Exhibit 4.1
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS NOTE AND
ANY SECURITIES INTO WHICH IT MAY BE CONVERTED MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF COUNSEL SATISFACTORY TO MGI
PHARMA, INC. THAT SUCH SALE, TRANSFER OR OTHER DISPOSITION MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE
SECURITIES LAWS OR (ii) SUCH REGISTRATION.
MGI PHARMA, INC.
FORM OF
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$_______________ December 2, 2002
MGI PHARMA, Inc., a Minnesota corporation (the "Company"), for value
received, hereby promises to pay to ______________________________, at the
address designated below, or registered assigns (the "Holder"), the principal
sum of $_______________ in lawful money of the United States of America, plus
simple interest on the unpaid principal balance of this Note at an annual rate
of 3%. The principal amount of this Note shall be payable on December 1, 2007.
Accrued interest shall be payable semiannually on June 1 and December 1 of each
year until paid in full or the Note is converted or prepaid as provided herein.
This Note has been executed and delivered pursuant to the Convertible
Note and Warrant Purchase Agreement, dated as of November 27, 2002, (the
"Purchase Agreement") by the Company and Holder. Capitalized terms used herein
and not otherwise defined herein shall have the meaning assigned to them in the
Purchase Agreement.
This Note is subject to the following terms and conditions:
1. Prepayment. This Note is not prepayable except as expressly provided
in this Section 1. At any time and from time to time following the three-year
anniversary of the date of this Note and provided the closing price of the
Common Stock as reported by the Nasdaq National Market is at or in excess of
125% of the Conversion Price (as defined below) for an aggregate of fifteen (15)
trading days during any period of twenty (20) trading days, the Company may
elect to prepay all or any portion of the outstanding principal amount of this
Note then outstanding together with all accrued and unpaid interest on such
outstanding principal amount. If the Company elects to make such prepayment, the
Company shall deliver to the Holder at least thirty (30) days prior to the date
on which the prepayment is to be consummated (the "Prepayment Date"), a written
notice of such election. Notwithstanding the foregoing, the Holder shall,
following the receipt of such notice, have the right to convert all or any
portion of the outstanding principal amount of this Note plus any accrued and
unpaid interest on the
principal amount converted by delivering to the Company a written notice of such
election no later than five (5) days prior to the Prepayment Date.
2. Acceleration of Maturity. Upon the occurrence of any of the
following events (each, an "Event of Default"):
(a) failure to pay interest on this Note when due, continued
for five days;
(b) failure to pay principal on this Note when due;
(c) any receivership, insolvency proceeding, bankruptcy,
assignment for the benefit of creditors, reorganization, inability of
the Company to pay its debts as they become due, whether or not
pursuant to bankruptcy laws, dissolution, liquidation or any other
marshalling of assets and liabilities of the Company;
(d) default by the Company in the performance of the covenants
contained herein or any material default in the covenants of the
Company set forth in the Purchase Agreement or Warrants, which is not
cured within 30 days after written notice of default is delivered to
the Company; or
(e) any representation or warranty of the Company contained in
the Purchase Agreement is false or misleading in any material respect
on the date made.
the Holder may declare the entire principal and accrued interest on this Note
due and payable immediately, and upon such declaration this Note shall become
immediately due and payable without further notice, demand or presentment.
Any principal amount hereof not paid when demand is made therefor
shall, at the option of the Holder, bear interest from the date of such demand
until paid in full at a rate per annum equal to the rate of interest applicable
immediately prior to such demand plus 5%.
The Company agrees to pay all reasonable costs of collection, including
reasonable attorneys' fees, in an Event of Default.
3. Subordination. This Note shall rank pari passu in seniority with the
other notes issued under the Purchase Agreement. The indebtedness evidenced by
this Note is and shall remain subordinate in right of payment to all Senior Debt
to the extent and in the manner hereinafter set forth. "Senior Debt" shall mean
the principal and interest on indebtedness of the Company to financial
institutions for borrowed money (other than the indebtedness evidenced by this
Note and the other notes issued and sold pursuant to the Purchase Agreement),
whether created, incurred or assumed before or after the date hereof and which
is permitted under Section 5.2 of the Purchase Agreement, except such as by its
terms is expressly not superior in right of payment to this Note, and renewals,
extensions and refundings of any such indebtedness. The subordination provisions
contained in this Section 3 are expressly and only for the benefit of third
party senior creditors of the Company and shall in no way limit the rights or
remedies of Holder against the Company, including without limitation the time at
which or the method with which Holder may proceed against the Company for any
default.
Upon any distribution of assets of the Company, upon dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency or receivership
proceedings, or upon an assignment for the benefit of creditors, or any other
marshalling of the assets and liabilities of the Company, or otherwise, Senior
Debt shall first be paid in full, or provision made for such payment in cash,
before any payment is made on account of the principal of and interest on this
Note. In such event, upon payment in full of all Senior Debt, Holder shall be
subrogated ratably to all rights of such Senior Debtors to receive payments or
distributions of the assets of the Company applicable to such Senior Debt until
the principal of and interest on this Note shall be paid in full.
No payment of principal of or interest on this Note shall be made if
the Company is in default, or such payment would result in a default, with
respect to the payment of any Senior Debt. For purposes of this paragraph,
default with respect to payment of any Senior Debt shall refer to failure of the
Company to pay in full when due the principal of or interest or premium on any
such Senior Debt, or any portion thereof, according to its terms.
Notwithstanding the foregoing, payment of principal and interest on this Note
shall not be subordinated to the prior payment of such Senior Debt as to all
amounts which actually are paid by the Company under this Note if the Company
was not in default, and such payment did not result in a default, with respect
to the payment of any Senior Debt at the time or times such payment or payments
were made.
4. Conversion Rights. This Note shall be convertible, in whole or in
part ($1,000 or an integral multiple thereof), into fully paid and nonassessable
shares of common stock, $.01 par value, of the Company, at the option of Holder,
upon the following terms:
(a) Holder may exercise the right of conversion at any time
prior to the full payment by the Company of the principal balance of
this Note.
(b) The Company shall not be required to issue any fraction of
a share upon any conversion of this Note. The Company may make a cash
adjustment in lieu of any such fraction of a share which otherwise
would be issuable upon such conversion.
(c) Subject to adjustment in accordance with the provisions of
Section 4(d), such conversion shall be at the rate of one common share
for each $____ of principal being converted (the "Conversion Price").
(d) The Conversion Price shall be subject to adjustment from
time to time as hereinafter provided in this Section 4(d):
(1) If the Company at any time divides the
outstanding shares of its common stock into a greater number
of shares (whether pursuant to a stock split, stock dividend
or otherwise), and conversely, if the outstanding shares of
its common stock are combined into a smaller number of shares,
the Conversion Price in effect immediately prior to such
division or combination shall be proportionately adjusted to
reflect the reduction or increase in the value of each such
common share.
(2) If any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or
merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation
shall be effected in such a way that holders of the Company's
common stock shall be entitled to receive stock, securities or
assets with respect to or in exchange for such common stock,
then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, Holder shall have the right to
purchase and receive upon the basis and upon the terms and
conditions specified in this Note and in lieu of the shares of
the common stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, other securities or
assets as would have been issued or delivered to Holder if
Holder had exercised this Note and had received such shares of
common stock immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The Company
shall not effect any such consolidation, merger or sale unless
prior to the consummation thereof the successor corporation
(if other than the Company) resulting from such consolidation
or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed to the Holder
at the last address of the Holder appearing on the books of
the Company the obligation to deliver to the Holder such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Holder may be entitled to
purchase.
5. Adjustment of Conversion Price.
(a) Consolidation, Merger or Sale of Assets. If, prior to the
conversion of this Note, the Company shall at any time consolidate with
or merge into another corporation, the Holder will thereafter receive,
upon the conversion hereof in accordance with the terms of this Note,
the securities to which the holder of the number of shares of Common
Stock then deliverable upon the conversion of this Notes would have
been entitled upon such consolidation or merger, and the Company shall
take such steps in connection with such consolidation or merger as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to any
securities thereafter deliverable upon the conversion of the Note. The
Company or the successor corporation, as the case may be, shall execute
and deliver to the Holder a supplemental agreement so providing. A sale
of all or substantially all the assets of the Company for a
consideration (apart from the assumption of obligations) consisting
primarily of securities shall be deemed a consolidation or merger for
the foregoing purposes. The provisions of this Section 5(a) shall
similarly apply to successive mergers or consolidations or sales or
other transfers.
(b) Stock Dividends, Subdivisions, Combinations and
Reclassifications. In case the Company shall at any time after the date
hereof (i) declare a dividend on the Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares,
or (iv) issue any shares of its capital stock in a reclassification of
the Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
corporation), the Conversion Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and/or the number and kind of shares
of capital stock issuable upon conversion of this Note on such date
shall be proportionately adjusted so that the Holder after such time
shall be entitled to receive upon conversion of this Note
the aggregate number and kind of shares of capital stock which, if such
Note had been converted immediately prior to such date and at a time
when the Common Stock transfer books of the Company were open, such
holder would have owned upon such conversion and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever
any event listed above shall occur.
(c) Notice of Adjustment. Whenever the number of Conversion
Shares or number or kind of securities or other property purchasable
upon the conversion of this Note or the Conversion Price is adjusted,
as herein provided, the Company shall promptly give the Holder notice
of such adjustment or adjustments setting forth the number of
Conversion Shares (and other securities or property) issuable upon the
conversion of this Note and the Conversion Price of such Conversion
Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by
which such adjustment was made.
6. Registration Rights. The Holder and any permitted transferee of the
Holder shall be entitled to the registration rights as set forth in Article VI
of the Purchase Agreement.
7. Reservation of Shares. The Company shall at all times during the
period this Note is outstanding reserve from its authorized and unissued Common
Stock, solely for the purpose of issuance, directly or indirectly, upon the
conversion of this Note, a sufficient number of shares of Common Stock to
provide for the issuance of Common Stock upon conversion of the rights contained
herein.
8. Accredited Investor. The Holder represents and warrants to, and
covenants with, the Company that: (a) the Investor is an "accredited investor"
as defined in Regulation D under the Securities Act and the Investor is also
knowledgeable, sophisticated and experienced in making, and is qualified to make
decisions with respect to, investments in securities presenting an investment
decision like that involved in the purchase of this Note, and has had the
opportunity to request, receive, review and consider all information that it
deemed relevant in making an informed decision to purchase this Note; (b) the
Holder is acquiring the Note in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
this Note or any arrangement or understanding with any other persons regarding
the distribution of this Note; (c) the Holder will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) this Note except in
compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder or exemptions therefrom;
and (d) the Holder, in connection with its decision to purchase this Note,
relied only upon the Exchange Act Documents, any materials requested and
received pursuant to clause (a) above and the representations and warranties of
the Company contained in the Purchase Agreement. The Holder understands that
neither the offering nor the acquisition of this Note has been registered under
the Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Holder's investment intent as
express herein.
9. Loss, Theft, Destruction or Mutilation of Note. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of a Note or
stock certificate, and in case of loss, theft or
destruction, of indemnity of security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such Note or stock certificate, if mutilated,
the Company will make and deliver a new Note or stock certificate of like tenor
and dated as of such cancellation, in lieu of this Note or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
11. Transfer. The Investor shall not effect any disposition of this
Note or its right to purchase the Conversion Shares except as provided in
Section 6.2 of the Purchase Agreement.
12. Waiver. THE COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY in any litigation arising in connection with this
Note AND THE COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE RIGHT TO INTERPOSE ANY SET-OFF OR DEDUCTION in connection with any such
litigation.
13. Governing Law; Jurisdiction and Venue. This Note will be governed
by, and construed in accordance with, the internal laws of the State of
Minnesota, without giving effect to the principles of conflicts of law. The
Company hereby consents to the non-exclusive jurisdiction of any court of the
State of New York, County of New York and waives any objection based on venue or
forum non conveniens with respect to any action arising under or related to this
Note.
14. Notices. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, by facsimile or e-mail, or (b) if delivered
from outside the United States, by international express courier, facsimile or
e-mail. All such notices will be deemed given (i) if delivered by first-class
registered or certified mail, three business days after so mailed, (ii) if
delivered by nationally recognized overnight carrier, one business day after so
mailed, (iii) if delivered by International Federal Express, two business days
after so mailed, and (iv) if delivered by facsimile or e-mail, upon electronic
confirmation of receipt and will be delivered as addressed to the e-mail address
furnished by the parties to each other or by mail as follows:
If to the Company, to:
MGI PHARMA, Inc.
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
With a copy to:
▇▇▇▇▇▇ & Whitney, LLP
Suite 1500
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Investor, to:
Deerfield Management Company
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Esq.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by a duly authorized officer.
MGI PHARMA, INC.
By:
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Name:
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Title:
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Name and Address of Holder:
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CONVERSION
(To be signed only upon conversion of this Note)
The undersigned hereby irrevocably elects to convert this Note or
portion below designated ($1,000 or an integral multiple thereof), into shares
of common stock of the Company and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of an delivered to the undersigned unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned has paid all transfer
taxes payable with respect thereto.
Dated: _____
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Signature
If shares are to be issued other Social Security or other Portion to be converted
than to Holder Tax Identification No. (if less than all):
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$
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Please print name and complete address
ASSIGNMENT
(To be signed only upon transfer of this Note)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________________ $_____ in aggregate principal amount of
this Note and appoints ___________________________________ attorney to transfer
such right on the books of [Issuer], with full power of substitution in the
premises.
Dated:________________
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Signature
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Social Security or other Tax Identification No.
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Please print name and complete address