Exhibit 10.26
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of January 1, 2005 ("EFFECTIVE DATE") by and among Light Sciences
Oncology, Inc., a Washington corporation "COMPANY"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an
individual ("INVESTOR").
INTRODUCTION:
A. Investor wishes to loan Company funds to finance operations related to the
research and development operations of Company by purchase of Convertible
Promissory Notes sold by Company under terms and conditions of this Agreement.
C. Under the terms of this Agreement, Company, in its discretion and at such
times during the term of this Agreement that it determines that funds are
necessary for the operation of Company, may require that Investor purchase
future Convertible Notes as provided herein.
D. Under the terms of this Agreement, Investor's obligation to purchase
Convertible Notes shall run from the date of this Agreement through the first to
occur of: (i) a Qualified Financing (as defined below); (ii) a Change of Control
Event (as defined below); (iii) December 31, 2005; or (iv) until effectively
terminated by one or both of the parties pursuant to the terms of the Agreement.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE I
PURCHASE OF CONVERTIBLE NOTES AND CLOSINGS
1.1 AGREEMENT TO PURCHASE AND ISSUE CONVERTIBLE NOTES. Company agrees to
sell to Investor at each Closing (as defined in Section 1.4 below), and Investor
agrees to purchase from Company at each Closing, convertible promissory notes in
the form attached hereto as Exhibit 1.1a ("CONVERTIBLE NOTES") up to an
aggregate principal amount of _________________________ (the "MAXIMUM PRINCIPAL
AMOUNT"). Company shall sell and Investor shall purchase at each Closing
Convertible Notes in the principal amount as determined under Section 1.5 below.
1.2 CLOSING. The purchase and sale of the Convertible Notes will take place
by exchange of original or facsimile signatures on the date or dates (each, a
"CLOSING") as determined pursuant to Section 1.3 below. At each Closing: (i)
Company will deliver to Investor a certificate signed by an officer of Company
confirming the sale of the Convertible Note, specifying the principal amount
thereof and the satisfaction of the conditions to the sale as stated herein; and
(ii) Investor will deliver to Company the principal amount specified in such
certificate (as determined pursuant to Section 1.6 below). Promptly following
each Closing, Company shall issue a Convertible Note for such principal amount
and at an interest rate equal to the prime rate as reported by the Wall Street
Journal on each respective closing plus one and one-half percent (1 1/2%).
1.3 PRINCIPAL AMOUNT OF CONVERTIBLE NOTES. Company, in its discretion, may
decide at any time during the Term (as defined in Section 1.4 below) to require
Investor to purchase Convertible Notes in an amount not to exceed the Maximum
Principal Amount less the aggregate principal amount of Convertible Notes
already purchased by Investor at previous Closings (not including the Principal
Amount). Company shall give either oral or written notice to Investor of its
intention to effect a Closing, which notice shall state the date that Closing is
to occur. If Investor elects to terminate this Agreement pursuant to Section
4.2(b) below, then during the Interim Period (as defined in Section 4.2(b)
below) Company shall only be able to require Investor to purchase Convertible
Notes for a principal amount reasonably consistent with previous monthly funding
requirements of Company; provided, however, that the amount that Company shall
be able to require Investor to fund during the Interim Period shall not exceed
the Maximum Principal Amount less the aggregate principal amount of Convertible
Notes already purchased by Investor at previous Closings (not including the
Principal Amount).
1.4 TERM. Unless earlier terminated pursuant to Article IV hereof, the
term of this Agreement shall run from the date of this Agreement through the
first to occur of: (i) a Qualified Financing, (ii) a Change of Control Event (as
defined below), or (iii) December 31, 2005 (the "TERM"). For purposes of this
Agreement, a "QUALIFIED FINANCING" shall mean the closing of a private round of
financing of "Series A Preferred Stock" as defined below. The term "CHANGE OF
CONTROL EVENT" shall mean the closing of a merger of Company with or into
another entity in which the holders of voting securities of Company immediately
prior to such transaction will hold less than 50% of the voting securities of
the surviving entity or the sale of all or substantially all of the assets of
Company effected through a single transaction or a series of related
transactions. As used herein, the term "SERIES A PREFERRED STOCK" shall mean
that series of preferred stock of Company designated as Series A Preferred Stock
and having the rights and preferences set forth in Company's Articles of
Incorporation, as amended (or such other series of preferred securities issued
in Company's next round of equity financing).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby represents and warrants to Company that:
2.1 PURCHASE FOR INVESTOR'S OWN ACCOUNT. Investor is acquiring the
Convertible Notes (and the shares of Preferred Stock issuable upon the
conversion of the Convertible Notes (the "NOTE CONVERSION SHARES) for Investor's
own account, not as nominee or agent, for investment and not with a view to, or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended (the "SECURITIES
ACT"). By executing this Agreement, Investor further represents that Investor
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to any such person or to any
third person, with respect to the Convertible Notes (or the Note Conversion
Shares and the Common Shares issuable upon conversion of the Note Conversion
Shares).
2.2 UNREGISTERED SECURITIES; LEGEND. Investor understands that (i) the
Convertible Notes (and the Note Conversion Shares and the Common Shares issuable
upon conversion of the Note Conversion Shares) have not been registered under
either the Securities Act or the
securities laws of any state by reason of specific exemptions therefrom, (ii)
the Convertible Notes (and the Note Conversion Shares and Common Shares issuable
upon conversion of the Note Conversion Shares) must be held by Investor
indefinitely, and, therefore, Investor must bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Securities Act and the securities laws of any applicable state or is
exempt from such registrations; (iii) the Convertible Notes and each certificate
representing the Note Conversion Shares and Common Shares issuable upon
conversion of the Note Conversion Shares will be endorsed with a legend
substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM."
and (iv) Company will instruct any transfer agent not to register the transfer
of the Convertible Notes, the Note Conversion Shares and the Common Shares
issuable upon conversion of the Note Conversion Shares unless the conditions
specified in the foregoing legend are satisfied.
2.3 COMPANY INFORMATION. Investor has been furnished with such materials
and has been given access to such information relating to Company as Investor or
Investor's qualified representative has requested and Investor has been afforded
the opportunity to ask questions regarding Company, the Convertible Notes, the
Note Conversion Shares, and the Common Shares issuable upon conversion of the
Note Conversion Shares, as Investor has found necessary to make an informed
investment decision. Investor has been solely responsible for its own due
diligence investigation of Company and its proposed business, for its own
analysis of the merits and risks of its investment made pursuant to this
Agreement and for its own analysis of the terms of its investment.
2.4 ACCREDITED INVESTOR. Investor is an accredited investor within the
meaning of Regulation D under the Securities Act. Investor is in a financial
position to hold the Convertible Notes, the Note Conversion Shares and the
Common Shares issuable upon conversion of the Note Conversion Shares, and is
able to bear the economic risk and withstand a complete loss of Investor's
investment in the Convertible Notes. Investor recognizes that the investment in
the Convertible Notes involves a high degree of risk. Investor understands and
acknowledges that there can be no assurance that Company will be able to meet
its projected goals and that Company will need significant additional capital to
be successful, which capital may not be available readily.
2.5 FINANCIAL SOPHISTICATION. Investor acknowledges hereby that he has been
advised to and has obtained, to the extent Investor deems necessary,
professional (including legal) advice with respect to the risks inherent in the
investment in the Convertible Notes, the condition of Company, and the
suitability of the investment in the Convertible Notes in light of
Investor's condition and investment needs, and the terms and conditions of this
Agreement and documents relating to the investment in the Convertible Notes.
Investor, either alone or with the assistance of such professional advisors, is
a sophisticated investor, is able to fend for himself in the transaction
contemplated by this Agreement, and has such knowledge and experience in
financial and business matters that Investor is capable of evaluating the merits
and risks of the prospective investment in the Convertible Notes. Investor is an
investor in securities of companies in the development stage and acknowledges
that an investment in the Convertible Notes is a speculative risk.
2.6 SUITABILITY. The investment in the Convertible Notes is suitable for
Investor based upon Investor's investment objectives and financial needs, and
Investor has adequate net worth and means for providing for its current
financial needs and contingencies and has no need for liquidity of the
investment with respect to the Convertible Notes.
2.7 DOMICILE. For purposes of the application of state securities laws,
Investor represents that it is a bona fide resident of, and is domiciled in, the
state set forth in Investor's address on Investor's signature page hereto.
ARTICLE III
CONDITIONS PRECEDENT
3.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE. The respective
obligation of each party to close the transactions contemplated by this
Agreement shall be subject to the satisfaction prior to each Closing of the
following conditions:
3.1.1 GOVERNMENTAL APPROVALS. All governmental consents legally
required for the consummation of the transactions contemplated by this Agreement
shall have been filed, other than such governmental consents for which the
failure to obtain would have no material adverse effect on the consummation of
the transactions contemplated hereby or on Company.
3.1.2 NO RESTRAINTS. No statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or enforced
by any United States court or governmental entity of competent jurisdiction
which enjoins or prohibits the consummation of the transactions herein
contemplated.
3.2 CONDITION OF OBLIGATION OF INVESTOR. The obligation of Investor to
purchase the Convertible Notes at each Closing is subject to the condition
(unless waived by Investor) that the representations and warranties of Company
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the date of each Closing as though
made on and as of the date of each Closing.
3.3 CONDITION OF OBLIGATION OF COMPANY. The obligation of Company to
effect the issuance of the Convertible Notes is subject to the condition (unless
waived by Company) that the representations and warranties of Investor set forth
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the date of each Closing as though made on and
as of the date of each Closing.
ARTICLE IV
TERMINATION
4.1 MUTUAL AGREEMENT. This Agreement may be terminated at any time by the
written consent of Investor and Company.
4.2 TERMINATION BY INVESTOR.
(A) This Agreement may be terminated by Investor alone, by means of
written notice to Company, if there has been a material breach by Company of any
representation, warranty, covenant or agreement set forth in the Agreement,
which breach has not been cured within fifteen business days following receipt
by Company of written notice of such breach.
(B) In the absence of any breach, this Agreement may also be
terminated by Investor alone, upon thirty (30) days following delivery of a
written notice to Company. For purposes of this Agreement, the period from the
date of the delivery of such notice and the expiration of the thirty (30) day
period following such delivery shall be defined as the "INTERIM PERIOD."
4.3 TERMINATION BY COMPANY. This Agreement may be terminated by Company
alone, by means of written notice to Investor, if there has been a material
breach by Investor of any representation, warranty, covenant or agreement set
forth in the Agreement, which breach has not been cured within fifteen business
days following receipt by Investor of notice of such breach.
4.4 EXPIRATION OF TERM. This Agreement shall terminate upon the expiration
of the Term.
ARTICLE V
MISCELLANEOUS
5.1 ENTIRE AGREEMENT. This Agreement, including the exhibits and schedules
delivered pursuant to this Agreement between the parties contain all of the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings, and communications of the parties, whether oral or
written, respecting that subject matter.
5.2 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Washington as applied to agreements
entered into and entirely to be performed within that state. Venue of any action
arising out of this Agreement shall be had in King County, Washington and the
parties hereby consent to the jurisdiction thereof.
5.3 HEADINGS. The headings contained in this Agreement are intended
principally for convenience and shall not, by themselves, determine the rights
of the parties to this Agreement.
5.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, such provision and all other related provisions
shall be modified rather than voided,
if possible, in order to achieve the intent of the parties to this Agreement to
the extent possible. In any event, all other unrelated provisions of this
Agreement shall be deemed valid and enforceable to the full extent.
5.5 COUNTERPARTS. This Agreement and any certificates may be executed in
two or more partially or fully executed counterparts and by facsimile signatures
each of which shall be deemed an original and shall bind the signatory, but all
of which together shall constitute but one and the same instrument. The
execution and delivery of a signature page in the form annexed to this Agreement
by any party hereto who shall have been furnished the final form of this
Agreement shall constitute the execution and delivery of this Agreement by such
party.
5.6 SUCCESSORS, ASSIGNS AND HEIRS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding on the respective
successors, assigns and heirs of the parties, by will, intestacy or otherwise.
5.7 AMENDMENT. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
5.8 EXTENSION, WAIVER. At any time prior to the Closing, any party hereto
may, to the extent legally allowed: (i) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made to such other party
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements, covenants or conditions for the benefit
of such other party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
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SIGNATURE PAGE -
SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY"
LIGHT SCIENCES ONCOLOGY, INC.,
a Washington corporation
By
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, MD, Ph.D.
Its President
"INVESTOR"
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
LIGHT SCIENCES ONCOLOGY, INC.
CONVERTIBLE NOTE
Note No. ______ [Date]
LIGHT SCIENCES ONCOLOGY, INC., a Washington corporation (the "Company"),
for value received hereby promises to pay to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual, or
his registered assigns (the "Holder"), the sums of (i) $_______ (the "Principal
Amount") plus unpaid accrued interest hereon, as set forth below, all on
December 31, 2005 ("Maturity Date"). Payment for all amounts due hereunder shall
be made by mail to the registered address of the Holder, or, if requested in
writing by the Holder, by wire transfer in accordance with the Holder's
instructions. This Note is issued in connection with the transactions described
in that certain Securities Purchase Agreement, dated January 1, 2005, by and
among the Company and the Holder, as the same may be further amended, modified
or supplemented from time to time (the "Securities Purchase Agreement"). The
Holder is subject to certain restrictions, and is entitled to certain rights and
privileges, set forth in the Securities Purchase Agreement.
The following is a statement of the rights of the Holder and the conditions
to which this Note is subject, and to which the Holder, by the acceptance of
this Note, agrees:
1. PRINCIPAL AND INTEREST.
Unless this Note is sooner prepaid or converted pursuant to Section 3
hereof, the Principal Amount and interest on the Principal Amount shall be paid
in full on the Maturity Date. Commencing on the original issue date of this Note
(the "Original Issue Date"), until the earlier of (a) the payment in full of the
Principal Amount, Previously Accrued Interest and interest on the Principal
Amount, or (b) the conversion, pursuant to Section 3 hereof, of this Note,
including the entire Principal Amount and any and all accrued but unpaid
interest on the Principal Amount, the Company shall accrue and defer all
interest on this Note, computed on the basis of a 365-day year, from the date of
this Note, on the unpaid balance of the outstanding Principal Amount of this
Note, at the non-compounded rate of [] percent ([]%) per annum, and such
interest shall be payable upon the earlier of (a) or (b) of this sentence.
2. EVENTS OF DEFAULT.
(A) DEFINITION. An "Event of Default" with respect to this Note shall
mean the following:
(i) Default for fifteen (15) business days in payment of the
Principal Amount, Previously Accrued Interest and interest on the Principal
Amount when due;
(ii) Default in the performance or breach of any covenant or
warranty of the Company in respect to this Note that is not remedied, waived or
cured for a period of fifteen (15) days following knowledge by the Company of
such default;
(iii) The institution by the Company of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to institution of
bankruptcy or insolvency proceedings against it or the filing by it of a
petition or answer or consent seeking reorganization or release under the
federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the
Company, or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate action by
the Company in furtherance of any such action; and
(iv) If, within sixty (60) days after the commencement of an
action against the Company (and service of process in connection therewith on
the Company) seeking any bankruptcy, insolvency, reorganization, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, such action shall not have been resolved in favor of the Company or
all orders or proceedings thereunder affecting the operations or the business of
the Company stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within sixty (60) days after the appointment
without the consent or acquiescence of the Company of any trustee, receiver or
liquidator of the Company, such appointment shall not have been vacated.
(B) NOTICE OF EVENTS OF DEFAULT. The Company covenants that it will
give notice to the Holder of the occurrence of any Event of Default within five
(5) business days after the discovery of such an event by an officer of the
Company, specifying the nature thereof, the period of existence thereof and what
action it proposes to take with respect thereto.
(C) RIGHT OF ACCELERATION. If an Event of Default shall occur and be
continuing, then the Holder may elect to accelerate payment of the Note. If any
payment due hereunder, including those due upon acceleration, is not paid within
fifteen (15) days after its due date, the entire balance of the Principal Amount
and any and all accrued interest on the Principal Amount shall bear interest
from the date of default until such payment (including all accrued interest on
the Principal Amount through the date of
payment) is paid, at the per annum rate of interest equal to twelve percent
(12%); provided, however, that in no event shall such interest rate exceed the
maximum rate permitted by law.
3. CONVERSION. The outstanding Principal Amount, the Previously Accrued
Interest and any and all accrued but unpaid interest on the Principal Amount
(the "Conversion Amounts") shall be convertible into capital stock of the
corporate successor to Company ("Oncology Corporation") or the Company (the
"Conversion Shares"), as follows:
(A) MANDATORY CONVERSION UPON CLOSING OF A PREFERRED OFFERING. Upon
the closing (but in no event later than the Maturity Date) (the "Series A
Preferred Closing Date") of the offer and sale of a class of "Series A Preferred
Stock," as defined in Section 3(c)(i) below (a "Qualifying Offering"), the
Conversion Amounts shall be converted automatically, without any further act of
the Company, its shareholders or the Holder, into fully paid nonassessable
shares of "Series A Preferred Stock,", as defined in Section 3(c)(i) below, of
Light Sciences Oncology, Inc. pursuant to the terms and conditions of this
Section 3, at a conversion price equal to the per share purchase price paid by
investors in the Qualifying Offering (the "Series A Preferred Offering Price").
(B) OPTIONAL CONVERSION INTO COMMON. In the event that the Company
fails to close a Qualifying Offering on or before the Maturity Date, the Holder
shall have the right at the Holder's option to convert the Conversion Amounts
into fully paid, nonassessable shares of Series A Preferred stock of the
Company, at a conversion price equal to $1.275 per share (the "Series A
Preferred Conversion Price").
(C) CERTAIN DEFINITIONS.
As used herein, the term "Series A Preferred Stock" shall mean that
series of preferred stock of the Oncology Corporation designated as Series A
Preferred Stock and having the rights and preferences set forth in the Oncology
Corporation's Articles of Incorporation, (or such other series of preferred
securities issued in Oncology Corporation's initial round of equity financing).
(D) MECHANICS OF CONVERSION. Upon the Series A Preferred Closing Date,
the Conversion Amounts shall be converted automatically into Series A Preferred
Stock without any further action by the Holder and whether or not this Note is
surrendered to the Company; provided, however, that the neither the Company nor
Oncology Corporation shall be obligated to issue to the Holder a certificate
that evidences the Conversion Shares unless this Note is delivered to the
Company. The Holder may exercise the optional conversion rights specified in
Section 3(b) as to any part of this Note by surrendering this Note to the
Company, accompanied by written notice stating that the Holder elects to convert
all or a specified portion of the Conversion Amounts into common membership
units of the Company in accordance with Section 3(b). Conversion of this Note
shall be deemed to have been effected (the "Conversion
Date") (i) with respect to Section 3(a), on the Series A Preferred Closing Date,
or (ii) the date when delivery of notice of an election to convert pursuant to
Section 3(b) is made. As promptly as practicable thereafter (and after surrender
of this Note to the Company), the Company, or Oncology Corporation, as successor
in interest under this Note, shall issue and deliver to the Holder a certificate
for the number of full Conversion Shares to which the Holder is entitled and a
check or cash with respect to any fractional interest in a Conversion Share as
provided in Section 3(e). The entity in whose name the certificate for
Conversion Shares is to be issued shall be deemed to have become a holder of
record of such shares on the Conversion Date. Upon conversion of only a portion
of the Conversion Amounts (in the case of optional conversion pursuant to
Section 3(b)), the Company shall issue and deliver to the Holder, at the expense
of the Company, a new Note covering the amounts of the unconverted portion of
this Note.
(E) FRACTIONAL SHARES. No fractional Conversion Shares or scrip shall
be issued upon conversion of this Note. Instead of any fractional Conversion
Shares which would otherwise be issuable upon conversion of this Note, the
Company shall pay a cash adjustment in respect of such fractional interest in an
amount equal to that fractional interest of the Series A Preferred Offering
Price or the Common Membership Interest Conversion Price, as applicable.
(F) ADJUSTMENT FOR STOCK DIVIDENDS, SPLITS, ETC. If at any time after
the date of issuance of this Note (the "Issue Date"), the number of Conversion
Shares outstanding is increased by a stock dividend or other distribution on
Conversion Shares payable in Conversion Shares or by a subdivision, split-up or
reclassification of outstanding Conversion Shares, then immediately after the
record date fixed for the determination of holders of Conversion Shares entitled
to receive such stock dividend or the effective date of such subdivision,
split-up or reclassification, as the case may be, the Series A Conversion Price
shall be reduced appropriately so that the Holder shall be entitled to receive
the number of Conversion Shares which it would have owned immediately following
such action had this Note been converted immediately prior thereto.
(G) ADJUSTMENT FOR COMBINATION OF CONVERSION SHARES. If the number of
Conversion Shares at any time after the Issue Date is decreased by a combination
or reclassification of the outstanding Conversion Shares, then, immediately
after the effective date of such combination or reclassification, the Series A
Conversion Price and the Common Membership Interest Conversion Price, as
appropriate, shall be increased appropriately so that the Holder shall be
entitled to receive the number of Conversion Shares which it would have owned
immediately following such action had this Note been converted immediately prior
thereto.
(H) ADJUSTMENT FOR CAPITAL REORGANIZATION OR RECLASSIFICATION. If the
Conversion Shares shall be changed into the same or different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
or stock dividend provided
for in Sections 3(f) and (g)), then in each such event the Holder shall have the
right thereafter to convert this Note into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification or other change by the Holder of the number of Conversion
Shares into which this Note might have been converted immediately prior to such
reorganization, reclassification or change, all subject to further adjustment as
provided herein.
(I) ADJUSTMENT FOR MERGER OR CONSOLIDATION. If at any time or from
time to time there shall be an acquisition of the Company by another entity by
means of merger, consolidation or otherwise, resulting in the exchange of the
outstanding Conversion Shares for securities or consideration issued or caused
to be issued by the acquiring entity or any of its affiliates, then, as a part
of such acquisition, provision shall be made so that the Holder shall thereafter
be entitled to receive, upon conversion of this Note, the number of shares of
stock or other securities or property of the acquiring corporation resulting
from such acquisition to which the Holder would have been entitled if the Holder
had converted this Note pursuant to Section 3(b) immediately prior to such
acquisition. In any such case, appropriate adjustments shall be made in the
application of the provisions of this Section 3(i) with respect to the rights of
the Holder after such acquisition to the end that the provisions of this Section
3(i) shall be applicable after that event in as nearly equivalent a manner as
may be practicable.
(J) NOTICE TO HOLDER. In the event the Company shall propose to take
any action of the type described in Sections 3(f), (g), (h) or (i), the Company
shall give notice to the Holder, which notice shall specify the record date, if
any, with respect to any such action and the approximate date on which such
action is to take place. In the case of any action which would require the
fixing of a record date, such notice shall be given at least ten (10) days prior
to the date so fixed, and in case of all other action, such notice shall be
given at least fifteen (15) days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.
(K) COSTS. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of Conversion
Shares upon conversion of this Note; provided, however, that the Company shall
not be required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the Holder.
4. UNSECURED OBLIGATION. The payment of the Principal Amount, Previously
Accrued Interest and interest on the Principal Amount is a general, unsecured
obligation of the Company.
5. ASSIGNMENT. Subject to the restrictions on transfer described in Section
7 below, the rights and obligations of the Company and the Holder shall be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.
6. WAIVER AND AMENDMENT. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and Holder.
7. TRANSFER OF THIS NOTE. The Holder understands that the Company will
instruct any transfer agent not to register the transfer of this Note (or the
Conversion Shares issued upon conversion of this Note) unless the conditions
specified in the legend above are satisfied.
8. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
personal delivery; upon confirmed transmission by telecopy or telex; or upon
deposit with the United States Post Office, by first-class mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (i) if to the
Holder, at the Holder's address as set forth on the signature page hereto or at
such other address as the Holder shall have furnished to the Company in writing,
or (ii) if to the Company, one copy shall be sent to ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ to the attention of the President, or at such
other address as the Company shall have furnished to the Holder.
9. NO RIGHTS OF A SHAREHOLDER. Nothing contained in this Note shall be
construed as conferring upon the Holder or any other person the right to vote or
consent or to receive notice as a shareholder in respect of meetings of
shareholders for the election of directors of the Company or any other matters
or any rights whatsoever as a shareholder of the Company prior to the time that
this Note is converted into Conversion Shares pursuant to Section 3.
10. PREPAYMENT. The Principal Amount, Previously Accrued Interest, and
accrued interest of the Principal Amount, may be prepaid by the Company at any
time, without premium or penalty, upon ten (10) days' prior written notice to
Holder.
11. GOVERNING LAW; VENUE. This Note shall be governed by and construed in
accordance with the laws of the State of Washington, and venue for any action
taken in connection herewith or related hereto shall exclusively reside in King
County, Washington.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
This Note has been executed and delivered as of the date first above
written.
LIGHT SCIENCES ONCOLOGY, INC.,
a Washington
By
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▇▇▇▇ ▇▇▇▇▇▇▇
Its President
Accepted and agreed by Holder:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
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Telephone:
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Telefax:
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Schedule of Convertible Promissory Notes
Note Number Date Principal Amount Interest Rate
----------- ------------------ ---------------- -------------
1 January 13, 2005 $ 821,000 6.75%
2 February 24, 2005 $ 265,581 7.00%
3 March 17, 2005 $ 544,000 7.00%
4 May 16, 2005 $ 400,000 7.50%
5 June 6, 2005 $ 250,000 7.50%
6 July 14, 2005 $1,100,000 7.75%
7 August 15, 2005 $ 619,419 8.00%
8 September 19, 2005 $1,000,000 8.00%
9 September 23, 2005 $1,250,000 8.25%