Exhibit 4.1
EXHIBIT A
---------
TO
--
UNSECURED CONVERTIBLE DEBENTURE
-------------------------------
AND WARRANT PURCHASE AGREEMENT
------------------------------
NEITHER THIS DEBENTURE NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE
CONVERSION OF THIS DEBENTURE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE
"SECURITIES ACT"). THIS DEBENTURE AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS DEBENTURE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR UNLESS
SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
[INSERT SIDE LETTER LEGEND, IF APPLICABLE]
MIRAVANT MEDICAL TECHNOLOGIES
UNSECURED CONVERTIBLE DEBENTURE
-------------------------------
$________________ _________________ August 28, 2003
MIRAVANT MEDICAL TECHNOLOGIES, a Delaware corporation (the "Maker"),
for value received, hereby promises to pay to the order of
______________________, or its registered assigns (the "Holder"), at its
offices located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other place as the Holder may, from time to time, designate in writing,
the principal sum of _______________________ DOLLARS ($_______), together
with interest thereon at the rate of Eight Percent (8%) per annum (the
"Interest Rate"), calculated on the basis of a 360-day year and the actual
number of days elapsed, until the principal hereof is paid. The principal of
and interest on this Debenture shall be paid at such times as are specified
herein. This Debenture shall be subject to the following additional terms
and conditions:
1. Purchase Agreement. This Debenture is being issued by the Maker
along with similar Unsecured Convertible Debentures (together with this
Debenture, the "Debentures," and the holders thereof, together with the
Holder, the "Holders") pursuant to that certain Unsecured Convertible
Debenture and Warrant Purchase Agreement dated August 28, 2003 (the "Purchase
Agreement") by and among the Maker and the purchasers party thereto, and is
entitled to the benefits of such Purchase Agreement. All capitalized terms
that are used in this Debenture and are not otherwise defined herein are
intended to have the meanings assigned to such terms in the Purchase
Agreement.
2. Payment of Principal and Interest.
(a) Payment of Interest. All interest shall be due and payable
quarterly on each January 1, April 1, July 1 and October 1 (each, an
"Interest Payment Date"), commencing on October 1, 2003. The Maker shall
have the option (subject to the limitation set forth in Section 4(f) below)
1
to pay any interest due hereunder (i) in cash or (ii) in duly authorized,
validly issued, fully paid and non-assessable shares of its common stock, par
value $0.01 per share (the "Common Stock"), but only to the extent that there
exists an effective registration statement under the Securities Act covering
such shares of Common Stock (which registration statement is not subject to
any stop order or otherwise unavailable for use by the Holder hereof);
provided, however, that, for each particular Interest Payment Date, the Maker
shall be required to make the same election for all Debentures then
outstanding (except to the extent that the Maker is required to pay the
interest due to a particular Holder in cash by operation of the limitation
set forth in Section 4(f) below, where the Maker has otherwise elected to pay
the interest due on the Debentures in shares of Common Stock). In the event
that the Maker elects to pay an installment of interest due hereunder in
shares of Common Stock, the Maker shall give written notice to the Holders at
least five (5) business days in advance of the applicable Interest Payment
Date, and on such Interest Payment Date, the Maker shall issue to the Holder
such number of shares of Common Stock as is equal to (A) the aggregate amount
of interest due to such Holder on such Interest Payment Date divided by (B)
the average Closing Sales Price (as defined in Section 12 below) of the
Common Stock for the five (5) trading day period ending on the date
immediately prior to the applicable Interest Payment Date.
(b) Payment of Principal. The entire unpaid principal of, and
accrued but unpaid interest on, this Debenture shall be due and payable in
full on August 28, 2006 [THIRD ANNIVERSARY OF CLOSING DATE] (the "Maturity
Date").
(c) Optional Prepayment. Except as expressly provided in this
Section 2(c), no amounts of principal or interest due hereunder may be
prepaid by the Maker without the prior written consent of the Holder. In the
event that (i) the registration statement required to be filed by the Maker
pursuant to the Registration Rights Agreement of even date herewith executed
in connection with in the Purchase Agreement (the "Registration Rights
Agreement") shall have been declared effective by the Securities and Exchange
Commission and shall remain effective and (ii) either (A) the Closing Sales
Price of the Common Stock has been greater than Two Hundred Fifty Percent
(250%) of the Conversion Price then in effect for at least twenty (20)
consecutive trading days, or (B) the Maker shall have consummated the sale of
its Common Stock in a firm commitment underwritten public offering in which
the offering price per share of Common Stock was greater than Two Hundred
Percent (200%) of the Conversion Price then in effect and the aggregate gross
proceeds to the Maker were greater than TWENTY MILLION DOLLARS ($20,000,000)
(any such event meeting the criteria specified in clauses (i) and (ii) being
referred to herein as a "Prepayment Trigger Event"), then the Maker shall be
entitled to prepay, subject to the terms of this Section 2(c), any or all of
the outstanding principal of and accrued but unpaid interest on the
Debentures by giving written notice to the Holders at least thirty (30) days
prior to the date fixed for the prepayment (which shall not be more than
ninety (90) days after the Prepayment Triggering Event), and, upon delivery
of such prepayment notice to the Holders, such prepayment election shall be
irrevocable; provided, however, that in the event that the Maker elects to
prepay less than all of the then outstanding Debentures, such prepayment
shall be allocated pro rata among all Holders based upon the proportion that
the aggregate principal of and accrued but unpaid interest on the Debentures
held by the Holder bears to the aggregate principal of and accrued but unpaid
interest on all of the Debentures held by all Holders. Neither the
occurrence of a Prepayment Trigger Event or an election by the Maker to
2
prepay the Debentures shall affect the right of the Holder to exercise its
Conversion Option with respect to this Debenture on or prior to the
prepayment in full of this Debenture.
(d) Payments in General. Except as otherwise provided herein,
all sums payable hereunder shall be paid in lawful money of the United States
of America which shall be legal tender for public and private debts at the
time of payment. If the payment to be made hereunder shall be due on a day
other than a Business Day (as defined in Section 12 below), such payment
shall be made on the next succeeding Business Day. All payments on this
Debenture shall be applied first to the payment of any costs, fees or other
charges incurred by the Holder in connection with the indebtedness evidenced
hereunder, next to the payment of accrued interest, and the remainder toward
principal.
3. Default Rate. Notwithstanding any other provision in this
Debenture to the contrary, any amount, whether of accrued interest or
principal, that is not paid when due (whether at stated maturity, by
acceleration or otherwise), shall bear interest, from the date on which such
amount is due until such amount is paid in full, at Eighteen Percent (18%)
per annum.
4. Conversion Rights.
(a) Conversion at the Option of the Holder. Subject to the
limitations on conversion set forth in subsection (f) of this Section 4, this
Debenture (including all accrued but unpaid interest) shall be convertible,
in whole or in part, at any time and from time to time prior to the repayment
of this Debenture in full (whether before or after the Maturity Date), at the
option of the Holder (the "Conversion Option"), into a number of fully paid
and non-assessable shares of Common Stock (the "Conversion Shares") equal to
(i) the aggregate amount of principal and interest being so converted divided
by (ii) the Conversion Price as then in effect. The "Conversion Price" shall
initially equal ONE DOLLAR ($1.00), but shall be subject to adjustment from
time to time as provided in subsection (e) below.
(b) Conversion Mechanics. In order to exercise the Conversion
Option, the Holder shall: (i) fax (or otherwise deliver) a copy of the fully
executed Notice of Conversion attached hereto as EXHIBIT A to the Maker and
(ii) surrender or cause to be surrendered to the Maker the original
certificate(s) representing the Debentures being converted, along with the
original manually executed Notice of Conversion as soon as practicable
thereafter. Upon receipt by the Maker of a facsimile copy of a Notice of
Conversion from the Holder, the Maker shall promptly send, via facsimile, a
confirmation to the Holder stating that the Notice of Conversion has been
received, the date upon which the Maker expects to deliver the Conversion
Shares issuable upon such conversion and the name and telephone number of a
contact person at the Maker regarding the conversion. Within two (2)
Business Days following surrender of this Debenture for conversion, the
Maker, at its expense, shall cause to be issued in the name of and delivered
to the Holder the number of fully paid and non-assessable Conversion Shares
to which the Holder shall be entitled upon such conversion, which Conversion
Shares shall be issued in the manner set forth in the Purchase Agreement;
provided, however, that the Holder shall, for all purposes, be deemed to have
become the holder of record of such Conversion Shares on the date on which
this Debenture, together with a duly executed Notice of Conversion, was
surrendered, irrespective of the date of delivery of such Conversion Shares.
In the event that this Debenture is converted in part, the Maker shall
deliver to the Holder a new Debenture in like tenor for the amount not
3
converted. The Maker shall pay any and all taxes (other than securities
transfer taxes or other taxes imposed on the Holder based upon a measure of
the Holder's income) which may be imposed upon it with respect to the
issuance and delivery of the Conversion Shares upon the conversion of this
Debenture.
(c) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture, but the Maker shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Closing Sales Price
of the Common Stock on the date of such conversion.
(d) Reservation of Conversion Shares. [Subject to the terms of
that certain Side Letter Agreement dated as of August 28, 2003 by and between
the Maker and the initial Holder of this Debenture (the "Side Letter
Agreement"), the / The] Maker shall at all times reserve and keep available,
solely for the issuance and delivery upon the conversion of this Debenture,
such number of Conversion Shares and other stock, securities and property, as
from time to time shall be issuable upon the conversion of this Debenture.
(e) Adjustments to Conversion Price. The Conversion Price
shall be subject to adjustment from time to time as follows:
(i) Stock Splits, Stock Dividends, Etc. If, at any time
and from time to time, the number of outstanding shares of Common Stock is
increased by a stock split, stock dividend, combination, reclassification or
other similar event, the Conversion Price shall be proportionately reduced,
or if the number of outstanding shares of Common Stock is decreased by a
reverse stock split, combination, reclassification or other similar event,
the Conversion Price shall be proportionately increased. In such event, the
Maker shall notify the Maker's transfer agent of such change on or before the
effective date thereof.
(ii) Corporate Change. If, at any time and from time to
time, there shall be (A) any reclassification or change in the terms of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result
of a subdivision or combination), (B) any consolidation or merger of the
Maker with any other entity (other than a merger in which the Maker is the
surviving or continuing entity and its capital stock is unchanged), (C) any
sale or transfer of all or substantially all of the assets of the Maker, or
(D) any share exchange or other transaction pursuant to which all of the
outstanding shares of Common Stock are converted into other securities or
property (each of (A) - (D) above being a "Corporate Change"), then the
Holder shall thereafter have the right to receive upon conversion, in lieu of
the Conversion Shares otherwise issuable, such shares of stock, securities
and/or other property as would have been issued or payable in such Corporate
Change with respect to or in exchange for the number of Conversion Shares
which would have been issuable upon conversion had such Corporate Change not
taken place (without giving effect to the limitations contained in Section
4(f) below), and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the Holder) shall be made with respect
to the rights and interests of the Holder to the end that the economic value
of the Conversion Option is in no way diminished by such Corporate Change.
The Maker shall not effect any Corporate Change unless (x) the Holder has
4
received written notice of such transaction at least thirty (30) days prior
thereto, but in no event later than five (5) days prior to the record date
for the determination of stockholders entitled to vote with respect thereto,
and (y) the resulting successor or acquiring entity (if not the Maker)
assumes by written instrument (in form and substance reasonable satisfactory
to the Holder) the obligations of the Maker under this Debenture.
(iii) Distributions. If, at any time and from time to
time, the Maker shall declare or make any distribution of its assets (or
rights to acquire its assets) to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise (including any
dividend or distribution to the Maker's stockholders in cash or shares (or
rights to acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a "Distribution"), then the Holder shall be entitled, upon any
exercise of the Conversion Option after the date of record for determining
stockholders entitled to such Distribution (or if no such record is taken,
the date on which such Distribution is declared or made), to receive the
amount of such assets which would have been payable to the Holder with
respect to the Conversion Shares issuable upon such conversion (without
giving effect to the limitations contained in Section 4(f) below) had the
Holder been the holder of such Conversion Shares on the record date for the
determination of stockholders entitled to such Distribution (or if no such
record is taken, the date on which such Distribution is declared or made).
(iv) Purchase Rights. If, at any time and from time to
time, the Maker issues any securities or other instruments which are
convertible into or exercisable or exchangeable for Common Stock
("Convertible Securities") or options, warrants or other rights to purchase
or subscribe for Common Stock or Convertible Securities ("Purchase Rights")
pro rata to the record holders of Common Stock, whether or not such
Convertible Securities or Purchase Rights are immediately convertible,
exercisable or exchangeable, then the Holder shall be entitled, upon any
exercise of the Conversion Option after the date of record for determining
stockholders entitled to receive such Convertible Securities or Purchase
Rights (or if no such record is taken, the date on which such Convertible
Securities or Purchase Rights are issued), to receive the aggregate number of
Convertible Securities or Purchase Rights which the Holder would have
received with respect to the Conversion Shares issuable upon such conversion
(without giving effect to the limitations contained in Section 4(f) below)
had the Holder been the holder of such Conversion Shares on the record date
for the determination of stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on
which such Convertible Securities or Purchase Rights were issued). If the
right to exercise or convert any such Convertible Securities or Purchase
Rights would expire in accordance with their terms prior to the exercise of
the Conversion Option, then the terms of such Convertible Securities or
Purchase Rights shall provide that such exercise or convertibility right
shall remain in effect until thirty (30) days after the date the Holder
receives such Convertible Securities or Purchase Rights pursuant to the
conversion hereof.
(v) Other Action Affecting Conversion Price. If, at any
time and from time to time, the Maker takes any action affecting the Common
Stock that would be covered by this Section 4(e), but for the manner in which
such action is taken or structured, which would in any way diminish the value
of the Conversion Option, then the Conversion Price shall be adjusted in such
manner as the Maker's board of directors shall in good faith determine to be
equitable under the circumstances.
5
(vi) Notice of Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section
4(e) amounting to a more than one percent (1%) change in such Conversion
Price, or any change in the number or type of stock, securities and/or other
property issuable upon exercise hereof, the Maker, at its expense, shall
promptly compute such adjustment or readjustment or change and prepare and
furnish to the Holder a certificate setting forth such adjustment or
readjustment or change and showing in detail the facts upon which such
adjustment or readjustment or change is based.
(f) Conversion Limit. In no event shall (i) the Maker issue
Common Stock to the Holder as payment of any interest, (ii) the Holder have
the right to exercise the Conversion Option or (iii) the Holder have the
right to vote as set forth in Section 6 below, to the extent that such
payment of interest in shares of Common Stock or right to exercise such
Conversion Option for Conversion Shares or to vote this Debenture would
result in the holder and its affiliates together beneficially owning more
than 4.95% of the outstanding shares of Common Stock. For purposes of this
subparagraph, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G thereunder. The restriction contained in this subparagraph
may not be altered, amended, deleted or changed in any manner whatsoever
unless the holders of a majority of the outstanding shares of Common Stock
and the Holder shall approve, in writing, such alteration, amendment,
deletion or change. In the event the Maker is prohibited from issuing Common
Stock to the Holder as payment of any interest, it shall pay such interest to
the Holder in cash.
5. Events of Default. In the event (each of the events described in
subsections (a)-(k) below, following the expiration of any applicable cure
period, being referred to herein as an "Event of Default") that:
(a) the Maker shall fail to pay any amounts (including, without
limitation, any principal or interest) due hereunder, whether at maturity,
upon acceleration or otherwise, within five (5) days of the due date
therefor; or
(b) except with respect to the matters covered by clause (a)
above, as to which such clause shall apply, the Maker shall breach or fail to
observe or perform any material covenant or agreement hereunder or under the
Purchase Agreement or any of the other Transaction Documents and, if such
breach or failure to observe or perform is capable of cure, shall fail to
cure such breach or failure within twenty (20) days after written demand by
the Holder resulting from the specific breach or failure; or
(c) any material representation or warranty made by the Maker
in the Purchase Agreement or in any of the other Transaction Documents shall
not have been true and correct when made; or
(d) the Maker shall authorize, approve or otherwise commence
its dissolution or liquidation; or
(e) the Maker or any of its Subsidiaries shall make an
assignment for the benefit of creditors or apply for or consent to the
6
appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed; or
(f) the Maker or any of its Subsidiaries shall file a petition
under any chapter of the United States Bankruptcy Code or any other
bankruptcy law or shall otherwise institute bankruptcy, reorganization or
insolvency proceeding or other proceeding for relief under any law relating
to bankruptcy, bankruptcy reorganization, insolvency or relief of debtors; or
(g) any involuntary petition under any chapter of the United
States Bankruptcy Code or any other bankruptcy law shall be filed, or any
bankruptcy, reorganization or insolvency proceeding or other proceeding for
relief under any law relating to bankruptcy, bankruptcy reorganization,
insolvency or relief of debtors shall be instituted, in any such case against
the Maker or any of its Subsidiaries, which petition or proceeding is not
dismissed within thirty (30) days from the date on which it is filed or
instituted; or
(h) there shall not be effective under the Securities Act,
within one hundred fifty (150) days after the date hereof, a registration
statement registering the resale of the Registrable Securities (as defined in
the Registration Rights Agreement), or if such registration statement is no
longer effective, there shall not have been filed a new (or amended)
registration statement such that there shall not be effective under the
Securities Act, not more than twenty (20) days after termination of the
effectiveness of the prior registration statement, a registration statement
registering the resale of the Registrable Securities; or
(i) the Maker shall not have filed a New Drug Application for
its AMD Clinical Trials with respect to PhotoPoint SnET2 with the U.S. Food
and Drug Administration by December 31, 2003, or the U.S. Food and Drug
Administration shall have rejected such New Drug Application; or
(j) the Maker shall consummate a Change of Control; or
(k) the Maker shall either (i) fail to pay when due, or within
any applicable grace period, any payment with respect to the indebtedness of
the Maker (including, without limitation, the other Debentures) in excess of
$250,000 due to any third party, other than payments contested by the Maker
in good faith, or otherwise breach or violate any agreement for monies owed
or owing in an amount in excess of $250,000 (including, without limitation,
the other Debentures), which breach or violation permits the other party
thereto to declare a default or otherwise accelerate amounts due thereunder,
or (ii) suffer to exist any other default or event of default under any
agreement binding the Maker, which default or event of default is reasonably
likely to have a material adverse effect on the business, operations,
properties, financial condition, results of operations or prospects of the
Maker;
then, upon the occurrence and during the continuance thereof, at the option
of the Holder, exercisable in whole or in part at any time and from time to
time during the continuance thereof by delivery of written notice to such
effect to the Maker, all sums owing and to become owing hereon shall become
immediately due and payable; provided, however, that upon the occurrence of
any Event of Default described in subsections (e), (f) or (g) above, such
7
acceleration shall be automatic and all sums owing and to become owing herein
shall become immediately due and payable without any notice by or other
action on the part of the Holder. In addition, in the event of an
acceleration of this Debenture in connection with any Event of Default
described in subsection (j) above, the Maker shall be required to pay a
default premium equal to Fifty Percent (50%) of the outstanding principal
balance of the Debentures being so accelerated, such that the Holder shall
have the right to receive in connection with such acceleration an amount
equal to One Hundred Fifty Percent (150%) of the outstanding principal
balance of the Debentures plus all accrued but unpaid interest thereon. Upon
the Maker's receipt of any default notice from a Holder, the Maker shall
immediately (but in any event within one (1) Business Day thereafter) deliver
written notice to all Holders of Debentures stating the date upon which the
Maker received such default notice and the amount of Debentures covered
thereby. Neither the occurrence of an Event of Default nor an acceleration
of any Debentures in connection therewith (whether automatic or pursuant to
notice given by the Holder) shall affect the right of the Holder to exercise
its Conversion Option with respect to this Debenture prior to the full and
absolute defeasance of all amounts due under this Debenture.
6. Voting Rights.
(a) Subject to the limitation set forth in Section 4(f) above,
the Holder shall be entitled to vote on all matters submitted to a vote or
written consent of the holders of Common Stock and, in that regard, shall be
entitled to that number of votes as is equal to the largest number of whole
shares of Common Stock into which the Debentures held by the Holder could be
converted pursuant to the provisions of Section 4 hereof (taking into account
the limitation on conversions set forth in Section 4(f)), at the record date
for the determination of stockholders entitled to vote on or consent to such
matters or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited. The Holder and
all other Holders shall vote together (or tender written consents in lieu of
a vote) with the holders of Common Stock as a single class on all matters
submitted to a vote or written consent of the holders of Common Stock.
(b) The Maker shall deliver to the Holder all notices and other
materials (including, without limitation, proxy solicitation materials)
delivered to the stockholders of the Maker, at the same time and in the same
manner as so delivered to the stockholders, and the Holder shall be entitled
to exercise its voting rights granted hereunder at the same time and in the
same manner as the stockholders of the Maker (including, without limitation,
by giving a proxy to any person to the extent permitted under applicable law).
(c) In no event shall the Maker convene any meeting of holders
of Common Stock unless there shall be present, in person or by proxy, holders
of Common Stock and/or Holders having the right to direct the voting of a
number of votes equal to or greater than that percentage of the votes of the
holders of Common Stock as is necessary to constitute a quorum under the
Maker's Certificate of Incorporation or Bylaws or under applicable law
(assuming, for such purpose, that all outstanding Debentures are converted
into shares of Common Stock (without giving effect to the limitations
contained in Section 4(f) above)).
(d) In no event shall the Maker take any action that requires
the approval of the holders of Common Stock under the Maker's Certificate of
Incorporation or Bylaws or under applicable law, unless the Maker shall have
8
received (from holders of Common Stock and/or Holders) a number of
affirmative votes that is equal to or greater than that percentage of
affirmative votes of the holders of Common Stock required under the Maker's
Certificate of Incorporation or Bylaws or under applicable law for the
approval of such action (assuming, for such purpose, that all outstanding
Debentures are converted into shares of Common Stock (without giving effect
to the limitations contained in Section 4(f) above)).
(e) The voting rights set forth in this Section 6 shall be
effective, and the Company shall comply with its obligations hereunder, from
and after the date hereof notwithstanding the Company's agreement in Section
4.19 of the Purchase Agreement to solicit the vote of its stockholders to
amend its Certificate of Incorporation to provide the Holders with voting
rights in accordance with Section 221 of the Delaware General Corporation
Law. Upon obtaining such stockholder approval and the effectiveness of such
amendment to the Company's Certificate of Incorporation, this Section 6 shall
cease to have any further force or effect and the Holders shall have only
those voting rights set forth in the Company's Certificate of Incorporation;
provided that such voting rights shall not thereafter be further amended
without the prior written consent of the Holder.
7. Participation Right. Subject to the terms and conditions of this
Section 7, the Holder shall have a right to participate with respect to the
issuance of (i) equity or equity-linked securities or (ii) debt which is
convertible into equity or in which there is an equity component, in each
case which is issued at an effective price (taking into account any
applicable conversion, exercise or exchange price) per share that is less
than the then applicable Conversion Price (any such securities being referred
to herein as "Additional Securities"), on the same terms and conditions as
offered by the Maker to the other purchasers of such Additional Securities.
Each time the Maker proposes to offer any Additional Securities, the Maker
shall offer such Additional Securities to the Holder in accordance with the
following provisions:
(a) The Maker shall deliver a notice (the "Notice") to the
Holder, at least ten (10) business days prior to the date on which it
proposes to offer such Additional Securities, stating (i) its bona fide
intention to offer such Additional Securities, (ii) the number of such
Additional Securities to be offered, (iii) the price and additional terms, if
any, upon which it proposes to offer such Additional Securities, and (iv) the
anticipated closing date of the issuance of such Additional Securities.
(b) The Holder shall have the right, exercisable by delivering
written notice to such effect to the Maker within five (5) business days
after its receipt of the Notice, to purchase, at the price and on the terms
specified in the Notice, up to such number of Additional Securities
(regardless of whether such number exceeds the aggregate number of Additional
Securities originally proposed to be issued by the Maker) that have a total
purchase price equal to the aggregate outstanding principal amount of, and
all accrued but unpaid interest on, the Debentures held by such Holder in
consideration for the exchange by such Holder of its Debentures. In order to
exercise its rights under this Section 7, in addition to delivering the
notice required by this subsection (b), the Holder shall be required to
surrender or cause to be surrendered to the Maker the original certificate(s)
representing the Debentures being so exchanged. Thereupon, the Maker shall
issue and deliver to the Holder the number of Additional Securities to which
the Holder is entitled hereunder.
9
(c) If all Additional Securities which the Holder is entitled
to purchase pursuant to this Section 7 are not purchased by the Holder as
provided herein, the Maker may, during the 75-day period following the
expiration of the 5-business day period provided in subsection (b) above,
offer the remaining unsubscribed portion of such Additional Securities to any
person at a price not less than, and upon terms no more favorable to the
offeree than, those specified in the Notice. If the Maker does not
consummate the sale of such Additional Securities within such period, the
right provided hereunder shall be deemed to be revived and such Additional
Securities shall not be offered or sold unless first reoffered to the Holder
in accordance herewith.
(d) Notwithstanding the foregoing, in no event shall the
participation rights granted in this Section 7 be applicable to (i) the
issuance of shares of Common Stock upon the exercise or conversion of the
Maker's options, warrants or other convertible securities outstanding as of
the date hereof and disclosed on Schedule 3.3 to the Purchase Agreement in
accordance with the terms of such options, warrants or other securities as in
effect on the date hereof, (ii) the grant of options to purchase Common
Stock, with exercise prices not less than the market price of the Common
Stock on the date of grant, which are issued to employees, directors or
consultants pursuant to an equity compensation plan approved by the Maker's
board of directors, and the issuance of shares of Common Stock upon the
exercise thereof, (iii) the issuance of shares of Common Stock upon the
conversion of the Debentures or exercise of the Warrants, (iv) the issuance
of shares of Common Stock to the Holders as payment of interest on the
Debentures, in accordance with the terms of the Debentures, (v) the issuance
of shares of Common Stock pursuant to stock splits, combinations,
subdivisions, dividends or other distributions on the outstanding shares of
the Common Stock, (vi) the issuance of securities in connection with
strategic business partnerships, and (vii) the issuance of securities
pursuant to any credit line or equipment financing from a bank or similar
financial or lending institution approved by the Maker's board of directors,
which, in the case of any transaction described in clause (ii), (vi) or
(vii), is not, in the good faith judgment of the Maker's board of directors,
for the primary purpose of raising additional capital.
(e) The participation right set forth in this Section 7 is in
addition to, and not in lieu of, the participation right set forth in Section
4.4 of the Purchase Agreement.
8. Attorneys' Fees; Waiver of Demand; Other Costs and Expenses. If
action is instituted to collect any amounts due under this Debenture, the
Maker shall pay all costs and expenses, including reasonable attorneys' fees,
incurred in connection with such action upon resolution of such dispute in
favor of the Holder. The obligations to make the payments provided for in
this Debenture are absolute and unconditional and not subject to any defense,
set-off, counterclaim, rescission, recoupment or adjustment whatsoever. The
Maker hereby expressly waives demand and presentment for payment, notice of
nonpayment, notice of default, dishonor, protest, notice of protest, bringing
of suit and diligence in taking any action to collect any amount called for
hereunder, and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount
called for hereunder.
9. Assignment. Neither this Debenture nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
10
otherwise, in whole or in part, by the Maker without the Holder's prior
written consent (which consent may be given or withheld in the sole and
absolute discretion of the Holder); provided, however, that such consent
shall not be required in connection with any Change of Control or other
Corporate Change in which the Maker is not the surviving entity provided that
the resulting successor or acquiring entity assumes by written instrument (in
form and substance reasonable satisfactory to the Holder) the obligations of
the Maker under this Debenture. This Debenture, including all rights
hereunder, is freely transferable by the Holder, without the consent of the
Maker, subject to any limitations on transfer set forth in the Purchase
Agreement [or Side Letter Agreement].
10. No Waiver; Amendments; Remedies; Etc. Neither acceptance by the
Holder of partial or delinquent payment, nor any failure on the part of the
Holder to exercise, or any delay in exercising, any right under this
Debenture or under applicable law, shall operate as a waiver of any
obligation of the Maker or any right of the Holder, and no single or partial
exercise of any right under this Debenture shall preclude any other or
further exercise thereof or the exercise of any other right. No waiver,
amendment, alteration or other modification of any provision of this
Debenture shall in any event be effective unless the same shall be in writing
and signed by the Holder. The remedies provided in this Debenture are
cumulative and not exclusive of any remedies provided by law. All of the
covenants, provisions, and conditions herein contained are made on behalf of,
and shall apply to and bind, the respective distributees, personal
representatives, successors, and assigns of the parties hereto, jointly and
severally.
11. Notices of Certain Transactions. In addition to any other
notices required by this Debenture, in the event: (a) the Maker shall take a
record of the holders of its capital stock (or other securities at the time
deliverable upon the exercise of this Debenture) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive
any right to subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right, or (b) of any capital
reorganization of the Maker, any reclassification of the capital stock of the
Maker, any consolidation or merger of the Maker with or into another entity,
or any transfer of all or substantially all of the assets of the Maker, or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of
the Maker, or (d) of any redemption of any of the outstanding capital stock
of the Maker, or (e) the Maker pays a dividend or makes a distribution on any
of its capital stock payable otherwise than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting
principles) except for a stock dividend payable in shares of such capital
stock, then, and in each such case, the Maker shall mail or cause to be
mailed to the Holder of this Debenture a notice specifying, as the case may
be, (i) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation, winding-up or redemption is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common
Stock (or such other stock or securities at the time deliverable upon such
reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation, winding-up or redemption) are to be determined.
Such notice shall be mailed at least ten (10) days prior to the record date
or effective date for the event specified in such notice.
12. Definitions. For purposes of this Debenture, the following terms
shall have the following respective meanings:
11
(a) "Business Day" means any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Delaware are
authorized or required to close.
(b) "Change of Control" means (i) the sale of all or
substantially all of the assets of the Maker to any person or entity (the
presentation of any such transaction for stockholder approval being
conclusive evidence that such transaction involves the sale of all or
substantially all of the assets of the Maker) or (ii) the merger or
consolidation of the Maker with or into any person or entity, in each case
that results in either (A) the holders of the voting securities of the Maker
immediately prior to such transaction holding or having the right to direct
the voting of fifty percent (50%) or less of the total outstanding voting
securities of the Maker or such other surviving or acquiring person or entity
immediately following such transaction or (B) the members of the board of
directors or other governing body of the Maker comprising fifty percent (50%)
of less of the members of the board of directors or other governing body of
the Maker or such other surviving or acquiring person or entity immediately
following such transaction.
(c) "Closing Sales Price" means, for any security as of any
date, the last sales price of such security on the Nasdaq SmallCap Market or
other principal trading market where such security is listed or traded as
reported by Bloomberg Financial Markets (or a comparable reporting service of
national reputation selected by the Maker, "Bloomberg"), or if the foregoing
does not apply, the last reported sales price of such security on a national
exchange or in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no such price is reported
for such security by Bloomberg, the average of the bid prices of all market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a
trading day for such security, on the next preceding date which was a trading
day. If the Closing Sales Price cannot be calculated for such security as of
either of such dates on any of the foregoing bases, the Closing Sales Price
of such security on such date shall be the fair market value as reasonably
determined by an investment banking firm selected by the Maker and reasonably
acceptable to the Holder, with the costs of such appraisal to be borne by the
Maker.
13. Governing Law; Jurisdiction. This Debenture shall be construed
in accordance with the laws of the State of Delaware, without regard to the
conflicts of law provisions of the State of Delaware or of any other state.
The Maker irrevocably consents to the jurisdiction of the United States
federal courts and state courts located in the County of New Castle in the
State of Delaware in any suit or proceeding based on or arising under this
Debenture and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. The Maker irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or
proceeding in such forum. The Maker further agrees that service of process
upon the Maker mailed by the first class mail in accordance with Section 14
shall be deemed in every respect effective service of process upon the Maker
in any suit or proceeding arising hereunder. Nothing herein shall affect the
Holder's right to serve process in any other manner permitted by law. The
Maker agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner. The Maker irrevocably
waives any right to a trial by jury under applicable law.
12
14. Notice. Any notices required or permitted to be given under the
terms of this Debenture shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
(a) If to the Maker:
Miravant Medical Technologies
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy simultaneously transmitted by like means (which
transmittal shall not constitute notice hereunder) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Hampton, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Holder, to the address set forth under the
Holder's name on the signature page to the Purchase Agreement executed by the
Holder, or to any other address specified by the Holder in writing to the
Maker.
15. Denominations. At the request of the Holder, upon surrender of
this Debenture, the Maker shall promptly issue new Debentures in the
aggregate outstanding principal amount hereof, in the form hereof, in such
denominations of at least $25,000 as the Holder shall request.
16. Lost or Stolen Debentures. Upon receipt by the Maker of (a)
evidence of the loss, theft, destruction or mutilation of any Debenture and
(b) (i) in the case of loss, theft or destruction, of indemnity (without any
bond or other security) reasonably satisfactory to the Maker, or (ii) in the
case of mutilation, upon surrender and cancellation of such mutilated
Debenture, the Maker shall execute and deliver a new Debenture of like tenor
and date.
17. Severability. If any provision of this Debenture shall be
prohibited or invalid, under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Debenture.
18. Maximum Interest Rate. If the effective interest rate on this
Debenture would otherwise violate any applicable usury law, then the interest
rate shall be reduced to the maximum permissible rate and any payment
received by the Holder in excess of the maximum permissible rate shall be
treated as a prepayment of the principal of this Debenture.
13
IN WITNESS WHEREOF, the Maker has caused this Debenture to be executed
as of the date first above written.
MIRAVANT MEDICAL TECHNOLOGIES
By:
----------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
14
EXHIBIT A
---------
NOTICE OF OPTIONAL CONVERSION
To: MIRAVANT MEDICAL TECHNOLOGIES
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (___) ___-____
Attention: Chief Executive Officer
The undersigned hereby irrevocably elects to convert the amount of principal
and interest set forth below of the Unsecured Convertible Debenture dated
____________ (the "Debenture"), into shares of common stock (the "Common
Stock") of MIRAVANT MEDICAL TECHNOLOGIES (the "Company") according to the
conditions of the Debenture, as of the date written below (the
"Conversion"). If securities are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. No fee will be charged to the holder for any
conversion, except for transfer taxes, if any. A copy of the Debenture is
attached hereto (or evidence of loss, theft or destruction thereof).
The Company shall electronically transmit the Common Stock issuable pursuant
to this Notice of Conversion to the account of the undersigned or its nominee
(which is ________________) with DTC through its Deposit Withdrawal Agent
Commission System ("DTC Transfer").
In the event of partial conversion, please reissue an appropriate
Debenture(s) for the principal balance which shall not have been converted.
Check Box if Applicable:
|_| In lieu of receiving the shares of Common Stock issuable pursuant to
this Notice of Conversion by way of DTC Transfer, the undersigned
hereby requests that the Company issue and deliver to the undersigned
or its nominee (if applicable) physical certificates representing such
shares of Common Stock.
Date of Conversion:__________________________________________
Applicable Conversion Price:_________________________________
Amount of Principal to be converted:_________________________
Amount of Accrued and Unpaid Interest on
the Principal Amount to be converted, if any:________________
Number of Shares of
Common Stock to be Issued:___________________________________
Signature: __________________________________________________
Name:________________________________________________________
Address:_____________________________________________________
15
