Binding Letter of Intent Regarding Amendment of Existing Convertible Note and Related Agreements of pSivida Limited
| PROPRIETARY AND CONFIDENTIAL |
April
2,
2007
|
Binding
Letter of Intent Regarding
Amendment
of Existing Convertible Note and Related Agreements
of
pSivida Limited
|
ISSUER:
|
pSivida
Limited ("PSDV"
or the "Company")
|
|
INVESTOR:
|
Castlerigg
Master Investments Ltd. (the "Investor")
|
|
AMENDMENT
OF
SECOND
AMENDMENT AGREEMENT |
The
Company and the Investor hereby agree to duly execute and deliver
such
documentation as reasonably necessary to effect the amendment
of that
certain Second Amendment Agreement (the "Amendment
Agreement"),
dated as of December 29, 2006, by and among the Company and the
Investor
as follows:
On
or before the Closing Date and
after the successful signing of definitive agreements related
to the
Company's contemplated transaction with Pfizer (the "Pfizer
Transaction")
and subject to the conditions set forth in the section labeled
“INVESTMENT” below,
the Company shall be required to deliver an irrevocable mandatory
redemption notice with respect to the full outstanding amount
of the
Second Amended and Restated Notes (as defined below) issued to
the
Investor. The redemption date of the Second Amended and Restated
Notes
will be the later of (i) 60 days after the Closing Date and (ii)
June 4,
2007. Immediately upon redemption, Investor shall release its
liens and
execute such additional documentation as may reasonably be requested
by
the Company to evidence such release.
On
the Closing Date, the Company shall issue to the Investor (i)
Series D
Warrants exercisable
for 4 million ADSs (the "Series
D Warrant Shares")
in the form attached to the Amendment Agreement as Exhibit
C,
with an exercise price equal to $2.00, (ii) Series E Warrants,
exercisable
for 4 million ADSs (the "Series
E Warrant Shares"),
which shall be in the form attached to the Amendment Agreement
as
Exhibit
C
in all material respects, other than the exercise price, which
shall be
amended to equal $1.57, (iii) Series F Warrants, exercisable
for
1 million ADSs (the "Series
F Warrant Shares"),
which shall be in the form attached to the Amendment Agreement
as
Exhibit
C
in all material respects, other than the exercise price, which
shall be
amended to equal $1.95 and (iv) the Series
B Warrants issuable upon the redemption of the Second Amended
and Restated
Notes, with the exercise price determined as of the Closing
Date.
The
form of the Second Amended and Restated Notes attached to the
Amendment
Agreement as Exhibit
A
(the "Second
Amended and Restated Notes"),
shall be amended to provide that (i) the Company shall deliver
any
conversion shares issuable upon conversion of the Second Amended
and
Restated Notes to the Investor in three Trading Days (as defined
in the
Second Amended and Restated Notes) with buy-in damages payable
if such
conversion shares are not delivered on or prior to such third
(3rd)
Trading Day and an Event of Default if such conversion shares
are not
delivered in five (5) Trading Days, and (ii) the Series B Warrants
issuable upon redemption of the Second Amended and Restated Notes
shall
have been issued on the Closing Date, and otherwise consistent
with this
term sheet.
At
the Closing, the Company shall deliver the closing documents
set forth in
the Amendment Agreement, which shall be amended, as necessary,
to include
the issuance of the Series B Warrants, the Series E Warrants
and the
Series F Warrants on the Closing Date.
The
Amendment Agreement shall further be amended to remove any references
to
the Financing Transactions, including, without limitation, the
Company's
obligation to close such Financing Transactions on or prior to
the Closing
Date.
|
| PROPRIETARY AND CONFIDENTIAL |
April
2,
2007
|
|
REGISTRATION
RIGHTS |
The
Second Amended and Restated Registration Rights Agreement (as
defined in
the Amendment Agreement) shall be amended to include the Series
E Warrant
Shares and the Series F
Warrant Shares as
Registrable Securities thereunder, and to provide for the inclusion
of the
Series A, Series B, Series C, Series D, Series E and Series
F Warrants on
the Additional Registration Statement (as defined in the Second
Amended
and Restated Registration Rights Agreement).
|
|
LEGAL
FEES
|
The
Company will pay all of Investor's documented legal and due
diligence
expenses regardless of whether the transaction is
consummated.
|
|
FORBEARANCE
LETTER |
Promptly
upon the execution of this term sheet by the parties hereto,
the Investor
shall deliver to the Company the forbearance letter in the
form attached
hereto as Exhibit
I.
|
|
STANDSTILL
|
The
Company agrees that, except: (i) with respect to the $5 million
purchase
by Pfizer of the Company's equity securities in connection
with the Pfizer
Transaction; (ii) the approximately $7 million financing currently
contemplated (the "Contemplated
Financing");
(iii) in connection with any Approved Stock Plan (as defined in the
Second Amended and Restated Notes); (iv) upon conversion of
the Notes (as
defined in the Second Amended and Restated Notes) or the exercise
of the
Warrants (as defined in the Second Amended and Restated Notes)
or the
Series E Warrants and the
Series F Warrants issued
in connection herewith, (v) upon conversion of any Options
(as defined in
the Second Amended and Restated Notes) or Convertible Securities
(as
defined in the Second Amended and Restated Notes) which are
outstanding on
the day immediately preceding the Subscription Date (as defined
in the
Second Amended and Restated Notes); provided
that the terms of such Options or Convertible Securities are
not amended,
modified or changed on or after the Subscription Date, (vi)
any sale of
securities by the Company pursuant to existing participation
rights;
provided
that the terms of such participation rights are not amended,
modified or
changed on or after the date hereof and (vii) the sale of any
securities
of AION Diagnostics, from and after the Closing Date, the Company
shall
not enter into any agreements with respect to the issuance
of any ordinary
shares or other equity security or securities exercisable or
convertible
into ordinary shares or other equity security of the Company
or any of its
Subsidiaries until 30 trading days after the Closing Date,
without the
prior written consent of the Investor.
|
| PROPRIETARY AND CONFIDENTIAL |
April
2,
2007
|
|
REDEMPTION
NOTICE |
Promptly
after (i) the signing
of definitive agreements related to the Pfizer Transaction,
(ii) the
Closing of the transactions contemplated by the Second Amendment
Agreement, modified as set forth in this term sheet, (iii) the public
announcement by the Company of the transactions described in
(i) and (ii)
above, the
Company shall deliver to the Investor a Company Optional Redemption
Notice
with respect to the full outstanding amount of the Second Amended
and
Restated Notes computed in accordance therewith. The redemption
date of
the Second Amended and Restated Notes will be the later of
(i) 60 days
after the Closing Date and (ii) June 4, 2007.
|
|
DISCLOSURE
|
On
the first business day following the execution of the primary
transaction
document with respect to the Contemplated Financing, the Company
shall
file a Form 6-K describing the terms of the Contemplated Financing
in the
form required by the 1934 Act (as defined in the Amendment
Agreement) and
attaching the material transaction documents as exhibits to
such
submission (such submission including all attachments, the
"6-K
Filing").
From and after the 6-K Filing, no Investor shall be in possession
of any
material, nonpublic information received from the Company,
any of its
Subsidiaries or any of its respective officers, directors,
employees or
agents, that is not disclosed in the Disclosure Filings or
in some other
public filing or public disclosure.
The
Company shall file a Cleansing Statement (as defined under
the securities
laws of Australia) with respect to any securities issued in
connection
with the Investor’s investment described above in accordance with the
timing set out in the primary transaction document with respect
to the
Contemplated Financing which shall not be later than 24 hours
after the
announcement of the Contemplated Financing.
|
|
DILIGENCE
|
The
parties agree to work diligently and in good faith to agree
upon and
execute definitive documentation necessary to implement the
foregoing.
|
The parties hereby acknowledge, by their signatures below, their mutual agreement to the above terms and conditions. The parties agree to negotiate in good faith the contemplated transaction in an expeditious manner. This term sheet is a binding letter of intent.
Agreed
to and Accepted by:
| pSivida Limited | Castlerigg Master Investments Ltd. | |||
| By: Xxxxxxx Asset Management Corp. | ||||
| By: | /s/ Xxxxxxx X. Xxxx | By: | /s/ Xxxxxxx X’Xxxxx | |
| Name: | Xxxxxxx X. Xxxx | Name: | Xxxxxxx X’Xxxxx | |
| Title: | V.P. and CFO | Title: | Chief Financial Officer | |
Castlerigg
Master Investments Ltd.
00
Xxxx
00xx Xx
26th
Floor
New
York,
NY 10019
Exhibit
I
FORBEARANCE
LETTER
(See
attached)
