Exhibit 10.7
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered
into on the date hereinafter set forth by and between MIRAVANT MEDICAL
TECHNOLOGIES, a Delaware corporation ("MRVT") and XXXXXXX X. XXXXXX ("Xxxxxx").
WHEREAS:
X. Xxxxxx is a Director and Shareholder of MRVT and owns Four Hundred
and Thirty Five Thousand (435,000) shares of MRVT stock, together with options
to acquire Forty Five Thousand (45,000) shares of MRVT stock (collectively, the
"Xxxxxx Shares");
X. Xxxxxx has pledged the Xxxxxx Shares to Xxxxxx Bank as collateral
for a SEVEN MILLION FIVE HUNDRED SIXTY EIGHT THOUSAND FOUR HUNDRED AND EIGHTEEN
DOLLAR ($7,568,418) loan, with interest accruing after February 2, 1998 at TWO
THOUSAND ONE HUNDRED FOURTEEN DOLLARS ($2,114) per day (the "Coutts Loan") and
Xxxxxx Bank demands payment and requests that MRVT release any applicable
legends on stock certificates representing the Xxxxxx Shares;
C. MRVT feels that it is in MRVT's best interest to assist Xxxxxx to
resolve the Xxxxxx Bank demand;
X. Xxxxxx wishes to secure the assistance of MRVT with respect to
guaranteeing a loan by Sanwa Bank, MRVT's principal banker, to pay the Coutts
Loan in full; and
E. MRVT has secured the approval of a majority of its Directors with
respect to this transaction, and Xxxxxx has abstained from voting with respect
to this matter.
NOW, THEREFORE, in consideration of the premises and promises,
warranties and representations herein contained, it is agreed as follows:
1. Corporate Guaranty. MRVT will provide a corporate guaranty to Sanwa
Bank (the "Guaranty") of a loan, for not more than eighteen (18) months, not to
exceed SEVEN MILLION SIX HUNDRED THOUSAND DOLLARS ($7,600,000), plus interest
payable quarterly from the date of the loan (the "Sanwa Loan"), which will be
used to pay the Coutts Loan. The Guaranty will be provided to Sanwa Bank by
MRVT.
2. Credit Enhancement Fee. Xxxxxx will pay to MRVT, at the execution of
the Guaranty and this Agreement, a credit enhancement fee equal to two percent
(2%) of the borrowed amount, not to exceed SEVEN MILLION SIX HUNDRED THOUSAND
DOLLARS ($7,600,000), payable in MRVT stock (the "Fee Shares") at the closing
price on the date of this Agreement.
3. Pledge of Assets. Xxxxxx represents that he will pledge to Sanwa
Bank all the Xxxxxx Shares, less the Fee Shares, as well as any other collateral
required by Sanwa Bank, to secure the payment of the Sanwa Loan.
4. Personal Financial Statement. Xxxxxx has delivered to the Chairman
of the Board of MRVT, on a confidential basis, his personal financial statement
as delivered to Sanwa Bank, and Xxxxxx warrants and represents that it is true
and correct.
5. Director Status. Xxxxxx has noticed MRVT that he will not stand for
re-election as a Director of MRVT at the 1998 MRVT Annual Shareholders meeting.
6. Indemnification. Xxxxxx does hereby unconditionally and irrevocably
indemnify and hold harmless MRVT from and against any and all losses,
liabilities, claims, demands, and causes of action of any kind or nature related
to this Agreement, the Sanwa Loan, the Guaranty or the Coutts Loan. Included in
this indemnification is the payment of reasonable legal fees in the event of any
litigation involving the Sanwa Loan or Xxxxxx'x MRVT stock as it relates
directly to a uncured default by Xxxxxx of the Sanwa Loan.
7. Lock-Up Agreement. Xxxxxx agrees not to sell any of the Xxxxxx
Shares until January 1, 1999 and, thereafter, not to sell the Xxxxxx Shares in
an amount not to exceed up to five percent (5%) of the ten (10) day average
trading volume (as reported by Bloomberg, L.P.) on the date prior to the date of
disposition. Nothing in this Section 7 is intended to limit Xxxxxx'x ability to
repay the Sanwa Loan by selling the Xxxxxx Shares in off-market transactions in
an orderly manner to repay the Sanwa Loan or refinancing with one or more
sources, so long as the purchaser or refinancier agrees to the foregoing terms;
provided, however, that MRVT, in its sole and absolute discretion, may agree to
other arrangements on a mutually agreeable basis, but this provision shall not
be construed to require MRVT to make any such other arrangements if it chooses
not to do so.
8. Default. In the event of (i) a default by Xxxxxx in the payment of
the Sanwa Loan, which is not cured by Xxxxxx within the cure period of the Sanwa
Loan agreements, and result in Sanwa's demand of full repayment of the Sanwa
Loan (the "Loan Default Date"), (ii) a default by Xxxxxx in any of the terms of
this Agreement (the "Agreement Default Date"), or (iii) if Sanwa Bank calls upon
MRVT to honor its Guaranty of the Sanwa Loan or puts the Sanwa Loan to MRVT (the
"Guaranty Performance Date"), MRVT may then elect to purchase the Sanwa Loan
from the Sanwa Bank for the amount due to it and have all of Sanwa Bank's rights
under the Sanwa Loan agreements, and Xxxxxx will not assert against MRVT any
claims he may have against Sanwa Bank. Provided that MRVT elects to purchase the
Sanwa Loan at its unpaid balance, Xxxxxx hereby irrevocably and unconditionally
grants MRVT an assignable option ("Option") to acquire the Xxxxxx Shares at a
price equal to fifty percent (50%) of the 20-day average closing price of the
MRVT stock on the exercise date of the Option, net of the Sanwa Loan repayment .
The Option may be exercised by MRVT or its assignee within sixty (60) days of
the applicable Loan Default Date, Agreement Default Date or the Guaranty
Performance Date. If MRVT does not exercise the Option, it may pursue all
remedies available to Sanwa Bank.
9. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring Xxxxxx to do or fail to do any act in violation
of applicable law. In the event any provision of this Agreement is finally
determined by the courts to require Xxxxxx to do or fail to do such an act, such
provision shall be limited or modified in its application to the minimum extent
necessary to avoid a violation of law, and as so limited or modified such
provision and the balance of this Agreement shall be enforceable in accordance
with their terms.
10. Choice of Law; Arbitration. This Agreement is made and entered into
in Santa Barbara, California, and California law shall apply. Any dispute
between the parties shall be resolved by arbitration, before one arbitrator, in
Santa Barbara, California, in accordance with the Rules of the American
Arbitration Association.
11. Successors and Assigns. This Agreement shall be binding upon
Xxxxxx, and his successors and assigns, and shall inure to the benefit of MRVT
and MRVT's officers, directors, shareholders, agents and representatives.
12. Confidentiality. Xxxxxx and MRVT will keep all of the terms of this
Agreement confidential and will not disclose any of those terms without the
prior written consent of the other party, except for any obligations of MRVT or
Xxxxxx to make a disclosure as required under applicable federal securities
laws.
13. Release. In consideration of this Agreement, Xxxxxx does hereby
irrevocably and unconditionally release Miravant, its officers, directors,
employees, agents and insureds (collectively, the "Released Parties") from any
and all liabilities, losses, claims and damages related to the Sanwa Loan or
this Agreement, including MRVT's Option set forth in Section 8 hereof. Xxxxxx
represents that he has not made an assignment of his claims and he is fully
authorized to execute this Agreement. Xxxxxx waives the rights of Section 1542
of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
14. Counsel Waiver. Xxxxxx hereby acknowledges that he has been advised
to seek independent counsel with respect to this Agreement, and has sought such
counsel, and Xxxxxx also hereby consents to Nida & Xxxxxxx, P.C. representing
MRVT with respect to the preparation of this Agreement. Both MRVT and Xxxxxx
hereby acknowledge that Nida & Xxxxxxx, P.C. has provided services to each of
the parties hereto.
(Signatures on next page)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 27th day of February, 1998.
MRVT:
MIRAVANT MEDICAL TECHNOLOGIES,
a Delaware corporation
By: /S/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chief Executive Officer
XXXXXX:
/S/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
SPOUSAL CONSENT
The undersigned, the spouse of XXXXXXX X. XXXXXX, hereby consents to
her spouse's execution of the foregoing Agreement, agrees to be bound by the
terms of this Agreement and hereby irrevocably appoints her spouse as the agent
of the undersigned for purposes of executing and performing any actions directly
or indirectly relating to MRVT and the foregoing Agreement, including, without
limitation, any amendments and supplements thereto and any waivers, consents or
approvals thereunder, without further signature, consent or notice to the
undersigned whatsoever.
Date: February 27, 1998 /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
