NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") is entered
into as of March 7, 2005, by and between MIRAVANT MEDICAL TECHNOLOGIES, a
Delaware corporation (the "Company"), with headquarters located at 000 Xxxxxx
Xxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, and ST. CLOUD INVESTMENTS, LTD., a
British Virgin Islands company (the "Purchaser").
RECITALS
A. The parties hereto have agreed to a Non-Binding Letter of Intent
(the "Letter of Intent").
B. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
C. The Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, (a) up to FIFTEEN MILLION DOLLARS ($15,000,000) of the
Company's Secured Convertible Promissory Notes in the form attached hereto as
Exhibit A (collectively, the "Notes"), and (b) warrants, in the form attached
hereto as Exhibit B (collectively, the "Warrants"), to acquire shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"). The
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as "Warrant Shares." The shares of Common Stock
issuable on the conversion of the Notes, including any share of Common Stock
issued for interest payments under the Notes, are referred to herein as the
"Conversion Shares." The Notes, the Warrants, the Warrant Shares and the
Conversion Shares are collectively referred to herein as the "Securities."
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering (a) a Security Agreement in the
form attached hereto as Exhibit C (the "Security Agreement"), pursuant to which
the Company is granting to Purchaser a security interest in the Collateral (as
defined therein) as security for the repayment of the Notes, and (b) a
Registration Rights Agreement in the form attached hereto as Exhibit D (the
"Registration Rights Agreement"), pursuant to which the Company has agreed to
provide certain registration rights with respect to the Conversion Shares and
the Warrant Shares under the Securities Act, the rules and regulations
promulgated thereunder and applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF NOTES AND WARRANTS
1.1 Line of Credit Commitment. The Purchaser agrees, on the terms of and subject
to the conditions specified in this Agreement, to purchase from the Company on
one or more dates prior to July 1, 2006 (the "Commitment Expiration Date") an
aggregate principal amount of sum of up to FIFTEEN MILLION DOLLARS ($15,000,000)
of Notes (the "Credit Commitment").
1.2 Drawdowns. The Purchaser agrees to purchase ONE MILLION DOLLARS ($1,000,000)
of Notes (the "Monthly Amount") at the Initial Closing (as defined below). Each
month thereafter in which the Company desires to borrow additional amounts under
the terms and conditions set forth in this Agreement, the Company shall deliver
to Purchaser a new Borrowing Request in the form attached hereto as Exhibit E
specifying an amount, up to the Monthly Amount, the Company desires to borrow.
The Borrowing Request must be received by the Purchaser at least thirty (30)
days prior to the requested funding date. Upon receipt of such Borrowing
Request, Purchaser shall, in its sole and absolute discretion, either accept or
reject, in part or in total, the Company's Borrowing Request by delivering to
the Company a certificate (the "Funding Acceptance Certificate") not less than
ten (10) business days after receipt of the Borrowing Request evidencing
Purchaser's desire to purchase additional Notes at a Subsequent Closing (defined
below). In the event Purchaser delivers a Funding Acceptance Certificate to the
Company and elects to purchase additional Notes, funds will be delivered by
Purchaser no later than thirty (30) days following the date of the Borrowing
Request. In the absence of either a Borrowing Request delivered by the Company
to the Purchaser or a Funding Acceptance Certificate delivered by the Purchaser
to the Company evidencing Purchaser's election to purchase additional Notes in a
Subsequent Closing, there shall be no obligation of the Company to sell and no
obligation of the Purchaser to purchase additional Notes. If in any month the
Company does not borrow the full Monthly Amount, then any unused borrowing may
be carried forward and the funding of such amounts may be requested by the
Company in subsequent months' Borrowing Requests. Notwithstanding the foregoing,
in the event Purchaser has purchased Notes with an aggregate principal amount at
least of $7.0 million and such Notes remain outstanding, the Company shall not
be permitted to submit a subsequent Borrowing Request unless (a) the Company has
reserved, solely for the issuance and delivery upon the conversion of the Notes
and exercise of the Warrants, such number of the Conversion Shares and Warrant
Shares and other stock, securities and property, as from time to time shall be
issuable upon the conversion of the Notes and upon exercise of the Warrants,
including a sufficient number of Conversion Shares and Warrant Shares issuable
in connection with the Notes and Warrants to be issued pursuant to such
subsequent Borrowing Request, or (b) the Company has first amended its
Certificate of Incorporation to increase the number of authorized shares of the
Company's Common Stock and has reserved, solely for the issuance and delivery
upon the conversion of the Notes and exercise of the Warrants, such number of
the Conversion Shares and Warrant Shares and other stock, securities and
property, as from time to time shall be issuable upon the conversion of the
Notes and upon exercise of the Warrants, including a sufficient number of
Conversion Shares and Warrant Shares issuable in connection with the Notes and
Warrants to be issued pursuant to such subsequent Borrowing Request. The last
Borrowing Request will be delivered no later than the Commitment Expiration
Date.
1.3 Warrants. In consideration for the purchase by the Purchaser of the
Notes, the Company will issue to the Purchaser, simultaneously with the issuance
and sale of each Note, a Warrant to purchase that number of shares of Common
Stock that is equal one-quarter (1/4) share for each Conversion Share to be
received. The exercise price per share shall be equal to one hundred ten percent
(110%) of the average of the closing sales prices of the shares of the Company's
Common Stock on a national exchange or over-the-counter trading system during
all trading days of the full calendar month prior to the date on which the
Warrant is issued.
1.4 Closings. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII below, the initial closing under
this Agreement (the "Initial Closing") will be held on March 7, 2005, or on such
other date as the parties shall mutually agree (the "Initial Closing Date"), and
each subsequent closing (each a "Subsequent Closing" and, together with the
Initial Closing, the "Closings") shall occur on the date specified by the
applicable Borrowing Request (which date shall be thirty (30) days after the
date of such Borrowing Request, assuming acceptance of such Borrowing Request by
Purchaser as evidenced by Purchaser's delivery of a Funding Acceptance
Certificate), or on such other date as the parties shall mutually agree (each a
"Subsequent Closing Date" and, together with the Initial Closing Date, the
"Closing Dates").
1.5 Delivery. At each Closing, the Purchaser shall pay to the Company the
aggregate purchase price for the Note so purchased (equal to the face principal
amount of such Note) by wire transfer to the account designated by the Company.
Upon receipt of such funds, the Company shall deliver to the Purchaser a duly
executed Note and related Warrant.
1.6 Purchaser's Termination of Obligations. The Purchaser may terminate its
obligations hereunder with respect to any unused portion of the Credit
Commitment at any time upon ten (10) days' prior written notice if, in the
Purchaser's reasonable judgment, the operations of the Company are not meeting
their business objectives as expected.
1.7 Letter of Intent. The Letter of Intent is hereby superceded and
terminated.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company, as of the date hereof
and as of each Closing Date, as set forth in this Article II. The Purchaser
makes no other representations or warranties, express or implied, to the Company
in connection with the transactions contemplated hereby and any and all prior
representations and warranties, if any, which may have been made by the
Purchaser to the Company in connection with the transactions contemplated hereby
shall be deemed to have been merged in this Agreement and any such prior
representations and warranties, if any, shall not survive the execution and
delivery of this Agreement.
2.1 Investment Purpose. Purchaser is purchasing the Securities for
Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof. The Purchaser will not,
directly or indirectly, offer, sell, pledge or otherwise transfer the Notes or
Warrants or any interest therein except pursuant to transactions that are exempt
from the registration requirements of the Securities Act and/or sales registered
under the Securities Act. Purchaser understands that Purchaser must bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities
laws or an exemption from such registration is available, and that the Company
has no present intention of registering any such Securities other than as
contemplated by the Registration Rights Agreement.
2.2 Accredited Investor Status. Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D.
2.3 Reliance on Exemptions. Purchaser understands that the Securities are
being offered and sold to Purchaser in reliance upon specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and Purchaser's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of Purchaser to acquire the
Notes and Warrants.
2.4 Information. The Company or its counsel have made available all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
specifically requested by Purchaser, including without limitation the Company's
Annual Report on Form 10-K for the Year ended December 31, 2003, Quarterly
Reports on Form 10-Q for the periods ended March 31, 2004, June 30, 2004 and
September 30, 2004 filed with the SEC (such documents, together with any
periodic report filed hereafter, collectively, the "SEC Documents") as well as
any press release issued through the Closing Date. The Purchaser has been
afforded the opportunity to ask questions of the Company, was permitted to meet
with the Company's officers and has received what the Purchaser believes to be
complete and satisfactory answers to any such inquiries. Neither such inquiries
nor any other due diligence investigation conducted by the Purchaser or any of
its representations shall modify, amend or affect the Purchaser's right to rely
on the Company's representations and warranties contained in Article III. The
Purchaser understands that Purchaser's investment in the Securities involves a
high degree of risk, including without limitation the risks and uncertainties
disclosed in the SEC Documents. Purchaser acknowledges it has reviewed the
disclosures presented under the caption "Risk Factors" in the Company's Form
10-Qs and Form 10-Ks.
2.5 Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. Purchaser understands that (i) except as provided
in the Registration Rights Agreement, the Securities have not been and are not
being registered under the Securities Act or any state securities laws, and may
not be offered, sold, pledged or otherwise transferred unless subsequently
registered thereunder or an exemption from such registration is available (which
exemption the Company expressly agrees may be established as contemplated in
clauses (b) and (c) of Section 5.1 hereof); (ii) any sale of such Securities
made in reliance on Rule 144 under the Securities Act (or a successor rule)
("Rule 144") may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of such Securities without
registration under the Securities Act under circumstances in which the seller
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the SEC thereunder in order for such resale to
be allowed, (iii) the Company is under no obligation to register such Securities
under the Securities Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder (in each case, other than
pursuant to this Agreement or the Registration Rights Agreement) and (iv) the
Company has agreed to register the shares of Common Stock as provided in the
Registration Rights Agreement. Prior to any transfer (other than a routine
transfer pursuant to Rule 144), the Purchaser shall deliver to the Company an
opinion of counsel, in form and substance reasonably acceptable to the
Purchaser, that the shares are transferable without prior registration and any
transferee shall agree to restrictions on transfers substantially in the form
provided pursuant to this Section 2.6. The Purchaser consents to the Company
making a notation on its records and giving instructions to any transfer agent
in order to implement the restrictions on transfer established in this Section
2.6.
2.7 Legends. Purchaser understands that, subject to Article V hereof, the
certificates for the Securities, until such time as the Securities been
registered under the Securities Act as contemplated by the Registration Rights
Agreement or otherwise may be sold by the Purchaser pursuant to Rule 144
(subject to and in accordance with the procedures specified in Article V
hereof), the certificates for the Securities will bear a restrictive legend (the
"Legend") in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A NOTE AND WARRANT PURCHASE
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY, AND MAY BE OBTAINED BY HOLDER WITHOUT CHARGE.
2.8 Authorization; Enforcement. This Agreement and the Registration Rights
Agreement have been duly and validly authorized, executed and delivered on
behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable in accordance with their respective terms, except to the extent that
such validity or enforceability may be subject to or affected by any bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights or remedies of
creditors generally, or by other equitable principles of general application.
2.9 Residency. Purchaser is a resident of the jurisdiction set
forth under Purchaser's name on the signature page hereto executed by Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the date
hereof and as of each Closing Date that:
3.1 Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing would have a Material
Adverse Effect. "Material Adverse Effect" means any effect which, individually
or in the aggregate with all other effects, reasonably would be expected to be
materially adverse to the business, operations, properties, financial condition,
operating results or prospects of the Company and its subsidiaries, taken as a
whole on a consolidated basis or on the transactions contemplated hereby.
3.2 Authorization; Enforcement. (a) The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and the Registration Rights Agreement, and to issue, sell and perform its
obligations with respect to the Securities in accordance with the terms hereof
and thereof and the terms of the Securities in accordance with the terms and
conditions of the Warrants; (b) the execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of all of the Securities) have been
duly authorized by all necessary corporate action and, except as set forth on
Schedule 3.2 hereof, no further consent or authorization of the Company, its
board of directors, or its stockholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby or thereby;
(c) this Agreement, the Registration Rights Agreement, certificates for the
Securities have been duly executed and delivered by the Company; and (d) this
Agreement, the Registration Rights Agreement, the Securities constitute legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except (i) to the extent that such
validity or enforceability may be subject to or affected by any bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights or remedies of
creditors generally, or by other equitable principles of general application,
and (ii) as rights to indemnity and contribution under the Registration Rights
Agreement may be limited by Federal or state securities laws.
3.3 Capitalization. The capitalization of the Company as of
December 31, 2004, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares reserved for issuance pursuant to
the Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Warrants) exercisable for, or convertible
into or exchangeable for, any shares of Common Stock and the number of shares to
be reserved for issuance upon exercise of the Warrants is set forth on Schedule
3.3 hereof. All of such outstanding shares of capital stock have been, or upon
issuance will be, validly issued, fully paid and nonassessable. No shares of
capital stock of the Company (including the Conversion Shares and the Warrant
Shares) are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances. Except as disclosed in
Schedule 3.3 hereof, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital stock
of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries, (ii) issuance of the Securities will not
trigger antidilution rights for any other outstanding or authorized securities
of the Company, except as provided in Schedule 3.3 hereof; and (iii) there are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of its or their securities under the
Securities Act (except the Registration Rights Agreement and except as provided
in Schedule 3.3 hereof). The Company has furnished to Purchaser true and correct
copies of the Company's Certificate of Incorporation as in effect on the date
hereof (the "Certificate of Incorporation"), and the Company's By-laws as in
effect on the date hereof (the "Bylaws"). The Company has set forth on Schedule
3.3 hereof all instruments and agreements (other than the Certificate of
Incorporation and Bylaws) governing securities convertible into or exercisable
or exchangeable for Common Stock of the Company (and the Company shall provide
to Purchaser copies thereof upon the request of Purchaser).
3.4 Issuance of Shares. The Company has currently 8,739,950
shares of Common Stock duly authorized and reserved for issuance pursuant to the
conversion of the Notes and the exercise of the Warrants. Such shares, as well
as any additional shares of Common Stock subsequently authorized by the
Company's stockholders and Board of Directors for issuance pursuant to the
conversion of the Notes and the exercise of the Warrants, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances imposed or suffered by the Company and will not be subject to
preemptive rights or other similar rights of stockholders of the Company. The
Notes and Warrants are duly authorized and validly issued, fully paid and
nonassessable, and free from all liens, claims and encumbrances imposed or
suffered by the Company and are not and will not be subject to preemptive rights
or other similar rights of stockholders of the Company.
3.5 No Conflicts. The execution, delivery and performance of
this Agreement and the Registration Rights Agreement by the Company, and the
consummation by the Company of transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance, as
applicable, of the Securities do not and will not (a) result in a violation of
the Certificate of Incorporation or Bylaws or (b) conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including U.S. federal and
state securities laws) applicable to the Company or any of its subsidiaries, or
by which any property or asset of the Company or any of its subsidiaries, is
bound or affected (except for such possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation or other organizational documents, and neither the Company nor any
of its subsidiaries, is in default (and no event has occurred which has not been
waived which, with notice or lapse of time or both, would put the Company or any
of its subsidiaries in default) under, nor has there occurred any event giving
others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, except
for possible violations, defaults or rights as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted, and shall not be conducted so long as a
Purchaser owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as set forth on Schedule 3.5 hereof, or except
(A) such as may be required under the Securities Act in connection with the
performance of the Company's obligations under the Registration Rights
Agreement, (B) filing of a Form D with the SEC, and (C) compliance with the
state securities or Blue Sky laws of applicable jurisdictions, the Company is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency or any regulatory
or self-regulatory agency in order for it to execute, deliver or perform any of
its obligations under this Agreement or the Registration Rights Agreement or to
perform its obligations in accordance with the terms hereof or thereof.
3.6 SEC Documents. Since December 31, 2003, the Company has
timely filed the SEC Documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company has made available to the Purchaser true and
complete copies of the SEC Documents, except for exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents which is
required to be updated or amended under applicable law has not been so updated
or amended. The consolidated financial statements of the Company included in the
SEC Documents have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, and the rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such consolidated financial statements or the notes thereto, or (ii) in the case
of unaudited interim statements, to the extent they do not include footnotes or
are condensed or summary statements) and present accurately and completely the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
consolidated financial statements or the notes thereto of the Company included
in the SEC Documents, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
consistent with past practice subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business consistent with past practice and not required under
generally accepted accounting principles to be reflected in such financial
statements. To the extent required by the rules of the SEC applicable thereto,
the SEC Documents contain a complete and accurate list of all material
undischarged written or oral contracts, agreements, leases or other instruments
to which the Company or any subsidiary is a party or by which the Company or any
subsidiary is bound or to which any of the properties or assets of the Company
or any subsidiary is subject (each a "Contract"). None of the Company, its
subsidiaries or, to the best knowledge of the Company, any of the other parties
thereto, is in breach or violation of any Contract, which breach or violation
would have a Material Adverse Effect. No event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, would become a
default by the Company or its subsidiaries thereunder which would have a
Material Adverse Effect.
3.7 Absence of Certain Changes. Since September 30, 2004,
there has been no material adverse change and no material adverse development in
the business, properties, operations, financial condition, results of operations
or prospects of the Company or clearly evident to a sophisticated institutional
investor from the SEC Documents and the press releases issued by the Company
after September 30, 2004.
3.8 Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, or self-regulatory organization or body pending or, to the
best of the Company's knowledge or to the knowledge of any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such, which could
reasonably be expected to result in an unfavorable decision, ruling or finding
which would have a Material Adverse Effect or would adversely affect the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents. There are no facts known to the
Company (other than as disclosed in the SEC Documents) which, if known by a
potential claimant or governmental authority, could reasonably be expected to
give rise to a claim or proceeding which, if asserted or conducted with results
unfavorable to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect.
3.9 Disclosure. No information relating to or concerning the
Company set forth in this Agreement contains an untrue statement of a material
fact. No information relating to or concerning the Company set forth in any of
the SEC Documents contains a statement of material fact that was untrue as of
the date such SEC Document was filed with the SEC. The Company has not omitted
to state a material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement, no
material fact (within the meaning of the federal securities laws of the United
States and of applicable state securities laws) exists with respect to the
Company which has not been publicly disclosed.
3.10 Acknowledgment Regarding Purchaser's Purchase of the Securities. The
Company acknowledges and agrees that Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement or the transactions contemplated hereby, that this Agreement and
the transaction contemplated hereby, and the relationship between the Purchaser
and the Company, are "arms-length," and that any statement made by Purchaser
(except as set forth in Article II), or any of its representatives or agents, in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation, is merely incidental to Purchaser's purchase of the
Securities and has not been relied upon as such in any way by the Company, its
officers or directors. The Company further represents to Purchaser that the
Company's decision to enter into this Agreement and the transactions
contemplated hereby have been based solely on an independent evaluation by the
Company and its representatives.
3.11 No General Solicitation. Neither the Company nor any
distributor participating on the Company's behalf in the transactions
contemplated hereby (if any) nor any person acting for the Company, or any such
distributor, has conducted any "general solicitation," as described in Rule
502(c) under Regulation D, with respect to any of the Securities being offered
hereby
3.12 No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
the registration under the Securities Act pursuant to the provisions of
Regulation D. The transactions contemplated hereby are exempt from the
registration requirements of the Securities Act, assuming the accuracy of the
representations and warranties herein contained of the Purchaser.
3.13 No Brokers. The Company has taken no action which would
give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property. Each of the Company and its
subsidiaries owns or possesses adequate and enforceable rights to use all
material patents, patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "Intangibles") used or necessary for the
conduct of its business as now being conducted and as described in the Company's
Annual Report on Form 10-K for its most recently ended fiscal year. Neither the
Company nor any subsidiary of the Company infringes on or is in conflict with
any right of any other person with respect to any Intangibles nor is there any
claim of infringement made by a third party against or involving the Company or
any of its subsidiaries, which infringement, conflict or claim, individually or
in the aggregate, could reasonably be expected to result in an unfavorable
decision, ruling or finding which would have a Material Adverse Effect.
3.15 Key Employees. No Key Employee, to the best of the
knowledge of the Company and its subsidiaries, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each Key Employee does not subject the Company or any of its
subsidiaries to any liability with respect to any of the foregoing matters. No
Key Employee has, to the best of the knowledge of the Company and its
subsidiaries, any intention to terminate his employment with, or services to,
the Company or any of its subsidiaries. "Key Employee" means each of Xxxx X.
Xxxxxxx, Chairman of the Board and Chief Executive Officer, and Xxxxx X. Xxx,
President.
3.16 Takeover Statute; Rights Agreement. The Company has taken
all necessary actions such that the provisions of Section 203 of the DGCL does
not and will not apply to this Agreement or the Securities issuable hereunder or
thereunder. The Company has taken all necessary actions such that the provisions
of Section 203 of the DGCL did not apply to prior purchases of debt and equity
securities by the Purchaser, including, but not limited to, purchases made
pursuant to that certain Convertible Debt and Warrant Purchase Agreement dated
as of December 19, 2002 and purchases made pursuant to that certain Unsecured
Convertible Debenture and Warrant Purchase Agreement dated as of August 28,
2003. Consummation of the transactions contemplated by this Agreement shall
result in Purchaser being deemed an "Acquiring Person" within the meaning of
Section 1(a) of the Preferred Stock Rights Agreement, by and between the Company
and U.S. Stock Transfer Corporation, dated July 13, 2000 as amended by Amendment
No. 1 on April 24, 2001 and as amended by Amendment No. 2 on December 31, 2004
("Rights Agreement"). The Board of Directors of the Company has approved
Amendment No. 4 amending Section 1(a) of the Rights Agreement to exclude
Purchaser from the definition of Acquiring Person thereunder. As a result, as a
consequence of this Agreement and the transactions contemplated hereby, (i)
Purchaser shall not be an "Acquiring Person" within the meaning of the Rights
Agreement, (ii) a "Triggering Event" (as defined in the Rights Agreement) shall
not have occurred and (iii) the Rights (as defined in the Rights Agreement)
shall not separate from the Company's Common Stock as a result of any of the
transactions contemplated hereby.
ARTICLE IV
COVENANTS
4.1 Reasonable Efforts. The parties shall use their commercially reasonable
efforts to timely satisfy each of the conditions described in Articles VI and
VII of this Agreement.
4.2 Securities Laws. The Company agrees to file a Form D with
respect to the Securities with the SEC as required under Regulation D and to
provide a copy thereof to the Purchaser within fifteen (15) days after the
Closing Date. The Company shall, on or prior to the Closing Date, take such
action as is necessary to sell the Securities to the Purchaser under applicable
securities laws of the states of the United States, and shall provide evidence
of any such action so taken to the Purchaser on or prior to the Closing Date.
4.3 Reporting Status. So long as any Purchaser beneficially
owns any of the Securities, the Company shall timely file all reports required
to be filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination.
4.4 Anti-Dilution Upon Subsequent Offering. In the event that
upon a subsequent financing transaction pursuant to which the Company offers
Additional Securities (as defined below) to third parties, the Company issues or
sells such Additional Securities for a purchase price per share of less than the
Conversion Price of the Notes (as defined in Exhibit A) or the Exercise Price of
the Warrants (as defined in Exhibit B), the Purchaser shall adjust the
Conversion Price of the Notes and/or the Exercise Price of the Warrants to such
lower price. In addition, in the event that the Company consummates any
subsequent financing transaction in which the warrant coverage provided to the
lenders or investors in such transaction is more favorable than the terms hereof
(i.e., greater than one-quarter (1/4) share of Common Stock per Conversion Share
received), irrespective of the exercise price per share underlying such
warrants, then the Purchaser shall receive additional Warrants as necessary to
receive the same warrant coverage on the Notes purchased hereunder as is
provided in such other financing transaction at a per share exercise price equal
to the lesser of (i) the exercise price per share underlying the warrants issued
in the subsequent financing and (ii) the then current Exercise Price. For
purposes of this Agreement, "Additional Securities" shall mean shares of Common
Stock or securities convertible or exchangeable into Common Stock, other than:
(i) securities issued upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof or
with respect to which the Company has entered into an agreement relating to the
future issuance of; (ii) the grant of additional options or warrants, or the
issuance of additional securities, under any employee, director or consulting
stock option, stock purchase or restricted stock plan of Company as approved by
the Company's Board of Directors; or (iii) any firm commitment underwritten
public offering.
4.5 Extension of Term of Existing Warrants. As additional
inducement for the Purchaser to enter into this Agreement and perform its
obligations hereunder, the period for exercise of each of the outstanding
warrants as listed on Schedule 4.5 which are currently held by the Purchaser,
shall be extended to December 31, 2013.
4.6 Information. The Company agrees to make available the
following reports to the Purchaser until the Purchaser transfers, assigns or
sells all of its Securities in transactions in which the transferee is (unless
such transferee is an affiliate of the Company) not subject to securities law
resale restrictions: (a) within three (3) business days after the filing with
the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form
10-Q, any proxy statements and any Current Reports on Form 8-K; and (b) within
one (1) business day after release, copies of all press releases issued by the
Company or any of its subsidiaries. The Company further agrees to promptly
provide to any Purchaser any information with respect to the Company, its
properties, or its business or Purchaser's investment as the Purchaser may
reasonably request; provided, however, that the Company shall not be required to
give any Purchaser any material nonpublic information. If any information
requested by a Purchaser from the Company contains material nonpublic
information, the Company shall inform the Purchaser in writing that the
information requested contains material nonpublic information and shall in no
event provide such information to Purchaser without the express written consent
of the Purchaser after being so informed.
4.7 Prospectus Delivery Requirement. The Purchaser understands
that the Securities Act may require delivery of a prospectus relating to the
Common Stock in connection with any sale thereof pursuant to a registration
statement under the Securities Act covering the resale by the Purchaser of the
Warrant Shares or Conversion Shares being sold, and the Purchaser shall comply
with the applicable prospectus delivery requirements of the Securities Act in
connection with any such sale.
4.8 Hedging Transactions. The Purchaser has no existing short
position with respect to the Common Shares. The Purchaser agrees not to,
directly or indirectly, enter into any short sales with respect to the Common
Shares prior to the date on which the Purchaser is entitled to sell, transfer
the number of shares of Common Stock as to which the Purchaser proposes to
establish a short position. This Section 4.8 shall not prohibit Purchaser from
at any time entering into options contracts with respect to the Common Shares,
including puts and calls including delivering Common Stock in satisfaction of
any exercised options.
4.9 Use of Proceeds. The Company will use the proceeds of the
sale of the Securities for working capital or such other purposes as management
or the Company's Board of Directors shall determine.
4.10 Negative Covenants. So long as Notes with an aggregate
principal amount of at least $1.0 million are outstanding, the Company shall not
do any of the following without the Purchaser's prior written consent:
(a) Engage in any business other than the businesses currently engaged in
by the Company or reasonably related thereto;
(b) Authorize or issue, or obligate itself to issue any debt security, or
authorize or designate (or obligate itself to do so), whether by
reclassification or otherwise, any new class or series of stock, or any
other securities convertible into equity securities of the Company;
provided, however, that if the Purchaser has declined a Borrowing
Request pursuant to Section 1.2 above, the Purchaser's consent shall
not be unreasonably withheld;
(c) Authorize a merger, acquisition or sale of substantially all of the
assets of the Corporation (other than a merger exclusively to effect a
change of domicile of the Company);
(d) Acquire a material amount of assets through a merger or purchase of all
or substantially all of the assets or capital stock of another entity;
(e) Declare or pay any distribution with respect to its shares of Common
Stock or Preferred Stock;
(f) Transfer or grant of rights in any of the Company's technology other
than that of licenses that are incidental to either research,
development, manufacturing, distribution or sales of the Company's
products in the ordinary course of business;
(g) Take any action to effect any addition to the Company's Board of
Directors;
(h) Increase the authorized shares of the Company other than as
contemplated by this Agreement; or
(i) Voluntarily liquidate or dissolve.
In the event of a breach of this Section 4.10, any and all
obligations of the Company to Purchaser shall become immediately due and
payable, at the option of Purchaser, without notice or demand. The occurrence of
any such breach shall also constitute, without notice or demand, a default under
all other agreements between Purchaser and Company and instruments and papers
given Purchaser by the Company, whether such agreements, instruments, or papers
now exist or hereafter arise. In addition, in the event of a breach of this
Section 4.10, Purchaser shall have the right, upon written notice to the
Company, to cause the Company to call a special meeting of its stockholders for
the purpose of electing to the Company's Board of Directors a majority of
members designated by Purchaser.
4.11 Reservation of Conversion Shares. The Company will at all times reserve and
keep available, solely for the issuance and delivery upon the conversion of the
Notes, such number of the Conversion Shares and other stock, securities and
property, as from time to time shall be issuable upon the conversion of the
Notes and issuable upon the conversion of the Conversion Shares.
4.12 Takeover Statute. If any takeover statute, including any corporate takeover
provision under laws of the State of Delaware or any other state or federal
"fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation, shall become applicable to the transactions
contemplated hereby, the Company and the members of the Board of Directors of
the Company, as necessary, shall grant such approvals and take such actions as
are necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statue or regulation on the
transactions contemplated hereby.
4.13 Amendment to Rights Agreement. In order to ensure the transactions
contemplated hereby would not (a) result in the occurrence of a "Triggering
Event" under the Rights Agreement, (b) cause Purchaser to become an "Acquiring
Person" as defined in the Rights Agreement or (c) otherwise cause the exercise
of any "Right" issued pursuant to the Rights Agreement or the issuance or
exercise of any "Rights Certificate" under the Rights Agreement, the Company
will promptly cause the Rights Agreement to be duly amended to prevent any such
characterization, including the exclusion of Purchaser from the definition of
"Acquiring Person" thereunder.
ARTICLE V
LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES
5.1 Removal of Legend. The Legend shall be removed and the Company shall issue a
certificate without such Legend to the holder of any Security upon which it is
stamped, and a certificate for a security shall be originally issued without the
Legend, if, (a) the sale of such Security is registered under the Securities
Act, (b) such holder provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable transactions
and reasonably satisfactory to the Company and its counsel (the reasonable cost
of which shall be borne by the Company if, after one (1) year, neither an
effective registration statement under the Securities Act or Rule 144 is
available in connection with such sale) to the effect that a public sale or
transfer of such Security may be made without registration under the Securities
Act pursuant to an exemption from such registration requirements or (c) such
Security can be sold pursuant to Rule 144 and the holder provides the Company
with reasonable assurances that the Security can be so sold without restriction
or (d) such Security can be sold pursuant to Rule 144(k). The Purchaser agrees
to sell all Securities, including those represented by a certificate(s) from
which the Legend has been removed, or which were originally issued without the
Legend, pursuant to an effective registration statement, in accordance with the
manner of distribution described in such registration statement and to deliver a
prospectus in connection with such sale, or in compliance with an exemption from
the registration requirements of the Securities Act. In the event the Legend is
removed from any Security or any Security is issued without the Legend and the
Security is to be disposed of other than pursuant to the registration statement
or pursuant to Rule 144, then prior to, and as a condition to, such disposition
such Security shall be relegended as provided herein in connection with any
disposition if the subsequent transfer thereof would be restricted under the
Securities Act. Also, in the event the Legend is removed from any Security or
any Security is issued without the Legend and thereafter the effectiveness of a
registration statement covering the resale of such Security is suspended or the
Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon reasonable advance notice to Purchaser
holding such Security, the Company may require that the Legend be placed on any
such Security that cannot then be sold pursuant to an effective registration
statement or Rule 144 or with respect to which the opinion referred to in clause
(b) next above has not been rendered, which Legend shall be removed when such
Security may be sold pursuant to an effective registration statement or Rule 144
or such holder provides the opinion with respect thereto described in clause (b)
next above.
5.2 Transfer Agent Instructions. The Company shall instruct
its transfer agent to issue certificates, registered in the name of the
Purchaser or its nominee, for the Securities in such amounts determined in
accordance with the terms of the Securities. Such certificates shall bear the
Legend only to the extent provided by Section 5.1 above. The Company covenants
that no instruction other than such instructions referred to in this Article V,
and stop transfer instructions to give effect to Section 2.6 hereof in the case
of the Securities prior to registration of the Securities under the Securities
Act, will be given by the Company to its transfer agent and that the Securities
shall otherwise be freely transferable on the books and records of the Company.
Nothing in this Section shall affect in any way the Purchaser's obligations and
agreement set forth in Section 5.1 hereof to resell the Securities pursuant to
an effective registration statement and to deliver a prospectus in connection
with such sale or in compliance with an exemption from the registration
requirements of applicable securities laws. If (a) a Purchaser provides the
Company with an opinion of counsel, which opinion of counsel shall be in form,
substance and scope customary for opinions of counsel in comparable transactions
and reasonably satisfactory to the Company and its counsel (the reasonable cost
of which shall be borne by the Company if, after one (1) year, neither an
effective registration statement under the Securities Act or Rule 144 is
available in connection with such sale), to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an exemption from
registration or (b) a Purchaser transfers Securities to an affiliate which is an
accredited investor (within the meaning of Regulation D under the Securities
Act) and which delivers to the Company in written form the same representations,
warranties and covenants made by Purchaser hereunder or pursuant to Rule 144,
the Company shall permit the transfer, and, in the case of the Securities,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denomination as specified by the Purchaser. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Article V will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Article V, that the Purchaser shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of the
Company hereunder to issue and sell the Notes and Warrants to the Purchaser at
each Closing, is subject to the satisfaction, as of the date of any such Closing
and with respect to the Purchaser, of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion:
(i) The Purchaser shall have executed and delivered the
signature page to this Agreement and the Registration Rights
Agreement;
(ii) The Purchaser shall have wired the Borrowing Request amount to the account
designated by the Company.
(iii) The representations and warranties of the Purchaser shall be
true and correct in all material respects as of the date when
made and as of each Closing as though made at that time
(except for representations and warranties that speak as of a
specific date), and the Purchaser shall have performed,
satisfied and complied in all material respects with the
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
applicable Purchaser at or prior to each Closing.
(iv) No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which restricts
or prohibits the consummation of any of the transactions
contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of the Purchaser hereunder to purchase the Notes and the
Warrants to be purchased by it at each Closing is subject to the satisfaction of
each of the following conditions, provided that these conditions are for the
Purchaser's sole benefit and may be waived by the Purchaser at any time in the
Purchaser's sole discretion:
(i) The Company shall have executed and delivered the signature
page to this Agreement, the Security Agreement and the
Registration Rights Agreement at the Initial Closing or
related signed Borrowing Request for each Subsequent Closing.
(ii) The Company shall have delivered to the Purchaser's counsel
duly issued Notes being so purchased by Purchaser and Warrants
being issued to the Purchaser at such Closing.
(iii) The representations and warranties of the Company shall be
true and correct as of the date when made and as of such
Closing Date as though made at that time and the Company shall
have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to such Closing Date.
Purchaser shall have received a certificate, executed by the
Chief Executive Officer or Chief Financial Officer of the
Company, dated as of the Initial Closing Date and each
Subsequent Closing Date to the foregoing effect.
(iv) No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits
the consummation of any of the transactions contemplated by
this Agreement.
(v) That certain Convertible Debt and Warrant Purchase Agreement dated December
19, 2002 between the Company and Purchaser shall be amended to provide that
in the event that the Company consummates a subsequent financing
transaction in which the warrant coverage provided to the lenders or
investors in such transaction is more favorable than the terms thereof,
irrespective of the exercise price per share underlying such warrants, then
the Purchaser shall receive additional warrants as necessary to receive the
same warrant coverage on the notes purchased thereunder as is provided in
such other financing transaction at a per share exercise price equal to the
lesser of (x) the exercise price per share underlying the warrants issued
in the subsequent financing and (y) the then current exercise price on the
outstanding warrants issued in connection with the Convertible Debt and
Warrant Purchase Agreement.
(vi) The outstanding Debentures issued pursuant to that certain Unsecured
Debenture and Warrant Purchase Agreement dated August 28, 2003 which are
currently held by Purchaser shall be amended (x) to provide that the
conversion price of the Debentures and the exercise price underlying the
warrants issued in connection with the Debentures will be subject to normal
"full ratchet" anti-dilution protection in the event the Company
consummates a subsequent financing in which the Company sells shares of
Common Stock or securities convertible into or exchangeable for Common
Stock at a per share price less than the then applicable conversion price
or exercise price; (y) to provide that in the event the Company consummates
a subsequent financing in which the warrant coverage provided therein (i.e.
the number of warrant shares issuable upon exercise of the warrant) is more
favorable than the warrant coverage provided in this transaction,
irrespective of the exercise price of such warrants, Purchaser shall
receive additional warrants to match such increased coverage as provided in
the subsequent financing at an exercise price equal to the lesser of (i)
the exercise price per share underlying the warrants issued in the
subsequent financing or (ii) the then current exercise price on the
outstanding warrants issued in connection with the Debentures; and (z) to
remove the limitation set forth in Section 4(f) limiting Purchaser's
ability to convert the Debenture if such a conversion would result in
Purchaser beneficially owning greater than 4.95% of the Company.
(vii) The Company shall have obtained the prior written consent of
the holders of a majority of the outstanding principal amount
of Debentures, excluding the principal amount of the
Debentures held by the Purchaser.
(viii) In the event Purchaser has purchased Notes with an aggregate principal
amount at least of $7.0 million and such Notes remain outstanding, the
Company shall not be permitted to submit a subsequent Borrowing Request
unless (a) the Company has reserved, solely for the issuance and delivery
upon the conversion of the Notes and exercise of the Warrants, such number
of the Conversion Shares and Warrant Shares and other stock, securities and
property, as from time to time shall be issuable upon the conversion of the
Notes and upon exercise of the Warrants, including a sufficient number of
Conversion Shares and Warrant Shares issuable in connection with the Notes
and Warrants to be issued pursuant to such subsequent Borrowing Request, or
(b) the Company has first amended its Certificate of Incorporation to
increase the number of authorized shares of the Company's Common Stock and
has reserved, solely for the issuance and delivery upon the conversion of
the Notes and exercise of the Warrants, such number of the Conversion
Shares and Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the conversion of the Notes and upon
exercise of the Warrants, including a sufficient number of Conversion
Shares and Warrant Shares issuable in connection with the Notes and
Warrants to be issued pursuant to such subsequent Borrowing Request.
(ix) Upon the separate written request of Purchaser, Purchaser
shall have received a legal opinion from the Company's outside
legal counsel, dated as of the Initial Closing Date and each
Subsequent Closing Date in the form attached hereto as Exhibit
F.
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law: Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. The parties
hereto irrevocably consent to the jurisdiction of the United States federal
courts and state courts located in the County of Santa Xxxxxxx in the State of
California in any suit or proceeding based on or arising under this Agreement or
the transactions contemplated hereby and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such courts. The Company
and the Purchaser irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in such forum. The Company and the
Purchaser further agrees that service of process upon the Company or the
Purchaser, as applicable, mailed by the first class mail in accordance with
Section 8.6 shall be deemed in every respect effective service of process upon
the Company or the Purchaser in any suit or proceeding arising hereunder.
Nothing herein shall affect Purchaser's right to serve process in any other
manner permitted by law. The parties hereto agree 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 parties hereto irrevocably waive any right to a trial by jury under
applicable law.
8.2 Counterparts. This Agreement may be executed in two or
more counterparts, including, without limitation, by facsimile transmission, all
of which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties as soon
as practicable thereafter.
8.3 Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
8.4 Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
8.5 Entire Agreement: Amendments. The Letter of Intent is
superceded by this Agreement, and this Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
maters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and the
Purchaser.
8.6 Notice. Any notice herein required or permitted to be
given shall be in writing and may be personally served or delivered by
nationally-recognized overnight courier or by facsimile machine confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). The addresses for such
communications shall be:
If to the Company:
-----------------
Miravant Medical Technologies
000 Xxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with copy to:
Xxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
with copy to:
------------
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Purchaser:
================================
--------------------------------
Attention: ________________________
Facsimile: ________________________
with a copy to:
--------------
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Feucther
Facsimile: (000) 000-0000
8.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns. Neither the Company
nor any Purchaser shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, the Purchaser may assign its rights and obligations hereunder, in
whole or in part, to any of its "affiliates," as that term is defined under the
Securities Act, without the consent of the Company so long as such affiliate is
an accredited investor (within the meaning of Regulation D under the Securities
Act) and agrees in writing to be bound by this Agreement. This provision shall
not limit the Purchaser's right to transfer the Securities pursuant to the terms
of this Agreement or to assign the Purchaser's rights hereunder to any such
transferee. In that regard, if Purchaser sells all or part of its Common Shares
to someone that acquires the shares subject to restrictions on transferability
(other than restrictions, if any, arising out of the transferee's status as an
affiliate of the Company), Purchaser shall be permitted to assign its rights
hereunder, in whole or in part, to such transferee.
8.8 Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. The representations and warranties of the
Company and the agreements and covenants shall survive the Closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of
Purchaser. The Company agrees to indemnify and hold harmless the Purchaser and
each of the Purchaser's officers, directors, employees, partners, agents and
affiliates for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations or covenants set
forth herein, including advancement of expenses as they are incurred. The
representations and warranties of the Purchaser shall survive the Closing
hereunder and the Purchaser shall indemnify and hold harmless the Company and
each of its officers, directors, employees, partners, agents and affiliates for
any loss or damage arising as a result of the breach of the Purchaser's
representations and warranties.
8.10 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.11 Legal Expenses. The Company will pay the Purchaser's actual documented
legal expenses not to exceed $35,000.
8.12 Remedies. No provision of this Agreement providing for
any remedy to a Purchaser shall limit any remedy which would otherwise be
available to the Purchaser at law or in equity. Nothing in this Agreement shall
limit any rights a Purchaser may have with any applicable federal or state
securities laws with respect to the investment contemplated hereby. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser. Accordingly, the Company acknowledges that the
remedy at law for a material breach of its obligations under this Agreement will
be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement, that a Purchaser shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate compliance, without the necessity of showing
economic loss and without any bond or other security being required.
8.13 Final Agreement. This Agreement, when executed by the
parties hereto, shall constitute the final agreement between the parties and
upon such execution the Purchaser and the Company accept the terms hereof and
have no cause of action against each other for prior negotiations preceding the
execution of this Agreement.
8.14 Facsimile Signatures/Counterparts. The Closing of this
transaction will occur through the exchange of signature pages by facsimile and
fully executed copies shall be subsequently exchanged.
[Signatures on next page]
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
COMPANY:
MIRAVANT MEDICAL TECHNOLOGIES
By:
------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Financial Officer
PURCHASER:
ST. CLOUD INVESTMENTS, LTD.
a British Virgin Islands
company
By:
------------------------
Name:
Title:
Exhibit A
to
Note and Warrant Purchase Agreement
CONVERTIBLE SECURED NOTE
Exhibit B
to
Note and Warrant Purchase Agreement
WARRANT
1)
Exhibit C
to
Note and Warrant Purchase Agreement
SECURITY AGREEMENT
Exhibit D
to
Note and Warrant Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
Exhibit E
to
Note and Warrant Purchase Agreement
BORROWING REQUEST
TO: ____________________ (the "Purchaser")
---------
DATE: ____________________
Miravant Medical Technologies (the "Company") hereby gives notice that
it requests to the Borrower on the ___ day of ____________, 200__ the sum of
$_____________. The Company will deliver the Convertible Promissory Note, in the
form attached as Exhibit A and the Warrant in the form attached as Exhibit B,
upon receipt of the funds.
Date: ______________ MIRAVANT MEDICAL TECHNOLOGIES
By:
------------------------
Name:
Title:
List of Schedules
to
Note and Warrant Purchase Agreement
Schedule 3.2 - Authorization; Enforcement
Schedule 3.3 - Capitalization
Schedule 3.5 - Conflicts
Schedule 4.5 - Warrants
SCHEDULE 3.2
TO
NOTE AND WARRANT PURCHASE AGREEMENT
AUTHORIZATION; ENFORCEMENT
There currently are available only 8,739,950 shares of authorized common stock.
SCHEDULE 3.3
TO
NOTE AND WARRANT PURCHASE AGREEMENT
CAPITALIZATION
AS OF DECEMBER 31, 2004
Number of Shares
Authorized Stock as:
Preferred Stock...................................... 30,000,000
Common Stock......................................... 75,000,000
Outstanding Stock:
Preferred Stock...................................... 1,112,966
Common Stock......................................... 36,718,605
Stock Options:
Issued ($2.57 avg exercise price) 5,028,254
Exercisable (vested; $2.98 avg exercise price) 3,541,652
Warrants:
Issued ($0.85 avg exercise price) 10,005,750
Other Convertible Instruments:
Reserved for Preferred Stock conversion 1,112,966
Convertible Debentures Issued 10,317,026
Note: There currently are available only 8,739,950 shares of authorized common
stock.
SCHEDULE 3.5
TO
NOTE AND WARRANT PURCHASE AGREEMENT
CONFLICTS
None
SCHEDULE 4.5
TO
NOTE AND WARRANT PURCHASE AGREEMENT
WARRANTS
Warrant Exercise
Description Shares Price Expiration Date
--------------------------- --------------------------- ---------------
August 2002 Warrant 300,000 $ 0.50 August 28, 2007
August 0000 Xxxxxxx 2,500,000 $ 0.50 October 27, 2007
December 2002 Warrant 250,000 $ 0.50 December 31, 2008
August 0000 Xxxxxxx 3,450,000 $ 1.00 August 28, 2008
December 2002 Warrant 1,575,000 $ 1.00 December 31 2008
