "2"
------------
Cashless Exercise Form
The undersigned hereby irrevocably elects to exercise the number of
Compensation Warrants of Cardiome Pharma Corp. set out below for the number of
Units (or other property or securities subject thereto) as set forth below:
(a) Number of Compensation Warrants to be Exercised: ________________________
(b) Exercise Price per Unit: ________________________
(c) Current Market Price: $__________________________
(d) Number of Units to be Acquired: $________________________
[(a) x ((c) - (b))/(c)]
and directs such Units to be registered and certificates therefore to be issued
as directed below.
The undersigned represents that:
[Please check one box]
* It is not a U.S. person (as defined in Regulation S under the United
States Securities Act of 1933, as amended), is acquiring the Units for
its own account and not for the account or benefit of a U.S. person and
has executed and delivered this Election outside the United States.
* Accompanying this Election is a Representation Letter in the form
attached as Exhibit 1 to the Compensation Warrant Certificate.
This Election has been executed and delivered in Canada.
DATED this ______ day of ____________, 200__ .
[NAME OF HOLDER]
Per:________________________________
_________________________________
Name of Registered Holder:
____________________________________
Address of Registered Holder:
____________________________________
____________________________________
Exhibit 1
Representation Letter
____________, 2002
Cardiome Pharma Corp.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, X.X. X0X 0X0
XXXXXX
Ladies and Gentlemen:
In connection with the purchase by the undersigned on this date of common
shares and warrants (the "Securities") of Cardiome Pharma Corp. (the "Company"),
the undersigned hereby confirms to you that:
1. The undersigned:
(a) is an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D under the United States Securities Act of 1933, as
amended (the "Securities Act") because it is a broker-dealer
registered pursuant to Section 15 of the United States Securities
Exchange Act of 1934, as amended; and
(b) is purchasing the Securities for its own account and not with a view
to resale, distribution or other disposition in a manner that would
violate the registration requirements of the Securities Act.
2. It acknowledges that neither the Securities nor any interest therein has
been or will be registered under the Securities Act or the securities laws
of any State or other political subdivision of the United States.
3. It further acknowledges and agrees that, because the Securities have not
been registered under the Securities Act and are being offered and sold in
a private offering under the exemption afforded by Section 4(2) of the
Securities Act, the Shares are "restricted securities" within the meaning
of Rule 144(a)(3) under the Securities Act and cannot be reoffered or
resold unless they are subsequently registered under the Securities Act or
an exemption from registration thereunder is available, and that it will
continue to bear the economic risk of its investment in the Shares for an
indefinite period of time.
4. It agrees that it will not re-offer, resell, pledge, hypothecate or
otherwise transfer or dispose of the Securities (or securities that may be
received in replacement thereof or in exchange therefore) except:
(a) pursuant to an effective registration statement under the Securities
Act;
Page 2
(b) in a transaction outside the United States meeting the requirements
of Rule 904 of Regulation S under the Securities Act; or
(c) in a transaction exempt from registration under the Securities Act
and, in each case in compliance with any applicable state securities
("blue sky") laws.
It agrees that in connection with any transaction pursuant to the foregoing
clause (c), it will furnish to the Company a written opinion of counsel
acceptable to the Company to the effect that such offer, sale, pledge,
hypothecation, transfer or disposition is in compliance with the
registration requirements of all applicable United States federal and state
securities laws. It acknowledges and agrees that each certificate for the
Securities (and any certificate issued in replacement therefore) shall bear
a restrictive legend in substantially the following form and that an
appropriate stop transfer order implementing the same shall be lodged with
the transfer agent:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACTO F 1933, AS AMENDED (THE "SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE
CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C)
PURSUANT TO THE EXEMPTION FORM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION AFTER PROVIDING A SATISFACTORY LEGAL OPINION TO THE
CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD
DELIVERY", MAY BE OBTAINED FROM THE TRANSFER AGENT FOR SUCH SECURITIES
UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION IN A FORM
SATISFACTORY TO THE TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT
THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT.
5. The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities. It acknowledges that it has had access to
such information concerning the Company as it has deemed necessary to make
an informed decision to purchase Securities, and has been afforded the
opportunity to ask questions and receive satisfactory answers from
representatives of the Company regarding the Company and the terms and
conditions relating to investment in the Company, and all such questions
have been answered to its full satisfaction.
Very truly yours,
SCHEDULE "C"
FORM OF U.S. SUBSCRIPTION AGREEMENT
Exhibit 4.3
Page EX 4.3-1
SUBSCRIPTION AGREEMENT
----------------------
This SUBSCRIPTION AGREEMENT (this "Agreement") made as of the last date set
forth on the signature page hereof between Cardiome Pharma Corp. (the
"Company"), and the undersigned (the "Subscriber").
W I T N E S S E T H:
WHEREAS, Sprott Securities Inc. ("Sprott") and Xxxxxxx Xxxxx Ltd. have been
retained by the Company to act as agents (collectively the "Agents"), in the
sale of units (the "Units," defined below) and in connection therewith, Sprott
has retained Paramount Capital Inc. ("Paramount") to act as an agent, on a "best
efforts" basis, in the private offering of the Units pursuant to Regulation D
under the Act of 1933 as amended (the "Act") in the United States (Paramount and
any of its agents, employees, officers, directors, consultants or assigns,
hereinafter the "Selected Dealer"); and
WHEREAS the Company desires to issue a minimum of _____ Units and a maximum
of Units of the Company (the "Offering") at a price of $__________ per Unit
("Offering Price") for minimum gross proceeds of $10,000,000 ("Minimum
Offering") and maximum gross proceeds of $15,000,000 ("Maximum Offering") on or
before March 15, 2002, subject to an extension of 60 days at the discretion of
the Agents and the Company without notice to the investors (the "Closing Date").
In addition, the Company has granted the Agents an option to offer an additional
$5,000,000 of Units to cover over-allotments, if any (the "Over allotment
Option"). The Minimum Offering will be offered on a "all or none, best efforts"
basis. The Maximum Offering and the Over allotment Option, if exercised, will
be offered on a "best efforts" basis. Each Unit consists of one common share,
no par value (a "Cardiome Share"), in the capital of the Company and one quarter
of one Cardiome Share purchase warrant (a "Cardiome Warrant") of the Company.
Subject to adjustment in certain events, one whole Cardiome Warrant will entitle
the holder thereof to purchase one Cardiome Share at any time on or before 24
months after the Closing Date ("Expiry Date") at a price equal to 200% of the
Offering Price. The Offering Price was determined by the Agents and the
Company. The Cardiome Shares and the Cardiome Warrants are being issued
pursuant to the attached Offering Materials (defined below). The minimum
investment by each individual investor will be $100,000 subject to the
discretion of the Selected Dealer to accept purchases of lesser amounts. Unless
otherwise stated, all dollar amounts in this Agreement refer to United States
Dollars; and
WHEREAS, the Subscriber desires to purchase that number of Units set forth
on the signature page hereof on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER
--------------------------------------------------------
1.1 Subject to the terms and conditions hereinafter set forth and in
the Preliminary Prospectus of the Company, filed with Canadian securities
regulators, dated February 5, 2002 (such prospectus, together with all
amendments thereof' and supplements and exhibits thereto, the "Prospectus"), the
Confidential Private Placement Memorandum of the Company, dated February 20,
2002, (such memorandum, together with all amendments thereof and supplements and
exhibits thereto, the "Memorandum"), this Agreement, as amended and supplemented
(collectively with the Prospectus and the Memorandum, the "Offering Materials"),
the Subscriber hereby irrevocably purchases for itself and agrees to purchase
Page EX 4.3-2
from the Company such number of Units and the Company agrees to sell to the
Subscriber such number of Units, as is set forth on the signature page hereof at
a price per Unit equal to the Offering Price. The purchase price is payable by
solely wire transfer of immediately available funds, pursuant to the payment
instructions described in the Memorandum, contemporaneously with the execution
and delivery of this Agreement, as supplemented. The Subscriber understands,
however, that the purchase and sale of the Units is contingent upon the Company
making sales of the Minimum Offering prior to the Offering Termination Date (as
defined in Section 3.2 below).
1.2 The Subscriber hereby warrants and represents that it recognizes
that the purchase of the Units involves a high degree of risk including, but not
limited to, the following: (a) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Units; (b) the
Subscriber may not be able to liquidate its investment, (c) transferability of
the Cardiome Shares, the Cardiome Warrants, and the Cardiome Shares issuable
upon exercise of the Cardiome Warrants (sometimes hereinafter collectively
referred to as the "Securities") is limited. Without limiting the generality of
the representations set forth in Section 1.5 below, the Subscriber represents
that the Subscriber has carefully reviewed the section of the Prospectus
captioned "Risk Factors" and the section of the Memorandum entitled "Additional
Risk Factors for United States Investors"
1.3 The Subscriber represents that: it is an "accredited investor" as
such term is defined in Rule 501(a) of Regulation D, as indicated by the
Subscriber's responses to the questions contained in Article VII hereof, and by
reason of its business and financial experience and the business and financial
experience of those persons it may have retained to advise it with respect to
its investment in the Securities it, together with such advisors, has such
knowledge, sophistication and experience in business and financial matters that
it is capable of evaluating the merits and risks of the prospective investment.
1.4 The Subscriber hereby acknowledges and represents that: (a) the
Subscriber has knowledge and experience in business and financial matters, prior
investment experience, including investment in securities that are non-listed,
unregistered and/or not traded on a national securities exchange nor on the
National Association of Securities Dealers, Inc. (the "NASD") automated
quotation system ("NASDAQ"), or the Subscriber, at its own risk and expense, has
employed the services of a "purchaser representative" (as defined in Rule 501(h)
of Regulation D), attorney and/or accountant to read all of the documents
furnished or made available by the Company to the Subscriber to evaluate the
merits and risks of such an investment on the Subscriber's behalf; (b) the
Subscriber recognizes the highly speculative nature of this investment; and (c)
the Subscriber is able to bear the economic risk that the Subscriber hereby
assumes.
1.5 The Subscriber hereby acknowledges receipt and careful review of
the Offering Materials and hereby represents that the Subscriber has been
furnished by the Company during the course of the Offering with all information
regarding the Company, the terms and conditions of the Offering and any
additional information that the Subscriber has requested or desired to know, and
has been afforded the opportunity to ask questions of and receive answers from
duly authorized officers or other representatives of the Company concerning the
Company and the terms and conditions of the Offering.
1.6 (a) In making the decision to invest in the Units, the Subscriber
has not relied on the Agents or the Selected Dealer, but has relied solely upon
the information provided by the Company in the Offering Materials. To the extent
necessary, the Subscriber has retained, at its own risk and expense, and relied
upon appropriate professional advice regarding the investment, tax and legal
merits and consequences of this Agreement and the purchase of the Units
hereunder. The Subscriber disclaims reliance on any statements made or
information provided by any person or entity in the course of the Subscriber's
consideration of an investment in the Units other than the Offering Materials.
Page EX 4.3-3
The Subscriber acknowledges and agrees that (i) the Company has prepared the
Offering Materials and that no other person, including without limitation, the
Agents and the Selected Dealer, has supplied any information for inclusion in
the Offering Materials other than information furnished in writing to the
Company by the Agents or the Selected Dealer specifically for inclusion in those
parts of the Offering Materials relating specifically to the Agents or the
Selected Dealer, respectively; (ii) neither the Agents nor the Selected Dealer
has responsibility for the accuracy or completeness of the Offering Materials;
and (iii) the Subscriber has not relied upon the independent investigation or
verification, if any, that may have been undertaken by the Agents or the
Selected Dealer.
(b) The Subscriber represents that (i) the Subscriber was contacted
regarding the sale of the Units by the Company, the Agents, or the Selected
Dealer (or their respective authorized agents or representatives) with whom the
Subscriber had a prior substantial pre-existing relationship and (ii) no Units
were offered or sold to it by means of any form of general solicitation or
general advertising, and in connection therewith, the Subscriber did not receive
any general solicitation or general advertising including, but not limited to:
(A) receive or review any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, whether closed circuit, or generally available; or (B)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising.
1.7 The Subscriber hereby represents that the Subscriber, either by
reason of the Subscriber's business or financial experience or the business or
financial experience of the Subscriber's professional advisors (who are
unaffiliated with and not compensated by the Company or any affiliate or selling
agent of the Company, including Paramount, directly or indirectly), has the
capacity to protect the Subscriber's own interests in connection with the
transaction contemplated hereby.
1.8 The Subscriber hereby acknowledges that the Offering has not been
reviewed by the United States Securities and Exchange Commission (the "SEC") nor
any state regulatory authority as the Offering is intended to be exempt from the
registration requirements of Section 5 of the Act pursuant to Regulation D and
the registration requirements of applicable state "blue sky" securities laws or
regulations.
1.9 The Subscriber understands that the Cardiome Shares and Cardiome
Warrants comprising the Units have not been registered under the Act or under
any state securities or "blue sky" laws or regulations by reason of a claimed
exemption that depends, in part, upon the Subscriber's investment intention and
agrees not to sell, pledge, assign or otherwise transfer or dispose of the
Securities unless they are registered under the Act and under any applicable
state securities or "blue sky" laws or regulations or unless an exemption from
such registration is available, subject to Section 1.11 herein. In this
connection, the Subscriber hereby represents that the Subscriber is purchasing
the Securities for the Subscriber's own account for investment purposes only and
not with a view toward the resale or distribution to others. The Subscriber, if
an entity, further represents that it was not formed for the purpose of
purchasing the Securities.
1.10 The Subscriber understands that there is no public market in the
United States for the Securities and that no market may develop in the United
States for any of such Securities. The Subscriber understands that even if a
public market develops for such Securities, Rule 144 ("Rule 144") promulgated
under the Act requires for non-affiliates, among other conditions, a one-year
holding period prior to the resale in the United States (in limited amounts) of
securities acquired in a non-public offering without having to satisfy the
registration requirements under the Act. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register any of the
Securities under the Act or any state securities or "blue sky" laws other than
as set forth in Article V.
Page EX 4.3-4
1.11 The Subscriber agrees that if it decides to offer, sell or
otherwise transfer, pledge or hypothecate all or any part of the Securities, it
will not offer, sell or otherwise transfer, pledge or hypothecate any of such
Securities (other than pursuant to an effective registration statement under the
Act), directly or indirectly unless an offer and sale or other disposition is:
(i) to the Company; or
(ii) made outside the United States in accordance with the
requirements of Rule 904 of Regulation S under the Act; or
(iii) made pursuant to the exemption from registration under the
Act provided by Rule 144 thereunder; or
(iv) in a transaction that does not require registration under
the Act or any applicable United States state laws, rules and regulations
governing the offer and sale of securities, and it has theretofore furnished to
the Company an opinion to that effect of counsel of recognized standing
reasonably satisfactory to the Company.
1.12 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities that such Securities
have not been registered under the Act or any state securities or "blue sky"
laws and setting forth or referring to the restrictions on transferability and
sale thereof contained in this Agreement. The Subscriber is aware that the
Company will make a notation in its appropriate records with respect to the
restrictions on the transferability of such Securities. The legend to be placed
on each certificate shall be in form substantially similar to the following:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A)
TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, OR
(D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A
SATISFACTORY LEGAL OPINION TO THE ISSUER. DELIVERY OF THIS CERTIFICATE MAY
NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH
WILL CONSTITUTE "GOOD DELIVERY," MAY BE OBTAINED FROM THE TRANSFER AGENT FOR
SUCH SECURITIES UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT AND THE ISSUER, TO
THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT.
Provided that the Securities are being sold pursuant to Section 1.11 (ii) above,
the Company covenants and represents that the legend nay be removed by providing
a declaration to the transfer agent for the Securities of the Company
substantially as attached hereto as Appendix A (or as the Company may prescribe
from time to time) upon the sale of the Securities by the Subscriber.
Page EX 4.3-5
1.13 The Subscriber understands that the Selected Dealer, the Agents,
and/or the Company will review this Agreement and are hereby given authority by
the Subscriber to call the Subscriber's bank or place of employment or otherwise
review the financial standing of the Subscriber; and it is further agreed that
the Selected Dealer, the Agents and the Company, each at their sole discretion,
reserve the unrestricted right, without further documentation or agreement on
the part of the Subscriber, to reject or limit any purchase, to accept purchases
for fractional Units and to close the Offering to the Subscriber at any time and
that the Company will issue stop transfer instructions to its transfer agent
with respect to such Securities.
1.14 The Subscriber hereby represents that the address of the Subscriber
furnished by Subscriber on the signature page hereof is the Subscriber's
principal residence if the Subscriber is an individual or its principal business
address if it is a corporation or other entity.
1.15 The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Units. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms.
1.16 If the Subscriber is a corporation, partnership, limited liability
company, trust, employee benefit plan, individual retirement account, Xxxxx
Plan, or other tax-exempt entity, it is authorized and qualified to invest in
the Company and the person signing this Agreement on behalf of such entity has
been duly authorized by such entity to do so
1.17 The Subscriber acknowledges that if he or she is a Registered
Representative of an NASD member firm, he or she must give such firm the notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section 7.4 below.
1.18 (a) The Subscriber agrees not to issue any public statement
with respect to the Subscriber's investment or proposed investment in the
Company or the terms of any agreement or covenant between them and the Company
without the Company's prior written consent, except such disclosures as may be
required under applicable law or under any applicable order, rule or regulation.
(b) The Company agrees not to disclose the name, address or any
other information about the Subscriber, except as required by law or applicable
regulatory authorities; provided, that the Company may use the name (but not the
address) of the Subscriber in any registration statement filed pursuant to
Article V in which the Subscriber's Securities are included.
1.19 The Subscriber represents and warrants that it has not engaged,
consented to or authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Subscriber
hereby agrees to indemnify and hold harmless the Company from and against all
fees, commissions or other payments owing to any such person or firm acting on
behalf of the Subscriber hereunder.
1.20 The Subscriber agrees to hold the Company and its directors,
officers, employees, affiliates, controlling persons and agents (including the
Selected Dealer, the Agents and their respective officers, directors, employees,
counsel, controlling persons and agents) and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of (a) any sale
or distribution of the Securities by the Subscriber in violation of the Act or
any applicable state securities or "blue sky" laws; or (b) any false
representation or warranty or any breach or failure by the Subscriber to comply
with any covenant made by the Subscriber in this Agreement (including the
Confidential Investor Questionnaire contained in Article VII herein) or any
Page EX 4.3-6
other document furnished by the Subscriber to any of the foregoing in connection
with this transaction.
1.21 The Subscriber understands, acknowledges and agrees with the
Company and the Selected Dealer that, except as otherwise set forth herein, that
the subscription hereunder is irrevocable by the Subscriber, that, except as
required by law, the Subscriber is not entitled to cancel, terminate or revoke
this Agreement or any agreements of the Subscriber hereunder and that this
Agreement and such other agreements shall survive the death or disability of the
Subscriber and shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
permitted assigns. If the Subscriber is more than one person, the obligations
of the Subscriber hereunder shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and his/her heirs, executors,
administrators, successors, legal representatives and permitted assigns.
1.22 The Subscriber understands, acknowledges and agrees with the
Company, the Agents and the Selected Dealer that the Offering is intended to be
exempt from registration under the Act pursuant to the provisions of Regulation
D thereunder, which is in part dependent upon the truth, completeness and
accuracy of the representations made by the Subscriber herein.
1.23 The Subscriber understands and acknowledges the Selected Dealer
has been engaged by Sprott to act as a introducing agent and is acting as a
introducing agent in connection with this Offering and will receive a commission
in the form of both cash and warrants from Sprott and Sprott will reimburse the
Selected Dealer's reasonable out-of-pocket expenses in connection with the
Offering (including legal fees).
1.24 The Subscriber acknowledges that the information contained in this
Agreement or otherwise made available to the Subscriber is confidential and
non-public and agrees that all such information shall be kept in confidence by
the Subscriber and neither used by the Subscriber for the Subscriber's personal
benefit (other than in connection with this Agreement, as supplemented) nor
disclosed to any third party for any reason, notwithstanding that the
Subscriber's subscription may not be accepted by the Company; provided, however,
that this obligation shall not apply to any such information that (i) is part of
the public knowledge or literature and readily accessible at the date hereof,
(ii) becomes part of the public knowledge or literature and readily accessible
by publication (except as a result of a breach of this provision) or (iii) is
received from third parties (except third parties who disclose such information
in violation of any confidentiality agreements or obligations, including,
without limitation, any subscription or other similar agreement entered into
with the Company).
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to the Subscriber that:
2.1 Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of The Province of British Columbia and has full corporate power and authority
to conduct its business.
2.2 Capitalization and Voting Rights. The authorized, issued and
--------------------------------
outstanding capital stock of the Company is as set forth in the Prospectus, as
of the date of the Prospectus, and all issued and outstanding shares of the
Company are validly issued, fully paid and nonassessable. As of January 31,
2001, except as set forth in the Prospectus, there are no outstanding options,
warrants, agreements, convertible securities, preemptive rights or other rights
to subscribe for or to purchase any shares of capital stock of the Company.
Page EX 4.3-7
Except as set forth in the Prospectus and as otherwise required by law, there
are no restrictions upon the voting or transfer of any of the shares of capital
stock of the Company pursuant to the Company's Memorandum and Articles of
Incorporation or other governing documents or any agreement or other instruments
to which the Company is a party or by which the Company is bound.
2.3 Authorization; Enforceability. The Company has all corporate
-----------------------------
right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the (i) authorization
execution, delivery and performance of this Agreement by the Company; and (ii)
authorization, sale, issuance and delivery of the Securities contemplated hereby
and the performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. The Cardiome Shares, when issued and fully
paid for in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable. The Company shall, at all times when any of the
Cardiome Warrants remain outstanding, have authorized and reserved for issuance
a sufficient number of Cardiome Shares to provide for exercise of the Cardiome
Warrants. Upon the exercise of the Cardiome Warrants in accordance with their
terms and the issuance and delivery of the Cardiome Shares issuable upon
exercise of the Cardiome Warrants, such Cardiome Shares will be validly issued,
fully paid and nonassessable. The issuance and sale of the Cardiome Shares
contemplated hereby and the issuance and sale of the Cardiome Shares underlying
the Cardiome Warrants, will not give rise to any preemptive rights or rights of
first refusal on behalf of any person which have not been waived in connection
with this Offering.
2.4 No Conflict; Governmental Consents.
-----------------------------------
(a) The execution and delivery by the Company of this Agreement
and the consummation of the transactions contemplated hereby will not result in
the violation of any material law, statute, role, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority to or by
which the Company is bound, or of any provision of the Memorandum and Articles
of Incorporation of the Company, and will not conflict with, or result in a
material breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its properties or assets is subject, nor result in the
creation or imposition of any lien upon any of the properties or assets of the
Company.
(b) No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Company in connection
with the authorization, execution and delivery of this Agreement or with the
authorization, issue and sale of the Units or the Securities comprising the
Units, except such filings as may be required to be made with the SEC, NASD,
NASDAQ, the Toronto Stock Exchange (the "TSE") and with any state or foreign
blue sky or other securities regulatory authority and any Canadian securities
regulatory authority, all of which filing has been or will be timely made.
2.5 Litigation. The Company knows of no pending or threatened legal or
----------
governmental proceedings against the Company which could materially adversely
affect the business, property, financial condition or operations of the Company
or which materially and adversely questions the validity of this Agreement or
any agreements related to the transactions contemplated hereby or the right of
the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality which could materially
adversely affect the business, property, financial condition or operations of
Page EX 4.3-8
the Company. There is no action, suit, proceeding or investigation by the
Company currently pending in any court or before any arbitrator or that the
Company intends to initiate.
2.6 Disclosure. The information set forth in the Offering Materials as
----------
of the date of the Prospectus contains no untrue statement of a material fact
nor omits to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
2.7 Investment Company. The Company is not an "investment company"
-------------------
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
2.8 Selected Dealer. The Company has engaged, consented to and
----------------
authorized the Agents to act as exclusive agents of the Company solely in
connection with the transactions contemplated by this Agreement. Sprott, with
the consent of the Company, will pay the Selected Dealer a commission in the
form of both cash and Broker's Warrants (as defined in the Prospectus) and will
reimburse the Selected Dealer's reasonable out-of-pocket expenses incurred in
connection with the Offering (including legal fees).
III. TERMS OF SUBSCRIPTION
---------------------
3.1 The minimum investment that may be made by any prospective investor
in the Units is $100,000. Subscriptions for investment below the minimum
investment may be accepted at the discretion of the Selected Dealer.
3.2 Pending the sale of the Units, all funds paid hereunder shall be
deposited by the Company in escrow with Sprott. If the Company shall not have
obtained subscriptions (including this subscription) equal to the Minimum
Offering on or before the Closing Date (such date, as it may be so extended, the
"Offering Termination Date"), then this purchase shall be void and all funds
paid hereunder by the Subscriber shall be promptly returned to the Subscriber,
without interest. The Subscriber hereby authorizes and directs the Company, the
Agents and the Selected Dealer to direct Sprott to return any funds for
unaccepted purchases to the same account from which the funds were drawn,
including any customer account maintained with the Selected Dealer.
3.3 Upon receipt of sales of at least the Minimum Offering, on or prior
to the Offering Termination Date, the Company, the Agents, and the Selected
Dealer will conduct a closing at a time and place of their choice, of the
purchase and sale of Units (the "Closing").
3.4 Certificates representing the Units purchased by the Subscriber
pursuant to this Agreement will be prepared for delivery to the Subscriber
within 10 business days following the Closing. The Subscriber hereby authorizes
and directs the Company to deliver the certificates representing the Units
purchased by the Subscriber pursuant to this Agreement directly to the
Subscriber's account maintained by the Selected Dealer, if any, or, if no such
account exists, to the residential or business address indicated on the
signature page hereto.
IV. CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS
--------------------------------------------
4.1 The Subscriber's obligation to purchase the Units at the Closing at
which such purchase is to be consummated is subject to the fulfillment on or
prior to such Closing of the following conditions, which conditions may be
waived at the option of the Subscriber to the extent permitted by law:
Page EX 4.3-9
(a) Representations and Warranties Correct. The representations
--------------------------------------
and warranties made by the Company in Article II hereof shall be true and
correct in all material respects.
(b) Covenants. All covenants, agreements and conditions contained
---------
in this Agreement to be performed by the Company on or prior to the date of such
Closing shall have been performed or complied with in all material respects.
(c) No Legal Order Pending. There shall not then be in effect any
----------------------
legal or other order enjoining or restraining the transactions contemplated by
this Agreement.
(d) No Law Prohibiting or Restricting Such Sale. There shall not
-------------------------------------------
be in effect any law, rule or regulation prohibiting or restricting such sale or
requiting any consent or approval of any person, which shall not have been
obtained, to issue the Securities (except as otherwise provided in this
Agreement).
(e) The Acquisition is Complete. All material conditions of the
---------------------------
Acquisition Agreement (as defined in the Prospectus), with the exception of this
Offering, shall have been satisfied by the Company and Paralex (as defined in
the Prospectus).
V. REGISTRATION RIGHTS
-------------------
5.1 As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as defined
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition "control,"
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day Monday through Friday on which
banks are generally open for business in New York.
(c) "Exchange Act" shall mean the United States Securities
Exchange Act of 1934.
(d) "Holder" or "Holders" shall mean the Subscriber(s) who hold
Registrable Securities (including, without limitation, Cardiome Shares issuable
upon exercise of the "Cardiome Warrants or any person(s) to whom the rights
under this Article V have been transferred in accordance with Section 5.9
hereof).
(e) "Person" shall mean any individual, corporation, limited
liability company, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(f) The terms "register," "registered" and "registration" refer to
the registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
(g) "Registrable Securities" shall mean (i) the Cardiome Shares
issued as part of the Units; (ii) the Cardiome Shares issuable upon exercise of
the Cardiome Warrants; and (iii) any Cardiome Shares issued as (or issuable upon
the conversion of any warrant, right or other security which is issued as) a
Page EX 4.3-10
dividend or other distribution with respect to or in replacement of the Cardiome
Shares issued as part of the Units, the Cardiome Warrants, and/or the Cardiome
Shares underlying the Cardiome Warrants; provided, however, that securities
shall only be treated as Registrable Securities if and only for so long as they
(A) have not been disposed of pursuant to a registration statement declared
effective by the SEC; (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Exchange Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale; (C) are held by a Holder or a
permitted transferee pursuant to Section 5.9; or (D) have not become eligible
for sale pursuant to Rule 144(k) (or any successor thereto) under the Act.
(h) "Registration Expenses" shall mean all expenses incurred by
the Company in complying with Section 5.2 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the fees of legal counsel for any Holder).
(i) "Registration Statement" shall have the meaning ascribed to
such term in Section 5.2.
(j) "Registration Period" shall have the meaning ascribed to such
term in Section 5.2.
(k) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of legal counsel for any Holder.
5.2 (a) Subject to the terms herein, the Company shall, as soon as
practicable but not later than 30 days after the Closing Date (the "Outside
Filing Date"), (a) file a registration statement (the "Registration Statement")
for resale by the Holders of the Registrable Securities with the SEC and use its
best efforts to have such Registration Statement declared effective by the SEC
prior to the date which is 90 days after the initial filing of the Registration
Statement; and (b) cause such Registration Statement to remain effective for the
period (the "Registration Period") until the earlier of (i) such date as the
holders of the securities have completed the distribution described in the
Registration Statement; (ii) at such time that such shares are no longer, by
reason of Rule 144(k) under the Act, required to be registered for the sale
thereof by such holders; or (iii) such time that no Holders are in possession of
Registrable Securities.
(b) Prior to the Closing Date, the Company will obtain the
conditional approval of the TSE to the listing of the Cardiome Shares and the
Cardiome Shares issuable upon exercise of the Cardiome Warrants for resale on
the TSE.
(c) Notwithstanding the foregoing, the Company shall not be
obligated to enter into any underwriting agreement for the sale of any of the
Registrable Securities.
5.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 5.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
5.4 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
Page EX 4.3-11
registration, qualification, exemption and compliance. At its expense the
Company shall:
(a) use its best efforts to keep such registration, and any
qualification, exemption or compliance under state or federal securities laws
which the Company determines to obtain, continuously effective during the
Registration Period;
(b) advise the Holders as soon as practicable:
(i) when the Registration Statement or any amendment
thereto has been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making
of any changes in the Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(c) make every reasonable; effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;
(d) furnish to each Holder, without charge, at least one copy of
such Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference) in the form filed with
the SEC;
(e) during the Registration Period, deliver to each Holder,
without charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use, consistent with the provisions
hereof, of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the prospectus or any amendment or
supplement thereto. In addition, upon the reasonable request of the Holder and
subject in all cases to confidentiality protections reasonably acceptable to the
Company, the Company will meet with a Holder or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement coveting the Registrable Securities, and will otherwise
cooperate with any Holder conducting an investigation for the purpose of
reducing or eliminating such Holder's exposure to liability under the Exchange
Act, including the reasonable production of information at the Company's
headquarters;
Page EX 4.3-12
(f) during the Registration Period, deliver to each Holder, without
charge, (i) as soon as practicable (but in the case of the annual report of the
Company to its stockholders, within 180 days after the end of each fiscal year
of the Company) one copy of the following documents: (A) its annual report to
its stockholders, if any (which annual report shall contain audited financial
statements with a reconciliation to generally accepted accounting principles in
the United States of America prepared by a firm of certified public accountants
of recognized standing); (B) if not included in substance in its annual report
to stockholders, its annual report on Form 20F (or such similar form); (C) each
of its quarterly or periodic reports on Form 6K (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(g) use commercially reasonable efforts to qualify any of the
Registrable Securities for sale in such states as the Holder reasonably
designates. However, the Company shall not for any such purpose be required to
qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction, and do any and all other acts or things
reasonably necessary or advisable to enable the Holder to consummate the
disposition in such jurisdictions of the Registrable Securities covered by
such Registration Statement;
(h) cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to any Registration Statement free of any restrictive legends to the extent not
required at such time and in such denominations and registered in such names as
Holders may request at least five (5) business days prior to sales of
Registrable Securities pursuant to such Registration Statement;
(i) upon the occurrence of any event contemplated by Section 5.4(b)(v)
above, the Company shall promptly prepare a post-effective amendment to the
Registration Statement or a supplement to the related prospectus, or file any
other required document so that, as thereafter promptly delivered to purchasers
of the Registrable Securities included therein, the prospectus will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and
(j) use its best efforts to comply with all applicable rules and
regulations of the SEC, and will make generally available to the Holder not
later than 60 days (or 140 days if the fiscal quarter is the fourth fiscal
quarter) after the end of its fiscal quarter in which the first anniversary date
of the effective date of the Registration Statement occurs, an earnings
statement satisfying the provisions of Section 11(a) of the Exchange Act.
5.5 The Holders shall have no right to take any action to restrain,
enjoin or otherwise delay any registration pursuant to Section 5.2 hereof as a
result of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
5.6 (a) To the extent permitted by law, the Company shall indemnify
and hold harmless the Holder, and each Person controlling such Holder, if any,
within the meaning of Section 15 of the Act, with respect to which any
registration, qualification or compliance has been effected pursuant to this
Agreement, against all claims, losses, damages and liabilities (or action in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
Page EX 4.3-13
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse each Holder, and each
Person controlling such Holder, if any, for reasonable legal and other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred; provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage or liability arises out of or is based upon any untrue statement or
omission or allegation thereof is made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder and
stated to be specifically for use in preparation of the Registration Statement,
prospectus or offering circular; provided, further, that the Company will not be
liable in any such case where the claim, loss, damage or liability arises out of
or is related to the failure of the Holder to comply with the covenants and
agreements contained in this Agreement respecting sales of Registrable
Securities, and except that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement or alleged
untrue statement or omission or alleged omission made in the preliminary
prospectus but eliminated or remedied in (i) the amended prospectus on file with
the SEC at the time the registration statement becomes effective, (ii) in an
amended prospectus filed with the SEC pursuant to Rule 424(b) of the Act, or
(iii) in the prospectus subject to completion under Rule 434 of the Act, which
together meet the requirements of Section 10(a) of the Act (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
such Holder or any such controlling Person, if a copy of the Final Prospectus
furnished by the Company to the Holder for delivery was not furnished to the
Person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Act and the Final Prospectus would
have cured the defect giving rise to such loss, liability, claim or damage.
(b) The Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify and hold harmless the Company, each of
its directors and officers, and each Person who controls the Company within the
meaning of Section 15 of the Act, against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened (subject to
Section 5.6(c) below), arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus or offering circular, or any amendment or supplement
thereof, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances in which they were made, and will
reimburse the Company, such directors and officers, and each Person controlling
the Company for reasonable legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action as incurred, in each case to the extent, but only to the
extent, that such untrue statement or omission or allegation thereof is made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder and stated to be specifically for use in
preparation of such registration statement, prospectus or offering circular;
provided, however, that the indemnity shall not apply to the extent that such
claim, loss, damage or liability results frown the fact that a current copy of
the prospectus was not made available to the Holder and such current copy of the
prospectus would have cured the defect giving rise to such loss, claim, damage
or liability. Notwithstanding the foregoing, in no event shall a Holder be
liable for any such claims, losses, damages or liabilities in excess of the net
proceeds received by such Holder from the sale of Registrable Securities covered
by such Registration Statement, except in the event of fraud by such Holder.
(c) Each party entitled to indemnification under this Section 5.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Page EX 4.3-14
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such failure
is materially prejudicial to the ability of the Indemnifying Party to defend
against such claim or litigation. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 5.6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and the Holder
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Holder and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holder agree that it would not be just and equitable if
contribution pursuant to this Section 5.6(d) were based solely upon the number
of entities from whom contribution was requested or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 5.6(d). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages and liabilities referred to
above in this Section 5.6(d) shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim, subject to the provisions
of Section 5.6(d) hereof. The Parties agree that it would not be just and
equitable if contributions pursuant to this Section 5.6 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations as set forth in this Section 5.6.
Notwithstanding the provisions of this Section 5.6(d), the Holder shall not be
required to contribute any amount or make any other payments under this
Agreement which in the aggregate exceed the net proceeds received by such Holder
from the sale of Registrable Securities covered by such Registration Statement.
No person guilty of fraudulent misrepresentation (within the meaning of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.7 (a) The Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiting the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, the
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement until its receipt of copies of the supplemented or
amended prospectus from the Company, such prospectus to be forwarded promptly to
the Subscriber by the Company, and, if so directed by the Company, the Holder
shall deliver to the Company all copies, other than permanent file copies then
in the Holder's possession, of the prospectus coveting such Registrable
Securities current at the time of receipt of such notice.
Page EX 4.3-15
(b) The Holder shall suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to the Registration Statement and
prospectus contemplated by Section 5.2 during (i) any period not to exceed two
30-day periods within any one 12-month period the Company requires in connection
with a primary underwritten offering of equity securities and (ii) any period,
not to exceed one 45-day period within any one 12-month period, when the Company
determines in good faith that offers and sales pursuant thereto should not be
made by reason of the presence of material undisclosed circumstances or
developments with respect to which the disclosure that would be required in such
a prospectus is premature, would have an adverse effect on the Company or is
otherwise inadvisable.
(c) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may request in
writing or as shall be required in connection with any registration,
qualification or compliance referred to in this Article V.
(d) The Holder hereby covenants with the Company (i) not to make
any sale of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Exchange Act to be satisfied, and
(ii) if such Registrable Securities are to be sold by any method or in any
transaction other than on a national securities exchange, the Nasdaq National
Market, the Nasdaq Small Cap Market, the TSE or in the over-the-counter market,
in privately negotiated transactions, or in a combination of such methods, to
notify the Company at least five (5) business days prior to the date on which
the Holder first offers to sell any such Registrable Securities.
(e) The Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement described in this Section
are not transferable on the books of the Company unless the stock certificate
submitted to the transfer agent evidencing such Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (i) the Registrable Securities have been sold in accordance with
such Registration Statement and (ii) the requirement of delivering a current
prospectus has been satisfied.
(f) The Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to the Registration Statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the Registration Period, the Holders shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and such
Holders shall notify the Company of the number of shares registered which
remain unsold immediately upon receipt of such notice from the Company.
5.8 With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, the Company shall
use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
Page EX 4.3-16
(c) so long as the Holder owns any unregistered Registrable
Securities, furnish to the Holder, upon any reasonable request, a written
statement by the Company as to its compliance with Rule 144 under the Act, and
of the Exchange Act, a copy of the most recent annual, or quarterly report of
the Company, and such other reports and documents of the Company as the Holder
may reasonably request in availing itself of any rule or regulation of the SEC
allowing the Holder to sell any such securities without registration.
5.9 The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under Section 5.2 may be assigned in full
by the Holder in connection with a transfer by such Holder of its Registrable
Securities, provided, however, that (i) such transfer may otherwise be effected
in accordance with applicable securities laws; (ii) the Holder gives written
notice to the Company of such transfer; and (iii) the transferee agrees to
comply with the terms and provisions of this Agreement, and such transfer is
otherwise in compliance with this Agreement. Except as specifically permitted
by this Section 5.9, the rights of the Holder with respect to Registrable
Securities as set out herein shall not be transferable to any other Person, and
any attempted transfer shall be null and void and shall cause all rights of the
Holder to be forfeited.
5.10 With the written consent of the Company and the Holder, any
provision of this Article V may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended.
VI. MISCELLANEOUS
-------------
6.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed as follows:
if to the, to it at:
Cardiome Pharma Corp.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX X0X 0X0 Xxxxxx
Attn: President
With a copy to:
Catalyst Corporate Finance Lawyers
0000-0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0 Xxxxxx
Attn: Xxxxxxx Varabioff, Esq.
And
Xxxxxxx Xxxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx
Page EX 4.3-17
If to Selected Dealer
Paramount Capital, Inc.
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
If to Agents
Sprott Securities, Inc.
Royal Bank Plaza South
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX X0X 0X0
Attn: Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxx Ltd.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX X0X 0X0
Attn: Xxxxxxx Xxxxx
if to the Subscriber, to the Subscriber's address indicated on the
signature page of this Agreement.
Notices shall be deemed to have been given or delivered on the date of mailing,
except notices of change of address, which shall be deemed to have been given or
delivered when received.
6.2 Except as otherwise provided herein, this Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3 Subject to the provisions of Section 5.9, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and to their
respective heirs, legal representatives, successors and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
6.4 Upon the execution and delivery of this Agreement by the Subscriber,
this Agreement shall become a binding obligation of the Subscriber with respect
to the purchase of Units as herein provided, subject, however, to the right
hereby :reserved by the Company to enter into the same agreements with other
purchasers and to add and/or delete other persons as purchasers.
6.5 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE WITHOUT REGARD TO SUCH STATE'S PRINCIPLES OF CONFLICTS
OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM
FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE
FEDERAL COURTS FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE
Page EX 4.3-18
PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE
TO SAID VENUE.
6.6 In order to discourage frivolous claims the parties agree that
unless a claimant in any proceeding arising out of this Agreement succeeds in
establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.
6.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If
any provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
6.8 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.9 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
6.10 This Agreement may be executed in two or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
6.11 Nothing in this Agreement shall create or be deemed to create any
rights in any person or entity not a party to this Agreement, except (a) for the
holders of Registrable Securities and (b) for the Selected Dealer pursuant to
Sections 1.6(a), 2.8, and 5.6 hereof.
VII. CONFIDENTIAL INVESTOR QUESTIONNAIRE
-----------------------------------
7.1 The Subscriber represents and warrants that he, she or it comes
within at least one category marked below, and that for any category marked, he,
she or it has truthfully set forth, where applicable, the factual basis or
reason the Subscriber comes within that category. ALL INFORMATION IN RESPONSE
TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below.
Category A ___ The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net
worth with his or her spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may include
equity in personal property and real estate, including your
principal residence, cash, short-term investments, stock
and securities. Equity in personal property and real estate
should be based on the fair market value of such property
less debt secured by such property.
Page EX 4.3-19
Category B ___ The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000
in each of the two most recent years, or joint income with
his or her spouse in excess of $300,000 in each of those
years (in each case including foreign income, tax exempt
income and full amount of capital gains and losses but
excluding: any income of other family members and any
unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the
current year.
Category C ___ The undersigned is a director or executive officer of the
Company which is issuing and selling the Units.
Category D ___ The undersigned is a bank, as defined in Section 3(a)(2) of
the Act; a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act,
whether acting in its individual or fiduciary capacity;
any insurance company as defined in Section 2(13) of the
Act; any investment company registered under the Investment
Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act; any Small Business
Investment Company ("SBIC") licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; any plan established
and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; any employee
benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of
such act, which is either a bank, savings and loan
association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are
accredited investors (describe entity).
-----------------------------------------------------------
Category E ___ The undersigned is a private business development company
as defined in section 202(a)(22) of the Investment Advisors
Act of 1940. (describe entity)
-----------------------------------------------------------
Category F ___ The undersigned is either a corporation, partnership,
Massachusetts business trust, or non-profit organization
within the meaning of Section 501 (c)(3) of the Internal
Revenue Code, in each case not formed for the specific
purpose of acquiring the Units and with total assets in
excess of $5,000,000. (describe entity)
-----------------------------------------------------------
-----------------------------------------------------------
Category G ___ The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the Units, where the purchase is directed by a
"sophisticated investor" as defined in Regulation 506(b)
(2)(ii) under the Act.
Page EX 4.3-20
Category H ___ The undersigned is an entity (other than a trust) in which
all of the equity owners are "accredited investors" within
one or more of the above categories. If relying upon this
Category alone, each equity owner must complete a separate
copy of this Agreement. (describe entity)
-----------------------------------------------------------
-----------------------------------------------------------
The undersigned agrees that the undersigned will notify the
Company at any time on or prior to the Closing Date in the
event that the representations and warranties in this
Agreement shall cease to be true, accurate and complete.
7.2 SUITABILITY (please answer each question)
(a) For an individual Subscriber, please describe your current
employment, including the company by which you are employed
and its principal business:
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(b) For an individual Subscriber, please describe any college or
graduate degrees held by you:
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(c) For all Subscribers, please list types of prior investments:
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(d) For all Subscribers, please state whether you have you
participated in other private placements before:
------------------
YES _____ NO _____
(e) If your answer to question (d) above was "YES", please
indicate frequency of such prior participation in private
-------
placements of:
----------
Public Private Public or Private
Companies Companies Biotechnology Companies
-------------------- ----------------- -----------------------
Frequently -------------------- ----------------- -----------------------
Occasionally -------------------- ----------------- -----------------------
Never -------------------- ----------------- -----------------------
Page EX 4.3-21
(f) For individual Subscribers, do you expect your current level
of income to significantly decrease in the foreseeable future:
YES _____ NO _____
(g) For trust, corporate, partnership and other institutional
Subscribers, do you expect your total assets to significantly
decrease in the foreseeable future:
YES _____ NO _____
(h) For all Subscribers, do you have any other investments or
contingent liabilities which you reasonably anticipate could
cause you to need sudden cash requirements in excess of cash
readily available to you:
YES _____ NO _____
(i) For all Subscribers, are you familiar with the risk aspects
and the non-liquidity of investments such as the securities
for which you seek to purchase?
YES _____ NO _____
(j) For all Subscribers, do you understand that there is no
guarantee of financial return on this investment and that you
run the risk of losing your entire investment?
YES _____ NO _____
7.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)
-----------------------------------
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of Survivorship (both parties must
sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
*If Units are being purchased for by an entity, the attached Certificate
of Signatory must also be completed.
7.4 NASD AFFILIATION.
-----------------
Are you affiliated or associated with an NASD member firm (please check one):
YES _____ NO _____
If Yes, please describe:
--------------------------------------------
--------------------------------------------
Page EX 4.3-22
*If Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
-------------------------------------------
Name of NASD Member Firm
By:
Authorized Officer
Date: _____________________________________
7.5 The undersigned is informed of the significance to the Company of
the foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Article VII and such answers have been provided
under the assumption that the Company will rely on them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Page EX 4.3-23
UNITS PURCHASED _________ X OFFERING PRICE (______) = $________________
----------- ------ -------------------------
("PURCHASE PRICE")
------------------------------------- --------------------------------------
Signature Signature (if purchasing jointly)
Name Typed or Printed Name Typed or Printed
------------------------------------- --------------------------------------
Entity Name Entity Name
------------------------------------- --------------------------------------
Address Address
------------------------------------- --------------------------------------
City, State and Zip Code City, State and Zip Code
------------------------------------- --------------------------------------
Telephone-Business Telephone-Business
------------------------------------- --------------------------------------
Telephone-Residence Telephone-Residence
------------------------------------- --------------------------------------
Facsimile-Business Facsimile-Business
------------------------------------- --------------------------------------
Facsimile-Residence Facsimile-Residence
------------------------------------- --------------------------------------
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should be issued:
Dated: ___________________, 2002
This Subscription Agreement is agreed to and accepted as of ___________, 2002.
CARDIOME PHARMA CORP.
By:
----------------------------------
Name:
Title:
Page EX 4.3-24
CERTIFICATE OF SIGNATORY
(To be completed if Units are
being purchased for by an entity)
I, ___________________________________ am the ________________________________
of ________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Units, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ____ day of ___________________.
(Signature)
Page EX 4.3-25
REGULATION "S" RESALE REPRESENTATION LETTER
-------------------------------------------
Cardiome Pharma Corp.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
Attn: President
To Whom It May Concern:
The undersigned (A) acknowledges that the sale of the securities of Cardiome
Pharma Corp. (the "Company") to which this declaration relates is being made in
reliance on Rule 904 of Regulation S under the United States Securities Act of
1933, as amended (the "Act") and (B) certifies that: (1) the offer of such
securities was not made to a person in the United States and either (a) at the
time the buy order was originated, the buyer was outside the United States, or
the seller and any person acting on its behalf reasonably believes that the
buyer was outside the United States or (b) the transaction was executed on or
through the facilities of The Toronto Stock Exchange and neither the seller nor
any person acting on its behalf knows that the transaction has been prearranged
with a buyer in the United States; (2) neither the seller (or its affiliates)
nor any person acting on its behalf engaged in any "directed selling efforts" in
the United States in connection with the offer and sale of such securities; (3)
the sale is bona fide and not for the purpose of "washing off" the resale
restrictions imposed because the securities are "restricted securities" (as such
term is defined in Rule 144(a)(3) under the Act); (4) the seller does not have a
short position in the securities sold and does not intend to replace the
securities sold in reliance on Rule 904 with fungible unrestricted securities;
(5) the contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S, is part
of a plan or scheme to evade the registration provisions of the Act; and (6) the
undersigned is not an "affiliate" (as defined in Rule 405 under the Act) of the
Issuer. Terms used herein have the meanings given to them by Regulation S.
-------------------------------------
By:
Its:
Date:
