September 4, 1996
Atlantic Pharmaceuticals, Inc.
142 Cypress Point Road
Half Moon Bay, CA 94019
Attn: J.D. Lindjord, President and CEO
Dear Sirs:
This letter (this "Agreement") will confirm the understanding and agreement
between Paramount Capital, Incorporated ("Paramount") and Atlantic
Pharmaceuticals, Inc. (the "Company") as follows:
1. The Company hereby engages Paramount, and Paramount hereby accepts
such engagement effective as of April 15, 1996 (the "Effective Date"), on a
non-exclusive basis to render financial advisory services to the Company. The
term of Paramount's engagement hereunder shall extend from the Effective Date
hereof through June 15, 1996 (the "Initial Term") and shall be renewed at the
sole option of the Company on a monthly basis thereafter (the Initial Term and
any renewals thereof being referred to as the "Term").
2. The Company shall make available to Paramount all publicly available
information concerning the business, assets, operations, financial condition and
prospects of the Company which it reasonably requests in connection with the
performance of its obligations hereunder.
3. As compensation for the services rendered by Paramount hereunder
during the Term, the Company shall pay Paramount as follows:
(a) The amount of Five Thousand Dollars ($5,000) per month, payable
in advance.
(b) A retainer payable in warrants to Paramount or its designees to
purchase 25,000 shares of the Company's common stock at an exercise price of
$10.00. In the event that this Agreement is renewed beyond the Initial Term by
the Company, the Company further agrees to issue to Paramount warrants to
purchase an additional 25,000 shares of the Company's common stock at an
exercise price equal to the price per share of the Company's common stock on the
effective date of such renewal of this Agreement. The
parties agree that no additional warrants will be issued in the event of
additional renewals, unless agreed to in advance by the parties.
(c) `If permitted by applicable regulations, upon the exercise of any
warrants between the effective date of this Agreement and December 13, 1996, the
Company shall pay Paramount 1% of any proceeds received.
4. In addition, upon the closing of any Investment (as defined below)
during the Term or during the twelve-month period following the expiration or
earlier termination of the Term, the Company shall pay to Paramount a fee in an
amount equal to 7% of the aggregate value of such Investment (payable in the
same form as received by the Company (e.g., cash or stock) within 30 days of the
receipt of such Investment by the Company) and shall issue to Paramount warrants
to purchase an amount of securities equal to 10% of the securities sold by the
Company in connection with such Investment at an exercise price of 110% of the
price of such securities, exercisable until five years from the date of issuance
of such warrants; provided, however, with respect to Investments made by parties
listed on Schedule I, the Company shall pay to Paramount a fee in an amount
equal to 5% of the aggregate value of such Investment and shall issue to
Paramount warrants to purchase an amount of securities equal to 5% of the
securities sold as part of such Investment at an exercise price of 110% of the
price of such securities, exercisable until five years from the date of issuance
of such warrants. For the purposes of this Agreement, an Investment shall be any
sale of securities by the Company or its affiliates during the Term or during
the twelve-month period following the expiration of the Term to an investor
first introduced to the Company by or through Paramount during or prior to the
Term. In the event that it could be reasonably interpreted that Paramount is
entitled to compensation under this Agreement as well as any other agreement
between Paramount and the Company, then this Agreement shall control unless such
other agreement specifically states that it controls.
5. The Company shall reimburse Paramount for its reasonable out-of-pocket
expenses (including without limitation, reasonable professional fees and
disbursements) incurred in connection with its engagement hereunder with respect
to the services to be rendered by it; provided, however, that if any individual
expense item shall exceed $500.00, Paramount agrees to obtain prior
authorization for such item from the Company.
6. Except as contemplated by the terms hereof or as required by
applicable law or pursuant to an order entered or subpoena issued by a court of
competent jurisdiction, Paramount shall keep confidential all material
non-public information provided to it by the Company, if any, and shall not
disclose such information to any third party, other than such of its employees
and advisors as Paramount determines to have a need to know for a period of 2
years following the date of such disclosure. This provision shall not apply to
any information which: (a) was in Paramount's possession or control prior to the
date of disclosure; (b) was in the public domain or enters into the public
domain through no
2.
improper act on Paramount's part or on the part of any of Paramount's employees;
(c) is required to be disclosed by legal, administrative or judicial process; or
(d) is rightfully given to Paramount from sources independent of the Company.
7. Except as required by applicable law, any advice to be provided by
Paramount under this Agreement shall not be disclosed publicly or made available
to third parties without the prior approval of Paramount, and accordingly such
advice shall not be relied upon by any person or entity other than the Company.
8. The Company agrees that Paramount has the right following the closing
of a transaction initiated or negotiated by Paramount to place advertisements in
financial and other newspapers and journals at its own expense describing its
services to the Company hereunder subject to applicable regulatory restrictions
and, provided that Paramount will submit a copy of any such advertisements to
the Company for its prior approval.
9. The Company shall indemnify each of Paramount, its successors and
assigns, and the directors, officers, employees and agents thereof (the
"Paramount Indemnities"), and hold each Paramount Indemnity harmless from and
against, any and all liabilities, damages, losses, settlements, claims, actions,
suits, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees) (any of the foregoing, a "Claim") incurred by or
asserted against any Paramount Indemnity, arising from, in connection with or
occurring as a result of this Agreement or any introduction made pursuant
hereto; provided, however, that this indemnity shall not apply to the extent
that it is finally judicially determined that such claims resulted from the
gross negligence or willful misconduct of Paramount.
10. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
11. Subject to the provisions of paragraphs 3, 4, 5, 6, 7, 9 and 12 which
shall survive any termination or expiration of this Agreement (including by
operation of the preceding sentence), either party may terminate this Agreement
at any time by giving the other party at least 10 days' prior written notice.
12. This Agreement may not be amended or modified except in writing signed
by each of the parties and shall be governed by and construed and enforced in
accordance with the laws of the State of New York. Neither the making of this
Agreement nor the performance of any of the provisions hereof shall be construed
to constitute Paramount an agent, employee or legal representative of the
Company for any purpose nor shall Paramount hold itself out to third parties as
the Company's agent, employee or legal representative or otherwise bind the
Company. The Company and Paramount hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States District Courts located in the City of
3.
New York for any lawsuits, actions or other proceeding arising out of or
relating to this Agreement and agree not to commence any such lawsuit, action or
other proceeding except in such courts. The Company and Paramount hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any lawsuit, action or other proceeding arising out of or relating to this
Agreement in the courts of the State of New York or the United States District
Courts located in the City of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such lawsuit, action or other proceeding brought in any such court has been
brought in an inconvenient forum. Any right to trial by jury with respect to any
lawsuit, claim or other proceeding arising out of or relating to this Agreement
or the services to be rendered by Paramount hereunder is expressly and
irrevocably waived.
If the foregoing correctly sets forth the understanding and agreement
between Paramount and the Company, please do indicate in the space provided for
that purpose below, whereupon this letter shall constitute a binding agreement
as of the date hereof.
PARAMOUNT CAPITAL, INCORPORATED
By: __________________________
Title: ________________________
AGREED:
ATLANTIC PHARMACEUTICALS, INC.
By: _______________________________________
Name: J.D. Lindjord
Title: President and Chief Executive Officer
4.
SCHEDULE I
Fiduciary Trust
The Dreyfus Fund